Engrossments
Introduction		Posted on 05/23/2017
1st Engrossment		Posted on 05/31/2017

ARTICLE 1

INDIVIDUAL INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES

Section 1.

new text begin [41B.0391] BEGINNING FARMER PROGRAM; TAX CREDITS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Agricultural assets" means agricultural land, livestock, facilities, buildings, and
machinery used for farming in Minnesota.
new text end

new text begin (c) "Beginning farmer" means an individual who:
new text end

new text begin (1) is a resident of Minnesota;
new text end

new text begin (2) is seeking entry, or has entered within the last ten years, into farming;
new text end

new text begin (3) intends to farm land located within the state borders of Minnesota;
new text end

new text begin (4) is not and whose spouse is not a family member of the owner of the agricultural
assets from whom the beginning farmer is seeking to purchase or rent agricultural assets;
new text end

new text begin (5) is not and whose spouse is not a family member of a partner, member, shareholder,
or trustee of the owner of agricultural assets from whom the beginning farmer is seeking to
purchase or rent agricultural assets; and
new text end

new text begin (6) meets the following eligibility requirements as determined by the authority:
new text end

new text begin (i) has a net worth that does not exceed the limit provided under section 41B.03,
subdivision 3, paragraph (a), clause (2);
new text end

new text begin (ii) provides the majority of the day-to-day physical labor and management of the farm;
new text end

new text begin (iii) has, by the judgment of the authority, adequate farming experience or demonstrates
knowledge in the type of farming for which the beginning farmer seeks assistance from the
authority;
new text end

new text begin (iv) demonstrates to the authority a profit potential by submitting projected earnings
statements;
new text end

new text begin (v) asserts to the satisfaction of the authority that farming will be a significant source
of income for the beginning farmer;
new text end

new text begin (vi) participates in a financial management program approved by the authority or the
commissioner of agriculture;
new text end

new text begin (vii) agrees to notify the authority if the beginning farmer no longer meets the eligibility
requirements within the three-year certification period, in which case the beginning farmer
is no longer eligible for credits under this section; and
new text end

new text begin (viii) has other qualifications as specified by the authority.
new text end

new text begin (d) "Family member" means a family member within the meaning of the Internal Revenue
Code, section 267(c)(4).
new text end

new text begin (e) "Farm product" means plants and animals useful to humans and includes, but is not
limited to, forage and sod crops, oilseeds, grain and feed crops, dairy and dairy products,
poultry and poultry products, livestock, fruits, and vegetables.
new text end

new text begin (f) "Farming" means the active use, management, and operation of real and personal
property for the production of a farm product.
new text end

new text begin (g) "Owner of agricultural assets" means an individual, trust, or pass-through entity that
is the owner in fee of agricultural land or has legal title to any other agricultural asset. Owner
of agricultural assets does not mean an equipment dealer, livestock dealer defined in section
17A.03, subdivision 7, or comparable entity that is engaged in the business of selling
agricultural assets for profit and that is not engaged in farming as its primary business
activity. An owner of agricultural assets approved and certified by the authority under
subdivision 4 must notify the authority if the owner no longer meets the definition in this
paragraph within the three year certification period and is then no longer eligible for credits
under this section.
new text end

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

new text begin (i) "Share rent agreement" means a rental agreement in which the principal consideration
given to the owner of agricultural assets is a predetermined portion of the production of
farm products produced from the rented agricultural assets and which provides for sharing
production costs or risk of loss, or both.
new text end

new text begin Subd. 2. new text end

new text begin Tax credit for owners of agricultural assets. new text end

new text begin (a) An owner of agricultural
assets may take a credit against the tax due under chapter 290 for the sale or rental of
agricultural assets to a beginning farmer in the amount allocated by the authority under
subdivision 4. An owner of agricultural assets is eligible for allocation of a credit equal to:
new text end

new text begin (1) five percent of the lesser of the sale price or the fair market value of the agricultural
asset, up to a maximum of $32,000;
new text end

new text begin (2) ten percent of the gross rental income in each of the first, second, and third years of
a rental agreement, up to a maximum of $7,000 per year; or
new text end

new text begin (3) 15 percent of the cash equivalent of the gross rental income in each of the first,
second, and third years of a share rent agreement, up to a maximum of $10,000 per year.
new text end

new text begin (b) A qualifying rental agreement includes cash rent of agricultural assets or a share rent
agreement. The agricultural asset must be rented at prevailing community rates as determined
by the authority.
new text end

new text begin (c) The credit may be claimed only after approval and certification by the authority, and
is limited to the amount stated on the certificate issued under subdivision 4. An owner of
agricultural assets must apply to the authority for certification and allocation of a credit, in
a form and manner prescribed by the authority.
new text end

new text begin (d) An owner of agricultural assets or beginning farmer may terminate a rental agreement,
including a share rent agreement, for reasonable cause upon approval of the authority. If a
rental agreement is terminated without the fault of the owner of agricultural assets, the tax
credits shall not be retroactively disallowed. In determining reasonable cause, the authority
must look at which party was at fault in the termination of the agreement. If the authority
determines the owner of agricultural assets did not have reasonable cause, the owner of
agricultural assets must repay all credits received as a result of the rental agreement to the
commissioner of revenue. The repayment is additional income tax for the taxable year in
which the authority makes its decision or when a final adjudication under subdivision 5,
paragraph (a), is made, whichever is later.
new text end

new text begin (e) The credit is limited to the liability for tax as computed under chapter 290 for the
taxable year. If the amount of the credit determined under this section for any taxable year
exceeds this limitation, the excess is a beginning farmer incentive credit carryover according
to section 290.06, subdivision 37.
new text end

new text begin Subd. 3. new text end

new text begin Beginning farmer management tax credit. new text end

new text begin (a) A beginning farmer may take
a credit against the tax due under chapter 290 for participating in a financial management
program approved by the authority. A beginning farmer is eligible for allocation of a credit
equal to 100 percent of the amount paid for participating in the program, not to exceed
$1,500 per year. The credit is available for up to three years while the farmer is in the
program. The authority shall maintain a list of approved financial management programs
and establish a procedure for approving equivalent programs that are not on the list.
new text end

new text begin (b) The credit may be claimed only after approval and certification by the authority.
new text end

new text begin (c) The credit is limited to the liability for tax as computed under chapter 290 for the
taxable year. If the amount of the credit determined under this section for any taxable year
exceeds this limitation, the excess is a beginning farmer management credit carryover
according to section 290.06, subdivision 38.
new text end

new text begin Subd. 4. new text end

new text begin Authority duties. new text end

new text begin (a) The authority shall:
new text end

new text begin (1) approve and certify or recertify beginning farmers as eligible for the program under
this section;
new text end

new text begin (2) approve and certify or recertify owners of agricultural assets as eligible for the tax
credit under subdivision 2 subject to the allocation limits in paragraph (c);
new text end

new text begin (3) provide necessary and reasonable assistance and support to beginning farmers for
qualification and participation in financial management programs approved by the authority;
new text end

new text begin (4) refer beginning farmers to agencies and organizations that may provide additional
pertinent information and assistance; and
new text end

new text begin (5) notwithstanding section 41B.211, the Rural Finance Authority must share information
with the commissioner of revenue to the extent necessary to administer provisions under
this subdivision and section 290.06, subdivisions 37 and 38. The Rural Finance Authority
must annually notify the commissioner of revenue of approval and certification or
recertification of beginning farmers and owners of agricultural assets under this section.
For credits under subdivision 2, the notification must include the amount of credit approved
by the authority and stated on the credit certificate.
new text end

new text begin (b) The certification of a beginning farmer or an owner of agricultural assets under this
section is valid for the year of the certification and the two following years, after which
time the beginning farmer or owner of agricultural assets must apply to the authority for
recertification.
new text end

new text begin (c) For credits for owners of agricultural assets allowed under subdivision 2, the authority
must not allocate more than $5,000,000 for taxable years beginning after December 31,
2017, and before January 1, 2019, and must not allocate more than $6,000,000 for taxable
years beginning after December 31, 2018. The authority must allocate credits on a first-come,
first-served basis beginning on January 1 of each year, except that recertifications for the
second and third years of credits under subdivision 2, paragraph (a), clauses (1) and (2),
have first priority. Any amount authorized but not allocated in any taxable year does not
cancel and is added to the allocation for the next taxable year.
new text end

new text begin Subd. 5. new text end

new text begin Appeals of authority determinations. new text end

new text begin (a) Any decision of the authority under
this section may be challenged as a contested case under chapter 14. The contested case
proceeding must be initiated within 60 days of the date of written notification by the office.
new text end

new text begin (b) If a taxpayer challenges a decision of the authority under this subdivision, upon
perfection of the appeal the authority must notify the commissioner of revenue of the
challenge within 5 days.
new text end

new text begin (c) Nothing in this subdivision affects the commissioner of revenue's authority to audit,
review, correct, or adjust returns claiming the credit.
new text end

new text begin Subd. 6. new text end

new text begin Report to legislature. new text end

new text begin (a) No later than February 1, 2022, the Rural Finance
Authority, in consultation with the commissioner of revenue, must provide a report to the
chairs and ranking minority members of the legislative committees having jurisdiction over
agriculture, economic development, rural development, and taxes, in compliance with
sections 3.195 and 3.197, on the beginning farmer tax credits under this section issued in
tax years beginning after December 31, 2017, and before January 1, 2022.
new text end

new text begin (b) The report must include background information on beginning farmers in Minnesota
and any other information the commissioner and authority find relevant to evaluating the
effect of the credits on increasing opportunities for and the number of beginning farmers.
new text end

new text begin (c) For credits issued under subdivision 2, paragraph (a), clauses (1) to (3), the report
must include:
new text end

new text begin (1) the number and amount of credits issued under each clause;
new text end

new text begin (2) the geographic distribution of credits issued under each clause;
new text end

new text begin (3) the type of agricultural assets for which credits were issued under clause (1);
new text end

new text begin (4) the number and geographic distribution of beginning farmers whose purchase or
rental of assets resulted in credits for the seller or owner of the asset;
new text end

new text begin (5) the number and amount of credits disallowed under subdivision 2, paragraph (d);
new text end

new text begin (6) data on the number of beginning farmers by geographic region in calendar years
2017 through 2021; and
new text end

new text begin (7) the number and amount of credit applications that exceeded the allocation available
in each year.
new text end

new text begin (d) For credits issued under subdivision 3, the report must include:
new text end

new text begin (1) the number and amount of credits issued;
new text end

new text begin (2) the geographic distribution of credits;
new text end

new text begin (3) a listing and description of each approved financial management program for which
credits were issued; and
new text end

new text begin (4) a description of the approval procedure for financial management programs not on
the list maintained by the authority, as provided in subdivision 3, paragraph (a).
new text end

new text begin Subd. 7. new text end

new text begin Sunset. new text end

new text begin This section expires for taxable years beginning after December 31,
2023.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 2.

Minnesota Statutes 2016, section 289A.10, subdivision 1, is amended to read:

Subdivision 1.

Return required.

In the case of a decedent who has an interest in property
with a situs in Minnesota, the personal representative must submit a Minnesota estate tax
return to the commissioner, on a form prescribed by the commissioner, if:

(1) a federal estate tax return is required to be filed; or

(2) the sum of the federal gross estate and federal adjusted taxable gifts, as defined in
section 2001(b) of the Internal Revenue Code, made within three years of the date of the
decedent's death exceeds $1,200,000 for estates of decedents dying in 2014; $1,400,000 for
estates of decedents dying in 2015; $1,600,000 for estates of decedents dying in 2016;
deleted text begin $1,800,000deleted text end new text begin $2,100,000new text end for estates of decedents dying in 2017; new text begin $2,400,000 for estates of
decedents dying in 2018; $2,700,000 for estates of decedents dying in 2019; new text end and deleted text begin $2,000,000deleted text end new text begin
$3,000,000new text end for estates of decedents dying in deleted text begin 2018deleted text end new text begin 2020new text end and thereafter.

The return must contain a computation of the Minnesota estate tax due. The return must
be signed by the personal representative.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2016.
new text end

Sec. 3.

Minnesota Statutes 2016, section 289A.19, subdivision 7, is amended to read:

Subd. 7.

Federal extensions.

When an extension of time to file a partnershipnew text begin , fiduciary
income tax,new text end or S corporation tax return is granted by the Internal Revenue Service, the
commissioner shall grant an automatic extension to file the comparable Minnesota return
for that period. An extension granted under this subdivision does not affect the due date for
making payments of tax.

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2016, section 290.01, subdivision 4a, is amended to read:

Subd. 4a.

Financial institution.

(a) "Financial institution" means:

(1) deleted text begin a holding companydeleted text end new text begin any corporation or other business entity registered (i) under state
law as a bank holding company; (ii) under the federal Bank Holding Company Act of 1956,
as amended; or (iii) as a savings and loan holding company under the federal National
Housing Act, as amendednew text end ;

(2) deleted text begin any regulated financial corporation; ordeleted text end new text begin a national bank organized and existing as a
national bank association pursuant to the provisions of United States Code, title 12, chapter
2;
new text end

(3) deleted text begin any other corporation organized under the laws of the United States or organized
under the laws of this state or any other state or country that is carrying on the business of
a financial institution.deleted text end new text begin a savings association or federal savings bank as defined in United
States Code, title 12, section 1813(b)(1);
new text end

new text begin (4) any bank or thrift institution incorporated or organized under the laws of any state;
new text end

new text begin (5) any corporation organized under United States Code, title 12, sections 611 to 631;
new text end

new text begin (6) any agency or branch of a foreign depository as defined under United States Code,
title 12, section 3101;
new text end

new text begin (7) any corporation or other business entity that is more than 50 percent owned, directly
or indirectly, by any person or business entity described in clauses (1) to (6), other than an
insurance company taxable under chapter 297I;
new text end

new text begin (8) a corporation or other business entity that derives more than 50 percent of its total
gross income for financial accounting purposes from finance leases. For the purposes of
this clause, "gross income" means the average from the current tax year and immediately
preceding two years and excludes gross income from incidental or occasional transactions.
For purposes of this clause, "finance lease" means any lease transaction that is the functional
equivalent of an extension of credit and that transfers substantially all the benefits and risks
incident to the ownership of property, including any direct financing lease or leverage lease
that meets the criteria of Financial Accounting Standards Board Statement No. 13, accounting
for leases, or any other lease that is accounted for as financing by a lessor under generally
accepted accounting principles; or
new text end

new text begin (9) any other person or business entity, other than an insurance company taxable under
chapter 297I, that derives more than 50 percent of its gross income from activities that an
entity described in clauses (2) to (6) or (8) is authorized to transact. For the purposes of this
clause, gross income does not include income from nonrecurring, extraordinary items.
new text end

(b) deleted text begin "Holding company" means any corporation registered under the Federal Bank Holding
Company Act of 1956, as amended, or registered as a savings and loan holding company
under the Federal National Housing Act, as amended, or a federal savings bank holding
company.deleted text end new text begin The commissioner is authorized to exclude any person from the application of
paragraph (a), clause (9), if the person proves by clear and convincing evidence that the
person's income-producing activity is not in substantial competition with any person described
in paragraph (a), clauses (2) to (6) or (8).
new text end

deleted text begin (c) "Regulated financial corporation" means an institution, the deposits or accounts of
which are insured under the Federal Deposit Insurance Act or by the Federal Savings and
Loan Insurance Corporation, any institution which is a member of a Federal Home Loan
Bank, any other bank or thrift institution incorporated or organized under the laws of any
state or any foreign country which is engaged in the business of receiving deposits, any
corporation organized under the provisions of United States Code, title 12, sections 611 to
631 (Edge Act Corporations), and any agency of a foreign depository as defined in United
States Code, title 12, section 3101.
deleted text end

deleted text begin (d) "Business of a financial institution" means:
deleted text end

deleted text begin (1) the business that any corporation organized under the authority of the United States
or organized under the laws of this state or any other state or country does or has authority
to do which is substantially similar to the business which a corporation may be created to
do under chapters 46 to 55 or any business which a corporation is authorized to do by those
laws; or
deleted text end

deleted text begin (2) the business that any corporation organized under the authority of the United States
or organized under the laws of this state or any other state or country does or has authority
to do if the corporation derives more than 50 percent of its gross income from lending
activities (including discounting obligations) in substantial competition with the businesses
described in clause (1). For purposes of this clause, the computation of the gross income of
a corporation does not include income from nonrecurring, extraordinary items.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 5.

Minnesota Statutes 2016, section 290.01, subdivision 7, is amended to read:

Subd. 7.

Resident.

(a) The term "resident" means any individual domiciled in Minnesota,
except that an individual is not a "resident" for the period of time that the individual is a
"qualified individual" as defined in section 911(d)(1) of the Internal Revenue Code, if the
qualified individual notifies the county within three months of moving out of the country
that homestead status be revoked for the Minnesota residence of the qualified individual,
and the property is not classified as a homestead while the individual remains a qualified
individual.

(b) "Resident" also means any individual domiciled outside the state who maintains a
place of abode in the state and spends in the aggregate more than one-half of the tax year
in Minnesota, unless:

(1) the individual or the spouse of the individual is in the armed forces of the United
States; or

(2) the individual is covered under the reciprocity provisions in section 290.081.

For purposes of this subdivision, presence within the state for any part of a calendar day
constitutes a day spent in the state. Individuals shall keep adequate records to substantiate
the days spent outside the state.

The term "abode" means a dwelling maintained by an individual, whether or not owned
by the individual and whether or not occupied by the individual, and includes a dwelling
place owned or leased by the individual's spouse.

(c) new text begin In determining where an individual is domiciled, new text end neither the commissioner nor any
court shall considernew text begin :
new text end

new text begin (1)new text end charitable contributions made by deleted text begin andeleted text end new text begin thenew text end individual within or without the state deleted text begin in
determining if the individual is domiciled in Minnesotadeleted text end new text begin ;
new text end

new text begin (2) the location of the individual's attorney, certified public accountant, or financial
adviser; or
new text end

new text begin (3) the place of business of a financial institution at which the individual applies for any
new type of credit or at which the individual opens or maintains any type of accountnew text end .

new text begin (d) For purposes of this subdivision, the following terms have the meanings given them:
new text end

new text begin (1) "financial adviser" means:
new text end

new text begin (i) an individual or business entity engaged in business as a certified financial planner,
registered investment adviser, licensed insurance producer or agent, or registered securities
broker-dealer representative; or
new text end

new text begin (ii) a financial institution providing services related to trust or estate administration,
investment management, or financial planning; and
new text end

new text begin (2) "financial institution" means a financial institution as defined in section 47.015,
subdivision 1; a state or nationally chartered credit union; or a registered broker-dealer
under the Securities and Exchange Act of 1934.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 6.

