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Alexis C. Stangl
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   Senate   
State of Minnesota
 
 
 
 
 
S.F. No. 2136 - Department Policy and Technical Bill; Nonbudget Tax Bill (Author's Delete-Everything Amendment)
 
Author: Senator Julianne E. Ortman
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
Eric S. Silvia, Senate Counsel (651/296-1771)
 
Date: April 2, 2012



 

 ARTICLE 1

DEPARTMENT POLICY AND TECHNICAL: INCOME AND CORPORATE FRANCHISE TAXES

Section 1.  Field audit.  Restates the definition of field audit that is stricken in a later section.  Effective the day following final enactment.

Section 2.  Short taxable year.   Clarifies that a short taxable year and the resulting estimated tax applies to both C corporations that pay corporate franchise tax and exempt entities that pay unrelated business income tax.  Effective the day following final enactment.

Section 3.  Underpayment of estimated tax.  Clarifies that the underpayment of estimated tax will be added to tax for the taxable year for both C corporations that pay corporate franchise tax and exempt entities that pay unrelated business income tax.  Effective the day following final enactment.

Section 4.  Required installments.  Clarifies that both C corporations that pay corporate franchise tax and exempt entities that pay unrelated business income tax pay their estimated tax payments in four installments.  Effective the day following final enactment.

Section 5.  Failure to file an estimate.  Clarifies that the policy for the failure to file an estimate applies to both C corporations that pay corporate franchise tax and exempt entities that pay unrelated business income tax.  Effective the day following final enactment.

Section 6.  Federal tax changes.  Strikes language relating to the time frame to report which is reinstated in a later section.  Effective the day following final enactment.

Section 7.  Time requirement to report federal tax changes.  Reinstates language relating to the time frame to report federal tax changes that was stricken in an earlier section.  Effective the day following final enactment.

Section 8.  Limitations on time for assessment for federal tax changes.  Clarifies that the department may reassess tax, including the refund, within the shorter of six and one half years after a federal change or one year after the taxpayer notifies the department of a federal change.  Strikes the definition of “field audit” that is reinstated in an earlier section.  Effective the day following final enactment.

Section 9.  Federal extensions.  Strikes the reference to the definition of “field audit” since the definition is reinstated in a definition section that applies to the entire chapter.  Effective the day following final enactment.

Section 10.  Penalty for failure to notify of federal change.  Makes a conforming change to correct the cross-reference the time frame to report federal tax changes.  Effective the day following final enactment.

Section 11.  Foreign operating corporation.  Strikes an obsolete reference to the Internal Revenue Code relating to federal extraterritorial income.  Effective for taxable years beginning after December 31, 2011.

Section 12.  Subtractions from federal taxable income.  Corrects an incorrect cross-reference.  Effective for taxable years beginning after December 31, 2011.

Section 13.  Corporations; additions to federal taxable income.  Corrects an incorrect cross-reference and strikes an obsolete reference to the Internal Revenue Code relating to federal extraterritorial income. Effective for taxes payable beginning after December 31, 2011.

Section 14.  Corporations; modifications decreasing federal taxable income.  Strikes an obsolete reference to the Internal Revenue Code relating to federal extraterritorial income.  Effective for taxable years beginning after December 31, 2011.

Section 15.  Alternative minimum taxable income.  Strikes an obsolete reference to federal extraterritorial income.  Effective for taxable years beginning after December 31, 2011.

Section 16.  Carryover.  Clarifies that the net operating loss calculation includes the Minnesota business loss and the Minnesota nonbusiness loss.  Effective the day following final enactment.

Section 17.  Unitary business principle.  Clarifies that unity of ownership does not exist when two or more corporations are involved unless there is, directly or indirectly, a common owner of more than 50 percent.  Effective the day following final enactment.

 ARTICLE 2

 DEPARTMENT POLICY AND TECHNICAL: ESTATE TAXES

Section 1.  Recapture tax – return required.  Adds a subdivision to require a return if there is a disqualifying cessation of the trade or business or a disqualifying of the property that was excluded from the taxable estate.  Effective retroactively for estates of decedents dying after June 30, 2011.

Section 2.  Recapture tax – informational return required.  Adds a subdivision to require an annual informational return during the three-year period after a decedent’s death if the decedent excluded from the taxable estate qualified small business or qualified farm property. Effective retroactively for estates of decedents dying after June 30, 2011.

