Senate Counsel, Research
and Fiscal Analysis
Minnesota Senate Bldg.
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St. Paul, MN 55155
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Tom Bottern
Director
   Senate   
State of Minnesota
 
 
 
 
 
H.F. No. 848 - Omnibus Tax Bill (Conference Committee Report)
 
Author: Senator Rod Skoe
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
Eric S. Silvia, Senate Counsel (651/296-1771)
 
Date: May 22, 2016



 

ARTICLE 1 -- PROPERTY TAX

Sections 1, 12, and 13. County levy authority; soil and water conservation district. Requires that a levy for the soil and water conservation district (SWCD) operations must be certified as a special levy and adds the certification of county levies for soil and water conservation districts as a special taxing district. Effective for certifications made in 2015 and thereafter, and for taxes payable in 2017 and thereafter.

Section 2. County historical society; tax levy. Allows the governing bodies of any city or town to appropriate from its general fund an amount not to exceed 0.02418 percent of estimated market value to be paid to the historical society of its respective city, town or county. Current law provides that the funds must be paid to the historical society of its respective county. Effective the day following final enactment.

Section 3. Property tax adjustment; cooperative association. Allows a cooperative electric association that has elected to be subject to rate regulation to file with the public utilities commission for approval of an adjustment for real and personal property taxes, fees and permits. The Dakota Electric Authority (DEA) is the only electric cooperative that has elected to be rate-regulated. Effective the day following final enactment.

Section 4. Electric generation facility; personal property. Provides a property tax exemption for a new generation facility proposed to be built in or near Marshall. Also provides for the facility to make payments in lieu of taxes based on the number of kilowatt hours produced.

Section 5. Electric generation facility; personal property. Provides an exemption from taxes and payments in lieu of taxes for a new generation facility owned by a municipal power agency in or near Owatonna

Section 6. Restrictions on transfers of specific parts. Allows a county to review a deed or other instrument conveying a parcel of land for transfer or division for conformity with a county’s land use regulation before the county auditor transfers or divides the land or its net tax capacity Effective the day following final enactment.

Section 7. Homestead of disabled veteran. Provides that the surviving spouse of a permanently and totally disabled veteran, or a service member who dies due to a service-related cause, will receive the $300,000 homestead market value exclusion each year, until the spouse remarries or disposes of the property. Under current law this benefit to the surviving spouse expires after eight years. Effective beginning with taxes payable in 2017.

Section 8. State general levy; amount. Reduces the state general levy for commercial-industrial property by $56,400,000, which is the amount of levy estimated to be paid by the property that is being exempted in section 9. Separately states the portion of the state general levy to be paid by commercial-industrial property and by seasonal-recreational property. Effective beginning with taxes payable in 2017.

Section 9. Commercial-industrial tax capacity. Exempts the first $100,000 of market value of each parcel of commercial-industrial property from the state general levy. Effective beginning with taxes payable in 2017.

Section 10. Apportionment and levy of the state general tax. Eliminates the apportionment of the state general levy into a commercial-industrial share and a seasonal-recreational share since the levy amounts are separately stated in section 8. Effective beginning with taxes payable in 2017.

Section 11. Proposed levy. Changes the date by which all special taxing districts, with the exception of the Metropolitan Council and the Metropolitan Mosquito Control District, must certify their proposed levies, from September 15th to September 30th each year. The statutes specifically outlining the proposed levy certification dates for the Metropolitan Council and Mosquito Control District are referenced. Effective beginning with proposed levy certifications for taxes payable in 2017

Section 14 and 15. Property tax settlements. Allows county auditors one extra day after the payment due date to issue property tax payments to taxing jurisdictions to correspond with the change made to property tax due dates in Section 19. Effective for property taxes payable in 2017.

Section 16. Refunds of overpayment. Allows the county to refund taxes for overvalued property by providing a credit against future years’ taxes, if agreed to by the property owner. Effective for refunds for overpayment of taxes payable in 2016 and thereafter.

Section 17. Mistakenly billed property tax. Eliminates the possibility of taxpayers challenging their property’s classification using the “mistakenly billed taxes” provision, since they may appeal classification decisions directly to the local board of review or through tax court. Effective based on property taxes payable in 2017 and thereafter.

Section 18. Due dates; penalties. Equalizes the penalties for first and second-half late payments of property taxes for homestead and nonhomestead properties. Effective beginning with taxes payable in 2017.

Section 19. Abatement of penalty. Provides that the county treasurer shall abate the penalty for late payment of taxes in the current year if the property tax payment is delivered by mail to the county treasurer and the envelope containing the payment is postmarked by the U.S. Postal Service within one business day of the due date prescribed under law, but only if the property owner requesting the abatement has not previously received an abatement under this authorization.  

Section 20. Penalties for late payment of property taxes; agricultural property. Equalizes the penalties for first and second-half late payments of property taxes for agricultural homestead and agricultural nonhomestead properties. Deletes a provision applicable to taxes payable in 2010 and 2011. Effective beginning with taxes payable in 2017.

Sections 22-24. Installment payments; confessions of judgment. Eliminates a restriction on interest rates available under contracts to repurchase tax-forfeited property. Allows a county to sell tax-forfeited properties on a contract for deed at a rate equal to the rate allowed for confessions of judgement, which is the greater of five percent or two percent over the prime rate. Requires that the interest rate on the unpaid balance of a tax forfeited property purchased under an installment contract be the same as the rate imposed for composite judgements. Allows a taxpayer and the county to enter into an agreement to repurchase properties with delinquent taxes at an interest rate equal to the rate allowable for confessions of judgment. Effective for composite judgments, repurchase contracts and sales occurring after January 1, 2017.

Section 25. Metropolitan agricultural preserves; early termination. Allows for immediate withdrawal from the metropolitan agricultural preserves program if requested by the surviving owner within 180 days of the death of an owner, an owner's spouse, or other qualifying person. When the covenant is terminated in this manner, the property is subject to additional taxes equal to 50 percent of the total tax amount actually levied against the property in the current payable year. Effective July 1, 2016.

Section 26. Cook/Orr hospital district. Modifies the use of levy proceeds for the Cook/Orr hospital district by allowing levy proceeds to be used for administrative, operation, or salary expenses for the Cook ambulance service and the Orr ambulance service. Effective the day following final enactment.

Section 27. Recreation levy for Sawyer by Carlton County. Reinstates and makes permanent the authority for Carlton County to levy a tax within the unorganized territory of Sawyer for recreational purposes, limited to $2,000 per year. Effective for taxes payable in 2017.

Sections 28-32. Cloquet area fire and ambulance special taxing district. Modifies special laws relating to the Cloquet area fire and ambulance special taxing district by clarifying the district’s ability to incur debt. The district may issue debt but only after obtaining approval of a majority of the electors voting on the question of issuing the obligation. The debt service for debt used to finance capital costs for ambulance service shall be levied within the primary service area, and debt service used to finance capital costs for fire service shall be levied within municipalities receiving fire services.  The district shall pledge its full faith and credit and taxing power without limitation as to rate or amount for the payment of the district’s debt. A property tax on property located in a municipality that wishes to withdraw from the district will remain in effect until the obligations outstanding on the date of withdrawal are satisfied. Effective upon local approval.

Section 33. 2016 Appeals and equalization course township waiver. Provides that if a city or town that conducts local board of appeal and equalization meetings certified by February 1, 2016 that it was in compliance with the requirements of section 274.014, subdivision 2, but no member of the local board has attended an appeals and equalization course training within the preceding four years, the board shall have its powers reinstated for the 2017 assessment year by resolution of the governing body of the city or town and by certifying that it is in compliance with the requirements of 274.04, subdivision 2. Effective the day following final enactment.

Section 34. Town of Tofte; municipal housing. Authorizes the town of Tofte to own and operate up to 12 units of housing for individuals over 55 years of age, or for low-income individuals and families. The town may levy a tax not to exceed 0.0185 percent of estimated market value for these purposes. The authority to undertake new projects under this authority expires on June 30, 2017.

Section 35. Soccer stadium property tax exemption; special assessment. Exempts the stadium and related facilities used for the primary purpose of providing a Major League Soccer stadium located in St. Paul from state and local property taxes. The property remains subject to special assessments. The exemption applies to property subject to a lease or use agreement between the city and a private party as long as the use is related to operation of the stadium and related parking facilities. The exemption does not apply to property under a lease or use agreement for residential, business, or commercial development unrelated to the operation of the stadium. Effective upon approval by the St. Paul City Council.

Section 36. Cancellation of tax forfeiture for property in St. Louis County; appropriation. Authorizes St. Louis County to combine separate parcel identification numbers for buildings and the land upon which the buildings are located upon approval from the county board and the commissioner of revenue. If the buildings are in tax-forfeiture, the county must cancel the certificate of forfeiture and cancel all unpaid property taxes, special assessments, and associated costs. $1,000,000 is appropriated to St. Louis County in fiscal year 2017 only to be used for the demolition of the buildings upon request by the landowner. Effective the day following final enactment.

Section 37. Lake Mille Lacs property tax abatement. Provides an appropriation to Mille Lacs County to act as the fiscal agent for a property tax refund program aimed at businesses experiencing economic hardship in the immediate area surrounding the lake. Eligible taxpayers may apply to receive an abatement of local property taxes that were payable in 2016. All commercial and industrial properties in the immediate area surrounding the lake and paying the state general tax (except utilities) receive a refund of the tax that was payable in 2016. Counties granting abatements and refunds must certify to Mille Lacs County the amounts refunded or proposed to be refunded and Mille Lacs County will reimburse the counties. A $1,400,000 onetime appropriation is granted to the commissioner of revenue, for transfer to Mille Lacs County to provide the refunds authorized. After Mille Lacs County pays the reimbursements to counties, each county receives a pro rata share of any remaining funds, to be used for abatements in future years. Effective the day following final enactment.

Section 38. Repealer. Repeals the property tax exemption for agricultural containment facilities. Effective for taxes payable in 2017 and thereafter. 

 

ARTICLE 2 -- AIDS AND CREDITS

Sections 1 to 3. School building bond agricultural credit computation. Provides for a property tax credit on all property classified as agricultural, equal to 40 percent of the tax on the property attributable to school district bonded debt levies. Effective beginning with taxes payable in 2017. 

Section 4. Notice of proposed property taxes. Provides for the school building bond agricultural credit to be reported on the notice of proposed property taxes.

Section 5. School district levies. Provides a definition of “debt service levies” for the school building bond credit.  School debt levies exclude amounts for repayment of other postemployment benefits. 

Section 6. Tax rate computation. Requires county auditors to calculate the school debt tax rate for use in calculating the credit under section 1. 

Section 7. Property tax statement. Provides for the school building bond agricultural credit to be reported on the property tax statement.

Section 8. Out-of-home placement aid for counties and tribes.  Provides that the commissioner of revenue shall reimburse each county for 100 percent of the nonfederal share of the cost of out-of-home placement of children under the Indian Child Welfare Act. Reimbursement to tribes shall be the greater of five percent of the average reimbursement amount received from the federal government for out-of-home placement for the most recent three calendar years, or $200,000.  Effective for aids payable in 2018.

Section 9. Aid payment dates. Provides that for Local Government Aid (LGA) payments in 2017 only, 6.5 percent of the aid shall be paid on June 15, 2017, 43.5 percent shall be paid on July 20, 2017 and 50 percent shall be paid on December 26, 2017. 

Section 10.  Uniform reporting standards for townships.  Requires the state auditor to prescribe uniform reporting standards for all towns. Effective for reporting of financial information for calendar year 2016 and thereafter.

Section 11. Conformity requirement.  Requires that towns conform to the state auditor reporting requirements in order to receive aid. Effective beginning with reporting of financial information for aid payable in 2017 and thereafter.

Section 12. Local Government Aid (LGA) appropriation. Increases the appropriation for local government aid by $20,000,000 to $539,398,012 for aids payable in 2017 and thereafter.

Section 13. County program aid (CPA) appropriation. Increases the appropriation for the county program need aid by $5,000,000 and the appropriation for tax base equalization aid by $5,000,000 for aids payable in 2017 and thereafter.

Section 14. Maximum effort loan aid.  Provides an aid for school districts with a maximum effort loan equal to one-fifth of the interest paid on the loan between December 1, 1997 and June 30, 2016. Aid payments must be used to reduce property tax levies on net tax capacity within the school district. 

Section 15. Riparian protection aid. Provides an aid payment to eligible counties to enforce and implement the riparian protection and water quality practices required under section 103F.48. A county is eligible if it has been certified or contains a watershed district that has been certified by Board of Water and Soil Resources to have affirmed its jurisdiction for enforcing and implementing riparian protection under chapter 103F. The preliminary aid for all counties equals: (1) each county’s share of the total number of agricultural acres in the state, divided by two; plus (2) each county’s share of the number of miles of public water basins, each county’s share of the number of centerline miles of public watercourses, and each county’s share of the number of miles of public drainage ditches, divided by two; multiplied by (3) $10,000,000.  Aid to a county shall not be greater than $200,000 or less than $45,000.  Aid that would otherwise be payable to a county that is not eligible must be paid to Board of Water and Soil Resources for enforcing and implementing riparian protection. Counties that are not certified by Board of Water and Soil Resources but which contain a certified watershed district will receive an aid payment in proportion to the area of the certified watershed district to the area of the county as a whole.  Aid shall be paid in the same manner and at the same time as county program aid payments. Effective for aids payable in 2017 and thereafter.

Section 16. Red River watershed management board.  Increases the payment per acre for payments made by the Red River watershed management board to counties and townships.  Effective for aids payable in 2016 and thereafter.

Section 17. 2013 LGA penalty forgiveness. Forgives an aid penalty to the city of Oslo which lost part of its calendar year 2013 LGA payment as a penalty for not filing its calendar year 2012 financial report with the state auditor in a timely fashion.  The penalty is only forgiven if the city has filed its calendar year 2012 financial statement with the auditor by December 31, 2013.

