1.1 	A bill for an act
1.2 	relating to economic development; conforming certain income, franchise, 
1.3 	and property tax refund provisions to changes in federal law; providing an 
1.4 	administrative mechanism for conforming to certain federal changes; creating 
1.5 	an account; transferring money; providing a small business tax refund; 
1.6 	modifying small business development center services; promoting initiative 
1.7 	foundation business finance services; modifying duties of the Bureau of Small 
1.8 	Business; establishing a private letter ruling; requiring a report; appropriating 
1.9 	money;amending Minnesota Statutes 2014, sections 116J.68; 270C.33, by 
1.10 	adding a subdivision; 270C.34, subdivision 1; 289A.60, subdivision 1; 290.01, 
1.11 	subdivisions 19a, 19b, 19c, 19d; 290.091, subdivision 2; Minnesota Statutes 
1.12 	2015 Supplement, sections 289A.02, subdivision 7; 290.01, subdivisions 19, 
1.13 	31; 290.0671, subdivision 1; 290A.03, subdivision 15; 291.005, subdivision 1; 
1.14 	proposing coding for new law in Minnesota Statutes, chapters 270C; 290; 297A.
1.15 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.16 	ARTICLE 1
1.17 	FEDERAL TAX CONFORMITY

1.18 	Section 1. Minnesota Statutes 2015 Supplement, section 289A.02, subdivision 7, 
1.19 	is amended to read:
1.20 		Subd. 7.Internal Revenue Code. Unless specifically defined otherwise, "Internal 
1.21 	Revenue Code" means the Internal Revenue Code of 1986, as amended through December 
1.22 	31, 2014 2015.

1.23 	Sec. 2. Minnesota Statutes 2015 Supplement, section 290.01, subdivision 19, is 
1.24 	amended to read:
1.25 		Subd. 19.Net income. The term "net income" means the federal taxable income, 
1.26 	as defined in section 63 of the Internal Revenue Code of 1986, as amended through the 
2.1 	date named in this subdivision, incorporating the federal effective dates of changes to the 
2.2 	Internal Revenue Code and any elections made by the taxpayer in accordance with the 
2.3 	Internal Revenue Code in determining federal taxable income for federal income tax 
2.4 	purposes, and with the modifications provided in subdivisions 19a to 19f.
2.5 	In the case of a regulated investment company or a fund thereof, as defined in section 
2.6 	851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment 
2.7 	company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, 
2.8 	except that:
2.9 	(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal 
2.10 	Revenue Code does not apply;
2.11 	(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal 
2.12 	Revenue Code must be applied by allowing a deduction for capital gain dividends and 
2.13 	exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal 
2.14 	Revenue Code; and
2.15 	(3) the deduction for dividends paid must also be applied in the amount of any 
2.16 	undistributed capital gains which the regulated investment company elects to have treated 
2.17 	as provided in section 852(b)(3)(D) of the Internal Revenue Code.
2.18 	The net income of a real estate investment trust as defined and limited by section 
2.19 	856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust 
2.20 	taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
2.21 	The net income of a designated settlement fund as defined in section 468B(d) of 
2.22 	the Internal Revenue Code means the gross income as defined in section 468B(b) of the 
2.23 	Internal Revenue Code.
2.24 	The Internal Revenue Code of 1986, as amended through December 31, 2014 2015, 
2.25 	shall be in effect for taxable years beginning after December 31, 1996.
2.26 	Except as otherwise provided, references to the Internal Revenue Code in 
2.27 	subdivisions 19 to 19f mean the code in effect for purposes of determining net income for 
2.28 	the applicable year.

2.29 	EFFECTIVE DATE. This section is effective the day following final enactment, 
2.30 	except the changes incorporated by federal changes are effective retroactively at the same 
2.31 	time as the changes were effective for federal purposes.

2.32 	Sec. 3. Minnesota Statutes 2014, section 290.01, subdivision 19a, is amended to read:
2.33 		Subd. 19a.Additions to federal taxable income. For individuals, estates, and 
2.34 	trusts, there shall be added to federal taxable income:
3.1 	(1)(i) interest income on obligations of any state other than Minnesota or a political 
3.2 	or governmental subdivision, municipality, or governmental agency or instrumentality 
3.3 	of any state other than Minnesota exempt from federal income taxes under the Internal 
3.4 	Revenue Code or any other federal statute; and
3.5 	(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 
3.6 	Code, except:
3.7 	(A) the portion of the exempt-interest dividends exempt from state taxation under 
3.8 	the laws of the United States; and
3.9 	(B) the portion of the exempt-interest dividends derived from interest income 
3.10 	on obligations of the state of Minnesota or its political or governmental subdivisions, 
3.11 	municipalities, governmental agencies or instrumentalities, but only if the portion of the 
3.12 	exempt-interest dividends from such Minnesota sources paid to all shareholders represents 
3.13 	95 percent or more of the exempt-interest dividends, including any dividends exempt 
3.14 	under subitem (A), that are paid by the regulated investment company as defined in section 
3.15 	851(a) of the Internal Revenue Code, or the fund of the regulated investment company as 
3.16 	defined in section 851(g) of the Internal Revenue Code, making the payment; and
3.17 	(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 
3.18 	government described in section 7871(c) of the Internal Revenue Code shall be treated as 
3.19 	interest income on obligations of the state in which the tribe is located;
3.20 	(2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or 
3.21 	accrued within the taxable year under this chapter and the amount of taxes based on net 
3.22 	income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state or 
3.23 	to any province or territory of Canada, to the extent allowed as a deduction under section 
3.24 	63(d) of the Internal Revenue Code, but the addition may not be more than the amount 
3.25 	by which the state itemized deduction exceeds the amount of the standard deduction as 
3.26 	defined in section 63(c) of the Internal Revenue Code, minus any addition that would have 
3.27 	been required under clause (17) if the taxpayer had claimed the standard deduction. For 
3.28 	the purpose of this clause, income, sales and use, motor vehicle sales, or excise taxes are 
3.29 	the last itemized deductions disallowed under clause (15);
3.30 	(3) the capital gain amount of a lump-sum distribution to which the special tax under 
3.31 	section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
3.32 	(4) the amount of income taxes paid or accrued within the taxable year under this 
3.33 	chapter and taxes based on net income paid to any other state or any province or territory 
3.34 	of Canada, to the extent allowed as a deduction in determining federal adjusted gross 
3.35 	income. For the purpose of this paragraph, income taxes do not include the taxes imposed 
3.36 	by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
4.1 	(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10 
4.2 	other than expenses or interest used in computing net interest income for the subtraction 
4.3 	allowed under subdivision 19b, clause (1);
4.4 	(6) the amount of a partner's pro rata share of net income which does not flow 
4.5 	through to the partner because the partnership elected to pay the tax on the income under 
4.6 	section 6242(a)(2) of the Internal Revenue Code;
4.7 	(7) 80 percent of the depreciation deduction allowed under section 168(k) of the 
4.8 	Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that 
4.9 	in the taxable year generates a deduction for depreciation under section 168(k) and the 
4.10 	activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 
4.11 	the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 
4.12 	limited to excess of the depreciation claimed by the activity under section 168(k) over the 
4.13 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
4.14 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
4.15 	under section 168(k) is allowed;
4.16 	(8) for taxable years beginning before January 1, 2015, 80 percent of the amount by 
4.17 	which the deduction allowed by section 179 of the Internal Revenue Code exceeds the 
4.18 	deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended 
4.19 	through December 31, 2003;
4.20 	(9) to the extent deducted in computing federal taxable income, the amount of the 
4.21 	deduction allowable under section 199 of the Internal Revenue Code;
4.22 	(10) the amount of expenses disallowed under section 290.10, subdivision 2;
4.23 	(11) for taxable years beginning before January 1, 2010, the amount deducted for 
4.24 	qualified tuition and related expenses under section 222 of the Internal Revenue Code, to 
4.25 	the extent deducted from gross income;
4.26 	(12) for taxable years beginning before January 1, 2010, the amount deducted for 
4.27 	certain expenses of elementary and secondary school teachers under section 62(a)(2)(D) 
4.28 	of the Internal Revenue Code, to the extent deducted from gross income;
4.29 	(13) discharge of indebtedness income resulting from reacquisition of business 
4.30 	indebtedness and deferred under section 108(i) of the Internal Revenue Code;
4.31 	(14) changes to federal taxable income attributable to a net operating loss that the 
4.32 	taxpayer elected to carry back for more than two years for federal purposes but for which 
4.33 	the losses can be carried back for only two years under section 290.095, subdivision 
4.34 	11, paragraph (c);
4.35 	(15) the amount of disallowed itemized deductions, but the amount of disallowed 
4.36 	itemized deductions plus the addition required under clause (2) may not be more than the 
5.1 	amount by which the itemized deductions as allowed under section 63(d) of the Internal 
5.2 	Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of 
5.3 	the Internal Revenue Code, and reduced by any addition that would have been required 
5.4 	under clause (17) if the taxpayer had claimed the standard deduction:
5.5 	(i) the amount of disallowed itemized deductions is equal to the lesser of:
5.6 	(A) three percent of the excess of the taxpayer's federal adjusted gross income 
5.7 	over the applicable amount; or
5.8 	(B) 80 percent of the amount of the itemized deductions otherwise allowable to the 
5.9 	taxpayer under the Internal Revenue Code for the taxable year;
5.10 	(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a 
5.11 	married individual filing a separate return. Each dollar amount shall be increased by 
5.12 	an amount equal to:
5.13 	(A) such dollar amount, multiplied by
5.14 	(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal 
5.15 	Revenue Code for the calendar year in which the taxable year begins, by substituting 
5.16 	"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
5.17 	(iii) the term "itemized deductions" does not include:
5.18 	(A) the deduction for medical expenses under section 213 of the Internal Revenue 
5.19 	Code;
5.20 	(B) any deduction for investment interest as defined in section 163(d) of the Internal 
5.21 	Revenue Code; and
5.22 	(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or 
5.23 	theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue 
5.24 	Code or for losses described in section 165(d) of the Internal Revenue Code;
5.25 	(16) the amount of disallowed personal exemptions for taxpayers with federal 
5.26 	adjusted gross income over the threshold amount:
5.27 	(i) the disallowed personal exemption amount is equal to the number of personal 
5.28 	exemptions allowed under section 151(b) and (c) of the Internal Revenue Code multiplied 
5.29 	by the dollar amount for personal exemptions under section 151(d)(1) and (2) of the 
5.30 	Internal Revenue Code, as adjusted for inflation by section 151(d)(4) of the Internal 
5.31 	Revenue Code, and by the applicable percentage;
5.32 	(ii) "applicable percentage" means two percentage points for each $2,500 (or 
5.33 	fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable 
5.34 	year exceeds the threshold amount. In the case of a married individual filing a separate 
5.35 	return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In 
5.36 	no event shall the applicable percentage exceed 100 percent;
6.1 	(iii) the term "threshold amount" means:
6.2 	(A) $150,000 in the case of a joint return or a surviving spouse;
6.3 	(B) $125,000 in the case of a head of a household;
6.4 	(C) $100,000 in the case of an individual who is not married and who is not a 
6.5 	surviving spouse or head of a household; and
6.6 	(D) $75,000 in the case of a married individual filing a separate return; and
6.7 	(iv) the thresholds shall be increased by an amount equal to:
6.8 	(A) such dollar amount, multiplied by
6.9 	(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal 
6.10 	Revenue Code for the calendar year in which the taxable year begins, by substituting 
6.11 	"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
6.12 	(17) to the extent deducted in the computation of federal taxable income, for taxable 
6.13 	years beginning after December 31, 2010, and before January 1, 2014, the difference 
6.14 	between the standard deduction allowed under section 63(c) of the Internal Revenue Code 
6.15 	and the standard deduction allowed for 2011, 2012, and 2013 under the Internal Revenue 
6.16 	Code as amended through December 1, 2010.