Section 3.  Recapture tax – return due date.  Adds a subdivision to clarify the due date of the recapture tax return: 6 months after a disqualifying cessation of the trade or business or a disqualifying disposition of the property that was excluded from the taxable estate.  Effective retroactively for estates of decedents dying after June 30, 2011.

Sections 4 and 5.  Recapture tax – payment due date.  Changes a cross-reference and clarifies the recapture tax payment due date: on or before 6 months after a disqualifying cessation of the trade or business or a disqualifying disposition of the property that was excluded from the taxable estate.  Effective retroactively for estates of decedents dying after June 30, 2011.

Section 6.  Definitions.  Clarifies that a “family member” includes a trust whose present beneficiaries are all family members qualifies as a family member for purposes of the qualified small business property and qualified farm property exclusion.  Clarifies the definition of “qualified heir” to mean a family member who acquired qualified property upon the death of the decedent.  Effective retroactively for estates of decedents dying after June 30, 2011.

Section 7.  Qualified small business property.  Makes the following clarifying changes to the qualified small business property estate tax exclusion:

  • clarifies the decedent’s ownership interest requirement for qualified small business property;
  • clarifies that during the taxable year that ended before decedent’s death, the trade or business must not have been a passive activity and the decedent or the decedent’s spouse must have materially participated in the trade or business; 
  • excludes publicly traded securities and assets not used in the operation of the trade or business from the value of property subject to exclusion;
  • excludes agricultural land (which may be included under the farm property exclusion in the next section);
  • allows, in the case of a sole proprietor, that if property is replaced by similar property within the three-year period prior to decedent’s death, the replacement property will be treated as having met the three-year ownership test prior to decedent’s death; and
  • provides that for three years following the decedent’s death the trade or business must not be a passive activity and a family member must materially participate in the trade or business.

Effective retroactively for estates of decedents dying after June 30, 2011.

Section 8.  Qualified farm property.  Makes the following clarifying changes to the qualified farm property exclusion:

  • clarifies that the property must be agricultural land and owned by a person or entity that is not excluded from owning agricultural land by section 500.24;
  • provides that for property taxes payable in the year of the decedent’s death, the property was classified as the homestead of the decedent or decedent’s spouse (or both) and as class 2a property under section 273.13, subdivision 23;
  • requires that the decedent continuously owned the property for the three years preceding the decedent’s date of death, either by owning the land or holding an interest in an entity that is not excluded from owning the land under section 500.24; and
  • requires that the property is classified as class 2a property under section 273.13, subdivision 23, for three years following the decedent’s date of death.

Effective retroactively for estates of decedents dying after June 30, 2011.

Section 9.  Recapture tax.  Provides that if the requirements for qualified small business and qualified small farm property are not met in the three years following the decedent’s death, the property will be subject to an additional estate tax.  Adds an exception for to allow, in the case of a sole proprietor, that the qualified heir will not be treated as having disposed of an interest in the qualified property if the qualified heir replaces qualified small business property with similar property.  Effective retroactively for estates of decedents dying after June 30, 2011. 

 ARTICLE 3

DEPARTMENT POLICY AND TECHNICAL: PROPERTY TAX

Section 1 – Homestead Applications – updates cross-references concerning tax information remaining private data.

Section 2 – Air Flight Property Tax; Collection – clarifies that the Commissioner of Revenue collects the air flight property tax.  Current law only requires that the tax be credited to the state airports fund, but does not specify that the commissioner collect the tax.

Section 3 – Assessor’s Duties – modifies the list of nontax property appraisals that an assessor may perform within the jurisdiction within which they are the assessor, so that county assessor’s are allowed to do appraisals related to land exchanges.

Section 4 – Air Flight Property Tax – clarifies that the commissioner has the power to abate both late payment and late filing penalties upon finding reasonable cause.

Section 5 – Exempt Property; Usage Tax – clarifies that taxes on the use of federal real property are assessed as a personal property tax against the user.

Section 6 –Property Tax; Person – expands the definition of "person" by including an individual, association, estate, trust, and partnership.

Section 7 – Rural Preserve Property Tax Program – allows new owners to qualify for the program without an intervening period of disqualification and provides specific situations when this may occur.

