HF 79

1st Engrossment - 91st Legislature, 2020 1st Special Session (2019 - 2020) Posted on 06/18/2020 05:18pm

A bill for an act
relating to taxation; providing sales tax exemptions for certain destroyed or
damaged properties; providing property tax relief for properties damaged by fire
or vandalism; amending Minnesota Statutes 2018, section 297A.71, by adding a
subdivision; Minnesota Statutes 2019 Supplement, section 297A.75, subdivisions
1, as amended, 2.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2018, section 297A.71, is amended by adding a subdivision
to read:

new text begin Subd. 53. new text end

new text begin Properties destroyed or damaged during protests and unrest in May and
June of 2020. new text end

new text begin (a) The sale and purchase of the following items are exempt if the items are
used to repair, replace, clean, or otherwise recover from real and personal property damage
and destruction after May 24, 2020, and before June 16, 2020, resulting from protests and
unrest in the cities included in the peacetime emergency declared in the governor's Executive
Order No. 20-64:
new text end

new text begin (1) building materials and supplies used or consumed in, and equipment incorporated
into, the construction, replacement, or repair of real property;
new text end

new text begin (2) capital equipment, including retail fixtures, office equipment, and restaurant
equipment, with a cost of $5,000 or more and a useful life of more than one year; and
new text end

new text begin (3) building cleaning and disinfecting services related to mitigating smoke damage and
graffiti on and in impacted buildings.
new text end

new text begin (b) The exemption in this subdivision only applies to materials, supplies, and services
purchased to repair, replace, or clean buildings owned by a government entity or by a private
owner provided the building housed one or more of the following entities at the time of the
damage or destruction:
new text end

new text begin (1) a commercial establishment with annual gross income of $30,000,000 or less in
calendar year 2019;
new text end

new text begin (2) a nonprofit organization; or
new text end

new text begin (3) a low-income housing development that meets the certification requirements under
Minnesota Statutes, section 273.128, whether or not the development was occupied at the
time of its damage or destruction.
new text end

new text begin (c) The tax must be imposed and collected as if the rate under section 297A.62,
subdivision 1, applied and then refunded in the manner provided in section 297A.75. The
exemption under paragraph (a) applies to sales and purchases made after May 25, 2020,
and before December 1, 2022.
new text end

new text begin (d) Both the owner and occupants of the real property at the time of the damage or
destruction may apply for a refund under this subdivision but may only request a refund for
the goods and services they paid for, or were contracted and paid for on their behalf. The
exemption does not apply to purchases of an owner if the owner did not own the real property
at the time of the damage or destruction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies retroactively to sales and purchases made after May 25, 2020.
new text end

Sec. 2.

Minnesota Statutes 2019 Supplement, section 297A.75, subdivision 1, as amended
by Laws 2020, chapter 83, article 1, section 74, is amended to read:

Subdivision 1.

Tax collected.

The tax on the gross receipts from the sale of the following
exempt items must be imposed and collected as if the sale were taxable and the rate under
section 297A.62, subdivision 1, applied. The exempt items include:

(1) building materials for an agricultural processing facility exempt under section
297A.71, subdivision 13;

(2) building materials for mineral production facilities exempt under section 297A.71,
subdivision 14;

(3) building materials for correctional facilities under section 297A.71, subdivision 3;

(4) building materials used in a residence for veterans with a disability exempt under
section 297A.71, subdivision 11;

(5) elevators and building materials exempt under section 297A.71, subdivision 12;

(6) materials and supplies for qualified low-income housing under section 297A.71,
subdivision 23;

(7) materials, supplies, and equipment for municipal electric utility facilities under
section 297A.71, subdivision 35;

(8) equipment and materials used for the generation, transmission, and distribution of
electrical energy and an aerial camera package exempt under section 297A.68, subdivision
37;

(9) commuter rail vehicle and repair parts under section 297A.70, subdivision 3, paragraph
(a), clause (10);

(10) materials, supplies, and equipment for construction or improvement of projects and
facilities under section 297A.71, subdivision 40;

(11) materials, supplies, and equipment for construction, improvement, or expansion of

a biopharmaceutical manufacturing facility exempt under section 297A.71, subdivision
45;

(12) enterprise information technology equipment and computer software for use in a
qualified data center exempt under section 297A.68, subdivision 42;

(13) materials, supplies, and equipment for qualifying capital projects under section
297A.71, subdivision 44, paragraph (a), clause (1), and paragraph (b);

(14) items purchased for use in providing critical access dental services exempt under
section 297A.70, subdivision 7, paragraph (c);

(15) items and services purchased under a business subsidy agreement for use or
consumption primarily in greater Minnesota exempt under section 297A.68, subdivision
44;

(16) building materials, equipment, and supplies for constructing or replacing real
property exempt under section 297A.71, subdivisions 49; 50, paragraph (b); and 51; deleted text begin and
deleted text end

(17) building materials, equipment, and supplies for qualifying capital projects under
section 297A.71, subdivision 52 deleted text begin . deleted text end new text begin ; and
new text end

new text begin (18) building materials, equipment, supplies, and capital equipment for constructing or
replacing real property, and cleaning and disinfecting services for impacted property exempt
under section 297A.71, subdivision 53.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2019 Supplement, section 297A.75, subdivision 2, is amended
to read:

Subd. 2.

Refund; eligible persons.