Minnesota Statutes 2016, section 290.0131, is amended by adding a subdivision
to read:

new text begin Subd. 14. new text end

new text begin First-time home buyer savings account. new text end

new text begin The amount for a first-time home
buyer savings account required by section 462D.06, subdivision 2, is an addition.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 7.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 23. new text end

new text begin Contributions to a section 529 plan. new text end

new text begin (a) The amount equal to the contributions
made during the taxable year to a qualified account is a subtraction.
new text end

new text begin (b) The definitions under section 290.0684 apply for the purposes of this subdivision.
new text end

new text begin (c) The subtraction under this subdivision must not exceed $3,000 for married couples
filing joint returns and $1,500 for all other filers, and is limited to individuals who do not
claim the credit under section 290.0684.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 8.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 24. new text end

new text begin Discharge of indebtedness; education loans. new text end

new text begin (a) The amount equal to the
discharge of indebtedness of the taxpayer is a subtraction if:
new text end

new text begin (1) the indebtedness discharged is a qualified education loan; and
new text end

new text begin (2) the indebtedness was discharged under section 136A.1791, or following the taxpayer's
completion of an income-driven repayment plan.
new text end

new text begin (b) For the purposes of this subdivision, "qualified education loan" has the meaning
given in section 221 of the Internal Revenue Code.
new text end

new text begin (c) For purposes of this subdivision, "income-driven repayment plan" means a payment
plan established by the United States Department of Education that sets monthly student
loan payments based on income and family size under United States Code, title 20, section
1087e, or similar authority and specifically includes, but is not limited to:
new text end

new text begin (1) the income-based repayment plan under United States Code, title 20, section 1098e;
new text end

new text begin (2) the income contingent repayment plan established under United States Code, title
20, section 1087e, subsection (e); and
new text end

new text begin (3) the PAYE program or REPAYE program established by the Department of Education
under administrative regulations.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 9.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 25. new text end

new text begin First-time home buyer savings account. new text end

new text begin (a) For purposes of this subdivision,
the terms defined in section 462D.02 have the meanings given in that section.
new text end

new text begin (b) The earnings on a first-time home buyer savings account allowed by section 462D.06,
subdivision 1, is a subtraction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 10.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 26. new text end

new text begin Social Security benefits. new text end

new text begin (a) A portion of Social Security benefits is allowed
as a subtraction. The subtraction equals the lesser of Social Security benefits or a maximum
subtraction subject to the limits under paragraphs (b), (c), and (d).
new text end

new text begin (b) For married taxpayers filing a joint return and surviving spouses, the maximum
subtraction equals $4,500. The maximum subtraction is reduced by 20 percent of provisional
income over $77,000. In no case is the subtraction less than zero.
new text end

new text begin (c) For single or head-of-household taxpayers, the maximum subtraction equals $3,500.
The maximum subtraction is reduced by 20 percent of provisional income over $60,200.
In no case is the subtraction less than zero.
new text end

new text begin (d) For married taxpayers filing separate returns, the maximum subtraction equals $2,250.
The maximum subtraction is reduced by 20 percent of provisional income over $38,500.
In no case is the subtraction less than zero.
new text end

new text begin (e) For purposes of this subdivision, "provisional income" means modified adjusted
gross income as defined in section 86(b)(2) of the Internal Revenue Code, plus one-half of
the Social Security benefits received during the taxable year, and "Social Security benefits"
has the meaning given in section 86(d)(1) of the Internal Revenue Code.
new text end

new text begin (f) The commissioner shall adjust the maximum subtraction and threshold amounts in
paragraphs (b) to (d) by the percentage determined pursuant to the provisions of section
1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B) of the Internal Revenue
Code the word "2016" shall be substituted for the word "1992." For 2018, the commissioner
shall then determine the percentage change from the 12 months ending on August 31, 2016,
to the 12 months ending on August 31, 2017, and in each subsequent year, from the 12
months ending on August 31, 2016, to the 12 months ending on August 31 of the year
preceding the taxable year. The determination of the commissioner pursuant to this
subdivision must not be considered a rule and is not subject to the Administrative Procedure
Act contained in chapter 14, including section 14.386. The maximum subtraction and
threshold amounts as adjusted must be rounded to the nearest $10 amount. If the amount
ends in $5, the amount is rounded up to the nearest $10 amount.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 11.

new text begin [290.0137] ACCELERATED RECOGNITION OF CERTAIN
INSTALLMENT SALE GAINS.
new text end

new text begin (a) In the case of a nonresident individual or a person who becomes a nonresident
individual during the tax year, taxable net income shall include the allocable amount realized
upon a sale of the assets of, or any interest in, an S corporation or partnership that operated
in Minnesota during the year of sale, including any income or gain to be recognized in future
years pursuant to an installment sale method of reporting under the Internal Revenue Code.
new text end

new text begin (1) For the purposes of this paragraph, an individual who becomes a nonresident of
Minnesota in any year after an installment sale is required to recognize the full amount of
any income or gain described in this paragraph on the individual's final Minnesota resident
tax return to the extent that such income has not been recognized in a prior year.
new text end

new text begin (2) For the purposes of this section, "realized" has the meaning given in section 1001(b)
of the Internal Revenue Code.
new text end

new text begin (3) For the purposes of this section, "installment sale" means any installment sale under
section 453 of the Internal Revenue Code and any other sale that is reported utilizing a
method of accounting authorized under subchapter E of the Internal Revenue Code that
allows taxpayers to delay reporting or recognizing a realized gain until a future year.
new text end

new text begin (4) For the purposes of this section, "allocable amount" means the full amount to be
apportioned to Minnesota under section 290.191 or 290.20, or the full amount to be assigned
to Minnesota under section 290.17.
new text end

new text begin (b) Notwithstanding paragraph (a), nonresident taxpayers may elect to defer recognizing
unrecognized installment sale gains by making an election under this paragraph. The election
must be filed on a form to be determined or prescribed by the commissioner and must be
filed by the due date of the individual income tax return, including any extension. Electing
taxpayers must make an irrevocable agreement to:
new text end

new text begin (1) file Minnesota tax returns in all subsequent years when gains from the installment
sales are recognized and reported to the Internal Revenue Service;
new text end

new text begin (2) allocate gains to the state of Minnesota as though the gains were realized in the year
of sale under section 290.17, 290.191, or 290.20; and
new text end

new text begin (3) include all relevant federal tax documents reporting the installment sale with
subsequent Minnesota tax returns.
new text end

new text begin (c) Income or gain recognized for Minnesota purposes pursuant to paragraph (a) must
be excluded from taxable net income in any future year that the taxpayer files a Minnesota
tax return to the extent that the income or gain has already been subject to tax pursuant to
paragraph (a).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 12.

Minnesota Statutes 2016, section 290.05, subdivision 1, is amended to read:

Subdivision 1.

Exempt entities.

The following corporations, individuals, estates, trusts,
and organizations shall be exempted from taxation under this chapter, provided that every
such person or corporation claiming exemption under this chapter, in whole or in part, must
establish to the satisfaction of the commissioner the taxable status of any income or activity:

(a) corporations, individuals, estates, and trusts engaged in the business of mining or
producing iron ore and mining, producing, or refining other ores, metals, and minerals, the
mining, production, or refining of which is subject to the occupation tax imposed by section
298.01; but if any such corporation, individual, estate, or trust engages in any other business
or activity or has income from any property not used in such business it shall be subject to
this tax computed on the net income from such property or such other business or activity.
Royalty shall not be considered as income from the business of mining or producing iron
ore within the meaning of this section;

(b) the United States of America, the state of Minnesota or any political subdivision of
either agencies or instrumentalities, whether engaged in the discharge of governmental or
proprietary functions; and

(c) any insurance companynew text begin , as defined in section 290.17, subdivision 4, paragraph (j),
but including any insurance company licensed and domiciled in another state that grants,
on a reciprocal basis, exemption from retaliatory taxesnew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 13.

Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to
read:

new text begin Subd. 2g. new text end

new text begin First-time home buyer savings account. new text end

new text begin (a) For purposes of this subdivision,
the terms defined in section 462D.02 have the meanings given in that section.
new text end

new text begin (b) In addition to the tax computed under subdivision 2c, an additional amount of tax
applies equal to the additional tax computed for the taxable year for the account holder of
a first-time home buyer account under section 462D.06, subdivision 3.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 14.

Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to
read:

new text begin Subd. 2h. new text end

new text begin Section 529 plan recapture. new text end

new text begin (a) For the purposes of this subdivision:
new text end

new text begin (1) the definitions under section 290.0684 apply;
new text end

new text begin (2) "account owner" means an individual who owns one or more qualified accounts;
new text end

new text begin (3) "credit ratio" means the ratio of (i) two times the total amount of credits that an
account owner claimed under section 290.0684 for contributions to the account owner's
qualified accounts to (ii) the total contributions in all taxable years to the account owner's
qualified accounts; and
new text end

new text begin (4) "subtraction ratio" means the ratio of (i) the total amount of subtractions that an
account owner claimed under section 290.0132, subdivision 23, for contributions to the
account owner's qualified accounts to (ii) the total contributions in all taxable years to the
account owner's qualified accounts.
new text end

new text begin (b) If a distribution from a qualified account is used for a purpose other than to pay for
qualified higher education expenses, the account owner must pay an additional tax equal
to:
new text end

new text begin (1) 50 percent of the product of the credit ratio and the amount of the distribution; plus
new text end

new text begin (2) 10 percent of the product of the subtraction ratio and the amount of the distribution.
new text end

new text begin (c) The additional tax under this subdivision does not apply to any portion of a distribution
that is subject to the additional tax under section 529(c)(6) of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 15.

Minnesota Statutes 2016, section 290.06, subdivision 22, is amended to read:

Subd. 22.

Credit for taxes paid to another state.

(a) A taxpayer who is liable for taxes
based on net income to another state, as provided in paragraphs (b) through (f), upon income
allocated or apportioned to Minnesota, is entitled to a credit for the tax paid to another state
if the tax is actually paid in the taxable year or a subsequent taxable year. A taxpayer who
is a resident of this state pursuant to section 290.01, subdivision 7, paragraph (b), and who
is subject to income tax as a resident in the state of the individual's domicile is not allowed
this credit unless the state of domicile does not allow a similar credit.

(b) For an individual, estate, or trust, the credit is determined by multiplying the tax
payable under this chapter by the ratio derived by dividing the income subject to tax in the
other state that is also subject to tax in Minnesota while a resident of Minnesota by the
taxpayer's federal adjusted gross income, as defined in section 62 of the Internal Revenue
Code, modified by the addition required by section 290.0131, subdivision 2, and the
subtraction allowed by section 290.0132, subdivision 2, to the extent the income is allocated
or assigned to Minnesota under sections 290.081 and 290.17.

(c) If the taxpayer is an athletic team that apportions all of its income under section
290.17, subdivision 5, the credit is determined by multiplying the tax payable under this
chapter by the ratio derived from dividing the total net income subject to tax in the other
state by the taxpayer's Minnesota taxable income.

(d)new text begin (1)new text end The credit determined under paragraph (b) or (c) shall not exceed the amount of
tax so paid to the other state on the gross income earned within the other state subject to
tax under this chapterdeleted text begin , nor shalldeleted text end new text begin ; and
new text end

new text begin (2)new text end the allowance of the credit new text begin does not new text end reduce the taxes paid under this chapter to an
amount less than what would be assessed if deleted text begin such income amount wasdeleted text end new text begin the gross income
earned within the other state werenew text end excluded from taxable net income.

(e) In the case of the tax assessed on a lump-sum distribution under section 290.032, the
credit allowed under paragraph (a) is the tax assessed by the other state on the lump-sum
distribution that is also subject to tax under section 290.032, and shall not exceed the tax
assessed under section 290.032. To the extent the total lump-sum distribution defined in
section 290.032, subdivision 1, includes lump-sum distributions received in prior years or
is all or in part an annuity contract, the reduction to the tax on the lump-sum distribution
allowed under section 290.032, subdivision 2, includes tax paid to another state that is
properly apportioned to that distribution.

(f) If a Minnesota resident reported an item of income to Minnesota and is assessed tax
in such other state on that same income after the Minnesota statute of limitations has expired,
the taxpayer shall receive a credit for that year under paragraph (a), notwithstanding any
statute of limitations to the contrary. The claim for the credit must be submitted within one
year from the date the taxes were paid to the other state. The taxpayer must submit sufficient
proof to show entitlement to a credit.

(g) For the purposes of this subdivision, a resident shareholder of a corporation treated
as an "S" corporation under section 290.9725, must be considered to have paid a tax imposed
on the shareholder in an amount equal to the shareholder's pro rata share of any net income
tax paid by the S corporation to another state. For the purposes of the preceding sentence,
the term "net income tax" means any tax imposed on or measured by a corporation's net
income.

(h) For the purposes of this subdivision, a resident partner of an entity taxed as a
partnership under the Internal Revenue Code must be considered to have paid a tax imposed
on the partner in an amount equal to the partner's pro rata share of any net income tax paid
by the partnership to another state. For purposes of the preceding sentence, the term "net
income" tax means any tax imposed on or measured by a partnership's net income.

(i) For the purposes of this subdivision, "another state":

(1) includes:

(i) the District of Columbia; and

(ii) a province or territory of Canada; but

(2) excludes Puerto Rico and the several territories organized by Congress.

(j) The limitations on the credit in paragraphs (b), (c), and (d), are imposed on a state
by state basis.

(k) For a tax imposed by a province or territory of Canada, the tax for purposes of this
subdivision is the excess of the tax over the amount of the foreign tax credit allowed under
section 27 of the Internal Revenue Code. In determining the amount of the foreign tax credit
allowed, the net income taxes imposed by Canada on the income are deducted first. Any
remaining amount of the allowable foreign tax credit reduces the provincial or territorial
tax that qualifies for the credit under this subdivision.

new text begin (l)(1) The credit allowed to a qualifying individual under this section for tax paid to a
qualifying state equals the credit calculated under paragraphs (b) and (d), plus the amount
calculated by multiplying:
new text end

new text begin (i) the difference between the preliminary credit and the credit calculated under paragraphs
(b) and (d), by
new text end

new text begin (ii) the ratio derived by dividing the income subject to tax in the qualifying state that
consists of compensation for performance of personal or professional services by the total
amount of income subject to tax in the qualifying state.
new text end

new text begin (2) If the amount of the credit that a qualifying individual is eligible to receive under
clause (1) for tax paid to a qualifying state exceeds the tax due under this chapter before
the application of the credit calculated under clause (1), the commissioner shall refund the
excess to the qualifying individual. An amount sufficient to pay the refunds required by this
subdivision is appropriated to the commissioner from the general fund.
new text end

new text begin (3) For purposes of this paragraph, "preliminary credit" means the credit that a qualifying
individual is eligible to receive under paragraphs (b) and (d) for tax paid to a qualifying
state without regard to the limitation in paragraph (d), clause (2); "qualifying individual"
means a Minnesota resident under section 290.01, subdivision 7, paragraph (a), who received
compensation during the taxable year for the performance of personal or professional services
within a qualifying state; and "qualifying state" means a state with which an agreement
under section 290.081 is not in effect for the taxable year but was in effect for a taxable
year beginning before January 1, 2010.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 16.

Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to
read:

new text begin Subd. 37. new text end

new text begin Beginning farmer incentive credit. new text end

new text begin (a) A beginning farmer incentive credit
is allowed against the tax due under this chapter for the sale or rental of agricultural assets
to a beginning farmer according to section 41B.0391, subdivision 2, and is limited to the
amount stated on the certificate issued under section 41B.0391, subdivision 4.
new text end

new text begin (b) The credit may be claimed only after approval and certification by the Rural Finance
Authority according to section 41B.0391.
new text end

new text begin (c) The credit is limited to the liability for tax, as computed under this chapter, for the
taxable year. If the amount of the credit determined under this subdivision for any taxable
year exceeds this limitation, the excess is a beginning farmer incentive credit carryover to
each of the 15 succeeding taxable years. The entire amount of the excess unused credit for
the taxable year is carried first to the earliest of the taxable years to which the credit may
be carried and then to each successive year to which the credit may be carried. The amount
of the unused credit which may be added under this paragraph must not exceed the taxpayer's
liability for tax, less the beginning farmer incentive credit for the taxable year.
new text end

new text begin (d) Credits allowed to a partnership, a limited liability company taxed as a partnership,
an S corporation, or multiple owners of property are passed through to the partners, members,
shareholders, or owners, respectively, pro rata to each based on the partner's, member's,
shareholder's, or owner's share of the entity's assets or as specially allocated in the
organizational documents or any other executed agreement, as of the last day of the taxable
year.
new text end

new text begin (e) For a nonresident or part-year resident, the credit under this section must be allocated
using the percentage calculated in section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin (f) Notwithstanding the approval and certification by the Rural Finance Authority under
section 41B.0391, the commissioner may utilize any audit and examination powers under
chapter 270C or 289A to the extent necessary to verify that the taxpayer is eligible for the
credit and to assess for the amount of any improperly claimed credit.
new text end

new text begin (g) This section expires at the same time and on the same terms as section 41B.0391,
except that the expiration of this section does not affect the commissioner of revenue's
authority to audit or power of examination and assessment for credits claimed under this
section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 17.

Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to
read:

new text begin Subd. 38. new text end

new text begin Beginning farmer management credit. new text end

new text begin (a) A taxpayer who is a beginning
farmer may take a credit against the tax due under this chapter for participation in a financial
management program according to section 41B.0391, subdivision 3.
new text end

new text begin (b) The credit may be claimed only after approval and certification by the Rural Finance
Authority according to section 41B.0391.
new text end

new text begin (c) The credit is limited to the liability for tax, as computed under this chapter, for the
taxable year. If the amount of the credit determined under this subdivision for any taxable
year exceeds this limitation, the excess is a beginning farmer management credit carryover
to each of the three succeeding taxable years. The entire amount of the excess unused credit
for the taxable year is carried first to the earliest of the taxable years to which the credit
may be carried and then to each successive year to which the credit may be carried. The
amount of the unused credit which may be added under this paragraph must not exceed the
taxpayer's liability for tax, less the beginning farmer management credit for the taxable
year.
new text end

new text begin (d) For a part-year resident, the credit under this section must be allocated using the
percentage calculated in section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin (e) Notwithstanding the approval and certification by the Rural Finance Authority under
section 41B.0391, the commissioner may utilize any audit and examination powers under
chapter 270C or 289A to the extent necessary to verify that the taxpayer is eligible for the
credit and to assess for the amount of any improperly claimed credit.
new text end

new text begin (f) This section expires at the same time and on the same terms as section 41B.0391,
except that the expiration of this section does not affect the commissioner of revenue's
authority to audit or power of examination and assessment for credits claimed under this
section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 18.

Minnesota Statutes 2016, section 290.067, subdivision 1, is amended to read:

Subdivision 1.

Amount of credit.

(a) A taxpayer may take as a credit against the tax
due from the taxpayer and a spouse, if any, under this chapter an amount equal to the
dependent care credit for which the taxpayer is eligible pursuant to the provisions of section
21 of the Internal Revenue Code deleted text begin subject to the limitations provided in subdivision 2deleted text end except
that in determining whether the child qualified as a dependent, income received as a
Minnesota family investment program grant or allowance to or on behalf of the child must
not be taken into account in determining whether the child received more than half of the
child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of the Internal
Revenue Code do not apply.

(b) If a child who has not attained the age of six years at the close of the taxable year is
cared for at a licensed family day care home operated by the child's parent, the taxpayer is
deemed to have paid employment-related expenses. If the child is 16 months old or younger
at the close of the taxable year, the amount of expenses deemed to have been paid equals
the maximum limit for one qualified individual under section 21(c) and (d) of the Internal
Revenue Code. If the child is older than 16 months of age but has not attained the age of
six years at the close of the taxable year, the amount of expenses deemed to have been paid
equals the amount the licensee would charge for the care of a child of the same age for the
same number of hours of care.

(1) has a child who has not attained the age of one year at the close of the taxable year;

(2) files a joint tax return for the taxable year; and

(3) does not participate in a dependent care assistance program as defined in section 129
of the Internal Revenue Code, in lieu of the actual employment related expenses paid for
that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of (i)
the combined earned income of the couple or (ii) the amount of the maximum limit for one
qualified individual under section 21(c) and (d) of the Internal Revenue Code will be deemed
to be the employment related expense paid for that child. The earned income limitation of
section 21(d) of the Internal Revenue Code shall not apply to this deemed amount. These
deemed amounts apply regardless of whether any employment-related expenses have been
paid.