Section 18. 2014 LGA penalty forgiveness.  Forgives penalties to the cities of Dundee, Jeffers and Woodstock which lost all or part of their calendar year 2014 LGA payment as a penalty for not filing their calendar year 2013 financial reports with the state auditor in a timely fashion.  The penalty is only forgiven if the cities have filed both their calendar year 2013 and 2014 financial statements with the auditor by June 1, 2015.

Section 19. Rice Lake base year formula aid. Provides that the base year formula aid for the newly incorporated city of Rice Lake will be deemed to be $115 multiplied by its population. 

Section 20. Repealer. Repeals debt service aid for the Lewis and Clark joint powers board. Effective the day following final enactment.

 

ARTICLE 3 -- INCOME AND CORPORATE FRANCHISE TAXES

Section 1. Greater Minnesota internship program. Removes the requirements that the employer certify that it would not have hired the intern without the internship credit, and that an internship required as part of an academic program does not qualify for the credit. Effective beginning in tax year 2016.

Section 2. Internal Revenue Code reference; federal update. Updates the reference to the Internal Revenue Code (Code) in the tax administration chapter. Effective the day following final enactment.

Section 3. Residency determination. Modifies both the statutory residency test and the domicile test under the individual income tax in two ways.

  • Provides that a day does not qualify as a day spent in Minnesota for purposes of residency if the taxpayer traveled from outside the state for the primary and essential purpose of obtaining medical care in Minnesota for the taxpayer, spouse, or their dependent, and the travel expense is allowed as a federal deduction.  Effective beginning in tax year 2017.
  • Modifies the domicile test so that DOR or a court, in determining where the individual intends his or her permanent home, cannot consider the location of the individual’s attorney, certified public accountant, or financial advisor; and the place of business of a financial institution where the individual opened or maintains an account. Defines “financial advisor” and “financial institution.”  Effective beginning in tax year 2016.

Sections 4 and 5. Net income; additions to federal taxable income; federal update.  Updates the reference to the Code in for purposes of calculating Minnesota net income and Minnesota taxable income to adopt a number of changes made to federal taxable income between December 31, 2014 and December 31, 2015. Some federal changes were extensions of items that were previously in effect but had been allowed to sunset.

Minnesota would conform to all federal changes except section 179 expensing, for which current law would remain in effect. While Minnesota conforms to the increased expensing amount, taxpayers are required to add 80 percent of the increased section 179 expensing allowed at the federal level to taxable income, and then subtract one-fifth of the amount added back in each of the five following tax years.

Effective the day following final enactment, and changes are effective for Minnesota purposes at the same time they are effective for federal purposes.   A summary of federal conformity items follows the summary of this Article.

Section 6. Subtractions from federal taxable income; federal update.  Makes the following changes to the Minnesota subtractions from federal taxable income, all effective beginning in tax year 2016:

  • Allows a taxpayer to deduct up to $1,500 ($3,000 for married joint filers) of contributions to any state’s section 529 college savings plan for purposes of computing the Minnesota individual income tax. The subtraction excludes amounts that are rolled-over from other college savings plans, and is not allowed for amounts used to claim the credit in a later section.
  • Also allows a taxpayer to subtract from federal taxable income the amount discharged from indebtedness of student loans following the completion of certain income-driven repayment plans. 
  • Strikes the Minnesota subtraction for transportation fringe benefits. This deduction from federal taxable income was made permanent at the federal level, so the Minnesota subtraction is no longer necessary.

Section 7. Additions to federal taxable income for corporations; federal update. Requires taxpayers to add back 80 percent of section 179 expensing taxable income, and then subtract one-fifth of the amount added back in each of the five following tax years. Effective the day following final enactment, and changes are effective for Minnesota purposes at the same time they are effective for federal purposes.

Section 8. Corporate subtractions; section 179 expensing. Replaces the section 179 expensing subtraction with a reference to the new subtraction and carryover provision in a later section. Effective beginning in tax year 2016.

Section 9.  Federal update to individual alternative taxable income, wages, built in gains for S corporations, and credits. Updates the reference to the Code for federal changes that impact Minnesota tax provisions not part of the computation of regular tax. Effective the day following final enactment, and changes are effective for Minnesota purposes at the same time they are effective for federal purposes.    

Section 10. Credit for taxes paid to another state. Provides a credit for Minnesota residents who work in Wisconsin.  If the amount of the credit for taxes paid to another state allowed under current law exceeds a taxpayer’s tax liability, the excess is allowed as a refund.  Effective beginning in tax year 2016.

Sections 11 and 12. Dependent care credit; inflation adjustment. Increases the state dependent care credit for taxpayers with adjusted gross income (AGI) exceeding $38,000.  The credit is equal to the lesser of: the credit amount calculated under current law using the definition of household income, or the credit amount calculated under current law minus 10 percent of AGI in excess of $38,000.  Provides an inflation adjustment for the $38,000 threshold amount. Effective beginning in tax year 2016.

Sections 13 and 14. Working family credit; inflation adjustment. Expands the Minnesota working family credit to single filers 21-24 years of age. Modifies the amounts of earned income to which the credit applies and is phased out, and modifies the percentage of earned income on which the credit is calculated, so that claimants at the lowest income levels would be eligible for larger credit amounts and the credit would extend to higher income levels. The income levels are adjusted annually for inflation.

  • For filers with no dependent children, increases the percentage of earned income on which the credit is calculated and increases the level of earned income to which the percentage is applied and increases the percentage by which the credit phases out over the earned income threshold, but also increases the threshold amount. 
  • For filers with dependent children, increases the percentage of earned income on which the credit is calculated and reduces the level of earned income to which the percentage is applied, and then reduces the percentage by which the credit phases out over the earned income threshold and increases the threshold amount. 

Effective beginning in tax year 2016.

Sections 15 and 16. Household income definition; K-12 credit. Strikes the reference of the definition of income in the K-12 credit and replaces the definition for purposes of phasing out the K-12 credit in a new section of law. The reference to household income that applied to the K-12 credit was stricken in the dependent care credit in section 11 because the dependent care credit may now be calculated using adjusted gross income. Effective beginning in tax year 2016.

Section 17. Past military service credit. Increases the credit amount from $750 to $1,000 per individual and increases the income level at which the credit begins to phase out from $30,000 to $50,000.  Effective beginning in tax year 2016.

Section 18. Research credit; base amount. Provides for a base percentage of 16 percent when taxpayer accounting records for the base year are unavailable or inadequate. Effective beginning in tax year 2016.

Section 19. Credit for attaining master’s degree in teacher’s licensure field. Allows a refundable individual income tax credit of $2,500 to licensed K-12 teachers who complete a master’s degree program in their field of licensure. Requires elementary school teachers to complete a master’s degree in a core content area in which the teacher provides direct classroom instruction. Core academic subjects defined in federal and state law include English, reading or language arts, mathematics, science, foreign languages, civics and government, economics, arts, history, and geography. Limited to teachers who begin a program after June 30, 2016, and teachers would claim the credit in the year they complete the degree. Teachers may claim the credit once for each master’s degree completed. Effective beginning in tax year 2016.

Section 20. Student loan credit. Authorizes a refundable credit of up to $1,000 for eligible individuals ($2,000 for married joint filers) equal to a specified percentage of student loan payments in excess of ten percent of adjusted gross income. An eligible individual is an individual with qualified education loans related to an undergraduate or graduate degree at a postsecondary institution. Loans must have been incurred on behalf of the individual or individual’s spouse. The percentage of payments eligible for the credit for eligible individuals is 50 percent; for eligible individuals in a public service job (excluding public education), the percentage is 65 percent; and for eligible individuals in an education profession, the percentage is 75 percent. For spouses eligible at different percentage amounts, the credit must be calculated on the lowest applicable percentage amount.  Effective beginning in tax year 2016.

Section 21. Credit for section 529 plan contributions. Allows an income tax credit for contributions to any state’s section 529 college savings plan, not including amounts rolled over from other plans. The maximum credit is $500; the credit rate varies by federal adjusted gross income (AGI), with the income ranges adjusted annually for inflation. The credit is refundable; credit amounts in excess of income tax liability would be paid to the claimant as a refund. Imposes a penalty on individuals who claimed credits under this section if the beneficiary of an account uses a distribution for other than higher education expenses (e.g., tuition, fees, books, or the student’s living expenses). The penalty equals the lesser of ten percent of the nonqualified distribution, or the total amount of credits the individual claimed under this section. Effective beginning in tax year 2016.

Section 22. Section 179 expensing allowance. Allows subtractions related to section 179 expensing in excess of taxable income to be carried over for up to ten tax years. Effective beginning in tax year 2016.

Section 23. Alternative minimum taxable income; federal conformity. Adds a cross reference to the addition to federal taxable income for purposes of calculating alternative minimum taxable income, effective beginning in tax year 2016. Strikes the reference to the transportation fringe benefits subtraction that was stricken in an earlier section as a federal conformity provision.  Effective beginning in tax year 2015.

Section 24. Federal update, property tax refund. Updates the reference to the Code in the property tax refund chapter. Effective retroactively for refunds based on property taxes payable after December 31, 2015, and rent paid after December 31, 2014.

Section 25. Federal update for estate tax; domicile definition. Updates the reference to the Code in the estate tax chapter, and provides a cross reference to the new provisions in an earlier section pertaining to determination of domicile. Effective retroactively for estates of decedents dying after June 30, 2011.

Section 26. Qualified farm property exclusion; eminent domain. Provides that a taxpayer will not be disqualified from claiming the farm property estate tax exclusion solely due to the farm property becoming disqualified as a result of a taking under eminent domain. Effective retroactively for estates of decedents dying after June 30, 2011.

Section 27. Amended returns; certain IRA rollovers; exclusion for incarcerated individuals. Adds uncodified language to reflect federal changes to exclude from gross income civil damages, restitution, or other monetary awards that a taxpayer received as compensation for a wrongful incarceration. This provision applies to tax years beginning before, on or, after the date of enactment. This section extends the time for filing an amended individual income tax return for to claim a refund for taxes paid on civil damages restitution, or other monetary awards that a taxpayer received for wrongful incarceration until September 1, 2016 if the general statute of limitations has expired.

A separate federal provision was enacted to extend the time for filing amended returns for an individual who made retroactive IRA rollovers from payments received from an airline in bankruptcy. The period to claim a refund is September 1, 2016 if the general statute of limitations to claim a refund has expired.

Effective the day following final enactment.

Section 28. Estate tax review; temporary limit on assessments. Requires the commissioner of revenue to review the definition of qualified farm property in the estate tax and its linkage to the property classification of the property during the three-year period following the death of the decedent and requires the commissioner to issue a report to the House and Senate tax committees on the issue. Prohibits the commissioner of revenue from assessing the estate recapture tax for disqualified farm property if the property is held in a trust of which the surviving spouse is the beneficiary or the property receives partial homestead classification because a beneficiary of the trust is the owner of another agricultural homestead. Effective the day following final enactment.   

Section 29. Individual income tax collection prohibited. Prohibits the commissioner of revenue from increasing the amount of tax due or decreasing the refund for a 2015 individual income tax return if the amount due was understated or the refund was overstated because the taxpayer calculated the tax based on Minnesota income tax law prior to adopting the federal updates in this article.  Effective the day following final enactment.   

 

Summary of Federal Conformity Provisions

Slain Officer Family Support Act (2015) – allows deductions made by Minnesota taxpayers for families of certain slain officers to flow through to their 2014 state returns. Without this change, taxpayers deducting contributions for the families of the detectives on their 2014 federal returns would be required to add those contributions to Minnesota taxable income on their 2014 state returns and then deduct them from Minnesota taxable income on their 2015 state returns.

Don’t Tax Our Fallen Public Safety Heroes Act (2015) – excluded federal or state benefits paid to surviving dependents of a public safety officer killed in the line of duty also apply to state benefits that were payable without regard to whether the officer’s death was in the line of duty.

Bipartisan Budget Act of 2015 – clarified the treatment of partnership interest created by gift and changed partnership audit rules.

Protecting Americans from Tax Hikes Act of 2015 (PATH); Consolidated Appropriations Act of 2016 – for purposes of calculating federal taxable income, created new provisions and modified and/or extended existing provisions.  Changes include:

  • Exclusion of compensation paid to individuals who were wrongfully incarcerated from gross income; effective retroactively for all tax years;
  • Rollover from employer-sponsored retirement plans and traditional IRAs into SIMPLE (savings incentive match plan for employees) IRAs following the end of the two-year period that started when the employee first participated in the SIMPLE IRA.
  • Allowance of contributions to agricultural research organizations claimed under the itemized deduction for charitable contributions;
  • Clarification of valuation rules for charitable remainder unitrusts;
  • Ineligibility of REITs to participate in tax-free spinoffs;
  • Exclusion from gross income clean coal power grants for non-corporate taxpayers; grant recipients must reduce the basis of any property acquired using the grant; and
  • Prohibition of the transfer of losses from tax indifferent parties.

Modifications to existing provisions:

  • Expands the definition of qualified higher education expenses that can be paid for with distributions from section 529 college savings plans to include the purchase of computers and related equipment; 
  • Extension of the exclusion from gross income for qualified scholarships to apply to payments resulting from required participation in a comprehensive work-learning-service program at a work college;
  • Allowance of the excise tax on high-cost employer-sponsored health coverage to be claimed as an itemized deduction (the imposition of the excise tax is delayed to 2020).
  • Extension of the exclusion of reimbursements of medical expenses of a deceased employee’s beneficiary who is not a surviving spouse or dependent under age 27 to apply to distributions from medical trusts (limited to certain governmental health plans); andAllowance of ABLE (Achieving a Better Life Experience) accounts for a designated beneficiary to be opened in states other than the state of residency of the beneficiary.

