HF 2554

as introduced - 91st Legislature (2019 - 2020) Posted on 03/18/2019 02:41pm

A bill for an act
relating to taxation; estate and gift taxes; imposing a gift tax; making technical
and conforming changes; amending Minnesota Statutes 2018, sections 270B.01,
subdivision 8; 270B.03, subdivision 1; 291.03, subdivision 1; proposing coding
for new law in Minnesota Statutes, chapter 292.

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

Section 1.

Minnesota Statutes 2018, section 270B.01, subdivision 8, is amended to read:

Subd. 8.

Minnesota tax laws.

For purposes of this chapter only, unless expressly stated
otherwise, "Minnesota tax laws" means:

(1) the taxes, refunds, and fees administered by or paid to the commissioner under
chapters 115B, 289A (except taxes imposed under sections 298.01, 298.015, and 298.24),
290, 290A, 291, new text begin 292, new text end 295, 297A, 297B, 297H, and 403, or any similar Indian tribal tax
administered by the commissioner pursuant to any tax agreement between the state and the
Indian tribal government, and includes any laws for the assessment, collection, and
enforcement of those taxes, refunds, and fees; and

(2) section 273.1315.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gifts made after December 31, 2018.
new text end

Sec. 2.

Minnesota Statutes 2018, section 270B.03, subdivision 1, is amended to read:

Subdivision 1.

Who may inspect.

Returns and return information must, on request, be
made open to inspection by or disclosure to the data subject. The request must be made in
writing or in accordance with written procedures of the chief disclosure officer of the
department that have been approved by the commissioner to establish the identification of
the person making the request as the data subject. For purposes of this chapter, the following
are the data subject:

(1) in the case of an individual return, that individual;

(2) in the case of an income tax return filed jointly, either of the individuals with respect
to whom the return is filed;

(3) in the case of a return filed by a business entity, an officer of a corporation, a
shareholder owning more than one percent of the stock, or any shareholder of an S
corporation; a general partner in a partnership; the owner of a sole proprietorship; a member
or manager of a limited liability company; a participant in a joint venture; the individual
who signed the return on behalf of the business entity; or an employee who is responsible
for handling the tax matters of the business entity, such as the tax manager, bookkeeper, or
managing agent;

(4) in the case of an estate return:

(i) the personal representative or trustee of the estate; and

(ii) any beneficiary of the estate as shown on the federal estate tax return;

(5) in the case of a trust return:

(i) the trustee or trustees, jointly or separately; and

(ii) any beneficiary of the trust as shown in the trust instrument;

(6) if liability has been assessed to a transferee under section 270C.58, subdivision 1,
the transferee is the data subject with regard to the returns and return information relating
to the assessed liability;

(7) in the case of an Indian tribal government or an Indian tribal government-owned
entity:

(i) the chair of the tribal government; or

(ii) any person authorized by the tribal government; deleted text begin and
deleted text end

(8) in the case of a successor as defined in section 270C.57, subdivision 1, paragraph
(b), the successor is the data subject and information may be disclosed as provided by section
270C.57, subdivision 4 deleted text begin . deleted text end new text begin ; and
new text end

new text begin (9) in the case of a gift return, the donor.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2018, section 291.03, subdivision 1, is amended to read:

Subdivision 1.

Tax amount.

new text begin (a) new text end The tax imposed must be computed by applying to the
Minnesota taxable estate the deleted text begin following deleted text end schedule of rates new text begin in paragraph (b), new text end and then
new text begin multiplying new text end the resulting amount deleted text begin multiplied deleted text end by a fraction, not greater than one, the numerator
of which is the value of the Minnesota gross estate plus the value of gifts under section
291.016, subdivision 2, clause (3), with a Minnesota situs, and the denominator of which
is the federal gross estate plus the value of gifts under section 291.016, subdivision 2, clause
(3) new text begin , reduced by the amount of gift tax paid by the decedent under section 292.23 on gifts
included in the Minnesota taxable estate and not subtracted as qualified farm or small
business property new text end :

