HF 511

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:38am

A bill for an act
relating to taxation; property; providing for a seasonal recreational property
tax deferral program; appropriating money; proposing coding for new law as
Minnesota Statutes, chapter 290D.

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

Section 1.

new text begin [290D.01] CITATION.
new text end

new text begin This program shall be named the "seasonal recreational property tax deferral
program."
new text end

Sec. 2.

new text begin [290D.02] TERMS.
new text end

new text begin Subdivision 1. new text end

new text begin Terms. new text end

new text begin For purposes of sections 290D.01 to 290D.08, the terms
defined in this section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Primary property owner. new text end

new text begin "Primary property owner" means a person who
(1) has been the owner, or one of the owners, of the eligible property for at least 15 years
prior to the year the application is filed under section 290D.04; and (2) applies for the
deferral of property taxes under section 290D.04.
new text end

new text begin Subd. 3. new text end

new text begin Secondary property owner. new text end

new text begin "Secondary property owner" means any
person, other than the primary property owner, who has been an owner of the eligible
property for at least 15 years prior to the year the initial application is filed for deferral
of property taxes under section 290D.04.
new text end

new text begin Subd. 4. new text end

new text begin Eligible property. new text end

new text begin "Eligible property" means a parcel of property or
contiguous parcels of property under the same ownership classified as noncommercial
seasonal residential recreational 4c(1) property under section 273.13, subdivision 25.
new text end

new text begin Subd. 5. new text end

new text begin Base property tax amount. new text end

new text begin "Base property tax amount" means the total
property taxes levied by all taxing jurisdictions, including special assessments, on the
eligible property in the year prior to the year that the initial application is approved under
section 290D.04 and payable in the year of the application.
new text end

new text begin Subd. 6. new text end

new text begin Special assessments. new text end

new text begin "Special assessments" mean any assessment, fee, or
other charge that may be made by law, and that appears on the property tax statement for
the property for collection under the laws applicable to the enforcement of real estate taxes.
new text end

new text begin Subd. 7. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of revenue.
new text end

Sec. 3.

new text begin [290D.03] QUALIFICATIONS FOR DEFERRAL.
new text end

new text begin In order for an eligible property to qualify for treatment under this program:
new text end

new text begin (1) the eligible property must have been owned solely by the primary property owner,
or jointly with others, for at least 15 years prior to the year the initial application is filed;
new text end

new text begin (2) there must be no state or federal tax liens or judgment liens on the eligible
property;
new text end

new text begin (3) there must be no mortgages or other liens on the eligible property that secure
future advances, except for those subject to credit limits that result in compliance with
clause (4); and
new text end

new text begin (4) the total unpaid balances of debts secured by mortgages and other liens on the
eligible property, including unpaid and delinquent special assessments and interest and
any delinquent property taxes, penalties, and interest, but not including property taxes
payable during the year, must not exceed 60 percent of the assessor's estimated market
value for the current assessment year.
new text end

Sec. 4.

new text begin [290D.04] APPLICATION FOR DEFERRAL.
new text end

new text begin Subdivision 1. new text end

new text begin Initial application. new text end

new text begin (a) A primary owner of a property meeting
the qualifications under section 290D.03 may apply to the commissioner for deferral
of taxes on the eligible property. Applications are due on or before July 1 for deferral
of any taxes payable in the following year. The application, which must be prescribed
by the commissioner, shall include the following items and any other information the
commissioner deems necessary:
new text end

new text begin (1) the name, address, and Social Security number of the primary property owner
and secondary property owners, if any;
new text end

new text begin (2) a copy of the property tax statement for the current taxes payable year for the
eligible property;
new text end

new text begin (3) the initial year of ownership of the primary property owner and any second
property owners of the eligible property;
new text end

new text begin (4) information on any mortgage loans or other amounts secured by mortgages or
other liens against the eligible property, for which purpose the commissioner may require
the applicant to provide a copy of the mortgage note, the mortgage, or a statement of the
balance owing on the mortgage loan provided by the mortgage holder. The commissioner
may require the appropriate documents in connection with obtaining and confirming
information on unpaid amounts secured by other liens; and
new text end

