Senate Counsel, Research
and Fiscal Analysis
Minnesota Senate Bldg.
95 University Avenue W. Suite 3300
St. Paul, MN 55155
(651) 296-4791
Tom Bottern
Director
   Senate   
State of Minnesota
 
 
 
 
 
H.F. No. 1 - Omnibus Tax Bill (First Special Session - 2017)
 
Author: Senator Roger C. Chamberlain
 
Prepared By: Eric S. Silvia, Senate Counsel (651/296-1771)
Nora Pollock, Senate Counsel (651/297-8066)
Jay M. Willms, Senate Fiscal Analyst (651/296-2090)
Jack Paulson, Senate Analyst (651/296-4954)
 
Date: June 9, 2017



 

 Article 1

Income, Corporate Franchise, and Estate Taxes

Section 1. Beginning farmer program; tax credits.

Subd. 1 defines terms: 

            Beginning farmer is a resident individual of Minnesota who:

  • is seeking to enter or has entered farming within the last ten years;
  • intends to provide the majority of physical labor and management to farm on land in Minnesota; and
  • is not related to the current owner of the agricultural assets that the beginning farmer intends to purchase or rent.

Agricultural assets includes land, livestock, buildings, and machinery used for farming in Minnesota.

Farming means active use of real and personal property for production of farm products; which are defined as plants and animals useful to humans.

Subd. 2 allows a capped, nonrefundable income and franchise tax credit for the sale or rental of agricultural assets to a beginning farmer. The credit equals:

  • 5 percent of the sale price of agricultural assets sold to the beginning farmer, up to $32,000;
  • 10 percent of the gross rental income in the first three years of a cash rental agreement with the beginning farmer, up to $7,000; and
  • 15 percent of the cash equivalent in the first three years of a share rent agreement with the beginning farmer, up to $10,000.

Requires the Rural Finance Authority (RFA) to approve and certify credits. Beginning farmers must re-certify with the RFA every three years and must notify the RFA if they no longer meet the eligibility requirements, in which case they would no longer be eligible for credits.

Subd. 3 grants an income/franchise tax credit up to $1,500 to beginning farmers who participate in an approved financial management program. The credit equals the program costs paid by the farmer, for up to three years of program participation.

Subd. 4 directs the RFA to administer the credit by certifying beginning farmers and owners of agricultural assets, and otherwise assisting beginning farmers. Requires the RFA to share data with the Department of Revenue to the extent necessary to administer the credit.

Subd. 5 allows an appeal process of decision of the RFA.

Subd. 6 requires the RFA to issue a report on the credit to various legislative committees.

Subd. 7 states that the credit is effective for tax years 2017-2023.

Section 2. Return required. Amends the thresholds for the estate tax return filing requirement to reflect the increased general exclusion amount in a later section. Effective for estates of decedents after December 31, 2016.

Section 3. Federal extensions. Adds fiduciary income tax return filings to those automatically eligible for a filing extension if a federal extension is granted. Effective the day following final enactment.

Section 4. Financial institution. Modifies the definition of financial institution to include any entity registered as a bank, savings association, or other similar organization under state or federal law. Additionally, under the new definition, entities and individuals who derive 50% or more of their income from activities commonly conducted by financial institutions will also be treated as financial institutions unless they provide clear and convincing evidence to the commissioner that they do not substantially compete with financial institutions in the market. Effective beginning in tax year 2017.

Section 5. Resident definition – domicile test. Modifies the domicile test under the individual income tax’s definition of resident, so that the location of the individual’s attorney, certified public accountant, or financial adviser and the place of business of a financial institution where the individual opened or maintains an account cannot be considered by the Department of Revenue (DOR) or a court in determining where the individual intends his or her permanent home to be (i.e., the domicile test).  Effective beginning in tax year 2017.

Section 6. First-time homebuyer savings account; addition to federal taxable income. Requires certain amounts of the first-time home buyer savings account to be added back for purposes of calculating Minnesota taxable income. Effective beginning in tax year 2017.

Section 7. Subtraction for contributions to 529 plans. Allows an income tax subtraction of up to $1,500 ($3,000 for married joint filers) of contributions to any state’s section 529 college savings plan or prepaid tuition plan. The subtraction excludes amounts that are rolled over from other college savings plans. The subtraction is limited to taxpayers who do not claim the 529 contribution credit in a later section. Effective beginning in tax year 2017.

Section 8. Subtraction for discharge of student loan indebtedness. Allows an income tax subtraction for student loan indebtedness discharged by the lender following the borrower’s completion of an income-driven repayment plan that sets monthly payments based on the borrower’s income and family size or through the state teacher shortage loan forgiveness program. Effective beginning in tax year 2017.

Section 9. First-time homebuyer savings account; subtraction from federal taxable income. Authorizes a subtraction for earnings on a first-time home buyer savings account for purposes of calculating Minnesota taxable income. Effective beginning in tax year 2017.

Section 10. Subtraction for Social Security benefits. Authorizes a subtraction of Social
Security benefits for purposes of calculating Minnesota taxable income. The subtraction equals the lesser of the amount of benefits, or: $4,500 for married joint filers and surviving spouses; $3,500 for single or head of household filers; and $2,250 for married couples filing separate returns. The subtractions are phased out by 20% of provisional income over $77,000, $60,200, and $28,500, respectively. Effective beginning in tax year 2017. The subtractions and income thresholds are adjusted annually for inflation beginning in tax year 2018.

Section 11. Accelerated recognition of certain installment sale gains. Requires nonresident owners of pass-through entities, and owners who become nonresidents to recognize future year gains following the sale of an interest in a pass-through entity when they use the installment sale method of reporting income from the sale. The provision also allows taxpayers to elect out of early recognition by agreeing to continue filing Minnesota tax returns and recognizing future year installment sale gains in the year that they are recognized federally. The provision also provides that taxpayers who do not elect out of early recognition will not be taxed twice on the gains recognized early if they continue to file Minnesota income tax returns in future years. Effective beginning in tax year 2017.

Sections 12 and 30. Exempt entities; unitary business principle. Narrows the definition of the term “insurance company.” Generally, insurance companies are excluded from the unitary groups of businesses who pay franchise tax under chapter 290. Under the proposed definition, that exclusion would only apply to insurance companies that are admitted to practice the business of insurance in Minnesota, or licensed to practice the business of insurance in another state that has reciprocal agreement with Minnesota not to impose retaliatory taxes. Effective beginning in tax year 2017.

Section 13. First-time homebuyer savings account. Imposes an additional penalty tax on amounts withdrawn and not used for eligible costs. Effective beginning in tax year 2017.

Section 14. Section 529 plan recapture. Requires a recapture tax for the section 529 contribution credit and subtraction if distributions are not used for qualifying expenses. Effective beginning in tax year 2017.

Section 15. Income tax credit for taxes paid to Wisconsin. Makes the credit for taxes paid to other states refundable for Minnesota residents who had personal or professional income taxed by Wisconsin. The credit would only apply in years in which Minnesota did not have an income tax reciprocity agreement with Wisconsin and essentially provides the same tax treatment to Minnesota residents who work in Wisconsin that they would receive under a reciprocity agreement. Effective beginning in tax year 2017.

Section 16. Beginning farmer incentive credit; farm assets. Allows a nonrefundable credit against the individual income and corporate franchise tax for taxpayers who sell or rent assets to beginning farmers. Allows a 15 year carryover of unused credits. Effective beginning in tax year 2017.

Section 17. Beginning farmer management credit. Allows a nonrefundable credit against the individual income tax for beginning farmers who participate in an approved financial management program. Allows a three year carryover of unused credits. Effective beginning in tax year 2017.

Section 18. Dependent care credit. Increases the state dependent care credit to equal the federal credit. The credit would follow the phasedown of the federal credit and then be subject to a state phaseout, so that the maximum credit by AGI would be: 

 

AGI

Maximum for One Dependent

Maximum for Two or More Dependents

Less than $15,000

$1,050

$2,100

$15,000 to $43,000

maximum credit decreases by $30 for each $2,000 of AGI over $15,000

maximum credit decreases by $60 for each $2,000 of AGI over $15,000

$43,000 to $50,000

$600

$1,200

$50,000 to $62,000

Maximum credit decreases by 5% of AGI over $50,000

Maximum credit decreases by 5% of AGI over $50,000

$62,000 to $74,000

No credit allowed

Maximum credit continues to decrease by 5% of AGI over $50,000

Over $74,000

No credit allowed

No credit allowed



The state credit would remain refundable, as under current law. The income measure for the state phaseout would change from household income (a relatively broad measure that includes most nontaxable income) to AGI. Married couples with dependents under age one and family daycare home operators would be eligible for the proposed credit based on deemed expenses in the same manner as they are eligible for the current law credit. Effective beginning in tax year 2017.

Section 19. Dependent care credit; inflation adjustment of phaseout threshold. Provides for the new $50,000 income threshold for the phaseout in section 18 to be adjusted annually for inflation beginning in 2018.

Section 20. Working family credit; extension to certain individuals and modification for certain income derived from an Indian reservation. Modifies the working family tax credit to include taxpayers age 21 to 24 with no qualifying children, effective beginning in tax year 2019. Under current law, the credit is eligible to taxpayers age 25 to 65. Excludes on-reservation earnings of enrolled members of a tribe earned while living on the reservation. Under current law, the credit is apportioned based on the portion of income taxable to Minnesota relative to total income. Minnesota does not tax on-reservation earnings of enrolled tribal members because is it pre-empted from doing so under federal law. For these members, the effect of the apportionment formula is to disallow the credit because if all income is earned on-reservation, then there is no Minnesota taxable income to apportion. This section specifies that income earned on-reservation by enrolled tribal members is not included in the apportionment formula, thus allowing those members to claim the credit. Effective beginning in tax year 2017.

Section 21. K-12 expense credit. Strikes the reference to household income as defined for the dependent care credit, since the income threshold for the dependent care credit is changed in section 18 from household income to adjusted gross income.

Section 22. K-12 credit; definition of household income. Provides a definition of household income for purposes of phasing out of the K-12 credit. Effective beginning in tax year 2017.

Section 23. Research and development credit rate. Increases the credit rate under the R&D credit that applies to the second tier (qualifying research expenditures in excess of $2 million) from 2.5 percent to four percent. Effective beginning in tax year 2017.

Section 24. Student loan credit. Allows a nonrefundable income tax credit for principal and interest payments on higher education loans used to pay for the costs of attending an undergraduate or graduate degree program at an educational institution eligible for federal financial aid. Only payments made by an eligible individual on the individual’s qualified education loans qualify for the credit. If both the taxpayer and the taxpayer’s spouse have qualified loans, each may claim the credit.

The credit equals the least of the following:

  • Eligible loan payments minus ten percent of an individual’s adjusted gross income in excess of $10,000.
  • The earned income of the individual for the taxable year.
  • The sum of:
    • the interest portion of eligible loan payments during the taxable year; and
    • ten percent of the original loan amount of all qualified education loans of the individual.
    • $500.

Effective beginning in tax year 2017.

Section 25. 529 College savings plan credit. Allows a nonrefundable income tax credit of 50 percent of for contributions to any state’s section 529 college savings plan, including prepaid tuition plans, up to $500. For individual filers, the maximum credit is phased out by two percent of adjusted gross income in excess of $75,000. The credit is fully phased out for individual filers at $100,000 of adjusted gross income. For married couples filing joint returns, the maximum credit is phased out in two stages, and is fully phased out when AGI reaches $160,000. Effective beginning in tax year 2017.

Section 26. Credit for attaining master’s degree in teacher’s licensure field. Allows a nonrefundable individual income tax credit of $2,500 to licensed K-12 teachers who complete a master’s degree program in a core content area directly related to their field of licensure. Limits the credit to the amount a teacher pays for tuition, fees, and instructional materials, excluding amounts paid by the teacher’s employer or through a scholarship. Limited to teachers who begin a program after June 30, 2017. Effective beginning in tax year 2017.

Section 27. Sunset; angel investment credit. Provides that the angel investment tax credit expires at the same time as the provisions in the economic development chapter. Effective the day following final enactment.

Section 28. Reciprocity. Authorizes the commissioner of revenue to enter into an income tax reciprocity agreement with the Wisconsin secretary of revenue. Requires that the state with a net revenue loss must receive the amount of that loss by the other state on a quarterly basis. For agreements entered into before October 1, 2017, the amount received by Minnesota must equal net revenue loss minus $3,000,000. Requires that an agreement with Wisconsin must provide for:

  • suspension of the agreement in case of late payment;
  • the interest rate applied and the duration for which the rate applies;
  • a time for annual reconciliation by October 31 of the year following the year the agreement is in effect;
  • a requirement that each party conduct benchmark studies every five years;
  • a requirement that a list of taxpayers who request exemption from withholding in the state where they work to be made available and exchanged annually; and
  • the sum of the amount of quarterly payments must reasonably estimate the amount of revenue loss,

Effective for agreements entered into beginning in tax year 2018 or 2019.