Section 8 – Homestead Application – clarifies that tax information supplied to the assessor to support an application for a property tax classification benefit remains private data and removes obsolete reference relating to mailing homestead applications.

Section 9 – Agricultural Homesteads – clarifies provisions in agricultural land use classification that classify land used for intensive livestock and poultry confinement even if confinement area is less than 20 acres; allows classification for land in CRP, RIM, or similar programs when land was used agriculturally prior to enrollment; provides a 10-acre safe harbor if a house is present and grants classification to small parcels with residence when agricultural use is one of three enumerated, intensive uses.

Section 10 – Class 4bb Residential Classifications – eliminates the two separate property tax classifications in class 4bb for nonhomestead single-unit residences that are located on either nonagricultural property or agricultural property.

Section 11 – Class 1bb Homestead Declaration Before 2009 – updates cross-references relating to homestead applications.

Section 12 – Class 1b homestead declaration 2009 and thereafter – updates cross-references relating to homestead applications. 

Section 13 – Tax Exempt Property; Lease – clarifies that tax on leased exempt property applies in the case of property owned by a local unit of government.

Section 14 – Administrative Appeals for Railroads and Utilities – allows railroads until the earlier of June 15 or ten days after the date of the valuation and utilities until the earlier of July 1 or ten days after the valuation to file an administrative appeal of their property tax valuations.

Section 15 – Rural Area; Definition for Electrical Cooperatives Per Capita Tax – amends the definition of "rural area" to refer to "statutory cities" and "home rule charter cities."  Currently, the statute only refers to "incorporated city," a designation that no longer exists.

Section 16 – Notice of Delinquent Property Tax – eliminates obsolete text from notice concerning various times within which owners of different types of property may avoid a forfeiture of the property by paying taxes, costs, and interest and adds an instruction that the Commissioner of Revenue will provide a correct and complete narrative description of the various redemption periods that the respective county auditors will include in the notice.

Section 17 – Verification of Social Security Numbers – updates cross reference related to "homestead benefits."

Section 18 – Senior Citizens Property Tax Deferral Program – allows the Commissioner of Revenue to prescribe the form of the lien notices recorded under the program eliminating the need for the lien notices to be notarized or contain a statutorily prescribed notation that the document was drafted by the commissioner.

Section 19 – Assessor’s Duties – clarifies that the County Auditor need not be licensed as a real estate appraiser in order to do appraisals as modified by section 3.

Section 20 – Repealer – repeals obsolete statute imposing gross misdemeanor penalty if a lessor of tangible property fails to file a list of all leased items with the commissioner by specified date and repeals obsolete statute providing a limited, one-year value exclusion for residential property if qualifying investments reducing the hazards related to lead paint were made prior to a specified date.

ARTICLE 4

DEPARTMENT POLICY AND TECHNICAL: SALES AND USE TAXES; SPECIAL TAXES

Section 1.  Auto theft prevention surcharge.  Repeals a cite in Minnesota Statutes, section 65B.84, subd. 1, regarding the surcharge for the automobile theft prevention program which the Department of Revenue is authorized to collect in a later section.  Effective for insurance premiums collected after June 30, 2012. 

Section 2.  Deed tax; consideration.  Modifies the rebuttable presumption in current law that, for deed tax purposes, the consideration for a deed is an amount that is at least equal to the market value of the property.  The presumption will be the latest assessor’s estimated market value, and will apply in all nongift situations instead of only when the consideration is not expressed as a dollar amount.  Effective for deeds executed and recorded after June 30, 2012.

Section 3.  Deed tax; partitions.  Adds a new subdivision defining a real property “partition” for purposes of the existing exemption for partition deeds.   Effective the day following final enactment.

Section 4.  Exemption certificate taken in good faith.  Defines “taken in good faith” for purposes of seller relief from liability when a seller obtains a fully completed exemption certificate within 120 days after a request by the commissioner for substantiation of the exemption, and to provide that the relief is not available if the commissioner finds that at the time the exemption certificate or information is obtained by the seller, the seller had knowledge or reason to know that the information relating to the exemption was materially false, or finds that the seller knowingly participated in activity intended to purposefully evade the tax due.  These provisions are necessary for conformity with the Streamlined Sales Tax Agreement.  Effective the day following final enactment.

Section 5.  Wholesale sales price. Amends the definition of “wholesale sales price” to mean the price at which a distributor purchases a tobacco product.  Effective for purchases made after December 31, 2012.