6.17 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
6.18 	beginning after December 31, 2014.

6.19 	Sec. 4. Minnesota Statutes 2014, section 290.01, subdivision 19b, is amended to read:
6.20 		Subd. 19b.Subtractions from federal taxable income. For individuals, estates, 
6.21 	and trusts, there shall be subtracted from federal taxable income:
6.22 	(1) net interest income on obligations of any authority, commission, or 
6.23 	instrumentality of the United States to the extent includable in taxable income for federal 
6.24 	income tax purposes but exempt from state income tax under the laws of the United States;
6.25 	(2) if included in federal taxable income, the amount of any overpayment of income 
6.26 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
6.27 	is received as a refund or as a credit to another taxable year's income tax liability;
6.28 	(3) the amount paid to others, less the amount used to claim the credit allowed under 
6.29 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
6.30 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
6.31 	transportation of each qualifying child in attending an elementary or secondary school 
6.32 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
6.33 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
6.34 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
6.35 	of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 
7.1 	tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, 
7.2 	"textbooks" includes books and other instructional materials and equipment purchased 
7.3 	or leased for use in elementary and secondary schools in teaching only those subjects 
7.4 	legally and commonly taught in public elementary and secondary schools in this state. 
7.5 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
7.6 	section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 
7.7 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
7.8 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
7.9 	or materials for, or transportation to, extracurricular activities including sporting events, 
7.10 	musical or dramatic events, speech activities, driver's education, or similar programs. No 
7.11 	deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or 
7.12 	the qualifying child's vehicle to provide such transportation for a qualifying child. For 
7.13 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
7.14 	given in section 32(c)(3) of the Internal Revenue Code;
7.15 	(4) income as provided under section 290.0802;
7.16 	(5) to the extent included in federal adjusted gross income, income realized on 
7.17 	disposition of property exempt from tax under section 290.491;
7.18 	(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) 
7.19 	of the Internal Revenue Code in determining federal taxable income by an individual 
7.20 	who does not itemize deductions for federal income tax purposes for the taxable year, an 
7.21 	amount equal to 50 percent of the excess of charitable contributions over $500 allowable 
7.22 	as a deduction for the taxable year under section 170(a) of the Internal Revenue Code, 
7.23 	under the provisions of Public Law 109-1 and Public Law 111-126;
7.24 	(7) for individuals who are allowed a federal foreign tax credit for taxes that do not 
7.25 	qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
7.26 	of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
7.27 	foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 
7.28 	"federal foreign tax credit" means the credit allowed under section 27 of the Internal 
7.29 	Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
7.30 	under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
7.31 	the extent they exceed the federal foreign tax credit;
7.32 	(8) in each of the five tax years immediately following the tax year in which an 
7.33 	addition is required under subdivision 19a, clause (7), or 19c, clause (12), in the case of a 
7.34 	shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 
7.35 	delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount 
7.36 	of the addition made by the taxpayer under subdivision 19a, clause (7), or subdivision 19c, 
8.1 	clause (12), in the case of a shareholder of an S corporation, minus the positive value of 
8.2 	any net operating loss under section 172 of the Internal Revenue Code generated for the 
8.3 	tax year of the addition. The resulting delayed depreciation cannot be less than zero;
8.4 	(9) job opportunity building zone income as provided under section 469.316;
8.5 	(10) to the extent included in federal taxable income, the amount of compensation 
8.6 	paid to members of the Minnesota National Guard or other reserve components of the 
8.7 	United States military for active service, including compensation for services performed 
8.8 	under the Active Guard Reserve (AGR) program. For purposes of this clause, "active 
8.9 	service" means (i) state active service as defined in section 190.05, subdivision 5a, clause 
8.10 	(1); or (ii) federally funded state active service as defined in section 190.05, subdivision 
8.11 	5b, and "active service" includes service performed in accordance with section 190.08, 
8.12 	subdivision 3;
8.13 	(11) to the extent included in federal taxable income, the amount of compensation 
8.14 	paid to Minnesota residents who are members of the armed forces of the United States 
8.15 	or United Nations for active duty performed under United States Code, title 10; or the 
8.16 	authority of the United Nations;
8.17 	(12) an amount, not to exceed $10,000, equal to qualified expenses related to a 
8.18 	qualified donor's donation, while living, of one or more of the qualified donor's organs 
8.19 	to another person for human organ transplantation. For purposes of this clause, "organ" 
8.20 	means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 
8.21 	"human organ transplantation" means the medical procedure by which transfer of a human 
8.22 	organ is made from the body of one person to the body of another person; "qualified 
8.23 	expenses" means unreimbursed expenses for both the individual and the qualified donor 
8.24 	for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 
8.25 	may be subtracted under this clause only once; and "qualified donor" means the individual 
8.26 	or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 
8.27 	individual may claim the subtraction in this clause for each instance of organ donation for 
8.28 	transplantation during the taxable year in which the qualified expenses occur;
8.29 	(13) in each of the five tax years immediately following the tax year in which an 
8.30 	addition is required under subdivision 19a, clause (8), or 19c, clause (13), in the case of a 
8.31 	shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 
8.32 	addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (13), in the 
8.33 	case of a shareholder of a corporation that is an S corporation, minus the positive value of 
8.34 	any net operating loss under section 172 of the Internal Revenue Code generated for the 
8.35 	tax year of the addition. If the net operating loss exceeds the addition for the tax year, 
9.1 	a subtraction is not allowed under this clause the section 179 expensing subtraction as 
9.2 	provided under section 290.0803, subdivision 3;
9.3 	(14) to the extent included in the federal taxable income of a nonresident of 
9.4 	Minnesota, compensation paid to a service member as defined in United States Code, title 
9.5 	10, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief 
9.6 	Act, Public Law 108-189, section 101(2);
9.7 	(15) to the extent included in federal taxable income, the amount of national service 
9.8 	educational awards received from the National Service Trust under United States Code, 
9.9 	title 42, sections 12601 to 12604, for service in an approved Americorps National Service 
9.10 	program;
9.11 	(16) to the extent included in federal taxable income, discharge of indebtedness 
9.12 	income resulting from reacquisition of business indebtedness included in federal taxable 
9.13 	income under section 108(i) of the Internal Revenue Code. This subtraction applies only 
9.14 	to the extent that the income was included in net income in a prior year as a result of the 
9.15 	addition under subdivision 19a, clause (13);
9.16 	(17) the amount of the net operating loss allowed under section 290.095, subdivision 
9.17 	11, paragraph (c);
9.18 	(18) the amount of expenses not allowed for federal income tax purposes due 
9.19 	to claiming the railroad track maintenance credit under section 45G(a) of the Internal 
9.20 	Revenue Code;
9.21 	(19) the amount of the limitation on itemized deductions under section 68(b) of 
9.22 	the Internal Revenue Code; and
9.23 	(20) the amount of the phaseout of personal exemptions under section 151(d) of 
9.24 	the Internal Revenue Code; and.
9.25 	(21) to the extent included in federal taxable income, the amount of qualified 
9.26 	transportation fringe benefits described in section 132(f)(1)(A) and (B) of the Internal 
9.27 	Revenue Code. The subtraction is limited to the lesser of the amount of qualified 
9.28 	transportation fringe benefits received in excess of the limitations under section 
9.29 	132(f)(2)(A) of the Internal Revenue Code for the year or the difference between the 
9.30 	maximum qualified parking benefits excludable under section 132(f)(2)(B) of the Internal 
9.31 	Revenue Code minus the amount of transit benefits excludable under section 132(f)(2)(A) 
9.32 	of the Internal Revenue Code.