Section 29. Alternative minimum tax. Provides a corresponding subtraction for purposes of calculating alternative minimum tax for discharge of indebtedness on education loans and Social Security benefits. Effective beginning in tax year 2017.

Section 31. Property taxes payable. Requires taxpayers to reduce the property taxes payable or rent constituting property taxes on their homestead to account for business use of the homestead regardless of Internal Revenue Code limitations or a taxpayer’s decision to elect to deduct business expenses under the Internal Revenue Code rather than depreciating part of the home. Effective for refunds based on property taxes payable after December 31, 2016 or rent paid after December 31, 2015.

Section 32. Estate tax; definitions. Provides that the definition of resident established in an earlier applies to the definition of resident decedent in the estate tax chapter. Effective retroactively for decedents dying after December 31, 2016.

Section 33. Estate tax; subtractions. Modifies the calculation of the subtraction available for purposes of calculating the Minnesota taxable estate. The qualified small business and farm property subtraction is modified to reflect the increased general exclusion amount, beginning for estates of decedents dying in 2017. For estates of decedents dying in 2020 and thereafter, the general exclusion amount is $3 million and the qualified small business and farm property subtraction equals $2 million. Effective for estates of decedents dying in 2018 and after.

Section 34. Estate tax; rates. Strikes the estate tax rates that apply to decedents dying before 2017 and establishes new amounts for the general subtraction for purposes of calculating estate tax. Effective retroactively for decedents dying after December 31, 2016.

Section 35. Recapture tax. Provides that transfer of qualified farm or small business property to a governmental entity with eminent domain powers does not trigger imposition of recapture tax under the estate tax. Effective retroactive to the original effective date of the recapture tax.

Section 36. First-time home buyer program. Adds a new chapter to Minnesota Statutes for the first-time home buyer savings account program. The provisions in sections 37 to 41 are effective the day following final enactment.

Section 37. First time home buyer program.  Establishes definitions for the program, including:

Account holder is the person establishing the account—this need not be the home buyer. For example, a parent could establish an account for a child and take the subtraction for contributions and earnings.

Commissioner is the commissioner of DOR.

Eligible costs are a down payment or closing costs for a single family residence for a qualified beneficiary.

Financial institution includes banks, credit unions, savings banks, and similar institutions, as well as money market mutual funds.

First-time home buyer is someone who does not own a principal residence for the three-year period ending on the earlier of: (1) the purchase of the home funded with the proceeds from the account; or (2) the end of last tax year in which a subtraction was claimed for the account.

First-time home buyer savings account is an account held in a financial institution that is designated by the account holder as a first-time home buyer savings account.

Principal residence has the same meaning used in the capital gain exclusion under the federal income tax (Internal Revenue Code, section 121).

Qualified beneficiary must be: (1) a Minnesota resident; (2) a first-time home buyer; and (3) designated as the beneficiary on the account.

Single-family residence means a single-family residence located in Minnesota that is the first-time home-buyer’s principal residence and may include a manufactured home, trailer, mobile home, condominium unit, townhome, or cooperative.

Section 38. First-time homebuyer program; establishment of accounts. Provides requirements for designation of first-time home buyer savings accounts. Authorizes an individual to establish a first-time home buyer savings account. The individual must designate a beneficiary of the account. No more than one qualified beneficiary may be designated per account, but a married couple qualifies as one qualified beneficiary. Requires the commissioner of revenue to establish a process for account holders to notify the state of the account, account holder or holders, transfers to and from the account, and the designated qualified beneficiary of each account.

Allows an individual to jointly own a first-time home buyer account with another person if the holders of the account file a joint tax return. An individual may have more than one account but may not have multiple accounts that designate the same beneficiary. An individual may be the designated beneficiary on more than one account.

Requires that only cash may be contributed to an account and allows individuals other than the account holder to contribute to the account. There is no limit to the amount of contributions made to or retained in a first-time home buyer account.

Section 39. First-time homebuyer program; account holder responsibilities. Requires the account holder to not use funds in a first-time home buyer savings account to pay administrative expenses, except for a service fee. Requires the account holder to submit to the commissioner a list of transactions and eligible costs for which funds were expended. Allows transfer of funds to another first-time home buyer account at the same or a different financial institution.

Section 40. First-time homebuyer program; financial institutions. States that financial institutions are not required to take action or ensure compliance by account holders or beneficiaries.

Section 41. First-time homebuyer program; subtraction; addition; additional tax. Allows a subtraction for account holders from federal taxable income for purposes of calculating Minnesota taxable income, on interest or dividends earned on the first-time home buyer savings account during the taxable year. The subtraction is allowed only for account holders who deposit funds into a first-time home buyer savings account.

Requires account holders to add back the following to federal taxable income for purposes of calculating Minnesota taxable income:

  • Earnings on amounts withdrawn and not used to pay eligible costs (down payment, closing costs, new construction) or not transferred to another first-time home buyer account; and
  • Any amount remaining in the account after the end of the tenth year after the taxable year the account was established.

A 10% tax is also imposed on the amount required to be added back. The tax is not imposed on withdrawals due to the account holder or beneficiary’s death or disability, wage garnishment, or disbursement of assets under bankruptcy. Effective beginning in tax year 2017.

Section 42. Effective date; angel investment credit. Modifies the effective date for the 2016 extension of the angel investment credit to reflect the extension of the credit in an earlier section.

Section 43. Income tax reciprocity benchmark study and appropriation. Requires the Department of Revenue, in conjunction with the Wisconsin Department of Revenue, to conduct a study to determine the number of residents from each state who earn income from personal services in the other state; and the total amount of income earned by these residents; and the change in tax revenue in each state if a reciprocity agreement were resumed. The Department of Revenue must submit a report to the House and Senate tax committees by March 1, 2019. The study may only be conducted if the Wisconsin Department of Revenue fully participates. Appropriates $300,000 to the commissioner of revenue to conduct the study. The appropriation is also conditioned on Wisconsin’s participation.

Section 44. Repealer. Paragraph (a) repeals the greater Minnesota internship credit. Paragraph (b) repeals the phaseout of the dependent care credit, which is moved to another section.

Article 2

Property Tax

Section 1. Allowed commercial and industrial operations. Allows cell towers to be installed on property within an agricultural preserve in greater Minnesota. Effective the day following final enactment.

Section 2. Assessor accreditation waiver. Extends the deadline for assessors to obtain licensure as an accredited assessor from the State Board of Assessors (SBOA), from July 1, 2019, or within four years of becoming a certified assessor, whichever is later, to July 1, 2022, or within five years of becoming certified. An individual may apply for a waiver if the individual: (1) was first licensed as a certified assessor before July 1, 2004; (2) has had an assessor license since July 1, 2004; (3) has successfully passed an examination substantially equivalent to the requirements by the SBOA for the accredited assessor license before May 1, 2020; and (4) submits an application to the SBOA no later than July 1, 2022. Waivers granted under this section expire on June 30, 2032 and this accreditation waiver authorization expires on July 1, 2032.

Section 3. Apprenticeship training facilities. Modifies the criteria under which township property may qualify for the training facilities exemption by lowering the population threshold to 1,400. (Haverhill Township, Olmsted County). Effective beginning with taxes payable in 2018.

Section 4. Electric generation facility; personal property. Provides an exemption from taxes and payments in lieu of taxes for a new electric generating facility owned by a municipal power agency in or near Owatonna. Effective beginning with taxes payable in 2018.

Section 5. Exemption; certain property owned by an Indian tribe. Provides a temporary property tax exemption for certain Indian-owned property. To qualify for the exemption, the property must be: (1) located in a city of the first class with a population less than 100,000 according to the 2010 federal census; (2) owned by a federally recognized Indian tribe, or its instrumentality, on January 1, 2016, and for the current assessment; and (3) used exclusively as a medical clinic. Effective for taxes payable in 2018 through 2028.

Section 6. Leased seasonal-recreational land. Makes changes to the law affecting the taxation of land leased from governmental units by private entities and used for seasonal-recreational purposes. This section automatically exempts land leased from the state, a county, a city, or a town from taxation, whereas under current law, exemption requires county approval (for land leased from the federal government, the exemption is already automatic). This section also eliminates the requirement that in order to qualify for exemption, the property had to be exempt in 2008 and rented for the same purpose. Effective beginning with assessment year 2018.

Section 7. Real property. Clarifies that the definition of real property subject to property taxation does not apply to general sales and use taxes. Effective for sales and purchases made after the day of final enactment.

Section 8. Restrictions on transfers of specific parts. Allows a county to review a deed conveying a parcel of land for transfer or division for conformity with the county’s land use regulations. Effective the day following final enactment.

Section 9. Manufactured homes; sectional structures. Increases the minimum value for a storage shed, deck, or similar structure on a leased manufactured home site to be considered taxable from $1,000 to $10,000. Effective beginning with assessment year 2018.

Section 10. Class 1c (homestead resort) classification. Extends eligibility for class 1c homestead resort classification to resort properties abutting state trails (currently this classification is limited to resorts abutting public waters). Effective beginning with assessment year 2018.

Section 11. Class 2 (agricultural property). Allows land enrolled in a conservation program administered by a local agency such as a city, town, or water conservation district to qualify as agricultural for property tax purposes, provided that under the program the landowner receives incentive payments equal to at least $50 per acre in return for restrictions placed on the use of the land. A taxpayer must apply to the county assessor and provide a copy of the program requirements, the agreement between the land owner and agency, and a map of the conservation area. This section also broadens the definition of agricultural products to include all products of aquaculture cultured within an aquatic farm. Effective beginning with assessment year 2018.

Section 12. Class 4 (miscellaneous property classification). Allows garage condominiums with separate parcel identification numbers to be classified under class 4bb, which is the classification for single-family residential rental units, with a class rate of one percent (up to $500,000 value). This section also provides a reduced class rate (one percent) for manufactured home park lots whose owner or park manager meets certain continuing education requirements, and further reduces the class rate for property of nonprofit community service organizations that are congressionally chartered veterans’ organizations, i.e. the American Legion and the VFW, from 1.5 percent to 1 percent. The first two provisions are effective beginning with taxes payable in 2019, while the third is effective beginning with taxes payable in 2018.

Section 13. Homestead of disabled veteran or family caregiver. Allows the surviving spouses of disabled veterans dying after December 31, 2011, to qualify for the spousal benefit if the veteran qualified at the time of death or the spouse is receiving dependency and indemnity compensation. This section also eliminates the annual application requirement, but requires notice for eligibility changes and requires annual certification of a veteran’s disability rating.

Section 14. State general levy; amount. Freezes the state general levy for both commercial-industrial property and seasonal-recreational property at the payable 2018 level for taxes payable in 2018 and thereafter, and further reduces the commercial-industrial levy by the amount estimated to be paid by the first $100,000 of each commercial-industrial property.

Section 15. State general levy; commercial-industrial tax capacity.  Provides that the first $100,000 of each parcel of commercial-industrial property is exempt from the state general levy. Effective for taxes payable in 2018 and thereafter.

Section 16. State general levy; apportionment. Eliminates the 95%/5% apportionment of the state general levy between commercial-industrial and seasonal-recreational property, since each levy amount is now stated separately. Effective for taxes payable in 2018 and thereafter.

Section 17. Underserved municipalities distribution. Provides for a distribution of the state general levy paid by properties within a municipality back to the municipality, provided that the municipality: (1) lies within the metropolitan area but outside the transit district area; and (2) has a net fiscal disparities contribution tax capacity in excess of eight percent of the municipality’s total net tax capacity. The distribution is equal to the contribution tax capacity in excess of eight percent times the municipality’s tax rate. The distribution cannot exceed the amount of state general levy paid by properties within the municipality. Effective for taxes payable in 2018 and thereafter.

Sections 18 and 19. Proposed levy certification dates. Changes, from September 15th to September 30th, the date by which towns and special taxing districts must certify their proposed levy to the county auditor, and clarifies that the Metropolitan Council and the Metropolitan Mosquito Control Commission must certify their proposed levy by September 15th. Under current law, school districts, cities and counties must certify their proposed levy by September 30, while towns must submit their proposed levy by September 15th. Effective beginning with proposed levy certifications for taxes payable in 2018.