Provisions extended to tax years 2015 and 2016 or otherwise as indicated

  • Deduction in adjusted gross income for up to $4,000 of qualified tuition and related expenses;
  • Exclusion for discharge of indebtedness income on principal residence;
  • Itemized deduction for mortgage insurance premiums on a principal residence;
  • Bonus depreciation, extended at 50 percent to tax years 2015 to 2017, 40 percent in tax year 2018, and 30 percent in tax year 2019 (Under the bill, Minnesota would not conform to the extension of bonus depreciation, but would retain its current law requirement that taxpayers add-back to taxable income 80 percent of the increased depreciation amount in the first tax year, and then subtract one-fifth of the amount added back in each of the five following tax years.);
  • Classification of certain racehorses as 3-year property;
  • First-year 50 percent bonus depreciation and alternative minimum depreciation adjustment exemption for qualified second generation biofuel plant property;
  • Allowed depreciation of certain motorsports entertainment complex property over 7 years;
  • Allowed expensing of 50 percent of the cost of advanced mine safety equipment;
  • Allowed accelerated depreciation of qualified Indian reservation property; and
  • Allowed expensing for the first $15,000,000 of production costs of films and television shows;

Provisions made permanent

  • Deduction in adjusted gross income of up to $250 for classroom or professional development expenses paid by a K-12 grade educator;
  • Increased limitation on valuation of qualified conservation contributions of appreciated real property;
  • Increased section 179 expensing amount and phaseout threshold for tax year 2015 to $500,000 and $2,000,000; with the increased amounts indexed for inflation beginning in 2016 (Minnesota would not conform to this provision but would require the 80 percent addback for the first year and 20 percent subtraction for the following five years as under current law);
  • For taxpayers 70 ½ years of age or older, exclusion from gross income up to $100,000 of IRA distributions made directly to charitable organizations (the amount excluded is not allowed as a charitable deduction);
  • Parity for in allowable deduction for employer-provided transit expenses with employer-provided parking expenses;
  • Enhanced deduction for donations of food inventory;
  • Deduction for energy efficient commercial building property;
  • Allowed depreciation of leasehold improvements and qualified restaurant property, including new restaurant property and improvements to retail property over 15 years;
  • Extension of basis adjustment to S corporation stock when the S corporation donates appreciated property, which is equal to the tax basis of the property rather than the fair market value;
  • Increased exclusion for gain from the sale of qualified small business stock sold by an individual from 50 percent to 100 percent for original issue C corporation stock. The exclusion applies to certain stock purchased in businesses with less than $50,000,000 of assets that is held for at least five years;
  • Treatment of dividends of regulated investment companies;
  • Exclusion of active financing income from the definition of Subpart F income for U.S. shareholders with at least ten percent interest in a controlled foreign corporation;
  • Extension of the special rule limiting payments from controlled subsidiaries of tax-exempt organizations that are subject to the unrelated business income tax to the amount in excess of allowable payments under arm’s length transactions rules, only if a binding written contract between the entities was in effect on August 17, 2006;
  • Reduction in the minimum holding period for built-in gains on sales of assets of S corporations that converted from C corporations from ten years to five years so that S corporations can sell assets held more than five years without being taxed on built-in gains; and

Parity in qualified transportation fringe benefits under which employers may exclude up to the same maximum amount per month per employee for vanpool and transit pass expenses as for parking.

 

ARTICLE 4 -- SALES AND USE TAXES

Sections 1. Sale and purchase; charges included in price of admission. Clarifies that all charges required by the seller to purchase the privilege of admission, including amenities that may be provided, are taxable, unless amenities are separately stated and the purchaser may add or decline amenities, and the amenities are not otherwise taxable.  Effective the day following final enactment.

Sections 2 to 5. Remote seller collection and remittance requirements. These sections expand nexus for purposes of triggering collection and remittance of sales tax for remote sales transactions, and modify collection, remittance and reporting requirements for sellers.

Section 2. Definitions. Modifies the definition of a “retailer maintaining a place of business in the state” for purposes of the requirement to collect and remit Minnesota sales and use taxes.  A retailer maintaining a place of business in the state includes having storage facility in the state, employing a state resident who works from a home office in the state, or having a marketplace provider or other third party operating in the state under the retailer’s authority to facilitate or process sales in the state. Defines “marketplace provider” and “total taxable retail sales.”

Section 3. Retailer maintaining a place of business in the state. Provides that the duty to collect and remit sales taxes does not apply to a retailer making less than $10,000 of taxable retail sales into the state in a year whose sole physical connection to the state is through a marketplace provider located in the state, unless they are or were previously registered in the state.

Section 4. Affiliated entities. Modifies the definition of “affiliated entities.” A retailer having an in-state affiliate is required to collect and remit sales and use tax. Adds criteria by which an affiliate entity is deemed to be a related party to the retailer (and thus required to collect and remit sales and use tax) to include:

  • selling taxable products that are the same as or similar to the retailer or selling under the same or similar name;
  • maintaining a facility such as an office, warehouse, distribution center, or the like to facilitate sales in the state made by the out-of-state retailer;
  • using intellectual property with consent or knowledge that is the same or similar to the out-of-state retailer’s intellectual property;
  • delivering, installing, assembling, performing maintenance or repair services on tangible personal property in the state if the property is sold to in-state customers by the out-of-state retailer;
  • facilitating delivery of tangible personal property to in-state customers by allowing a customer to pick up the property at a facility in the state; or
  • sharing information systems or employees with, or engaging in intercompany transactions with the out-of-state retailer.

Also deems two entities as related parties if the entities are related taxpayers under the Internal Revenue Code for purposes of certain disallowed deductions, or if the transactions are disallowed losses between partnerships and their owners under the Code.

Entities that have one or more ownership relationships designed with the purpose of avoiding establishment of affiliate nexus would also be deemed related parties.

Section 5. Collection and remittance requirements. Establishes collection and remittance requirements for marketplace providers. Marketplace providers are required to collect and remit sales and use tax under provisions in existing law, except when a marketplace seller for whom the marketplace facilitates a sale either provides a copy of its registration to collect and remit sales and use tax to the marketplace provider before the marketplace provider facilitates the sale; or the commissioner of revenue discloses to the marketplace provider, upon inquiry, that the marketplace seller is registered to collect and remit sales and use taxes in the state.

Relieves a marketplace provider of liability to collect and remit sales and use taxes, in most cases, to the extent that the provider demonstrates that failure to collect and remit was due to incorrect or insufficient information provided by the marketplace seller.

Section 6. Sales tax exemption; accessories and supplied used in durable medical equipment. Expands the sales tax exemption for accessories and supplies required for use of durable medical equipment to include purchases covered by any insurance plan. Currently these accessories and supplies are exempt when purchased for home use or if the purchase is covered by Medicare or Medicaid. Effective for sales and purchases made after June 30, 2016.

Sections 7 and 8. Sales tax exemption; suite licenses and stadium builder’s licenses.  Provides that the price of a suite, skybox, or private box seat license if is not included in the taxable price of admissions if: (1) the lessee may arrange to use the suite, sky box or private box on non-game or event days, and (2) the sales price for the admission excluding the license is higher than the highest priced general admission ticket closest to the suite, or box.  Excludes from the taxable price of admissions consideration paid for a stadium builder’s license at the new Vikings stadium. Effective the day after final enactment. Both provisions are effective the day following final enactment.

Section 9. Super bowl admissions and related events.  Provides a sales tax exemption for admission to Super Bowl-related events sponsored by the NFL or its affiliates or the Minnesota Super Bowl Host Committee, and for the sale of nonresidential parking by the NFL for the Super Bowl and related events. Effective for sales and purchases made after June 30, 2016 and before March 1, 2018.

Section 10. Fund raising events sponsored by nonprofit groups. Extends the allowed duration of a short term lease for premises used for tax exempt fundraising events from 5 days to 10 days. Currently if a non-profit holds an event on premises that it leases for more than 5 days but fewer than 30 days, the sales at the event are subject to sales tax. Effective for sales and purchases made after June 30, 2016.

Section 11. Sales tax exemption; siding production facility materials. Authorizes a sales tax exemption for building materials and supplies for constructing a siding facility that can produce up to 400 million square feet of siding annually. The tax must be paid upfront and then refunded under provisions of current law. Effective for sales and purchases made after June 30, 2016.

Section 12. Sales tax exemption; properties destroyed by fire. Authorizes a sales tax exemption for building materials and supplies used in, and equipment incorporated into, the construction or replacement of real property in Madelia affected by the February 3, 2016 fire. The tax must be paid upfront and then refunded under provisions of current law. Effective for sales and purchases made after June 30, 2016 and before July 1, 2018.

Section 13. Sales tax exemption; former Duluth Central High School redevelopment. Authorizes a sales tax exemption for materials and supplies used in and equipment incorporated into a private redevelopment project on the site of the former Duluth Central High School, provided that the development is subject to property tax. The tax must be paid upfront and then refunded under provisions of current law. Effective for sales and purchases made after June 30, 2016 and before January 1, 2018.

Sections 14 to 16. Refund provisions; sales tax exemptions. Adds cross references to the sales tax exemptions in sections 6 to 8 for purposes of refund applications. Effective dates correspond with the specific exemptions.

Section 17. Motor vehicle lease sales tax revenue. Provides that the portion of revenue from the motor vehicle lease sales tax that comes from the Legacy constitutional amendment is allocated in accordance with the constitutional distribution and is not included in calculating allocation to the transit or highway allocation accounts. Effective the day following final enactment.

Sections 18 and 19; Duluth food and beverage tax; hotel and motel tax. Changes the boundary line defining the area in which Duluth may spend revenues from its extra ½ percent food and beverage tax and ½ percent lodging tax from 34th Avenue West to 14th Avenue west and the area south of and including Skyline Parkway.

Section 20. Mankato local option sales tax. Allows the city to extend its sales tax for different projects, subject to voter approval. Paragraph (b) allows the city, subject to voter approval at a general election held by December 31, 2018, and in conjunction with the North Mankato vote in section 28, to raise another $47,000,000 plus associated bond costs to fund:

  • construction and improvements to regional recreational facilities including indoor athletic facilities;
  • improvements to the flood control and levee system;
  • water quality improvement projects in Blue Earth and Nicollet counties;
  • expansion of a transit building and related transit improvements; and
  • matching funds for regional facilities such as a historic museum, supportive housing, and a senior center.

Section 21. Expiration of taxing authority and expenditure limitation; Mankato. If the new uses in subdivision 1, paragraph (b) are authorized, the tax will expire at the earlier of December 31, 2038, or when revenues are sufficient to fund the current projects. Otherwise, the tax will expire at the earlier of December 31, 2022, or when revenues are sufficient to pay off the existing bonds.

Section 22. Bonds. Allows Mankato to issue an additional $47,000,000 in bonds based on the required voter approval in an earlier section.

Section 23. Reverse referendum; authorization of extensions. Requires the Mankato city council to pass a resolution by July 1, 2016, if it intends to extend the tax to fund the new projects under section 20. The extension is not effective without the required voter approval.

Section 24. Sales tax authorized; Hermantown. Allows the city to use revenues from the local sales tax to fund debt service payments for construction of a regional wellness center if approved by the voters at the 2016 general election.

Section 25. Termination. Allows the city of Hermantown to extend its tax to the earlier of December 31, 2036 or when funds are sufficient to pay off the bonds for the specified projects, if approved by the voters at the 2016 general election.

Section 26. Proctor local sales tax. Allows Proctor to increase the rate of its existing local sales tax from 0.5 percent to 1.0 percent, based on voter approval at the 2014 general election. The revenue from the increased tax would pay for the $10,000,000 in improvements to public utilities, sidewalks, bike paths and trails, and park and recreation facilities authorized in the 2008 and 2010 special laws.

Section 27. City of North Mankato; taxes authorized. Allows the city to extend its existing sales tax to raise up to an additional $9,000,000 for the currently funded projects, subject to voter approval at the next general election.

Subdivision 2. Use of revenue. Adds construction of indoor athletic facilities to the list of authorized projects and increase the amount that can be raised by $9,000,000, plus associated bond costs, subject to voter approval in subdivision 2a. The existing projects include an interchange, trails, a library, riverfront development, and lake improvement projects.

Subdivision 2a. Authorization to extend the tax. Allows the city to extend the tax to cover an additional $9,000,000 plus associated bond costs if approved by voters at a general election held by December 31, 2018, and simultaneously with the city of Mankato’s sales tax extension vote.

Subdivision 3. Bonds. Subject to the voter approval requirement in subdivision 2a, the city may issue an additional $9,000,000 in bonds to fund the authorized projects without an additional referendum.

Subdivision 4. Terminations of the taxes. If the taxes are extended under this section, the new expiration date would be the earlier of December 31, 2038 or when revenues are sufficient to fund the additional $9,000,000 plus associated bond costs. Currently the tax expires when revenues are sufficient to fund the current $6,000,000 and associated bond costs.

Section 28. East Grand Forks. Allows the city of East Grand Forks to impose up to a one percent sales tax to finance improvements to the city swimming pool. The voters already approved the tax at a March 7, 2016, special election. Allows the city to bond for up to $2,820,000 for the project without additional approval. The tax expires at the later of (1) five years or (2) when revenues from the tax are sufficient to pay for the $2,820,000 in improvements plus associated bond costs.

Section 29. City of Marshall; validation of prior act. Retroactively approves the imposition of the 2011 authorized local sales tax based on approval at the 2012 general election and the filing of local approval with the secretary of state by June 15, 2013.

Section 30. Certain reimbursements authorized, considered operating or capital expenses. Allows the Minnesota Sports facility authority to reimburse the NFL or its affiliates and the Minnesota Super Bowl Host Committee for up to $1,600,000 in state and local taxes paid on purchases, nonresidential parking, and lodging in connection with the Super Bowl LII and related events from its reserve funds. Effective for sales and purchases made after June 30, 2016 and before March 1, 2018.

Section 31. Severability. Provides that if any provision in sections 2 to 5 are held invalid, other provisions not affected by the invalidity are given effect. Effective the day following final enactment.

Section 32. Effective date. Establishes that the provisions of sections 2 to 5 are effective upon the U.S. Supreme Court overturning or expanding its Quill decision, or July 1, 2019, whichever is earlier.  If Congress enacts a law authorizing states to impose collection and remittance requirements for retailers without physical presence in the state, Minnesota must enforce the provisions of sections 2 to 5 to the extent allowed under federal law.