9.33 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
9.34 	beginning after December 31, 2014.

9.35 	Sec. 5. Minnesota Statutes 2014, section 290.01, subdivision 19c, is amended to read:
10.1 		Subd. 19c.Corporations; additions to federal taxable income. For corporations, 
10.2 	there shall be added to federal taxable income:
10.3 	(1) the amount of any deduction taken for federal income tax purposes for income, 
10.4 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
10.5 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
10.6 	another state, a political subdivision of another state, the District of Columbia, or any 
10.7 	foreign country or possession of the United States;
10.8 	(2) interest not subject to federal tax upon obligations of: the United States, its 
10.9 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
10.10 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
10.11 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
10.12 	tribal governments;
10.13 	(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
10.14 	Revenue Code;
10.15 	(4) the amount of any net operating loss deduction taken for federal income tax 
10.16 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
10.17 	deduction under section 810 of the Internal Revenue Code;
10.18 	(5) the amount of any special deductions taken for federal income tax purposes 
10.19 	under sections 241 to 247 and 965 of the Internal Revenue Code;
10.20 	(6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
10.21 	clause (a), that are not subject to Minnesota income tax;
10.22 	(7) the amount of any capital losses deducted for federal income tax purposes under 
10.23 	sections 1211 and 1212 of the Internal Revenue Code;
10.24 	(8) the amount of percentage depletion deducted under sections 611 through 614 and 
10.25 	291 of the Internal Revenue Code;
10.26 	(9) for certified pollution control facilities placed in service in a taxable year 
10.27 	beginning before December 31, 1986, and for which amortization deductions were elected 
10.28 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
10.29 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
10.30 	income for those facilities;
10.31 	(10) the amount of a partner's pro rata share of net income which does not flow 
10.32 	through to the partner because the partnership elected to pay the tax on the income under 
10.33 	section 6242(a)(2) of the Internal Revenue Code;
10.34 	(11) any increase in subpart F income, as defined in section 952(a) of the Internal 
10.35 	Revenue Code, for the taxable year when subpart F income is calculated without regard to 
10.36 	the provisions of Division C, title III, section 303(b) of Public Law 110-343;
11.1 	(12) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) 
11.2 	and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer 
11.3 	has an activity that in the taxable year generates a deduction for depreciation under 
11.4 	section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year 
11.5 	that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed 
11.6 	under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the 
11.7 	depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the 
11.8 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
11.9 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
11.10 	under section 168(k)(1)(A) and (k)(4)(A) is allowed;
11.11 	(13) for taxable years beginning before January 1, 2015, 80 percent of the amount by 
11.12 	which the deduction allowed by section 179 of the Internal Revenue Code exceeds the 
11.13 	deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended 
11.14 	through December 31, 2003;
11.15 	(14) to the extent deducted in computing federal taxable income, the amount of the 
11.16 	deduction allowable under section 199 of the Internal Revenue Code;
11.17 	(15) the amount of expenses disallowed under section 290.10, subdivision 2; and
11.18 	(16) discharge of indebtedness income resulting from reacquisition of business 
11.19 	indebtedness and deferred under section 108(i) of the Internal Revenue Code.

11.20 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
11.21 	beginning after December 31, 2014.

11.22 	Sec. 6. Minnesota Statutes 2014, section 290.01, subdivision 19d, is amended to read:
11.23 		Subd. 19d.Corporations; modifications decreasing federal taxable income. For 
11.24 	corporations, there shall be subtracted from federal taxable income after the increases 
11.25 	provided in subdivision 19c:
11.26 	(1) the amount of foreign dividend gross-up added to gross income for federal 
11.27 	income tax purposes under section 78 of the Internal Revenue Code;
11.28 	(2) the amount of salary expense not allowed for federal income tax purposes due to 
11.29 	claiming the work opportunity credit under section 51 of the Internal Revenue Code;
11.30 	(3) any dividend (not including any distribution in liquidation) paid within the 
11.31 	taxable year by a national or state bank to the United States, or to any instrumentality of 
11.32 	the United States exempt from federal income taxes, on the preferred stock of the bank 
11.33 	owned by the United States or the instrumentality;
11.34 	(4) the deduction for capital losses pursuant to sections 1211 and 1212 of the 
11.35 	Internal Revenue Code, except that:
12.1 	(i) for capital losses incurred in taxable years beginning after December 31, 1986, 
12.2 	capital loss carrybacks shall not be allowed;
12.3 	(ii) for capital losses incurred in taxable years beginning after December 31, 1986, 
12.4 	a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be 
12.5 	allowed;
12.6 	(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a 
12.7 	capital loss carryback to each of the three taxable years preceding the loss year, subject to 
12.8 	the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
12.9 	(iv) for capital losses incurred in taxable years beginning before January 1, 1987, 
12.10 	a capital loss carryover to each of the five taxable years succeeding the loss year to the 
12.11 	extent such loss was not used in a prior taxable year and subject to the provisions of 
12.12 	Minnesota Statutes 1986, section 290.16, shall be allowed;
12.13 	(5) an amount for interest and expenses relating to income not taxable for federal 
12.14 	income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and 
12.15 	expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 
12.16 	291 of the Internal Revenue Code in computing federal taxable income;
12.17 	(6) in the case of mines, oil and gas wells, other natural deposits, and timber for 
12.18 	which percentage depletion was disallowed pursuant to subdivision 19c, clause (8), a 
12.19 	reasonable allowance for depletion based on actual cost. In the case of leases the deduction 
12.20 	must be apportioned between the lessor and lessee in accordance with rules prescribed 
12.21 	by the commissioner. In the case of property held in trust, the allowable deduction must 
12.22 	be apportioned between the income beneficiaries and the trustee in accordance with the 
12.23 	pertinent provisions of the trust, or if there is no provision in the instrument, on the basis 
12.24 	of the trust's income allocable to each;
12.25 	(7) for certified pollution control facilities placed in service in a taxable year 
12.26 	beginning before December 31, 1986, and for which amortization deductions were elected 
12.27 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
12.28 	31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 
12.29 	1986, section 290.09, subdivision 7;
12.30 	(8) amounts included in federal taxable income that are due to refunds of income, 
12.31 	excise, or franchise taxes based on net income or related minimum taxes paid by the 
12.32 	corporation to Minnesota, another state, a political subdivision of another state, the 
12.33 	District of Columbia, or a foreign country or possession of the United States to the extent 
12.34 	that the taxes were added to federal taxable income under subdivision 19c, clause (1), in a 
12.35 	prior taxable year;
13.1 	(9) income or gains from the business of mining as defined in section 290.05, 
13.2 	subdivision 1, clause (a), that are not subject to Minnesota franchise tax;
13.3 	(10) the amount of disability access expenditures in the taxable year which are not 
13.4 	allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
13.5 	(11) the amount of qualified research expenses not allowed for federal income tax 
13.6 	purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that 
13.7 	the amount exceeds the amount of the credit allowed under section 290.068;
13.8 	(12) the amount of salary expenses not allowed for federal income tax purposes due to 
13.9 	claiming the Indian employment credit under section 45A(a) of the Internal Revenue Code;
13.10 	(13) any decrease in subpart F income, as defined in section 952(a) of the Internal 
13.11 	Revenue Code, for the taxable year when subpart F income is calculated without regard to 
13.12 	the provisions of Division C, title III, section 303(b) of Public Law 110-343;
13.13 	(14) in each of the five tax years immediately following the tax year in which an 
13.14 	addition is required under subdivision 19c, clause (12), an amount equal to one-fifth of 
13.15 	the delayed depreciation. For purposes of this clause, "delayed depreciation" means the 
13.16 	amount of the addition made by the taxpayer under subdivision 19c, clause (12). The 
13.17 	resulting delayed depreciation cannot be less than zero;
13.18 	(15) in each of the five tax years immediately following the tax year in which an 
13.19 	addition is required under subdivision 19c, clause (13), an amount equal to one-fifth 
13.20 	of the amount of the addition the section 179 expensing subtraction as provided under 
13.21 	section 290.0803, subdivision 3;
13.22 	(16) to the extent included in federal taxable income, discharge of indebtedness 
13.23 	income resulting from reacquisition of business indebtedness included in federal taxable 
13.24 	income under section 108(i) of the Internal Revenue Code. This subtraction applies only 
13.25 	to the extent that the income was included in net income in a prior year as a result of the 
13.26 	addition under subdivision 19c, clause (16); and
13.27 	(17) the amount of expenses not allowed for federal income tax purposes due 
13.28 	to claiming the railroad track maintenance credit under section 45G(a) of the Internal 
13.29 	Revenue Code.

13.30 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
13.31 	beginning after December 31, 2014.

13.32 	Sec. 7. Minnesota Statutes 2015 Supplement, section 290.01, subdivision 31, is 
13.33 	amended to read:
13.34 		Subd. 31.Internal Revenue Code. Unless specifically defined otherwise, "Internal 
13.35 	Revenue Code" means the Internal Revenue Code of 1986, as amended through December 
14.1 	31, 2014 2015. Internal Revenue Code also includes any uncodified provision in federal 
14.2 	law that relates to provisions of the Internal Revenue Code that are incorporated into 
14.3 	Minnesota law. When used in this chapter, the reference to "subtitle A, chapter 1, 
14.4 	subchapter N, part 1, of the Internal Revenue Code" is to the Internal Revenue Code as 
14.5 	amended through March 18, 2010.

14.6 	EFFECTIVE DATE. This section is effective the day following final enactment, 
14.7 	except the changes incorporated by federal changes are effective retroactively at the same 
14.8 	time as the changes were effective for federal purposes.