Sections 20, 24-37, and 40. Tax forfeited land provisions. These sections include provisions related to the management and sale of tax forfeited land.

Section 20 clarifies the marks that may be used as proof of timely mailing.

Section 21. Due dates; penalties. Equalizes the penalties for first- and second-half late payments of property taxes. Effective for taxes payable in 2018 and thereafter.

Section 22. Abatement of penalty. On a onetime basis, allows the county treasurer to abate the penalty for late payment of tax if an envelope is postmarked within one business day of the due date. Effective for taxes payable in 2018 and thereafter.

Section 23. Agricultural properties. Provides the same due date for rural vacant land as for class 2a land. Effective for taxes payable in 2019 and thereafter.

Section 24 allows the county auditor to offer financial literacy counseling as part of an agreement to enter into a confession of judgment.

Section 25 clarifies that the period of redemption for targeted communities.

Sections 26 and 27 allow a county to commence an action to reduce the period of redemption for abandoned or vacant property.

Section 28 provides that a governmental entity is not bound to an agreement to maintain the property with public funds.

Section 29 allows the county auditor to protect and secure a vacant or unoccupied property.

Section 30 allows a county board to sell individual parcels by alternate means, including through a real estate broker.

Sections 31 and 34 allow the county auditor to sell tax-forfeited property through an online auction.

Section 32 broadens the number of prohibited purchasers of tax-forfeited land.

Section 33 authorizes a county to sell property adjacent to public waters with written authorization from the commissioner of natural resources.

Sections 35 and 36 reduce the repurchase period for nonhomestead property.

Section 37 expands the list of forfeited lands the county board may file with the county auditor to include land acquired by a municipal subdivision of the state.

Section 38. Early termination of agricultural preserve. Allows a property’s enrollment in the metropolitan agricultural preserves program to be terminated upon the death of an owner of the property and provides that when an agricultural preserve is terminated under this provision, the property is subject to additional taxes equal to 50 percent of the current year’s taxes. Effective July 1, 2017.

Section 39. Allowed commercial and industrial operations. Allows cell towers to be installed on property within a metropolitan agricultural preserve. Effective the day following final enactment.

Section 40 authorizes evictions after the redemption period expires.

Section 41. 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 $1,500 per year. Effective for taxes payable in 2018 and thereafter.

Section 42. 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 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 compliance with the city of St. Paul with Minnesota Statutes, section 645.021.

Section 43. Repealer. Paragraph (a) repeals a notice requirement for parcels that have not been sold one year before the expiration of the redemption period. Effective the day following final enactment. Paragraph (b) repeals the property tax exemption for agricultural containment facilities. Effective beginning with taxes payable in 2016, provided that nothing shall cause property that the assessor classified as exempt for property taxes payable in 2016 or 2017 to lose its exempt status for taxes payable in those years.

Article 3

Sales and Use Taxes

Section 1. Volunteer fire assistance grant account. Establishes this new account in the special revenue fund to be used for making grants to local fire departments for equipment and training funded with 25 percent of sales tax revenue from the sale of personal fireworks. Effective beginning with deposits in fiscal year 2018.

Sections 2 and 3. Certification of qualified business and available tax incentives; job expansion program exemption. Section 2 modifies the certification requirements to allow a business to qualify for the exemption if it invests at least $200 million over a ten-year period. Effective July 1, 2017. Section 3 increases the maximum annual exemption for a qualifying project from $2,000,000 to $5,000,000 and the maximum total exemption from $10,000,000 to $40,000,000. Effective July 1, 2017.

Sections 4 and 26. Minnesota State High School League funds exemption and transfer. Provides a reference to the exemption in the new subdivision created in a later section. This section requires the Minnesota State High School League (MSHSL) to determine the tax savings attributable to the exemption in a later section and transfer that amount to a nonprofit charitable foundation created to promote high school extracurricular activities. Section 22 exempts tickets and admissions to games, events, and activities sponsored by the MSHSL. Effective for sales and purchases made after June 30, 2017 and before July 1, 2027.

Section 5. Sale and purchase; food sold through vending machines; privilege of admission. Removes food sold through vending machines from the list of taxable food items within the definition of “sale and purchase,” effective for sales and purchases made after June 30, 2017. Specifies that the sale of privilege of admission includes all amenities (e.g., viewing locations; exclusive use of entrances) included in the sales price unless the amenities are separately stated, can be declined by the purchaser, and are not otherwise taxable, effective the day following final enactment.

Sections 6 and 8. Tangible personal property; definition of real property. Removes large and ponderous machinery and equipment from the exclusions in the definition of tangible personal property. Creates a separate definition of real property specific to sales tax that includes improvements and fixtures incorporated into and intended to be of permanent benefit to a building given the present use of the building if they cannot be removed without causing damage to the building, and excludes tools, implements, machinery, and equipment installed into real property for use in a business or production activity that qualify for a sales tax exemption under current law. Effective the day following final enactment.

Section 7. Taxable food sold through vending machines. Amends the definition of “food sold through vending machines” to specify that taxable food sold through vending machines means taxable food, as already defined in statutes, dispensed from a vending machine. Effective for sales and purchases made after June 30, 2017.

Sections 9 to 12. Remittance requirements for marketplace providers and marketplace retailers. 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.”

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.

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.

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.

Sections 13 to 16. Food and food ingredients; exempt meals. Removes food sold through vending machines from the list of items that are taxable under the definition of “food and food ingredients.” Specifies that taxable food sold through vending machines at residential facilities, schools, and in connection with certain government programs or nonprofit organizations is not exempt. Effective for sales and purchases made after June 30, 2017.

Section 17. Precious metal bullion. Provides a sales tax exemption for precious metal bullion. “Precious metal bullion” is defined as bars or rounds that are at least 99.9% gold, silver, or platinum by weight, and are marked for weight, purity, and content. Jewelry, works of art, and scrap metal are not exempt. States that the intent of the provision is to provide similar tax treatment with bullion and other investment instruments. Effective for sales and purchases made after June 30, 2017.

Sections 18 and 19. Suite licenses; stadium builder’s licenses. Exempts suite licenses from sales tax if the use agreement allows the lessee to use the suite on days when there is no amusement or athletic event, the sales price is separately stated and is at least as much as the highest priced general admission ticket for the closest seat not in the suite. Effective for sales and purchases made after June 30, 2017. Exempts stadium builder’s licenses from sales tax effective the day following final enactment.

Section 20. Capital equipment. Makes a technical change in the items excluded from the capital equipment exemption to conform to the expansion of the telecommunications equipment sales tax exemption in a later section. Effective for sales and purchases made after June 30, 2017.

Section 21. Super Bowl admissions and related events. Expands the sales tax exemption for Super Bowl tickets to also exempt tickets and admissions to other Super Bowl-related events sponsored by the NFL or Super Bowl Host Committee, and to sales of nonresidential parking by the NFL to the Super Bowl and related events. Allows the Super Bowl Host Committee to purchase nonresidential parking as a sale for resale. Effective for sales and purchases made after June 30, 2016, and before March 1, 2018.

Section 22. Petroleum products; special fuels. Exempts special fuels used for certain refrigeration units, semi-trailers, and power takeoff units from sales tax. Effective for sales and purchases made after June 30, 2017.

Section 23. Telecommunications machinery and equipment. Adds fiber and conduit to the items eligible under the sales tax exemption for telecommunications equipment. Effective for sales and purchases made after June 30, 2017.

Section 24. Jukebox music. Exempts music in the form of a digital audio work or in tangible form purchased by operators providing the service of making jukeboxes available as amusement devices, if the music is used exclusively for the jukebox. Effective for sales and purchases made after June 30, 2017.

Sections 25 and 27. Sales to nonprofit groups; YMCA and similar memberships. Adds purchases by nonprofit organizations used in the performance of their mission to the current exemption for sales to nonprofit groups. Expands the existing sales tax exemption for the sale of memberships to YMCAs, YWCAs, and JCCs to similar 501(c)(3) organizations. Effective for sales and purchases after June 30, 2017.

Section 28. Fundraising events sponsored by nonprofit groups. Increases the exemption limits for fund-raising events sponsored by nonprofits on events held on leased premises from five days to ten days.  Effective for sales and purchases after June 30, 2017.

Section 29. Ice arenas and rinks. Provides a sales tax exemption for materials used by a nonprofit, 501(c)(3) corporation for the operation of ice rinks or ice arenas that are part of the Duluth Heritage Sports Center. Effective for sales and purchases after June 30, 2017.

Section 30. Building materials; capital projects. Allows the city of Plymouth a sales tax exemption on materials and supplies used in and equipment incorporated into the construction, remodeling, expansion or improvement of an ice arena or other city-owned buildings and facilities. The exemption applies to purchases by contractors, subcontractors, and builders as well as direct purchases by the city. The tax must be paid at the time of purchase and the city must apply for the refund. The total amount of refund that the city may apply for is $2.5 million. Effective retroactively to sales and purchases made after January 1, 2013. Also exempts materials and supplies used in and equipment incorporated into the construction, remodeling, expansion or improvement of a sports facility that has a total construction cost of at least $100 million and begins after July 1, 2016 and before December 31, 2017, effective the day following final enactment and expiring one year after the date of the first major sports game played at the facility.

Section 31. Property destroyed by fire; Madelia. Provides a sales tax exemption for construction materials, equipment, and supplies used to construct or replace property affected by the February 2016 fire in Madelia. The exemption applies to purchases by the property owner or by a contractor, subcontractor, or builder. The tax must be paid at the time the material is purchased and the owner of the property must apply for a refund of the tax. Effective retroactively for purchases made after December 31, 2015, and before July 1, 2018.

Section 32. Properties destroyed by fire; Melrose. Provides a sales tax exemption for construction materials, supplies, and equipment used for construction or replacement of real property destroyed by a fire in the city of Melrose on September 8, 2016. Provides that for the period between September 30, 2016, and before July 1, 2017, the tax must be paid at the time of the purchase and refunded. For purchases after July 1, 2017, the exemption is upfront. Effective retroactively for purchases made after September 30, 2016, and before January 1, 2019.

Section 33. Tax collected. Adds the construction exemptions in earlier sections to the list of exemptions that are handled as refunds. Also clarifies the version of statute that applies to two expired and repealed exemptions.

Section 34. Refund; eligible person. Requires that the owner or developer of a project under sections 31 and 32 must apply for refunds of the tax paid by the contractor, subcontractor, or builder.

Section 35. Application. Requires the contractor, subcontractor, or builder to provide the refund applicant with the information needed to apply for the refund.

Section 36. Appropriation. Provides that for fiscal year 2018 and fiscal year 2019 only, the revenues to the legacy funds will not be reduced for their relative share of the new refunds under this bill.

Section 37. Deposit of revenues. Requires the commissioner of revenue to deposit 25 percent of the estimated sales tax from the sale of personal fireworks in the account created in section 1 and 25 percent of the revenue to the existing fire safety account. Effective for sales and purchases made after December 31, 2017.

Section 38. Use of local tax revenues by cities of the first class. Modifies the definition of “capital project of regional significance” for purposes of use of local sales tax revenues to reflect the new definition of a qualifying sports facility in an earlier section. Effective for sales and purchases made after the day of final enactment.

Section 39. Calculation of the percent of sales tax revenue attributable to the sales of certain fireworks related items. Requires the commissioner of revenue to consult with industry groups and make an estimate by December 31, 2017, of the amount of sales taxes collected in 2016 that were attributable to the sale of personal fireworks. This percentage shall be used to make future dedications under section 37. Effective the day after final enactment.

Section 40. Sales tax exemption for construction materials used by a nonprofit economic development corporation. Provides a sales tax exemption and refund of taxes paid on materials, supplies, and equipment used in construction of a multipurpose retail development owned by a 501(c)(3) nonprofit economic development corporation in the city of Trimont. Effective the day after final enactment, applying to purchases made between January 1, 2013, and January 1, 2017.

Section 41. Certain reimbursements authorized, considered operating or capital expenses. Allows the Minnesota Sports Facility Authority to reimburse the NFL, 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 42. Reimbursements to certain constitutionally dedicated funds for expanded sales tax exemptions. Reimburses the legacy funds from the general fund for the Pay 2018-2019 biennium for revenue losses due to the sales and tobacco tax changes in this bill. Effective the day after final enactment.

Section 43. Severability. Provides that if any provision in sections 9 to 12 are held invalid, other provisions not affected by the invalidity are given effect. Effective the day following final enactment.

Section 44. Effective date. Establishes that the provisions of sections 9 to 12 are effective at the earlier of: (1) the U.S. Supreme Court overturning Quill; (2) July 1, 2019; or (3) congressional authorization for states to impose collection and remittance requirements on remote sellers to the extent allowed by federal law.

