Minnesota Legislature
HF 437
as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
1.1 A bill for an act 1.2 relating to taxation; making policy changes to certain 1.3 taxes and tax administrative provisions; conforming 1.4 certain state tax provisions to changes in the 1.5 Internal Revenue Code; amending Minnesota Statutes 1.6 1998, sections 60A.19, subdivision 6; 270.07, 1.7 subdivision 1; 270.65; 270.78; 270B.03, subdivisions 1 1.8 and 5; 270B.14, by adding a subdivision; 289A.02, 1.9 subdivision 7; 289A.31, subdivision 2; 289A.40, 1.10 subdivision 1a; 289A.50, subdivision 7; 289A.55, 1.11 subdivision 9; 289A.56, subdivision 4; 290.01, 1.12 subdivisions 19, 19b, and 31; 290.17, subdivisions 3, 1.13 4, and 6; 290A.03, subdivision 15; 291.005, 1.14 subdivision 1; 295.50, subdivision 4; 295.53, 1.15 subdivision 1; 297F.08, by adding a subdivision; and 1.16 297H.05. 1.17 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.18 ARTICLE 1 1.19 SALES AND SPECIAL TAXES 1.20 Section 1. Minnesota Statutes 1998, section 60A.19, 1.21 subdivision 6, is amended to read: 1.22 Subd. 6. [RETALIATORY PROVISIONS.] (1) When by the laws of 1.23 any other state or country any taxes, fines, deposits, 1.24 penalties, licenses, or fees,other than assessments made by an1.25insurance guaranty association or similar organization,in 1.26 addition to or in excess of those imposed by the laws of this 1.27 state upon foreign insurance companies and their agents doing 1.28 business in this state,other than assessments by an insurance1.29guaranty association or similar organization organized under the1.30laws of this state,are imposed on insurance companies of this 1.31 state and their agents doing business in that state or country, 2.1 or when any conditions precedent to the right to do business in 2.2 that state are imposed by the laws thereof, beyond those imposed 2.3 upon these foreign companies by the laws of this state, the same 2.4 taxes, fines, deposits, penalties, licenses, fees, and 2.5 conditions precedent shall be imposed upon every similar 2.6 insurance company of that state or country and their agents 2.7 doing or applying to do business in this state so long as these 2.8 foreign laws remain in force. Special purpose obligations or 2.9 assessments, including assessments by an insurance guaranty 2.10 association, joint underwriting association or similar 2.11 organization, or assessments imposed in connection with 2.12 particular kinds of insurance, are not taxes, licenses, or fees 2.13 as these terms are used in this section. 2.14 (2) In the event that a domestic insurance company, after 2.15 complying with all reasonable laws and rulings of any other 2.16 state or country, is refused permission by that state or country 2.17 to transact business therein after the commissioner of commerce 2.18 of Minnesota has determined that that company is solvent and 2.19 properly managed and after the commissioner has so certified to 2.20 the proper authority of that other state or country, then, and 2.21 in every such case, the commissioner may forthwith suspend or 2.22 cancel the certificate of authority of every insurance company 2.23 organized under the laws of that other state or country to the 2.24 extent that it insures, or seeks to insure, in this state 2.25 against any of the risks or hazards which that domestic company 2.26 seeks to insure against in that other state or country. Without 2.27 limiting the application of the foregoing provision, it is 2.28 hereby determined that any law or ruling of any other state or 2.29 country which prescribes to a Minnesota domestic insurance 2.30 company the premium rate or rates for life insurance issued or 2.31 to be issued outside that other state or country shall not be 2.32 reasonable. 2.33 (3) This section does not apply to insurance companies 2.34 organized or domiciled in a state or country, the laws of which 2.35 do not impose retaliatory taxes, fines, deposits, penalties, 2.36 licenses, or fees or which grant, on a reciprocal basis, 3.1 exemptions from retaliatory taxes, fines, deposits, penalties, 3.2 licenses, or fees to insurance companies domiciled in this state. 3.3 Sec. 2. Minnesota Statutes 1998, section 289A.56, 3.4 subdivision 4, is amended to read: 3.5 Subd. 4. [CAPITAL EQUIPMENT REFUNDS; REFUNDS TO 3.6 PURCHASERS.] Notwithstanding subdivision 3, for refunds payable 3.7 under section 297A.15, subdivision 5, interest is computed from 3.8 the date the refund claim is filed with the commissioner. For 3.9 refunds payable under section 289A.50, subdivision 2a, interest 3.10 is computed from the 20th day of the month following the month 3.11 of the invoice date for the purchase which is the subject of the 3.12 refund, if the refund claim includes a detailed schedule of 3.13 purchases made during each of the periods in the claim. If the 3.14 refund claim submitted does not contain a schedule reflecting 3.15 purchases made in each period, interest is computed from the 3.16 date the claim was filed. 3.17 Sec. 3. Minnesota Statutes 1998, section 297F.08, is 3.18 amended by adding a subdivision to read: 3.19 Subd. 8a. [REVOLVING ACCOUNT.] A heat applied cigarette 3.20 tax stamp revolving account is created. The commissioner shall 3.21 use the amounts in this fund to purchase heat applied stamps for 3.22 resale. The commissioner shall charge distributors for the tax 3.23 value of the stamps they receive along with the commissioner's 3.24 cost to purchase the stamps and ship them to the distributor. 3.25 The stamp purchase and shipping costs recovered must be 3.26 deposited into the revolving account and are available to the 3.27 commissioner for further purchases and shipping costs. The 3.28 revolving account is initially funded by a $40,000 transfer from 3.29 the department of revenue. 3.30 Sec. 4. Minnesota Statutes 1998, section 297H.05, is 3.31 amended to read: 3.32 297H.05 [SELF-HAULERS.] 3.33 (a) A self-hauler of mixed municipal solid waste shall pay 3.34 the tax to the operator of the waste management facility to 3.35 which the waste is delivered at the rate imposed under section 3.36 297H.03, based on the sales price of the waste management 4.1 services except that a self-hauler of mixed municipal solid 4.2 waste from a residential generator shall pay the tax to the 4.3 operator of the waste management facility to which the waste is 4.4 delivered at the rate imposed under section 297H.02. 4.5 (b) A self-hauler of non-mixed-municipal solid waste shall 4.6 pay the tax to the operator of the waste management facility to 4.7 which the waste is delivered at the rate imposed under section 4.8 297H.04. 4.9 (c) The tax imposed on the self-hauler of 4.10 non-mixed-municipal solid waste may be based either on the 4.11 capacity of the container, the actual volume, or the 4.12 weight-to-volume conversion schedule in paragraph (d). However, 4.13 the tax must be calculated by the operator using the same method 4.14 for calculating the tipping fee so that both are calculated 4.15 according to container capacity, actual volume, or weight. 4.16 (d) The weight-to-volume conversion schedule for: 4.17 (1) construction debris as defined in section 115A.03, 4.18 subdivision 7, is one ton equals 3.33 cubic yards, or $2 per 4.19 ton; 4.20 (2) industrial waste as defined in section 115A.03, 4.21 subdivision 13a, is equal to 60 cents per cubic yard. The 4.22 commissioner of revenue, after consultation with the 4.23 commissioner of the pollution control agency, shall determine, 4.24 and may publish by notice, a conversion schedule for various 4.25 industrial wastes; and 4.26 (3) infectious waste as defined in section 116.76, 4.27 subdivision 12, and pathological waste as defined in section 4.28 116.76, subdivision 14, is 150 pounds equals one cubic yard, or 4.29 60 cents per 150 pounds. 4.30 Sec. 5. [EFFECTIVE DATES.] 4.31 Section 1 is effective for tax years beginning after 4.32 December 31, 1999. Section 2 is effective for amended returns 4.33 and refund claims filed on or after July 1, 1999. Section 3 is 4.34 effective July 1, 1999. Section 4 is effective for services 4.35 provided on or after July 1, 1999. 