14.9 	Sec. 8. [290.016] CONFORMITY TO FEDERAL TAX EXTENDERS BY 
14.10 	ADMINISTRATIVE ACTION.
14.11 		Subdivision 1.Legislative purpose. (a) The legislature intends this section to 
14.12 	provide an ongoing mechanism for conforming the Minnesota individual income and 
14.13 	corporate franchise taxes to federal tax legislation enacted after the legislature has 
14.14 	adjourned that extends existing provisions of federal law, if the provisions affect a 
14.15 	taxable year that ends before the legislature is scheduled to reconvene in regular session. 
14.16 	Congress has regularly enacted changes of that type that affect computation of Minnesota 
14.17 	tax through its links to federal law. The federal changes consist mainly of extending 
14.18 	provisions that reduce revenues and that are scheduled to expire. Because Minnesota law 
14.19 	is linked to federal law as of a specific date, taxpayers and the Department of Revenue 
14.20 	must assume that Minnesota law does not include the effect of these federal changes even 
14.21 	though the legislature regularly adopts most of the federal provisions retroactively in the 
14.22 	next legislative session. This situation undermines compliance and administration of 
14.23 	Minnesota taxes, causing delay, uncertainty, and added costs. This section provides an 
14.24 	administrative mechanism to conform to most of these federal changes. The legislature's 
14.25 	intent is to conform to the federal tax extenders, including minor modifications of them, 
14.26 	and to set aside the necessary state budget resources to do so.
14.27 	(b) By expressing its intent regarding specific federal provisions and indicating how 
14.28 	to treat each federal extender provision, the legislature is exercising its legislative power 
14.29 	and is not delegating to congress or the commissioner the authority to determine Minnesota 
14.30 	tax law. The legislature believes that this section is consistent with the Minnesota Supreme 
14.31 	Court's ruling in the case of Wallace v. Commissioner of Taxation, 289 Minn. 220 (1971).
14.32 		Subd. 2.Federal tax conformity account established; transfer. (a) A federal tax 
14.33 	conformity account is established in the general fund. Money in the account is available 
14.34 	for transfer to the general fund to offset the reduction in general fund revenues resulting 
14.35 	from conforming Minnesota tax law to federal law under this section.
15.1 	(b) $20,000,000 is transferred from the general fund to the federal tax conformity 
15.2 	account, effective July 1, 2016. On January 1 of each fiscal year in which a transfer is 
15.3 	made under paragraph (c), the commissioner shall transfer an amount to the account 
15.4 	necessary to maintain a $20,000,000 balance in the account or the amount necessary to 
15.5 	offset the estimated annual revenue reduction from conforming to eligible federal tax 
15.6 	preferences that are scheduled to expire under federal law, whichever is less.
15.7 	(c) Within ten days after receiving notice of the amount from the commissioner, the 
15.8 	commissioner of management and budget shall transfer from the account to the general fund 
15.9 	each year the amount that the commissioner determines is required under subdivision 4.
15.10 	(d) Amounts sufficient to make the transfers under:
15.11 	(1) paragraph (b) are appropriated from the general fund; and
15.12 	(2) paragraph (c) are appropriated from the federal tax conformity account.
15.13 		Subd. 3.Eligible federal tax preferences. For purposes of this section and section 
15.14 	290.01, the term "eligible federal tax preferences" means any of the following items that 
15.15 	are not in effect under the Internal Revenue Code for future taxable years beginning 
15.16 	after December 31, 2016:
15.17 	(1) discharge of qualified principal residence indebtedness under section 
15.18 	108(a)(1)(E) of the Internal Revenue Code;
15.19 	(2) mortgage insurance premiums treated as qualified residence interest under 
15.20 	section 163(h)(3)(E) of the Internal Revenue Code;
15.21 	(3) qualified tuition and related expenses under section 222 of the Internal Revenue 
15.22 	Code;
15.23 	(4) the special rules for itemized deductions of the expenses of medical care by 
15.24 	individuals who have attained the age of 65 under section 213(f) of the Internal Revenue 
15.25 	Code;
15.26 	(5) classification of certain race horses as three-year property under section 
15.27 	168(e)(3)(A)(i) and (ii) of the Internal Revenue Code;
15.28 	(6) the seven-year recovery period for motorsports entertainment complexes under 
15.29 	section 168(i)(15) of the Internal Revenue Code;
15.30 	(7) the accelerated depreciation for business property on an Indian reservation under 
15.31 	section 168(j) of the Internal Revenue Code;
15.32 	(8) the election to expense mine safety equipment under section 179E of the Internal 
15.33 	Revenue Code;
15.34 	(9) the special expensing rules for certain film and television productions under 
15.35 	section 181 of the Internal Revenue Code;
16.1 	(10) the special allowance for second-generation biofuel plant property under 
16.2 	section 168(l) of the Internal Revenue Code;
16.3 	(11) the energy efficient commercial buildings deduction under section 179D of the 
16.4 	Internal Revenue Code;
16.5 	(12) the five-year recovery period for property described in section 
16.6 	168(e)(3)(B)(vi)(I) of the Internal Revenue Code and qualifying for an energy credit under 
16.7 	section 48(a)(3)(A) of the Internal Revenue Code; and
16.8 	(13) the amount of the additional section 179 allowance in an empowerment zone 
16.9 	under section 1397A of the Internal Revenue Code.
16.10 		Subd. 4.Designation of qualifying federal conformity items. (a) If, after final 
16.11 	adjournment of a regular session of the legislature, Congress enacts a law that extends 
16.12 	one or more of the eligible federal tax preferences to taxable years beginning during the 
16.13 	calendar year in which the legislature adjourned, the commissioner shall prepare a list of 
16.14 	qualifying federal conformity items and publish it on the Department of Revenue's Web 
16.15 	site within 30 days following enactment of the law. In preparing the list, the commissioner 
16.16 	shall estimate the change in revenue resulting from allowing the eligible federal tax 
16.17 	preferences, including the effect of subdivision 6, for the current and succeeding fiscal 
16.18 	year only. The commissioner shall not include an item on the list of qualifying federal 
16.19 	conformity items if the commissioner estimates that its inclusion would reduce general 
16.20 	fund revenues for the current and succeeding fiscal year by more than the balance in the 
16.21 	federal tax conformity account.
16.22 	(b) The commissioner shall consider the provisions of subdivision 6 as the first item 
16.23 	to include on the list of qualifying conformity items. The commissioner shall apply the 
16.24 	following priorities in determining which additional items to include:
16.25 	(1) the effect of all the eligible federal tax preferences on computation of federal 
16.26 	adjusted gross income under this chapter and household income under chapter 290A, 
16.27 	is the first priority;
16.28 	(2) the effect of the federal law on computation of Minnesota tax credits is the 
16.29 	second priority;
16.30 	(3) the items in subdivision 3, clauses (5) to (13), in that order, are the third priority; 
16.31 	and
16.32 	(4) the items in subdivision 3, clauses (1) to (4), in that order, are the last priority.
16.33 	(c) In determining whether to include an eligible federal tax preference on the list 
16.34 	of qualifying federal conformity items, the commissioner may include items in which 
16.35 	nonmaterial changes were made in the federal law extending allowance of the eligible 
16.36 	federal tax preferences, as compared to the provision that was in effect for the prior federal 
17.1 	taxable year. For purposes of this determination, nonmaterial changes are limited to 
17.2 	changes that are estimated to increase or decrease Minnesota tax revenues by no more 
17.3 	than $1,000,000 for the affected eligible federal tax preference item for the taxable year.
17.4 	(d) Within ten days after the commissioner's final determination of qualifying federal 
17.5 	conformity items under this subdivision, the commissioner shall notify the commissioner 
17.6 	of management and budget, in writing, of the amounts of the federal tax conformity 
17.7 	account transfers under subdivision 2.
17.8 		Subd. 5.Provisions in effect. (a) For purposes of determining tax and credits under 
17.9 	this chapter, including the taxes under sections 290.091 and 290.0921, and household 
17.10 	income under chapter 290A, qualifying federal conformity items and bonus depreciation 
17.11 	rules under subdivision 6 apply for the designated taxable year and all the provisions of 
17.12 	this chapter apply as if the definition of the Internal Revenue Code under section 290.01, 
17.13 	subdivision 31, included the amendments to the qualifying federal conformity items.
17.14 	(b) The commissioner shall administer the taxes under this chapter, and refunds 
17.15 	under chapter 290A, as if Minnesota had conformed to the federal definitions of net 
17.16 	income, adjusted gross income, and tax credits that affect computation of Minnesota tax or 
17.17 	refunds resulting from extension of the qualifying federal conformity items.
17.18 	(c) For purposes of this subdivision and subdivision 6, "designated taxable year" 
17.19 	means a taxable year that begins during a calendar year in which an eligible federal tax 
17.20 	preference is enacted after the legislature adjourned its regular session and is effective for 
17.21 	taxable years beginning during that calendar year.
17.22 		Subd. 6.Bonus depreciation; 80 percent rule applies. If following final 
17.23 	adjournment of a regular session of the legislature, Congress enacts a law that extends 
17.24 	application of the depreciation special allowances under section 168(k) of the Internal 
17.25 	Revenue Code to taxable years beginning during the same calendar year, the allowance 
17.26 	must be determined using the rules under section 290.01, subdivisions 19a, clause (7), 
17.27 	and 19c, clause (12), for the designated taxable year, and the rules under section 290.01, 
17.28 	subdivisions 19b, clause (8), and 19d, clause (14), for the five tax years immediately 
17.29 	following the designated taxable year.
17.30 		Subd. 7.Forms preparation. If the provisions of subdivisions 3 and 4 apply to 
17.31 	a taxable year, the commissioner shall prepare forms and instructions that reflect the 
17.32 	qualifying federal conformity items and bonus depreciation rules under subdivision 6, if 
17.33 	applicable, for the taxable year consistent with the provisions of this section.
17.34 		Subd. 8.Draft legislation. For a taxable year for which the commissioner publishes 
17.35 	a list of qualifying federal conformity items under this section, the commissioner 
17.36 	shall provide the chairs of the house of representatives and senate committees with 
18.1 	jurisdiction over taxes with draft legislation that would conform Minnesota Statutes to the 
18.2 	qualifying federal conformity items and any other conformity items that the commissioner 
18.3 	recommends be adopted, including application to taxable years beyond those to which 
18.4 	this section applies. The draft legislation is intended to make the statutes consistent with 
18.5 	application of the designated qualifying federal conformity items under this section for the 
18.6 	convenience of members of the public. Failure to pass the draft legislation does not affect 
18.7 	computation of Minnesota tax liability for the affected taxable years under this section.