 

ARTICLE 5 -- SPECIAL TAXES

Sections 1 and 4. Compressed natural gas definition; rate of tax. Changes the energy content of compressed natural gas (CNG) in the definition of CNG, from 1000 BTUs to 900 BTUs. Reduces the motor fuels tax rate for compressed natural gas (CNG) in the per thousand feet calculation of the rate from $2.174 to $1.974, and sets a gasoline equivalent (i.e., for comparing energy content of CNG to gasoline) in cubic feet. Effective for sales and purchases made after June 30, 2016.

Sections 2, 3, 5 to 16, and 29. Modification of tax treatment of gasoline used as a substitute for aviation gasoline. Section 2 adds a definition to the fuel tax chapter of statutes, defining “dealer of gasoline used as a substitute for aviation gasoline” as a person who sells gasoline on the premises of an airport to be dispensed directly into the fuel tank of an aircraft. Section 3 exempts from the fuel excise tax gasoline purchased by a dealer of gasoline used as a substitute for aviation gasoline. Section 5 applies the five cents per gallon aviation gasoline tax to gasoline used as a substitute for aviation gasoline. Section 6 provides that the aviation gasoline tax does not apply to gasoline purchased and placed in an aircraft fuel tank outside the state of Minnesota. Section 7 provides that the aviation gasoline tax is not a tax upon consumption by an aircraft. Section 8 exempts a licensed ambulance service from liability for the aviation gasoline tax. Section 9 requires gasoline taxpayers to include in their monthly reports to the Department of Revenue a statement of the number of gallons sold to a dealer of gasoline used as a substitute for aviation gasoline. Section 10 requires a person who buys gasoline from a dealer of gasoline used as a substitute for aviation gasoline and pays the tax on it, then uses it in motor vehicles, or sells it knowingly to a person for use in motor vehicles, to report this to the commissioner of Revenue. Section 11 requires a person claiming a graduated refund or credit to set forth in the claim form the total number of gallons of gasoline used as a substitute for aviation gasoline on which tax was paid during the calendar year. Section 12 adds purchasers of gasoline used as a substitute for aviation gasoline to the eligible claimants for refunds of aviation taxes paid and not used in motor vehicles or in aircraft. Section 13 adds taxpayers who have paid aviation tax on gasoline used as a substitute for aviation tax, and airflight property tax, or is an aerial applicator, to the eligible claimants for refunds on a graduated basis. Section 14 excepts gasoline sold to a dealer of gasoline used as a substitute for aviation gasoline from the presumption that all gasoline in this state is intended for use in motor vehicles. Section 15 provides that revenues from excise taxes on gasoline used as a substitute for aviation gasoline are credited to the state airports fund and appropriated to the commissioner as needed. Section 16 establishes recordkeeping and retention requirements for dealers of gasoline used as a substitute for aviation gasoline. Section 29 repeals a subpart of Minnesota Rules that describes who may claim refunds for gasoline used as a substitute for aviation gasoline. The repealer is effective the day following final enactment; all other provisions are effective for sales and purchases made after June 30, 2016.

Section 17. Tax rate for pull-tabs sold at bingo halls. Tax rate for pull-tabs sold at bingo halls. Subjects paper pull-tabs sold at bingo halls to a flat tax rate of 9 percent.  Effective for gross receipts receive on or after July 1, 2016.

Section 18. Combined net receipts tax. Clarifies that pull-tabs subject to the new rate under section 17 are not subject to the combined net receipts tax.

Section 19. Bulk nicotine definition. Defines “bulk nicotine” as a solution having a nicotine concentration of 50 milligrams per milliliter or more.

Section 20. Consumable material definition. Defines “consumable material” as a solution containing less than 50 milligrams of nicotine per milliliter.

Section 21. Tobacco products definition. Includes “vapor products” in the definition of tobacco products.

Section 22. Vapor products definition. Defines “vapor products” as devices that produce vapor from nicotine, such as e-cigarettes and other similar devices. Also includes containers and cartridges of nicotine solution in the definition as well.

Section 23. Cigarette excise tax. Freezes the excise tax on cigarettes at the current rate of $3.00 per pack.

Section 24. Rates; tobacco products. Excludes vapor products from the 95 percent of wholesale tax rate.

Section 25. Rates; vapor products. Imposes one of two rates on vapor products based on the concentration of nicotine that the vapor product contains. The rate is 300 percent of the wholesale price for bulk nicotine and 45 percent of the wholesale price for consumable material.

Section 26. Use tax; vapor products. Imposes a use tax on vapor products at the rates imposed as provided under section 25.

Section 27. Solid waste management tax rate; construction debris. Changes the tax rate for construction debris from $2 per ton to 60 cents per cubic yard.

Section 28. Bingo hall. Defines “bingo hall” as a premises where a licensed gambling organization regularly conducts paper bingo, if more than 50 percent of the organization’s gross receipts are attributable to the conduct of bingo in the prior calendar year (or their receipts from lawful gambling were zero). This definition does not apply if more than one organization conducts lawful gambling on the premises.

Section 29. Repealer. Repeals the annual inflation adjustment on the cigarette excise tax. Repeals a subpart of Minnesota Rules that describes who may claim refunds for gasoline used as a substitute for aviation gasoline.

 

ARTICLE 6 -- MINERALS

Section 1. TEDF; deposits redirected. Provides that for concentrates produced by a plant subject to a reimbursement agreement dated September 9, 2008, by and among Itasca County, Essar Global Limited, and Minnesota Steel Industries LLC, the amount of production tax that would have been paid to the taconite economic development fund (TEDF) is redirected and deposited in the Douglas J. Johnson (DJJ) economic protection trust fund until the commissioner of employment and economic development certifies that all requirements of the reimbursement agreement are satisfied. Effective the day following final enactment.

Section 2. Cities; towns. Modifies the distribution of the taconite production tax received by certain towns by setting the base amount at 3.25 cents per taxable ton, and allows six unorganized territories in St. Louis County and Itasca County to be included within this distribution. The amount available to the six unorganized territories may be held by St. Louis County and combined for public infrastructure projects for the designated unorganized territories. Beginning with distributions in 2018, the 3.25 cents per ton allocation is indexed for inflation.  Effective for distributions beginning in 2017 and thereafter.

Section 3. Production tax; counties. Clarifies the one cent allocation received by Cook County for having in the county an electric power plant owned by and providing the primary source of power for a taconite plant located in a different county. This is guaranteed allocation. Effective the day following final enactment.

Section 4. Iron Range school consolidation and cooperatively operated school account. Provides that the Iron Range school consolidation and cooperatively operated school account will continue to receive an amount equal to two-thirds of the sum of the increased proceeds attributable to the increase in the implicit price deflator for distribution years 2015, 2016 and 2017. Effective for distributions beginning in 2017 and thereafter.

 

ARTICLE 7 -- LOCAL DEVELOPMENT

Section 1. Definitions. Modifies the definition of increment subject to the five-year rule to exclude increment that are repaid by developers under agreements. Effective the day following final enactment.

Section 2. Expenditures outside district. Clarifies that expenditures outside the district only apply to increment derived from properties located in the tax increment financing district. Effective the day following final enactment.

Section 3. Five-year rule. Makes the same corresponding change as in Section 2 to clarify that revenues must be derived from tax increment paid by properties in the district. Effective the day following final enactment.

Section 4. Interfund loans. Allows interfund loans to be made up to 60 days after the money has been transferred or spent and allows passage of the resolution authorizing interfund loans before the TIF plan is approved. The development authority is also authorized to rewrite the terms of the loan after the loan has been made but before the latest decertification of any tax increment financing district from which the interfund loan is to be repaid. Loans or advances may be structured as draw-down or line-of-credit obligations. Effective the day following final enactment and applies to all districts, regardless of when the request for certification was made.

Section 5. City of Burnsville; TIF modification. Modifies special legislation authorized in 2008 for the city of Burnsville by: (i) allowing the creation of economic development districts within the project area; (ii) extending the four-year “knockdown” rule to nine years for any district; and (iii) extending, by two years, the authority to approve districts under the authorization. Effective upon compliance by the governing body of the city of Burnsville with approval and filing requirements.

Section 6. Duluth; TIF. Modifies a 2009 special TIF law for the Seaway Port Authority of Duluth by adding four parcels to the area in which the district may be created and authorizes the use of interfund loans prior to approval of the TIF plan for any purpose that tax increments may be spent for. This authority applies to a resolution of the port authority adopted on or after March 25, 2010. Effective upon compliance by the governing body of the city of Duluth with approval and filing requirements.

Section 7. City of Maple Grove; TIF modification. Modifies special legislation authorized in 2014 for the city of Maple Grove by providing that the “project area” may be all or a portion of the designated metes and bounds description, and provides for any additional property necessary to cause the property included in the district to consist of complete parcels. The city may also use increment from a soil deficiency district to acquire parcels and other infrastructure costs either inside or outside the district but within the project area if the acquisition or infrastructure is for a qualified business, which is defined.  Effective upon compliance by the governing body of the city of Maple Grove with approval and filing requirements.

Section 8. City of Anoka; TIF 5-year rule extension. Provides a three-year extension of the five-year rule for the city of Anoka’s Greens of Anoka redevelopment tax increment financing district by deeming its certification date as June 29, 2012, rather than its actual certification date of July 2, 2012. In 2014, the legislature provided that for redevelopment districts certified after April 20, 2009 and before June 30, 2012, the five-year rule is extended to eight years after certification of the district. Effective upon compliance by the governing body of the city of Anoka with approval and filing requirements.

Section 9. City of Edina; TIF Approval extension. Provides an extension for the city of Edina to file approval of a 2014 special law authorizing the creation of tax increment financing districts. The city must file its certificate of approval by June 30, 2016, and provides that any action taken by the city in reliance on the authorization are deemed consistent with the authorization. Effective June 30, 2016, without local approval.

Section 10. City of Coon Rapids; duration extension. Extends, by five years, the duration of TIF District No. 6-1 (Port Riverwalk) in the city of Coon Rapids. Effective upon compliance by the governing bodies of the city of Coon Rapids, Anoka County and Independent School District No. 11 with approval and filing requirements.

Section 11. City of Cottage Grove; five-year rule extension. Extends, by ten years, the five-year rule for TIF district No. 1-12 (Gateway North) in the city of Cottage Grove. Effective upon compliance by the city of Cottage Grove with approval and filing requirements.

Section 12. City of Northfield; TIF 5-year rule extension. Provides a one-year extension of the five-year rule for the city of Northfield’s Riverfront tax increment financing district. The district was certified on July 12, 2006, and the five-year rule would have expired on July 12, 2011, but the legislature granted a five-year extension for all redevelopment districts certified after June 30, 2003 and before April 30, 2009. This section provides an additional one-year extension to July 12, 2017. Effective upon compliance by the governing body of the city of Anoka with approval and filing requirements.

Section 13. City of Richfield, duration extension.  Extends, by ten years, the duration of the Cedar Avenue TIF district in the city of Richfield. This district was established under a 2005 special law as a redevelopment district and has a duration limit of 25 years after receipt of the first increment.  As a result, the bill would authorize a 35-year duration. Effective upon compliance by the city of Richfield with approval and filing requirements.

Section 14. City of St. Paul; TIF authority. Provides that for purposes of computing TIF duration limits, the city of St. Paul may waive receipt of increment for the Ford Site Redevelopment TIF. This authority is limited to the first four years of increment or increments derived from taxes payable in 2023, whichever comes first. If the city elects to waive increments under this authority, the district’s certification date will be deemed to be January 2 of the assessment for the first year increment is received under the waiver for purposes of calculating the 5-year and 4-year rules. Effective without local approval. 

 

ARTICLE 8 -- PUBLIC FINANCE

Section 1. Certificates of indebtedness; towns. Provides that bonds issued by the town for the purpose of eliminating R-22 (Freon) as a refrigerant used in ice-making systems in existing public facilities shall be payable in not more than 20 years. 

Section 2. Equipment acquisition; capital notes; Hennepin County. Provides that bonds issued by Hennepin County for the purpose of eliminating R-22 (Freon) as a refrigerant used in ice-making systems in existing public facilities shall be payable in not more than 20 years. 

Section 3. Cities may issue capital notes for capital equipment; charter cities. Provides that bonds issued by charter cities for the purpose of eliminating R-22 (Freon) as a refrigerant used in ice-making systems in existing public facilities shall be payable in not more than 20 years. 

Section 4. Financing purchase of certain equipment; statutory cities. Provides that bonds issued by statutory cities for the purpose of eliminating R-22 (Freon) as a refrigerant used in ice-making systems in existing public facilities shall be payable in not more than 20 years. 

Section 5. General obligation revenue bonds; HRA. Increases the maximum amount of general obligation bonds that an HRA may issue to the greater of: (1) one-half of one percent of the estimated market value of the general jurisdiction governmental unit whose general obligation is pledged; or (2) $5,000,000 (an increase from $3,000,000).

Section 6. Establishment; EDA. Eliminates the requirement that before an economic development authority establishes an economic development district, the authority must publish notice of the hearing in a ’daily’ newspaper, so that any newspaper of general circulation in the city is sufficient.

Section 7. Metropolitan Council; obligations. Authorizes the Metropolitan Council to issue regional transit capital debt up to $82,100,000.  Of this amount, $40,100,000 may be issued after July 1, 2016, and $42,000,000 may be issued after July 1, 2017.  Effective the day following final enactment, and applies to the seven-county metropolitan area.

Section 8. Street reconstruction and bituminous overlays. Allows a city to approve a plan to issue and sell obligations for street reconstruction or bituminous overlays with approval of a majority of the members of the governing body present rather than approval by all members of the governing body present at the meeting.

Section 9. Requirements waived.  Changes a reference of ‘financial’ advisor to ‘municipal’ advisor to be consistent with generally accepted terms. 

 

ARTICLE 9 -- IRON RANGE RESOURCES AND REHABILITATION BOARD 

Section 1. Iron Range resources and rehabilitation; insurance. Provides that after seeking a recommendation from the IRRRB the commissioner may purchase insurance the commissioner deems necessary and appropriate to insure facilities operated by the board.

