HF 254

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; reducing the general rate of the 
  1.3             sales and use tax and the sales tax on motor vehicles; 
  1.4             exempting sales to political subdivisions of a state; 
  1.5             reducing income tax rates; amending Minnesota Statutes 
  1.6             1998, sections 290.06, subdivisions 2c and 2d; 
  1.7             290.091, subdivisions 1, 2, and 6; 297A.02, 
  1.8             subdivision 1; 297A.25, subdivision 11; and 297A.47. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1998, section 290.06, 
  1.11  subdivision 2c, is amended to read: 
  1.12     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  1.13  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  1.14  married individuals filing joint returns and surviving spouses 
  1.15  as defined in section 2(a) of the Internal Revenue Code must be 
  1.16  computed by applying to their taxable net income the following 
  1.17  schedule of rates: 
  1.18     (1) On the first $19,910 $25,220, 6 5.5 percent; 
  1.19     (2) On all over $19,910 $25,220, but not 
  1.20  over $79,120 $100,210, 8 7.5 percent; 
  1.21     (3) On all over $79,120 $100,210, 8.5 8 percent. 
  1.22     Married individuals filing separate returns, estates, and 
  1.23  trusts must compute their income tax by applying the above rates 
  1.24  to their taxable income, except that the income brackets will be 
  1.25  one-half of the above amounts.  
  1.26     (b) The income taxes imposed by this chapter upon unmarried 
  1.27  individuals must be computed by applying to taxable net income 
  2.1   the following schedule of rates: 
  2.2      (1) On the first $13,620 $17,250, 6 5.5 percent; 
  2.3      (2) On all over $13,620 $17,250, but not 
  2.4   over $44,750 $56,680, 8 7.5 percent; 
  2.5      (3) On all over $44,750 $56,680, 8.5 8 percent. 
  2.6      (c) The income taxes imposed by this chapter upon unmarried 
  2.7   individuals qualifying as a head of household as defined in 
  2.8   section 2(b) of the Internal Revenue Code must be computed by 
  2.9   applying to taxable net income the following schedule of rates: 
  2.10     (1) On the first $16,770 $21,240, 6 5.5 percent; 
  2.11     (2) On all over $16,770 $21,240, but not 
  2.12  over $67,390 $85,350, 8 7.5 percent; 
  2.13     (3) On all over $67,390 $85,350, 8.5 8 percent. 
  2.14     (d) In lieu of a tax computed according to the rates set 
  2.15  forth in this subdivision, the tax of any individual taxpayer 
  2.16  whose taxable net income for the taxable year is less than an 
  2.17  amount determined by the commissioner must be computed in 
  2.18  accordance with tables prepared and issued by the commissioner 
  2.19  of revenue based on income brackets of not more than $100.  The 
  2.20  amount of tax for each bracket shall be computed at the rates 
  2.21  set forth in this subdivision, provided that the commissioner 
  2.22  may disregard a fractional part of a dollar unless it amounts to 
  2.23  50 cents or more, in which case it may be increased to $1. 
  2.24     (e) An individual who is not a Minnesota resident for the 
  2.25  entire year must compute the individual's Minnesota income tax 
  2.26  as provided in this subdivision.  After the application of the 
  2.27  nonrefundable credits provided in this chapter, the tax 
  2.28  liability must then be multiplied by a fraction in which:  
  2.29     (1) the numerator is the individual's Minnesota source 
  2.30  federal adjusted gross income as defined in section 62 of the 
  2.31  Internal Revenue Code disregarding income or loss flowing from a 
  2.32  corporation having a valid election for the taxable year under 
  2.33  section 1362 of the Internal Revenue Code but which is not an 
  2.34  "S" corporation under section 290.9725 and increased by the 
  2.35  additions required under section 290.01, subdivision 19a, 
  2.36  clauses (1) and (9), after applying the allocation and 
  3.1   assignability provisions of section 290.081, clause (a), or 
  3.2   290.17; and 
  3.3      (2) the denominator is the individual's federal adjusted 
  3.4   gross income as defined in section 62 of the Internal Revenue 
  3.5   Code of 1986, increased by the amounts specified in section 
  3.6   290.01, subdivision 19a, clauses (1), (5), (6), (7), and (9), 
  3.7   and reduced by the amounts specified in section 290.01, 
  3.8   subdivision 19b, clauses (1), (11), and (12). 