4.36 ARTICLE 2 5.1 MINNESOTACARE TAXES 5.2 Section 1. Minnesota Statutes 1998, section 295.50, 5.3 subdivision 4, is amended to read: 5.4 Subd. 4. [HEALTH CARE PROVIDER.] (a) "Health care 5.5 provider" means: 5.6 (1) a person whose health care occupation is regulated or 5.7 required to be regulated by the state of Minnesota furnishing 5.8 any or all of the following goods or services directly to a 5.9 patient or consumer: medical, surgical, optical, visual, 5.10 dental, hearing, nursing services, drugs, laboratory, diagnostic 5.11 or therapeutic services; 5.12 (2) a person who provides goods and services not listed in 5.13 clause (1) that qualify for reimbursement under the medical 5.14 assistance program provided under chapter 256B; 5.15 (3) a staff model health plan company; 5.16 (4) an ambulance service required to be licensed; or 5.17 (5) a person who sells or repairs hearing aids and related 5.18 equipment or prescription eyewear. 5.19 (b) Health care provider does not include: (1) hospitals; 5.20 medical supplies distributors, except as specified under 5.21 paragraph (a), clause (5); nursing homes licensed under chapter 5.22 144A or licensed in any other jurisdiction; pharmacies; surgical 5.23 centers; bus and taxicab transportation, or any other providers 5.24 of transportation services other than ambulance services 5.25 required to be licensed; supervised living facilities for 5.26 persons with mental retardation or related conditions, licensed 5.27 under Minnesota Rules, parts 4665.0100 to 4665.9900; residential 5.28 care homes licensed under chapter 144B; board and lodging 5.29 establishments providing only custodial services that are 5.30 licensed under chapter 157 and registered under section 157.17 5.31 to provide supportive services or health supervision services; 5.32 adult foster homes as defined in Minnesota Rules, part 5.33 9555.5105; day training and habilitation services for adults 5.34 with mental retardation and related conditions as defined in 5.35 section 252.41, subdivision 3; and boarding care homes, as 5.36 defined in Minnesota Rules, part 4655.0100.; 6.1(c) For purposes of this subdivision, "directly to a6.2patient or consumer" includes goods and services provided in6.3connection with independent medical examinations under section6.465B.56 or other examinations for purposes of litigation or6.5insurance claims.6.6 (2) home health agencies as defined in Minnesota Rules, 6.7 part 9505.0175, subpart 15; a person providing personal care 6.8 services and supervision of personal care services as defined in 6.9 Minnesota Rules, part 9505.0335; a person providing private duty 6.10 nursing services as defined in Minnesota Rules, part 9505.0360; 6.11 and home care providers required to be licensed under chapter 6.12 144A; 6.13 (3) a person who employs health care providers solely for 6.14 the purpose of providing patient services to its employees; and 6.15 (4) an educational institution that employs health care 6.16 providers solely for the purpose of providing patient services 6.17 to its students if the institution does not receive fee for 6.18 service payments or payments for extended coverage. 6.19 Sec. 2. Minnesota Statutes 1998, section 295.53, 6.20 subdivision 1, is amended to read: 6.21 Subdivision 1. [EXEMPTIONS.] (a) The following payments 6.22 are excluded from the gross revenues subject to the hospital, 6.23 surgical center, or health care provider taxes under sections 6.24 295.50 to 295.57: 6.25 (1) payments received for services provided under the 6.26 Medicare program, including payments received from the 6.27 government, and organizations governed by sections 1833 and 1876 6.28 of title XVIII of the federal Social Security Act, United States 6.29 Code, title 42, section 1395, and enrollee deductibles, 6.30 coinsurance, and copayments, whether paid by the Medicare 6.31 enrollee or by a Medicare supplemental coverage as defined in 6.32 section 62A.011, subdivision 3, clause (10). Payments for 6.33 services not covered by Medicare are taxable; 6.34 (2) medical assistance payments including payments received 6.35 directly from the government or from a prepaid plan; 6.36 (3) payments received for home health care services; 7.1 (4) payments received from hospitals or surgical centers 7.2 for goods and services on which liability for tax is imposed 7.3 under section 295.52 or the source of funds for the payment is 7.4 exempt under clause (1), (2), (7), (8),or(10), or (13); 7.5 (5) payments received from health care providers for goods 7.6 and services on which liability for tax is imposed under this 7.7 chapter or the source of funds for the payment is exempt under 7.8 clause (1), (2), (7), (8),or(10), or (13); 7.9 (6) amounts paid for legend drugs, other than nutritional 7.10 products, to a wholesale drug distributor who is subject to tax 7.11 under section 295.52, subdivision 3, reduced by reimbursements 7.12 received for legend drugs under clauses (1), (2), (7), and (8); 7.13 (7) payments received under the general assistance medical 7.14 care program including payments received directly from the 7.15 government or from a prepaid plan; 7.16 (8) payments received for providing services under the 7.17 MinnesotaCare program including payments received directly from 7.18 the government or from a prepaid plan and enrollee deductibles, 7.19 coinsurance, and copayments. For purposes of this clause, 7.20 coinsurance means the portion of payment that the enrollee is 7.21 required to pay for the covered service; 7.22 (9) payments received by a health care provider or the 7.23 wholly owned subsidiary of a health care provider for care 7.24 provided outside Minnesotato a patient who is not domiciled in7.25Minnesota; 7.26 (10) payments received from the chemical dependency fund 7.27 under chapter 254B; 7.28 (11) payments received in the nature of charitable 7.29 donations that are not designated for providing patient services 7.30 to a specific individual or group; 7.31 (12) payments received for providing patient services 7.32 incurred through a formal program of health care research 7.33 conducted in conformity with federal regulations governing 7.34 research on human subjects. Payments received from patients or 7.35 from other persons paying on behalf of the patients are subject 7.36 to tax; 8.1 (13) payments received from any governmental agency for 8.2 services benefiting the public, not including payments made by 8.3 the government in its capacity as an employer or insurer; 8.4 (14) payments received for services provided by community 8.5 residential mental health facilities licensed under Minnesota 8.6 Rules, parts 9520.0500 to 9520.0690, community support programs 8.7 and family community support programs approved under Minnesota 8.8 Rules, parts 9535.1700 to 9535.1760, and community mental health 8.9 centers as defined in section 245.62, subdivision 2; 8.10 (15) government payments received by a regional treatment 8.11 center; 8.12 (16) payments received for hospice care services; 8.13 (17) payments received by a health care provider for 8.14 hearing aids and related equipment or prescription eyewear 8.15 delivered outside of Minnesota; 8.16 (18) payments received bya post-secondaryan educational 8.17 institution from student tuition, student activity fees, health 8.18 care service fees, government appropriations, donations, or 8.19 grants. Fee for service payments and payments for extended 8.20 coverage are taxable;and8.21 (19) payments received for services provided by: assisted 8.22 living programs and congregate housing programs; and 8.23 (20) payments received from nursing homes licensed under 8.24 chapter 144A for services provided to a nursing home. 8.25 (b) Payments received by wholesale drug distributors for 8.26 legend drugs sold directly to veterinarians or veterinary bulk 8.27 purchasing organizations are excluded from the gross revenues 8.28 subject to the wholesale drug distributor tax under sections 8.29 295.50 to 295.59. 8.30 Sec. 3. [EFFECTIVE DATE.] 8.31 Sections 1 and 2 are effective for payments received on or 8.32 after January 1, 2000. 