18.8 	EFFECTIVE DATE. This section is effective the day following final enactment.

18.9 	Sec. 9. Minnesota Statutes 2015 Supplement, section 290.0671, subdivision 1, is 
18.10 	amended to read:
18.11 		Subdivision 1.Credit allowed. (a) An individual who is a resident of Minnesota is 
18.12 	allowed a credit against the tax imposed by this chapter equal to a percentage of earned 
18.13 	income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the 
18.14 	Internal Revenue Code.
18.15 	(b) For individuals with no qualifying children, the credit equals 2.10 percent of the 
18.16 	first $6,180 of earned income. The credit is reduced by 2.01 percent of earned income 
18.17 	or adjusted gross income, whichever is greater, in excess of $8,130, but in no case is 
18.18 	the credit less than zero.
18.19 	(c) For individuals with one qualifying child, the credit equals 9.35 percent of the 
18.20 	first $11,120 of earned income. The credit is reduced by 6.02 percent of earned income 
18.21 	or adjusted gross income, whichever is greater, in excess of $21,190, but in no case is 
18.22 	the credit less than zero.
18.23 	(d) For individuals with two or more qualifying children, the credit equals 11 percent 
18.24 	of the first $18,240 of earned income. The credit is reduced by 10.82 percent of earned 
18.25 	income or adjusted gross income, whichever is greater, in excess of $25,130, but in no 
18.26 	case is the credit less than zero.
18.27 	(e) For a part-year resident, the credit must be allocated based on the percentage 
18.28 	calculated under section 290.06, subdivision 2c, paragraph (e).
18.29 	(f) For a person who was a resident for the entire tax year and has earned income 
18.30 	not subject to tax under this chapter, including income excluded under section 290.01, 
18.31 	subdivision 19b, clause (9), the credit must be allocated based on the ratio of federal 
18.32 	adjusted gross income reduced by the earned income not subject to tax under this chapter 
18.33 	over federal adjusted gross income. For purposes of this paragraph, the subtractions 
18.34 	for military pay under section 290.01, subdivision 19b, clauses (10) and (11), are not 
18.35 	considered "earned income not subject to tax under this chapter."
19.1 	For the purposes of this paragraph, the exclusion of combat pay under section 112 
19.2 	of the Internal Revenue Code is not considered "earned income not subject to tax under 
19.3 	this chapter."
19.4 	(g) For tax years beginning after December 31, 2007, and before December 31, 
19.5 	2010, and for tax years beginning after December 31, 2017, the $8,130 in paragraph (b), 
19.6 	the $21,190 in paragraph (c), and the $25,130 in paragraph (d), after being adjusted for 
19.7 	inflation under subdivision 7, are each increased by $3,000 for married taxpayers filing joint 
19.8 	returns. For tax years beginning after December 31, 2008, the commissioner shall annually 
19.9 	adjust the $3,000 by the percentage determined pursuant to the provisions of section 1(f) 
19.10 	of the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2007" shall be 
19.11 	substituted for the word "1992." For 2009, the commissioner shall then determine the 
19.12 	percent change from the 12 months ending on August 31, 2007, to the 12 months ending on 
19.13 	August 31, 2008, and in each subsequent year, from the 12 months ending on August 31, 
19.14 	2007, to the 12 months ending on August 31 of the year preceding the taxable year. The 
19.15 	earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the 
19.16 	amount ends in $5, the amount is rounded up to the nearest $10. The determination of the 
19.17 	commissioner under this subdivision is not a rule under the Administrative Procedure Act.
19.18 	(h)(1) (g)(1) For tax years beginning after December 31, 2012, and before January 
19.19 	1, 2014, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in 
19.20 	paragraph (d), after being adjusted for inflation under subdivision 7, are increased by 
19.21 	$5,340 for married taxpayers filing joint returns; and (2) for tax years beginning after 
19.22 	December 31, 2013, and before January 1, 2018, the $8,130 in paragraph (b), the $21,190 
19.23 	in paragraph (c), and the $25,130 in paragraph (d), after being adjusted for inflation under 
19.24 	subdivision 7, are each increased by $5,000 for married taxpayers filing joint returns. For 
19.25 	tax years beginning after December 31, 2010, and before January 1, 2012, and for tax 
19.26 	years beginning after December 31, 2013, and before January 1, 2018, the commissioner 
19.27 	shall annually adjust the $5,000 by the percentage determined pursuant to the provisions 
19.28 	of section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B), the word 
19.29 	"2008" shall be substituted for the word "1992." For 2011 2014, the commissioner shall 
19.30 	then determine the percent change from the 12 months ending on August 31, 2008, to the 
19.31 	12 months ending on August 31, 2010 2013, and in each subsequent year, from the 12 
19.32 	months ending on August 31, 2008, to the 12 months ending on August 31 of the year 
19.33 	preceding the taxable year. The earned income thresholds as adjusted for inflation must 
19.34 	be rounded to the nearest $10. If the amount ends in $5, the amount is rounded up to the 
19.35 	nearest $10. The determination of the commissioner under this subdivision is not a rule 
19.36 	under the Administrative Procedure Act.
20.1 	(i) (h) The commissioner shall construct tables showing the amount of the credit 
20.2 	at various income levels and make them available to taxpayers. The tables shall follow 
20.3 	the schedule contained in this subdivision, except that the commissioner may graduate 
20.4 	the transition between income brackets.

20.5 	EFFECTIVE DATE. This section is effective the day following final enactment.

20.6 	Sec. 10. [290.0803] SECTION 179 EXPENSING SUBTRACTION.
20.7 		Subdivision 1.Current year allowance. (a) In each of the five tax years 
20.8 	immediately following the tax year in which an addition is required under section 290.01, 
20.9 	subdivision 19a, clause (8), or 19c, clause (13), the current year allowance equals one-fifth 
20.10 	of the addition made by the taxpayer under section 290.01, subdivision 19a, clause (8), 
20.11 	or 19c, clause (13).
20.12 	(b) In the case of a shareholder of a corporation that is an S corporation, the current 
20.13 	year allowance is reduced by the positive value of any net operating loss under section 
20.14 	172 of the Internal Revenue Code generated for the tax year of the addition and, if the net 
20.15 	operating loss exceeds the addition for the tax year, the current year allowance is zero.
20.16 		Subd. 2.Section 179 expensing carryover. For purposes of this section, the current  
20.17 	year allowance determined under subdivision 1 is considered to be the last subtraction 
20.18 	allowed in determining taxable income. If the amount allowed under subdivision 1 
20.19 	exceeds taxable income, then the excess is a section 179 expensing carryover to each 
20.20 	of the ten succeeding taxable years. The entire amount of the section 179 expensing 
20.21 	carryover is carried first to the earliest taxable year to which the section 179 expensing 
20.22 	carryover may be carried and then to each successive year to which the section 179 
20.23 	expensing carryover may be carried.
20.24 		Subd. 3.Section 179 expensing subtraction. A taxpayer is allowed a section 179 
20.25 	expensing subtraction from federal taxable income. The subtraction equals the sum of:
20.26 	(1) the current year allowance determined under subdivision 1; and
20.27 	(2) any section 179 expensing carryover from prior taxable years determined under 
20.28 	subdivision 2. 

20.29 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
20.30 	beginning after December 31, 2014.