Article 4

Property Tax: Aids & Credits

Section 1. Agricultural homestead market value credit calculation. Computes the agricultural homestead market value credit for fractional homesteads on the amount of agricultural credit market value that corresponds to the taxpayer’s fraction of ownership, relative to the total number of owners. Effective for taxes payable in 2019 and thereafter.

Section 2. School building bond agricultural credit. Provides for a property tax credit on all property classified as agricultural, excluding the house, garage, and surrounding one acre of land of an agricultural homestead, equal to 40 percent of the tax on the property attributable to school district bonded debt levies. Provides an open and standing appropriation to pay for the credit. Effective beginning with taxes payable in 2018.

Section 3. Payment; school districts. Provides for state payment of school bond agricultural credit reimbursements to school districts. Effective for taxes payable in 2018 and thereafter.

Section 4. Computation of net property taxes. Includes the new school bond agricultural credit in the list of credits that reduce taxes. Effective for taxes payable in 2018 and thereafter.

Section 5. Notice of proposed property taxes. Provides for the new school bond agricultural credit to be shown on the Truth-in-Taxation statement. Effective for taxes payable in 2018 and thereafter.

Section 6. School district levies; special requirements. Defines which school district levies are considered to be debt service levies. Effective for taxes payable in 2018 and thereafter.

Section 7. Computation of tax rates. Requires the county auditor to compute a school debt tax rate for each school district so that the school bond agricultural credit can be computed. Effective for taxes payable in 2018 and thereafter.

Section 8. Contents of tax statements. Provides for the school bond agricultural credit to be shown on the tax statement. Effective for taxes payable in 2018 and thereafter.

Section 9. Border city allocation. Provides an additional $3 million allocation for border city aid. This amount is allocated among the five qualifying cities (Breckenridge, Dilworth, East Grand Forks, Moorhead, and Ortonville) on a per capita basis. The city could choose whether to use the allocation for tax reductions under the regular border city enterprise zone program or the border city development zone program. Allocations are used to provide tax reductions to businesses in the cities (either new and expanding businesses or existing businesses). The allocations remain available until used.

Section 10. City revenue need. Adds a sparsity adjustment factor to both the medium city revenue need formula and the small city revenue need formula. Medium cities are those with a population between 2,500 and 10,000 while “small cities” have a population of 2,500 or less. This section also modifies the transition provision between the medium and large city formula. The transition range will now be from 10,000 to 11,000 population rather that the current range of 10,000 to 10,500. Effective beginning with aids payable in 2018.

Section 11. Sparsity adjustment. Adds a new sparsity adjustment for medium and small cities equal to $200 per capita for cities with a population density of less than 30 per square mile. Effective beginning with aids payable in 2018.

Section 12. County tax-base equalization aid. Modifies county-tax base equalization aid by modifying the calculation used to determine a county’s tax-base equalization aid factor. Beginning with distributions in 2018, the allocation to a county under tax-base equalization aid shall not be less than: (1) an amount equal to 0.27 percent of the total appropriation available for that year; or (2) 95% of the tax-base equalization aid for the county in the prior year, whichever is greater. Annual allocations to Anoka and Washington Counties to pay postretirement costs of health insurance premiums for court employees is also repealed. Effective with aids payable in 2018 and thereafter.

Section 13. County aid calculations. Requires that data used in calculating county program aid shall be the most recently available data as of January 1 in the year in which the aid is calculated. Effective with aids payable in 2018 and thereafter.

Section 14. Reimbursement of county and tribes for certain out-of-home placement expenses. Establishes a new aid program for counties and tribes for out-of-home placement costs of children under the Indian Child Welfare Act (ICWA). Aid to tribes shall be the greater of: (1) five percent of the average reimbursement amount received from the federal government for out-of-home placement costs for three calendar years; or (2) $200,000. Aids to counties shall be the county’s proportionate share of the appropriation that remains after the aid for tribes has been paid. This section also establishes a process for the commissioner of Human Services to review whether a county is in compliance with ICWA and the Minnesota Indian Family Preservation Act. Any county found substantially out of compliance will be notified and if it does not get into compliance within a year, it will have its aid under this section reduced by 50% annually until it is in compliance. $5,000,000 is annually appropriated to the commissioner of revenue from the general fund to make the aid payments. $390,000 is appropriated annually beginning in fiscal year 2019 to cover costs related to the review process. Effective beginning with aids payable in 2018 and thereafter.

Section 15. City formula aid. Uses certified aid from the previous year as the starting point for calculating a city’s formula aid. A city’s formula aid (aid increase) is equal to a percentage of the difference between a city’s unmet need and its certified aid for the previous year. Effective beginning with aids payable in 2018.

Section 16. City aid distribution. Provides that if a city’s aid from the previous year is less than its unmet need for the current year, its new aid amount will be its certified aid from the previous year plus its formula aid. If a city’s aid in the previous year is equal to or greater than its current unmet need, its new aid amount is the greater of: (1) its current unmet need; or (2) its aid from the previous year minus the lesser of: (a) $10 per capita; or (b) 5 percent of its net levy in the previous year. Effective beginning with aids payable in 2018

Section 17. Payment dates.  Requires that, for aids payable in 2019 only, local government aid shall be paid in three installments: 14.6 percent on June 15, 2019, 35.4 percent on July 20, 2019, and 50 percent on December 26, 2019.  Effective for aids payable in 2019.

Section 18. Aid reduction for operating an unauthorized diversion program. Requires that if a county or city is found by the courts to have operated a diversion program not authorized by law, the county’s CPA or city’s LGA is reduced by the amount of fees that the county or city collected under the program while it was in operation. Allows a taxpayer to challenge the legality of a diversion program in court. Effective beginning with the second half payment of calendar year 2018 aids.

Section 19. LGA; appropriation.  Increases the local government aid appropriation by $15 million for aids payable in 2018 and thereafter.

Section 20. CPA; appropriation. Increases the county program tax-base equalization aid appropriation by $25.5 million for aids payable in 2018 and thereafter.

Section 21. Maximum effort loan aid. Makes payments over a five-year period to school districts that took advantage of the 2016 law allowing the districts to repay the outstanding principal on their maximum effort capital loans to compensate for the interest payments these districts had previously paid to the state. Effective for fiscal years 2018 to 2022.

Section 22. PILT payments. Increases, from $1.50 to $2.00, the payment per acre for county-administered and commissioner-administered natural resource land in the county. Effective for payments made in calendar year 2018 and thereafter.

Section 23. Lake Vermilion-Soudan underground mine park; annual payment. Provides that the appraised value of state-owned land within the Lake Vermilion-Soudan Underground Mine State park shall not be reduced below the 2010 appraised value of the land. Effective beginning with aids payable in 2017, and requires the commissioner of natural resources to recertify the amounts under this section by June 15, 2017.

Sections 24 and 25. Riparian protection aid; appropriation. Establishes an aid program for watershed districts and counties that have assumed jurisdiction for enforcing state riparian buffer requirements. The Board of Water and Soil Resources (BWSR) and the Department of Natural Resources (DNR) must provide certain information to the Department of Revenue (DOR) to use in determining eligibility for and calculating the payments. A formula is provided for calculating the payments based upon the total number of acres of certain agricultural land and the miles of public watercourses and public drainage system ditches. Payments to a county must not be greater than $200,000 or less than $50,000 and only counties assuming jurisdiction for enforcing the buffer requirements (or counties where a watershed district has assumed jurisdiction) are eligible for the payments. Aid that would otherwise go to a county or a portion of a county not assuming jurisdiction for enforcing the buffer requirements goes to BWSR. $6 million is appropriated for payments in calendar year 2017 and $8 million per year in each year thereafter.

Section 26. Base year formula aid for newly incorporated city. Provides that a city that incorporated on October 13, 2015, and that first qualifies for aid in 2017 (city of Rice Lake) will have its formula aid for 2016 equal to $95 times its population. Under current law, a city’s formula aid in the previous year is used to calculate aid for the following payable year. Effective for aids payable in 2018.

Section 27. 2013 city aid penalty forgiveness. Provides an extra $37,473.50 in LGA to the city of Oslo with the July 2017 LGA payment to compensate the city for the loss of one-half of its calendar year 2013 LGA payment, due to the city not filing its 2012 financial reports in a timely fashion. $37,473.50 is appropriated from the general fund to make this payment. Effective the day after final enactment.

Section 28. 2014 city aid penalty forgiveness. Forgives penalties to the cities of Dundee, Jeffers, and Woodstock who lost all or part of their calendar year 2014 LGA payment as a penalty for not filing calendar year 2013 financial reports with the state auditor in a timely fashion. The penalty is only forgiven if the city has filed both its calendar year 2013 and 2014 financial statements with the auditor by June 1, 2015. The restored aid will be paid with the July 2017 LGA payment and the $101,570 needed to make the payments is appropriated from the general fund. Effective the day after final enactment.

Section 29. Taylors Falls border city development zone. Authorizes the city of Taylors Falls to exercise border city development powers and allocates $50,000 for state tax reductions in the zones. The allocation to border cities along the North Dakota and South Dakota borders will be reduced by the amount for Taylors Falls. Effective July 1, 2017 without local approval.

Section 30. Report on rent constituting property taxes. Requires the commissioner of revenue to study and issue a report on the percentage of rent constituting property taxes used in determining the renter property tax refund. The report must include estimates for the cities of Minneapolis and St. Paul, and Anoka, Dakota, Hennepin and Ramsey counties. The report is due by March 1, 2018.

Section 31. Appropriation; Melrose fire remediation. Appropriates $1,296,458 to the city of Melrose, and $95,800 to Stearns County for grants to remediate the effects of fires in the city of Melrose on September 8, 2016. Grants must be used for remediation costs, including disaster recovery, infrastructure, reimbursement for emergency personnel and equipment costs, and reimbursement for property tax abatements. $1,392,258 in fiscal year 2018 is appropriated from the general fund to the commissioner of public safety to make the grant payments.

Section 32. Appropriation. Appropriates $600,000 in fiscal year 2018 and $600,000 in fiscal year 2019 from the general fund to the commissioner of revenue for a grant to Wadena County. Effective July 1, 2017.

Section 33. Repealer. Repeals the Lewis and Clark Joint Powers Board effective the day following final enactment, and certain county transition aid, effective beginning with aids payable in 2018.

Article 5

Local Option Sales and Use Taxes

Sections 1 and 2. Duluth food and beverage and lodging taxing area modification. 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. Effective the day after the city files its local approval with the Secretary of State.

Sections 3 to 5. Mankato local option sales tax modification. Allows Mankato to extend its 0.5% sales tax for different projects as approved by the voters at the November 2016 general election. The tax may be used to raise $47 million 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.

Requires the tax to expire at the earlier of December 31, 2038, or when revenues are sufficient to fund the current projects. Allows Mankato to issue an additional $47 million in bonds for the projects. Effective the day after each city files its local approval with the Secretary of State.

Sections 6 and 7. Hermantown local option sales tax modification. Allows the city to use revenues from its 1% local option sales tax to fund debt service payments for construction of a regional wellness center, as approved by the voters at the November 2016 general election.  As proposed to be amended, the tax would terminate at the earlier of December 31, 2036, or when the city council determines that sufficient funds have been received to fund bonding costs, including interest. Effective the day after the city files its approval with the Secretary of State.

Sections 8 to 10. New Ulm local option sales tax modification. Modifies the current New Ulm 0.5% local sales tax by authorizing new uses for the tax revenues and authorizing additional bonding authority, as approved by the voters in the November 2016 election, for the following projects:

  • construction of an indoor water park and safety improvements to the existing pool;
  • construction of an indoor playground, wellness center, and gymnastics facility;
  • construction of a winter multipurpose dome;
  • improvements to the Johnson Park Grandstand; and
  • improvements to the entrance road and parking and Hermann Heights Park.

Authorizes an additional $14.8 million in bonding for these projects. The local sales tax terminates when the city council determines that sufficient funds have been raised from the taxes to finance capital and administrative costs of the facilities and improvements. Effective the day after the city files its approval with the Secretary of State.

Sections 11 and 28. Proctor local option sales tax modification; validation of prior act. Allows the city of Proctor to increase the rate of its .0.5% existing local sales tax by an additional 1.5 percent, if approved by the voters in the first general election after the bill is enacted. The revenue from the increased tax would pay for the $10 million in improvements to public utilities, sidewalks, bike paths and trails, and park and recreation facilities authorized in 2008 and 2010 special laws. Effective the day after the city files its approval with the Secretary of State. Authorizes the city to approve the extension of the existing sales tax and new uses for the sales tax revenue authorized in the 2008 and 2010 special laws, based on the voter approval at the 2010 general election and the filing of local approval with the Secretary of State before January 1, 2015.