new text begin (5) the signatures of the primary property owner and all other owners, if any, stating
that each owner agrees to enroll the eligible property in the program to defer property
taxes under this chapter.
new text end

new text begin The application must state that program participation is voluntary. The application
must also state that program participation includes authorization for the annual deferred
amount. The deferred property tax calculated by the county and the cumulative deferred
property tax amount is public data.
new text end

new text begin (b) As part of the initial application process, if the property is abstract property, the
commissioner may require the applicant to obtain at the applicant's cost a report prepared
by a licensed abstracter showing the last deed and any unsatisfied mortgages, liens,
judgments, and state and federal tax lien notices which were recorded on or after the date
of that last deed with respect to the eligible property or to the applicant.
new text end

new text begin The certificate or report need not include references to any documents filed or
recorded more than 40 years prior to the date of the certification or report. The certification
or report must be as of a date not more than 30 days prior to submission of the application
under this section.
new text end

new text begin The commissioner may also require the county recorder or county registrar of the
county where the eligible property is located to provide copies of recorded documents
related to the applicant of the eligible property, for which the recorder or registrar shall
not charge a fee. The commissioner may use any information available to determine or
verify eligibility under this section.
new text end

new text begin Subd. 2. new text end

new text begin Approval; recording. new text end

new text begin The commissioner shall approve all initial
applications that qualify under this chapter and shall notify the primary property owner on
or before December 1. The commissioner may investigate the facts or require confirmation
in regard to an application. The commissioner shall record or file a notice of qualification
for deferral, including the names of the primary and any secondary property owners and a
legal description of the eligible property, in the office of the county recorder, or registrar of
titles, whichever is applicable, in the county where the eligible property is located. The
notice must state that it serves as a notice of lien and that it includes deferrals under this
section for future years. The primary property owner shall pay the recording or filing fees
for the notice, which, notwithstanding section 357.18, shall be paid by that owner at the
time of satisfaction of the lien.
new text end

new text begin Subd. 3. new text end

new text begin Penalty for failure; investigations. new text end

new text begin (a) The commissioner shall assess
a penalty equal to 20 percent of the property taxes improperly deferred in the case of a
false application. The commissioner shall assess a penalty equal to 50 percent of the
property taxes improperly deferred if the taxpayer knowingly filed a false application. The
commissioner shall assess penalties under this section through the issuance of an order
under the provisions of chapter 270C. Persons affected by a commissioner's order issued
under this section may appeal as provided in chapter 270C.
new text end

new text begin (b) The commissioner may conduct investigations related to initial applications
required under this chapter within the period ending 3-1/2 years from the due date of
the application.
new text end

new text begin Subd. 4. new text end

new text begin Annual certification to commissioner. new text end

new text begin Annually on or before July 1,
the primary property owner must certify to the commissioner that the person continues
to qualify as a primary property owner. If the primary owner has died or has transferred
the property in the preceding year, a certification may be filed by the primary owner's
spouse, or by one of the secondary owners, provided that the person is currently an
owner of the property. In this case, the primary owner's spouse or the secondary owner
shall be considered the primary owner from that point forward. If neither the primary
owner, the primary owner's spouse, or a secondary owner is eligible to file the required
annual certification for the property, the property's participation in the program shall be
terminated, and the procedures in section 290D.08 apply.
new text end

new text begin Subd. 5. new text end

new text begin Annual notice to primary property owner. new text end

new text begin Annually, on or before
September 1, the commissioner shall notify each primary property owner, in writing, of
the total cumulative deferred taxes and accrued interest on the qualifying property as of
that date.
new text end

Sec. 5.