20.31 	Sec. 11. Minnesota Statutes 2014, section 290.091, subdivision 2, is amended to read:
20.32 		Subd. 2.Definitions. For purposes of the tax imposed by this section, the following 
20.33 	terms have the meanings given:
21.1 	(a) "Alternative minimum taxable income" means the sum of the following for 
21.2 	the taxable year:
21.3 	(1) the taxpayer's federal alternative minimum taxable income as defined in section 
21.4 	55(b)(2) of the Internal Revenue Code;
21.5 	(2) the taxpayer's itemized deductions allowed in computing federal alternative 
21.6 	minimum taxable income, but excluding:
21.7 	(i) the charitable contribution deduction under section 170 of the Internal Revenue 
21.8 	Code;
21.9 	(ii) the medical expense deduction;
21.10 	(iii) the casualty, theft, and disaster loss deduction; and
21.11 	(iv) the impairment-related work expenses of a disabled person;
21.12 	(3) for depletion allowances computed under section 613A(c) of the Internal 
21.13 	Revenue Code, with respect to each property (as defined in section 614 of the Internal 
21.14 	Revenue Code), to the extent not included in federal alternative minimum taxable income, 
21.15 	the excess of the deduction for depletion allowable under section 611 of the Internal 
21.16 	Revenue Code for the taxable year over the adjusted basis of the property at the end of the 
21.17 	taxable year (determined without regard to the depletion deduction for the taxable year);
21.18 	(4) to the extent not included in federal alternative minimum taxable income, the 
21.19 	amount of the tax preference for intangible drilling cost under section 57(a)(2) of the 
21.20 	Internal Revenue Code determined without regard to subparagraph (E);
21.21 	(5) to the extent not included in federal alternative minimum taxable income, the 
21.22 	amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
21.23 	(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7) 
21.24 	to (9), and (11) to (14);
21.25 	less the sum of the amounts determined under the following:
21.26 	(1) interest income as defined in section 290.01, subdivision 19b, clause (1);
21.27 	(2) an overpayment of state income tax as provided by section 290.01, subdivision 
21.28 	19b, clause (2), to the extent included in federal alternative minimum taxable income;
21.29 	(3) the amount of investment interest paid or accrued within the taxable year on 
21.30 	indebtedness to the extent that the amount does not exceed net investment income, as 
21.31 	defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include 
21.32 	amounts deducted in computing federal adjusted gross income;
21.33 	(4) amounts subtracted from federal taxable income as provided by section 290.01, 
21.34 	subdivision 19b, clauses (6), (8) to (14), and (16), and (21); and
21.35 	(5) the amount of the net operating loss allowed under section 290.095, subdivision 
21.36 	11, paragraph (c).
22.1 	In the case of an estate or trust, alternative minimum taxable income must be 
22.2 	computed as provided in section 59(c) of the Internal Revenue Code.
22.3 	(b) "Investment interest" means investment interest as defined in section 163(d)(3) 
22.4 	of the Internal Revenue Code.
22.5 	(c) "Net minimum tax" means the minimum tax imposed by this section.
22.6 	(d) "Regular tax" means the tax that would be imposed under this chapter (without 
22.7 	regard to this section and section 290.032), reduced by the sum of the nonrefundable 
22.8 	credits allowed under this chapter.
22.9 	(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable 
22.10 	income after subtracting the exemption amount determined under subdivision 3.

22.11 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
22.12 	beginning after December 31, 2014.

22.13 	Sec. 12. Minnesota Statutes 2015 Supplement, section 290A.03, subdivision 15, 
22.14 	is amended to read:
22.15 		Subd. 15.Internal Revenue Code.  "Internal Revenue Code" means the Internal 
22.16 	Revenue Code of 1986, as amended through December 31, 2014 2015.

22.17 	EFFECTIVE DATE. This section is effective retroactively for property tax refunds 
22.18 	based on property taxes payable after December 31, 2015, and rent paid after December 
22.19 	31, 2014.

22.20 	Sec. 13. Minnesota Statutes 2015 Supplement, section 291.005, subdivision 1, is 
22.21 	amended to read:
22.22 		Subdivision 1.Scope. Unless the context otherwise clearly requires, the following 
22.23 	terms used in this chapter shall have the following meanings:
22.24 	(1) "Commissioner" means the commissioner of revenue or any person to whom the 
22.25 	commissioner has delegated functions under this chapter.
22.26 	(2) "Federal gross estate" means the gross estate of a decedent as required to be valued 
22.27 	and otherwise determined for federal estate tax purposes under the Internal Revenue Code, 
22.28 	increased by the value of any property in which the decedent had a qualifying income 
22.29 	interest for life and for which an election was made under section 291.03, subdivision 1d, 
22.30 	for Minnesota estate tax purposes, but was not made for federal estate tax purposes.
22.31 	(3) "Internal Revenue Code" means the United States Internal Revenue Code of 
22.32 	1986, as amended through December 31, 2014 2015.
23.1 	(4) "Minnesota gross estate" means the federal gross estate of a decedent after 
23.2 	(a) excluding therefrom any property included in the estate which has its situs outside 
23.3 	Minnesota, and (b) including any property omitted from the federal gross estate which 
23.4 	is includable in the estate, has its situs in Minnesota, and was not disclosed to federal 
23.5 	taxing authorities.
23.6 	(5) "Nonresident decedent" means an individual whose domicile at the time of 
23.7 	death was not in Minnesota.
23.8 	(6) "Personal representative" means the executor, administrator or other person 
23.9 	appointed by the court to administer and dispose of the property of the decedent. If there 
23.10 	is no executor, administrator or other person appointed, qualified, and acting within this 
23.11 	state, then any person in actual or constructive possession of any property having a situs in 
23.12 	this state which is included in the federal gross estate of the decedent shall be deemed 
23.13 	to be a personal representative to the extent of the property and the Minnesota estate tax 
23.14 	due with respect to the property.
23.15 	(7) "Resident decedent" means an individual whose domicile at the time of death 
23.16 	was in Minnesota.
23.17 	(8) "Situs of property" means, with respect to:
23.18 	(i) real property, the state or country in which it is located;
23.19 	(ii) tangible personal property, the state or country in which it was normally kept 
23.20 	or located at the time of the decedent's death or for a gift of tangible personal property 
23.21 	within three years of death, the state or country in which it was normally kept or located 
23.22 	when the gift was executed;
23.23 	(iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue 
23.24 	Code, owned by a nonresident decedent and that is normally kept or located in this state 
23.25 	because it is on loan to an organization, qualifying as exempt from taxation under section 
23.26 	501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is 
23.27 	deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and
23.28 	(iv) intangible personal property, the state or country in which the decedent was 
23.29 	domiciled at death or for a gift of intangible personal property within three years of death, 
23.30 	the state or country in which the decedent was domiciled when the gift was executed.
23.31 	For a nonresident decedent with an ownership interest in a pass-through entity with 
23.32 	assets that include real or tangible personal property, situs of the real or tangible personal 
23.33 	property, including qualified works of art, is determined as if the pass-through entity does 
23.34 	not exist and the real or tangible personal property is personally owned by the decedent. 
23.35 	If the pass-through entity is owned by a person or persons in addition to the decedent, 
24.1 	ownership of the property is attributed to the decedent in proportion to the decedent's 
24.2 	capital ownership share of the pass-through entity.
24.3 	(9) "Pass-through entity" includes the following:
24.4 	(i) an entity electing S corporation status under section 1362 of the Internal Revenue 
24.5 	Code;
24.6 	(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;
24.7 	(iii) a single-member limited liability company or similar entity, regardless of 
24.8 	whether it is taxed as an association or is disregarded for federal income tax purposes 
24.9 	under Code of Federal Regulations, title 26, section 301.7701-3; or
24.10 	(iv) a trust to the extent the property is includible in the decedent's federal gross 
24.11 	estate; but excludes
24.12 	(v) an entity whose ownership interest securities are traded on an exchange regulated 
24.13 	by the Securities and Exchange Commission as a national securities exchange under 
24.14 	section 6 of the Securities Exchange Act, United States Code, title 15, section 78f.

24.15 	EFFECTIVE DATE. This section is effective the day following final enactment.

24.16 	Sec. 14. INDIVIDUAL INCOME TAX COLLECTION ACTION PROHIBITED.
 24.17 	Notwithstanding any law to the contrary, the commissioner shall not increase the 
24.18 	amount due or decrease the refund for an individual income tax return for the taxable 
24.19 	year beginning after December 31, 2014, and before January 1, 2016, to the extent the 
24.20 	amount due was understated or the refund was overstated because the taxpayer calculated 
24.21 	the tax or refund based on the Internal Revenue Code, as amended through December 31, 
24.22 	2014, rather than based on the Internal Revenue Code, as amended through December 
24.23 	31, 2015, as provided in this act. 

24.24 	EFFECTIVE DATE. This section is effective the day following final enactment.

24.25 	Sec. 15. AMENDED RETURNS.
 24.26 		Subdivision 1.Certain IRA rollovers. An individual who excludes an amount 
24.27 	from net income in a prior taxable year through rollover of an airline payment amount to 
24.28 	a traditional IRA, as authorized under Public Law 114-113, division Q, title III, section 
24.29 	307, may file an amended individual income tax return and claim for refund of state taxes 
24.30 	as provided under Minnesota Statutes, section 289A.40, subdivision 1, or, if later, by 
24.31 	September 1, 2016.
24.32 		Subd. 2.Exclusion for certain incarcerated individuals. An individual who 
24.33 	excludes from net income in a prior taxable year civil damages, restitution, or other 
25.1 	monetary award related to wrongful incarceration, as authorized under Public Law 
25.2 	114-113, division Q, title III, section 304, may file an amended individual income tax 
25.3 	return and claim for refund of state taxes as provided under Minnesota Statutes, section 
25.4 	289A.40, subdivision 1, or, if later, by September 1, 2016.

25.5 	EFFECTIVE DATE. This section is effective the day following final enactment.

25.6 	ARTICLE 2
25.7 	SMALL BUSINESS COLLECTION CREDIT

25.8 	Section 1. [297A.816] SMALL BUSINESS COLLECTION CREDIT.
25.9 		Subdivision 1.Eligibility. A retailer or seller that is a small business may apply 
25.10 	to the commissioner for a refund for the annual cost of employing a certified service 
25.11 	provider or a certified automated system to collect and remit the appropriate amount of 
25.12 	sales taxes collected on their sales.
25.13 		Subd. 2.Definitions. (a) For purposes of this section, the following terms have the 
25.14 	meanings given in this subdivision.
25.15 	(b) "Certified service provider" and "certified automated system" have the meanings 
25.16 	given in article II of the Streamlined Sales and Use Tax Agreement, as amended through 
25.17 	May 15, 2014.
25.18 	(c) "Small business" means a small business as defined in section 645.445.
25.19 		Subd. 3.Application; administration. Upon application on forms prescribed 
25.20 	by the commissioner, a refund of the costs under subdivision 1 must be paid to the 
25.21 	qualifying small business. The application must provide sufficient information to permit 
25.22 	the commissioner to verify that the business qualifies and to document the actual costs 
25.23 	incurred. An applicant may file one application per calendar year for expenses incurred in 
25.24 	its latest fiscal year ending prior to the date of application.
25.25 		Subd. 4.Interest. Interest must be paid on the refund at the rate in section 
25.26 	270C.405, from 90 days after the refund claim is filed with the commissioner.
25.27 		Subd. 5.Appropriation. The amount required to pay the refunds under this section 
25.28 	is appropriated to the commissioner from the general fund.