(d) If the taxpayer is not required and does not file a federal individual income tax return
for the tax year, no credit is allowed for any amount paid to any person unless:

(1) the name, address, and taxpayer identification number of the person are included on
the return claiming the credit; or

(2) if the person is an organization described in section 501(c)(3) of the Internal Revenue
Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name
and address of the person are included on the return claiming the credit.

In the case of a failure to provide the information required under the preceding sentence,
the preceding sentence does not apply if it is shown that the taxpayer exercised due diligence
in attempting to provide the information required.

(e) In the case of a nonresident, part-year resident, or a person who has earned income
not subject to tax under this chapter including earned income excluded pursuant to section
290.0132, subdivision 10, the credit determined under section 21 of the Internal Revenue
Code must be allocated based on the ratio by which the earned income of the claimant and
the claimant's spouse from Minnesota sources bears to the total earned income of the claimant
and the claimant's spouse.

(f) For residents of Minnesota, the subtractions for military pay under section 290.0132,
subdivisions 11 and 12, are not considered "earned income not subject to tax under this
chapter."

(g) For residents of Minnesota, the exclusion of combat pay under section 112 of the
Internal Revenue Code is not considered "earned income not subject to tax under this
chapter."

new text begin (h) For taxpayers with federal adjusted gross income in excess of $50,000, the credit is
equal to the lesser of the credit otherwise calculated under this subdivision, or the amount
equal to $600 minus five percent of federal adjusted gross income in excess of $50,000 for
taxpayers with one qualified individual, or $1,200 minus five percent of federal adjusted
gross income in excess of $50,000 for taxpayers with two or more qualified individuals,
but in no case is the credit less than zero.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 19.

Minnesota Statutes 2016, section 290.067, subdivision 2b, is amended to read:

Subd. 2b.

Inflation adjustment.

The commissioner shall adjust the dollar amount of
the income threshold at which the maximum credit begins to be reduced under subdivision
deleted text begin 2deleted text end new text begin 1new text end by the percentage determined pursuant to the provisions of section 1(f) of the Internal
Revenue Code, except that in section 1(f)(3)(B) the word deleted text begin "1999"deleted text end new text begin "2016"new text end shall be substituted
for the word "1992." For deleted text begin 2001deleted text end new text begin 2018new text end , the commissioner shall then determine the percent
change from the 12 months ending on August 31, deleted text begin 1999deleted text end new text begin 2016new text end , to the 12 months ending on
August 31, deleted text begin 2000deleted text end new text begin 2017new text end , and in each subsequent year, from the 12 months ending on August
31, deleted text begin 1999deleted text end new text begin 2016new text end , to the 12 months ending on August 31 of the year preceding the taxable
year. The determination of the commissioner pursuant to this subdivision must not be
considered a "rule" and is not subject to the Administrative Procedure Act contained in
chapter 14. The threshold amount as adjusted must be rounded to the nearest $10 amount.
If the amount ends in $5, the amount is rounded up to the nearest $10 amount.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 20.

Minnesota Statutes 2016, section 290.0671, subdivision 1, as amended by Laws
2017, chapter 1, section 6, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual who is a resident of Minnesota is
allowed a credit against the tax imposed by this chapter equal to a percentage of earned
income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the
Internal Revenue Codenew text begin , except that a taxpayer with no qualifying children who has attained
the age of 21, but not attained age 65 before the close of the taxable year and is otherwise
eligible for a credit under section 32 of the Internal Revenue Code may also receive a creditnew text end .

(b) For individuals with no qualifying children, the credit equals 2.10 percent of the first
$6,180 of earned income. The credit is reduced by 2.01 percent of earned income or adjusted
gross income, whichever is greater, in excess of $8,130, but in no case is the credit less than
zero.

(c) For individuals with one qualifying child, the credit equals 9.35 percent of the first
$11,120 of earned income. The credit is reduced by 6.02 percent of earned income or adjusted
gross income, whichever is greater, in excess of $21,190, but in no case is the credit less
than zero.

(d) For individuals with two or more qualifying children, the credit equals 11 percent
of the first $18,240 of earned income. The credit is reduced by 10.82 percent of earned
income or adjusted gross income, whichever is greater, in excess of $25,130, but in no case
is the credit less than zero.

(e) For a part-year resident, the credit must be allocated based on the percentage calculated
under section 290.06, subdivision 2c, paragraph (e).

(f) For a person who was a resident for the entire tax year and has earned income not
subject to tax under this chapter, including income excluded under section 290.0132,
subdivision 10, the credit must be allocated based on the ratio of federal adjusted gross
income reduced by the earned income not subject to tax under this chapter over federal
adjusted gross income. For purposes of this paragraph, the new text begin following clauses are not
considered "earned income not subject to tax under this chapter":
new text end

new text begin (1) the new text end subtractions for military pay under section 290.0132, subdivisions 11 and 12deleted text begin ,
are not considered "earned income not subject to tax under this chapter."For the purposes
of this paragraph,deleted text end new text begin ;
new text end

new text begin (2)new text end the exclusion of combat pay under section 112 of the Internal Revenue Code deleted text begin is not
considered "earned income not subject to tax under this chapter."deleted text end new text begin ; and
new text end

new text begin (3) income derived from an Indian reservation by an enrolled member of the reservation
while living on the reservation.
new text end

(g) For tax years beginning after December 31, 2013, the $8,130 in paragraph (b), the
$21,190 in paragraph (c), and the $25,130 in paragraph (d), after being adjusted for inflation
under subdivision 7, are each increased by $5,000 for married taxpayers filing joint returns.
For tax years beginning after December 31, 2013, the commissioner shall annually adjust
the $5,000 by the percentage determined pursuant to the provisions of section 1(f) of the
Internal Revenue Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted
for the word "1992." For 2014, the commissioner shall then determine the percent change
from the 12 months ending on August 31, 2008, to the 12 months ending on August 31,
2013, and in each subsequent year, from the 12 months ending on August 31, 2008, to the
12 months ending on August 31 of the year preceding the taxable year. The earned income
thresholds as adjusted for inflation must be rounded to the nearest $10. If the amount ends
in $5, the amount is rounded up to the nearest $10. The determination of the commissioner
under this subdivision is not a rule under the Administrative Procedure Act.

(h) The commissioner shall construct tables showing the amount of the credit at various
income levels and make them available to taxpayers. The tables shall follow the schedule
contained in this subdivision, except that the commissioner may graduate the transition
between income brackets.

new text begin EFFECTIVE DATE. new text end

new text begin The amendment to paragraph (a) is effective for taxable years
beginning after December 31, 2018. The amendment to paragraph (f) is effective for taxable
years beginning after December 31, 2016.
new text end

Sec. 21.

Minnesota Statutes 2016, section 290.0674, subdivision 2, is amended to read:

Subd. 2.

Limitations.

(a) For claimants with income not greater than $33,500, the
maximum credit allowed for a family is $1,000 multiplied by the number of qualifying
children in kindergarten through grade 12 in the family. The maximum credit for families
with one qualifying child in kindergarten through grade 12 is reduced by $1 for each $4 of
household income over $33,500, and the maximum credit for families with two or more
qualifying children in kindergarten through grade 12 is reduced by $2 for each $4 of
household income over $33,500, but in no case is the credit less than zero.

deleted text begin For purposes of this section "income" has the meaning given in section 290.067,
subdivision 2a.deleted text end In the case of a married claimant, a credit is not allowed unless a joint income
tax return is filed.

(b) For a nonresident or part-year resident, the credit determined under subdivision 1
and the maximum credit amount in paragraph (a) must be allocated using the percentage
calculated in section 290.06, subdivision 2c, paragraph (e).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 22.

Minnesota Statutes 2016, section 290.0674, is amended by adding a subdivision
to read:

new text begin Subd. 2a. new text end

new text begin Income. new text end

new text begin (a) For purposes of this section, "income" means the sum of the
following:
new text end

new text begin (1) federal adjusted gross income as defined in section 62 of the Internal Revenue Code;
and
new text end

new text begin (2) the sum of the following amounts to the extent not included in clause (1):
new text end

new text begin (i) all nontaxable income;
new text end

new text begin (ii) the amount of a passive activity loss that is not disallowed as a result of section 469,
paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity loss
carryover allowed under section 469(b) of the Internal Revenue Code;
new text end

new text begin (iii) an amount equal to the total of any discharge of qualified farm indebtedness of a
solvent individual excluded from gross income under section 108(g) of the Internal Revenue
Code;
new text end

new text begin (iv) cash public assistance and relief;
new text end

new text begin (v) any pension or annuity (including railroad retirement benefits, all payments received
under the federal Social Security Act, Supplemental Security Income, and veterans benefits),
which was not exclusively funded by the claimant or spouse, or which was funded exclusively
by the claimant or spouse and which funding payments were excluded from federal adjusted
gross income in the years when the payments were made;
new text end

new text begin (vi) interest received from the federal or a state government or any instrumentality or
political subdivision thereof;
new text end

new text begin (vii) workers' compensation;
new text end

new text begin (viii) nontaxable strike benefits;
new text end

new text begin (ix) the gross amounts of payments received in the nature of disability income or sick
pay as a result of accident, sickness, or other disability, whether funded through insurance
or otherwise;
new text end

new text begin (x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
1986, as amended through December 31, 1995;
new text end

new text begin (xi) contributions made by the claimant to an individual retirement account, including
a qualified voluntary employee contribution; simplified employee pension plan;
self-employed retirement plan; cash or deferred arrangement plan under section 401(k) of
the Internal Revenue Code; or deferred compensation plan under section 457 of the Internal
Revenue Code;
new text end

new text begin (xii) nontaxable scholarship or fellowship grants;
new text end

new text begin (xiii) the amount of deduction allowed under section 199 of the Internal Revenue Code;
new text end

new text begin (xiv) the amount of deduction allowed under section 220 or 223 of the Internal Revenue
Code;
new text end

new text begin (xv) the amount deducted for tuition expenses under section 222 of the Internal Revenue
Code; and
new text end

new text begin (xvi) the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code.
new text end

new text begin In the case of an individual who files an income tax return on a fiscal year basis, the
term "federal adjusted gross income" means federal adjusted gross income reflected in the
fiscal year ending in the next calendar year. Federal adjusted gross income may not be
reduced by the amount of a net operating loss carryback or carryforward or a capital loss
carryback or carryforward allowed for the year.
new text end

new text begin (b) "Income" does not include:
new text end

new text begin (1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
new text end

new text begin (2) amounts of any pension or annuity that were exclusively funded by the claimant or
spouse if the funding payments were not excluded from federal adjusted gross income in
the years when the payments were made;
new text end

new text begin (3) surplus food or other relief in kind supplied by a governmental agency;
new text end

new text begin (4) relief granted under chapter 290A;
new text end

new text begin (5) child support payments received under a temporary or final decree of dissolution or
legal separation; and
new text end

new text begin (6) restitution payments received by eligible individuals and excludable interest as
defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 2001,
Public Law 107-16.
new text end

Sec. 23.

Minnesota Statutes 2016, section 290.068, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

A corporation, partners in a partnership, or shareholders
in a corporation treated as an "S" corporation under section 290.9725 are allowed a credit
against the tax computed under this chapter for the taxable year equal to:

(a) ten percent of the first $2,000,000 of the excess (if any) of

(1) the qualified research expenses for the taxable year, over

(2) the base amount; and

(b) deleted text begin 2.5deleted text end new text begin fournew text end percent on all of such excess expenses over $2,000,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 24.

new text begin [290.0682] STUDENT LOAN CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Adjusted gross income" means federal adjusted gross income as defined in section
62 of the Internal Revenue Code.
new text end

new text begin (c) "Earned income" has the meaning given in section 32(c) of the Internal Revenue
Code.
new text end

new text begin (d) "Eligible individual" means a resident individual with one or more qualified education
loans related to an undergraduate or graduate degree program at a postsecondary educational
institution.
new text end

new text begin (e) "Eligible loan payments" means the amount the eligible individual paid during the
taxable year in principal and interest on qualified education loans.
new text end

new text begin (f) "Postsecondary educational institution" means a public or nonprofit postsecondary
institution eligible for state student aid under section 136A.103 or, if the institution is not
located in this state, a public or nonprofit postsecondary institution participating in the
federal Pell Grant program under title IV of the Higher Education Act of 1965, Public Law
89-329, as amended.
new text end

new text begin (g) "Qualified education loan" has the meaning given in section 221 of the Internal
Revenue Code, but is limited to indebtedness incurred on behalf of the eligible individual.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An eligible individual is allowed a credit against the tax
due under this chapter.
new text end

new text begin (b) The credit for an eligible individual equals the least of:
new text end

new text begin (1) eligible loan payments minus ten percent of an amount equal to adjusted gross income
in excess of $10,000, but in no case less than zero;
new text end

new text begin (2) the earned income for the taxable year of the eligible individual, if any;
new text end

new text begin (3) the sum of:
new text end

new text begin (i) the interest portion of eligible loan payments made during the taxable year; and
new text end

new text begin (ii) ten percent of the original loan amount of all qualified education loans of the eligible
individual; or
new text end

new text begin (4) $500.
new text end

new text begin (c) For a part-year resident, the credit must be allocated based on the percentage calculated
under section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin (d) In the case of a married couple, each spouse is eligible for the credit in this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 25.

new text begin [290.0684] SECTION 529 PLAN CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Contribution" means the amount contributed to one or more qualified accounts
except that the amount:
new text end

new text begin (1) is reduced by any withdrawals or distributions, other than transfers or rollovers to
another qualified account, from a qualified account during the taxable year; and
new text end

new text begin (2) excludes the amount of any transfers or rollovers from a qualified account made
during the taxable year.
new text end

new text begin (c) "Federal adjusted gross income" has the meaning given under section 62(a) of the
Internal Revenue Code.
new text end

new text begin (d) "Qualified account" means an account qualifying under section 529 of the Internal
Revenue Code.
new text end

new text begin (e) "Qualified higher education expenses" has the meaning given in section 529 of the
Internal Revenue Code.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An individual who is a resident of Minnesota is allowed a
credit against the tax imposed by this chapter. The credit is not allowed to an individual
who is eligible to be claimed as a dependent, as defined in sections 151 and 152 of the
Internal Revenue Code. The credit may not exceed the liability for tax under this chapter.
new text end

new text begin (b) The amount of the credit allowed equals 50 percent of contributions for the taxable
year. The maximum credit is $500, subject to the phaseout in paragraphs (c) and (d). In no
case is the credit less than zero.
new text end

new text begin (c) For individual filers, the maximum credit is reduced by two percent of adjusted gross
income in excess of $75,000.
new text end

new text begin (d) For married couples filing a joint return, the maximum credit is phased out as follows:
new text end

new text begin (1) for married couples with adjusted gross income in excess of $75,000, but not more
than $100,000, the maximum credit is reduced by one percent of adjusted gross income in
excess of $75,000;
new text end

new text begin (2) for married couples with adjusted gross income in excess of $100,000, but not more
than $135,000, the maximum credit is $250; and
new text end

new text begin (3) for married couples with adjusted gross income in excess of $135,000, the maximum
credit is $250, reduced by one percent of adjusted gross income in excess of $135,000.
new text end

new text begin (e) The income thresholds in paragraphs (c) and (d) used to calculate the maximum
credit must be adjusted for inflation. The commissioner shall adjust the income thresholds
by the percentage determined under the provisions of section 1(f) of the Internal Revenue
Code, except that in section 1(f)(3)(B) the word "2016" is substituted for the word "1992."
For 2018, the commissioner shall then determine the percent change from the 12 months
ending on August 31, 2016, to the 12 months ending on August 31, 2017, and in each
subsequent year, from the 12 months ending on August 31, 2016, to the 12 months ending
on August 31 of the year preceding the taxable year. The income thresholds as adjusted for
inflation must be rounded to the nearest $10 amount. If the amount ends in $5, the amount
is rounded up to the nearest $10 amount. The determination of the commissioner under this
subdivision is not subject to chapter 14, including section 14.386.
new text end

new text begin Subd. 3. new text end

new text begin Allocation. new text end

new text begin For a part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 26.

new text begin [290.0686] CREDIT FOR ATTAINING MASTER'S DEGREE IN
TEACHER'S LICENSURE FIELD.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Master's degree program" means a graduate-level program at an accredited university
leading to a master of arts or science degree in a core content area directly related to a
qualified teacher's licensure field. The master's degree program may not include pedagogy
or a pedagogy component. To be eligible under this credit, a licensed elementary school
teacher must pursue and complete a master's degree program in a core content area in which
the teacher provides direct classroom instruction.
new text end

new text begin (c) "Qualified teacher" means a person who:
new text end

new text begin (1) holds a teaching license issued by the licensing division in the Department of
Education on behalf of the Minnesota Board of Teaching both when the teacher begins the
master's degree program and when the teacher completes the master's degree program;
new text end

new text begin (2) began a master's degree program after June 30, 2017; and
new text end

new text begin (3) completes the master's degree program during the taxable year.
new text end

new text begin (d) "Core content area" means the academic subject of reading, English or language arts,
mathematics, science, foreign languages, civics and government, economics, arts, history,
or geography.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An individual who is a qualified teacher is allowed a credit
against the tax imposed under this chapter. The credit equals the lesser of $2,500 or the
amount the individual paid for tuition, fees, books, and instructional materials necessary to
completing the master's degree program and for which the individual did not receive
reimbursement from an employer or scholarship.
new text end

new text begin (b) For a nonresident or a part-year resident, the credit under this subdivision must be
allocated based on the percentage calculated under section 290.06, subdivision 2c, paragraph
(e).
new text end

new text begin (c) A qualified teacher may claim the credit in this section only one time for each master's
degree program completed in a core content area.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 27.

Minnesota Statutes 2016, section 290.0692, is amended by adding a subdivision
to read:

new text begin Subd. 6. new text end

new text begin Sunset. new text end

new text begin This section expires at the same time and on the same terms as section
116J.8737, except that the expiration of this section does not affect the commissioner of
revenue's authority to audit or power of examination and assessment for credits claimed
under this section.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 28.

Minnesota Statutes 2016, section 290.081, is amended to read:

290.081 INCOME OF NONRESIDENTS, RECIPROCITY.

(a) The compensation received for the performance of personal or professional services
within this state by an individual whose residence, place of abode, and place customarily
returned to at least once a month is in another state, shall be excluded from gross income
to the extent such compensation is subject to an income tax imposed by the state of residence;
provided that such state allows a similar exclusion of compensation received by residents
of Minnesota for services performed therein.

(b) When it is deemed to be in the best interests of the people of this state, the
commissioner may determine that the provisions of paragraph (a) shall not apply. As long
as the provisions of paragraph (a) apply between Minnesota and Wisconsin, the provisions
of paragraph (a) shall apply to any individual who is domiciled in Wisconsin.