deleted text begin (a) For estates of decedents dying in 2017:
deleted text end

deleted text begin Amount of Minnesota Taxable Estate deleted text end	deleted text begin Rate of Tax deleted text end
deleted text begin Not over $5,100,000 deleted text end	deleted text begin 12 percent deleted text end
deleted text begin Over $5,100,000 but not over $7,100,000 deleted text end	deleted text begin $612,000 plus 12.8 percent of the excess over $5,100,000 deleted text end
deleted text begin Over $7,100,000 but not over $8,100,000 deleted text end	deleted text begin $868,000 plus 13.6 percent of the excess over $7,100,000 deleted text end
deleted text begin Over $8,100,000 but not over $9,100,000 deleted text end	deleted text begin $1,004,000 plus 14.4 percent of the excess over $8,100,000 deleted text end
deleted text begin Over $9,100,000 but not over $10,100,000 deleted text end	deleted text begin $1,148,000 plus 15.2 percent of the excess over $9,100,000 deleted text end
deleted text begin Over $10,100,000 deleted text end	deleted text begin $1,300,000 plus 16 percent of the excess over $10,100,000 deleted text end

(b) For estates of decedents dying in 2018 and thereafter:

Amount of Minnesota Taxable Estate	Rate of Tax
Not over $7,100,000	13 percent
Over $7,100,000 but not over $8,100,000	$923,000 plus 13.6 percent of the excess over $7,100,000
Over $8,100,000 but not over $9,100,000	$1,059,000 plus 14.4 percent of the excess over $8,100,000
Over $9,100,000 but not over $10,100,000	$1,203,000 plus 15.2 percent of the excess over $9,100,000
Over $10,100,000	$1,355,000 plus 16 percent of the excess over $10,100,000

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of decedents dying after
December 31, 2018.
new text end

Sec. 4.

new text begin [292.22] DEFINITIONS.
new text end

new text begin (a) For purposes of this chapter, the following definitions apply.
new text end

new text begin (b) The definitions of terms defined in section 291.005 apply.
new text end

new text begin (c) "Resident" has the meaning given in section 290.01, subdivision 7, paragraph (a).
new text end

new text begin (d) "Taxable gifts" means:
new text end

new text begin (1) the transfers by gift that are included in taxable gifts for federal gift tax purposes
under the following sections of the Internal Revenue Code:
new text end

new text begin (i) section 2503;
new text end

new text begin (ii) sections 2511 to 2514; and
new text end

new text begin (iii) sections 2516 to 2519; less
new text end

new text begin (2) the deductions allowed in sections 2522 to 2524 of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June 30,
2019.
new text end

Sec. 5.

new text begin [292.23] GIFT TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Imposition. new text end

new text begin (a) A tax is imposed on the transfer of property by gift by
any individual resident or nonresident in an amount equal to ten percent of the amount of
the taxable gift.
new text end

new text begin (b) The donor is liable for payment of the tax. If the gift tax is not paid when due, the
donee of any gift is personally liable for the tax to the extent of the value of the gift.
new text end

new text begin Subd. 2. new text end

new text begin Lifetime credit. new text end

new text begin A credit is allowed against the tax imposed under this section
equal to $100,000. This credit applies to the cumulative amount of taxable gifts made by
the donor during the donor's lifetime.
new text end

new text begin Subd. 3. new text end

new text begin Out-of-state gifts. new text end

new text begin Taxable gifts exclude the transfer of:
new text end

new text begin (1) real property located outside of this state;
new text end

new text begin (2) tangible personal property that was normally kept at a location outside of the state
on the date the gift was executed; and
new text end

new text begin (3) intangible personal property made by an individual who was not a resident at the
time the gift was executed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June 30,
2019.
new text end

Sec. 6.

new text begin [292.24] RETURNS.
new text end

new text begin (a) Any individual who makes a taxable gift during the taxable year shall file a gift tax
return in the form and manner prescribed by the commissioner.
new text end

new text begin (b) If the donor dies before filing the return, the executor of the donor's will or the
administrator of the donor's estate shall file the return. If the donor becomes legally
incompetent before filing the return, the guardian or conservator shall file the return.
new text end

new text begin (c) The return must include:
new text end

new text begin (1) each gift made during the calendar year that is to be included in computing the taxable
gifts;
new text end

new text begin (2) the deductions claimed and allowable under section 292.22, paragraph (d), clause
(2);
new text end

new text begin (3) a description of the gift, and the donee's name, address, and Social Security number;
new text end

new text begin (4) the fair market value of gifts not made in money; and
new text end

new text begin (5) any other information the commissioner requires to administer the gift tax.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June 30,
2019.
new text end