Section 6.  Brewer credit.  Clarifies the eligibility requirement for a qualified brewer to mean a brewer manufacturing less than 100,000 barrels of fermented malt beverages in the calendar year immediately preceding the fiscal year for which the credit is claimed.  Clarifies the meaning of “owned or controlled” for purposes of eligibility for the credit.  Effective for claims filed after December 31, 2012.

Section 7.  Nonadmitted insurance tax.  Adds purchasing groups that purchase insurance directly from a nonadmitted insurer to the entities subject to the tax.  Effective for premiums received after December 31, 2012.

Section 8.  Retaliatory provisions.  Strikes an obsolete reference and includes life insurance companies in the list of sections that are covered by the retaliatory tax provisions.  Effective the day following final enactment.

Section 9.  Tax on purchasing groups.  Removes the tax on purchasing groups that purchase insurance directly from a nonadmitted insurer.  (This tax is included in another section, similar to other entities that purchase insurance from nonadmitted insurers.)  Effective for premiums received after December 31, 2012.

Section 10.  Auto theft prevention surcharge.   Adds language to authorize the Department of Revenue to collect the surcharge imposed under current automobile insurance law for the automobile theft prevention program.  The Department of Public Safety was required to collect the surcharge until an inter-agency agreement provided the surcharge to be collected by the Department of Revenue. This proposed change codifies the current agreement and authorizes the Department of Revenue to administer the surcharge in the manner it administers other insurance taxes.  Effective for premiums collected after June 30, 2012.

Sections 11 and 12.  Purchasing groups due date.  Changes purchasing groups’ due date for filing returns from twice a year to once a year to be consistent with the annual return due for other entities that buy directly from unauthorized insurers rather than from licensed insurance companies or surplus lines brokers.  Effective for premiums received after December 31, 2012.  

Section 13.  Auto theft prevention surcharge.  Requires insurers subject to the auto theft prevention surcharge to file a quarterly return with the Commissioner of Revenue.   Effective for premiums collected after June 30, 2012.

Section 14.  Purpose statements.  Amends Laws 2011, First Special Session, to clarify that the sales tax exemption for minerals processing was for certain milling and grinding materials used in processing minerals, and not for minerals processing equipment, and clarifies the sales tax treatment of resold admission tickets.  Effective retroactively to July 21, 2011.

Section 15.  Repealer.  Repeals Minnesota Statutes 2010, section 168A.40, subdivisions 3 and 4, pertaining to the automobile theft prevention surcharge program, the provisions of which are added to other parts of statute in an earlier section. 

ARTICLE 5

DEPARTMENT POLICY AND TECHNICAL: MINERALS

Section 1 – Net Proceeds Tax; Property Tax Exemption – removes the exemption from property tax for "direct reduced ore" subject to the net proceeds tax.  Direct reduced ore is an iron ore product and the net proceeds tax only applies to nonferrous ores, metals, or minerals.

Section 2 – Nonferrous Occupation Tax – provides a definition of "hydrometallurgical processes."

Section 3 – Net Proceeds Tax – conforms the distribution of net proceeds tax on mining or extraction of ores, metals or minerals outside the taconite assistance area to the statutory language imposing the tax.

ARTICLE 6

DEPARTMENT POLICY AND TECHNICAL: MISCELLANEOUS

Section 1.  Lost or Destroyed Warrant Duplicate; Indemnity.

Subdivision 1.  Duplicate warrant.  Restates that the Commissioner of Management and Budget may refuse to issue a duplicate of an unpaid state warrant.

Subdivision. 2.  Original warrant is void.  Prohibits the Commissioner of Management and Budget from being liable to any holder who took the void original warrant for value.  Strikes that the Commissioner of Management and Budget may refuse to issue a duplicate of an unpaid state warrant (the language is reinstated above).  Effective the day following final enactment.

Section 2.  Sufficient notice.  Allows the department to notify the taxpayer or other person of a determination or action of the commissioner by electronic means if the taxpayer or other person agrees to accept notification by electronic means.  Effective the day following final enactment.

Section 3.  Penalty for failure to pay electronically.  Modifies the time from which the penalty bears interest, from the due date of the payment of the tax, to the date the penalty was assessable.  Effective the day following final enactment.