8.33 ARTICLE 3 8.34 INCOME AND FRANCHISE TAXES 8.35 Section 1. Minnesota Statutes 1998, section 290.17, 8.36 subdivision 3, is amended to read: 9.1 Subd. 3. [TRADE ORBUSINESS INCOME; GENERAL RULE.] All 9.2 income of a unitary business is subject to apportionment except 9.3 nonbusiness income. Income derived fromcarrying on a trade or9.4 a unitary business must be assigned to this state if thetrade9.5orunitary business is conducted wholly within this state, 9.6 assigned outside this state if conducted wholly without this 9.7 state and apportioned between this state and other states and 9.8 countries under this subdivision if conducted partly within and 9.9 partly without this state. For purposes of determining whether 9.10 atrade orunitary business is carried on exclusively within or 9.11 without this state: 9.12 (a) Atrade orunitary business physically located 9.13 exclusively within this state is nevertheless carried on partly 9.14 within and partly without this state if any of the principles 9.15 set forth in section 290.191 for the allocation of sales or 9.16 receipts within or without this state when applied to the 9.17 taxpayer's situation result in the allocation of any sales or 9.18 receipts without this state. 9.19 (b) Atrade orunitary business physically located 9.20 exclusively without this state is nevertheless carried on partly 9.21 within and partly without this state if any of the principles 9.22 set forth in section 290.191 for the allocation of sales or 9.23 receipts within or without this state when applied to the 9.24 taxpayer's situation result in the allocation of any sales or 9.25 receipts without this state. The jurisdiction to tax such a 9.26 business under this chapter must be determined in accordance 9.27 with sections 290.014 and 290.015. 9.28 Sec. 2. Minnesota Statutes 1998, section 290.17, 9.29 subdivision 4, is amended to read: 9.30 Subd. 4. [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 9.31 business conducted wholly within this state or partly within and 9.32 partly without this state is part of a unitary business, the 9.33 entire income of the unitary business is subject to 9.34 apportionment pursuant to section 290.191. Notwithstanding 9.35 subdivision 2, paragraph (c), none of the income of a unitary 9.36 business is considered to be derived from any particular source 10.1 and none may be allocated to a particular place except as 10.2 provided by the applicable apportionment formula. The 10.3 provisions of this subdivision do not apply to farm income 10.4 subject to subdivision 5, paragraph (a), business income subject 10.5 to subdivision 5, paragraph (b) or (c), income of an insurance 10.6 company determined under section 290.35, or income of an 10.7 investment company determined under section 290.36. 10.8 (b) The term "unitary business" means business activities 10.9 or operations whichare of mutual benefit, dependent upon, or10.10contributory to one another, individually or as a groupresult 10.11 in a flow of value between them. The term may be applied within 10.12 a single legal entity or between multiple entities and without 10.13 regard to whether each entity is a sole proprietorship, a 10.14 corporation, a partnership or a trust. 10.15 (c) Unity is presumed whenever there is unity of ownership, 10.16 operation, and use, evidenced by centralized management or 10.17 executive force, centralized purchasing, advertising, 10.18 accounting, or other controlled interaction, but the absence of 10.19 these centralized activities will not necessarily evidence a 10.20 nonunitary business. Unity is also presumed when business 10.21 activities or operations are of mutual benefit, dependent upon 10.22 or contributory to one another, either individually or as a 10.23 group. 10.24 (d) Where a business operation conducted in Minnesota is 10.25 owned by a business entity that carries on business activity 10.26 outside the state different in kind from that conducted within 10.27 this state, and the other business is conducted entirely outside 10.28 the state, it is presumed that the two business operations are 10.29 unitary in nature, interrelated, connected, and interdependent 10.30 unless it can be shown to the contrary. 10.31 (e) Unity of ownership is not deemed to exist when a 10.32 corporation is involved unless that corporation is a member of a 10.33 group of two or more business entities and more than 50 percent 10.34 of the voting stock of each member of the group is directly or 10.35 indirectly owned by a common owner or by common owners, either 10.36 corporate or noncorporate, or by one or more of the member 11.1 corporations of the group. For this purpose, the term "voting 11.2 stock" shall include membership interests of mutual insurance 11.3 holding companies formed under section 60A.077. 11.4 (f) The net income and apportionment factors under section 11.5 290.191 or 290.20 of foreign corporations and other foreign 11.6 entities which are part of a unitary business shall not be 11.7 included in the net income or the apportionment factors of the 11.8 unitary business. A foreign corporation or other foreign entity 11.9 which is required to file a return under this chapter shall file 11.10 on a separate return basis. The net income and apportionment 11.11 factors under section 290.191 or 290.20 of foreign operating 11.12 corporations shall not be included in the net income or the 11.13 apportionment factors of the unitary business except as provided 11.14 in paragraph (g). 11.15 (g) The adjusted net income of a foreign operating 11.16 corporation shall be deemed to be paid as a dividend on the last 11.17 day of its taxable year to each shareholder thereof, in 11.18 proportion to each shareholder's ownership, with which such 11.19 corporation is engaged in a unitary business. Such deemed 11.20 dividend shall be treated as a dividend under section 290.21, 11.21 subdivision 4. 11.22 Dividends actually paid by a foreign operating corporation 11.23 to a corporate shareholder which is a member of the same unitary 11.24 business as the foreign operating corporation shall be 11.25 eliminated from the net income of the unitary business in 11.26 preparing a combined report for the unitary business. The 11.27 adjusted net income of a foreign operating corporation shall be 11.28 its net income adjusted as follows: 11.29 (1) any taxes paid or accrued to a foreign country, the 11.30 commonwealth of Puerto Rico, or a United States possession or 11.31 political subdivision of any of the foregoing shall be a 11.32 deduction; and 11.33 (2) the subtraction from federal taxable income for 11.34 payments received from foreign corporations or foreign operating 11.35 corporations under section 290.01, subdivision 19d, clause (11), 11.36 shall not be allowed. 12.1 If a foreign operating corporation incurs a net loss, 12.2 neither income nor deduction from that corporation shall be 12.3 included in determining the net income of the unitary business. 12.4 (h) For purposes of determining the net income of a unitary 12.5 business and the factors to be used in the apportionment of net 12.6 income pursuant to section 290.191 or 290.20, there must be 12.7 included only the income and apportionment factors of domestic 12.8 corporations or other domestic entities other than foreign 12.9 operating corporations that are determined to be part of the 12.10 unitary business pursuant to this subdivision, notwithstanding 12.11 that foreign corporations or other foreign entities might be 12.12 included in the unitary business. 12.13 (i) Deductions for expenses, interest, or taxes otherwise 12.14 allowable under this chapter that are connected with or 12.15 allocable against dividends, deemed dividends described in 12.16 paragraph (g), or royalties, fees, or other like income 12.17 described in section 290.01, subdivision 19d, clause (11), shall 12.18 not be disallowed. 12.19 (j) Each corporation or other entity, except a sole 12.20 proprietorship, that is part of a unitary business must file 12.21 combined reports as the commissioner determines. On the 12.22 reports, all intercompany transactions between entities included 12.23 pursuant to paragraph (h) must be eliminated and the entire net 12.24 income of the unitary business determined in accordance with 12.25 this subdivision is apportioned among the entities by using each 12.26 entity's Minnesota factors for apportionment purposes in the 12.27 numerators of the apportionment formula and the total factors 12.28 for apportionment purposes of all entities included pursuant to 12.29 paragraph (h) in the denominators of the apportionment formula. 