  3.9      Sec. 2.  Minnesota Statutes 1998, section 290.06, 
  3.10  subdivision 2d, is amended to read: 
  3.11     Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
  3.12  taxable years beginning after December 31, 1991 1999, the 
  3.13  minimum and maximum dollar amounts for each rate bracket for 
  3.14  which a tax is imposed in subdivision 2c shall be adjusted for 
  3.15  inflation by the percentage determined under paragraph (b).  For 
  3.16  the purpose of making the adjustment as provided in this 
  3.17  subdivision all of the rate brackets provided in subdivision 2c 
  3.18  shall be the rate brackets as they existed for taxable years 
  3.19  beginning after December 31, 1990 1998, and before January 
  3.20  1, 1992 2000.  The rate applicable to any rate bracket must not 
  3.21  be changed.  The dollar amounts setting forth the tax shall be 
  3.22  adjusted to reflect the changes in the rate brackets.  The rate 
  3.23  brackets as adjusted must be rounded to the nearest $10 amount.  
  3.24  If the rate bracket ends in $5, it must be rounded up to the 
  3.25  nearest $10 amount.  
  3.26     (b) The commissioner shall adjust the rate brackets and by 
  3.27  the percentage determined pursuant to the provisions of section 
  3.28  1(f) of the Internal Revenue Code, except that in section 
  3.29  1(f)(3)(B) the word "1990 1998" shall be substituted for the 
  3.30  word "1987 1992."  For 1991 1999, the commissioner shall then 
  3.31  determine the percent change from the 12 months ending on August 
  3.32  31, 1990 1998, to the 12 months ending on August 31, 1991 1999, 
  3.33  and in each subsequent year, from the 12 months ending on August 
  3.34  31, 1990 1999, to the 12 months ending on August 31 of the year 
  3.35  preceding the taxable year.  The determination of the 
  3.36  commissioner pursuant to this subdivision shall not be 
  4.1   considered a "rule" and shall not be subject to the 
  4.2   Administrative Procedure Act contained in chapter 14.  
  4.3      No later than December 15 of each year, the commissioner 
  4.4   shall announce the specific percentage that will be used to 
  4.5   adjust the tax rate brackets. 
  4.6      Sec. 3.  Minnesota Statutes 1998, section 290.091, 
  4.7   subdivision 1, is amended to read: 
  4.8      Subdivision 1.  [IMPOSITION OF TAX.] In addition to all 
  4.9   other taxes imposed by this chapter a tax is imposed on 
  4.10  individuals, estates, and trusts equal to the excess (if any) of 
  4.11     (a) an amount equal to seven 6.8 percent of alternative 
  4.12  minimum taxable income after subtracting the exemption amount, 
  4.13  over 
  4.14     (b) the regular tax for the taxable year. 
  4.15     Sec. 4.  Minnesota Statutes 1998, section 290.091, 
  4.16  subdivision 2, is amended to read: 
  4.17     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
  4.18  this section, the following terms have the meanings given: 
  4.19     (a) "Alternative minimum taxable income" means the sum of 
  4.20  the following for the taxable year: 
  4.21     (1) the taxpayer's federal alternative minimum taxable 
  4.22  income as defined in section 55(b)(2) of the Internal Revenue 
  4.23  Code; 
  4.24     (2) the taxpayer's itemized deductions allowed in computing 
  4.25  federal alternative minimum taxable income, but excluding: 
  4.26     (i) the Minnesota charitable contribution deduction; 
  4.27     (ii) the medical expense deduction; 
  4.28     (iii) the casualty, theft, and disaster loss deduction; and 
  4.29     (iv) the impairment-related work expenses of a disabled 
  4.30  person; 
  4.31     (3) for depletion allowances computed under section 613A(c) 
  4.32  of the Internal Revenue Code, with respect to each property (as 
  4.33  defined in section 614 of the Internal Revenue Code), to the 
  4.34  extent not included in federal alternative minimum taxable 
  4.35  income, the excess of the deduction for depletion allowable 