(c) For the purposes of paragraph (a), whenever the Wisconsin tax on Minnesota residents
which would have been paid Wisconsin without paragraph (a) exceeds the Minnesota tax
on Wisconsin residents which would have been paid Minnesota without paragraph (a), or
vice versa, then the state with the net revenue loss deleted text begin resulting fromdeleted text end new text begin calculated undernew text end paragraph
deleted text begin (a)deleted text end new text begin (e)new text end shall receive from the other state the amount of such loss. deleted text begin This provision shall be
effective for all years beginning after December 31, 1972. The data used for computing the
loss to either state shall be determined on or before September 30 of the year following the
close of the previous calendar year.
deleted text end

(d)deleted text begin (1) Interest is payable on all amounts calculated under paragraph (c) relating to taxable
years beginning after December 31, 2000. Interest accrues from July 1 of the taxable year.deleted text end new text begin
Payments for amounts calculated under paragraph (c) must equal one-quarter of the estimated
annual amount and must be paid at the midpoint of each quarter, on February 15, May 15,
August 15, and November 15.
new text end

deleted text begin (2)deleted text end new text begin (e)(1)new text end The commissioner of revenue is authorized to enter into agreements with the
state of Wisconsin specifying the reciprocity payment due dates, conditions constituting
delinquency, interest rates, and a method for computing interest due.

deleted text begin (3)deleted text end new text begin (2)new text end For agreements entered into before deleted text begin October 1, 2014deleted text end new text begin August 1, 2018new text end , the annual
compensation required under paragraph (c) must equal at least the net revenue loss minus
deleted text begin $1,000,000deleted text end new text begin up to $3,000,000new text end per fiscal year.

deleted text begin (4) For agreements entered into after September 30, 2014, the annual compensation
required under paragraph (c) must equal the net revenue loss per fiscal year.
deleted text end

deleted text begin (5)deleted text end new text begin (3)new text end For the purposes of deleted text begin clauses (3) and (4)deleted text end new text begin this sectionnew text end , "net revenue loss" means the
difference between the amount of Minnesota income taxes Minnesota forgoes by not taxing
Wisconsin residents on income subject to reciprocity and the credit Minnesota would have
been required to give under section 290.06, subdivision 22, to Minnesota residents working
in Wisconsin had there not been reciprocity.

new text begin (4) All agreements must include provisions:
new text end

new text begin (i) providing for a suspension of the agreement if one party to the agreement does not
pay in full by a time prescribed in the agreement;
new text end

new text begin (ii) setting the interest rate that will be applied, and that interest shall run from the date
the payment is due until the day the payment is made, except that interest from the
reconciliation payments runs from July 1 of the tax year until paid;
new text end

new text begin (iii) stating a time for annual reconciliation must be completed by October 31 of the
year following the tax year, and the time for payment of any amounts to be completed by
no later than December 1 of the year following the tax year;
new text end

new text begin (iv) requiring the parties to jointly conduct updated benchmark studies every five years
beginning tax year 2018;
new text end

new text begin (v) requiring each party to the agreement to require taxpayers who request exemption
from withholding in the state where they work to make an annual application and that a list
of participants will be exchanged annually; and
new text end

new text begin (vi) the sum of the amount of the quarterly payments must be a reasonable estimate of
the revenue loss as defined in item (iii).
new text end

deleted text begin (e)deleted text end new text begin (f) new text end If an agreement cannot be reached as to the amount of the loss, the commissioner
of revenue and the taxing official of the state of Wisconsin shall each appoint a member of
a board of arbitration and these members shall appoint the third member of the board. The
board shall select one of its members as chair. Such board may administer oaths, take
testimony, subpoena witnesses, and require their attendance, require the production of books,
papers and documents, and hold hearings at such places as are deemed necessary. The board
shall then make a determination as to the amount to be paid the other state which
determination shall be final and conclusive.

deleted text begin (f)deleted text end new text begin (g)new text end The commissioner may furnish copies of returns, reports, or other information to
the taxing official of the state of Wisconsin, a member of the board of arbitration, or a
consultant under joint contract with the states of Minnesota and Wisconsin for the purpose
of making a determination as to the amount to be paid the other state under the provisions
of this section. Prior to the release of any information under the provisions of this section,
the person to whom the information is to be released shall sign an agreement which provides
that the person will protect the confidentiality of the returns and information revealed thereby
to the extent that it is protected under the laws of the state of Minnesota.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 29.

Minnesota Statutes 2016, section 290.091, subdivision 2, as amended by Laws
2017, chapter 40, article 1, section 100, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of the following for the taxable
year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum
taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal Revenue
Code, with respect to each property (as defined in section 614 of the Internal Revenue Code),
to the extent not included in federal alternative minimum taxable income, the excess of the
deduction for depletion allowable under section 611 of the Internal Revenue Code for the
taxable year over the adjusted basis of the property at the end of the taxable year (determined
without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the amount
of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue
Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the amount
of interest income as provided by section 290.0131, subdivision 2; and

(6) the amount of addition required by section 290.0131, subdivisions 9 to 11;

less the sum of the amounts determined under the following:

(i) interest income as defined in section 290.0132, subdivision 2;

(ii) an overpayment of state income tax as provided by section 290.0132, subdivision
3, to the extent included in federal alternative minimum taxable income;

(iii) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as defined
in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted
in computing federal adjusted gross income;

(iv) amounts subtracted from federal taxable income as provided by section 290.0132,
subdivisions 7, 9 to 15, 17, deleted text begin anddeleted text end 21new text begin , 24, and 26new text end ; and

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c).

In the case of an estate or trust, alternative minimum taxable income must be computed
as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3) of
the Internal Revenue Code.

(d) "Regular tax" means the tax that would be imposed under this chapter (without regard
to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed
under this chapter.

(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
after subtracting the exemption amount determined under subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 30.

Minnesota Statutes 2016, section 290.17, subdivision 4, is amended to read:

Subd. 4.

Unitary business principle.

(a) If a trade or business conducted wholly within
this state or partly within and partly without this state is part of a unitary business, the entire
income of the unitary business is subject to apportionment pursuant to section 290.191.
Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary business is
considered to be derived from any particular source and none may be allocated to a particular
place except as provided by the applicable apportionment formula. The provisions of this
subdivision do not apply to business income subject to subdivision 5, income of an insurance
company, or income of an investment company determined under section 290.36.

(b) The term "unitary business" means business activities or operations which result in
a flow of value between them. The term may be applied within a single legal entity or
between multiple entities and without regard to whether each entity is a sole proprietorship,
a corporation, a partnership or a trust.

(c) Unity is presumed whenever there is unity of ownership, operation, and use, evidenced
by centralized management or executive force, centralized purchasing, advertising,
accounting, or other controlled interaction, but the absence of these centralized activities
will not necessarily evidence a nonunitary business. Unity is also presumed when business
activities or operations are of mutual benefit, dependent upon or contributory to one another,
either individually or as a group.

(d) Where a business operation conducted in Minnesota is owned by a business entity
that carries on business activity outside the state different in kind from that conducted within
this state, and the other business is conducted entirely outside the state, it is presumed that
the two business operations are unitary in nature, interrelated, connected, and interdependent
unless it can be shown to the contrary.

(e) Unity of ownership does not exist when two or more corporations are involved unless
more than 50 percent of the voting stock of each corporation is directly or indirectly owned
by a common owner or by common owners, either corporate or noncorporate, or by one or
more of the member corporations of the group. For this purpose, the term "voting stock"
shall include membership interests of mutual insurance holding companies formed under
section 66A.40.

(f) The net income and apportionment factors under section 290.191 or 290.20 of foreign
corporations and other foreign entities which are part of a unitary business shall not be
included in the net income or the apportionment factors of the unitary business; except that
the income and apportionment factors of a foreign entity, other than an entity treated as a
C corporation for federal income tax purposes, that are included in the federal taxable
income, as defined in section 63 of the Internal Revenue Code as amended through the date
named in section 290.01, subdivision 19, of a domestic corporation, domestic entity, or
individual must be included in determining net income and the factors to be used in the
apportionment of net income pursuant to section 290.191 or 290.20. A foreign corporation
or other foreign entity which is not included on a combined report and which is required to
file a return under this chapter shall file on a separate return basis.

(g) For purposes of determining the net income of a unitary business and the factors to
be used in the apportionment of net income pursuant to section 290.191 or 290.20, there
must be included only the income and apportionment factors of domestic corporations or
other domestic entities that are determined to be part of the unitary business pursuant to this
subdivision, notwithstanding that foreign corporations or other foreign entities might be
included in the unitary business; except that the income and apportionment factors of a
foreign entity, other than an entity treated as a C corporation for federal income tax purposes,
that is included in the federal taxable income, as defined in section 63 of the Internal Revenue
Code as amended through the date named in section 290.01, subdivision 19, of a domestic
corporation, domestic entity, or individual must be included in determining net income and
the factors to be used in the apportionment of net income pursuant to section 290.191 or
290.20.

(h) Each corporation or other entity, except a sole proprietorship, that is part of a unitary
business must file combined reports as the commissioner determines. On the reports, all
intercompany transactions between entities included pursuant to paragraph (g) must be
eliminated and the entire net income of the unitary business determined in accordance with
this subdivision is apportioned among the entities by using each entity's Minnesota factors
for apportionment purposes in the numerators of the apportionment formula and the total
factors for apportionment purposes of all entities included pursuant to paragraph (g) in the
denominators of the apportionment formula. Except as otherwise provided by paragraph
(f), all sales of the unitary business made within this state pursuant to section 290.191 or
290.20 must be included on the combined report of a corporation or other entity that is a
member of the unitary business and is subject to the jurisdiction of this state to impose tax
under this chapter.

(i) If a corporation has been divested from a unitary business and is included in a
combined report for a fractional part of the common accounting period of the combined
report:

(1) its income includable in the combined report is its income incurred for that part of
the year determined by proration or separate accounting; and

(2) its sales, property, and payroll included in the apportionment formula must be prorated
or accounted for separately.

new text begin (j) For purposes of this subdivision, "insurance company" means an insurance company,
as defined in section 290.01, subdivision 5b, that is:
new text end

new text begin (1) licensed to engage in the business of insurance in Minnesota pursuant to chapter
60A; or
new text end

new text begin (2) domiciled and licensed to engage in the business of insurance in another state or
country that imposes retaliatory taxes, fines, deposits, penalties, licenses, or fees and that
does not grant, on a reciprocal basis, exemption from such retaliatory taxes to insurance
companies or their agents domiciled in Minnesota.
new text end

new text begin (k) For purposes of this subdivision, "retaliatory taxes" means taxes imposed on insurance
companies organized in another state or country that result from the fact that an insurance
company organized in the taxing jurisdiction and doing business in the other jurisdiction is
subject to taxes, fines, deposits, penalties, licenses, or fees in an amount exceeding that
imposed by the taxing jurisdiction upon an insurance company organized in the other state
or country and doing business to the same extent in the taxing jurisdiction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 31.

Minnesota Statutes 2016, section 290A.03, subdivision 13, is amended to read:

Subd. 13.

Property taxes payable.

"Property taxes payable" means the property tax
exclusive of special assessments, penalties, and interest payable on a claimant's homestead
after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2,
and any other state paid property tax credits in any calendar year, and after any refund
claimed and allowable under section 290A.04, subdivision 2h, that is first payable in the
year that the property tax is payable. In the case of a claimant who makes ground lease
payments, "property taxes payable" includes the amount of the payments directly attributable
to the property taxes assessed against the parcel on which the house is located. deleted text begin No
apportionment or reduction of the "property taxes payable" shall be required for the use of
a portion of the claimant's homestead for a business purpose if the claimant does not deduct
any business depreciation expenses for the use of a portion of the homestead in the
determination of federal adjusted gross income.deleted text end new text begin Regardless of the limitations in section
280A(c)(5) of the Internal Revenue Code, "property taxes payable" must be apportioned or
reduced for the use of a portion of the claimant's homestead for a business purpose if the
claimant deducts any business depreciation expenses for the use of a portion of the homestead
or deducts expenses under section 280A of the Internal Revenue Code for a business operated
in the claimant's homestead.new text end For homesteads which are manufactured homes as defined in
section 273.125, subdivision 8, and for homesteads which are park trailers taxed as
manufactured homes under section 168.012, subdivision 9, "property taxes payable" shall
also include 17 percent of the gross rent paid in the preceding year for the site on which the
homestead is located. When a homestead is owned by two or more persons as joint tenants
or tenants in common, such tenants shall determine between them which tenant may claim
the property taxes payable on the homestead. If they are unable to agree, the matter shall
be referred to the commissioner of revenue whose decision shall be final. Property taxes
are considered payable in the year prescribed by law for payment of the taxes.

In the case of a claim relating to "property taxes payable," the claimant must have owned
and occupied the homestead on January 2 of the year in which the tax is payable and (i) the
property must have been classified as homestead property pursuant to section 273.124, on
or before December 15 of the assessment year to which the "property taxes payable" relate;
or (ii) the claimant must provide documentation from the local assessor that application for
homestead classification has been made on or before December 15 of the year in which the
"property taxes payable" were payable and that the assessor has approved the application.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refunds based on rent paid after
December 31, 2015, and property taxes payable after December 31, 2016.
new text end

Sec. 32.

Minnesota Statutes 2016, section 291.005, subdivision 1, as amended by Laws
2017, chapter 1, section 8, is amended to read:

Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following terms
used in this chapter shall have the following meanings:

(1) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.

(2) "Federal gross estate" means the gross estate of a decedent as required to be valued
and otherwise determined for federal estate tax purposes under the Internal Revenue Code,
increased by the value of any property in which the decedent had a qualifying income interest
for life and for which an election was made under section 291.03, subdivision 1d, for
Minnesota estate tax purposes, but was not made for federal estate tax purposes.

(3) "Internal Revenue Code" means the United States Internal Revenue Code of 1986,
as amended through December 16, 2016.

(4) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included in the estate which has its situs outside Minnesota,
and (b) including any property omitted from the federal gross estate which is includable in
the estate, has its situs in Minnesota, and was not disclosed to federal taxing authorities.

(5) "Nonresident decedent" means an individual whose domicile at the time of death
was not in Minnesota.

(6) "Personal representative" means the executor, administrator or other person appointed
by the court to administer and dispose of the property of the decedent. If there is no executor,
administrator or other person appointed, qualified, and acting within this state, then any
person in actual or constructive possession of any property having a situs in this state which
is included in the federal gross estate of the decedent shall be deemed to be a personal
representative to the extent of the property and the Minnesota estate tax due with respect
to the property.

(7) "Resident decedent" means an individual whose domicile at the time of death was
in Minnesota.new text begin The provisions of section 290.01, subdivision 7, paragraphs (c) and (d), apply
to determinations of domicile under this chapter.
new text end

(8) "Situs of property" means, with respect to:

(i) real property, the state or country in which it is located;

(ii) tangible personal property, the state or country in which it was normally kept or
located at the time of the decedent's death or for a gift of tangible personal property within
three years of death, the state or country in which it was normally kept or located when the
gift was executed;

(iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue
Code, owned by a nonresident decedent and that is normally kept or located in this state
because it is on loan to an organization, qualifying as exempt from taxation under section
501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is
deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and

(iv) intangible personal property, the state or country in which the decedent was domiciled
at death or for a gift of intangible personal property within three years of death, the state or
country in which the decedent was domiciled when the gift was executed.

For a nonresident decedent with an ownership interest in a pass-through entity with
assets that include real or tangible personal property, situs of the real or tangible personal
property, including qualified works of art, is determined as if the pass-through entity does
not exist and the real or tangible personal property is personally owned by the decedent. If
the pass-through entity is owned by a person or persons in addition to the decedent, ownership
of the property is attributed to the decedent in proportion to the decedent's capital ownership
share of the pass-through entity.

(9) "Pass-through entity" includes the following:

(i) an entity electing S corporation status under section 1362 of the Internal Revenue
Code;

(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;

(iii) a single-member limited liability company or similar entity, regardless of whether
it is taxed as an association or is disregarded for federal income tax purposes under Code
of Federal Regulations, title 26, section 301.7701-3; or

(iv) a trust to the extent the property is includible in the decedent's federal gross estate;
but excludes

(v) an entity whose ownership interest securities are traded on an exchange regulated
by the Securities and Exchange Commission as a national securities exchange under section
6 of the Securities Exchange Act, United States Code, title 15, section 78f.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2016.
new text end

Sec. 33.

Minnesota Statutes 2016, section 291.016, subdivision 3, is amended to read:

Subd. 3.

Subtraction.

new text begin (a) For estates of decedents dying after December 31, 2016, a
subtraction is allowed in computing the Minnesota taxable estate, equal to the sum of:
new text end

new text begin (1) the exclusion amount for the year of death under paragraph (b); and
new text end

new text begin (2) the lesser of:
new text end

new text begin (i) new text end the value of qualified small business property under section 291.03, subdivision 9,
and the value of qualified farm property under section 291.03, subdivision 10deleted text begin , or the result
of $5,000,000 minus the amount for the year of death listed in clauses (1) to (5), whichever
is less, may be subtracted in computing the Minnesota taxable estate but must not reduce
the Minnesota taxable estate to less than zero:
deleted text end

deleted text begin (1) $1,200,000 for estates of decedents dying in 2014;
deleted text end

deleted text begin (2) $1,400,000 for estates of decedents dying in 2015;
deleted text end

deleted text begin (3) $1,600,000 for estates of decedents dying in 2016;
deleted text end

deleted text begin (4) $1,800,000 for estates of decedents dying in 2017; and
deleted text end

deleted text begin (5) $2,000,000 for estates of decedents dying in 2018 and thereafter. deleted text end new text begin ; or
new text end

new text begin (ii) $5,000,000 minus the exclusion amount for the year of death under paragraph (b).
new text end

new text begin (b) The following exclusion amounts apply for the year of death:
new text end

new text begin (1) $2,100,000 for decedents dying in 2017;
new text end

new text begin (2) $2,400,000 for decedents dying in 2018;
new text end

new text begin (3) $2,700,000 for decedents dying in 2019; and
new text end

new text begin (4) $3,000,000 for decedents dying in 2020 and thereafter.
new text end

new text begin (c) The subtraction under this subdivision must not reduce the Minnesota taxable estate
to less than zero.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2016.
new text end

Sec. 34.

Minnesota Statutes 2016, section 291.03, subdivision 1, is amended to read:

Subdivision 1.

Tax amount.