12.30 (k) If a corporation has been divested from a unitary 12.31 business and is included in a combined report for a fractional 12.32 part of the common accounting period of the combined report: 12.33 (1) its income includable in the combined report is its 12.34 income incurred for that part of the year determined by 12.35 proration or separate accounting; and 12.36 (2) its sales, property, and payroll included in the 13.1 apportionment formula must be prorated or accounted for 13.2 separately. 13.3 Sec. 3. Minnesota Statutes 1998, section 290.17, 13.4 subdivision 6, is amended to read: 13.5 Subd. 6. [NONBUSINESS INCOME.]For a trade or business for13.6which allocation of income within and without this state is13.7required, if the taxpayer has any income not connected with the13.8trade or business carried on partly within and partly without13.9this state that income must be allocated under subdivision 2.13.10Intangible property is employed in a trade or business if the13.11owner of the property holds it as a means of furthering the13.12trade or business.Nonbusiness income is income of the unitary 13.13 business that cannot be apportioned by this state because of the 13.14 United States Constitution or the constitution of the state of 13.15 Minnesota and includes income that is derived from a capital 13.16 transaction that solely serves an investment function. 13.17 Nonbusiness income must be allocated under subdivision 2. 13.18 Sec. 4. [NONBUSINESS INCOME; LIMITATION ON ASSESSMENT OF 13.19 TAX.] 13.20 If a taxpayer reported all income as business income for a 13.21 tax year, unless the income was the subject of a specific 13.22 exception in Minnesota Statutes, chapter 290, the commissioner 13.23 of revenue shall not adjust the return and assess additional tax 13.24 for that year by treating income as nonbusiness income under 13.25 Minnesota Statutes, section 290.17, subdivision 6. 13.26 Sec. 5. [EFFECTIVE DATE.] 13.27 Sections 1 to 3 are effective for tax years beginning after 13.28 December 31, 1998. 13.29 Section 4 is effective for tax years beginning before 13.30 January 1, 1999. 13.31 ARTICLE 4 13.32 FEDERAL UPDATE 13.33 Section 1. Minnesota Statutes 1998, section 289A.02, 13.34 subdivision 7, is amended to read: 13.35 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 13.36 defined otherwise, "Internal Revenue Code" means the Internal 14.1 Revenue Code of 1986, as amended through December 31,19971998. 14.2 Sec. 2. Minnesota Statutes 1998, section 290.01, 14.3 subdivision 19, is amended to read: 14.4 Subd. 19. [NET INCOME.] The term "net income" means the 14.5 federal taxable income, as defined in section 63 of the Internal 14.6 Revenue Code of 1986, as amended through the date named in this 14.7 subdivision, incorporating any elections made by the taxpayer in 14.8 accordance with the Internal Revenue Code in determining federal 14.9 taxable income for federal income tax purposes, and with the 14.10 modifications provided in subdivisions 19a to 19f. 14.11 In the case of a regulated investment company or a fund 14.12 thereof, as defined in section 851(a) or 851(g) of the Internal 14.13 Revenue Code, federal taxable income means investment company 14.14 taxable income as defined in section 852(b)(2) of the Internal 14.15 Revenue Code, except that: 14.16 (1) the exclusion of net capital gain provided in section 14.17 852(b)(2)(A) of the Internal Revenue Code does not apply; 14.18 (2) the deduction for dividends paid under section 14.19 852(b)(2)(D) of the Internal Revenue Code must be applied by 14.20 allowing a deduction for capital gain dividends and 14.21 exempt-interest dividends as defined in sections 852(b)(3)(C) 14.22 and 852(b)(5) of the Internal Revenue Code; and 14.23 (3) the deduction for dividends paid must also be applied 14.24 in the amount of any undistributed capital gains which the 14.25 regulated investment company elects to have treated as provided 14.26 in section 852(b)(3)(D) of the Internal Revenue Code. 14.27 The net income of a real estate investment trust as defined 14.28 and limited by section 856(a), (b), and (c) of the Internal 14.29 Revenue Code means the real estate investment trust taxable 14.30 income as defined in section 857(b)(2) of the Internal Revenue 14.31 Code. 14.32 The net income of a designated settlement fund as defined 14.33 in section 468B(d) of the Internal Revenue Code means the gross 14.34 income as defined in section 468B(b) of the Internal Revenue 14.35 Code. 14.36 The Internal Revenue Code of 1986, as amended through 15.1 December 31, 1986, shall be in effect for taxable years 15.2 beginning after December 31, 1986. The provisions of sections 15.3 10104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223, 15.4 10226, 10227, 10228, 10611, 10631, 10632, and 10711 of the 15.5 Omnibus Budget Reconciliation Act of 1987, Public Law Number 15.6 100-203, the provisions of sections 1001, 1002, 1003, 1004, 15.7 1005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013, 15.8 1014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137, 15.9 6277, and 6282 of the Technical and Miscellaneous Revenue Act of 15.10 1988, Public Law Number 100-647, the provisions of sections 15.11 7811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of 15.12 1989, Public Law Number 101-239, the provisions of sections 15.13 1305, 1704(r), and 1704(e)(1) of the Small Business Job 15.14 Protection Act, Public Law Number 104-188, and the provisions of 15.15 sections 975 and 1604(d)(2) and (e) of the Taxpayer Relief Act 15.16 of 1997, Public Law Number 105-34, and the provisions of section 15.17 4004 of the Omnibus Consolidated and Emergency Supplemental 15.18 Appropriations Act, 1999, Public Law Number 105-277 shall be 15.19 effective at the time they become effective for federal income 15.20 tax purposes. 15.21 The Internal Revenue Code of 1986, as amended through 15.22 December 31, 1987, shall be in effect for taxable years 15.23 beginning after December 31, 1987. The provisions of sections 15.24 4001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011, 15.25 6030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180, 15.26 6182, 6280, and 6281 of the Technical and Miscellaneous Revenue 15.27 Act of 1988, Public Law Number 100-647, the provisions of 15.28 sections 7815 and 7821 of the Omnibus Budget Reconciliation Act 15.29 of 1989, Public Law Number 101-239, and the provisions of 15.30 section 11702 of the Revenue Reconciliation Act of 1990, Public 15.31 Law Number 101-508, shall become effective at the time they 15.32 become effective for federal tax purposes. 15.33 The Internal Revenue Code of 1986, as amended through 15.34 December 31, 1988, shall be in effect for taxable years 15.35 beginning after December 31, 1988. The provisions of sections 15.36 7101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206, 16.1 7207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622, 16.2 7641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget 16.3 Reconciliation Act of 1989, Public Law Number 101-239, the 16.4 provision of section 1401 of the Financial Institutions Reform, 16.5 Recovery, and Enforcement Act of 1989, Public Law Number 101-73, 16.6 the provisions of sections 11701 and 11703 of the Revenue 16.7 Reconciliation Act of 1990, Public Law Number 101-508, and the 16.8 provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the 16.9 Small Business Job Protection Act, Public Law Number 104-188, 16.10 shall become effective at the time they become effective for 16.11 federal tax purposes. 16.12 The Internal Revenue Code of 1986, as amended through 16.13 December 31, 1989, shall be in effect for taxable years 16.14 beginning after December 31, 1989. The provisions of sections 16.15 11321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of 16.16 the Revenue Reconciliation Act of 1990, Public Law Number 16.17 101-508, and the provisions of sections 13224 and 13261 of the 16.18 Omnibus Budget Reconciliation Act of 1993, Public Law Number 16.19 103-66, shall become effective at the time they become effective 16.20 for federal purposes. 16.21 The Internal Revenue Code of 1986, as amended through 16.22 December 31, 1990, shall be in effect for taxable years 16.23 beginning after December 31, 1990. 