Section. 2. Iron Range resources and rehabilitation; contribution. Provides that the commissioner, after consultation with the IRRRB, has the sole discretion to decide match requirements under the Minerals 21st Century Fund.

Section 3. Definitions. Amends the definition of ‘Authority’ under the Public Utilities chapter to clarify that ‘authority’ also means the commissioner of Iron Range resources and rehabilitation, acting after consulting with the IRRRB.

Section 4. Municipality. Provides that the commissioner of Iron Range resources and rehabilitation, after seeking a recommendation from the IRRRB, shall, with the commissioner of revenue, make an annual determination concerning the eligibility of a municipality in the Iron Range fiscal disparities program.

Section 5. School fund allocation. Clarifies that the ‘school fund allocation’ under the Iron Range fiscal disparities program shall be an amount certified by the commissioner of Iron Range resources and rehabilitation, after seeing a recommendation from the IRRRB.

Section 6. Development; forest development. Provides that the commissioner of resources and rehabilitation, after seeking a recommendation from the IRRRB, may assist a county, upon their request, in carrying out any project for the long range development of its forest resources through matching funds or otherwise.

Section 7. Commissioner; definition. Clarifies when ‘commissioner’ means the commissioner of revenue or the commissioner of Iron Range resources and rehabilitation.

Section 8. Office of the commissioner of Iron Range resources and rehabilitation. Clarifies that the commissioner of Iron Range resources and rehabilitation may expend amounts appropriation to the commissioner for the board for projects after first submitting the expenditure to the IRRRB for a recommendation.

Section 9. Iron Range Resources and Rehabilitation Board. Provides that all expenditures and projects made by the commissioner of Iron Range resources and rehabilitation shall first be submitted to the IRRRB who shall recommend approval, disapproval or modification of the expenditures and projects.

Section 10. Forest trust. Clarifies that the commissioner, after requesting a recommendation from the IRRRB, may purchase and sell forest land in the taconite assistance area. Proceeds derived from the sale may be expended after the commissioner has sought a recommendation from the IRRRB.

Section 11. Private entity participation. Provides that the commissioner of Iron Range resources and rehabilitation, after seeking a recommendation from the IRRRB, may acquire an equity interest in any project for which the commissioner provides funding.

Section 12. Spending authority. Clarifies that the commissioner of Iron Range resources and rehabilitation, with the IRRRB’s recommendation, shall give highest priority to programs and projects that target relief in areas that have the largest percentage of job and population losses relating to the economic downtown in the taconite industry.

Section 13. Sale or privatization of functions. Provides that the commissioner of Iron Range resources and rehabilitation may not sell or privatize the Ironworld Discovery Center or Giants Ridge Golf and Ski Resort without first seeking a recommendation from the IRRRB.

Section 14. Budgeting. Provides that the commissioner of Iron Range resources and rehabilitation shall submit its annual budget to the IRRRB for a recommendation.

Section 15. Receipts from contracts; appropriation. Provides that all funds deposited into the IRRRB board account from fees or other sources of revenue from the public use of the Giants Ridge Recreation Area may be expended by the commissioner of Iron Range resources and rehabilitation after seeking a recommendation from the IRRRB.

Section 16. Project approval. Clarifies that certain projects, including tax increment financing projects, shall be submitted by the commissioner of Iron Range Resources and Rehabilitation to the IRRB for a recommendation.

Section 17. Project approval; Northeast Minnesota Economic Development Fund. Provides that the commissioner of Iron Range Resources and Rehabilitation must first seek a recommendation from the IRRRB before preparing a list of projects to be funded from the Fund, and clarifies that a project must be approved by the commissioner.

Section 18. Advisory committees; Northeast Minnesota Economic Development Fund. Provides that the commissioner shall not act on a proposal until the commissioner has sought review from the IRRRB of the evaluation and recommendation of any advisory committee.

Section 19. Use of repayments and earnings. Provides that principal and interest received in repayment of loans made under this section must be deposited into the northeast Minnesota economic development fund account in the special revenue fund. The commissioner of Iron Range resources and rehabilitation must seek a recommendation from the IRRRB for any use of the funds as appropriated under this section.

Section 20. Taconite Area Environmental Protection Fund; creation, purpose. Clarifies that any local development project funded with money from the Fund must first be approved by the commissioner of Iron Range resources and rehabilitation after seeking a recommendation from the IRRRB.

Section 21. Taconite area environmental protection fund; administration. Provides that the commissioner of Iron Range resources and rehabilitation may waive certain requirements of the fund and may submit projects for consideration to the governor, after seeking a recommendation from the IRRRB.

Section 21. Taconite economic development fund. Clarifies that the commissioner of Iron Range resources and rehabilitation must seek a recommendation from the IRRRB concerning proposed expenditures, or transfers from the fund.

Section 22. Taconite economic development fund. Provides that is a proposed expenditure is not approved by the commissioner of Iron Range resources and rehabilitation after seeking a recommendation from the IRRRB, the funds must be deposited into the taconite environmental protection fund.

Section 23. Iron Range school consolidation and cooperatively operated school fund. Provides that expenditures from the fund must be approved by the commissioner of Iron Range resources and rehabilitation after seeking review of the expenditure by the IRRRB.

Section 24. Iron Range higher education account. Clarifies that the commissioner of Iron Range resources and rehabilitation must approval all expenditures from the account, after seeking review and recommendation of the expenditures from the IRRRB.

Section 25. Douglas J. Johnson economic protection trust fund; use of money. Provides that forest land in the taconite assistance area may be sold by the commissioner of Iron Range resources and rehabilitation after seeking a recommendation from the IRRRB.

Section 26. Investment of fund. Requires that expenditures from the special account must be approval by the commissioner of Iron Range resources and rehabilitation after seeking a recommendation from the IRRRB.

Section 27. Douglas J. Johnson economic protection trust fund; project approval. Clarifies approval requirements for projects funded by the DJJ trust fund. The commissioner of Iron Range resources and rehabilitation must seek review and a recommendation from the IRRRB.

Section 28. Douglas J. Johnson economic protection trust fund; expenditure of funds. Clarifies the expenditure of funds from the DJJ trust fund by the commissioner of Iron Range resources and rehabilitation, after seeking a recommendation by the IRRRB.

Section 29. Douglas J. Johnson economic protection trust fund; temporary loan authority. Provides that the commissioner of Iron Range resources and rehabilitation may use money from the fund to provide loans and grants, after seeking a recommendation from the IRRRB.

Section 30. Douglas J. Johnson economic protection trust fund; project approval. Clarifies that the commissioner must seek approval of the IRRRB before proposing certain projects.  

Section 31. Douglas J. Johnson economic protection trust fund; grant and loan fund. Clarifies the approval procedure before making any grant or loans.

Section 32. Douglas J. Johnson economic protection trust fund; long-range plan. Clarifies the requirements of a long-range plan for the DJJ and specifies that no project shall be recommended by the IRRB if the board finds that the project is not consistent with the goals and objectives established in the plan.

Section 33. Unmined iron ore; valuation petition. Clarifies that taxing districts may petition the commissioner of Iron Range resources and rehabilitation for authority to petition the county to verify the existence of any unmined ore within its jurisdiction. The commissioner may grant the petition after seeking a recommendation from the IRRRB.

Section 34. Iron Range resources and rehabilitation board; early separation incentive program authorization. Permits the commissioner of Iron Range resources and rehabilitation to offer early separation incentives to employees over 60 years old or who have accumulated 30 years of service.  The commissioner is also authorized to offer a targeted separation incentive program for employees at Giants Ridge who will be eliminated if the IRRRB ceases to manage Giants Ridge. The incentives must be paid out of money available to the commissioner, after seeking a recommendation from the IRRRB. This section is repealed June 30, 2017.

Section 35. Revisor’s instruction. Instructs the revisor of statutes to identify and propose changes to Minnesota Statutes and Minnesota Rules that are consistent with the goals of this act to: (i) transfer discretionary approval authority for all expenditures and projects from the IRRRB to the commissioner; and (ii) provide that the commissioner must, in good faith, seek the review and recommendations of the IRRRB before exercising approval authority. The revisor shall submit its proposal for introduction during the 2017 regular legislative session.

 

ARTICLE 10 -- SUSTAINABLE FOREST INCENTIVE ACT MODIFICATIONS

Section 1. Purpose.  Adds emphasizing economic and ecological benefits to the purpose of the Sustainable Forest Incentive Act.

Section 2. Application.  Extends the applicability of the definitions to include all of the sections in the SFIA chapter.

Section 3. Claimant.  Strikes a requirement that the purchaser or grantee notify the commissioner in writing of the sale or transfer of the property as that requirement is addressed in another section and changes the application date. Effective for certifications and applications due in 2017 and thereafter.

Section 4. Forest land.  Removes the prohibition of land exceeding 60,000 acres that is subject to a single conservation easement funded by the outdoor heritage fund, or a comparable permanent easement conveyed to a governmental or nonprofit entity from participation in the program, and allows for land improved with a paved trail under easement, lease, or terminable license to the state or political subdivision.  Effective for applications made in 2017 and thereafter.

Section 5. Eligibility requirements.  Modifies the eligibility requirements to require that: (i) the forest management plan be registered with DNR; (ii) claimants enrolling land subject to a conservation easement funded by the outdoor heritage fund or comparable permanent easement allow year-round, nonmotorized access; and (iii) that the land is not classified as class 2c managed forest land.  In addition, a minimum of three acres must be excluded from enrolled land when the land is improved with a structure that is not a minor, ancillary, nonresidential structure. If land does not meet the definition of forest land, the entire tax parcel that contains the land is not eligible to be enrolled in the program. Effective for certifications and applications due in 2017 and thereafter.

Section 6. Applications.  Requires that the application form be prescribed by both the commissioners of revenue and natural resources, and contain the registration number for the management forest plan. Adds language to the covenant specifying that the covenant is binding and runs with the land for a period of not less than eight years, unless the claimant requests termination after a reduction in payments due to a formula change, or as a result of executive action, the amount of payment a claimant is eligible to receive is reduced or limited. The commissioner of revenue shall provide a copy of the application to the commissioner of natural resources who must confirm whether the applicant qualifies for enrollment. Effective for certifications and applications due in 2017 and thereafter.

Section 7. Annual certification and monitoring.  Requires that a report describing the management practices that have been carried out on the enrolled property during the prior year be part of the annual certification form that must be signed and returned to the commissioner and provides that the commissioner of natural resources must conduct annual monitoring of a subset of claimants which may include a site visit by a department of natural resources or a contracted forester.

Section 8. Length of covenant.  Provides for covenants with durations of eight, 20, or 50 years. Claimants enrolling any land subject to a conservation easement funded under the outdoor heritage fund must enroll their land under a covenant with a minimum duration of eight years; all other claimants may choose to enroll under an eight, 20, or 50 year covenant. Effective for certifications and applications due in 2017 and thereafter.

Section 9. Calculation of incentive payment.  Provides that the annual payment for land enrolled in the program shall be equal to a percentage of the property tax that would be paid on the land determined by using the previous year’s statewide average total tax rate for all taxes levied within townships or unorganized territories, the estimated market value per acre of managed forest land, and a class rate of one percent.  A claimant enrolling more than 1,920 acres shall be allowed an additional payment per acre for all acres of enrolled land on which public access is allowed.  Land improved with a paved trail under easement, lese, or terminable license to the state or political subdivision is not eligible for payment. Effective for calculations made in 2017 and thereafter.

Section 10. Annual payment.  Provides that by September 15th of each year the commissioner of natural resources certify to the commissioner of revenue the eligibility of each claimant to receive a payment. The commissioner of revenue shall pay the incentive payment on or before October 1 of each year. Effective for certifications and applications due in 2017 and thereafter.  

Section 11. Withdrawal procedures.  Provides withdrawal procedures for the eight, 20, or 50 year covenants and other early withdrawal procedures if the government or nonprofit entity acquires a permanent easement on the enrolled property that is at least as restrictive as the SFIA covenant or land that is subject to fee or easement acquisition or lease to the state for the public purpose of a paved trail.

Section 12. Transfer of ownership.  Provides for the transfer of ownership for lands enrolled in the program. The owner must notify the commissioner of revenue if the owner transfers any or all of the land. Upon notification, the commissioner shall inform the new owner of the restrictions of the covenant and requires that the new owner must file an application and register a new forest management plan with the commissioner of natural resources within two years from the date the title was transferred to remain eligible. Effective July 1, 2016.  

Section 13. Penalties for removal.  Establishes penalties if enrolled land is: (i) in violation of the conditions for enrollment; (ii) if there was construction or addition of an improvement to the property; and (iii) or if the land is used for purposes other than forestry management. Effective the day following final enactment.

Section 14. Determination of appeal.  Requires the commissioner of revenue consult with the commissioner of natural resources when an appeal relates to the use of the property for forestry or nonforestry purposes and for appeals related to the forest management plans. Effective the day following final enactment.

Section 15. Transition provision.  For land currently enrolled in the program, the owner shall have two years to change the length of their covenant without penalty and to comply with the changes being made in this act. Effective the day following final enactment.

Section 16. Administrative appropriation. Appropriates $600,000 in fiscal year 2017 from the general fund to the commissioner of natural resources for administrating this article. The funding base for administrating this article in fiscal year 2018 and thereafter is $600,000.

Section 17. Repealer.  Repeals definitions and provisions related to calculating the current use value and estimated market value that are not used anymore in calculating the SFIA payments. Effective the day following final enactment. 

 

ARTICLE 11 – MISCELLANEOUS PROVISIONS

Section 1. Budget Reserve. Resets the amount of the budget reserve account at $1,596,522,000, the current amount in the budget reserve, in the statute that allocates surpluses after budget forecasts to a set of statutory priorities.

Section 2. New markets grant program. Establishes a new markets grant program administered by DEED. This program is modeled after the federal new markets tax credit program, which is designed to channel equity and debt investments to community businesses operating in low income areas. Grants will be made directly to Qualified Community Development Entities (QCDEs), which will invest in Qualified Active Low-Income Community Businesses (QALICs).