25.29 	EFFECTIVE DATE. This section is effective beginning with costs after June 
25.30 	30, 2016.

26.1 	ARTICLE 3
26.2 	SMALL BUSINESS DEVELOPMENT CENTERS

26.3 	Section 1. SMALL BUSINESS DEVELOPMENT CENTERS; APPROPRIATION.
 26.4 	(a) $500,000 in fiscal year 2017 is appropriated from the general fund to the 
26.5 	commissioner of employment and economic development for small business development 
26.6 	center (SBDC) services to support business transition planning. For the purposes of this 
26.7 	section, business transition planning includes, but is not limited to:
26.8 	(1) succession planning for next generation proprietors. For the purposes of this 
26.9 	clause, "next generation proprietors" do not include immediate family members of the 
26.10 	current business owner;
26.11 	(2) matching business owners seeking to sell existing businesses with aspiring 
26.12 	business owners. Matching services under this clause may be targeted to small 
26.13 	businesses located in economically disadvantaged communities or areas of declining 
26.14 	population. For the purposes of this clause, "economically disadvantaged communities" 
26.15 	means communities in which the average household income is less than 80 percent of 
26.16 	statewide median household income as measured by the United States Census Bureau or 
26.17 	communities that contain two or more contiguous census tracts in which the average 
26.18 	household income is less than 80 percent of the statewide median household income as 
26.19 	measured by the Unites States Census Bureau; and
26.20 	(3) providing information and counseling services to business owners, prospective 
26.21 	owners, and others regarding the importance of business transition and succession 
26.22 	planning, the transition and succession process, and financing options and requirements 
26.23 	related to the business transition and succession process.
26.24 	(b) Funds available under this section may be used to:
26.25 	(1) provide the necessary information and services under paragraph (a);
26.26 	(2) build small business development center staff capacity to provide business 
26.27 	transition and succession planning services; and
26.28 	(3) match funds under the federal Small Business Development Center Program 
26.29 	under United States Code, title 15, section 648, and other federal, state, or local funds 
26.30 	available for the purposes of this section.

26.31 	ARTICLE 4
26.32 	INITIATIVE FOUNDATIONS

26.33 	Section 1. INITIATIVE FOUNDATIONS; APPROPRIATION.
 27.1 	$7,000,000 in fiscal year 2017 is appropriated from the general fund to the 
27.2 	commissioner of employment and economic development for grants to initiative 
27.3 	foundations to provide financing for business start-ups, expansions, and maintenance; and 
27.4 	for business ownership transition and succession. Of the amount appropriated:
27.5 	(1) $1,000,000 is for a grant to the Southwest Initiative Foundation;
27.6 	(2) $1,000,000 is for a grant  to the West Central Initiative Foundation;
27.7 	(3) $1,000,000 is for a grant  to the Southern Minnesota Initiative Foundation;
27.8 	(4) $1,000,000 is for a grant  to the Northwest Minnesota Foundation;
27.9 	(5) $1,000,000 is for a grant  to the Initiative Foundation;
27.10 	(6) $1,000,000 is for a grant  to the Northland Foundation; and 
27.11 	(7) $1,000,000 is for a grant  to the Urban Initiative Board under Minnesota Statutes, 
27.12 	chapter 116M. Funds available under this clause must be allocated as follows: 
27.13 	(i) 50 percent of the funds must be allocated for projects in the counties of Dakota, 
27.14 	Ramsey, and Washington; and 
27.15 	(ii) 50 percent of the funds must be allocated for projects in the counties of Anoka, 
27.16 	Carver, Hennepin, and Scott. 

27.17 	ARTICLE 5
27.18 	BUREAU OF SMALL BUSINESSES

27.19 	Section 1. Minnesota Statutes 2014, section 116J.68, is amended to read:
27.20 	116J.68 BUREAU OF SMALL BUSINESS.
27.21 		Subdivision 1.Generally. The Bureau of Small Business within the business 
27.22 	assistance center shall serve as a clearinghouse, technical assistance center, and referral 
27.23 	service for information and other assistance needed by small businesses including small 
27.24 	targeted group businesses and small businesses located in an economically disadvantaged 
27.25 	area.
27.26 		Subd. 2.Duties. The bureau shall:
27.27 	(1) provide information and assistance with respect to all aspects of business 
27.28 	planning, business finance, and business management related to the start-up, operation, or 
27.29 	expansion of a small business in Minnesota;
27.30 	(2) refer persons interested in the start-up, operation, or expansion of a small 
27.31 	business in Minnesota to assistance programs sponsored by federal agencies, state 
27.32 	agencies, educational institutions, chambers of commerce, civic organizations, community 
27.33 	development groups, private industry associations, and other organizations;
28.1 	(3) plan, develop, and implement a master file of information on small business 
28.2 	assistance programs of federal, state, and local governments, and other public and private 
28.3 	organizations so as to provide comprehensive, timely information to the bureau's clients;
28.4 	(4) employ staff with adequate and appropriate skills and education and training for 
28.5 	the delivery of information and assistance;
28.6 	(5) seek out and utilize, to the extent practicable, contributed expertise and services 
28.7 	of federal, state, and local governments, educational institutions, and other public and 
28.8 	private organizations;
28.9 	(6) maintain a close and continued relationship with the director of the procurement 
28.10 	program within the Department of Administration so as to facilitate the department's 
28.11 	duties and responsibilities under sections 16C.16 to 16C.19 relating to the small targeted 
28.12 	group business and economically disadvantaged business program of the state;
28.13 	(7) develop an information system which will enable the commissioner and other 
28.14 	state agencies to efficiently store, retrieve, analyze, and exchange data regarding small 
28.15 	business development and growth in the state. All executive branch agencies of state 
28.16 	government and the secretary of state shall to the extent practicable, assist the bureau in 
28.17 	the development and implementation of the information system;
28.18 	(8) establish and maintain a toll-free telephone number, e-mail account, and other 
28.19 	electronic contact mediums determined by the commissioner, so that all small business 
28.20 	persons anywhere in the state can call may contact the bureau office for assistance. 
28.21 	An outreach program shall be established to make the existence of the bureau and the 
28.22 	assistance and services the bureau may provide to small businesses well known to its 
28.23 	potential clientele throughout the state. If the small business person requires a referral to 
28.24 	another provider the bureau may use the business assistance referral system established by 
28.25 	the Minnesota Project Outreach Corporation;
28.26 	(9) conduct research and provide data as required by the state legislature;
28.27 	(10) develop and publish material on all aspects of the start-up, operation, or 
28.28 	expansion of a small business in Minnesota;
28.29 	(11) collect and disseminate information on state procurement opportunities, 
28.30 	including information on the procurement process;
28.31 	(12) develop a public awareness program through the use of regarding state 
28.32 	assistance programs for small businesses, including those programs specifically for 
28.33 	socially disadvantaged small business persons. The commissioner may utilize print and 
28.34 	electronic newsletters, personal contacts, andadvertising devices as defined under section 
28.35 	173.02, subdivision 16, social media, other electronic and print news media advertising 
28.36 	about state assistance programs for small businesses, including those programs specifically 
29.1 	for socially disadvantaged small business persons, and any other means determined by 
29.2 	the commissioner;
29.3 	(13) enter into agreements with the federal government and other public and private 
29.4 	entities to serve as the statewide coordinator or host agency for the federal small business 
29.5 	development center program under United States Code, title 15, section 648; and
29.6 	(14) assist providers in the evaluation of their programs and the assessment of 
29.7 	their service area needs. The bureau may establish model evaluation techniques and 
29.8 	performance standards for providers to use.

29.9 	Sec. 2. BUSINESS DEVELOPMENT SPECIALISTS; APPROPRIATION.
 29.10 	$....... in fiscal year 2017 is appropriated from the general fund to the commissioner 
29.11 	of employment and economic development for expansion of business assistance services 
29.12 	provided by business development specialists located in the northwest region, northeast 
29.13 	region, west central region, southwest region, southeast region, and Twin Cities 
29.14 	metropolitan region offices established throughout the state. Funds under this section may 
29.15 	be used to provide services including, but not limited to: business start-ups; expansion; 
29.16 	location or relocation; finance; regulatory and permitting assistance; and other services 
29.17 	determined by the commissioner. Business development specialists must, to the extent 
29.18 	feasible, contact owners of new or expanded businesses within 90 days of the business 
29.19 	start-up or expansion to offer follow-up or consultative services, or other services or 
29.20 	assistance upon request. The commissioner may also use funds under this section to 
29.21 	increase the number of business development specialists in each region of the state, 
29.22 	increase and expand the services provided through each regional office, and publicize the 
29.23 	services available and provide outreach to communities in each region regarding services 
29.24 	and assistance available through the business development specialist program.

29.25 	Sec. 3. BUREAU OF SMALL BUSINESS PROMOTION ACTIVITIES; 
29.26 	APPROPRIATION.
 29.27 	$....... in fiscal year 2017 is appropriated from the general fund to the commissioner 
29.28 	of employment and economic development to enhance the outreach and public awareness 
29.29 	activities of the Bureau of Small Business under Minnesota Statutes, section 116J.68.