16.24 The provisions of section 13431 of the Omnibus Budget 16.25 Reconciliation Act of 1993, Public Law Number 103-66, shall 16.26 become effective at the time they became effective for federal 16.27 purposes. 16.28 The Internal Revenue Code of 1986, as amended through 16.29 December 31, 1991, shall be in effect for taxable years 16.30 beginning after December 31, 1991. 16.31 The provisions of sections 1936 and 1937 of the 16.32 Comprehensive National Energy Policy Act of 1992, Public Law 16.33 Number 102-486, the provisions of sections 13101, 13114, 13122, 16.34 13141, 13150, 13151, 13174, 13239, 13301, and 13442 of the 16.35 Omnibus Budget Reconciliation Act of 1993, Public Law Number 16.36 103-66, and the provisions of section 1604(a)(1), (2), and (3) 17.1 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 17.2 shall become effective at the time they become effective for 17.3 federal purposes. 17.4 The Internal Revenue Code of 1986, as amended through 17.5 December 31, 1992, shall be in effect for taxable years 17.6 beginning after December 31, 1992. 17.7 The provisions of sections 13116, 13121, 13206, 13210, 17.8 13222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of 17.9 the Omnibus Budget Reconciliation Act of 1993, Public Law Number 17.10 103-66, the provisions of sections 1703(a), 1703(d), 1703(i), 17.11 1703(l), and 1703(m) of the Small Business Job Protection Act, 17.12 Public Law Number 104-188, and the provision of section 1604(c) 17.13 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 17.14 shall become effective at the time they become effective for 17.15 federal purposes. 17.16 The Internal Revenue Code of 1986, as amended through 17.17 December 31, 1993, shall be in effect for taxable years 17.18 beginning after December 31, 1993. 17.19 The provision of section 741 of Legislation to Implement 17.20 Uruguay Round of General Agreement on Tariffs and Trade, Public 17.21 Law Number 103-465, the provisions of sections 1, 2, and 3, of 17.22 the Self-Employed Health Insurance Act of 1995, Public Law 17.23 Number 104-7, the provision of section 501(b)(2) of the Health 17.24 Insurance Portability and Accountability Act, Public Law Number 17.25 104-191, the provisions of sections 1604 and 1704(p)(1) and (2) 17.26 of the Small Business Job Protection Act, Public Law Number 17.27 104-188, and the provisions of sections 1011, 1211(b)(1), and 17.28 1602(f) of the Taxpayer Relief Act of 1997, Public Law Number 17.29 105-34, shall become effective at the time they become effective 17.30 for federal purposes. 17.31 The Internal Revenue Code of 1986, as amended through 17.32 December 31, 1994, shall be in effect for taxable years 17.33 beginning after December 31, 1994. 17.34 The provisions of sections 1119(a), 1120, 1121, 1202(a), 17.35 1444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small 17.36 Business Job Protection Act, Public Law Number 104-188, the 18.1 provision of section 511 of the Health Insurance Portability and 18.2 Accountability Act, Public Law Number 104-191, and the 18.3 provisions of sections 1174 and 1601(i)(2) of the Taxpayer 18.4 Relief Act of 1997, Public Law Number 105-34, shall become 18.5 effective at the time they become effective for federal purposes. 18.6 The Internal Revenue Code of 1986, as amended through March 18.7 22, 1996, is in effect for taxable years beginning after 18.8 December 31, 1995. 18.9 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 18.10 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 18.11 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 18.12 Protection Act, Public Law Number 104-188, the provisions of 18.13 Public Law Number 104-117,andthe provisions of sections 313(a) 18.14 and (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 18.15 1002, 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 18.16 1087, 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 18.17 1601(f)(5) and (h), and 1604(d)(1) of the Taxpayer Relief Act of 18.18 1997, Public Law Number 105-34, the provisions of section 6010 18.19 of the Internal Revenue Service Restructuring and Reform Act of 18.20 1998, Public Law Number 105-206, and the provisions of section 18.21 4003 of the Omnibus Consolidated and Emergency Supplemental 18.22 Appropriations Act, 1999, Public Law Number 105-277, shall 18.23 become effective at the time they become effective for federal 18.24 purposes. 18.25 The Internal Revenue Code of 1986, as amended through 18.26 December 31, 1996, shall be in effect for taxable years 18.27 beginning after December 31, 1996. 18.28 The provisions of sections 202(a) and (b), 221(a), 225, 18.29 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 18.30 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 18.31 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 18.32 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 18.33 of the Taxpayer Relief Act of 1997, Public Law Number 18.34 105-34, the provisions of sections 6004, 6005, 6012, 6013, 6015, 18.35 6016, 7002, and 7003 of the Internal Revenue Service 18.36 Restructuring and Reform Act of 1998, Public Law Number 105-206, 19.1 and the provisions of section 3001 of the Omnibus Consolidated 19.2 and Emergency Supplemental Appropriations Act, 1999, Public Law 19.3 Number 105-277, shall become effective at the time they become 19.4 effective for federal purposes. 19.5 The Internal Revenue Code of 1986, as amended through 19.6 December 31, 1997, shall be in effect for taxable years 19.7 beginning after December 31, 1997. 19.8 The provisions of sections 5002, 6009, 6011, and 7001 of 19.9 the Internal Revenue Service Restructuring and Reform Act of 19.10 1998, Public Law Number 105-206, the provisions of section 9010 19.11 of the Transportation Equity Act for the 21st Century, Public 19.12 Law Number 105-178, the provisions of sections 1004, 4002, and 19.13 5301 of the Omnibus Consolidation and Emergency Supplemental 19.14 Appropriations Act, 1999, Public Law Number 105-277, and the 19.15 provision of section 303 of the Ricky Ray Hemophilia Relief Fund 19.16 Act of 1998, Public Law Number 105-369, shall become effective 19.17 at the time they become effective for federal purposes. 19.18 The Internal Revenue Code of 1986, as amended through 19.19 December 31, 1998, shall be in effect for taxable years 19.20 beginning after December 31, 1998. 19.21 Except as otherwise provided, references to the Internal 19.22 Revenue Code in subdivisions 19a to 19g mean the code in effect 19.23 for purposes of determining net income for the applicable year. 19.24 Sec. 3. Minnesota Statutes 1998, section 290.01, 19.25 subdivision 19b, is amended to read: 19.26 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 19.27 individuals, estates, and trusts, there shall be subtracted from 19.28 federal taxable income: 19.29 (1) interest income on obligations of any authority, 19.30 commission, or instrumentality of the United States to the 19.31 extent includable in taxable income for federal income tax 19.32 purposes but exempt from state income tax under the laws of the 19.33 United States; 19.34 (2) if included in federal taxable income, the amount of 19.35 any overpayment of income tax to Minnesota or to any other 19.36 state, for any previous taxable year, whether the amount is 20.1 received as a refund or as a credit to another taxable year's 20.2 income tax liability; 20.3 (3) the amount paid to others, less the credit allowed 20.4 under section 290.0674, not to exceed $1,625 for each dependent 20.5 in grades kindergarten to 6 and $2,500 for each dependent in 20.6 grades 7 to 12, for tuition, textbooks, and transportation of 20.7 each dependent in attending an elementary or secondary school 20.8 situated in Minnesota, North Dakota, South Dakota, Iowa, or 20.9 Wisconsin, wherein a resident of this state may legally fulfill 20.10 the state's compulsory attendance laws, which is not operated 20.11 for profit, and which adheres to the provisions of the Civil 20.12 Rights Act of 1964 and chapter 363. For the purposes of this 20.13 clause, "tuition" includes fees or tuition as defined in section 20.14 290.0674, subdivision 1, clause (1). As used in this clause, 20.15 "textbooks" includes books and other instructional materials and 20.16 equipment used in elementary and secondary schools in teaching 20.17 only those subjects legally and commonly taught in public 20.18 elementary and secondary schools in this state. Equipment 20.19 expenses qualifying for deduction includes expenses as defined 20.20 and limited in section 290.0674, subdivision 1, clause (3). 