Sections 12 and 13. Albert Lea local option sales tax modification. Modifies the existing Albert Lea 0.5% local sales tax to direct revenues to pay for “water quality improvements” in the Shell Rock River watershed district instead of “lake improvements” as under current law. The bill also strikes language stating that the city is not required to review intended uses of the tax revenues and the district is not required to submit proposed budgets, statements or invoices explaining the intended uses as a prerequisite to receive the revenues. Instead, the bill requires the district to appear before the city on a biannual basis to report its activities, expenditures, and intended uses of the sales tax revenue. Extends the duration of the tax from 15 to 30 years and increases the bonding authority for the authorized projects from $15 million to $30 million. Effective the day after the city files its local approval with the Secretary of State.

Sections 14 to 16. Worthington local option sales tax modification. Modifies the Worthington 0.5% local sales tax authorization to allow bonding for up to $7.3 million and the revenues to be used for construction of public athletic facilities, subject to approval in a reverse referendum. Effective the day after the city files its approval with the Secretary of State.

Section 17. City of North Mankato local options sales tax modification. Allows the city to extend its existing sales tax to raise up to an additional $9 million in addition to the currently authorized projects the city may use the additional money to fund construction of indoor athletic facilities. The existing projects include an interchange, trails, a library, riverfront development, and lake improvement projects. The city may issue an additional $9 million in bonds to fund the authorized projects without an additional vote.

The tax is extended to the earlier of December 31, 2038, or when revenues are sufficient to fund the total $15 million (additional $9 million) of projects plus associated bond costs. Currently the tax expires when revenues are sufficient to fund the current $6 million and associated bond costs.

Section 18. East Grand Forks local option sales tax authorization. Authorizes the city of East Grand Forks to impose up to a 1% 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. Effective the day after the city files its approval with the Secretary of State.

Section 19. Fairmont local option sales tax authorization. Authorizes the city of Fairmont to impose a 0.5% local sales tax, as approved by the voters in the November 2016 election, to finance capital and administrative costs of constructing and funding recreational amenities, trails, and a community center. The city may bond for up to $15 million for the projects. The tax terminates at the earlier of 25 years or when the city council determines that sufficient funds have been raised from the taxes to pay the bonds issuance, including interest. Effective the day after the city files its approval with the Secretary of State.

Section 20. Fergus Falls local option sales tax authorization. Authorizes the city of Fergus Falls to impose a 0.5% local sales tax, as approved by the voters in the November 2016 election, to finance costs of expansion and betterment of the Fergus Falls Public Library. The city may bond for up to $9.8 million for the projects, plus bond issuance costs. The tax terminates at the earlier of 12 years or when the city council determines that sufficient funds have been raised from the taxes to pay the bond issuance, including interest. Effective the day after the city files its approval with the Secretary of State.

Section 21. Moose Lake local option sales tax authorization. Authorizes the city of Moose Lake to impose a local option sales tax of up to 0.5%, as approved by the voters at the November 2012 election. Revenues must be used to finance the costs of improvements to the city’s park system, street and related infrastructure improvements, and municipal arena improvements. Authorizes the city to bond for up to $3 million for the improvements. The tax terminates at the earlier of 20 years after the tax is first imposed, or when the city council determines that a sufficient amount has been raised to pay the bond costs plus interest. Effective the day after the city files its approval with the Secretary of State.

Section 22. New London local option sales tax authorization. Authorizes the city of New London to impose by ordinance a local sales tax up to 0.5% to finance capital and administrative costs for construction and equipping of a new library and community room and an ambulance bay at the fire hall, and improvements to the New London Senior Citizen Center. The tax was approved by the voters in the November 2016 election. Revenues from the tax may not exceed $872,000 plus finance and debt service costs. The tax terminates 20 years after it is first imposed, or when the city council determines that the amount sufficient to pay the capital and bond costs have been raised. Effective the day after the city files its approval with the Secretary of State.

Section 23. Sleepy Eye lodging tax authorization. Authorizes Sleepy Eye to impose a lodging tax up to 2%. Under current law, local jurisdictions may impose, without legislative approval, up to a 3% tax on lodging gross receipts, 95% of which must be used to fund tourism promotion in the city. The bill provides that the total tax that may be imposed under current authority and the authorization in the bill must not exceed 5% and that revenues from the tax imposed under this section must be used for the same purposes as revenues from the taxes imposed under general law authority. Effective the day after the city files its approval with the Secretary of State.

Section 24. Spicer local option sales tax authorization. Authorizes the city of Spicer to impose a 0.5% local sales tax, as approved by the voters in the November 2016 election, to finance capital and administrative costs for pedestrian public safety, park and trail, and regional community facility improvements. The city may bond for up to $800,000 for the projects, plus bond issuance costs. The tax terminates at the earlier of ten years after the tax was first imposed, December 31, 2027, or when the city council determines sufficient revenues have been raised to pay the bond costs, including interest. Effective the day after the city files its approval with the Secretary of State.

Section 25. Walker local sales tax authorization. Allows the city of Walker to impose a local sales tax of up to 1.5 percent to fund a number of projects outlined in its 2012 capital improvement plan. The voters approved this at the 2012 general election. The city would be authorized to bond for up to $20 million for the projects without an additional vote. The tax would expire at the earlier of 20 years or when revenues are sufficient to pay off the bonds. Effective the day after the city files its approval with the Secretary of State.

Section 26. Clay County local option sales tax authorization. Authorizes Clay County to impose up to a 0.5% percent sales tax to finance capital and administrative costs of constructing and equipping a new correctional facility, law enforcement center, and related parking facility. The voters approved the tax at the November 2016 general election. Allows the city to bond for up to $52 million for the projects without additional approval. The tax expires at the earlier of 20 years after the date of initial imposition or when the city council determines that $52 million, plus associated bond costs, has been received from the tax revenues. Effective the day after the city files its approval with the Secretary of State.

Section 27. Garrison, Kathio, West Mille Lacs Lake Sanitary District; sales tax authorized. Allows the Garrison, Kathio, West Mille Lacs Lake Sanitary District to impose a local sales tax of up to one percent to raise up to $10 million to repay bonds and pay for maintenance and improvements of the waste water system. The tax was approved by local voters at the 2016 general election. Allows the district to issue bonds up to $10 million minus the amount of bonds that the sales tax revenue is already committed to pay. If imposed, the tax expires at the earlier of 20 years or when $10 million has been raised. Effective the day after the district files its approval with the Secretary of State.

Article 6

Tax Increment Financing

Section 1. Economic development districts. Modifies the definition of economic development TIF districts to authorize the alternative findings for workforce housing projects. Effective for districts for which the request for certification is made after June 30, 2017.

Section 2. TIF plan approval; workforce housing projects. Specifies the findings that a city must make to approve an economic development TIF district for workforce housing: (1) the city is located outside the seven-county, Twin Cities metropolitan area; (2) the average vacancy rate for rental housing in the city or any other city within 15 miles is 3 percent or less for at least the last two years; (3) a business in the city or within 15 miles of the city that employs 20 or more full-time equivalent employees has provided a written statement that the lack of available rental housing has made it difficult to hire employees; and (4) the city intends to use increments to develop workforce housing. The county auditor may not certify the original tax capacity for an economic development district for a workforce housing project if the request is made after June 30, 2027. Effective for districts for which the request for certification is made after June 30, 2017.

Section 3. Economic development district. Allows increments from an economic development district to be spent for workforce housing projects, and requires approval, by resolution, from the governing bodies of the county and school district following receipt, review, and discussion of the tax increment financing plan. Effective for districts for which the request for certification is made after June 30, 2017.

Section 4. Housing districts; income limits. Allows the higher income limits under the Minnesota Housing Finance Agency (MHFA) challenge program to be used for housing TIF districts, if the project receives an MHFA grant from the program. Effective for districts for which the request for certification is made after June 30, 2017.

Section 5. Definitions; five-year rule. Modifies the definition of tax increment that is subject to the 5-year rule and the pooling rule to exclude increments that are repaid by developers. Effective the day following final enactment.

Section 6. Expenditures outside district; pooling.  Clarifies that the percentage pooling rules only apply to increment derived from properties located in the TIF district. Effective the day following final enactment.

Section 7. Five-year rule; increments. Clarifies that that five-year rule applies to revenues derived from increment paid by properties in the district. Effective the day following final enactment.

Section 8. Interfund loans. Makes several changes to the interfund loan provisions, including: (1) allowing loans to be made up to 60 days after the money has been transferred or spent; (2) authorizes the passage of a resolution authorizing the loan before the TIF plan is approved; (3) authorizes the development authority to rewrite the loans terms after the loan has been made if done before the district is decertified; and (4) requires an annual report on the amount of interfund loans made and any amendment of an interfund loan. Effective the day following final enactment and applies to all districts, regardless of when the request for certification was made.

Section 9. Burnsville TIF. Modifies special law authorized in 2008 that allowed the city of Burnsville to establish tax increment financing districts to develop the Northwest Quadrant area. This section allows the city two additional years to establish districts pursuant to this authorization, and allows the city to establish economic development districts in addition to redevelopment, renewal and renovation and soils districts. Lastly, the four-year knockdown rule is extended to nine years. Effective upon compliance by the city of Burnsville with approval and filing requirements.

Section 10. Seaway Port Authority; Duluth. Modifies special law authorized in 2009 by adding four additional parcels to the area in which the district can be created and authorizes the use of interfund loans prior to approval of the TIF plan. Effective upon compliance by the city of Duluth with approval and filing requirements.

Section 11. Edina TIF. Modifies a 2014 special law authorization for the city of Edina to allow the city until December 31, 2019 to certify districts. Effective upon compliance with the city of Edina with approval and filing requirements.

Section 12. Maple Grove TIF. Modifies special law authorized in 2014 that allows the city of Maple Grove to establish districts to develop a gravel pit. This section allows the city to designate all or a portion of the defined project area and to include all of a parcel if part is outside the area. In addition, the city may use money from soil deficiency districts for land acquisition and infrastructure outside of the district if it is for a development that does not include retail or housing development and the city has a binding, written commitment and adequate financial assurances from the developer that the development will occur. Effective upon compliance by the city of Maple Grove with approval and filing requirements.

Section 13. Anoka TIF.  Extends the five-year rule to eight years for the city of Anoka’s Greens of Anoka redevelopment district.  Effective upon compliance by the city of Anoka with approval and filing requirements.

Section 14. Coon Rapids TIF. Provides a five-year duration extension for TIF District 6-1 (Port Riverwalk) in the city of Coon Rapids. Effective upon compliance by the city of Coon Rapids, Anoka County, and Independent School District No. 11 with approval and filing requirements.

Section 15. Cottage Grove TIF. Extends the five-year rule for TIF District No. 1-12 (Gateway North) in the city of Cottage Grove to allow expenditures until January 1, 2017. Effective upon compliance with the city of Cottage Grove with approval and filing requirements.

Section 16. Edina TIF. Provides that the city of Edina must have filed a certificate of approval of a 2014 special law authorization with the secretary of state by December 31, 2016, and if so filed, the special law is deemed approved and all actions taken by the city before the effective date are deemed consistent with the authorization.  Effective the day following final enactment without local approval.

Section 17. Moorhead TIF. Extends the five-year rule to eight years for the city of Moorhead’s 1st Avenue North (Central Corridors) redevelopment district.  Effective upon compliance by the city of Moorhead with approval and filing requirements.

Section 18. Richfield TIF. Provides a ten-year duration extension for the Cedar Avenue tax increment financing district in the city of Richfield. Effective upon compliance by the city of Richfield, Hennepin County, and Independent School District No. 280 with approval and filing requirements.

Section 19. Richfield TIF. Extends the five-year rule to seven years for the city of Richfield’s Lyndale Gardens tax increment financing district. Effective upon compliance by the city of Richfield with approval and filing requirements.

Section 20. South St. Paul; TIF. Authorizes the Economic Development Authority of the city of South St. Paul to retroactively approve an interfund loan agreement for the 4th Avenue Village Tax Increment Financing District for purposes of Minnesota Statutes, section 469.178, subdivision 7. To do so, the EDA must act by August 1, 2017. Effective without local approval.

Section 21. St. Louis Park TIF. Increases the permitted pooling percentage for the city of St. Louis Park’s Elmwood Village tax increment financing district from 25 to 30 percent. Effective upon compliance by the city of St. Louis Park with approval and filing requirements.