The tax imposed must be computed by applying to the
Minnesota taxable estate the following schedule of rates and then the resulting amount
multiplied by a fraction, not greater than one, the numerator of which is the value of the
Minnesota gross estate plus the value of gifts under section 291.016, subdivision 2, clause
(3), with a Minnesota situs, and the denominator of which is the federal gross estate plus
the value of gifts under section 291.016, subdivision 2, clause (3):

deleted text begin (a) For estates of decedents dying in 2014:
deleted text end

deleted text begin Amount of Minnesota Taxable Estate deleted text end	deleted text begin Rate of Tax deleted text end
deleted text begin Not over $1,200,000 deleted text end	deleted text begin None deleted text end
deleted text begin Over $1,200,000 but not over $1,400,000 deleted text end	deleted text begin nine percent of the excess over $1,200,000 deleted text end
deleted text begin Over $1,400,000 but not over $3,600,000 deleted text end	deleted text begin $18,000 plus ten percent of the excess over $1,400,000 deleted text end
deleted text begin Over $3,600,000 but not over $4,100,000 deleted text end	deleted text begin $238,000 plus 10.4 percent of the excess over $3,600,000 deleted text end
deleted text begin Over $4,100,000 but not over $5,100,000 deleted text end	deleted text begin $290,000 plus 11.2 percent of the excess over $4,100,000 deleted text end
deleted text begin Over $5,100,000 but not over $6,100,000 deleted text end	deleted text begin $402,000 plus 12 percent of the excess over $5,100,000 deleted text end
deleted text begin Over $6,100,000 but not over $7,100,000 deleted text end	deleted text begin $522,000 plus 12.8 percent of the excess over $6,100,000 deleted text end
deleted text begin Over $7,100,000 but not over $8,100,000 deleted text end	deleted text begin $650,000 plus 13.6 percent of the excess over $7,100,000 deleted text end
deleted text begin Over $8,100,000 but not over $9,100,000 deleted text end	deleted text begin $786,000 plus 14.4 percent of the excess over $8,100,000 deleted text end
deleted text begin Over $9,100,000 but not over $10,100,000 deleted text end	deleted text begin $930,000 plus 15.2 percent of the excess over $9,100,000 deleted text end
deleted text begin Over $10,100,000 deleted text end	deleted text begin $1,082,000 plus 16 percent of the excess over $10,100,000 deleted text end

deleted text begin (b) For estates of decedents dying in 2015:
deleted text end

deleted text begin Amount of Minnesota Taxable Estate deleted text end	deleted text begin Rate of Tax deleted text end
deleted text begin Not over $1,400,000 deleted text end	deleted text begin None deleted text end
deleted text begin Over $1,400,000 but not over $3,600,000 deleted text end	deleted text begin ten percent of the excess over $1,400,000 deleted text end
deleted text begin Over $3,600,000 but not over $6,100,000 deleted text end	deleted text begin $220,000 plus 12 percent of the excess over $3,600,000 deleted text end
deleted text begin Over $6,100,000 but not over $7,100,000 deleted text end	deleted text begin $520,000 plus 12.8 percent of the excess over $6,100,000 deleted text end
deleted text begin Over $7,100,000 but not over $8,100,000 deleted text end	deleted text begin $648,000 plus 13.6 percent of the excess over $7,100,000 deleted text end
deleted text begin Over $8,100,000 but not over $9,100,000 deleted text end	deleted text begin $784,000 plus 14.4 percent of the excess over $8,100,000 deleted text end
deleted text begin Over $9,100,000 but not over $10,100,000 deleted text end	deleted text begin $928,000 plus 15.2 percent of the excess over $9,100,000 deleted text end
deleted text begin Over $10,100,000 deleted text end	deleted text begin $1,080,000 plus 16 percent of the excess over $10,100,000 deleted text end

deleted text begin (c) For estates of decedents dying in 2016:
deleted text end

deleted text begin Amount of Minnesota Taxable Estate deleted text end	deleted text begin Rate of Tax deleted text end
deleted text begin Not over $1,600,000 deleted text end	deleted text begin None deleted text end
deleted text begin Over $1,600,000 but not over $2,600,000 deleted text end	deleted text begin ten percent of the excess over $1,600,000 deleted text end
deleted text begin Over $2,600,000 but not over $6,100,000 deleted text end	deleted text begin $100,000 plus 12 percent of the excess over $2,600,000 deleted text end
deleted text begin Over $6,100,000 but not over $7,100,000 deleted text end	deleted text begin $520,000 plus 12.8 percent of the excess over $6,100,000 deleted text end
deleted text begin Over $7,100,000 but not over $8,100,000 deleted text end	deleted text begin $648,000 plus 13.6 percent of the excess over $7,100,000 deleted text end
deleted text begin Over $8,100,000 but not over $9,100,000 deleted text end	deleted text begin $784,000 plus 14.4 percent of the excess over $8,100,000 deleted text end
deleted text begin Over $9,100,000 but not over $10,100,000 deleted text end	deleted text begin $928,000 plus 15.2 percent of the excess over $9,100,000 deleted text end
deleted text begin Over $10,100,000 deleted text end	deleted text begin $1,080,000 plus 16 percent of the excess over $10,100,000 deleted text end

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

Amount of Minnesota Taxable Estate	Rate of Tax
deleted text begin Not over $1,800,000 deleted text end	deleted text begin None deleted text end
deleted text begin Over $1,800,000 but not over $2,100,000 deleted text end	deleted text begin ten percent of the excess over $1,800,000 deleted text end
deleted text begin Over $2,100,000 butdeleted text end Not over $5,100,000	deleted text begin $30,000 plus 12 percent of the excess over $2,100,000 deleted text end new text begin 12 percent new text end
Over $5,100,000 but not over $7,100,000	deleted text begin $390,000deleted text end new text begin $612,000new text end plus 12.8 percent of the excess over $5,100,000
Over $7,100,000 but not over $8,100,000	deleted text begin $646,000deleted text end new text begin $868,000 new text end plus 13.6 percent of the excess over $7,100,000
Over $8,100,000 but not over $9,100,000	deleted text begin $782,000deleted text end new text begin $1,004,000new text end plus 14.4 percent of the excess over $8,100,000
Over $9,100,000 but not over $10,100,000	deleted text begin $926,000deleted text end new text begin $1,148,000 new text end plus 15.2 percent of the excess over $9,100,000
Over $10,100,000	deleted text begin $1,078,000deleted text end new text begin $1,300,000 new text end plus 16 percent of the excess over $10,100,000

deleted text begin (e)deleted text end new text begin (b) new text end For estates of decedents dying in 2018 and thereafter:

Amount of Minnesota Taxable Estate	Rate of Tax
Not over deleted text begin $2,000,000deleted text end new text begin $7,100,000 new text end	deleted text begin None deleted text end new text begin 13 percent new text end
deleted text begin Over $2,000,000 but not over $2,600,000 deleted text end	deleted text begin ten percent of the excess over $2,000,000 deleted text end
deleted text begin Over $2,600,000 but not over $7,100,000 deleted text end	deleted text begin $60,000 plus 13 percent of the excess over $2,600,000 deleted text end
Over $7,100,000 but not over $8,100,000	deleted text begin $645,000deleted text end new text begin $923,000new text end plus 13.6 percent of the excess over $7,100,000
Over $8,100,000 but not over $9,100,000	deleted text begin $781,000deleted text end new text begin $1,059,000new text end plus 14.4 percent of the excess over $8,100,000
Over $9,100,000 but not over $10,100,000	deleted text begin $925,000deleted text end new text begin $1,203,000new text end plus 15.2 percent of the excess over $9,100,000
Over $10,100,000	deleted text begin $1,077,000deleted text end new text begin $1,355,000new text end plus 16 percent of the excess over $10,100,000

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2016.
new text end

Sec. 35.

Minnesota Statutes 2016, section 291.03, subdivision 11, is amended to read:

Subd. 11.

Recapture tax.

(a) If, within three years after the decedent's death and before
the death of the qualified heir, the qualified heir disposes of any interest in the qualified
property, other than by a disposition to a family member, or a family member ceases to
satisfy the requirement under subdivision 9, clause (7); or 10, clause (5), an additional estate
tax is imposed on the property. In the case of a sole proprietor, if the qualified heir replaces
qualified small business property excluded under subdivision 9 with similar property, then
the qualified heir will not be treated as having disposed of an interest in the qualified property.

(b) The amount of the additional tax equals the amount of the exclusion claimed by the
estate under subdivision 8, paragraph (d), multiplied by 16 percent.

(c) The additional tax under this subdivision is due on the day which is six months after
the date of the disposition or cessation in paragraph (a).

new text begin (d) The tax under this subdivision does not apply to the acquisition of title or possession
of the qualified property by a federal, state, or local government unit, or any other entity
with the power of eminent domain for a public purpose, as defined in section 117.025,
subdivision 11, within the three-year holding period.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after June 30, 2011.
new text end

Sec. 36.

new text begin [462D.01] CITATION.
new text end

new text begin This chapter may be cited as the "First-Time Home Buyer Savings Account Act."
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 37.

new text begin [462D.02] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this chapter, the following terms have the
meanings given.
new text end

new text begin Subd. 2. new text end

new text begin Account holder. new text end

new text begin "Account holder" means an individual who establishes,
individually or jointly with one or more other individuals, a first-time home buyer savings
account.
new text end

new text begin Subd. 3. new text end

new text begin Allowable closing costs. new text end

new text begin "Allowable closing costs" means a disbursement listed
on a settlement statement for the purchase of a single-family residence in Minnesota by a
qualified beneficiary.
new text end

new text begin Subd. 4. new text end

new text begin Commissioner. new text end

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

new text begin Subd. 5. new text end

new text begin Eligible costs. new text end

new text begin "Eligible costs" means the down payment and allowable closing
costs for the purchase of a single-family residence in Minnesota by a qualified beneficiary.
Eligible costs include paying for the cost of construction of or financing the construction
of a single-family residence.
new text end

new text begin Subd. 6. new text end

new text begin Financial institution. new text end

new text begin "Financial institution" means a bank, bank and trust,
trust company with banking powers, savings bank, savings association, or credit union,
organized under the laws of this state, any other state, or the United States; an industrial
loan and thrift under chapter 53 or the laws of another state and authorized to accept deposits;
or a money market mutual fund registered under the federal Investment Company Act of
1940 and regulated under rule 2a-7, promulgated by the Securities and Exchange Commission
under that act.
new text end

new text begin Subd. 7. new text end

new text begin First-time home buyer. new text end

new text begin "First-time home buyer" means an individual, and if
married, the individual's spouse, who has no present ownership interest in a principal
residence during the three-year period ending on the earlier of:
new text end

new text begin (1) the date of the purchase of the single-family residence funded, in part, with proceeds
from the first-time home buyer savings account; or
new text end

new text begin (2) the close of the taxable year for which a subtraction is claimed under sections
290.0132, subdivision 25, and 462D.06.
new text end

new text begin Subd. 8. new text end

new text begin First-time home buyer savings account. new text end

new text begin "First-time home buyer savings
account" or "account" means an account with a financial institution that an account holder
designates as a first-time home buyer savings account, as provided in section 462D.03, to
pay or reimburse eligible costs for the purchase of a single-family residence by a qualified
beneficiary.
new text end

new text begin Subd. 9. new text end

new text begin Internal Revenue Code. new text end

new text begin "Internal Revenue Code" has the meaning given in
section 290.01.
new text end

new text begin Subd. 10. new text end

new text begin Principal residence. new text end

new text begin "Principal residence" has the meaning given in section
121 of the Internal Revenue Code.
new text end

new text begin Subd. 11. new text end

new text begin Qualified beneficiary. new text end

new text begin "Qualified beneficiary" means a first-time home buyer
who is a Minnesota resident and is designated as the qualified beneficiary of a first-time
home buyer savings account by the account holder.
new text end

new text begin Subd. 12. new text end

new text begin Single-family residence. new text end

new text begin "Single-family residence" means a single-family
residence located in this state and owned and occupied by or to be occupied by a qualified
beneficiary as the qualified beneficiary's principal residence, which may include a
manufactured home, trailer, mobile home, condominium unit, townhome, or cooperative.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 38.

new text begin [462D.03] ESTABLISHMENT OF ACCOUNTS.
new text end

new text begin Subdivision 1. new text end

new text begin Accounts established. new text end

new text begin An individual may open an account with a financial
institution and designate the account as a first-time home buyer savings account to be used
to pay or reimburse the designated qualified beneficiary's eligible costs.
new text end

new text begin Subd. 2. new text end

new text begin Designation of qualified beneficiary. new text end

new text begin (a) The account holder must designate
a first-time home buyer as the qualified beneficiary of the account by April 15 of the year
following the taxable year in which the account was established. The account holder may
be the qualified beneficiary. The account holder may change the designated qualified
beneficiary at any time, but no more than one qualified beneficiary may be designated for
an account at any one time. For purposes of the one beneficiary restriction, a married couple
qualifies as one beneficiary. Changing the designated qualified beneficiary of an account
does not affect computation of the ten-year period under section 462D.06, subdivision 2.
new text end

new text begin (b) The commissioner shall establish a process for account holders to notify the state
that permits recording of the account, the account holder or holders, any transfers under
section 462D.04, subdivision 2, and the designated qualified beneficiary for each account.
This may be done upon filing the account holder's income tax return or in any other way
the commissioner determines to be appropriate.
new text end

new text begin Subd. 3. new text end

new text begin Joint account holders. new text end

new text begin An individual may jointly own a first-time home buyer
account with another person if the joint account holders file a married joint income tax
return.
new text end

new text begin Subd. 4. new text end

new text begin Multiple accounts. new text end

new text begin (a) An individual may be the account holder of more than
one first-time home buyer savings account, but must not hold or own multiple accounts that
designate the same qualified beneficiary.
new text end

new text begin (b) An individual may be designated as the qualified beneficiary on more than one
first-time home buyer savings account.
new text end

new text begin Subd. 5. new text end

new text begin Contributions. new text end

new text begin Only cash may be contributed to a first-time home buyer savings
account. Individuals other than the account holder may contribute to an account. No more
than $14,000 ($28,000 for married joint filers) may be contributed in any year and no more
than $50,000 ($100,000 for married joint filers) may be contributed in all years. The
maximum amount in any account is limited to $150,000.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 39.

new text begin [462D.04] ACCOUNT HOLDER RESPONSIBILITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Expenses; reporting. new text end

new text begin The account holder must:
new text end

new text begin (1) not use funds in a first-time home buyer savings account to pay expenses of
administering the account, except that a service fee may be deducted from the account by
the financial institution in which the account is held; and
new text end

new text begin (2) submit to the commissioner, in the form and manner required by the commissioner:
new text end

new text begin (i) detailed information regarding the first-time home buyer savings account, including
a list of transactions for the account during the taxable year and the Form 1099 issued by
the financial institution for the account for the taxable year; and
new text end

new text begin (ii) upon withdrawal of funds from the account, a detailed account of the eligible costs
for which the account funds were expended and a statement of the amount of funds remaining
in the account, if any.
new text end

new text begin Subd. 2. new text end

new text begin Transfers. new text end

new text begin An account holder may withdraw funds, in whole or part, from a
first-time home buyer savings account and deposit the funds in another first-time home
buyer savings account held by a different financial institution or the same financial institution.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 40.

new text begin [462D.05] FINANCIAL INSTITUTIONS.
new text end

new text begin (a) A financial institution is not required to take any action to ensure compliance with
this chapter, including to:
new text end

new text begin (1) designate an account, designate qualified beneficiaries, or modify the financial
institution's account contracts or systems in any way;
new text end

new text begin (2) track the use of money withdrawn from a first-time home buyer savings account;
new text end

new text begin (3) allocate funds in a first-time home buyer savings account among joint account holders
or multiple qualified beneficiaries; or
new text end

new text begin (4) report any information to the commissioner or any other government that is not
otherwise required by law.
new text end

new text begin (b) A financial institution is not responsible or liable for:
new text end

new text begin (1) determining or ensuring that an account satisfies the requirements of this chapter or
that its funds are used for eligible costs; or
new text end

new text begin (2) reporting or remitting taxes or penalties related to the use of a first-time home buyer
savings account.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 41.

new text begin [462D.06] SUBTRACTION; ADDITION; ADDITIONAL TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Subtraction. new text end

new text begin (a) As provided in section 290.0132, subdivision 25, an
account holder is allowed a subtraction from the federal taxable income equal to interest or
dividends earned on the first-time home buyer savings account during the taxable year.
new text end

new text begin (b) The subtraction under paragraph (a) is allowed each year for the taxable years
including and following the taxable year in which the account was established. No person
other than the account holder is allowed a subtraction under this section.
new text end

new text begin Subd. 2. new text end

new text begin Addition. new text end

new text begin (a) As provided in section 290.0131, subdivision 14, an account
holder must add to federal taxable income the following amounts:
new text end

new text begin (1) the amount in excess of the total contributions for all taxable years that is withdrawn
and used for other than eligible costs, or for a transfer permitted under section 462D.04,
subdivision 2; and
new text end

new text begin (2) the amount remaining in the first-time home buyer savings account at the close of
the tenth taxable year that exceeds the total contributions to the account for all taxable years.
new text end

new text begin (b) For an account that received a transfer under section 462D.04, subdivision 2, the
ten-year period under paragraph (a), clause (2), ends at the close of the earliest taxable year
that applies to either account under that clause.
new text end

new text begin Subd. 3. new text end

new text begin Additional tax. new text end

new text begin The account holder is liable for an additional tax equal to ten
percent of the addition under subdivision 2 for the taxable year. This amount must be added
to the amount due under section 290.06. The tax under this subdivision does not apply to:
new text end

new text begin (1) a withdrawal because of the account holder's or designated qualified beneficiary's
death or disability;
new text end

new text begin (2) a disbursement of assets of the account under federal bankruptcy law; and
new text end

new text begin (3) a disbursement of assets of the account under chapter 550 or 551.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
new text end

Sec. 42.

Laws 2010, chapter 216, section 12, the effective date, as amended by Laws 2016,
chapter 158, article 1, section 212, is amended to read:

EFFECTIVE DATE.

This section is effective for investments made after July 1, 2010,
for taxable years beginning after December 31, 2009deleted text begin , and before January 1, 2017deleted text end , and only
applies to investments made after the qualified small business receiving the investment has
been certified by the commissioner of employment and economic development.

new text begin EFFECTIVE DATE; REVIVAL AND REENACTMENT. new text end

new text begin This section is effective
retroactively from January 1, 2015, and Laws 2010, chapter 216, section 12, as amended
by Laws 2016, chapter 158, article 1, section 212, is revived and reenacted as of that date.
new text end

Sec. 43. new text begin INCOME TAX RECIPROCITY BENCHMARK STUDY;
APPROPRIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Study. new text end

new text begin (a) The Department of Revenue, in conjunction with the Wisconsin
Department of Revenue, must, provided the conditions of paragraph (d) are satisfied, conduct
a study to determine at least the following:
new text end

new text begin (1) the number of residents of each state who earn income from personal services in the
other state;
new text end

new text begin (2) the total amount of income earned by residents of each state who earn income from
personal services in the other state; and
new text end

new text begin (3) the change in tax revenue in each state if an income tax reciprocity arrangement were
resumed between the two states under which the taxpayers were required to pay income
taxes on the income only in their state of residence.
new text end

new text begin (b) The study must use information obtained from each state's income tax returns for
tax year 2017 and from any other source of information the departments determine is
necessary to complete the study.
new text end

new text begin (c) No later than March 1, 2019, the Department of Revenue must submit a report
containing the results of the study to the governor and to the chairs and ranking minority
members of the legislative committees having jurisdiction over taxes, in compliance with
Minnesota Statutes, sections 3.195 and 3.197.
new text end

new text begin (d) The department shall conduct the study only if the commissioner of revenue enters
an agreement under Minnesota Statutes, section 290.081, by April 1, 2018, and receives
notice from the secretary of revenue that the Wisconsin Department of Revenue will fully
participate in the study.
new text end

new text begin Subd. 2. new text end

new text begin Appropriation. new text end

new text begin $300,000 in fiscal year 2018 is appropriated from the general
fund to the commissioner of revenue for the income tax reciprocity benchmark study in
subdivision 1. This is a onetime appropriation and is not added to the agency's base budget.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. The
appropriation in subdivision 2 is only effective if the conditions of subdivision 1, paragraph
(d), are satisfied.
new text end

Sec. 44. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2016, sections 136A.129; and 290.06, subdivision 36, new text end new text begin are repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2016, section 290.067, subdivision 2, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective for agreements entered into after June
30, 2017, and for taxable years beginning after December 31, 2017. Paragraph (b) is effective
for taxable years beginning after December 31, 2016.
new text end

ARTICLE 2

PROPERTY TAX

Section 1.

Minnesota Statutes 2016, section 40A.18, subdivision 2, is amended to read:

Subd. 2.