20.21 "Textbooks" does not include instructional books and materials 20.22 used in the teaching of religious tenets, doctrines, or worship, 20.23 the purpose of which is to instill such tenets, doctrines, or 20.24 worship, nor does it include books or materials for, or 20.25 transportation to, extracurricular activities including sporting 20.26 events, musical or dramatic events, speech activities, driver's 20.27 education, or similar programs; 20.28 (4) to the extent included in federal taxable income, 20.29 distributions from a qualified governmental pension plan, an 20.30 individual retirement account, simplified employee pension, or 20.31 qualified plan covering a self-employed person that represent a 20.32 return of contributions that were included in Minnesota gross 20.33 income in the taxable year for which the contributions were made 20.34 but were deducted or were not included in the computation of 20.35 federal adjusted gross income. The distribution shall be 20.36 allocated first to return of contributions until the 21.1 contributions included in Minnesota gross income have been 21.2 exhausted. This subtraction applies only to contributions made 21.3 in a taxable year prior to 1985; 21.4 (5) income as provided under section 290.0802; 21.5 (6) the amount of unrecovered accelerated cost recovery 21.6 system deductions allowed under subdivision 19g; 21.7 (7) to the extent included in federal adjusted gross 21.8 income, income realized on disposition of property exempt from 21.9 tax under section 290.491; 21.10 (8) to the extent not deducted in determining federal 21.11 taxable income, the amount paid for health insurance of 21.12 self-employed individuals as determined under section 162(l) of 21.13 the Internal Revenue Code, except that the25percent limit does 21.14 not apply. If the taxpayer deducted insurance payments under 21.15 section 213 of the Internal Revenue Code of 1986, the 21.16 subtraction under this clause must be reduced by the lesser of: 21.17 (i) the total itemized deductions allowed under section 21.18 63(d) of the Internal Revenue Code, less state, local, and 21.19 foreign income taxes deductible under section 164 of the 21.20 Internal Revenue Code and the standard deduction under section 21.21 63(c) of the Internal Revenue Code; or 21.22 (ii) the lesser of (A) the amount of insurance qualifying 21.23 as "medical care" under section 213(d) of the Internal Revenue 21.24 Code to the extent not deducted under section 162(1) of the 21.25 Internal Revenue Code or excluded from income or (B) the total 21.26 amount deductible for medical care under section 213(a); 21.27 (9) the exemption amount allowed under Laws 1995, chapter 21.28 255, article 3, section 2, subdivision 3; 21.29 (10) to the extent included in federal taxable income, 21.30 postservice benefits for youth community service under section 21.31 124D.42 for volunteer service under United States Code, title 21.32 42, section 5011(d), as amended; 21.33 (11) to the extent not subtracted under clause (1), the 21.34 amount of income or gain included in federal taxable income 21.35 under section 1366 of the Internal Revenue Code flowing from a 21.36 corporation that has a valid election in effect for the taxable 22.1 year under section 1362 of the Internal Revenue Code which is 22.2 not allowed to be an "S" corporation under section 290.9725; 22.3 (12) in the year stock of a corporation that had made a 22.4 valid election under section 1362 of the Internal Revenue Code 22.5 but was not an "S" corporation under section 290.9725 is sold or 22.6 disposed of in a transaction taxable under the Internal Revenue 22.7 Code, the amount of difference between the Minnesota basis of 22.8 the stock under subdivision 19f, paragraph (m), and the federal 22.9 basis if the Minnesota basis is higher than the shareholder's 22.10 federal basis; and 22.11 (13) an amount equal to an individual's, trust's, or 22.12 estate's net federal income tax liability for the tax year that 22.13 is attributable to items of income, expense, gain, loss, or 22.14 credits federally flowing to the taxpayer in the tax year from a 22.15 corporation, having a valid election in effect for federal tax 22.16 purposes under section 1362 of the Internal Revenue Code but not 22.17 treated as an "S" corporation for state tax purposes under 22.18 section 290.9725. 22.19 Sec. 4. Minnesota Statutes 1998, section 290.01, 22.20 subdivision 31, is amended to read: 22.21 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 22.22 defined otherwise, "Internal Revenue Code" means the Internal 22.23 Revenue Code of 1986, as amended through December 31,19971998. 22.24 Sec. 5. Minnesota Statutes 1998, section 290A.03, 22.25 subdivision 15, is amended to read: 22.26 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 22.27 means the Internal Revenue Code of 1986, as amended through 22.28 December 31,19971998. 22.29 Sec. 6. Minnesota Statutes 1998, section 291.005, 22.30 subdivision 1, is amended to read: 22.31 Subdivision 1. Unless the context otherwise clearly 22.32 requires, the following terms used in this chapter shall have 22.33 the following meanings: 22.34 (1) "Federal gross estate" means the gross estate of a 22.35 decedent as valued and otherwise determined for federal estate 22.36 tax purposes by federal taxing authorities pursuant to the 23.1 provisions of the Internal Revenue Code. 23.2 (2) "Minnesota gross estate" means the federal gross estate 23.3 of a decedent after (a) excluding therefrom any property 23.4 included therein which has its situs outside Minnesota and (b) 23.5 including therein any property omitted from the federal gross 23.6 estate which is includable therein, has its situs in Minnesota, 23.7 and was not disclosed to federal taxing authorities. 23.8 (3) "Personal representative" means the executor, 23.9 administrator or other person appointed by the court to 23.10 administer and dispose of the property of the decedent. If 23.11 there is no executor, administrator or other person appointed, 23.12 qualified, and acting within this state, then any person in 23.13 actual or constructive possession of any property having a situs 23.14 in this state which is included in the federal gross estate of 23.15 the decedent shall be deemed to be a personal representative to 23.16 the extent of the property and the Minnesota estate tax due with 23.17 respect to the property. 23.18 (4) "Resident decedent" means an individual whose domicile 23.19 at the time of death was in Minnesota. 23.20 (5) "Nonresident decedent" means an individual whose 23.21 domicile at the time of death was not in Minnesota. 23.22 (6) "Situs of property" means, with respect to real 23.23 property, the state or country in which it is located; with 23.24 respect to tangible personal property, the state or country in 23.25 which it was normally kept or located at the time of the 23.26 decedent's death; and with respect to intangible personal 23.27 property, the state or country in which the decedent was 23.28 domiciled at death. 23.29 (7) "Commissioner" means the commissioner of revenue or any 23.30 person to whom the commissioner has delegated functions under 23.31 this chapter. 23.32 (8) "Internal Revenue Code" means the United States 23.33 Internal Revenue Code of 1986, as amended through December 31, 23.3419971998. 23.35 Sec. 7. [EFFECTIVE DATES.] 23.36 Sections 1, 4, 5, and 6 are effective at the same time 24.1 federal changes made by the Internal Revenue Service 24.2 Restructuring and Reform Act of 1998, Public Law Number 105-206 24.3 and the Omnibus Consolidation and Emergency Supplemental 24.4 Appropriations Act, 1999, Public Law Number 105-277 which are 24.5 incorporated into Minnesota Statutes, chapters 289A, 290, 290A, 24.6 and 291 by these sections become effective for federal tax 24.7 purposes. Section 3 is effective for tax years beginning after 24.8 December 31, 1998. 