Qualifying entities. DEED is directed to adopt administrative rules that establish criteria for determining grant eligibility. To qualify for a grant, QCDEs must meet the requirements under the federal tax credit and have lending experience in Minnesota. Similarly, QALICs must meet the federal requirements. Various listed businesses are excluded.

Qualifying areas for the investments. Qualifying communities are defined by reference to federal law, which is based on the income of residents of census tracts (either 20 percent of residents are below the poverty rate or median family income is 80 percent or less than that of the metro area or state). The grant program expands the federal rules to include any Greater Minnesota city with a population of 500 or more and per capita commercial-industrial tax capacity of less than $500.

Grant award process. DEED must award grants to applicants using a competitive process. The section sets out a list of priorities for DEED to consider in evaluating applications, as well as authorizing it to establish more priorities administratively.

Administrative funding. Application and administrative fees to pay DEED’s cost of running the program are authorized. These amounts are deposited in an account in the special revenue fund and appropriated to DEED.

Reporting. QCDEs must file annual reports providing information on the investments: types of businesses, counties in which the QALICs operate, number of jobs created or retained, wages paid, and so forth. In addition, DEED is required to annually report to the legislature.

Expiration. The program expires on July 1, 2024. $30,000,000 is appropriated for the program in section 11.

Section 3. Tax time savings grant program. Establishes the tax time savings grant program to make grants to nonprofit organizations to fund the integration of financial capability services into the delivery of taxpayer assistance services. Establishes eligibility requirements for applicants including dedicating at least one staff or volunteer position to coordinate financial capability services with initiation through completion of defined outcomes. Prohibits specified conflicts of interest between grant applicants and financial institutions. An applicant is allowed to receive funding from financial institutions not contingent on the applicant offering the services of that financial institution. Allows a grant recipient to use grant funds to dedicate a staff or volunteer position to coordinate financial capability services.

Sections 4 and 5. Tax Court. Increases the time for serving a motion for rehearing of a Tax Court order from 15 days to 30 days from the time the motion was filed and the time for the court to hear the motion from 30 days to 60 days. Increases the maximum Tax Court small claims jurisdiction from $5,000 to $15,000 in state tax cases. Effective the day following final enactment.

Section 6. Automated sales suppression devices. Authorizes the commissioner of revenue to assess civil penalties on persons who sell, transfer, develop, manufacture, or possess with the intent to sell or transfer automated sales suppression devices. The penalty is the greater of (1) $2,000 or (2) the amount of tax, penalty, and interest avoidance caused by using the device.

Section 7. Homestead credit refund; home offices. Prohibits claiming a homestead credit refund on a dwelling for which the owner claims a simplified home office deduction under section 280A of the Internal Revenue Code. Present law prohibits that only if the owner claims depreciation deductions for business use of the home, but section 280A (starting for tax year 2013) allows a simplified deduction based on square footage and, thus, would still permit receiving a refund. Effective for refunds based on rent paid after December 31, 2014 and property taxes payable after December 31, 2015.

Section 8. Border city enterprise zones. Allocates an additional $3,000,000 for border city enterprise zone and border city development zone tax reductions. The allocation is divided among the qualifying border cities on a per capita basis. The five cities that qualify are Moorhead, Dilworth, East Grand Forks, Breckenridge, and Ortonville. Effective July 1, 2016.

Section 9. Automated sales suppression devices. Classifies automated sales suppression devices as contraband subject to forfeiture.

Section 10. Use of automated sales suppression devices. Establishes a felony criminal penalty (maximum term of 5 years or $10,000 fine or both) for the sale, purchase, installation, transfer, possession, accessing, and use of a sales suppression device.

Section 11. Appropriations.

Subdivision 1. New markets grant program.  $30,000,000 onetime appropriation in fiscal year 2017, and available through fiscal year 2014.

Subdivision 2. Department of Revenue.  $5,000,000 for fiscal year 2017; $2 million set as base amount for fiscal year 2018.

Subdivision 3. Tax time savings grant program. $400,000 in fiscal year 2017 with base funding of $400,000 per year.

Subdivision 4. Taxpayer assistance grants. $400,000 in fiscal year 2017; this amount is added to the base funding, making the total base funding $800,000.

Subdivision 5. Local government grants.

  • City of Madelia - $1,200,000 in fiscal year 2016
  • City of Hibbing - $465,000 in fiscal year 2016
  • Stearns County - $52,288 in fiscal year 2016
  • Mahnomen County – $2,000,000 in fiscal year 2017 ($1,000,000 for the Mahnomen Health Center and $1,000,000 for the White Earth Band of Ojibwe)
  • Hennepin County - $1,130,000 in fiscal year 2017 ($730,000 for the EMERGE Career and Technology Center and $400,000 for the Cedar Riverside Opportunity Center)
  • City of Mahnomen - $1,000,000 for fiscal year 2017
  • City of Lilydale - $150,000 for fiscal year 2017

 

ARTICLE 12 – DEPARTMENT POLICY AND TECHNICAL PROVISIONS

INCOME, CORPORATE, ESTATE TAX

Section 1. Information included on income tax returns. Strikes obsolete references to telefiling of individual income tax returns. Filing state or federal returns by telephone has not been offered since 2005. Effective the day following final enactment.

Section 2. Electronic filing requirement. Extends the requirement that professional tax preparers submit individual income tax returns electronically to also apply to corporate, partnership, and fiduciary returns. It would also extend the $5.00 fee for each individual income tax return submitted by a professional preparer in paper form, including returns which the taxpayer has requested the preparer to submit in paper form, to also apply to corporate, partnership, and fiduciary returns. Effective for tax year 2016.

Section 3. Withholding statement. Changes the required date for employer filing of W-2 forms with DOR from February 28 to January 31, effective for wages paid after December 31, 2015. Also authorizes the commissioner to determine the content, format, and manner in which employers submit W-2 wage and withholding statements, and eliminates the requirement that employers submit an annual reconciliation of their quarterly withholding returns. The requirement has been rendered obsolete by the Department’s ability to electronically identify discrepancies in withholding accounts without the need for a separate return, effective for W2 statements and reconciliations required to be submitted to the commissioner after December 31, 2016.

Section 4. Reporting of exempt interest and dividends. Extends the requirement that regulated investment companies paying $10 or more in exempt-interest dividends to a Minnesota resident to report the amount paid to the recipient by February 15 of the year following the year of payment and by June 1 of the year following the year of payment to the commissioner to also apply to any person receiving $10 or more of exempt non-Minnesota municipal bond interest or dividends and paying those amounts as nominee to an individual who is a resident of Minnesota. Effective for reports required to be filed after December 31, 2016.

Section 5. Annual withholding returns. Permanently sets the threshold to file an annual withholding returns at $500, eliminating the indexing of the threshold and gives the commissioner authority to provide newly eligible employers with the option of filing an annual return. Changes the date when employers must file an annual return from February 28 to January 31. Effective for wages paid after December 31, 2015.

Section 6. Annual withholding returns. Makes a conforming change to be consistent with the provisions of section 5. Effective for taxable years beginning after December 31, 2015.

Section 7. Partnership assessments. Provides that assessments made on partnerships under section 8’s provisions are joint and several liabilities of the partnership and the general partner. Effective the day following final enactment.

Section 8. Assessments for pass-through entities. Allows S corporation shareholders and partners to request that DOR assessments be issued to and paid by the entity after initiation of an audit. The commissioner must decide whether to grant the request based on the “best interest of the state” and the decision is not appealable to either the tax or district court. Effective the day following final enactment.

Section 9. Expanded electronic filing. Extends the requirement that professional tax preparers include an identification number on each individual income tax return to also apply to corporate, partnership, and fiduciary returns. It would also extend the $50 penalty for each individual income tax return submitted by a professional preparer without the appropriate identification number to corporate, partnership, and fiduciary returns. Effective for tax year 2016.

Section 10. Subtractions from taxable income; individuals. Updates cross-references to conform to the change in section 11. Effective the day following final enactment.

Section 11. Additions to taxable income; corporations. Strikes the outdated clause (9), which related to amortization deductions of certified pollution control facilities placed in service before December 31, 1986. Effective the day following final enactment.

Section 12. Subtractions from taxable income; corporations. Strikes the outdated clause (7), which related to amortization deductions of certified pollution control facilities placed in service before December 31, 1986. Updates cross-references to conform to the change in section 11. Effective the day following final enactment.

Section 13. Long term care insurance premiums credit. Changes a reference to the “7.5 percent income test” for deduction of medical expenses at the federal level to “adjusted gross income test”, to reflect the 2013 change to the federal deduction providing that medical expenses are subject to a 10 percent of adjusted gross income test except that the percentage remains at 7.5 percent for taxpayers age 65 and older through tax year 2016. Effective retroactively for taxable years beginning after December 31, 2012.

Section 14. Research credit base period. Clarifies that Minnesota gross receipts must be used in all calculations of the base period for the research credit. Effective the day following final enactment.

Section 15. Alternative minimum tax; individuals. Strikes an internal cross reference to a clause that no longer exists as a result of the 2008 repeal of language related to the alternative tax exemption amount for tax years before 2005. Effective the day following final enactment.

Section 16. Alternative minimum tax; corporations. Updates cross-references to conform to the changes in sections 11 and 12. Effective the day following final enactment.

Section 17. Allocation language; corporate franchise tax. Replaces the term “assignable” with “allocable” in the statute that determines the amount of gain from the sale of goodwill or income from a covenant not to compete that is subject to Minnesota income or corporate franchise tax. Effective the day following final enactment.

Section 18. Partnership assessments. Makes a conforming change to be consistent with section 7’s changes.

Section 19. Landlord submission of certificates of rent paid to commissioner. Authorizes the commissioner to require owners or managing agents of residential rental property to submit a copy of each certificate of rent paid (CRP) furnished to a renter, in the content, format, and manner prescribed by the commissioner. The CRP would be due by February 1 of the year following the year the rent was paid, which is the same date by which the owner or managing agent must provide CRPs to renters under current law. Effective for CRPs relating to rent paid after December 31, 2015, but requires the commissioner to first consult with representatives of owners or managing agents to develop an implementation and administration plan that attempts to minimize financial burdens and costs of compliance.

Section 20. Additions to taxable estate. Clarifies that taxable gifts made within three years of death are subject to estate tax. Present law could be read to imply they are taxable only if they are deducted in computing the federal taxable estate, but under federal law they are never included in the federal estate because they were subject to the federal gift tax instead. Effective retroactive to the original date for the requirement to include these gifts in the Minnesota taxable estate (gifts after June 30, 2013).

Section 21. Estate tax calculation. Clarifies that property subject to a Minnesota-only Qualified Terminable Interest Property (QTIP) election may be excluded in the calculation of the Minnesota taxable estate. Effective retroactive to the original date of the Minnesota QTIP election (decedents dying after June 30, 2011).

Section 22. Includable small business property-estate tax. Clarifies that the qualified small business property subtraction under the estate tax excludes any cash, cash equivalents, or publicly traded securities, whether or not used in the small business or owned directly or through intangible property such as stock or partnership interests. DOR has been administering the small business property subtraction in this manner. Effective retroactive to the original effective date of the small business subtraction (decedents dying after June 30, 2011).

Section 23. Recapture tax. Provides an exemption from the recapture tax for qualified farm property under the estate tax to provide that property, classified as agricultural homestead when the decedent died, does not stop being qualified farm property if during the three-year period (required to avoid recapture tax):

  • A residence is re-classified as 4bb property (non-homestead residential).
  • Up to one-fifth of the land is reclassified as 2b property (rural vacant land) and the heir has not substantially altered the land during the three-year period.

Effective retroactive to the original effective date of the qualified farm property subtraction (decedents dying after June 30, 2011).

Section 24. Estate tax; credit for nonresident decedents. Corrects a cross reference in the credit for nonresident decedents to reflect that the credit was moved to its own statutory section in 2014. Effective retroactively for estates of decedents dying after December 31, 2013.

Section 25. Repealer. Repeals:

  • Minnesota Rules, part 8092.1400, (annual withholding returns) to eliminate any inconsistencies with the provisions of sections 5 and 6. Effective for tax year 2016, except that notifications from DOR to employers regarding eligibility to file an annual return for taxes withheld in calendar year 2016 remain in force.
  • Minnesota Rules, part 8092.2000, which unnecessarily duplicates statutory law and contains obsolete references to Department of Revenue forms. This rule deals with procedures that construction contractors must follow to demonstrate compliance with income tax withholding obligations before receiving final payment under contracts with state or local government agencies. Effective the day following final enactment.

 

ARTICLE 13 – DEPARTMENT POLICY AND TECHNICAL PROVISIONS

SPECIAL AND SALES TAXES

Section 1. Fire state aid. Replaces the term “town and farmers’ mutual insurance companies” with “township mutual insurance companies”, consistent of the use of the term elsewhere in statute. Effective the day following final enactment.

Section 2. MinnesotaCare tax; omission in excess of 25 percent. Allows 6 ½ years from the due date of a return or the date a return is filed for the commissioner to assess additional taxes on a MinnesotaCare return if the return failed to report tax in an amount that is at least 25 percent higher than the amount reported. Current law provides similar treatment for sales and withholding taxes, and allows 6 ½ years for making assessments for income tax and estate tax returns that understate income or assets by at least 25 percent. Effective the day following final enactment.

Section 3. Exemptions. Replaces the term “town and farmers’ mutual insurance companies” with “township mutual insurance companies”, consistent of the use of the term elsewhere in statute. Effective the day following final enactment.

Section 4. MinnesotaCare tax; pharmacy refund. Provides that a request for refund of MinnesotaCare taxes for legend drugs delivered outside Minnesota must be filed on the annual return by March 15 of the year following the year in which the drugs were delivered, and that a refund will not be allowed if the initial claim for refund is filed later than one year from that date. Current law requires the refund to be claimed within 18 months of the date of delivery outside of Minnesota. Effective for qualifying legend drugs delivered outside Minnesota after December 31, 2015.