Allowed commercial and industrial operations.

new text begin (a) new text end Commercial and industrial
operations are not allowed on land within an agricultural preserve except:

(1) small on-farm commercial or industrial operations normally associated with and
important to farming in the agricultural preserve area;

(2) storage use of existing farm buildings that does not disrupt the integrity of the
agricultural preserve; deleted text begin and
deleted text end

(3) small commercial use of existing farm buildings for trades not disruptive to the
integrity of the agricultural preserve such as a carpentry shop, small scale mechanics shop,
and similar activities that a farm operator might conductdeleted text begin .deleted text end new text begin ; and
new text end

new text begin (4) wireless communication installments and related equipment and structure capable
of providing technology potentially beneficial to farming activities. A property owner who
installs wireless communication equipment does not violate a covenant made prior to January
1, 2018, under section 40A.10, subdivision 1.
new text end

new text begin (b) For purposes of paragraph (a), clauses (2) and (3), new text end "existing" deleted text begin in clauses (2) and (3)deleted text end
means existing on August 1, 1989.

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2016, section 270C.9901, is amended to read:

270C.9901 ASSESSOR ACCREDITATIONnew text begin ; WAIVERnew text end .

new text begin Subdivision 1. new text end

new text begin Accreditation. new text end

Every individual who appraises or physically inspects
real property for the purpose of determining its valuation or classification for property tax
purposes must obtain licensure as an accredited Minnesota assessor from the State Board
of Assessors by July 1, deleted text begin 2019deleted text end new text begin 2022new text end , or within deleted text begin fourdeleted text end new text begin fivenew text end years of that person having become
licensed as a certified Minnesota assessor, whichever is later.

new text begin Subd. 2. new text end

new text begin Waiver. new text end

new text begin (a) An individual may apply to the State Board of Assessors for a
waiver from licensure as an accredited Minnesota assessor as required by subdivision 1 if
the individual:
new text end

new text begin (1) was first licensed as a certified Minnesota assessor before July 1, 2004;
new text end

new text begin (2) has had an assessor license since July 1, 2004;
new text end

new text begin (3) has successfully passed a comprehensive examination substantially equivalent to the
requirements by the State Board of Assessors for the accredited Minnesota assessor license
designation before May 1, 2020; and
new text end

new text begin (4) submits an application to the State Board of Assessors no later than July 1, 2022.
new text end

new text begin The examination can only be taken once to fulfill the requirements of the waiver.
new text end

new text begin (b) The commissioner of revenue, in consultation with the State Board of Assessors and
the Minnesota Association of Assessing Officers, must determine the contents of the waiver
application and the comprehensive examination.
new text end

new text begin (c) A county assessor in any jurisdiction assessed by an applicant may submit additional
information to the State Board of Assessors to be considered as part of the waiver review
proceedings.
new text end

new text begin (d) The State Board of Assessors must not grant a waiver unless the applicant has met
the requirements in paragraph (a) and has the ability to perform the duties of assessment
required in each jurisdiction in which the applicant appraises or physically inspects real
property for the purposes of determining its valuation or classification for property tax
purposes.
new text end

new text begin (e) An individual granted a waiver under this subdivision is allowed to continue
assessment duties at the individual's licensure level, provided the individual complies with
the continuing education requirements for the accredited Minnesota assessor designation
as prescribed by the State Board of Assessors.
new text end

new text begin (f) An individual granted a waiver under this section:
new text end

new text begin (1) is not considered to have achieved the designation as an accredited Minnesota assessor
and may not represent himself or herself as an accredited Minnesota assessor; and
new text end

new text begin (2) is not authorized to value income-producing property as defined in section 273.11,
subdivision 13, unless the individual meets the requirements of that section.
new text end

new text begin (g) A waiver granted by the State Board of Assessors under this section remains in effect
unless the individual's licensure is revoked. If the individual's licensure is revoked, the
waiver is void and the individual is subject to the requirements of subdivision 1.
new text end

new text begin (h) A decision of the State Board of Assessors to grant or deny a waiver under this
subdivision is final and is not subject to appeal.
new text end

new text begin (i) Waivers granted under this subdivision expire on June 30, 2032.
new text end

new text begin (j) This subdivision expires July 1, 2032.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2016, section 272.02, subdivision 86, is amended to read:

Subd. 86.

Apprenticeship training facilities.

All or a portion of a building used
exclusively for a state-approved apprenticeship program through the Department of Labor
and Industry is exempt if:

(1) it is owned by a nonprofit organization or a nonprofit trust, and operated by a nonprofit
organization or a nonprofit trust;

(2) the program participants receive no compensation; and

(3) it is located:

(i) in the Minneapolis and St. Paul standard metropolitan statistical area as determined
by the 2000 federal census;

(ii) in a city outside the Minneapolis and St. Paul standard metropolitan statistical area
that has a population of 7,400 or greater according to the most recent federal census; or

(iii) in a township that has a population greater than deleted text begin 2,000deleted text end new text begin 1,400 new text end but less than 3,000
determined by the 2000 federal census and the building was previously used by a school
and was exempt for taxes payable in 2010.

Use of the property for advanced skills training of incumbent workers does not disqualify
the property for the exemption under this subdivision. This exemption includes up to five
acres of the land on which the building is located and associated parking areas on that land,
except that if the building meets the requirements of clause (3), item (iii), then the exemption
includes up to ten acres of land on which the building is located and associated parking
areas on that land. If a parking area associated with the facility is used for the purposes of
the facility and for other purposes, a portion of the parking area shall be exempt in proportion
to the square footage of the facility used for purposes of apprenticeship training.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2018.
new text end

Sec. 4.

Minnesota Statutes 2016, section 272.02, is amended by adding a subdivision to
read:

new text begin Subd. 100. new text end

new text begin Electric generation facility; personal property. new text end

new text begin (a) Notwithstanding
subdivision 9, clause (a), attached machinery and other personal property that is part of an
electric generation facility with more than 35 megawatts and less than 40 megawatts of
installed capacity and that meets the requirements of this subdivision is exempt from taxation
and payments in lieu of taxation. The facility must:
new text end

new text begin (1) be designed to utilize natural gas as a primary fuel;
new text end

new text begin (2) be owned and operated by a municipal power agency as defined in section 453.52,
subdivision 8;
new text end

new text begin (3) be located within 800 feet of an existing natural gas pipeline;
new text end

new text begin (4) satisfy a resource deficiency identified in an approved integrated resource plan filed
under section 216B.2422;
new text end

new text begin (5) be located outside the metropolitan area as defined under section 473.121, subdivision
2; and
new text end

new text begin (6) have received, by resolution, the approval of the governing bodies of the city and
county in which it is located for the exemption of personal property provided by this
subdivision.
new text end

new text begin (b) Construction of the facility must have been commenced after January 1, 2015, and
before January 1, 2017. Property eligible for this exemption does not include electric
transmission lines and interconnections or gas pipelines and interconnections appurtenant
to the property or the facility.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2018.
new text end

Sec. 5.

Minnesota Statutes 2016, section 272.02, is amended by adding a subdivision to
read:

new text begin Subd. 101. new text end

new text begin Certain property owned by an Indian tribe. new text end

new text begin (a) Property is exempt that:
new text end

new text begin (1) is located in a city of the first class with a population less than 100,000 as of the
2010 federal census;
new text end

new text begin (2) was on January 1, 2016, and is for the current assessment, owned by a federally
recognized Indian tribe, or its instrumentality, that is located within the state of Minnesota;
and
new text end

new text begin (3) is used exclusively as a medical clinic.
new text end

new text begin (b) Property that qualifies for the exemption under this subdivision is limited to no more
than two contiguous parcels and structures that do not exceed, in the aggregate, 30,000
square feet. Property acquired for single-family housing, market-rate apartments, agriculture,
or forestry does not qualify for this exemption. The exemption created by this subdivision
expires with taxes payable in 2028.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2018.
new text end

Sec. 6.

Minnesota Statutes 2016, section 272.0213, is amended to read:

272.0213 LEASED SEASONAL-RECREATIONAL LAND.

(a) deleted text begin A county board may elect, by resolution, todeleted text end new text begin Qualified lands, as defined in this section,
are new text end exempt from taxation, including the tax under section 273.19deleted text begin , qualified landsdeleted text end . "Qualified
lands" for purposes of this section means deleted text begin propertydeleted text end new text begin landnew text end that:

(1) is owned by a county, city, town, or the state;new text begin and
new text end

(2) is rented by the entity for noncommercial seasonal-recreational deleted text begin ordeleted text end new text begin ,new text end noncommercial
seasonal-recreational residential usedeleted text begin ; anddeleted text end new text begin , or class 1c commercial seasonal-recreational
residential use.
new text end

deleted text begin (3) was rented for the purposes specified in clause (2) and was exempt from taxation
for property taxes payable in 2008.
deleted text end

(b) Lands owned by the federal government and rented for noncommercial
seasonal-recreational deleted text begin ordeleted text end new text begin ,new text end noncommercial seasonal-recreational residentialnew text begin , or class 1c
commercial seasonal-recreational residentialnew text end use are exempt from taxation, including the
tax under section 273.19.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes assessed in 2018
and payable in 2019.
new text end

Sec. 7.

Minnesota Statutes 2016, section 272.03, subdivision 1, is amended to read:

Subdivision 1.

Real property.

(a) For the purposes of taxation,new text begin but not for chapter 297A,new text end
"real property" includes the land itself, rails, ties, and other track materials annexed to the
land, and all buildings, structures, and improvements or other fixtures on it, bridges of bridge
companies, and all rights and privileges belonging or appertaining to the land, and all mines,
iron ore and taconite minerals not otherwise exempt, quarries, fossils, and trees on or under
it.

(b) A building or structure shall include the building or structure itself, together with all
improvements or fixtures annexed to the building or structure, which are integrated with
and of permanent benefit to the building or structure, regardless of the present use of the
building, and which cannot be removed without substantial damage to itself or to the building
or structure.

(c)(i) Real property does not include tools, implements, machinery, and equipment
attached to or installed in real property for use in the business or production activity
conducted thereon, regardless of size, weight or method of attachment, and mine shafts,
tunnels, and other underground openings used to extract ores and minerals taxed under
chapter 298 together with steel, concrete, and other materials used to support such openings.

(ii) The exclusion provided in clause (i) shall not apply to machinery and equipment
includable as real estate by paragraphs (a) and (b) even though such machinery and equipment
is used in the business or production activity conducted on the real property if and to the
extent such business or production activity consists of furnishing services or products to
other buildings or structures which are subject to taxation under this chapter.

(iii) The exclusion provided in clause (i) does not apply to the exterior shell of a structure
which constitutes walls, ceilings, roofs, or floors if the shell of the structure has structural,
insulation, or temperature control functions or provides protection from the elements, unless
the structure is primarily used in the production of biofuels, wine, beer, distilled beverages,
or dairy products. Such an exterior shell is included in the definition of real property even
if it also has special functions distinct from that of a building, or if such an exterior shell is
primarily used for the storage of ingredients or materials used in the production of biofuels,
wine, beer, distilled beverages, or dairy products, or for the storage of finished biofuels,
wine, beer, distilled beverages, or dairy products.

(d) The term real property does not include tools, implements, machinery, equipment,
poles, lines, cables, wires, conduit, and station connections which are part of a telephone
communications system, regardless of attachment to or installation in real property and
regardless of size, weight, or method of attachment or installation.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after the
day of final enactment.
new text end

Sec. 8.

Minnesota Statutes 2016, section 272.162, is amended to read:

272.162 RESTRICTIONS ON TRANSFERS OF SPECIFIC PARTS.

Subdivision 1.

Conditions restricting transfer.

When a deed or other instrument
conveying a parcel of land is presented to the county auditor for transfer or division under
sections 272.12, 272.16, and 272.161, the auditor shall not transfer or divide the land or its
net tax capacity in the official records and shall not certify the instrument as provided in
section 272.12, if:

(a) The land conveyed is less than a whole parcel of land as charged in the tax lists;

(b) The part conveyed appears within the area of application of municipal new text begin or countynew text end
subdivision regulations adopted and filed under new text begin section 394.35 or new text end section 462.36, subdivision
1; and

Subd. 2.

Conditions allowing transfer.

new text begin (a) new text end Notwithstanding the provisions of subdivision
1, the county auditor may transfer or divide the land and its net tax capacity and may certify
the instrument if the instrument contains a certification by the clerk of the municipalitynew text begin or
designated county planning officialnew text end :

deleted text begin (a)deleted text end new text begin (1)new text end that the municipality'snew text begin or county'snew text end subdivision regulations do not apply;

deleted text begin (b)deleted text end new text begin (2)new text end that the subdivision has been approved by the governing body of the municipalitynew text begin
or countynew text end ; or

deleted text begin (c)deleted text end new text begin (3)new text end that the restrictions on the division of taxes and filing and recording have been
waived by resolution of the governing body of the municipality new text begin or county new text end in the particular
case because compliance would create an unnecessary hardship and failure to comply would
not interfere with the purpose of the regulations.

new text begin (b) new text end If any of the conditions for certification by the municipalitynew text begin or countynew text end as provided
in this subdivision exist and the municipalitynew text begin or countynew text end does not certify that they exist within
24 hours after the instrument of conveyance has been presented to the clerk of the
municipalitynew text begin or designated county planning officialnew text end , the provisions of subdivision 1 do not
apply.

new text begin (c) new text end If an unexecuted instrument is presented to the municipality new text begin or county new text end and any of
the conditions for certification by the municipality new text begin or county new text end as provided in this subdivision
exist, the unexecuted instrument must be certified by the clerk of the municipalitynew text begin or the
designated county planning officialnew text end .

Subd. 3.

Applicability of restrictions.

new text begin (a) new text end This section does not apply to the exceptions
set forth in section 272.12.

new text begin (b) new text end This section applies only to land within municipalities new text begin or counties new text end which choose to
be governed by its provisions. A municipality new text begin or county new text end may choose to have this section
apply to the property within its boundaries by filing a certified copy of a resolution of its
governing body making that choice with the auditor and recorder of the county in which it
is located.

new text begin EFFECTIVE DATE. new text end

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

Sec. 9.

Minnesota Statutes 2016, section 273.125, subdivision 8, is amended to read:

Subd. 8.

Manufactured homes; sectional structures.

(a) In this section, "manufactured
home" means a structure transportable in one or more sections, which is built on a permanent
chassis, and designed to be used as a dwelling with or without a permanent foundation when
connected to the required utilities, and contains the plumbing, heating, air conditioning, and
electrical systems in it. Manufactured home includes any accessory structure that is an
addition or supplement to the manufactured home and, when installed, becomes a part of
the manufactured home.

(b) Except as provided in paragraph (c), a manufactured home that meets each of the
following criteria must be valued and assessed as an improvement to real property, the
appropriate real property classification applies, and the valuation is subject to review and
the taxes payable in the manner provided for real property:

(1) the owner of the unit holds title to the land on which it is situated;

(2) the unit is affixed to the land by a permanent foundation or is installed at its location
in accordance with the Manufactured Home Building Code in sections 327.31 to 327.34,
and rules adopted under those sections, or is affixed to the land like other real property in
the taxing district; and

(3) the unit is connected to public utilities, has a well and septic tank system, or is serviced
by water and sewer facilities comparable to other real property in the taxing district.

(c) A manufactured home that meets each of the following criteria must be assessed at
the rate provided by the appropriate real property classification but must be treated as
personal property, and the valuation is subject to review and the taxes payable in the manner
provided in this section:

(1) the owner of the unit is a lessee of the land under the terms of a lease, or the unit is
located in a manufactured home park but is not the homestead of the park owner;

(2) the unit is affixed to the land by a permanent foundation or is installed at its location
in accordance with the Manufactured Home Building Code contained in sections 327.31 to
327.34, and the rules adopted under those sections, or is affixed to the land like other real
property in the taxing district; and

(3) the unit is connected to public utilities, has a well and septic tank system, or is serviced
by water and sewer facilities comparable to other real property in the taxing district.

(d) Sectional structures must be valued and assessed as an improvement to real property
if the owner of the structure holds title to the land on which it is located or is a qualifying
lessee of the land under section 273.19. In this paragraph "sectional structure" means a
building or structural unit that has been in whole or substantial part manufactured or
constructed at an off-site location to be wholly or partially assembled on site alone or with
other units and attached to a permanent foundation.

(e) The commissioner of revenue may adopt rules under the Administrative Procedure
Act to establish additional criteria for the classification of manufactured homes and sectional
structures under this subdivision.

(f) A storage shed, deck, or similar improvement constructed on property that is leased
or rented as a site for a manufactured home, sectional structure, park trailer, or travel trailer
is taxable as provided in this section. In the case of property that is leased or rented as a site
for a travel trailer, a storage shed, deck, or similar improvement on the site that is considered
personal property under this paragraph is taxable only if its total estimated market value is
over deleted text begin $1,000deleted text end new text begin $10,000new text end . The property is taxable as personal property to the lessee of the site
if it is not owned by the owner of the site. The property is taxable as real estate if it is owned
by the owner of the site. As a condition of permitting the owner of the manufactured home,
sectional structure, park trailer, or travel trailer to construct improvements on the leased or
rented site, the owner of the site must obtain the permanent home address of the lessee or
user of the site. The site owner must provide the name and address to the assessor upon
request.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning for property taxes assessed
in 2018.
new text end

Sec. 10.

Minnesota Statutes 2016, section 273.13, subdivision 22, is amended to read:

Subd. 22.

Class 1.

(a) Except as provided in subdivision 23 and in paragraphs (b) and
(c), real estate which is residential and used for homestead purposes is class 1a. In the case
of a duplex or triplex in which one of the units is used for homestead purposes, the entire
property is deemed to be used for homestead purposes. The market value of class 1a property
must be determined based upon the value of the house, garage, and land.

The first $500,000 of market value of class 1a property has a net classification rate of
one percent of its market value; and the market value of class 1a property that exceeds
$500,000 has a classification rate of 1.25 percent of its market value.

(b) Class 1b property includes homestead real estate or homestead manufactured homes
used for the purposes of a homestead by:

(1) any person who is blind as defined in section 256D.35, or the blind person and the
blind person's spouse;

(2) any person who is permanently and totally disabled or by the disabled person and
the disabled person's spouse; or

(3) the surviving spouse of a permanently and totally disabled veteran homesteading a
property classified under this paragraph for taxes payable in 2008.

Property is classified and assessed under clause (2) only if the government agency or
income-providing source certifies, upon the request of the homestead occupant, that the
homestead occupant satisfies the disability requirements of this paragraph, and that the
property is not eligible for the valuation exclusion under subdivision 34.

Property is classified and assessed under paragraph (b) only if the commissioner of
revenue or the county assessor certifies that the homestead occupant satisfies the requirements
of this paragraph.

Permanently and totally disabled for the purpose of this subdivision means a condition
which is permanent in nature and totally incapacitates the person from working at an
occupation which brings the person an income. The first $50,000 market value of class 1b
property has a net classification rate of .45 percent of its market value. The remaining market
value of class 1b property has a classification rate using the rates for class 1a or class 2a
property, whichever is appropriate, of similar market value.