24.9 ARTICLE 5 24.10 MISCELLANEOUS 24.11 Section 1. Minnesota Statutes 1998, section 270.07, 24.12 subdivision 1, is amended to read: 24.13 Subdivision 1. [POWERS OF COMMISSIONER; APPLICATION FOR 24.14 ABATEMENT; ORDERS.] (a) The commissioner of revenue shall 24.15 prescribe the form of all blanks and books required under this 24.16 chapter and shall hear and determine all matters of grievance 24.17 relating to taxation. Except for matters delegated to the 24.18 various boards of county commissioners under section 375.192, 24.19 and except as otherwise provided by law, the commissioner shall 24.20 have power to grant such reduction or abatement of net tax 24.21 capacities or taxes and of any costs, penalties or interest 24.22 thereon as the commissioner may deem just and equitable, and to 24.23 order the refundment, in whole or in part, of any taxes, costs, 24.24 penalties or interest thereon which have been erroneously or 24.25 unjustly paid. Application therefor shall be submitted with a 24.26 statement of facts in the case and the favorable recommendation 24.27 of the county board or of the board of abatement of any city 24.28 where any such board exists, and the county auditor of the 24.29 county wherein such tax was levied or paid. In the case of taxes 24.30 other than gross earnings taxes, the order may be made only on 24.31 application and approval as provided in this paragraph. No 24.32 reduction, abatement, or refundment of any special assessments 24.33 made or levied by any municipality for local improvements shall 24.34 be made unless it is also approved by the board of review or 24.35 similar taxing authority of such municipality. 24.36 (b) The commissioner has the power to grant reductions or 25.1 abatements of gross earnings tax. An application for reduction 25.2 of gross earnings taxes may be made directly to the commissioner 25.3 without the favorable action of the county board and county 25.4 auditor. The commissioner shall direct that any gross earnings 25.5 taxes that may have been erroneously or unjustly paid be applied 25.6 against unpaid taxes due from the applicant. 25.7 (c) The commissioner shall forward to the county auditor a 25.8 copy of the order made by the commissioner in all cases in which 25.9 the approval of the county board is required. 25.10 (d) The commissioner may refer any question that may arise 25.11 in reference to the true construction of this chapter to the 25.12 attorney general, and the decision thereon shall be in force and 25.13 effect until annulled by the judgment of a court of competent 25.14 jurisdiction. 25.15 (e) The commissioner may by written order abate, reduce, or 25.16 refund any penalty or interest imposed by any law relating to 25.17 taxation, if in the commissioner's opinion the failure to timely 25.18 pay the tax or failure to timely file the return is due to 25.19 reasonable cause, or if the taxpayer is located in a 25.20 presidentially declared disaster area.The order shall be made25.21on application of the taxpayer to the commissioner.25.22(f) If an order issued under this subdivision is for an25.23abatement, reduction, or refund of over $5,000, it shall be25.24valid only if approved in writing by the attorney general.25.25(g)(f) An appeal may not be taken to the tax court from 25.26 any order of the commissioner of revenue made in the exercise of 25.27 the discretionary authority granted in paragraph (a) with 25.28 respect to the reduction or abatement of real or personal 25.29 property taxes in response to a taxpayer's application for an 25.30 abatement, reduction, or refund of taxes, net tax capacities, 25.31 costs, penalties, or interest. 25.32 Sec. 2. Minnesota Statutes 1998, section 270.65, is 25.33 amended to read: 25.34 270.65 [DATE OF ASSESSMENT; DEFINITION.] 25.35 For purposes of taxes administered by the commissioner, the 25.36 term "date of assessment" means the date a return was filed or 26.1 the date a return should have been filed, whichever is later; 26.2 or, in the case of taxes determined by the commissioner, "date 26.3 of assessment" means the date of the order assessing taxes; or, 26.4 in the case of an amended return filed by the taxpayer, the 26.5 assessment date is the date the return was filed with the 26.6 commissioner; or, in the case of a check from a taxpayer that is 26.7 dishonored and results in an erroneous refund being given to the 26.8 taxpayer, remittance of the check is deemed to be an assessment 26.9 and the "date of assessment" is the date the check was received 26.10 by the commissioner. 26.11 Sec. 3. Minnesota Statutes 1998, section 270.78, is 26.12 amended to read: 26.13 270.78 [PENALTY FOR FAILURE TO MAKE PAYMENT BY ELECTRONIC 26.14 FUNDS TRANSFER.] 26.15(a)In addition to other applicable penalties imposed by 26.16 law, after notification from the commissioner of revenue to the 26.17 taxpayer that payments for a tax administered by the 26.18 commissioner are required to be made by means of electronic 26.19 funds transfer, and the payments are remitted by some other 26.20 means, there is a penalty in the amount of five percent of each 26.21 payment that should have been remitted electronically. The 26.22 penalty can be abated under the abatement procedures prescribed 26.23 in section 270.07, subdivision 6, if the failure to remit the 26.24 payment electronically is due to reasonable cause. The penalty 26.25 bears interest at the rate specified in section 270.75 from the 26.26 due date of the payment of the tax to the date of payment of the 26.27 penalty. 26.28(b) The penalty under paragraph (a) does not apply if the26.29taxpayer pays by other means the amount due at least three26.30business days before the date the payment is due. This26.31paragraph does not apply after December 31, 1997.26.32 Sec. 4. Minnesota Statutes 1998, section 270B.03, 26.33 subdivision 1, is amended to read: 26.34 Subdivision 1. [WHO MAY INSPECT.] Returns and return 26.35 information must, onwrittenrequest in a form or manner 26.36 prescribed by the commissioner, be made open to inspection by or 27.1 disclosure to the data subject. For purposes of this chapter, 27.2 the following are the data subject: 27.3 (1) in the case of an individual return, that individual; 27.4 (2) in the case of an income tax return filed jointly, 27.5 either of the individuals with respect to whom the return is 27.6 filed; 27.7 (3) in the case of a partnership return, any person who was 27.8 a member of the partnership during any part of the period 27.9 covered by the return; 27.10 (4) in the case of the return of a corporation or its 27.11 subsidiary: 27.12 (i) any person designated by resolution of the board of 27.13 directors or other similar governing body; 27.14 (ii) any officer or employee of the corporation upon 27.15 written request signed by any officer and attested to by the 27.16 secretary or another officer; 27.17 (iii) any bona fide shareholder of record owning one 27.18 percent or more of the outstanding stock of the corporation; 27.19 (iv) if the corporation is a corporation that has made an 27.20 election under section 1362 of the Internal Revenue Code of 27.21 1986, as amended through December 31, 1988, any person who was a 27.22 shareholder during any part of the period covered by the return 27.23 during which an election was in effect; or 27.24 (v) if the corporation has been dissolved, any person 27.25 authorized by state law to act for the corporation or any person 27.26 who would have been authorized if the corporation had not been 27.27 dissolved; 27.28 (5) in the case of an estate return: 27.29 (i) the personal representative or trustee of the estate; 27.30 and 27.31 (ii) any beneficiary of the estate as shown on the federal 27.32 estate tax return; 27.33 (6) in the case of a trust return: 27.34 (i) the trustee or trustees, jointly or separately; and 27.35 (ii) any beneficiary of the trust as shown in the trust 27.36 instrument; 28.1 (7) if liability has been assessed to a transferee under 28.2 section 289A.31, subdivision 3, the transferee is the data 28.3 subject with regard to the returns and return information 28.4 relating to the assessed liability; 28.5 (8) in the case of an Indian tribal government or an Indian 28.6 tribal government-owned entity, 28.7 (i) the chair of the tribal government, or 28.8 (ii) any person authorized by the tribal government; and 28.9 (9) in the case of a successor as defined in section 28.10 270.102, subdivision 1, paragraph (b), the successor is the data 28.11 subject and information may be disclosed as provided by section 28.12 270.102, subdivision 4. 