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HF 1251

as introduced - 88th Legislature (2013 - 2014) Posted on 03/06/2013 03:03pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to taxes; individual income and corporate franchise; providing for federal
conformity under certain conditions; proposing coding for new law in Minnesota
Statutes, chapter 290.

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

Section 1.

new text begin [290.016] FEDERAL CONFORMITY FOR CURRENT TAXABLE
YEAR.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Current taxable year" means taxable years beginning during the calendar year
in which the qualified federal enactment occurred, or, in the case of a qualified federal
enactment that occurs in January or February, current taxable year means taxable years
beginning during the calendar year preceding that in which the qualified federal enactment
occurred.
new text end

new text begin (c) "Minnesota corporate franchise tax revenue" means revenue derived from the
tax under sections 290.06, subdivision 1, and 290.0921.
new text end

new text begin (d) "Minnesota individual income tax revenue" means revenue derived from the tax
under sections 290.06, subdivision 2c, and 290.091.
new text end

new text begin (e) "Nonqualifying provision" means a federal change to the definition of net income
in section 290.01, subdivision 19, which was in effect in the preceding taxable year,
but which Minnesota did not adopt for the preceding taxable year, but instead required
an addition to federal taxable income, subtraction from federal taxable income, or other
modification.
new text end

new text begin (f) "Preceding taxable year" means taxable years beginning during the calendar year
preceding that in which the qualified federal enactment occurred, or, in the case of a
qualified federal enactment that occurs in January or February, "preceding taxable year"
means taxable years beginning during the second calendar year preceding that in which
the qualified federal enactment occurred.
new text end

new text begin (g) "Qualified federal enactment" means a federal tax law that:
new text end

new text begin (1) modifies the definition of net income in section 290.01, subdivision 19, for the
current taxable year; and
new text end

new text begin (2) was enacted into law after the adjournment of the regular legislative session for
the year or within two calendar weeks before the last day of the calendar year in which
the legislature is permitted by the constitution to meet in regular session, and before the
date on which the legislature reconvenes in regular session.
new text end

new text begin (h) "Qualified federal tax provision" means a provision of a qualified federal
enactment that the commissioner determines is the same or similar to a provision of
federal law affecting the computation of net income for the preceding taxable year and the
predecessor provision was not a nonqualifying provision.
new text end

new text begin Subd. 2. new text end

new text begin Qualified federal tax provisions effective for current taxable year. new text end

new text begin (a)
Each year in which there is one or more qualified federal enactments, the commissioner
must estimate the effect of each qualified federal tax provision on Minnesota individual
income tax revenues and Minnesota corporate franchise tax revenues for the current
taxable year.
new text end

new text begin (b) Notwithstanding the provisions of section 290.01 specifying that the Internal
Revenue Code means the version of the Internal Revenue Code as amended through
a specific date, the Internal Revenue Code for the current taxable year includes each
qualified federal tax provision if the commissioner estimates that the sum of the effects
of all qualified federal tax provisions on Minnesota individual income tax and corporate
franchise tax revenues will result in an increase or decrease in Minnesota individual income
tax and corporate franchise tax revenues of less than one percent of Minnesota individual
income tax and corporate franchise tax revenues estimated for the current taxable year.
new text end

new text begin (c) Each qualified federal tax provision that becomes effective under this section for
the current taxable year is effective at the same time it became effective for federal purposes.
new text end

new text begin Subd. 3. new text end

new text begin Federal conformity bracket adjustment; individuals. new text end

new text begin (a) If the
commissioner determines that the conditions required under subdivision 2, paragraph (b),
are satisfied, the commissioner must adjust the individual income tax brackets for the
current taxable year to offset the effect of the qualified federal tax provisions on Minnesota
individual income tax revenues, as provided in paragraph (b).
new text end

new text begin (b) The commissioner must adjust the individual income tax brackets in section
290.06, subdivision 2c, in a manner such that the aggregate increase or decrease in tax for
each income bracket, other than the first bracket, bears the same relationship to the total
increase or decrease in tax as the current tax assessed on income in each bracket bears
to the total current tax assessed on income in all brackets other than the first bracket.
The commissioner may round the brackets as provided in section 290.06, subdivision
2d, paragraph (a).
new text end

new text begin Subd. 4. new text end

new text begin Federal conformity surtax; corporations. new text end

new text begin (a) If the commissioner
determines that the conditions required under subdivision 2, paragraph (b), are satisfied,
the commissioner must assess a surtax for the current taxable year to offset the effect of
the qualified federal tax provisions on corporate franchise tax revenues, as provided in this
section. The surtax may be positive, in the case of a qualified federal provision estimated
to result in a decrease in Minnesota corporate franchise tax revenue, or negative, in the
case of a qualified federal tax provision estimated to result in an increase in Minnesota
corporate franchise tax revenue.
new text end

new text begin (b) The commissioner must assess a surtax on the tax owed under section 290.06,
subdivision 1, at the rate necessary to offset the increase or decrease in Minnesota corporate
franchise tax revenue resulting from the qualified federal tax provision. The commissioner
may round the rate of the surtax to be in an increment of one-tenth of one percent.
new text end

new text begin Subd. 5. new text end

new text begin Reports and draft legislation. new text end

new text begin (a) Within 30 days of a qualified federal
enactment, the commissioner must notify the chairs of the legislative committees with
jurisdiction over taxes of:
new text end

new text begin (1) any qualified federal tax provisions included in the qualified federal enactment;
new text end

new text begin (2) whether or not the qualified federal tax provisions in the qualified federal
enactment, in aggregate with any qualified federal tax provisions from previous qualified
federal enactments, meet the conditions required under subdivision 2, paragraph (b);
new text end

new text begin (3) the amount of any bracket adjustment required under subdivision 3; and
new text end

new text begin (4) the amount and rate of any surtax assessment required under subdivision 4.
new text end

new text begin (b) By January 15 of the next year, the commissioner must provide the chairs of
the house and senate committees with jurisdiction over taxes with draft legislation to
update the statutes for any qualified federal tax provisions, bracket adjustments, and
surtax assessments in the current taxable year.
new text end

new text begin Subd. 6. new text end

new text begin Estimated taxes; exceptions. new text end

new text begin No addition to tax, penalties, or interest
may be made under section 289A.25 or 289A.26, for the current taxable year, with respect
to an underpayment of estimated tax, to the extent that the underpayment was created or
increased by the changes to the income brackets or the surtax under this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment for
qualified federal enactments occurring in calendar year 2013 and following years.
new text end