Section 5. Petroleum tax; Bulk storage or bulk storage facility definition. Adds a new definition of bulk storage or bulk storage facility to the petroleum tax chapter. Effective the day following final enactment.

Section 6. Petroleum tax; Motor fuel definition. Modifies the definition of “motor fuel” to include gaseous forms of fuel; current law is limited to liquid fuel. Effective the day following final enactment.

Section 7. Petroleum products definition; biobutanol. Updates the definition of petroleum products to include biobutanol. Effective the day following final enactment.

Section 8. Gasoline tax; biobutanol. Clarifies that biobutanol blends are taxable as gasoline by adding a reference to biobutanol. Effective day following final enactment.

Section 9. Tangible personal property. Repeals the exclusion of large ponderous machinery and equipment from the definition of tangible personal property consistent with Minnesota Tax Court decision, Dahmes Stainless, Inc., Appellant, v. Commissioner of Revenue, Appellee, 8228-R, April 7, 2015. Effective the day following final enactment.

Section 10. Exemptions. Clarifies that the tax exemption applicable to air flight equipment does not include aircraft with a maximum takeoff weight of less than 30,000 pounds. This conforms to change in the definition of flight property in article 13, section 3.

Section 11. Deposit in state airport fund. Clarifies that the tax revenue collected from the sale or purchase of an aircraft dedicated to the state airports fund includes interest and penalties, but does not include that portion of the sales tax that is constitutionally dedicated.

Section 12. Untaxed gambling product. Provides authority to tax all forms of gambling that are illegal pursuant to the criminal code under chapter 609. Adds a tax return filing requirement for persons or entities conducting untaxed gambling. Prohibits the commissioner from disclosing information in returns related to untaxed gambling, and provides that the information in such returns may not be used in criminal proceedings unless independently obtained. Effective for games played or purchased after June 30, 2016.

Section 13. Solid waste management tax; recyclable materials and source-separated compostable materials. Clarifies that the exemption from the solid waste management tax for recycling materials is only available if the price for handling the materials is separately itemized on a bill to the generator of the waste. Also updates terminology regarding the exemption for source-separated compostable materials, consistent with terms used in chapter 115A and related rules. Effective the day following final enactment.

Section 14. Insurance premiums tax; township mutual insurance companies. Replaces the term “town and farmers’ mutual insurance companies” with “township mutual insurance companies”, consistent of the use of the term elsewhere in statute. Effective the day following final enactment.

Section 15. Firefighter relief surcharge payments. Updates a use of the term “commissioner” to reflect the practice that the commissioner of revenue, not the commissioner of management and budget, determines payments under the firefighter relief surcharge for cities of the first class. Effective the day following final enactment.

Section 16. Firefighter relief surcharge payments appropriation. Changes the appropriation for firefighter relief surcharge payments to be to the commissioner of revenue, not the commissioner of management and budget, since the commissioner of revenue makes the payments. Effective the day following final enactment.

Section 17. Occupation tax deductions. Updates a cross reference to conform to changes made in Article 11, section 12 (290.01, 19c). Effective the day following final enactment.

Section 18. Occupation tax net operating loss. Updates a cross reference to conform to changes made in Article 11, section 12 (290.01, 19d). Also strikes an obsolete net operating loss provision, which applied to tax periods for which net operating loss carryover is no longer available. Effective the day following final enactment.

 

ARTICLE 14 – DEPARTMENT POLICY AND TECHINCAL PROVISIONS

PROPERTY TAXES

Section 1. Income-producing property assessment data classification. Makes property tax data related to income-producing property that is collected by the state of Minnesota for assessment purposes private or nonpublic data. Present law provides that property tax data on income-producing properties collected by political subdivisions is nonpublic. Effective the day following final enactment.

Section 2. Definition of air commerce. Modifies the definition of air commerce to:

  • specifically include airline companies that make three or more flights within Minnesota during a calendar year;
  • strike language related to intermittent or irregularly timed flights, for which a new definition is proposed in section …...; and
  • strike a specific exclusion from air commerce of casual transportation for hire.

Effective for assessment year 2017 and thereafter.

Section 3. Definition of flight property. Provides that flight property does not include aircraft with a maximum takeoff weight of less than 30,000 pounds. The current law exclusion of aircraft with a gross weight of less than 30,000 pounds is stricken in section … Maximum takeoff weight is a standard aviation term that refers to the maximum weight at which the pilot of an aircraft is allowed to take off. Effective for assessment year 2017 and thereafter.

Section 4. Definition of person. Modifies the definition of “person” used for the airline flight property tax to make it consistent with the definition used for other taxes administered by the commissioner. Effective for assessment year 2017 and thereafter.

Section 5. Definition of intermittent or irregularly timed flights. Adds a new definition of “intermittent or irregularly timed flights” to mean flights in which departures and arrivals are negotiated with the customer. The term also includes charter flights. Under present law the definition of this term is embedded in the definition of “air commerce”, which is modified in section .... Effective for assessment year 2017 and thereafter.

Section 6. Assessment of flight property. Deletes language that excludes aircraft with a gross weight of less than 30,000 pounds and used on intermittent and irregularly timed flights from the provisions of the airline flight property tax. Section ….. excluded aircraft with “maximum takeoff weight” from the definition of “flight property”, so such aircraft will not be valued for purposes of the tax. Companies engaged in air commerce and using aircraft with maximum takeoff weights of less than 30,000 pounds and flown on intermittent and irregularly timed flights will still need to file reports. Effective for assessment year 2017 and thereafter.

Section 7. Airline flight property tax reports. Provides that airline companies must file reports unless the commissioner determines that the company is exempt. Also clarifies that the commissioner may prescribe the content, format, and manner of air flight property tax reports as provided in Minnesota Statutes section 270C.30, and adds a cross reference to the definition of “electronic signature” in section 270C.304. The provision requiring airline companies to file reports unless determined to be exempt is effective for reports filed in 2017 and thereafter. The provisions regarding the content, format, and manner of reports are effective the day following final enactment.

Section 8. Commissioner may file reports for airline companies. Adds a new subdivision providing that if an airline company does not file a report the commissioner may file a report for it based on information that the commissioner has or can obtain and also may issue a notice of net tax capacity. Effective for assessment year 2017 and thereafter.

Section 9. State Board of Equalization (Board) reassessment orders. Adds a new subdivision that allows the State Board of Equalization to issue orders to county assessors to reassess all or part of a parcel if the Board determines that property has been under or over-valued and the board determines that the assessment is grossly unfair or inequitable. Effective for assessment year 2017 and thereafter.

Section 10. County Board of Appeal and Equalization Proceedings Minutes. Eliminates the requirement that county boards of appeal and equalization file a printed or typewritten copy of meeting minutes with the commissioner of revenue. Effective for county boards of appeal and equalization meetings held in 2017 and thereafter.

Section 11. Personal property; pipeline companies. Clarifies that all transportation pipelines are subject to tax as personal property without regard to the material transported through the pipeline. Effective the day following final enactment.

Section 12. Wind energy conversion systems. Provides that in determining if the nameplate capacities of wind energy conversion systems may be combined in order to determine the total size of the system for purposes of the wind energy production tax rate, the systems must have been built within the same 12 month period, rather than within the same calendar year. This change would make the criteria consistent with that used for the solar energy production tax. Effective for reports filed in 2017 and thereafter.

Section 13. Wind energy production tax reports. Allows the commissioner to grant an extension of time to file wind energy production tax reports for up to 15 days upon a showing of good cause. This makes it consistent with the commissioner’s authority to grant extensions for filing solar energy production tax reports. Effective for reports filed in 2017 and thereafter.

Section 14. Lead hazard market value reduction. Removes a reference to the lead hazard market value reduction from the definition of market value, since the lead hazard reduction was repealed in 2013. Effective the day following final enactment.

Section 15. Division of duties between local and county auditor. Requires local assessors to enter construction and valuation data into the records as directed by the county auditor. Effective for assessment year 2017 and thereafter.

Section 16. Valuation notice compliance. Provides that if a county or city assessor fails to timely mail valuation notices to taxpayers, the assessor must mail an additional valuation notice and convene a supplemental local board of appeal and equalization meeting or local review session. Effective for valuation notices sent in 2017 and thereafter.

Section 17. Blind/disabled homestead classification. Clarifies that the market value of class 1b blind or disabled homestead property in excess of $50,000 is classified as either class 1a or 2a property depending upon the use of the property.  Effective date: day following final enactment.

Section 18. Personal property; listing and assessment in county. Clarifies that the personal property of pipeline companies is subject to listing and assessment in the local jurisdiction without regard to the material transported through the pipeline. Effective the day following final enactment.

Section 19. Personal property; listing and assessment in county. Clarifies that the personal property of pipeline companies is subject to listing and assessment in the local jurisdiction without regard to the material transported through the pipeline. Effective the day following final enactment.

Section 20. Utility and railroad valuation appeals. Requires that an appeal of market value on state assessed railroad or utility property must be brought against both the commissioner of revenue and the county or taxing district in which the property is located. Clarifies that service must be made on the commissioner only. Effective for appeals starting in assessment year 2017.

Section 21. State assessed property tax appeals. Provides that utility and railroad company appeals to the Minnesota Tax Court on orders of the commissioner must be filed within 60 days from the date of the order or 90 days if an extension is granted, as provided in section 271.06, subdivision 2. Also provides that in the case of a conflict between the provisions of this section and chapter 278 (District Court or Tax Court), this section prevails. Current law provides that this section prevails over chapter 271 (Tax Court) in case of conflict, but does not reference chapter 278. Effective for assessment year 2017 and thereafter.

Section 22. Railroad and utility company appeals. Makes several changes in how utilities and railroads may appeal their valuations. Companies must request an administrative appeal in writing within 30 days of the valuation. The commissioner may grant a 15 day extension to file. The appeal must include identifying information about the company, include the assessment periods, identify findings that the company disputes and identify reasons for the dispute. An appeal conference must be held within 20 days, and the commissioner must notify the company of the final determination within 30 days after the conference. Taxpayers may appeal the commissioner’s determination to either Tax Court or District Court. Paragraph (c) dealing with informal appeals is deleted because it is no longer necessary as the proposed changes lay out how railroad and utility companies may appeal their valuations. Effective for assessment year 2017 and thereafter.

Section 23. Settlement of appeals. Provides that when it appears to be in the best interest of the state the commissioner may settle appeals of utility and railroad valuations. Effective beginning with assessment year 2017 and thereafter.

Section 24. Administrative appeal and appeal to tax court. Clarifies that if a taxpayer files an administrative appeal for an order of the commissioner and also files an appeal to Tax Court for that same order, the administrative appeal is dismissed and the commissioner no longer has to make a determination. Effective beginning with assessment year 2016 and thereafter.

Section 25. Equalization of public utility structures. Requires the value of state-assessed public utility structures to be equalized to the level accepted by the State Board of Equalization. Effective beginning with assessment year 2016.

Section 26. Local boards of appeal and equalization. Clarifies that the boards to which provisions related to meeting dates and times apply are the local boards of appeal and equalization. Effective the day following final enactment.

Section 27. County board of appeal and equalization valuation. Prohibits county boards of appeal and equalization from making a change in value to benefit a property if the owner has denied the assessor access to the property. This would make the authority of county boards of appeal and equalization consistent with local boards of appeal and equalization, which are already prohibited from making valuation changes after an owner has denied the assessor access. Effective for county board of appeal and equalization meetings in 2017 and thereafter.

Section 28. County Board of Appeal and Equalization certification. Extends the deadline from December 1 to February 1, for county boards of appeal and equalization to certify a trained member of the board in order to be eligible to hold regular board of appeal and equalization meetings. Effective for county boards of appeal and equalization meetings held in 2017 and thereafter.

Section 29. Public meeting announcement. Clarifies that taxing authorities only need to announce the time and place of the regularly scheduled meetings at which the budget and levy will be discussed if they have such a meeting. Effective the day following final enactment.

Section 30. Property tax levy reports. Eliminates the requirement that towns more than 5,000 population and communities receiving taconite aid file a property tax levy report. The reports are no longer needed for these towns and communities, as they are not subject to levy limitations. Effective the day following final enactment.

Section 31. State assessed property tax appeals. Provides that appeals of valuation notices provided by a county assessor as required under section 273.121 may be filed in Tax Court prior to May 1 of the year in which taxes are payable, in order to clarify that the additional time to appeal valuation notices does not apply to state assessed property because those notices are not required under section 273.121. Current law refers to section 273.121 but does not explicitly reference county assessors. Effective the day following final enactment.

Section 32. Conveyances to public entities. Modernizes the language used in describing the procedures for taxing districts to sell tax-forfeited land. Effective the day following final enactment.

Section 33. Conditional use deed. Clarifies that when a governmental subdivision wishes to purchase tax-forfeited property that it owns, but that is subject to a conditional use deed, the governmental subdivision must first reconvey the land subject to the conditional use deed to the commissioner of revenue before the commissioner may convey the property free of the use restriction back to the governmental subdivision. Effective the day following final enactment.

Section 34. City email address. Requires cities receiving aid to register an official electronic mail address with the commissioner for use in communicating with the city. Effective for aids payable in 2017 and thereafter.

Section 35. Aquatic invasive species prevention aid. Requires the commissioner of natural resources to annually certify the number of watercraft launches and watercraft trailer parking spaces in each county for purposes of administering aquatic invasive species prevention aid. Effective for aids payable in 2017 and thereafter.

Section 36. Aquatic invasive species prevention guidelines. Requires the commissioner of natural resources to annually certify to the commissioner of revenue the counties that have complied with the requirement to establish guidelines for addressing aquatic invasive species. Effective for aids payable in 2017 and thereafter.

Section 37. Tax-forfeited property contracts for deed. Provides that the five-day rescission period for sales made by contracts for deed does not apply to sales of tax-forfeited property. Effective for sales of tax-forfeited land occurring after the day following final enactment.