(c) Class 1c property is commercial use real and personal property that abuts public
water as defined in section 103G.005, subdivision 15, new text begin or abuts a state trail administered by
the Department of Natural Resources, new text end and is devoted to temporary and seasonal residential
occupancy for recreational purposes but not devoted to commercial purposes for more than
250 days in the year preceding the year of assessment, and that includes a portion used as
a homestead by the owner, which includes a dwelling occupied as a homestead by a
shareholder of a corporation that owns the resort, a partner in a partnership that owns the
resort, or a member of a limited liability company that owns the resort even if the title to
the homestead is held by the corporation, partnership, or limited liability company. For
purposes of this paragraph, property is devoted to a commercial purpose on a specific day
if any portion of the property, excluding the portion used exclusively as a homestead, is
used for residential occupancy and a fee is charged for residential occupancy. Class 1c
property must contain three or more rental units. A "rental unit" is defined as a cabin,
condominium, townhouse, sleeping room, or individual camping site equipped with water
and electrical hookups for recreational vehicles. Class 1c property must provide recreational
activities such as the rental of ice fishing houses, boats and motors, snowmobiles, downhill
or cross-country ski equipment; provide marina services, launch services, or guide services;
or sell bait and fishing tackle. Any unit in which the right to use the property is transferred
to an individual or entity by deeded interest, or the sale of shares or stock, no longer qualifies
for class 1c even though it may remain available for rent. A camping pad offered for rent
by a property that otherwise qualifies for class 1c is also class 1c, regardless of the term of
the rental agreement, as long as the use of the camping pad does not exceed 250 days. If
the same owner owns two separate parcels that are located in the same township, and one
of those properties is classified as a class 1c property and the other would be eligible to be
classified as a class 1c property if it was used as the homestead of the owner, both properties
will be assessed as a single class 1c property; for purposes of this sentence, properties are
deemed to be owned by the same owner if each of them is owned by a limited liability
company, and both limited liability companies have the same membership. The portion of
the property used as a homestead is class 1a property under paragraph (a). The remainder
of the property is classified as follows: the first $600,000 of market value is tier I, the next
$1,700,000 of market value is tier II, and any remaining market value is tier III. The
classification rates for class 1c are: tier I, 0.50 percent; tier II, 1.0 percent; and tier III, 1.25
percent. Owners of real and personal property devoted to temporary and seasonal residential
occupancy for recreation purposes in which all or a portion of the property was devoted to
commercial purposes for not more than 250 days in the year preceding the year of assessment
desiring classification as class 1c, must submit a declaration to the assessor designating the
cabins or units occupied for 250 days or less in the year preceding the year of assessment
by January 15 of the assessment year. Those cabins or units and a proportionate share of
the land on which they are located must be designated as class 1c as otherwise provided.
The remainder of the cabins or units and a proportionate share of the land on which they
are located must be designated as class 3a commercial. The owner of property desiring
designation as class 1c property must provide guest registers or other records demonstrating
that the units for which class 1c designation is sought were not occupied for more than 250
days in the year preceding the assessment if so requested. The portion of a property operated
as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center or meeting room, and (5)
other nonresidential facility operated on a commercial basis not directly related to temporary
and seasonal residential occupancy for recreation purposes does not qualify for class 1c.

(d) Class 1d property includes structures that meet all of the following criteria:

(1) the structure is located on property that is classified as agricultural property under
section 273.13, subdivision 23;

(2) the structure is occupied exclusively by seasonal farm workers during the time when
they work on that farm, and the occupants are not charged rent for the privilege of occupying
the property, provided that use of the structure for storage of farm equipment and produce
does not disqualify the property from classification under this paragraph;

(3) the structure meets all applicable health and safety requirements for the appropriate
season; and

(4) the structure is not salable as residential property because it does not comply with
local ordinances relating to location in relation to streets or roads.

The market value of class 1d property has the same classification rates as class 1a property
under paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2018
for taxes payable in 2019.
new text end

Sec. 11.

Minnesota Statutes 2016, section 273.13, subdivision 23, is amended to read:

Subd. 23.

Class 2.

(a) An agricultural homestead consists of class 2a agricultural land
that is homesteaded, along with any class 2b rural vacant land that is contiguous to the class
2a land under the same ownership. The market value of the house and garage and immediately
surrounding one acre of land has the same classification rates as class 1a or 1b property
under subdivision 22. The value of the remaining land including improvements up to the
first tier valuation limit of agricultural homestead property has a classification rate of 0.5
percent of market value. The remaining property over the first tier has a classification rate
of one percent of market value. For purposes of this subdivision, the "first tier valuation
limit of agricultural homestead property" and "first tier" means the limit certified under
section 273.11, subdivision 23.

(b) Class 2a agricultural land consists of parcels of property, or portions thereof, that
are agricultural land and buildings. Class 2a property has a classification rate of one percent
of market value, unless it is part of an agricultural homestead under paragraph (a). Class 2a
property must also include any property that would otherwise be classified as 2b, but is
interspersed with class 2a property, including but not limited to sloughs, wooded wind
shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback requirement,
and other similar land that is impractical for the assessor to value separately from the rest
of the property or that is unlikely to be able to be sold separately from the rest of the property.

An assessor may classify the part of a parcel described in this subdivision that is used
for agricultural purposes as class 2a and the remainder in the class appropriate to its use.

(c) Class 2b rural vacant land consists of parcels of property, or portions thereof, that
are unplatted real estate, rural in character and not used for agricultural purposes, including
land used for growing trees for timber, lumber, and wood and wood products, that is not
improved with a structure. The presence of a minor, ancillary nonresidential structure as
defined by the commissioner of revenue does not disqualify the property from classification
under this paragraph. Any parcel of 20 acres or more improved with a structure that is not
a minor, ancillary nonresidential structure must be split-classified, and ten acres must be
assigned to the split parcel containing the structure. Class 2b property has a classification
rate of one percent of market value unless it is part of an agricultural homestead under
paragraph (a), or qualifies as class 2c under paragraph (d).

(d) Class 2c managed forest land consists of no less than 20 and no more than 1,920
acres statewide per taxpayer that is being managed under a forest management plan that
meets the requirements of chapter 290C, but is not enrolled in the sustainable forest resource
management incentive program. It has a classification rate of .65 percent, provided that the
owner of the property must apply to the assessor in order for the property to initially qualify
for the reduced rate and provide the information required by the assessor to verify that the
property qualifies for the reduced rate. If the assessor receives the application and information
before May 1 in an assessment year, the property qualifies beginning with that assessment
year. If the assessor receives the application and information after April 30 in an assessment
year, the property may not qualify until the next assessment year. The commissioner of
natural resources must concur that the land is qualified. The commissioner of natural
resources shall annually provide county assessors verification information on a timely basis.
The presence of a minor, ancillary nonresidential structure as defined by the commissioner
of revenue does not disqualify the property from classification under this paragraph.

(e) Agricultural land as used in this section means:

(1) contiguous acreage of ten acres or more, used during the preceding year for
agricultural purposes; or

(2) contiguous acreage used during the preceding year for an intensive livestock or
poultry confinement operation, provided that land used only for pasturing or grazing does
not qualify under this clause.

"Agricultural purposes" as used in this section means the raising, cultivation, drying, or
storage of agricultural products for sale, or the storage of machinery or equipment used in
support of agricultural production by the same farm entity. For a property to be classified
as agricultural based only on the drying or storage of agricultural products, the products
being dried or stored must have been produced by the same farm entity as the entity operating
the drying or storage facility. "Agricultural purposes" also includes enrollment in new text begin a local
conservation program or new text end the Reinvest in Minnesota program under sections 103F.501 to
103F.535 or the federal Conservation Reserve Program as contained in Public Law 99-198
or a similar state or federal conservation program if the property was classified as agricultural
(i) under this subdivision for taxes payable in 2003 because of its enrollment in a qualifying
program and the land remains enrolled or (ii) in the year prior to its enrollment.new text begin For purposes
of this section, a local conservation program means a program administered by a town,
statutory or home rule charter city, or county, including a watershed district, water
management organization, or soil and water conservation district, in which landowners
voluntarily enroll land and receive incentive payments equal to at least $50 per acre in
exchange for use or other restrictions placed on the land. In order for property to qualify
under the local conservation program provision, a taxpayer must apply to the assessor by
February 1 of the assessment year and must submit the information required by the assessor,
including but not limited to a copy of the program requirements, the specific agreement
between the land owner and the local agency, if applicable, and a map of the conservation
area.new text end Agricultural classification shall not be based upon the market value of any residential
structures on the parcel or contiguous parcels under the same ownership.

"Contiguous acreage," for purposes of this paragraph, means all of, or a contiguous
portion of, a tax parcel as described in section 272.193, or all of, or a contiguous portion
of, a set of contiguous tax parcels under that section that are owned by the same person.

(f) Agricultural land under this section also includes:

(1) contiguous acreage that is less than ten acres in size and exclusively used in the
preceding year for raising or cultivating agricultural products; or

(2) contiguous acreage that contains a residence and is less than 11 acres in size, if the
contiguous acreage exclusive of the house, garage, and surrounding one acre of land was
used in the preceding year for one or more of the following three uses:

(i) for an intensive grain drying or storage operation, or for intensive machinery or
equipment storage activities used to support agricultural activities on other parcels of property
operated by the same farming entity;

(ii) as a nursery, provided that only those acres used intensively to produce nursery stock
are considered agricultural land; or

(iii) for intensive market farming; for purposes of this paragraph, "market farming"
means the cultivation of one or more fruits or vegetables or production of animal or other
agricultural products for sale to local markets by the farmer or an organization with which
the farmer is affiliated.

"Contiguous acreage," for purposes of this paragraph, means all of a tax parcel as
described in section 272.193, or all of a set of contiguous tax parcels under that section that
are owned by the same person.

(g) Land shall be classified as agricultural even if all or a portion of the agricultural use
of that property is the leasing to, or use by another person for agricultural purposes.

Classification under this subdivision is not determinative for qualifying under section
273.111.

(h) The property classification under this section supersedes, for property tax purposes
only, any locally administered agricultural policies or land use restrictions that define
minimum or maximum farm acreage.

(i) The term "agricultural products" as used in this subdivision includes production for
sale of:

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, bees,
and apiary products by the owner;

(2) deleted text begin fish breddeleted text end new text begin aquacultural productsnew text end for sale and consumptionnew text begin , as defined under section
17.47,new text end if the deleted text begin fish breedingdeleted text end new text begin aquaculturenew text end occurs on land zoned for agricultural use;

(3) the commercial boarding of horses, which may include related horse training and
riding instruction, if the boarding is done on property that is also used for raising pasture
to graze horses or raising or cultivating other agricultural products as defined in clause (1);

(4) property which is owned and operated by nonprofit organizations used for equestrian
activities, excluding racing;

(5) game birds and waterfowl bred and raised (i) on a game farm licensed under section
97A.105, provided that the annual licensing report to the Department of Natural Resources,
which must be submitted annually by March 30 to the assessor, indicates that at least 500
birds were raised or used for breeding stock on the property during the preceding year and
that the owner provides a copy of the owner's most recent schedule F; or (ii) for use on a
shooting preserve licensed under section 97A.115;

(6) insects primarily bred to be used as food for animals;

(7) trees, grown for sale as a crop, including short rotation woody crops, and not sold
for timber, lumber, wood, or wood products; and

(8) maple syrup taken from trees grown by a person licensed by the Minnesota
Department of Agriculture under chapter 28A as a food processor.

(j) If a parcel used for agricultural purposes is also used for commercial or industrial
purposes, including but not limited to:

(1) wholesale and retail sales;

(2) processing of raw agricultural products or other goods;

(3) warehousing or storage of processed goods; and

(4) office facilities for the support of the activities enumerated in clauses (1), (2), and
(3),

the assessor shall classify the part of the parcel used for agricultural purposes as class 1b,
2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its use.
The grading, sorting, and packaging of raw agricultural products for first sale is considered
an agricultural purpose. A greenhouse or other building where horticultural or nursery
products are grown that is also used for the conduct of retail sales must be classified as
agricultural if it is primarily used for the growing of horticultural or nursery products from
seed, cuttings, or roots and occasionally as a showroom for the retail sale of those products.
Use of a greenhouse or building only for the display of already grown horticultural or nursery
products does not qualify as an agricultural purpose.

(k) The assessor shall determine and list separately on the records the market value of
the homestead dwelling and the one acre of land on which that dwelling is located. If any
farm buildings or structures are located on this homesteaded acre of land, their market value
shall not be included in this separate determination.

(l) Class 2d airport landing area consists of a landing area or public access area of a
privately owned public use airport. It has a classification rate of one percent of market value.
To qualify for classification under this paragraph, a privately owned public use airport must
be licensed as a public airport under section 360.018. For purposes of this paragraph, "landing
area" means that part of a privately owned public use airport properly cleared, regularly
maintained, and made available to the public for use by aircraft and includes runways,
taxiways, aprons, and sites upon which are situated landing or navigational aids. A landing
area also includes land underlying both the primary surface and the approach surfaces that
comply with all of the following:

(i) the land is properly cleared and regularly maintained for the primary purposes of the
landing, taking off, and taxiing of aircraft; but that portion of the land that contains facilities
for servicing, repair, or maintenance of aircraft is not included as a landing area;

(ii) the land is part of the airport property; and

(iii) the land is not used for commercial or residential purposes.

The land contained in a landing area under this paragraph must be described and certified
by the commissioner of transportation. The certification is effective until it is modified, or
until the airport or landing area no longer meets the requirements of this paragraph. For
purposes of this paragraph, "public access area" means property used as an aircraft parking
ramp, apron, or storage hangar, or an arrival and departure building in connection with the
airport.

(m) Class 2e consists of land with a commercial aggregate deposit that is not actively
being mined and is not otherwise classified as class 2a or 2b, provided that the land is not
located in a county that has elected to opt-out of the aggregate preservation program as
provided in section 273.1115, subdivision 6. It has a classification rate of one percent of
market value. To qualify for classification under this paragraph, the property must be at
least ten contiguous acres in size and the owner of the property must record with the county
recorder of the county in which the property is located an affidavit containing:

(1) a legal description of the property;

(2) a disclosure that the property contains a commercial aggregate deposit that is not
actively being mined but is present on the entire parcel enrolled;

(3) documentation that the conditional use under the county or local zoning ordinance
of this property is for mining; and

(4) documentation that a permit has been issued by the local unit of government or the
mining activity is allowed under local ordinance. The disclosure must include a statement
from a registered professional geologist, engineer, or soil scientist delineating the deposit
and certifying that it is a commercial aggregate deposit.

For purposes of this section and section 273.1115, "commercial aggregate deposit"
means a deposit that will yield crushed stone or sand and gravel that is suitable for use as
a construction aggregate; and "actively mined" means the removal of top soil and overburden
in preparation for excavation or excavation of a commercial deposit.

(n) When any portion of the property under this subdivision or subdivision 22 begins to
be actively mined, the owner must file a supplemental affidavit within 60 days from the
day any aggregate is removed stating the number of acres of the property that is actively
being mined. The acres actively being mined must be (1) valued and classified under
subdivision 24 in the next subsequent assessment year, and (2) removed from the aggregate
resource preservation property tax program under section 273.1115, if the land was enrolled
in that program. Copies of the original affidavit and all supplemental affidavits must be
filed with the county assessor, the local zoning administrator, and the Department of Natural
Resources, Division of Land and Minerals. A supplemental affidavit must be filed each
time a subsequent portion of the property is actively mined, provided that the minimum
acreage change is five acres, even if the actual mining activity constitutes less than five
acres.

(o) The definitions prescribed by the commissioner under paragraphs (c) and (d) are not
rules and are exempt from the rulemaking provisions of chapter 14, and the provisions in
section 14.386 concerning exempt rules do not apply.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2018.
new text end

Sec. 12.

Minnesota Statutes 2016, section 273.13, subdivision 25, is amended to read:

Subd. 25.

Class 4.

(a) Class 4a is residential real estate containing four or more units
and used or held for use by the owner or by the tenants or lessees of the owner as a residence
for rental periods of 30 days or more, excluding property qualifying for class 4d. Class 4a
also includes hospitals licensed under sections 144.50 to 144.56, other than hospitals exempt
under section 272.02, and contiguous property used for hospital purposes, without regard
to whether the property has been platted or subdivided. The market value of class 4a property
has a classification rate of 1.25 percent.

(b) Class 4b includes:

(1) residential real estate containing less than four units that does not qualify as class
4bb, other than seasonal residential recreational property;

(2) manufactured homes not classified under any other provision;

(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead farm
classified under subdivision 23, paragraph (b) containing two or three units; and

(4) unimproved property that is classified residential as determined under subdivision
33.

The market value of class 4b property has a classification rate of 1.25 percent.

new text begin (1)new text end nonhomestead residential real estate containing one unit, other than seasonal
residential recreational propertydeleted text begin , anddeleted text end new text begin ;
new text end

new text begin (2) new text end a single family dwelling, garage, and surrounding one acre of property on a
nonhomestead farm classified under subdivision 23, paragraph (b)deleted text begin .deleted text end new text begin ; and
new text end

new text begin (3) a condominium-type storage unit having an individual property identification number
that is not used for a commercial purpose.
new text end

Class 4bb property has the same classification rates as class 1a property under subdivision
22.

Property that has been classified as seasonal residential recreational property at any time
during which it has been owned by the current owner or spouse of the current owner does
not qualify for class 4bb.

(d) Class 4c property includes:

(1) except as provided in subdivision 22, paragraph (c), real and personal property
devoted to commercial temporary and seasonal residential occupancy for recreation purposes,
for not more than 250 days in the year preceding the year of assessment. For purposes of
this clause, property is devoted to a commercial purpose on a specific day if any portion of
the property is used for residential occupancy, and a fee is charged for residential occupancy.
Class 4c property under this clause must contain three or more rental units. A "rental unit"
is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site
equipped with water and electrical hookups for recreational vehicles. A camping pad offered
for rent by a property that otherwise qualifies for class 4c under this clause is also class 4c
under this clause regardless of the term of the rental agreement, as long as the use of the
camping pad does not exceed 250 days. In order for a property to be classified under this
clause, either (i) the business located on the property must provide recreational activities,
at least 40 percent of the annual gross lodging receipts related to the property must be from
business conducted during 90 consecutive days, and either (A) at least 60 percent of all paid
bookings by lodging guests during the year must be for periods of at least two consecutive
nights; or (B) at least 20 percent of the annual gross receipts must be from charges for
providing recreational activities, or (ii) the business must contain 20 or fewer rental units,
and must be located in a township or a city with a population of 2,500 or less located outside
the metropolitan area, as defined under section 473.121, subdivision 2, that contains a portion
of a state trail administered by the Department of Natural Resources. For purposes of item
(i)(A), a paid booking of five or more nights shall be counted as two bookings. Class 4c
property also includes commercial use real property used exclusively for recreational
purposes in conjunction with other class 4c property classified under this clause and devoted
to temporary and seasonal residential occupancy for recreational purposes, up to a total of
two acres, provided the property is not devoted to commercial recreational use for more
than 250 days in the year preceding the year of assessment and is located within two miles
of the class 4c property with which it is used. In order for a property to qualify for
classification under this clause, the owner must submit a declaration to the assessor
designating the cabins or units occupied for 250 days or less in the year preceding the year
of assessment by January 15 of the assessment year. Those cabins or units and a proportionate
share of the land on which they are located must be designated class 4c under this clause
as otherwise provided. The remainder of the cabins or units and a proportionate share of
the land on which they are located will be designated as class 3a. The owner of property
desiring designation as class 4c property under this clause must provide guest registers or
other records demonstrating that the units for which class 4c designation is sought were not
occupied for more than 250 days in the year preceding the assessment if so requested. The
portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center
or meeting room, and (5) other nonresidential facility operated on a commercial basis not
directly related to temporary and seasonal residential occupancy for recreation purposes
does not qualify for class 4c. For the purposes of this paragraph, "recreational activities"
means renting ice fishing houses, boats and motors, snowmobiles, downhill or cross-country
ski equipment; providing marina services, launch services, or guide services; or selling bait
and fishing tackle;

(2) qualified property used as a golf course if:

(i) it is open to the public on a daily fee basis. It may charge membership fees or dues,
but a membership fee may not be required in order to use the property for golfing, and its
green fees for golfing must be comparable to green fees typically charged by municipal
courses; and

(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction with
the golf course is classified as class 3a property;

(3) real property up to a maximum of three acres of land owned and used by a nonprofit
community service oriented organization and not used for residential purposes on either a
temporary or permanent basis, provided that:

(i) the property is not used for a revenue-producing activity for more than six days in
the calendar year preceding the year of assessment; or

(ii) the organization makes annual charitable contributions and donations at least equal
to the property's previous year's property taxes and the property is allowed to be used for
public and community meetings or events for no charge, as appropriate to the size of the
facility.