  4.36  under section 611 of the Internal Revenue Code for the taxable 
  5.1   year over the adjusted basis of the property at the end of the 
  5.2   taxable year (determined without regard to the depletion 
  5.3   deduction for the taxable year); 
  5.4      (4) to the extent not included in federal alternative 
  5.5   minimum taxable income, the amount of the tax preference for 
  5.6   intangible drilling cost under section 57(a)(2) of the Internal 
  5.7   Revenue Code determined without regard to subparagraph (E); 
  5.8      (5) to the extent not included in federal alternative 
  5.9   minimum taxable income, the amount of interest income as 
  5.10  provided by section 290.01, subdivision 19a, clause (1); 
  5.11     (6) amounts added to federal taxable income as provided by 
  5.12  section 290.01, subdivision 19a, clauses (5), (6), and (7); 
  5.13     less the sum of the amounts determined under the following 
  5.14  clauses (1) to (4): 
  5.15     (1) interest income as defined in section 290.01, 
  5.16  subdivision 19b, clause (1); 
  5.17     (2) an overpayment of state income tax as provided by 
  5.18  section 290.01, subdivision 19b, clause (2), to the extent 
  5.19  included in federal alternative minimum taxable income; 
  5.20     (3) the amount of investment interest paid or accrued 
  5.21  within the taxable year on indebtedness to the extent that the 
  5.22  amount does not exceed net investment income, as defined in 
  5.23  section 163(d)(4) of the Internal Revenue Code.  Interest does 
  5.24  not include amounts deducted in computing federal adjusted gross 
  5.25  income; and 
  5.26     (4) amounts subtracted from federal taxable income as 
  5.27  provided by section 290.01, subdivision 19b, clauses (11) and 
  5.28  (12). 
  5.29     In the case of an estate or trust, alternative minimum 
  5.30  taxable income must be computed as provided in section 59(c) of 
  5.31  the Internal Revenue Code. 
  5.32     (b) "Investment interest" means investment interest as 
  5.33  defined in section 163(d)(3) of the Internal Revenue Code. 
  5.34     (c) "Tentative minimum tax" equals seven 6.8 percent of 
  5.35  alternative minimum taxable income after subtracting the 
  5.36  exemption amount determined under subdivision 3. 
  6.1      (d) "Regular tax" means the tax that would be imposed under 
  6.2   this chapter (without regard to this section and section 
  6.3   290.032), reduced by the sum of the nonrefundable credits 
  6.4   allowed under this chapter.  
  6.5      (e) "Net minimum tax" means the minimum tax imposed by this 
  6.6   section. 
  6.7      (f) "Minnesota charitable contribution deduction" means a 
  6.8   charitable contribution deduction under section 170 of the 
  6.9   Internal Revenue Code to or for the use of an entity described 
  6.10  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
  6.11  federal deduction for charitable contributions is limited under 
  6.12  section 170(b) of the Internal Revenue Code, the allowable 
  6.13  contributions in the year of contribution are deemed to be first 
  6.14  contributions to entities described in section 290.21, 
  6.15  subdivision 3, clauses (a) to (e). 
  6.16     Sec. 5.  Minnesota Statutes 1998, section 290.091, 
  6.17  subdivision 6, is amended to read: 
  6.18     Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
  6.19  is allowed against the tax imposed by this chapter on 
  6.20  individuals, trusts, and estates equal to the minimum tax credit 
  6.21  for the taxable year.  The minimum tax credit equals the 
  6.22  adjusted net minimum tax for taxable years beginning after 
  6.23  December 31, 1988, reduced by the minimum tax credits allowed in 
  6.24  a prior taxable year.  The credit may not exceed the excess (if 
  6.25  any) for the taxable year of 
  6.26     (1) the regular tax, over 
  6.27     (2) the greater of (i) the tentative alternative minimum 
  6.28  tax, or (ii) zero. 