Section 38. 2014 supplemental agricultural credit warrants. Provides that if the commissioner cannot locate a taxpayer eligible for the 2014 supplemental agricultural credit by October 15, 2016, or if a qualifying taxpayer to whom a warrant was issued does not cash that warrant within two years from the date the warrant was issued, the right to the credit lapses. A separate change in Article 4, section 6 allows the commissioner to reissue a lapsed warrant for the 2014 supplemental agricultural credit for up to five years after the original warrant was issued upon a showing of reasonable cause. Effective the day following final enactment.

Section 39. Repealer; property tax exemption for public utility project. Restores an exemption for personal property of an electric generating facility that was inadvertently repealed in 2014. The effective date section provides that the exemption is revived and reenacted. Effective retroactively from May 20, 2014.

Section 40. Repealer. (a) repeals Minnesota Statutes section 281.22, which is an obsolete provision that provided a one-year notice period for the expiration of redemption for properties bid in for the state prior to 1935. (b) Repeals the current rule regarding the equalization of public utility structures. Paragraph (a) is effective the day following final enactment. Paragraph (b) is effective beginning with assessment year 2016.

 

ARTICLE 15 – DEPARTMENT POLICY AND TECHNICAL PROVISIONS

MISCELLANEOUS

Section 1. Annual railroad returns. Authorizes the commissioner to prescribe the content, format, and manner of annual railroad property tax returns, and defines “electronic signature” for railroad property tax returns by reference to the definition in section 270C.304. Effective the day following final enactment.

Section 2. Revenue recapture; income floors on medical debts; definition of debtor. Updates the income amounts used to determine if a medical care debt may be submitted to the department’s revenue recapture system to have tax refunds applied to the debt to be the income amounts in effect for 2015, and provides for the updated amounts to be adjusted annually for inflation beginning in 2016. Also clarifies that the income of the debtor’s spouse is included in the calculation and that the spouse is considered a dependent. Effective retroactively to debts incurred in tax year 2015 and following years.

Section 3. Data disclosure to commissioner of human services. Authorizes the commissioner to provide information to the commissioner of human services to verify income for eligibility and premium payment under the medical assistance program. Effective the day following final enactment.

Section 4. Commissioner’s authority; manner of returns. Authorizes the commissioner to prescribe the manner of all returns required to be filed under state tax laws. Current law authorizes the commissioner to prescribe the content and format of returns. Effective the day following final enactment.

Section 5. Prohibition against collection. Provides that the 60 day time period used as one criterion in determining when a collection action on an order of assessment is prohibited ends 60 days after the notice date designated on the order; current law provides that the prohibition ends 60 days after the date the order is mailed. Effective for orders dated after December 31, 2016.

Section 6. Sufficiency of notice. Provides that a notice of an assessment of tax is sufficient if sent on or before the date designated by the commissioner in the notice. Effective for orders dated after December 31, 2016.

Section 7. Time for filing; request for abatement of penalty or additional tax. Provides that the 60 day time period for requesting abatement of a penalty or additional tax assessment begins on notice date designated on the order notifying the taxpayer of the penalty or additional tax; current law provides that the 60 days begins on the date the order is mailed. Effective for orders dated after December 31, 2016.

Section 8. 2014 supplemental agricultural credit warrants. Provides that upon a showing of reasonable cause for failure to cash a warrant for a supplemental agricultural credit the commissioner may reissue a replacement warrant for up to five years after the original warrant was issued. Under current law the commissioner is authorized to issue replacement warrants for rebates and property tax refunds. Effective the day following final enactment.

Section 9. Notice date; definition. Modifies the definition of “notice date” to mean the date designated by the commissioner on an order adjusting tax or denying a request for abatement. Current law defines “notice date” as the date of an order or notice. Effective for orders and notices dated after December 31, 2016.

Section 10. Administrative appeal. Provides that if a taxpayer files an administrative appeal of an order of the commissioner and also files an appeal to Tax Court for that same order, the administrative appeal is dismissed and the commissioner is no longer required to make a determination. Effective for administrative appeals filed after June 30, 2016.

Section 11. Sufficient notice. Provides that a notice of an action or determination of the commissioner is sufficient if sent on or before the date designated by the commissioner in the notice. Effective for orders dated after December 31, 2016.

Section 12. Tax preparer administrative penalty; statute of limitation. Establishes that the statute of limitations to assess an administrative penalty against a tax return preparer for an improper return equals the amount of time allowed to assess tax. Establishes a five year statute of limitations for imposing a penalty arising from violations not related to a specific tax return. Effective for tax preparation services provided after the day following final enactment.

Section 13. Publication of names of tax preparers subject to penalty. Extends from 90 days to three years the period of time in which the name of a tax preparer who has been subject to a penalty may be posted by the Department of Revenue. Effective the day following final enactment.

Section 14. Individual tax identification number. Clarifies that for purposes of the license clearance program, a licensing authority may accept an individual tax identification number in addition to social security and Minnesota business identification numbers. Effective the day following final enactment.

Section 15. Tax court appeals; period of time to appeal. Provides that the 60 day time period for appealing an order of the commissioner to the Tax Court begins on notice date designated on the order; current law provides that the 60 days begins on the date the order is filed. Effective for orders dated after December 31, 2016.

Section 16. Period of time to appeal orders of assessment. Provides that the 60 day time period for appealing an order of assessment begins on notice date designated on the order; current law provides that the 60 days begins on the date the order is filed. Effective for orders dated after December 31, 2016.

Section 17. Application for exemption for personal property used for pollution control. Authorizes the commissioner to prescribe the content, format, and manner of applications for exemption from the property tax on personal property for property used for pollution control, and defines “electronic signature” for pollution control personal property exemption applications by reference to the definition in section 270C.304. Effective the day following final enactment.

Section 18. Application for market value exclusion for electric power generation efficiency. Authorizes the commissioner to prescribe the content, format, and manner of applications for the market value exclusion for electric power generation efficiency, and defines “electronic signature” for market value exclusion applications by reference to the definition in section 270C.304. Effective the day following final enactment.

Section 19. Statement of exemption for personal property. Authorizes the commissioner to prescribe the content, format, and manner of annual statements required taxpayers claiming exemptions for personal property, and defines “electronic signature” for annual statements related to personal property exemptions by reference to the definition in section 270C.304. Current law authorizes the commissioner to prescribe the “form and contents” of the statements. Effective the day following final enactment.

Section 20. Annual wind energy reports. Changes the date when annual wind energy reports are due from February 1 to January 15, effective for reports required to be filed in 2017. Also authorizes the commissioner to prescribe the content, format, and manner of annual reports from owners of wind energy conversion systems, and defines “electronic signature” for wind energy report by reference to the definition in section 270C.304. Current law authorizes the commissioner to prescribe the “form” of the reports. Effective the day following final enactment.

Section 21. Annual solar energy reports. Authorizes the commissioner to prescribe the content, format, and manner of annual reports from owners of solar energy generating systems. Current law authorizes the commissioner to prescribe the “form” of the reports. Effective the day following final enactment.

Section 22. Certificate of value. Authorizes the commissioner to prescribe the content, format, and manner of the certificate of value required to be filed with the county of auditor on the sale of real property. Current law authorizes the commissioner to prescribe the “form” of the reports. Effective the day following final enactment.

Section 23. Homestead application. Authorizes the commissioner to prescribe the content, format, and manner of homestead applications. Current law authorizes the commissioner to prescribe the “format and contents” of the application. Effective the day following final enactment.

Section 24. Annual utility company reports. Authorizes the commissioner to prescribe the content, format, and manner of annual reports from utility companies. Also authorizes the commissioner to file a report for a company if the company fails to do so. Effective the day following final enactment.

Section 25. Deed tax on school forest. Clarifies that the deed tax for a conveyance of tax-forfeited land to a governmental subdivision for a school forest is $1.65. Effective the day following final enactment.

Section 26. Income tax returns. Authorizes the commissioner to prescribe the content, format, and manner of returns and other documents required to be filed under the individual income, fiduciary income, corporate franchise, mining, and entertainment taxes, but provides that the authorization provided does not allow the commissioner to require individuals to file income tax returns electronically. Effective the day following final enactment.

Section 27. Withholding tax returns. Authorizes the commissioner to prescribe the content, format, and manner of returns and other documents required to be filed under the various withholding taxes. Current law authorizes the commissioner to prescribe the “form and manner” of the returns. Effective the day following final enactment.

Section 28. Sales and use tax returns. Authorizes the commissioner to prescribe the content, format, and manner of sales and use tax returns. Current law authorizes the commissioner to prescribe the “form and manner” of the returns. Effective the day following final enactment.

Section 29. Partnership return due date. Requires partnerships to file their returns on the day the equivalent federal return is due. Effective the day following final enactment.

Section 30. Erroneous refund statute of limitations. Define an “erroneous refund” and clarifies that DOR has 3½ years from the due date of the return to assess tax under a claim filed by a taxpayer, not two years after issuing a refund. This effectively reverses the Minnesota Supreme Court decision in Connexus Energy v. Commissioner of Revenue, 868 N.W.2d 234 (Minnesota, 2015). Effective the day following final enactment and applies retroactively to all refunds, other than the refunds in the Connexus Energy case. The changes do not invalidate any assessments made before the effective date.

Section 31. Denial of refund claims; period of time to appeal. Provides that the 60 day time period for appealing the denial of a refund claim begins on the notice date designated on the notice of denial; current law provides that the 60 days begins on the date the notice is issued. Also provides that actions in district court must be brought with 18 months of the notice date. Current law references the “date of denial of the claim”. Effective for denials of claims for refunds after December 31, 2016.

Section 32. Senior citizens’ property tax deferral; forms. Authorizes the commissioner to prescribe the content, format, and manner of all forms and documents required for the senior citizens’ deferral. Effective the day following final enactment.

Section 33. Verification of forest management plans. Requires that on request of the commissioner of revenue, the commissioner of natural resources must verify that claimants have current forest management plans on file. Effective for certifications filed after July 1, 2017

Section 34. Exempt property of educational institutions; forms. Authorizes the commissioner to prescribe the content, format, and manner of all forms and documents related to taxation of income related to exempt property of educational institutions. Effective the day following final enactment.

Section 35. Gross receipts taxes; forms. Authorizes the commissioner to prescribe the content, format, and manner of all forms and the annual returns required under gross receipts taxes. Effective the day following final enactment.

Section 36. Petroleum and other fuels taxes; forms. Authorizes the commissioner to prescribe the content, format, and manner of all forms and other documents required under the petroleum and other fuels taxes. Effective the day following final enactment.

Section 37. Time for filing; request for abatement of penalty under petroleum tax. Provides that the 60 day time period for requesting abatement of a penalty begins on notice date designated on the order notifying the taxpayer of the penalty; current law provides that the 60 days begins on the date the notice is mailed. Effective for orders dated after December 31, 2016.

Section 38. Tax court appeals; petroleum tax. Provides that the 60 day time period for appealing to the Tax Court an order of the commissioner related to a tax, penalty, or interest under the petroleum tax begins on notice date designated on the order; current law provides that the 60 days begins on the “date of the notice of the order”. Effective for orders dated after December 31, 2016.

Section 39. Controlled substance tax; forms. Authorizes the commissioner to prescribe the content, format, and manner of all forms and other documents required under the controlled substance tax. Effective the day following final enactment.

Section 40. Gambling taxes; forms. Authorizes the commissioner to prescribe the content, format, and manner of returns required under the gambling taxes. Effective the day following final enactment.

Section 41. Gambling taxes; manufacturers’ reports. Authorizes the commissioner to prescribe the content, format, and manner of the manufacturers’ sales reports required under the gambling taxes. Effective the day following final enactment.

Section 42. Gambling taxes; distributors’ reports. Authorizes the commissioner to prescribe the content, format, and manner of the distributors’ sales reports required under the gambling taxes. Effective the day following final enactment.

Section 43. Gambling taxes; organization reports. Authorizes the commissioner to prescribe the content, format, and manner of the reports required of organizations conducting gambling activities. Effective the day following final enactment.

Section 44. Cigarette and tobacco taxes; monthly returns. Authorizes the commissioner to prescribe the content, format, and manner of monthly cigarette and tobacco tax returns. Effective the day following final enactment.

Section 45. Tax court appeals; cigarette and tobacco tax. Provides that the 60 day time period for appealing to the Tax Court an order of the commissioner related to a tax, penalty, or interest under the cigarette and tobacco tax begins on notice date designated on the order; current law provides that the 60 days begins on the “date of the notice of the order”. Effective for orders dated after December 31, 2016.

Section 46. Liquor taxes; monthly returns. Authorizes the commissioner to prescribe the content, format, and manner of the liquor tax monthly returns. Effective the day following final enactment.

Section 47. Tax court appeals; liquor tax. Provides that the 60 day time period for appealing to the Tax Court an order of the commissioner related to a tax, penalty, or interest under the liquor tax begins on notice date designated on the order; current law provides that the 60 days begins on the “date of the notice of the order”. Effective for orders dated after December 31, 2016.

Section 48. JOBZ repayment waiver; time for requesting. Authorizes the commissioner to prescribe the content, format, and manner of all forms and other documents required under the insurance premiums tax. Effective the day following final enactment.

Section 49. Denial of refund claims; insurance taxes; period of time to appeal. Provides that the 60 day time period for appealing the denial of a refund claim begins on the notice date designated on the notice of denial; current law provides that the 60 days begins on the date of the denial. Also provides that actions in district court must be brought with 180 days of the notice date. Current law references the “date of the notice of denial”. Effective for denials of claims for refunds after December 31, 2016.

Section 50. Provides that the 60 day time period for requesting waiver of a repayment of JOBZ benefits begins on the notice date designated on the notice of repayment order. Effective for orders dated after December 31, 2016.

Section 51. Repealer. Repeals Minnesota Statutes, section 290C.02 subdivisions 5, 9 and 290C.06, which contain an obsolete formula for calculating SFIA payments. These sections are not needed because the payment is now a flat $7 per acre, pursuant to Minnesota Statutes section 290C.07. Effective the day following final enactment.

 
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