For purposes of this clause:

(A) "charitable contributions and donations" has the same meaning as lawful gambling
purposes under section 349.12, subdivision 25, excluding those purposes relating to the
payment of taxes, assessments, fees, auditing costs, and utility payments;

(B) "property taxes" excludes the state general tax;

(C) a "nonprofit community service oriented organization" means any corporation,
society, association, foundation, or institution organized and operated exclusively for
charitable, religious, fraternal, civic, or educational purposes, and which is exempt from
federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal
Revenue Code; and

(D) "revenue-producing activities" shall include but not be limited to property or that
portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt
liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling
alley, a retail store, gambling conducted by organizations licensed under chapter 349, an
insurance business, or office or other space leased or rented to a lessee who conducts a
for-profit enterprise on the premises.

Any portion of the property not qualifying under either item (i) or (ii) is class 3a. The
use of the property for social events open exclusively to members and their guests for periods
of less than 24 hours, when an admission is not charged nor any revenues are received by
the organization shall not be considered a revenue-producing activity.

The organization shall maintain records of its charitable contributions and donations
and of public meetings and events held on the property and make them available upon
request any time to the assessor to ensure eligibility. An organization meeting the requirement
under item (ii) must file an application by May 1 with the assessor for eligibility for the
current year's assessment. The commissioner shall prescribe a uniform application form
and instructions;

(4) postsecondary student housing of not more than one acre of land that is owned by a
nonprofit corporation organized under chapter 317A and is used exclusively by a student
cooperative, sorority, or fraternity for on-campus housing or housing located within two
miles of the border of a college campus;

(5)(i) manufactured home parks as defined in section 327.14, subdivision 3, excluding
manufactured home parks described in deleted text begin section 273.124, subdivision 3adeleted text end new text begin items (ii) and (iii)new text end ,
deleted text begin anddeleted text end (ii) manufactured home parks as defined in section 327.14, subdivision 3, that are
described in section 273.124, subdivision 3anew text begin , and (iii) class I manufactured home parks as
defined in section 327C.01, subdivision 13new text end ;

(6) real property that is actively and exclusively devoted to indoor fitness, health, social,
recreational, and related uses, is owned and operated by a not-for-profit corporation, and is
located within the metropolitan area as defined in section 473.121, subdivision 2;

(7) a leased or privately owned noncommercial aircraft storage hangar not exempt under
section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan
Airports Commission, or group thereof; and

(ii) the land lease, or any ordinance or signed agreement restricting the use of the leased
premise, prohibits commercial activity performed at the hangar.

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must be
filed by the new owner with the assessor of the county where the property is located within
60 days of the sale;

(8) a privately owned noncommercial aircraft storage hangar not exempt under section
272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land abuts a public airport; and

(ii) the owner of the aircraft storage hangar provides the assessor with a signed agreement
restricting the use of the premises, prohibiting commercial use or activity performed at the
hangar; and

(9) residential real estate, a portion of which is used by the owner for homestead purposes,
and that is also a place of lodging, if all of the following criteria are met:

(i) rooms are provided for rent to transient guests that generally stay for periods of 14
or fewer days;

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated in
the basic room rate;

(iii) meals are not provided to the general public except for special events on fewer than
seven days in the calendar year preceding the year of the assessment; and

(iv) the owner is the operator of the property.

The market value subject to the 4c classification under this clause is limited to five rental
units. Any rental units on the property in excess of five, must be valued and assessed as
class 3a. The portion of the property used for purposes of a homestead by the owner must
be classified as class 1a property under subdivision 22;

(10) real property up to a maximum of three acres and operated as a restaurant as defined
under section 157.15, subdivision 12, provided it: (i) is located on a lake as defined under
section 103G.005, subdivision 15, paragraph (a), clause (3); and (ii) is either devoted to
commercial purposes for not more than 250 consecutive days, or receives at least 60 percent
of its annual gross receipts from business conducted during four consecutive months. Gross
receipts from the sale of alcoholic beverages must be included in determining the property's
qualification under item (ii). The property's primary business must be as a restaurant and
not as a bar. Gross receipts from gift shop sales located on the premises must be excluded.
Owners of real property desiring 4c classification under this clause must submit an annual
declaration to the assessor by February 1 of the current assessment year, based on the
property's relevant information for the preceding assessment year;

(11) lakeshore and riparian property and adjacent land, not to exceed six acres, used as
a marina, as defined in section 86A.20, subdivision 5, which is made accessible to the public
and devoted to recreational use for marina services. The marina owner must annually provide
evidence to the assessor that it provides services, including lake or river access to the public
by means of an access ramp or other facility that is either located on the property of the
marina or at a publicly owned site that abuts the property of the marina. No more than 800
feet of lakeshore may be included in this classification. Buildings used in conjunction with
a marina for marina services, including but not limited to buildings used to provide food
and beverage services, fuel, boat repairs, or the sale of bait or fishing tackle, are classified
as class 3a property; and

(12) real and personal property devoted to noncommercial temporary and seasonal
residential occupancy for recreation purposes.

Class 4c property has a classification rate of 1.5 percent of market value, except that (i)
each parcel of noncommercial seasonal residential recreational property under clause (12)
has the same classification rates as class 4bb property, (ii) manufactured home parks assessed
under clause (5), item (i), have the same classification rate as class 4b property, deleted text begin anddeleted text end the
market value of manufactured home parks assessed under clause (5), item (ii), deleted text begin hasdeleted text end new text begin havenew text end a
classification rate of 0.75 percent if more than 50 percent of the lots in the park are occupied
by shareholders in the cooperative corporation or association and a classification rate of
one percent if 50 percent or less of the lots are so occupied,new text begin and class I manufactured home
parks as defined in section 327C.01, subdivision 13, have a classification rate of 1.0 percent,new text end
(iii) commercial-use seasonal residential recreational property and marina recreational land
as described in clause (11), has a classification rate of one percent for the first $500,000 of
market value, and 1.25 percent for the remaining market value, (iv) the market value of
property described in clause (4) has a classification rate of one percent, (v) the market value
of property described in clauses (2), (6), and (10) has a classification rate of 1.25 percent,
deleted text begin anddeleted text end (vi) that portion of the market value of property in clause (9) qualifying for class 4c
property has a classification rate of 1.25 percentnew text begin , and (vii) property qualifying for
classification under clause (3) that is owned or operated by a congressionally chartered
veterans organization has a classification rate of one percent. The commissioner of veterans
affairs must provide a list of congressionally chartered veterans organizations to the
commissioner of revenue by June 30, 2017, and by January 1, 2018, and each year thereafternew text end .

(e) Class 4d property is qualifying low-income rental housing certified to the assessor
by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion of
the units in the building qualify as low-income rental housing units as certified under section
273.128, subdivision 3, only the proportion of qualifying units to the total number of units
in the building qualify for class 4d. The remaining portion of the building shall be classified
by the assessor based upon its use. Class 4d also includes the same proportion of land as
the qualifying low-income rental housing units are to the total units in the building. For all
properties qualifying as class 4d, the market value determined by the assessor must be based
on the normal approach to value using normal unrestricted rents.

(f) The first tier of market value of class 4d property has a classification rate of 0.75
percent. The remaining value of class 4d property has a classification rate of 0.25 percent.
For the purposes of this paragraph, the "first tier of market value of class 4d property" means
the market value of each housing unit up to the first tier limit. For the purposes of this
paragraph, all class 4d property value must be assigned to individual housing units. The
first tier limit is $100,000 for assessment year 2014. For subsequent years, the limit is
adjusted each year by the average statewide change in estimated market value of property
classified as class 4a and 4d under this section for the previous assessment year, excluding
valuation change due to new construction, rounded to the nearest $1,000, provided, however,
that the limit may never be less than $100,000. Beginning with assessment year 2015, the
commissioner of revenue must certify the limit for each assessment year by November 1
of the previous year.

new text begin EFFECTIVE DATE. new text end

new text begin (a) Except as provided in paragraphs (b) and (c), this section is
effective beginning with taxes assessed in 2017 and payable in 2018.
new text end

new text begin (b) The amendment to paragraph (d), clause (5), and the amendment to item (ii) of the
unlettered paragraph after paragraph (d), clause (12), are effective for taxes payable in 2019
and thereafter, but only become effective if the class I manufactured home park program
in chapter 327C is enacted during the 2017 legislative session.
new text end

new text begin (c) The amendment to paragraph (c), clause (3), is effective beginning with taxes payable
in 2019.
new text end

Sec. 13.

Minnesota Statutes 2016, section 273.13, subdivision 34, is amended to read:

Subd. 34.

Homestead of disabled veteran or family caregiver.

(a) All or a portion of
the market value of property owned by a veteran and serving as the veteran's homestead
under this section is excluded in determining the property's taxable market value if the
veteran has a service-connected disability of 70 percent or more as certified by the United
States Department of Veterans Affairs. To qualify for exclusion under this subdivision, the
veteran must have been honorably discharged from the United States armed forces, as
indicated by United States Government Form DD214 or other official military discharge
papers.

(b)(1) For a disability rating of 70 percent or more, $150,000 of market value is excluded,
except as provided in clause (2); and

(2) for a total (100 percent) and permanent disability, $300,000 of market value is
excluded.

(c) If a disabled veteran qualifying for a valuation exclusion under paragraph (b), clause
(2), predeceases the veteran's spouse, and if upon the death of the veteran the spouse holds
the legal or beneficial title to the homestead and permanently resides there, the exclusion
shall carry over to the benefit of the veteran's spouse for the current taxes payable year and
for eight additional taxes payable years or until such time as the spouse remarries, or sells,
transfers, or otherwise disposes of the property, whichever comes first. Qualification under
this paragraph requires an deleted text begin annualdeleted text end application under paragraph (h)new text begin , and a spouse must notify
the assessor if there is a change in the spouse's marital status, ownership of the property, or
use of the property as a permanent residencenew text end .

(d) If the spouse of a member of any branch or unit of the United States armed forces
who dies due to a service-connected cause while serving honorably in active service, as
indicated on United States Government Form DD1300 or DD2064, holds the legal or
beneficial title to a homestead and permanently resides there, the spouse is entitled to the
benefit described in paragraph (b), clause (2), for eight taxes payable years, or until such
time as the spouse remarries or sells, transfers, or otherwise disposes of the property,
whichever comes first.

(e) If a veteran meets the disability criteria of paragraph (a) but does not own property
classified as homestead in the state of Minnesota, then the homestead of the veteran's primary
family caregiver, if any, is eligible for the exclusion that the veteran would otherwise qualify
for under paragraph (b).

(f) In the case of an agricultural homestead, only the portion of the property consisting
of the house and garage and immediately surrounding one acre of land qualifies for the
valuation exclusion under this subdivision.

(g) A property qualifying for a valuation exclusion under this subdivision is not eligible
for the market value exclusion under subdivision 35, or classification under subdivision 22,
paragraph (b).

(h) To qualify for a valuation exclusion under this subdivision a property owner must
apply to the assessor by July 1 deleted text begin of each assessment year, except that an annual reapplication
is not required once a property has been accepted for a valuation exclusion under paragraph
(a) and qualifies for the benefit described in paragraph (b), clause (2), and the property
continues to qualify until there is a change in ownershipdeleted text end new text begin of the first assessment year for
which the exclusion is soughtnew text end . For an application received after July 1 deleted text begin of any calendar yeardeleted text end ,
the exclusion shall become effective for the following assessment year.new text begin Except as provided
in paragraph (c), the owner of a property that has been accepted for a valuation exclusion
must notify the assessor if there is a change in ownership of the property or in the use of
the property as a homestead.
new text end

(i) A first-time application by a qualifying spouse for the market value exclusion under
paragraph (d) must be made any time within two years of the death of the service member.

(j) For purposes of this subdivision:

(1) "active service" has the meaning given in section 190.05;

(2) "own" means that the person's name is present as an owner on the property deed;

(3) "primary family caregiver" means a person who is approved by the secretary of the
United States Department of Veterans Affairs for assistance as the primary provider of
personal care services for an eligible veteran under the Program of Comprehensive Assistance
for Family Caregivers, codified as United States Code, title 38, section 1720G; and

(4) "veteran" has the meaning given the term in section 197.447.

(k)new text begin If a veteran dying after December 31, 2011, did not apply for or receive the exclusion
under paragraph (b), clause (2), before dying, the veteran's spouse is entitled to the benefit
under paragraph (b), clause (2), for eight taxes payable years or until the spouse remarries
or sells, transfers, or otherwise disposes of the property if:
new text end

new text begin (1) the spouse files a first-time application within two years of the death of the service
member or by June 1, 2019, whichever is later;
new text end

new text begin (2) upon the death of the veteran, the spouse holds the legal or beneficial title to the
homestead and permanently resides there;
new text end

new text begin (3) the veteran met the honorable discharge requirements of paragraph (a); and
new text end

new text begin (4) the United States Department of Veterans Affairs certifies that:
new text end

new text begin (i) the veteran met the total (100 percent) and permanent disability requirement under
paragraph (b), clause (2); or
new text end

new text begin (ii) the spouse has been awarded dependency and indemnity compensation.
new text end

new text begin (l)new text end The purpose of this provision of law providing a level of homestead property tax
relief for gravely disabled veterans, their primary family caregivers, and their surviving
spouses is to help ease the burdens of war for those among our state's citizens who bear
those burdens most heavily.

new text begin (m) By July 1, the county veterans service officer must certify the disability rating and
permanent address of each veteran receiving the benefit under paragraph (b) to the assessor.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2018,
provided that, for taxes payable in 2018, the first-time application required under paragraph
(k) is due by August 1, 2017.
new text end

Sec. 14.

Minnesota Statutes 2016, section 275.025, subdivision 1, is amended to read:

Subdivision 1.

Levy amount.

The state general levy is levied against
commercial-industrial property and seasonal residential recreational property, as defined
in this section. The state general levy deleted text begin base amount is $592,000,000deleted text end new text begin for commercial-industrial
property is $784,590,000new text end for taxes payable in deleted text begin 2002deleted text end new text begin 2018 and thereafternew text end . deleted text begin For taxes payable
in subsequent years, the levy base amount is increased each year by multiplying the levy
base amount for the prior year by the sum of one plus the rate of increase, if any, in the
implicit price deflator for government consumption expenditures and gross investment for
state and local governments prepared by the Bureau of Economic Analysts of the United
States Department of Commerce for the 12-month period ending March 31 of the year prior
to the year the taxes are payable.deleted text end new text begin The state general levy for seasonal-recreational property
is $44,190,000 for taxes payable in 2018 and thereafter.new text end The tax under this section is not
treated as a local tax rate under section 469.177 and is not the levy of a governmental unit
under chapters 276A and 473F.

The commissioner shall increase or decrease the preliminary or final rate for a year as
necessary to account for errors and tax base changes that affected a preliminary or final rate
for either of the two preceding years. Adjustments are allowed to the extent that the necessary
information is available to the commissioner at the time the rates for a year must be certified,
and for the following reasons:

(1) an erroneous report of taxable value by a local official;

(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for commercial-industrial or seasonal
residential recreational property reported on the abstracts of tax lists submitted under section
275.29 that was not reported on the abstracts of assessment submitted under section 270C.89
for the same year.

The commissioner may, but need not, make adjustments if the total difference in the tax
levied for the year would be less than $100,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2018 and thereafter.
new text end

Sec. 15.

Minnesota Statutes 2016, section 275.025, subdivision 2, is amended to read:

Subd. 2.

Commercial-industrial tax capacity.

For the purposes of this section,
"commercial-industrial tax capacity" means the tax capacity of all taxable property classified
as class 3 or class 5(1) under section 273.13, deleted text begin except fordeleted text end new text begin excluding:
new text end

new text begin (1) the tax capacity attributable to the first $100,000 of market value of each parcel of
commercial-industrial property as defined under section 273.13, subdivision 24, clauses (1)
and (2);
new text end

new text begin (2)new text end electric generation attached machinery under class 3new text begin ;new text end and

new text begin (3)new text end property described in section 473.625.

County commercial-industrial tax capacity amounts are not adjusted for the captured
net tax capacity of a tax increment financing district under section 469.177, subdivision 2,
the net tax capacity of transmission lines deducted from a local government's total net tax
capacity under section 273.425, or fiscal disparities contribution and distribution net tax
capacities under chapter 276A or 473F.new text begin For purposes of this subdivision, the procedures
for determining eligibility for tier 1 under section 273.13, subdivision 24, clauses (1) and
(2), shall apply in determining the portion of a property eligible to be considered within the
first $100,000 of market value.
new text end

HF 1

Bill Text Versions

Current Version - 1st Engrossment

ARTICLE 1

INDIVIDUAL INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES

Section 1.

new text begin [41B.0391] BEGINNING FARMER PROGRAM; TAX CREDITS. new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin Subd. 2. new text end

new text begin Tax credit for owners of agricultural assets. new text end

new text begin Subd. 3. new text end

new text begin Beginning farmer management tax credit. new text end

new text begin Subd. 4. new text end

new text begin Authority duties. new text end

new text begin Subd. 5. new text end

new text begin Appeals of authority determinations. new text end

new text begin Subd. 6. new text end

new text begin Report to legislature. new text end

new text begin Subd. 7. new text end

new text begin Sunset. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 2.

Subdivision 1.

Return required.

new text begin EFFECTIVE DATE. new text end

Sec. 3.

Subd. 7.

Federal extensions.

new text begin EFFECTIVE DATE. new text end

Sec. 4.

Subd. 4a.

Financial institution.

new text begin EFFECTIVE DATE. new text end

Sec. 5.

Subd. 7.

Resident.

new text begin EFFECTIVE DATE. new text end

Sec. 6.

new text begin Subd. 14. new text end

new text begin First-time home buyer savings account. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 7.

new text begin Subd. 23. new text end

new text begin Contributions to a section 529 plan. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 8.

new text begin Subd. 24. new text end

new text begin Discharge of indebtedness; education loans. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 9.

new text begin Subd. 25. new text end

new text begin First-time home buyer savings account. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 10.

new text begin Subd. 26. new text end

new text begin Social Security benefits. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 11.

new text begin [290.0137] ACCELERATED RECOGNITION OF CERTAIN INSTALLMENT SALE GAINS. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 12.

Subdivision 1.

Exempt entities.

new text begin EFFECTIVE DATE. new text end

Sec. 13.

new text begin Subd. 2g. new text end

new text begin First-time home buyer savings account. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 14.

new text begin Subd. 2h. new text end

new text begin Section 529 plan recapture. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 15.

Subd. 22.

Credit for taxes paid to another state.

new text begin EFFECTIVE DATE. new text end

Sec. 16.

new text begin Subd. 37. new text end

new text begin Beginning farmer incentive credit. new text end

new text begin [41B.0391] BEGINNING FARMER PROGRAM; TAX CREDITS.
new text end

new text begin [290.0137] ACCELERATED RECOGNITION OF CERTAIN
INSTALLMENT SALE GAINS.
new text end

new text begin [290.0682] STUDENT LOAN CREDIT.
new text end

new text begin [290.0684] SECTION 529 PLAN CREDIT.
new text end

new text begin [290.0686] CREDIT FOR ATTAINING MASTER'S DEGREE IN
TEACHER'S LICENSURE FIELD.
new text end