28.13 Sec. 5. Minnesota Statutes 1998, section 270B.03, 28.14 subdivision 5, is amended to read: 28.15 Subd. 5. [ATTORNEY IN FACT.] Any return or return 28.16 information to which this section applies is, upon written28.17request,open to inspection by or disclosure to the attorney in 28.18 fact duly authorized in a writing signed by the data subject or 28.19 to the person or persons designated by the data subject in a 28.20writtenrequest for or consent to the disclosure in a form or 28.21 manner prescribed by the commissioner. 28.22 Sec. 6. Minnesota Statutes 1998, section 270B.14, is 28.23 amended by adding a subdivision to read: 28.24 Subd. 17. [DISCLOSURE TO DEPARTMENT OF COMMERCE.] The 28.25 commissioner may disclose to the commissioner of commerce 28.26 information required to administer the Uniform Disposition of 28.27 Unclaimed Property Act in sections 354.31 to 345.60, including 28.28 the social security numbers of the taxpayers whose refunds are 28.29 on the report of abandoned property submitted by the 28.30 commissioner to the commissioner of commerce under section 28.31 345.41. Except for data published under section 345.42, the 28.32 information received that is private or nonpublic data retains 28.33 its classification, and can be used by the commissioner of 28.34 commerce only for the purpose of verifying that the persons 28.35 claiming the refunds are the owners. 28.36 Sec. 7. Minnesota Statutes 1998, section 289A.31, 29.1 subdivision 2, is amended to read: 29.2 Subd. 2. [JOINT INCOME TAX RETURNS.] (a) If a joint income 29.3 tax return is made by a husband and wife, the liability for the 29.4 tax is joint and several. A spouse whois relieved ofqualifies 29.5 for relief from a liability attributable toa substantialan 29.6 underpayment under section6013(e)6015(b) of the Internal 29.7 Revenue Code isalsorelieved of the state income tax liability 29.8 on thesubstantialunderpayment. 29.9 (b) In the case of individuals who were a husband and wife 29.10 prior to the dissolution of their marriage or their legal 29.11 separation, or prior to the death of one of the individuals, for 29.12 tax liabilities reported on a joint or combined return, the 29.13 liability of each person is limited to the proportion of the tax 29.14 due on the return that equals that person's proportion of the 29.15 total tax due if the husband and wife filed separate returns for 29.16 the taxable year. This provision is effective only when the 29.17 commissioner receives written notice of the marriage 29.18 dissolution, legal separation, or death of a spouse from the 29.19 husband or wife. No refund may be claimed by an ex-spouse, 29.20 legally separated or widowed spouse for any taxes paid more than 29.21 60 days before receipt by the commissioner of the written notice. 29.22 Sec. 8. Minnesota Statutes 1998, section 289A.40, 29.23 subdivision 1a, is amended to read: 29.24 Subd. 1a. [INDIVIDUAL INCOME TAXES;REASONABLE29.25CAUSESUSPENSION DURING PERIOD OF DISABILITY.] If the 29.26 taxpayerestablishes reasonable cause for failing to timely file29.27the return required by section 289A.08, subdivision 1, files the29.28required return within ten years of the date specified in29.29section 289A.18, subdivision 1, and independently verifies that29.30an overpayment has been made, the commissioner shall grant a29.31refund claimed by the original return, notwithstanding the29.32limitations of subdivision 1meets the requirements for 29.33 suspending the running of the time period to file a claim for 29.34 refund under section 6511(h) of the Internal Revenue Code, the 29.35 time period in subdivision 1 for the taxpayer to file a claim 29.36 for an individual income tax refund is suspended. 30.1 Sec. 9. Minnesota Statutes 1998, section 289A.50, 30.2 subdivision 7, is amended to read: 30.3 Subd. 7. [REMEDIES.] (a) If the taxpayer is notified by 30.4 the commissioner that the refund claim is denied in whole or in 30.5 part, the taxpayer may: 30.6 (1) file an administrative appeal as provided in section 30.7 289A.65, or an appeal with the tax court, within 60 days after 30.8 issuance of the commissioner's notice of denial; or 30.9 (2) file an action in the district court to recover the 30.10 refund. 30.11 (b) An action in the district court on a denied claim for 30.12 refund must be brought within 18 months of the date of the 30.13 denial of the claim by the commissioner. 30.14 (c) No action in the district court or the tax court shall 30.15 be brought within six months of the filing of the refund claim 30.16 unless the commissioner denies the claim within that period. 30.17 (d) Ifa taxpayer files a claim for refund andthe 30.18 commissioner has not issued a denial of the claim within six 30.19 months of the date the claim was filed, the taxpayer may bring 30.20 an action in the district court or the tax courtat any time30.21after the expiration of six months of the time the claim was30.22filed, but within four years of the date that the claim was30.23filed. 30.24 (e) If the commissioner has not issued a denial of the 30.25 claim within 30 months of the date the claim was filed, the 30.26 claim is deemed to be denied by the commissioner on the last day 30.27 of the 30th month. The commissioner and the taxpayer may agree 30.28 to extend the 30-month time period prior to its expiration. An 30.29 action in the district court or tax court on a deemed denied 30.30 claim for refund must be brought within 18 months of the deemed 30.31 denial of the claim by the commissioner. 30.32 (f) The commissioner and the taxpayer may agree to extend 30.33 the period for bringing an action in the district court prior to 30.34 its expiration. 30.35(f)(g) An action for refund of tax by the taxpayer must be 30.36 brought in the district court of the district in which lies the 31.1 county of the taxpayer's residence or principal place of 31.2 business. In the case of an estate or trust, the action must be 31.3 brought at the principal place of its administration. Any 31.4 action may be brought in the district court for Ramsey county. 31.5 Sec. 10. Minnesota Statutes 1998, section 289A.55, 31.6 subdivision 9, is amended to read: 31.7 Subd. 9. [INTEREST ON PENALTIES.] (a) A penalty imposed 31.8 under section 289A.60, subdivision 1, 2, 3, 4, 5,or6, or 21 31.9 bears interest from the date the return or payment was required 31.10 to be filed or paid, including any extensions, to the date of 31.11 payment of the penalty. 31.12 (b) A penalty not included in paragraph (a) bears interest 31.13 only if it is not paid within ten days from the date of notice. 31.14 In that case interest is imposed from the date of notice to the 31.15 date of payment. 31.16 Sec. 11. [EFFECTIVE DATE; TIME LIMIT FOR CERTAIN CLAIMS.] 31.17 Sections 1 and 4 to 6 are effective the day following final 31.18 enactment. 31.19 Section 2 is effective for checks received on or after the 31.20 day following final enactment. 31.21 Sections 3 and 10 are effective for payments due on or 31.22 after the day following final enactment. 31.23 Section 7, paragraph (a), is effective at the same time 31.24 that section 6015(b) of the Internal Revenue Code is effective 31.25 for federal tax purposes. Section 7, paragraph (b), is 31.26 effective for claims for innocent spouse relief, requests for 31.27 allocation of joint income tax liability, and taxes filed or 31.28 paid on or after the day following final enactment. 31.29 Section 8 is effective for disabilities existing on or 31.30 after the date of enactment for which claims for refund have not 31.31 expired under the time limit in Minnesota Statutes, section 31.32 289A.40, subdivision 1. Claims based upon reasonable cause must 31.33 be filed prior to the expiration of the repealed ten-year period 31.34 or within one year after the date of enactment, whichever is 31.35 earlier. 31.36 Section 9 is effective for refund claims filed on or after 32.1 the day following final enactment, except that refund claims for 32.2 the corporate franchise tax imposed under Minnesota Statutes, 32.3 section 290.02, filed prior to enactment that have not been 32.4 previously denied shall be deemed to be denied upon the 32.5 expiration of 30 months after the day following final enactment.