29.30 	ARTICLE 6
29.31 	PRIVATE LETTER RULINGS

29.32 	Section 1. [270C.075] PRIVATE LETTER RULINGS.
30.1 		Subdivision 1.Program established. By January 1, 2017, the commissioner shall 
30.2 	establish and implement a program for issuing private letter rulings to taxpayers to 
30.3 	provide guidance as to how the commissioner will apply Minnesota tax law to a specific 
30.4 	transaction, arrangement, or other fact situation of the applying taxpayer. In establishing 
30.5 	the terms of the program, the commissioner may provide that rulings will not be issued 
30.6 	in specified subject areas, for categories of transactions, or under specified provisions 
30.7 	of law, if the commissioner determines doing so is in the best interests of the state and 
30.8 	sound tax administration.
30.9 		Subd. 2.Application procedure; fees. (a) The commissioner shall establish an 
30.10 	application procedure and forms for a taxpayer to request a private letter ruling. The 
30.11 	commissioner may require the taxpayer to provide any supporting factual information and 
30.12 	certifications that the commissioner determines necessary or appropriate to issuing private 
30.13 	letter rulings. The requirements may vary based on the type of ruling requested.
30.14 	(b) The commissioner may charge an applicant for the actual cost of preparing the 
30.15 	private letter ruling, including the cost of employee time, but the charge may not exceed 
30.16 	$1,000 per private letter ruling.
30.17 	(c) If the commissioner fails to issue a ruling to the taxpayer within 90 days after the 
30.18 	taxpayer's filing of a completed application, the commissioner must refund the application 
30.19 	fee to the taxpayer, however, the commissioner must issue a private letter ruling unless the 
30.20 	taxpayer withdraws the request.
30.21 		Subd. 3.Effect. (a) A private letter ruling is binding on the commissioner with 
30.22 	respect to the taxpayer to whom the ruling is issued, if:
30.23 	(1) there was no misstatement or omission of material facts in the application or 
30.24 	other information provided to the commissioner;
30.25 	(2) the facts that subsequently developed were not materially different from the facts 
30.26 	upon which the ruling was based;
30.27 	(3) the applicable statute, administrative rule, federal law referenced by state law, or 
30.28 	other relevant law has not changed; and
30.29 	(4) the taxpayer acted in good faith in applying for and relying on the ruling.
30.30 	(b) Private letter rulings have no precedential effect and may not be relied upon by a 
30.31 	taxpayer other than as provided by paragraph (a).
30.32 		Subd. 4.Public access. The commissioner shall make private letter rulings issued 
30.33 	under this section available to the public on the department's Web site. The published 
30.34 	rulings must redact any information that would permit identification of the requesting 
30.35 	taxpayer.
31.1 		Subd. 5.Legislative report. (a) By January 31 of each odd-numbered year, the 
31.2 	commissioner shall report, in writing, to the legislature the following information for the 
31.3 	immediately preceding two calendar years:
31.4 	(1) the number of applications for private letter rulings;
31.5 	(2) the number of private letter rulings issued, including the number issued within 
31.6 	the 90-day time period under subdivision 2, paragraph (c);
31.7 	(3) the amount of application fees refunded, if any;
31.8 	(4) the tax types for which rulings were requested;
31.9 	(5) the types and characteristics of taxpayers applying for rulings; and
31.10 	(6) any other information that the commissioner considers relevant to legislative 
31.11 	oversight of the private letter ruling program.
31.12 	(b) The report must be filed as provided in section 3.195, and copies provided to the 
31.13 	chairs and ranking minority members of the committees of the house of representatives and 
31.14 	the senate with jurisdiction over taxes and appropriations to the Department of Revenue.

31.15 	EFFECTIVE DATE. This section is effective the day following final enactment, 
31.16 	except that the first legislative report under subdivision 5 is due January 31, 2019. 

31.17 	Sec. 2. Minnesota Statutes 2014, section 270C.33, is amended by adding a subdivision 
31.18 	to read:
31.19 		Subd. 4a.Limitations; sales, corporate, and income taxes. (a) The provisions 
31.20 	of this subdivision are a limitation on the assessment authority of the commissioner 
31.21 	under this section.
31.22 	(b) The commissioner must not assess additional tax due under chapter 290 or 297A 
31.23 	if each of the following requirements are met:
31.24 	(1) the tax reported by the taxpayer is consistent with and based on past reporting or 
31.25 	other practices of the taxpayer that were fully disclosed to the commissioner and were 
31.26 	approved, in writing, to the taxpayer by the commissioner, including by issuing an audit 
31.27 	assessing no additional tax liability with respect to that item for a prior taxable period; and
31.28 	(2) effective for a taxable period beginning after the period covered by clause (1), 
31.29 	neither the statute or administrative rule on which the reporting or other practice is based 
31.30 	has been materially changed, nor has the commissioner issued a revenue notice or directly 
31.31 	notified the taxpayer, in writing, of a change in the commissioner's position as to the proper 
31.32 	reporting or other treatment of the relevant income, transaction, deduction, or other item.

31.33 	EFFECTIVE DATE. This section is effective for assessments made after June 
31.34 	30, 2016.

32.1 	Sec. 3. Minnesota Statutes 2014, section 270C.34, subdivision 1, is amended to read:
32.2 		Subdivision 1.Authority. (a) The commissioner may abate, reduce, or refund any 
32.3 	penalty or interest that is imposed by a law administered by the commissioner, or imposed 
32.4 	by section 270.0725, subdivision 1 or 2, or 270.075, subdivision 2, as a result of the late 
32.5 	payment of tax or late filing of a return, or any part of an additional tax charge under 
32.6 	section 289A.25, subdivision 2, or 289A.26, subdivision 4, if the failure to timely pay the 
32.7 	tax or failure to timely file the return is due to reasonable cause, or if the taxpayer is located 
32.8 	in a presidentially declared disaster or in a presidentially declared state of emergency area 
32.9 	or in an area declared to be in a state of emergency by the governor under section 12.31.
32.10 	(b) The commissioner shall abate any part of a penalty or additional tax charge 
32.11 	under section 289A.25, subdivision 2, or 289A.26, subdivision 4, attributable to erroneous 
32.12 	advice given to the taxpayer in writing by an employee of the department acting in 
32.13 	an official capacity, if the advice:
32.14 	(1) was reasonably relied on and was in response to a specific written request of the 
32.15 	taxpayer; and
32.16 	(2) was not the result of failure by the taxpayer to provide adequate or accurate 
32.17 	information.
32.18 	(c) In addition to the authority under paragraphs (a) and (b), the commissioner may 
32.19 	decline to impose or may abate any penalty under section 289A.60 or other law, or an 
32.20 	additional tax charge under section 289A.25, subdivision 2, or 289A.26, subdivision 4.

32.21 	EFFECTIVE DATE. This section is effective the day following enactment.

32.22 	Sec. 4. Minnesota Statutes 2014, section 289A.60, subdivision 1, is amended to read:
32.23 		Subdivision 1.Penalty for failure to pay tax. (a) If a corporate franchise, fiduciary 
32.24 	income, mining company, estate, partnership, S corporation, or nonresident entertainer 
32.25 	tax is not paid within the time specified for payment, a penalty of six percent is added to 
32.26 	the unpaid tax, except that if a corporation or mining company meets the requirements of 
32.27 	section 289A.19, subdivision 2, the penalty is not imposed.
32.28 	(b) For the taxes listed in paragraph (a), in addition to the penalty in that paragraph, 
32.29 	whether imposed or not, if a return or amended return is filed after the due date, without 
32.30 	regard to extensions, and any tax reported as remaining due is not remitted with the return 
32.31 	or amended return, a penalty of five percent of the tax not paid is added to the tax. If the 
32.32 	commissioner issues an order assessing additional tax for a tax listed in paragraph (a), 
32.33 	and the tax is not paid within 60 days after the mailing of the order or, if appealed, within 
32.34 	60 days after final resolution of the appeal, a penalty of five percent of the unpaid tax 
32.35 	is added to the tax.
33.1 	(c) If an individual income tax is not paid within the time specified for payment, a 
33.2 	penalty of four percent is added to the unpaid tax. There is a presumption of reasonable 
33.3 	cause for the late payment if the individual: (i) pays by the due date of the return at 
33.4 	least 90 percent of the amount of tax, after credits other than withholding and estimated 
33.5 	payments, shown owing on the return; (ii) files the return within six months after the due 
33.6 	date; and (iii) pays the remaining balance of the reported tax when the return is filed.
33.7 	(d) If the commissioner issues an order assessing additional individual income tax, 
33.8 	and the tax is not paid within 60 days after the mailing of the order or, if appealed, within 
33.9 	60 days after final resolution of the appeal, a penalty of four percent of the unpaid tax 
33.10 	is added to the tax.
33.11 	(e) If a withholding or sales or use tax is not paid within the time specified for 
33.12 	payment, a penalty must be added to the amount required to be shown as tax. The penalty 
33.13 	is five percent of the tax not paid on or before the date specified for payment of the tax 
33.14 	if the failure is for not more than 30 days, with an additional penalty of five percent of 
33.15 	the amount of tax remaining unpaid during each additional 30 days or fraction of 30 days 
33.16 	during which the failure continues, not exceeding 15 percent in the aggregate.
33.17 	(f) No penalty applies under this subdivision if the total calculated penalty that 
33.18 	would otherwise apply under paragraphs (a) to (e) is less than $150.

33.19 	EFFECTIVE DATE. This section is effective for penalties imposed after June 
33.20 	30, 2016.

33.21 	Sec. 5. APPROPRIATION; PRIVATE LETTER RULING PROGRAM.
 33.22 	$....... in fiscal year 2017 is appropriated from the general fund to the commissioner 
33.23 	of revenue for the cost of establishing and administering the private letter ruling program 
33.24 	under section 1.