  6.29     (b) The adjusted net minimum tax for a taxable year equals 
  6.30  the lesser of the net minimum tax or the excess (if any) of 
  6.31     (1) the tentative minimum tax, over 
  6.32     (2) seven 6.8 percent of the sum of 
  6.33     (i) adjusted gross income as defined in section 62 of the 
  6.34  Internal Revenue Code, 
  6.35     (ii) interest income as defined in section 290.01, 
  6.36  subdivision 19a, clause (1), 
  7.1      (iii) the amount added to federal taxable income as 
  7.2   provided by section 290.01, subdivision 19a, clauses (5), (6), 
  7.3   and (7), 
  7.4      (iv) interest on specified private activity bonds, as 
  7.5   defined in section 57(a)(5) of the Internal Revenue Code, to the 
  7.6   extent not included under clause (ii), 
  7.7      (v) depletion as defined in section 57(a)(1), determined 
  7.8   without regard to the last sentence of paragraph (1), of the 
  7.9   Internal Revenue Code, less 
  7.10     (vi) the deductions allowed in computing alternative 
  7.11  minimum taxable income provided in subdivision 2, paragraph (a), 
  7.12  clause (2) of the first series of clauses and clauses (1), (2), 
  7.13  (3), and (4) of the second series of clauses, and 
  7.14     (vii) the exemption amount determined under subdivision 3. 
  7.15     In the case of an individual who is not a Minnesota 
  7.16  resident for the entire year, adjusted net minimum tax must be 
  7.17  multiplied by the fraction defined in section 290.06, 
  7.18  subdivision 2c, paragraph (e).  In the case of a trust or 
  7.19  estate, adjusted net minimum tax must be multiplied by the 
  7.20  fraction defined under subdivision 4, paragraph (b). 
  7.21     Sec. 6.  Minnesota Statutes 1998, section 297A.02, 
  7.22  subdivision 1, is amended to read: 
  7.23     Subdivision 1.  [GENERALLY.] Except as otherwise provided 
  7.24  in this chapter, there is imposed an excise tax of 6.5 six 
  7.25  percent of the gross receipts from sales at retail made by any 
  7.26  person in this state. 
  7.27     Sec. 7.  Minnesota Statutes 1998, section 297A.25, 
  7.28  subdivision 11, is amended to read: 
  7.29     Subd. 11.  [SALES TO GOVERNMENT.] The gross receipts from 
  7.30  all sales, including sales in which title is retained by a 
  7.31  seller or a vendor or is assigned to a third party under an 
  7.32  installment sale or lease purchase agreement under section 
  7.33  465.71, of tangible personal property to, and all storage, use 
  7.34  or consumption of such property by, the following governmental 
  7.35  entities are exempt:  
  7.36     (1) the United States and its agencies and 
  8.1   instrumentalities,; 
  8.2      (2) the University of Minnesota, state universities, 
  8.3   community colleges, technical colleges, state academies, and the 
  8.4   Lola and Rudy Perpich Minnesota center for arts education, an 
  8.5   instrumentality of a political subdivision that is accredited as 
  8.6   an optional/special function school by the North Central 
  8.7   Association of Colleges and Schools, school districts,; 
  8.8      (3) public libraries, public library systems, multicounty, 
  8.9   multitype library systems as defined in section 134.001, county 
  8.10  law libraries under chapter 134A, the state library under 
  8.11  section 480.09, and the legislative reference library are 
  8.12  exempt; and 
  8.13     (4) political subdivisions of a state and their agencies 
  8.14  and instrumentalities. 
  8.15     As used in this subdivision, "school districts" means 
  8.16  public school entities and districts of every kind and nature 
  8.17  organized under the laws of the state of Minnesota, including, 
  8.18  without limitation, school districts, intermediate school 
  8.19  districts, education districts, service cooperatives, secondary 
  8.20  vocational cooperative centers, special education cooperatives, 
  8.21  joint purchasing cooperatives, telecommunication cooperatives, 
  8.22  regional management information centers, and any instrumentality 
  8.23  of a school district, as defined in section 471.59. 
  8.24     Sales exempted by this subdivision include sales under 
  8.25  section 297A.01, subdivision 3, paragraph (f).  
  8.26     Sales to hospitals and nursing homes owned and operated by 
  8.27  political subdivisions of the state are exempt under this 
  8.28  subdivision.  
  8.29     Sales of supplies and equipment used in the operation of an 
  8.30  ambulance service owned and operated by a political subdivision 
  8.31  of the state are exempt under this subdivision provided that the 
  8.32  supplies and equipment are used in the course of providing 
  8.33  medical care.  Sales to a political subdivision of repair and 
  8.34  replacement parts for emergency rescue vehicles and fire trucks 
  8.35  and apparatus are exempt under this subdivision.  