Section 22. St. Paul TIF. Allows the city of St. Paul to waive increment for up to four years for the tax increment financing district the city created at the Ford Motor Company plant site. If the city elects to waive the increment under this section, the district’s certification is deemed to be January 2 of the assessment year for the first year increment is received. Effective July 1, 2017 without local approval.

Section 23. Washington County; Newport TIF. Authorizes Washington County to establish TIF districts in the city of Newport. The following special rules apply: (1) several parcels are deemed to meet the “blight test” required under current law to establish redevelopment districts; (2) increment spent outside the district must be spent on blight correction within the project area; (3) pooling percentage limits are increased from 25% to 30%; and (4) the five-year rule is extended to nine  years. The authority to establish districts under this authorization expires on December 31, 2027. Effective upon approval by the city of Newport and Washington County with approval and filing requirements, and shall retroactively include a redevelopment district already approved.

Section 24. Wayzata TIF. Exempts TIF #3 (Widsten) in the city of Wayzata from the five-year rule to allow the city to use increment from district for a municipal parking ramp. This district is a redevelopment district was certified in 1996, so the five-year ended in 2001. Effective upon compliance by the city of Wayzata with approval and filing requirements.

Article 7

Public Finance

Section 1. Town certificates of indebtedness for Freon replacement. Allows towns to issue 20-year certificates of indebtedness for projects to eliminate R-22 (Freon-based refrigerant).

Section 2. Hennepin County capital notes for Freon replacement. Allows Hennepin County to issue 20-year capital notes for projects to eliminate R-22 (Freon-based refrigerant).

Section 3. Home rule charter city capital notes for Freon replacement. Allows home rule charter cities to issue 20-year capital notes for projects to eliminate R-22 (Freon-based refrigerant).

Section 4. Statutory city capital notes for Freon replacement. Allows statutory cities to issue 20-year capital notes for projects to eliminate R-22 (Freon-based refrigerant).

Section 5. Maximum limit on HRA GO bonds.  Increases the maximum dollar limit on HRA general obligation bonds from $3 million to $5 million.

Section 6. Publication requirement; districts created by EDAs. Allows an EDA to publish hearing notices for creating economic development districts in any general circulation newspaper, not just “daily” newspapers.

Section 7. Metropolitan council transit bonding. Authorizes the metropolitan council to issue up to $126 million in additional bonds to finance its transit capital improvement plan. An $82.1 million limit applies to the amount that may be issued in state fiscal year 2018 and the balance may be issued after July 1, 2018.

Section 8. Metropolitan council spending of bond proceeds for LRT. Prohibits the metropolitan council transit from spending proceeds of its general obligation bonds to finance a new LRT line, an extension of an existing LRT line, or provision of additional stops on an LRT line. Effective the day final enactment, but spending under binding contracts entered before March 25, 2017, is permitted.

Section 9. Street reconstruction bonds.  Eliminates the requirement that street reconstruction bonds be approved by unanimous vote of the governing body in favor of a two-thirds majority approval.

Section 10. Waiver of public sale requirement. Modifies the conditions to qualify for an exemption from public sale (i.e., competitive bidding) of bonds so that the municipality is required to retain an independent “municipal” advisor, rather than a “financial” advisor.

Article 8

Tax Administration

Section 1. Timely mailing of tax court filing; no postmark. Allows proof of timely mailing by affidavit of the taxpayer or counsel that the notice of appeal, proof of service, and filing fee were timely mailed when the materials are delivered by U.S. Mail but no postmark is applied. Effective date: Notices mailed after June 30, 2017.

Section 2. Tax court filings. Authorizes the tax court to provide for the manner of filing of notices, documents, and so forth. This will allow the court to require electronic filing. Effective date: Notices mailed after June 30, 2017.

Section 3. Post-trial motions; time to file. Extends the time to file motions for rehearing, amended filings, and similar from 15 days to 30 days. Effective date: Petitions and appeals filed after June 30, 2017.

Section 4. Tax court; conflict of interest. Drops employees of the tax court from the one-year ban on representing clients before the court after they leave the court’s employment and eliminate representing clients before DOR altogether (i.e., a judge who leaves the court would not be banned from representing a client before DOR for the one-year period). Effective date: Day following final enactment.

Article 9

Tobacco Taxes

Sections 1, 4, and 6. Premium cigar. Section 1 eliminates the hand-rolled requirement under the definition of “premium cigar”. Sections 4 and 6 reduce the maximum tax for those cigars from $3.50 to $0.50. Effective July 1, 2017.

Sections 2 and 7. Rates; cigarettes. Section 2 freezes the cigarette excise tax at the current rate of $3.04 per pack. Section 6 repeals the annual inflation adjustment on the cigarette excise tax. Effective July 1, 2017.

Sections 3 and 5. Rates; tobacco products. Modifies the tax for moist snuff so that it applies to each 1.2 ounce container or amount, if the moist snuff is sold in a container holding more than 1.2 ounces. Effective July 1, 2017.

Article 10

Sustainable Forest Incentive Act Modifications

Section 1. Purpose. Adds to the purposes provision of the Sustainable Forest Incentive Act (SFIA) to emphasize economic and ecological benefits. Effective the day following final enactment.

Section 2. Application. Extends the applicability of the definitions to include all of the sections in the SFIA chapter. Effective the day following final enactment.

Section 3. Claimant definition. Deletes a provision requiring a buyer of enrolled land to notify the commissioner of the sale. Changes the date by which certain claimants must provide written notice to the commissioner of revenue. Effective for certifications and applications dues in 2018 and thereafter.

Section 4. Forest land. Removes the prohibition on land exceeding 60,000 acres that is subject to a single conservation easement from participation in the program and allows land with a paved trail under an easement, lease, or license to the state to qualify as forest land. Effective for applications made in 2018 and thereafter, except the repeal of the prohibition on certain eligible land shall be effective retroactively for payments due to be made in 2014.

Section 5. Eligibility requirements. Adds eligibility requirements related to nonmotorized access, plan registration, property classification restrictions, exclusions, and restrictions on eligibility based on enrollment in certain federal or state programs, certain agricultural land, or land subject to agricultural controls or the Metropolitan Agricultural Preserves Act. Effective for certifications and applications dues in 2018 and thereafter.

Section 6. Applications. Adds application requirements regarding registration numbers, covenant termination, recording of eligible areas, and notifications between the commissioners of revenue and natural resources. Effective for certifications and applications dues in 2018 and thereafter.

Section 7. Annual certification and monitoring. Provides that the claimant under SFIA is the current property owner and requires the current owner to report each year on management practices. Requires the commissioner of natural resources to monitor certain claimants. The monitoring requirement is effective July 1, 2019.

Section 8. Length of covenant. Provides for different covenants with durations of eight, 20, or 50 years. Effective for certifications and applications dues in 2018 and thereafter.

Section 9. Calculation of incentive payment. Provides that the annual payment for land enrolled in the program equals a percentage of the property tax that would be paid on the land determined by using the previous year’s statewide average total tax for all taxes levied within townships or unorganized territories, the estimated market value per acre, and a class rate of one percent. Allows an additional payment for claimants required to allow public access. Effective for calculations made in 2018 and thereafter.

Section 10. Annual incentive payment. Provides that the commissioner of natural resources will certify the annual payment to each claimant to the commissioner of revenue. Effective for certifications and applications dues in 2018 and thereafter.

Section 11. Withdrawal procedures. Allows for early withdrawal from SFIA when a government or nonprofit entity acquires a conservation easement on the property, or when the land is subject to a fee or easement acquisition, or lease to the state for the purpose of a paved trail. Effective the day following final enactment / for notifications made in 2018 and thereafter.

Section 12. Transfer of ownership. Requires notice to the new owner of lands enrolled in the SFIA. If the new owner does not submit a new forest management plan within two years of the transfer, the commissioner of natural resources will terminate enrollment in SFIA. Effective for transfers of ownership after June 30, 2017.

Section 13. Penalties for removal. Clarifies that the penalties apply to the current owner of enrolled land and bases the penalty amounts on the value of the land. For land removed due to the construction of a building, the penalty is 25 percent of the market value of the property with the structure, plus certain payment amounts based on the length of the covenant. For land removed due to changes in the use of the land, the penalty is 30 percent of the market value of the property based on the new use, plus certain payment amounts based on the length of the covenant. Effective for certifications and applications dues in 2018 and thereafter.

Section 14. Determination of appeal. Requires the commissioner of revenue to consult with the commissioner of natural resources on appeals relating to forestry and nonforestry use of land and forest management plans. Effective the day following final enactment.

Section 15. SFIA transition provision. Allows current owners of enrolled lands to change the length of their covenant and delay compliance with the new provisions until 2019. Effective the day following final enactment.

Section 16. Administrative appropriation. Appropriates funds in fiscal year 2018 and 2018 to administer this act, and further provides an ongoing appropriation of $312,000 to the Department of Natural Resources. Effective the day following final enactment.

Section 17. Repealer. Repeals obsolete definitions and provisions related to calculating the current use value and estimated market value. Effective the day following final enactment.

Article 11

Miscellaneous

Section 1. Budget transfer. Adds a transfer from the general fund to the clean water fund if revenues are available after the budget forecast.

Section 2. Tax, how payable; receipts. Requires the commissioner of revenue to calculate and distribute each county’s share of the mortgage registry tax on multiple county mortgages. Effective for taxes collected after June 30, 2017.

Section 3. Provider tax exemptions. Exempts supplemental or enhanced payments made through intergovernmental transfers from gross revenues subject to the provider tax. Effective retroactively for gross revenues received on or after July 1, 2016.

Sections 4, 6, 7, 9, 10, 11, 12, and 22 (part). Gasoline used as a substitute for aviation gasoline. Make the following changes:

  • Modifies the definition of aviation gasoline to mean any gasoline used to produce or generate power for propelling internal combustion engine aircraft that is either sold to a dealer of aviation gasoline for dispensing directly into the fuel tank of an aircraft, or that is invoiced and billed by specified entities that meet certain ASTM specifications.
  • Defines “dealer of aviation gasoline”.
  • Exempts from the fuel excise tax gasoline purchased by a dealer of aviation gasoline intended to be dispensed directly into the fuel tank of an aircraft.
  • 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 aviation gasoline. 
  • Requires a person who buys gasoline from a dealer of 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.
  • Adds taxpayers who have paid aviation tax on aviation gasoline and airflight property tax, or is an aerial applicator, to the eligible claimants for refunds on a graduated basis. 
  • Repeals a subpart of Minnesota Rules that describes who may claim refunds for gasoline used as a substitute for aviation gasoline, effective the day following final enactment. All other provisions are effective for sales and purchases made after June 30, 2017.

Sections 5 and 8. Compressed natural gas rate modification. Aligns the defined energy content of compressed natural gas (CNG) with the industry standard of 900 BTUs per cubic foot (current law is at 1000 BTUs per cubic foot). Also changes the conversion factor used to calculate fuel tax on CNG from 114.9 cubic feet of CNG for every one gallon of gasoline, to 126.67 cubic feet, which is the standard under the International Fuel Tax Agreement.  This changes the effective fuel tax rate on CNG from $2.174 to $1.974 per thousand cubic feet. Effective for sales and purchases made after June 30, 2017.

Section 13. Small winery credit. Authorizes a credit for qualified wineries, defined as wineries in any state manufacturing fewer than 75,000 gallons of wine and cider annually. The credit is equal to the excise taxes due on wine and cider, for wine and cider sold in the fiscal year beginning July 1, up to $136,275. Effective January 1, 2018.

Section 14. Rate; solid waste management tax. Provides that the commissioner of revenue after consultation with the commissioner of the Pollution Control Agency, shall determine, and may publish by notice, a conversion schedule for construction debris. Effective for sales and purchases made after June 30, 2017.

Section 15. Taconite economic development fund. Adds concurrent reclamation to the list of allowable uses for taconite economic development funds. Effective the day following final enactment.

Section 16. No Metropolitan Council spending for Zip Rail. Prohibits the Metropolitan Council from spending public money (other than voluntary private contributions) on the Zip Rail project. Effective the day following final enactment.

Section 17. 2010 production tax allocation.  Modifies a 2010 one-time production tax allocation to the city of Cook by reducing the period by which if the city sells or otherwise disposes of land purchased with the production tax allocation the city must transfer a portion to the commissioner of IRRRB for deposit into the taconite environmental protection fund. Effective the day following final enactment.

Section 18. Clarification. Clarifies that money in an account funded by a repealed 2007 distribution of the production tax may be spent as previously authorized and that the funds in the account do not lapse or cancel. Effective retroactively to May 22, 2016.