Upon application on forms prescribed by the
commissioner, a refund equal to the tax paid on the gross receipts of the exempt items must
be paid to the applicant. Only the following persons may apply for the refund:

(1) for subdivision 1, clauses (1), (2), and (14), the applicant must be the purchaser;

(2) for subdivision 1, clause (3), the applicant must be the governmental subdivision;

(3) for subdivision 1, clause (4), the applicant must be the recipient of the benefits
provided in United States Code, title 38, chapter 21;

(4) for subdivision 1, clause (5), the applicant must be the owner of the homestead
property;

(5) for subdivision 1, clause (6), the owner of the qualified low-income housing project;

(6) for subdivision 1, clause (7), the applicant must be a municipal electric utility or a
joint venture of municipal electric utilities;

(7) for subdivision 1, clauses (8), (11), (12), and (15), the owner of the qualifying
business;

(8) for subdivision 1, clauses (9), (10), (13), and (17), the applicant must be the
governmental entity that owns or contracts for the project or facility; deleted text begin and
deleted text end

(9) for subdivision 1, clause (16), the applicant must be the owner or developer of the
building or project deleted text begin . deleted text end new text begin ; and
new text end

new text begin (10) for subdivision 1, clause (17), the applicant must be an owner or occupant of the
real property at the time of its damage or destruction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4. new text begin PROPERTY TAX RELIEF FOR PROPERTIES DAMAGED BY FIRE OR
VANDALISM.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Damage amount" means the difference between (1) a property's estimated market
value as determined on January 2, 2020, and (2) the property's estimated market value as
determined under subdivision 4.
new text end

new text begin (c) "Qualifying property" means a property that:
new text end

new text begin (1) is located in the area included in the peacetime emergency declared in the governor's
Executive Order No. 20-64;
new text end

new text begin (2) was damaged or destroyed due to the unrest in the cities of Minneapolis and St. Paul
and surrounding communities after May 24, 2020, and before June 16, 2020;
new text end

new text begin (3) has a damage amount equal to at least 25 percent of the property's estimated market
value as determined on January 2, 2020; and
new text end

new text begin (4) has not received abatements or credits under Minnesota Statutes, sections 273.1231
to 273.1235, for a disaster or emergency that occurred in 2020.
new text end

new text begin (d) "Utility property" means property appraised and classified for tax purposes by order
of the commissioner of revenue under Minnesota Statutes, sections 273.33 to 273.3711.
new text end

new text begin Subd. 2. new text end

new text begin Application. new text end

new text begin The owner of a property that is not a utility property must apply
to the county board and county or local assessor by September 1, 2020, in a manner
prescribed by the assessor, in order to be eligible for an abatement under subdivision 3. The
owner of a utility property must apply to the commissioner of revenue by September 1,
2020, in a manner prescribed by the commissioner, in order to be eligible for an abatement
under subdivision 3.
new text end

new text begin Subd. 3. new text end

new text begin Abatements. new text end

new text begin (a) Notwithstanding Minnesota Statutes, sections 270C.86 and
375.192, the county board and commissioner of revenue must grant abatements in the
amounts provided in paragraphs (b) and (c) for qualifying properties that submitted an
application under subdivision 2.
new text end

new text begin (b) For a qualifying property with a damage amount equal to less than 50 percent of the
property's estimated market value as determined on January 2, 2020, the abatement amount
is equal to 50 percent of the net property tax due on the property in 2020.
new text end

new text begin (c) For a qualifying property with a damage amount equal to at least 50 percent of the
property's estimated market value as determined on January 2, 2020, the abatement amount
is equal to 100 percent of the net property tax due on the property in 2020.
new text end

new text begin (d) If application is made after payment of all or a portion of the taxes being abated, the
portion of the abatement already paid must be refunded to the taxpayer by the county
treasurer as soon as practicable.
new text end

new text begin Subd. 4. new text end

new text begin Reassessments required. new text end

new text begin For the purposes of this section, the county or local
assessor must reassess all damaged property for which an application is submitted under
subdivision 2, except that the commissioner of revenue must reassess all utility property
for which an application is submitted under subdivision 2.
new text end

new text begin Subd. 5. new text end

new text begin Valuation increase prohibited. new text end

new text begin (a) The estimated market value for qualifying
properties that receive an abatement under subdivision 3 must not exceed the property's
estimated market value as determined under subdivision 4 until assessment year 2025,
provided that the property retains the same ownership it had as of May 25, 2020.
new text end

new text begin (b) Owners of property meeting the requirements of this subdivision must submit any
information the county or local assessor or commissioner of revenue deems necessary to
determine continued eligibility under this subdivision by December 15 of each year prior
to the assessment year for which the property qualifies under paragraph (a).
new text end

new text begin Subd. 6. new text end

new text begin Reimbursement and appropriation. new text end

new text begin (a) The county auditor must certify the
abatements granted under this section to the commissioner of revenue for reimbursement
to each taxing jurisdiction in which qualifying property is located. The commissioner must
make the payments to the taxing jurisdictions containing qualifying property, other than
school districts and the state, at the time distributions are made under Minnesota Statutes,
section 473H.10, subdivision 3. Reimbursements to school districts must be made as provided
in Minnesota Statutes, section 273.1392. No reimbursement is to be paid to the state treasury.
new text end

new text begin (b) An amount necessary to make payments required by this section is appropriated to
the commissioner of revenue from the general fund in fiscal year 2021.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end