new text begin [290D.05] DEFERRED PROPERTY TAX AMOUNT.
new text end

new text begin Subdivision 1. new text end

new text begin Calculation of deferred property tax amount. new text end

new text begin Each year after
the county auditor has determined the final property tax rates under section 275.08, the
"deferred property tax amount" must be calculated on each eligible property. The deferred
property tax amount is equal to 50 percent of the amount of the difference between (1) the
total amount of property taxes and special assessments levied upon the eligible property
for the current year by all taxing jurisdictions and (2) the eligible property's base property
tax amount. Any tax attributable to new improvements made to the eligible property after
the initial application has been approved under section 290D.04, subdivision 2, must be
excluded in determining the deferred property tax amount. The eligible property's total
current year's tax less the deferred property tax amount for the current year must be listed
on the property tax statement and is the amount due to the county under chapter 276.
Reference that the property is enrolled in the seasonal recreational property tax deferral
program under this chapter and a state lien has been recorded must be clearly printed on
the statement.
new text end

new text begin Subd. 2. new text end

new text begin Certification to commissioner. new text end

new text begin The county auditor shall annually, on or
before April 15, certify to the commissioner the property tax deferral amounts determined
under this section for each eligible property in the county. The commissioner shall
prescribe the information that is necessary to identify the eligible properties.
new text end

new text begin Subd. 3. new text end

new text begin Limitation on total amount of deferred taxes. new text end

new text begin The total amount of
deferred taxes and interest on a property, when added to (1) the balance owed on any
mortgages on the property at the time of initial application; (2) other amounts secured by
liens on the property at the time of the initial application; and (3) any unpaid and delinquent
special assessments and interest and any delinquent property taxes, penalties, and interest,
but not including property taxes payable during the year, must not exceed 60 percent of
the assessor's estimated market value of the property for the current assessment year.
new text end

Sec. 6.

new text begin [290D.06] LIEN; DEFERRED PORTION.
new text end

new text begin (a) Payment by the state to the county treasurer of property taxes, penalties, interest,
or special assessments and interest, deferred under this chapter is deemed a loan from the
state to the program participant. The commissioner shall compute the interest as provided
in section 270C.40, subdivision 5, but not to exceed two percent over the maximum
interest rate provided in section 290B.07, paragraph (a), and maintain records of the total
deferred amount and interest for each participant. Interest accrues beginning September 1
of the payable year for which the taxes are deferred. Any deferral made under this chapter
must not be construed as delinquent property taxes.
new text end

new text begin The lien created under section 272.31 continues to secure payment by the taxpayer,
or by the taxpayer's successors or assigns, of the amount deferred, including interest, with
respect to all years for which amounts are deferred. The lien for deferred taxes and interest
has the same priority as any other lien under section 272.31, except that liens, including
mortgages, recorded or filed prior to the recording or filing of the notice under section
290D.04, subdivision 2, have priority over the lien for deferred taxes and interest. A
seller's interest in a contract for deed, in which a qualifying owner is the purchaser or an
assignee of the purchaser, has priority over deferred taxes and interest on deferred taxes,
regardless of whether the contract for deed is recorded or filed. The lien for deferred taxes
and interest for future years has the same priority as the lien for deferred taxes and interest
for the first year, which is always higher in priority than any mortgages or other liens filed,
recorded, or created after the notice recorded or filed under section 290D.04, subdivision
2. The county treasurer or auditor shall maintain records of the deferred portion and shall
list the amount of deferred taxes for the year and the cumulative deferral and interest for
all previous years as a lien against the eligible property. In any certification of unpaid
taxes for a tax parcel, the county auditor shall clearly distinguish between taxes payable in
the current year, deferred taxes and interest, and delinquent taxes. Payment of the deferred
portion becomes due and owing at the time specified in section 290D.07. Upon receipt of
the payment, the commissioner shall issue a receipt to the person making the payment
upon request and shall notify the auditor of the county in which the parcel is located,
within ten days, identifying the parcel to which the payment applies. Upon receipt by the
commissioner of collected funds in the amount of the deferral, the state's loan to the
program participant is deemed paid in full.
new text end

new text begin (b) If eligible property for which taxes have been deferred under this chapter forfeits
under chapter 281 for nonpayment of a nondeferred property tax amount, or because
of nonpayment of amounts previously deferred following a termination under section
290D.07, the lien for the taxes deferred under this chapter, plus interest and costs, shall be
canceled by the county auditor as provided in section 282.07. However, notwithstanding
any other law to the contrary, any proceeds from a subsequent sale of the eligible property
under chapter 282 or another law, must be used to first reimburse the county's forfeited
tax sale fund for any direct costs of selling the eligible property or any costs directly
related to preparing the eligible property for sale, and then to reimburse the state for
the amount of the canceled lien. Within 90 days of the receipt of any sale proceeds to
which the state is entitled under these provisions, the county auditor must pay those funds
to the commissioner by warrant for deposit in the general fund. No other deposit, use,
distribution, or release of gross sale proceeds or receipts may be made by the county until
payments sufficient to fully reimburse the state for the canceled lien amount have been
transmitted to the commissioner.
new text end