Section 19. Special closing times; Super Bowl. Authorizes local licensing jurisdictions to issue special permits for service of alcohol for extended hours from February 2 to February 5, 2018. Only holders of an existing on-sale liquor license are eligible to receive a permit. Authorizes local jurisdictions to charge a permit fee of up to $250 and to limit permit approval to certain conditions. Effective the day following final enactment.

Section 20. Appropriation cancellation. Cancels a 2014 appropriation made to the commissioner of Iron Range Resources and Rehabilitation for a project in the city of Hoyt Lakes and returns the funds to the Minnesota 21st century fund.

Section 21. Appropriations. Appropriates $2,500,000 in fiscal year 2018 and $2,500,000 in fiscal year 2019 from the general fund to the commissioner of revenue to administer this act.

Section 22. Health Care Access Fund Transfer. Requires the commissioner of management and budget to transfer $7,200,000 from the general fund to the health care access fund on July 1, 2019.

Article 12: Department of Revenue

2015-2016 Policy and Technical: Income, Corporate Franchise and Estate Taxes

Section 1. Information included on income tax returns. Strikes obsolete references to telefiling of individual income tax returns. 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 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 corporate, partnership, and fiduciary returns. Effective for tax year 2017.

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, 2016. 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 W-2 statements and reconciliations required to be submitted to the commissioner after December 31, 2017.

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 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, 2017.

Section 5. Annual withholding returns. Sets the threshold to file an annual withholding returns at $500, eliminates the indexing of the threshold, and authorizes the commissioner to allow newly eligible employers to file 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, 2016.

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, 2016.

Section 7. Partnership assessments. Provides that assessments made on partnerships under the provisions of section 8 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. 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 10. 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 11. 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 12. Partnership assessments. Makes a conforming change to be consistent with changes in section 8.

Section 13. Landlord submission of certificates of rent paid to commissioner. Authorizes the commissioner to require owners or managing agents of residential rental property to submit certificates of rent paid (CRP) to renters, 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, 2016, 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 14. 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 15. Repealer. Repeals: Minnesota Rules, part 8092.1400, (annual withholding returns) to eliminate any inconsistencies with the provisions of sections 2 and 9. Effective for tax year 2017, except that notifications from DOR to employers regarding eligibility to file an annual return for taxes withheld in calendar year 2017 remain in force. Minnesota Rules, part 8092.2000, which unnecessarily duplicates statutory law and contains obsolete references to DOR forms. This rule sets 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 of Revenue

2015-2016 Policy and Technical Provisions: Special Taxes and Sales and Use 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. Extends the longer statute of limitations (6.5 years versus 3.5 years) for DOR to assess tax for omissions of 25 percent or more to MinnesotaCare taxes. Present law applies this similar authority to sales and use, withholding, income, and estate taxes. Effective the day following final enactment.

Section 3. Exemptions. Replaces the term “town and farmers’ mutual insurance companies” with “township mutual insurance companies.” 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, 2017.

Section 5. Petroleum tax; bulk storage or bulk storage facility definition. Defines bulk storage or bulk storage facility for purposes of 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. 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. Effective for sales and purchases made after December 31, 2017.

Section 10. 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. Effective the day following final enactment.

Section 11. Untaxed gambling product. Provides authority to tax all forms of gambling that are illegal under 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 the returns may not be used in criminal proceedings unless independently obtained. Effective for games played or purchased after June 30, 2017.

Section 12. Solid waste management tax; recyclable materials and source-separated compostable materials. Clarifies that the exemption from the solid waste management tax for recycling materials only applies 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 sourceseparated compostable materials, consistent with terms used in chapter 115A and related rules. Effective the day following final enactment.

Section 13. Insurance premiums tax; township mutual insurance companies. Replaces the term “town and farmers’ mutual insurance companies” with “township mutual insurance companies.” Effective the day following final enactment.

Section 14. Firefighter relief surcharge payments. Modifies the definition of “commissioner” to reflect 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 15. Firefighter relief surcharge payments appropriation. Changes the appropriation for firefighter relief surcharge payments 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 16. Occupation tax net operating loss. 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 of Revenue

2015-2016 Policy and Technical Provisions: Property Tax

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:  include airline companies making 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 5; 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 6. 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 2018 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 2018 and thereafter.

Section 5. Definition of intermittent or irregularly timed flights. Defines “intermittent or irregularly timed flights” as 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 2. Effective for assessment year 2018 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 3 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 2018 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, and adds a cross-reference to the definition of “electronic signature.” 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 airlines. Provides 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 2018 and thereafter.

Section 9. State Board of Equalization (board) reassessment orders. Authorizes 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 2018 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 2018 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 2018 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. Effective for reports filed in 2018 and thereafter.

Section 14. 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 2018 and thereafter

Section 15. Division of duties between local and county assessor. Requires local assessors to enter construction and valuation data into the records as directed by the county auditor.

Section 16. Valuation notice compliance. Provides that if an 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 2018 and thereafter

Section 17. Blind/disabled homestead classification. Clarifies that the market value of class 1b blind or disabled homestead property over $50,000 is classified as either class 1a or 2a property depending upon the use of the property. Effective for assessment year 2018 and thereafter

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. State assessed property tax appeals. Provides that utility and railroad company tax court appeals of commissioner orders must be filed within 60 days from the date of the order or 90 days if an extension is granted. Also provides that in the case of a conflict between the provisions of this section and chapter 278 (district or tax court), this section prevails. Effective for assessment year 2018.

Section 21. 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 or district court.

Section 22. Settlement of appeals. Authorizes the commissioner to settle utility and railroad valuation appeals when it is in the best interest of the state to do so. Effective beginning with assessment year 2018.

Section 23. Administrative appeal and appeal to tax court. Clarifies that if a taxpayer files an administrative appeal of a commissioner order and also files an appeal to tax court for that order, the administrative appeal is dismissed. Effective beginning with assessment year 2017.

Section 24. 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 2017.

Section 25. 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 26. 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 makes the authority of county boards of appeal and equalization consistent with local boards, which are prohibited from making valuation changes if the owner has denied the assessor access. Effective for county board of appeal and equalization meetings in 2018 and thereafter.

Section 27. 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 28. Property tax levy reports. Eliminates the requirement that towns with populations greater than 5,000 and communities receiving taconite aid file a property tax levy report. Effective the day following final enactment

Section 29. State assessed property tax appeals. Provides that appeals of valuation notices provided by a county assessor 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. Effective the day following final enactment.

Section 30. Conveyances to public entities. Makes technical and minor changes in the language describing the procedures for taxing districts to sell tax-forfeited land. Effective the day following final enactment.

Section 31. 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 re-convey 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 32. City email address. Requires cities receiving aid to register an official email address with the commissioner. Effective for aids payable in 2018 and thereafter

Section 33. 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 2018 and thereafter.

Section 34. 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 2018 and thereafter.

Section 35. 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 36. 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. Effective retroactively from May 20, 2014

Section 37. 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 2017.

Article 15: Department of Revenue

2015-2016 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 used for state tax purposes. 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 for filing 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, 2017.

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, 2017.

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, 2017.

Section 8. 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, 2017.

Section 9. 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, 2017.

Section 10. 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, 2017.

Section 11. 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 12. 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 13. 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, 2017.

Section 14. 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, 2017

Section 15. 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. Effective the day following final enactment

Section 16. 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. Effective the day following final enactment.

Section 17. 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. Current law authorizes the commissioner to prescribe the “form and contents” of the statements. Effective the day following final enactment.

Section 18. 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 2018. 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. Current law authorizes the commissioner to prescribe the “form” of the reports.

Section 19. 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 20. 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 21. 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 22. 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 23. 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 24. 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 25. 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 26. 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 27. Partnership return due date. Requires partnerships to file their returns on the day the equivalent federal return is due.

Section 28. Erroneous refund statute of limitations. Defines an “erroneous refund” and clarifies that DOR has 3.5 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 (Minn. 2015). Effective July 1, 2017.

Section 29. 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, 2017.

Section 30. 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 31. 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 32. 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 33. 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 34. 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, 2017.

Section 35. 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, 2017.

Section 36. 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 37. 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 38. 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 39. 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 40. 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 41. 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 42. 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, 2017

Section 43. 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 44. 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, 2017

Section 45. Insurance taxes; forms. Authorizes the commissioner to prescribe the content, format, and manner of all forms and other documents required under the insurance premiums tax.

Section 46. 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, 2017

Section 47. JOBZ repayment waiver; time for requesting. 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, 2017.

Section 48. Effective date. Modifies the effective date for 2016 corrections bill provision relating to sustainable forest incentive act program.

Article 16: Department of Revenue

2015-2016 Sustainable Forest Incentive Act Provisions

Section 1. Eligibility requirements. Requires: (1) that forest management plans must be registered with the Department of Natural Resources. Effective for certifications filed after July 1, 2018; (2) that the entire parcel containing land enrolled in Reinvest in Minnesota, certain federal or state easement programs, agricultural preserves, or green acres may not be enrolled in SFIA. Effective the day following final enactment; (3) clarifies that 2c managed forest land may not be enrolled. Effective for certifications and applications due in 2017 and thereafter; and (4)  Requires that a minimum of three acres be excluded from enrolled land when land is improved with a structure. Effective the day following final enactment.

Section 2. Verification of forest management plan. Requires the commissioner of natural resources to annually verify to the commissioner of revenue that a SFIA claimant has a forest management plan on file with the Department of Natural Resources. Effective for certifications filed after July 1, 2018

Section 3. Repealer. Repeals obsolete definitions and provisions related to calculating the current use value and estimated market value. The current payment is $7 per acre. Effective the day following final enactment.

Article 17: Department of Revenue

2017 Individual Income, Corporate Franchise, and Estate Tax Technical Provisions

Section 1. Subtraction for military retirement pay. Clarifies that a taxpayer may not claim both the credit for past military service and the subtraction for military retirement pay. Effective retroactively for tax years beginning after December 31, 2015.

Section 2. Household income; homestead credit refund and renter property tax refund. Corrects a reference to the Internal Reference Code relating to inflation adjustment of individual retirement account limits. Effective the day following final enactment.

Section 3. Property tax refunds; proof of taxes paid. Provides that a taxpayer is only required to provide a property tax statement upon request by the commissioner. Effective for refunds based on rent paid after December 31, 2015, and property taxes payable after December 31, 2016.

Section 4. Federal estate tax credit. Strikes an obsolete reference to the federal credit for state death taxes. Effective the day following final enactment.

Section 5. Repealer. Repeals Minnesota Statues, sections 290.9743, and 290.9744, which became obsolete following the repeal of federal Financial Asset Securitization Investment Trust (FASIT) legislation in 2005. Effective the day following final enactment.

Article 18: Department of Revenue

2017 Property Tax and Local Government Aid Technical Provisions

Section 1. Flight property. Corrects a cross-reference to the net tax capacity of the airline flight property. Effective the day following final enactment.

Section 2 Taconite homestead credit. Clarifies that the taconite homestead credit applies to both the homestead and nonhomestead portions of qualifying property. Effective the day following final enactment.

Section 3. Annexation requirements. Removes the requirement that the Office of Administrative Hearings send copies of municipal boundary adjustment orders to DOR. Effective the day following final enactment.

Section 4. Population data; county program aid. Changes references from “over age 65” to “age 65 and over” to match the age category in U.S. Census Bureau data that is used in calculating county program aid. Effective the day following final enactment.

Section 5. Town Aid. Modifies language to correctly use the term “ratio” and by clarifying that the data to be used is the most recently available data as of January 1 of the year in which the aid is calculated. Effective the day following final enactment.

Article 19: Department of Revenue

2017 Technical Provisions: Sales and Use and Special Taxes

Section 1. Local taxes. Clarifies that when a special law grants a local government the authority to impose a local tax other than the sales tax (for example, lodging, entertainment, admissions, or food and beverage taxes), and DOR administers the local tax, then terms in the special law have the meanings given in chapter 297A or Minnesota Rules, chapter 8130, unless the special law defines them differently. Undefined terms are considered to be consistent with the department’s position as to the extent of the tax base. Provides that terms are defined in this matter regardless of whether the local government specifically or formally adopts the definitions into its local law. Effective the day following final enactment.

Section 2. Occupation tax apportionment; other ores. Strikes obsolete language.

Section 3. Occupation tax; iron ore and taconite. Strikes obsolete language.

Section 4. Production tax. Reorganizes the subdivision and changes the term "direct reduced iron" to "direct reduced ore" consistent with the rest of the minerals chapter. Effective the day following final enactment.