Sec. 7.

new text begin [292.25] FILING REQUIREMENTS.
new text end

new text begin Gift tax returns must be filed by the April 15 following the close of the calendar year,
except if a gift is made during the calendar year in which the donor dies, the return for the
donor must be filed by the last date, including extensions, for filing the gift tax return for
federal gift tax purposes for the donor.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June 30,
2019.
new text end

Sec. 8.

new text begin [292.26] APPRAISAL OF PROPERTY; DECLARATION BY DONOR.
new text end

new text begin The commissioner may require the donor or the donee to show the property subject to
the tax under section 292.23 to the commissioner upon demand and may employ a suitable
person to appraise the property. The donor shall submit a declaration, in a form prescribed
by the commissioner and including any certification required by the commissioner, that the
property shown by the donor on the gift tax return includes all of the property transferred
by gift for the calendar year and not deductible under section 292.22, paragraph (d), clause
(2).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June 30,
2019.
new text end

Sec. 9.

new text begin [292.27] ADMINISTRATIVE PROVISIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Payment of tax; penalty for late payment. new text end

new text begin The tax imposed under
section 292.23 is due and payable to the commissioner by the April 15 following the close
of the calendar year during which the gift was made. The return required under sections
292.24 and 292.25 must be included with the payment. If a taxable gift is made during the
calendar year in which the donor dies, the due date is the last date, including extensions,
for filing the gift tax return for federal gift tax purposes for the donor. If any person fails to
pay the tax due within the time specified under this section, a penalty applies equal to ten
percent of the amount due and unpaid or $100, whichever is greater. The unpaid tax and
penalty bear interest at the rate under section 270C.40 from the due date of the return.
new text end

new text begin Subd. 2. new text end

new text begin Extensions. new text end

new text begin The commissioner may, for good cause, extend the time for filing
a gift tax return, if a written request is filed with a tentative return accompanied by a payment
of the tax, which is estimated in the tentative return, on or before the last day for filing the
return. Any person to whom an extension is granted must pay, in addition to the tax, interest
at the rate under section 270C.40 from the date on which the tax would have been due
without the extension.
new text end

new text begin Subd. 3. new text end

new text begin Changes in federal gift tax. new text end

new text begin If the amount of a taxpayer's taxable gifts for
federal gift tax purposes, as reported on the taxpayer's federal gift tax return for any calendar
year, is changed or corrected by the Internal Revenue Service or other officer of the United
States or other competent authority, the taxpayer shall report the change or correction in
federal taxable gifts within 180 days after the final determination of the change or correction,
and concede the accuracy of the determination or provide a letter detailing how the federal
determination is incorrect or does not change the Minnesota gift tax. Any taxpayer filing
an amended federal gift tax return shall also file within 180 days an amended return under
this chapter and shall include any information the commissioner requires. The time for filing
the report or amended return may be extended by the commissioner upon due cause shown.
Notwithstanding any limitation of time in this chapter, if, upon examination, the
commissioner finds that the taxpayer is liable for the payment of an additional tax, the
commissioner shall, within a reasonable time from the receipt of the report or amended
return, notify the taxpayer of the amount of additional tax, together with interest computed
at the rate under section 270C.40 from the date when the original tax was due and payable.
Within 30 days of the mailing of the notice, the taxpayer shall pay the commissioner the
amount of the additional tax and interest. If, upon examination of the report or amended
return and related information, the commissioner finds that the taxpayer has overpaid the
tax due the state, the commissioner shall refund the overpayment to the taxpayer.
new text end

new text begin Subd. 4. new text end

new text begin Application of federal rules. new text end

new text begin In administering the tax under this chapter, the
commissioner shall apply the provisions of sections 2701 to 2704 of the Internal Revenue
Code. The words "secretary or his delegate," as used in those sections of the Internal Revenue
Code, mean the commissioner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June 30,
2019.
new text end