Section 4.  Notice and procedures.  Requires that the employer must file all wage levy disclosure forms and remit all wage levy payments by electronic means if the commissioner has prescribed that withholding returns be filed electronically.  This requirement applies to the compensation of entertainers, payments to out-of-state contractors, and taxes withheld by partnerships and small business corporations.  Effective for wage levy disclosures or wage levy payments filed or made after December 31, 2012.

Section 5.  Interest on penalties.  Modifies the time from which the penalty bears interest, from the date the payment was required to be paid, including any extensions, to the date the penalty was assessable for the purposes of the mortgage registry and deed taxes.  Effective the day following final enactment.

Section 6.  Interest on penalties.  Modifies the time from which the penalty bears interest, from the date the return or payment was required to be filed or paid, including any extensions, to the date the penalty was assessable.  Effective the day following final enactment.

Section 7.  Substantial understatement of liability; penalty.  Modifies the time from which the penalty bears interest, from the time the tax should have been paid, to the date the penalty was assessable.  Effective the day following final enactment.

Section 8.  Nonpayment of Tax; Civil Penalties.

Subdivision 1.  Penalty for failure to pay tax, general rule.  Clarifies that the penalties shall bear interest only until paid.

Subdivision 3.  Operating without license.  Clarifies that the penalty bears interest from the date the penalty was assessable until the date of payment of the penalty.  Effective the day following final enactment.

Section 9.  Interest on penalties.  Modifies the time from which the penalty bears interest, from the date the return or payment was required to be filed or paid, including any extension, to the date the penalty was assessable, for the purposes of the gambling tax.  Effective the day following final enactment.

Section 10.  Interest.  Clarifies that the penalty bears interest from the date the penalty was assessable until the date of  payment of the penalty, for the purpose of the cigarette and tobacco taxes.  Effective the day following final enactment.

Section 11.  Interest on penalties.  Modifies the time from which the penalty bears interest, from the date the return or payment was required to be filed or paid, including any extension, to the date the penalty was assessable, for the purposes of the cigarette and tobacco taxes.  Effective the day following final enactment.

Section 12.  Interest.  Clarifies that the penalty bears interest from the date the penalty was assessable until the date of payment of the penalty, for the purpose of the liquor tax.  Effective the day following final enactment.

Section 13.  Interest on penalties.  Modifies the time from which the penalty bears interest, from the date the return or payment was required to be filed or paid, including any extension, to the date the penalty was assessable, for the purposes of the liquor tax.  Effective the day following final enactment.

Section 14.  Payable to commissioner.  Modifies the time from which the penalty bears interest, from the date the return or payment was required to be filed or paid, to the date the penalty was assessable, for the purposes of the insurance tax.  Effective the day following final enactment.

ARTICLE 7  

ECONOMIC DEVELOPMENT PROVISIONS CLEANUP

Section 1 – State Procurement; Economically Disadvantaged Area – changes reference to refer to the border city enterprise zone in statute providing state procurement preferences to small businesses located in economically disadvantaged areas.

Section 2 – Agriculture Resource Loan Program; Small Business Loans – changes reference to refer to the border city enterprise zone program in statute giving preference in the agricultural resource loan program.

Section 3 – Eminent Doman; Public Service Corporation – removes reference to the International Economic Development Zone in definition of a public service corporation under eminent domain law.  This zone was never established and the authority is repealed in section 43.

Section 4 – Tax Data; Administration – changes reference to refer to the border city enterprise zone program and corrects cross-references.

Section 5 – Property Tax Exemption; Housing and Redevelopment Authorities – eliminates cross-reference to authority of housing and redevelopment authorities to exempt property from taxes which is repealed in section 43.

Section 6 – Classification of Property; Employment Property – repeals reference to employment property in property tax classification.  Employment property is not used in border city enterprise zones.

Section 7 – Disparity Reduction Credit – corrects cross-references in disparity reduction credit to reflect repeal of employment property classification.

Section 8 – Iron Range Fiscal Disparity Program – eliminates cross-references to obsolete pre-1979 HRA tax increment financing laws. The authority to create new districts under these laws expired in 1979 and remaining districts were required to decertify in 2009.

Section 9 – Subtractions from Federal Taxable Income – removes reference to international economic development zones (IEDZ) income, for purposes of the Minnesota income tax subtraction.  International economic development zones are repealed in section 43.