Section 5. Production tax distribution. Clarifies the distributions of production tax revenue to cities and towns affected by mining to include cities and towns within three miles of a mine pit that was actively mined by LTV in 1999. Effective the day following final enactment.

Section 6. Production tax distribution. Clarifies distributions of production tax revenue to counties with an electric power plant that provides power to mining and concentrating activities in another county. Effective the day following final enactment.

Article 20: Department of Revenue

2017 Policy Provisions: Property tax and Local Government Aids

Section 1. Flight property apportionment. Changes apportionment of the value of flight property from one-third each on total tonnage first received within the state, total flight time in the state, and revenue ton miles in the state to be based on one-half each of the percentage of revenue ton miles flown within the state and total departures within the state. Effective in assessment year 2018.

Section 2. Statement of exemption. Authorizes the commissioner to determine for which types of exempt property statements of exemption must be annually filed and to publish the list on the DOR website. The commissioner’s determinations are not a rule subject to the Administrative Procedures Act. Effective for applications for exemption submitted in 2018 and thereafter.

Section 3. Solar energy production tax reports. Allows the commissioner to grant an extension of time to file solar energy production tax reports for up to 15 days on a showing of good cause.

Section 4. Certificate of real estate value threshold. Increases the threshold amount of consideration paid for real estate that triggers the need for filing a certificate of real estate value from $1,000 to $1,500. Effective for certificates of value filed after December 31, 2017.

Section 5. Certificate of real estate value; paper copies. Removes the requirement that DOR provide paper certificate of value forms to counties; these certificates are now submitted electronically. Effective the day following final enactment.

Section 6. Certificate of real estate value; paper copies. Removes the requirement that county auditors provide copies of certificates of real estate value to the assessor and DOR. Effective for certificates of value filed after December 31, 2017

Section 7. Property tax administrator certifications. Provides that DOR certifications of assessors expire after four years and authorizes the commissioner to require one employee of each county performing property tax administration functions to take property tax training. Effective the day following final enactment.

Section 8. Homestead application. Requires the homestead application to include the name and Social Security number of the applicant’s spouse, without regard to whether the spouse lives at the homestead. Extends this requirement to the spouses of relatives who occupy relative homesteads. Effective beginning with homestead applications filed in 2018.

Section 9. Homestead data. Requires the annual electronic sharing of homestead data by counties with the commissioner to include the name and Social Security number of the property owner’s spouse, or, for relative homesteads, the name and Social Security number of the qualifying relative’s spouse. Effective beginning with homestead applications filed in 2018.

Section 10. Proof of compliance; local boards. Requires local boards of appeal and equalization to have at least one member attend training every four years; the powers of boards that fail to meet the requirement are transferred to the county for at least two years. Effective for board meetings in 2018 and following years.

Section 11. Proof of compliance; county boards. Requires county boards of appeal and equalization to have at least one member attend training every four years; the powers of boards that fail to meet the requirement are transferred to the special board of appeal and equalization for at least two years. Effective for board meetings in 2018 and following years.

Section 12. Repealer. Repeals section 270.074, subd. 2, which provides for alternative apportionment of air flight property on petition to the commissioner.

Article 21: Department of Revenue

2017 Sales and Use, and Special Taxes Policy Provisions

Section 1. Use tax on snowmobiles. Requires the commissioner of revenue or authorized deputy registrars acting as agents of the commissioner to collect use tax when a snowmobile is registered by an individual who does not document payment of the tax and to pay refunds of use tax paid in error. Effective for registrations after June 30, 2017.

Section 2. Use tax on all-terrain vehicles (ATVs). Requires the commissioner of revenue or authorized deputy registrars acting as agents of the commissioner to collect use tax when an ATV is registered by an individual who does not document payment of the tax and to pay refunds of use tax paid in error. Effective for registrations after June 30, 2017.

Section 3. Use tax on watercraft. Requires the commissioner of revenue or authorized deputy registrars acting as agents of the commissioner to collect use tax when a watercraft is registered by an individual who does not document payment of the tax and to pay refunds of use tax paid in error. Effective for registrations after June 30, 2017.

Section 4. Disclosure to Department of Natural Resources (DNR). Authorizes the commissioner of revenue to disclose return information related to sales and use taxes on snowmobiles, ATVs, and watercraft to the DNR and authorized deputy registrars of motor vehicles for use in administering use tax under sections 1 to 3. Effective the day following final enactment.

Section 5. Disclosure to Department of Transportation. Authorizes the commissioner of revenue to disclose return information related to sales and use taxes on aircraft to the Department of Transportation for use in administering sales and use tax on the lease, purchase, or sale of aircraft. Effective the day following final enactment.

Section 6. Purchaser refunds. Provides that refunds for sales for resale will not be paid to purchasers if the vendor has a published no resale policy. Effective the day following final enactment.

Section 7. Agreements related to sales and use tax on snowmobiles, ATVs and watercraft. Authorizes the commissioner of revenue to enter an agreement with the DNR commissioner, in consultation with the commissioner of public safety, so that the DNR and authorized deputy registrars of motor vehicles are agents of the commissioner of revenue to collect use tax on snowmobiles, ATVs, and watercraft from a person applying for a registration or license if the applicant cannot prove that sales or use tax was paid, that the purchase was exempt, or that the purchase was from a Minnesota dealer as provided in sections 1 to 3. The DNR and deputy registrars may issue refunds of use tax paid in error. Effective the day following final enactment.

Section 8. Motor vehicle sales tax presumption. Provides that when a foreign business entity purchases a motor vehicle that is under the control of a Minnesota resident, the Minnesota resident is presumed the owner for sales tax purposes if two or more of six listed factors are met. The Minnesota resident is considered to be “in control” of the vehicle if the resident is a partner, member or shareholder of the foreign business entity, is insured to drive the vehicle, and operates or stores the vehicle in Minnesota for any period of time. Effective the day following final enactment.

Section 9. Returns; firefighter relief surcharge. Reduces the number of tax returns companies for the firefighter relief surcharge from three to two, by combining the March and May filings. Effective for returns due after October 31, 2017.

Section 10. Repealer. Repeals Minnesota Rules, part 8125.1300, subpart 3, which addresses refunds of tax paid on gasoline used to propel aircraft and is made obsolete by the changes in article 9. Effective the day following final enactment.

Article 22: Department of Revenue

Paid Preparer Policy Provisions

Section 1. Definitions. Applies the definitions in section 270C.445, which relates to tax preparation services, continue to apply to refund anticipation loans, and refund anticipation checks, which under the Revisor’s instruction in section 21 are recodified from section 270C.445 to the new section 270C.4451, and to injunction actions under section 270C.447. Under current law, section 270C.447 contains its own definition of tax preparer which section 22 repeals. The result is to consolidate definitions related to preparers in this section. Expands the definition of preparers from those who prepare individual income tax returns to include those who prepare any kind of tax return required to be filed with the commissioner of revenue, as well as claims for refunds, claims for homestead credit state refunds or renter property tax refunds, and the credit for military service in a combat zone. Clarifies that certified service providers, third-party bulk filers, and persons copying or providing other mechanical assistance are not preparers.

Section 2. Tax preparers; standards of conduct. Adds the following prohibitions to the standards of conduct for tax preparers:

  • Failing to provide the preparer’s identification number on the return if otherwise required under state or federal law.
  • Reporting household income on homestead credit state refund or renter property tax refund returns that the preparer knows or should know is inaccurate.
  • Engaging in conduct subject to civil penalty.
  • Failing to conform to the standards of conduct for preparers in administrative rules.
  • Engaging in incompetent or disreputable conduct as provided in administrative rules.

Section 3. Nongame wildlife checkoff. Changes a reference from “form” to “claim” to be consistent with definitions in section 1.

Section 4. Penalty; administrative order. Prohibits preparers from applying for refunds penalties for violations of the standards of conduct or cease and desist orders. Authorizes the commissioner to issue an administrative cease and desist order to a preparer who has violated the standards of conduct for preparers, the requirement that preparers issue itemized receipts, or requirements related to RALs and RACs. The administrative order is in addition to the current $1,000 administrative penalty. The subject of a cease and desist order may request administrative review of the order under the contested case procedure by filing a hearing request within 30 days. The hearing must be conducted within ten days. Adds a penalty of up to $5,000 for each violation of a cease and desist order, and may collect the penalty as an income tax liability. This penalty is in addition to the $1,000 penalty under current law and both are allowed expedited review from the Office of Administrative Hearings. Adds a five year statute of limitations for imposing both the administrative penalty in current law and the proposed administrative order.

Section 5. Exchange of data; State Board of Accountancy. Makes conforming cross-reference changes.

Section 6. Exchange of data; Lawyers Board of Professional Responsibility. Makes conforming cross-reference changes.

Section 7. Exchange of data; commissioner of revenue. Makes conforming cross-reference changes.

Section 8. Enforcement; civil actions. Makes conforming cross-reference changes.

Section 9. Exemptions; enforcement provisions. Authorizes the commissioner to impose administrative penalties and issue cease and desist orders to preparers who are otherwise exempt (attorneys, accounting professionals, enrolled agents, or an employee acting at their direction) if the individual has:

  • had his or her professional license suspended for cause (other than failure to pay a professional license fee);
  • been convicted of a crime involving dishonesty or breach of trust;
  • been censured, suspended, or disbarred under U.S. Treasury Department Circular 230, governing practice before the IRS; 
  • been sanctioned by a civil or criminal court; or
  • demonstrated a pattern of willful disreputable conduct.

Also clarifies that registered accounting practitioners, registered accounting practitioner firms, and certified public accounting firms, all of which are subject to the jurisdiction of the State Board of Accountancy, are exempt from preparer regulations to the same extent as certified public accountants and other exempt individuals. Individuals acting as supervisors to exempt tax preparers are also exempt.

Section 10. Powers additional. Clarifies that the commissioner’s powers and authority related to tax preparers are in addition to the commissioner’s other powers.

Section 11. Publication of list of tax preparers subject to penalties. Expands the list of circumstances that require the commissioner to include a preparer on the published list of preparers subject to penalty to preparers who have been:

  • convicted of crimes related to identity subject to administrative penalty for more than one violation of the standards of conduct or regulations related to RALs and RACs; 
  • issued a cease and desist order that has become final; or
  • subject to administrative penalty for failure to obey a cease and desist order.

Publication does not apply if convictions or orders are under appeal or if the time for appeal has not expired.

Section 12. Notice to tax preparer. Removes the requirement that the written notice to tax preparers of pending publication be made by certified mail; this will allow notice by methods other than the U.S. Mail.

Section 13. Form of list. Conforms language related to the commissioner’s discretion over the medium and method of list publication to other changes in the article.

Section 14. Removal from list. Extends from 90 days to three years the time period after satisfaction of the preparer’s sentence before the preparer may be removed from list; clarifies that this period includes probation and payment of penalties.

Section 15. Civil action. Requires the court to grant a permanent injunction or other appropriate relief if the commissioner shows that the preparer has violated a law administered by the commissioner or a cease and desist order under section 4 and adds Ramsey County District Court as a venue for DOR’s civil action.

Section 16. Injunction prohibiting specific conduct. Adds violation of a cease and desist order under section 4 to the items that may be enjoined.

Section 17. Injunction prohibiting business activities. Changes references from “tax return preparers” to “tax preparers” consistent with the definitions in section 1.

Section 18. Enforcement of cease and desist orders. Directs the court to consider allegations in a cease and desist order under section 4 as conclusively established for final orders. Grants the court new authority to enforce cease and desist orders, including an additional civil penalty of up to $10,000 per violation of an order. Authorizes the commissioner to collect penalties as income tax liabilities. Prohibits the court from requiring the commissioner to post bond in actions under this section.

Section 19. Tax preparers; civil penalties. Extends the current law $500 civil penalty for reckless disregard or willful understatement of tax in chapter 289A to claims for credit for military service in a combat zone, and replaces a definition of tax preparer with a reference to the definition in section 1.

Section 20. Preparer identification number. Imposes a $500 civil penalty for failure to provide a tax preparer identification number. Also conforms chapter 289A requirements for provision of tax preparer identification numbers with changes in the article, including a cross-reference to the definition of tax preparer in section 1. This expands the requirement to additional tax types beyond the individual income tax.

Section 21. Revisor instruction. Directs the Revisor to recodify subdivisions relating to RALs and RACs into a new section 270C.4551 in the next compilation of Minnesota Statutes.

Section 22. Repealer. Repeals section 270C.445, subdivision 1, which specifies the tax preparers subject to DOR oversight; that is replaced by the expanded definitions in section 1. Also repeals section 270C.447, subdivision 4, a definition of tax return preparer that is replaced by the consolidated definition in section 1.

 
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