Sec. 7.

new text begin [290D.07] TERMINATION OF DEFERRAL; PAYMENT OF DEFERRED
TAXES.
new text end

new text begin Subdivision 1. new text end

new text begin Termination. new text end

new text begin (a) The deferral of taxes granted under this chapter
terminates when one of the following occurs:
new text end

new text begin (1) the eligible property is sold or transferred to someone other than the primary
owner's spouse or a secondary owner;
new text end

new text begin (2) the death of the primary owner, or in the case of a married couple, after the
death of both spouses, provided that there is not a secondary owner eligible to become
the primary owner;
new text end

new text begin (3) the primary property owner notifies the commissioner, in writing, that all owners,
including any secondary property owners, desire to discontinue the deferral; or
new text end

new text begin (4) the eligible property no longer qualifies under section 290D.03.
new text end

new text begin (b) An eligible property is not terminated from the program because no deferred
property tax amount is determined for any given year after the eligible property's initial
enrollment into the program.
new text end

new text begin (c) An eligible property is not terminated from the program if the eligible property
subsequently becomes the homestead of one or more of the property owners and the
property and the owners qualify for, and are immediately enrolled in, the senior deferral
program under chapter 290B.
new text end

new text begin Subd. 2. new text end

new text begin Payment upon termination. new text end

new text begin Upon the termination of the deferral under
subdivision 1, the amount of deferred taxes, penalties, interest, and special assessments
and interest, plus the recording or filing fees under this subdivision and section 290D.04,
subdivision 2, becomes due and payable to the commissioner within 90 days of termination
of the deferral for terminations under subdivision 1, paragraph (a), clauses (1) and (2),
and within one year of termination of the deferral for terminations under subdivision 1,
paragraph (a), clauses (3) and (4). No additional interest is due on the deferral if timely
paid. On receipt of payment, the commissioner shall, within ten days, notify the auditor
of the county in which the parcel is located, identifying the parcel to which the payment
applies and shall remit the recording or filing fees under this subdivision and section
290D.04, subdivision 2, to the auditor. A notice of termination of deferral, containing the
legal description and the recording or filing data for the notice of qualification for deferral
under section 290D.04, subdivision 2, shall be prepared and recorded or filed by the
county auditor in the same office in which the notice of qualification for deferral under
section 290D.04, subdivision 2, was recorded or filed, and the county auditor shall mail a
copy of the notice of termination to the property owner. The property owner shall pay the
recording or filing fees. Upon recording or filing of the notice of termination of deferral,
the notice of qualification for deferral under section 290D.04, subdivision 2, and the lien
created by it are discharged. If the deferral is not timely paid, the penalty, interest, lien,
forfeiture, and other rules for the collection of ad valorem property taxes apply.
new text end

Sec. 8.

new text begin [290D.08] STATE REIMBURSEMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Determination; payment. new text end

new text begin The county auditor shall determine the
total current year's deferred amount of property tax under this chapter in the county, and
submit those amounts as part of the abstracts of tax lists submitted by the county auditors
under section 275.29. The commissioner may make changes in the abstracts of tax lists as
deemed necessary. The commissioner, after such review, shall pay the deferred amount of
property tax to each county treasurer on or before August 31.
new text end

new text begin The county treasurer shall distribute as part of the October settlement the funds
received as if they had been collected as part of the property tax.
new text end

new text begin Subd. 2. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the total amount of property
tax determined under subdivision 1, plus any other amounts paid under this chapter, is
annually appropriated from the general fund to the commissioner.
new text end

Sec. 9. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 8 are effective for applications filed July 1, 2009, and thereafter.
new text end