Section 10 – Taxable income – removes reference to the exemption for operating in an IEDZ for purposes of computing Minnesota taxable income.  The authorization for the exemption is repealed in section 43.

Section 11 – Schedules of rates – removes reference to the subtraction for IEDZ income for purposes of calculating Minnesota income.

Section 12 – Amount of credit – removes reference to IEDZ income for purposes of calculating the dependent care credit.

Section 13 – Credit allowed – removes reference to IEDZ income for purposes of calculating the working family credit.

Section 14 - Definitions – removes reference to IEDZ income for purposes of calculating individual AMT income. 

Section 15 – Alternative minimum taxable income – removes reference to IEDZ income for purposes of calculating corporate AMT income. 

Section 16 – Exemptions – removes reference to the subtraction for payroll for corporations located in an IEDZ.  

Section 17 – Definitions – removes reference to the exclusion for IEDZ property and payroll, payroll from the calculation of the corporate franchise tax minimum fee.  

Section 18 – Tax collected – removes reference to sales tax refund eligibility for businesses in an IEDZ.  The sales tax exemption is repealed in section 43.   

Section 19 – Housing and Redevelopment Authorities – eliminates exemption from public bidding requirement under HRA law which expired on August 1, 2009.

Section 20 – Housing and Redevelopment Authorities; Dissolution Authority – converts authority to dissolve certain HRAs to a general authority to dissolve an HRA that no longer has operative contracts with the federal government.

Section 21 – Enterprise Zone; Definition – modifies definition of "enterprise zone" to refer only to border city enterprise zones since the other zones have expired.

Section 22 – Enterprise Zones; Definition of Municipality – modifies definition of "municipality" under enterprise zone law to refer only to a "city" since only the five border city enterprise zones in cities remain.

Section 23 – Enterprise Zones; Definition of Governing Body – modifies definition of "governing body" to refer only to city councils or other body designated by the city.

Section 24 – Enterprise Zones; Duration Limits – limits definition of "duration limit" to apply only to border city zones which are effective until terminated by the city.

Section 25 – Border City Enterprise Zones – imports substantive restrictions that apply to tax incentives provided in border city enterprise zones which are currently found in Minnesota Statutes, section 469.170, subd. 5.  Section 469.170 is repealed in section 43.

Section 26 – Enterprise Zones; Restrictions – eliminates obsolete portion of the limits of the enterprise zone law that applied to the regular or competitive zones.

Section 27 – Enterprise Zones; Allocations – eliminates reference to the employment property tax classification under the enterprise zone law which is not used by the border city zones.  

Section 28 – Enterprise Zones; Duration Limits – removes obsolete language referring to duration limits of regular or competitive zone.  

Section 29 – Enterprise Zone; Recapture – removes obsolete reference to employment property and modifies recapture provisions so that it only refers to border city enterprise zones.  

Section 30 – Enterprise Zones; Limitations – adds reference to border city enterprise zone in statute referring to reductions provided to a business within eight months of expiration of the zone.

Section 31 – Enterprise Zones; Development and Redevelopment Powers – adds reference to border city enterprise zones and removes authority relating to expired enterprise zones.

Section 32 – Enterprise Zones; Data Practices – clarifies the Commissioner of Revenue’s authority to share information with border cities.

Section 33 – Enterprise Zones; Zone Boundary Realignment – adds reference to border city enterprise zones in statute authorizing the realignment of zone boundaries and eliminates reference to expired enterprise zones.

Section 34 – Tax Increment Financing; IRS – removes specific date reference in definition of the Internal Revenue Code to allow for future updates.

Section 35 – Tax Increment Financing; Definition of Tax Increment – removes reference to now repealed homestead market value credit.

Section 36 – Tax Increment Financing; Rural Preserves Program – adds reference to rural preserves property tax program in statute prohibiting using TIF for parcels that are in green acres, open space, or metropolitan agricultural preserves program. The green acres program was separated into two separate programs – green acres and rural preserves.  This language clarifies that the prohibition applies to both programs.

Section 37 – Tax Increment Financing; Cross-References – eliminates references to special tax authority that is repealed in section 43 and the special grant program.

Section 38 – Tax Increment Financing; Cross-References – modifies cross-reference to reflect the repeal of pre-1979 TIF statutes.