  8.36     Sales to a political subdivision of machinery and 
  9.1   equipment, except for motor vehicles, used directly for mixed 
  9.2   municipal solid waste management services at a solid waste 
  9.3   disposal facility as defined in section 115A.03, subdivision 10, 
  9.4   are exempt under this subdivision.  
  9.5      Sales to political subdivisions of chore and homemaking 
  9.6   services to be provided to elderly or disabled individuals are 
  9.7   exempt. 
  9.8      Sales to a town of gravel and of machinery, equipment, and 
  9.9   accessories, except motor vehicles, used exclusively for road 
  9.10  and bridge maintenance, and leases of motor vehicles exempt from 
  9.11  tax under section 297B.03, clause (10), are exempt. 
  9.12     Sales of telephone services to the department of 
  9.13  administration that are used to provide telecommunications 
  9.14  services through the intertechnologies revolving fund are exempt 
  9.15  under this subdivision. 
  9.16     This exemption shall not apply to building, construction or 
  9.17  reconstruction materials purchased by a contractor or a 
  9.18  subcontractor as a part of a lump-sum contract or similar type 
  9.19  of contract with a guaranteed maximum price covering both labor 
  9.20  and materials for use in the construction, alteration, or repair 
  9.21  of a building or facility.  This exemption does not apply to 
  9.22  construction materials purchased by tax exempt entities or their 
  9.23  contractors to be used in constructing buildings or facilities 
  9.24  which will not be used principally by the tax exempt entities. 
  9.25     This exemption does not apply to the leasing of a motor 
  9.26  vehicle as defined in section 297B.01, subdivision 5, except for:
  9.27     (1) leases entered into by the United States or its 
  9.28  agencies or instrumentalities; and 
  9.29     (2) leases entered into by a political subdivision of motor 
  9.30  vehicles exempt from tax under chapter 297B. 
  9.31     The tax imposed on sales to political subdivisions of the 
  9.32  state under this section applies to all political subdivisions 
  9.33  other than those explicitly exempted under this subdivision, 
  9.34  notwithstanding section 115A.69, subdivision 6, 116A.25, 
  9.35  360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 
  9.36  469.127, 473.448, 473.545, or 473.608 or any other law to the 
 10.1   contrary enacted before 1992. 
 10.2      Sales exempted by this subdivision include sales made to 
 10.3   other states or political subdivisions of other states, if the 
 10.4   sale would be exempt from taxation if it occurred in that state, 
 10.5   but do not include sales under section 297A.01, subdivision 3, 
 10.6   paragraphs (c) and (e). 
 10.7      Sec. 8.  Minnesota Statutes 1998, section 297A.47, is 
 10.8   amended to read: 
 10.9      297A.47 [REPORTING OF SALES TAX ON MINNESOTA GOVERNMENTS.] 
 10.10     The commissioner shall estimate the amount of revenues 
 10.11  derived from imposing the tax under this chapter and chapter 
 10.12  297B on state agencies and political subdivisions for each 
 10.13  fiscal year and shall report this amount to the commissioner of 
 10.14  finance before the time for filing reports for the fiscal year 
 10.15  with the United States Department of Commerce.  The commissioner 
 10.16  of finance in reporting the sales tax and sales tax on motor 
 10.17  vehicles collections to the United States Department of Commerce 
 10.18  shall exclude this amount from the sales and motor vehicle 
 10.19  collections.  Sales tax and Sales tax on motor vehicles revenues 
 10.20  received from political subdivisions must be reported as 
 10.21  intergovernmental grants or similar intergovernmental revenue.  
 10.22  The amount of the sales tax and sales tax on motor vehicles paid 
 10.23  by state agencies must be reported as reduced state expenditures.
 10.24     Sec. 9.  [EFFECTIVE DATE.] 
 10.25     Sections 1 and 3 to 5 are effective for taxable years 
 10.26  beginning after December 31, 1998.  Section 2 is effective for 
 10.27  taxable years beginning after December 31, 1999.  Sections 6 to 
 10.28  8 are effective for sales and purchases occurring after June 30, 
 10.29  1999.