HF 1771

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to agricultural tax relief; creating an 
  1.3             offer-in-compromise program; expanding an exemption; 
  1.4             amending Minnesota Statutes 1998, sections 270.67, by 
  1.5             adding a subdivision; and 290.491. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1998, section 270.67, is 
  1.8   amended by adding a subdivision to read: 
  1.9      Subd. 4.  [OFFER-IN-COMPROMISE PROGRAM.] (a) In 
  1.10  implementing the authority provided in subdivision 1 or in 
  1.11  section 8.30 to accept offers of installment payments or 
  1.12  offers-in-compromise of tax liabilities, the commissioner of 
  1.13  revenue shall prescribe guidelines for employees of the 
  1.14  department of revenue to determine whether an 
  1.15  offer-in-compromise or an offer to make installment payments is 
  1.16  adequate and should be accepted to resolve a dispute.  In 
  1.17  prescribing the guidelines, the commissioner shall develop and 
  1.18  publish schedules of national and local allowances designed to 
  1.19  provide that taxpayers entering into a compromise have an 
  1.20  adequate means to provide for basic living expenses.  The 
  1.21  guidelines must provide that the taxpayer's ownership interest 
  1.22  in a motor vehicle, to the extent of the value allowed in 
  1.23  section 550.37, will not be considered as an asset; in the case 
  1.24  of an offer related to a joint tax liability of spouses, that 
  1.25  value of two motor vehicles must be excluded.  The guidelines 
  2.1   must provide that employees of the department shall determine, 
  2.2   on the basis of the facts and circumstances of each taxpayer, 
  2.3   whether the use of the schedules is appropriate and that 
  2.4   employees must not use the schedules to the extent the use would 
  2.5   result in the taxpayer not having adequate means to provide for 
  2.6   basic living expenses.  The guidelines must provide that: 
  2.7      (1) an employee of the department shall not reject an 
  2.8   offer-in-compromise from a low-income taxpayer solely on the 
  2.9   basis of the amount of the offer; and 
  2.10     (2) in the case of an offer-in-compromise which relates 
  2.11  only to issues of liability of the taxpayer: 
  2.12     (i) the offer must not be rejected solely because the 
  2.13  commissioner is unable to locate the taxpayer's return or return 
  2.14  information for verification of the liability; and 
  2.15     (ii) the taxpayer shall not be required to provide an 
  2.16  audited, reviewed, or compiled financial statement. 
  2.17     (b) The commissioner shall establish procedures: 
  2.18     (1) for an independent administrative review of any 
  2.19  rejection of a proposed offer-in-compromise or installment 
  2.20  agreement made by a taxpayer under this section before the 
  2.21  rejection is communicated to the taxpayer; 
  2.22     (2) that allow a taxpayer to appeal any rejection of the 
  2.23  offer or agreement to the taxpayer rights advocate of the 
  2.24  department of revenue; 
  2.25     (3) that provide for notification to the taxpayer when an 
  2.26  offer-in-compromise has been accepted, and issuance of 
  2.27  certificates of release of any liens imposed under section 
  2.28  270.69 related to the liability which is the subject of the 
  2.29  compromise; and 
  2.30     (4) that require presentation of a counteroffer by the 
  2.31  commissioner if the amount offered by the taxpayer in an 
  2.32  offer-in-compromise is not accepted by the commissioner. 
  2.33     Sec. 2.  Minnesota Statutes 1998, section 290.491, is 
  2.34  amended to read: 
  2.35     290.491 [TAX ON GAIN; DISCHARGE IN BANKRUPTCY.] 
  2.36     (a) Any tax due under this chapter on a gain realized on a 
  3.1   forced sale pursuant to foreclosure of a mortgage or other 
  3.2   security interest in agricultural production property, other 
  3.3   real property, or equipment, used in a farm business that was 
  3.4   owned and operated by the taxpayer shall be a dischargeable debt 
  3.5   in a bankruptcy proceeding under United States Code, title 11, 
  3.6   section 727. 
  3.7      (b) Income realized on a sale or exchange of agricultural 
  3.8   production property, other real property, or equipment, used in 
  3.9   a farm business that was owned and operated by the taxpayer 
  3.10  shall be exempt from taxation under this chapter, if the 
  3.11  taxpayer was insolvent at the time of the sale or would become 
  3.12  insolvent if tax were payable on the income from the sale and 
  3.13  the proceeds of the sale were used solely to discharge 
  3.14  indebtedness secured by a mortgage, lien, or other security 
  3.15  interest on the property sold.  For purposes of this section, 
  3.16  "insolvent" means insolvent as defined in section 108(d)(3) of 
  3.17  the Internal Revenue Code. This paragraph applies only to the 
  3.18  extent that the gain is includable in federal taxable income or 
  3.19  in the computation of the alternative minimum taxable income 
  3.20  under section 290.091 for purposes of the alternative minimum 
  3.21  tax.  The amount of the exemption is limited to the excess of 
  3.22  the taxpayer's (1) liabilities over (2) the total assets and any 
  3.23  exclusion claimed under section 108 of the Internal Revenue Code 
  3.24  determined immediately before application of this paragraph. 
  3.25     (c) For purposes of this section, any tax due under this 
  3.26  chapter specifically includes, but is not limited to, tax 
  3.27  imposed under sections 290.02 and 290.03 on income derived from 
  3.28  a sale or exchange, whether constituting gain, discharge of 
  3.29  indebtedness or recapture of depreciation deductions, or the 
  3.30  alternative minimum tax imposed under section 290.091. 
  3.31     Sec. 3.  [EFFECTIVE DATE.] 
  3.32     Section 1 is effective the day following final enactment, 
  3.33  and applies to offers-in-compromise submitted after June 30, 
  3.34  1999.  Section 2 is effective for taxable years beginning after 
  3.35  December 31, 1997.