Section 39 – Tax Increment Financing; Adjustment to Original Net Tax Capacity – provides for adjustment to original net tax capacity reflecting the market value homestead exclusion.

Section 40 – Tax Increment Financing; Cross Reference – removes reference to grant program that was repealed in 2002.  

Section 41 – Abatements – eliminates language in economic development property tax abatement law that expired on July 1, 2004.

Section 42 – Metropolitan Area Fiscal Disparities – eliminates reference to pre-1979 HRA TIF laws.  The authority to create new districts expired in 1979, and the last districts were required to be decertified in 2009.  

Section 43 – Repealer – repeals obsolete provisions from Chapter 469 and certain references in other statutes that reference repealed sections.

Section 44 – Effective Date – sets the effective date for this act as August 1, 2012, and the tax increment financing provisions apply to all districts, regardless of when the request for certification was made, provided that the adjustments to original tax capacity required under section 39 apply only to exclusions that reduced taxable market value beginning with taxes payable in 2012 or thereafter, regardless of when the law authorizing the exclusion became effective.

ARTICLE 8

PUBLIC FINANCE

Section 1 – Counties; Capital Improvement Bonds – expands the definition of "capital improvement" to include public works facilities, fairground buildings, and records and data storage facilities.

Section 2 – Counties; Capital Improvement Bonds Election Requirement – makes the following changes to the reverse referendum authority for CIP bonds: 

  1. ties the 5-percent petition requirement to the number of voters in the last county general election;
  2. eliminates the requirement that the Commissioner of Revenue prepare the ballot question; and
  3. prohibits the county from proposing to issue CIP bonds for a one-year period if a reverse referendum petition is filed and the county chooses not to issue the bonds rather than holding an election to approve them.  If the issue is submitted and the voters do not approve, the issue can be resubmitted to the voters after 180 days.

Section 3 – Counties; Capital Improvement Bonds, Limitations on Amount – excludes from the statutory dollar limit on CIP bonds the interest paid by the federal government so that the limit applies only to the portion of the interest paid by the county.  

Section 4 – Bond Allocation; Qualified Bonds – eliminates references to specific types of projects that qualify for bond allocations as "public facility bond projects" and updates a reference to the Internal Revenue Code – now, any project that qualifies under federal law could qualify for an allocation of this type of tax-exempt bonding.  

Section 5 – Cities; Capital Improvement Bonds Election Requirement – makes the following changes relating to reverse referendum authority for city CIP bonds: 

  1. ties the 5 percent petition requirement to number of voters in last municipal general election;
  2. eliminates the requirement that the Commissioner of Revenue prepare the ballot question; and
  3. prohibits the city from proposing CIP bonds for a one-year period if a petition is filed and the city does not submit the question to voters; if the question is submitted and voters do not approve, it can be resubmitted after 180 days.

Section 6 – Cities; Capital Improvement Bond, Limitations on Amount – excludes from statutory dollar limit interest paid by the federal government so that the limit only applies to the portion of the interest paid by the city. 

Section 7 – Cities; Street Construction Bonds – modifies the street construction bond reverse referendum provisions by prohibiting a city from proposing street construction bonds for one year if a petition is filed and an election is not held, but if an election is held and voters do not approve the question, the same can be resubmitted after 180 days.

Section 8 – City of St Paul, Capital Improvement Bonds – extends to 2024 the special law authorizing the city of St Paul’s capital improvement bonding program. Absent the extension, the authority expires in 2013.

Section 9 – Itasca County; Nursing Home Bonds – authorizes the county to issue general obligation bonds in addition to revenue bonds to finance nursing home improvements.

Section 10 – City of Woodbury; Issuance of Bonds – authorizes the city of Woodbury to issue and sell bonds to pay for costs associated with the Bielenberg Sports Center without submitting the issue to voters, but subject to a reverse referendum.  To qualify, the bonds must be secured by a pledge of revenues from the facility and the city must find that the bonds can be paid for through a tax levy that is not more than the levy used to pay the original bonds to finance the center.

ARTICLE 9

SALES TAXES

Section 1.  Liquor reporting requirements.   Exempts liquor manufacturers, distributors, or other wholesalers from providing copies of sales tax exemption certificates for the retailers to whom they sold liquor in the annual information reports required to be filed with the Department of Revenue.  Effective for reports required to be filed beginning in calendar year 2012.  Retroactively exempts those entities from the reporting requirement for reports required to be filed in calendar years 2010 or 2011, effective the day following final enactment.

Section 2.  Rochester local option sales tax.  Adds cities to be eligible for up to $5 million in grants from the $10 million economic development fund allocated under Rochester’s local sales tax authorization.  Cities with a 2010 population of at least 1,000 and a city boundary within 25 miles of Rochester’s geographic center that are closer to Rochester than another city with a population of 20,000 or more are eligible for such grants.  Effective the day following final enactment. 

Section 3.  Rochester lodging tax.  Increases the Rochester lodging tax from one to three percent.  Extends, from December 31, 2014, to December 31, 2016, the date by which bonds and obligations for costs associated with the construction, expansion, improvement, and renovation of the Mayo Civic Center Complex must be issued in order to be funded from the lodging tax revenue.  Repeals the authority for the Rochester food and beverage taxes to be used to fund the Mayo Civic Center Complex bond payments.  Effective the day after the Rochester city council and its chief clerical officer comply with Minnesota Statutes 2010, section 645.021, subdivisions 2 and 3.

Sections 4 and 5.  St. Cloud local option sales tax.  Allows St. Cloud area cities to extend their local sales tax authority for regional community and aquatics facilities projects.  Allows each city to extend its tax from 2018 to 2038, provided the extension is approved by the voters at a general election held by November 2017.  The ballot must still list the projects to be funded from the tax extension, but the tax does not have to expire for one year before being re-imposed.  Effective the day after the governing body of each city complies with Minnesota Statutes 2010, section 645.021, subdivision 3.

Section 6.  Clearwater local option sales tax.  Provides that proceeds of the Clearwater local sales tax may be used for specified park, trail, walkway, and recreation center improvements, acquisition, and construction.  Effective the day after the Clearwater city council and its chief clerical officer comply with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

Section 7.  Proctor food, beverage and entertainment tax.  Authorizes the city of Proctor to impose a sales tax of up to one percent on sales of food and beverages, including liquor, sold by a restaurant; and a sales tax of up to one percent on admissions to specified entertainment events.  Specifies the projects for which proceeds of the taxes must be used.  Authorizes the city to enter into an agreement with the Commissioner of Revenue to administer, collect, and enforce the taxes.  Effective the day after the Proctor city council and its chief clerical officer comply with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

Section 8.  Solicitor Nexus Study.  Requires the Department of Revenue to conduct a study on solicitor nexus and submit a report of the study findings by January 15, 2013, to the chairs and ranking minority members of the house and senate committees with jurisdiction over taxes.  Effective the day following final enactment.

Section 9.  Repealer.  Repeals the Rochester food and beverage tax.

 

ARTICLE 10

PROPERTY TAXES

Section 1 – Truth in Taxation Notice; Special Taxing District – requires that the Truth in Taxation notice list separately any levy by a special taxing district that exceeds 25 percent of the total of all special taxing district levies and provide identifying and contact information for each special taxing district. 

Section 2 – Property Tax Statements; Special Taxing District – requires that any levy by a special taxing district that exceeds 25 percent of the total of all special taxing district levies be separately stated on the property tax statement.

Section 3 – City of Vergas; Aggregate Materials Tax – allows the city of Vergas to impose the aggregate materials tax if Otter Tail County chooses not to impose the tax.  The proceeds of the tax would be retained by the city and allocated in the same manner as the county tax.  If at any time Otter Tail County chose to impose the tax, the city tax would be repealed.

Section 4 – Local Government Aid; Penalties – authorizes a graduated forfeiture of local government aid for cities that do not submit the required financial documents to the state auditor by the required deadline.

Section 5 – Cook/ Orr Ambulance Services; Levy Authority – expands the authorized uses of the levy proceeds to include attached and portable equipment for use in and for the ambulances and parts and replacement parts for maintenance and repair of ambulances and specifically excludes "operation expenses."

Section 6 – Local Government Aid; 2011 Payments – authorizes payment of 2011 local government aid to cities that did not meet the reporting requirement deadline provided that all necessary information was submitted to the state auditor by March 31, 2012.

Section 7 – Repealer – repeals statute requiring review of property tax system benchmark and indicators.

 

 

 

 

 

 

 
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