HF 1997

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

  1.1                          A bill for an act 
  1.2             relating to taxation; income; replacing the working 
  1.3             family tax credit, dependent care tax credit, 
  1.4             education credit, and property tax refund with a 
  1.5             comprehensive low-income tax credit; appropriating 
  1.6             money; amending Minnesota Statutes 1998, section 
  1.7             290.06, by adding a subdivision; proposing coding for 
  1.8             new law in Minnesota Statutes, chapter 290; repealing 
  1.9             Minnesota Statutes 1998, sections 290.067; 290.0671; 
  1.10            290.0674; 290A.01; 290A.02; 290A.03; 290A.04; 290A.05; 
  1.11            290A.07; 290A.08; 290A.09; 290A.091; 290A.10; 290A.13; 
  1.12            290A.14; 290A.15; 290A.18; 290A.20; 290A.22; 290A.23; 
  1.13            290A.25; and 290A.27. 
  1.14  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.15     Section 1.  Minnesota Statutes 1998, section 290.06, is 
  1.16  amended by adding a subdivision to read: 
  1.17     Subd. 26.  [CREDIT FOR INCREASES IN PROPERTY TAXES.] (a) An 
  1.18  individual is allowed a credit against the tax due under this 
  1.19  section, if the following conditions are met: 
  1.20     (1) the gross property taxes payable on the taxpayer's 
  1.21  homestead increase more than 12 percent over the net property 
  1.22  taxes payable in the prior year, but excluding (i) any increase 
  1.23  in the gross property taxes payable attributable to improvements 
  1.24  made to the homestead after the assessment date for the prior 
  1.25  year's taxes and (ii) any increase in the gross property taxes 
  1.26  payable attributable to the termination of valuation exclusions 
  1.27  under section 273.11, subdivision 16; 
  1.28     (2) the taxpayer owned and occupied the homestead on 
  1.29  January 2 of both years; and 
  2.1      (3) the increase is $100 or more. 
  2.2      (b) The amount of the credit equals 60 percent of the 
  2.3   amount of the increase over the greater of 12 percent of the 
  2.4   prior year's net property taxes payable or $100.  The maximum 
  2.5   refund allowed under this subdivision is $1,000. 
  2.6      (c) If the amount of credit that the individual is eligible 
  2.7   to receive under this section exceeds the individual's tax 
  2.8   liability under this chapter, the commissioner shall refund the 
  2.9   excess. 
  2.10     (d) For purposes of this subdivision, the following terms 
  2.11  have the meanings given: 
  2.12     (1) "Homestead" means the dwelling occupied as the 
  2.13  claimant's principal residence and so much of the land 
  2.14  surrounding it, not exceeding ten acres, as is reasonably 
  2.15  necessary for use of the dwelling as a home and any other 
  2.16  property used for purposes of a homestead as defined in section 
  2.17  273.13, subdivision 22, except for agricultural land assessed as 
  2.18  part of a homestead under section 273.13, subdivision 23, 
  2.19  "homestead" is limited to 320 acres or, if the farm homestead is 
  2.20  rented, one acre.  The homestead may be owned or rented and may 
  2.21  be a part of a multidwelling or multipurpose building and the 
  2.22  land on which it is built.  A manufactured home, as defined in 
  2.23  section 273.125, subdivision 8, or a park trailer taxed as a 
  2.24  manufactured home under section 168.012, subdivision 9, assessed 
  2.25  as personal property, may be a dwelling for purposes of this 
  2.26  subdivision. 
  2.27     (2) "Gross property taxes" means property taxes payable 
  2.28  determined without regard to the credit allowed under this 
  2.29  subdivision. 
  2.30     (3) "Net property taxes payable" means property taxes 
  2.31  payable minus credit amounts for which the claimant qualifies 
  2.32  under this subdivision. 
  2.33     (e) Each claimant under this subdivision shall file with 
  2.34  the return a copy of the property tax statement for taxes 
  2.35  payable in the preceding year or any other documents required by 
  2.36  the commissioner. 
  3.1      (f) If the amount of the credit under this subdivision 
  3.2   exceeds the liability for tax, the commissioner shall refund the 
  3.3   excess to the taxpayer. 
  3.4      (g) An amount sufficient to pay the refunds required by 
  3.5   this subdivision is appropriated to the commissioner from the 
  3.6   general fund. 
  3.7      Sec. 2.  [290.0675] [COMPREHENSIVE LOW-INCOME TAX CREDIT.] 
  3.8      Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
  3.9   section, the following terms have the meanings given them. 
  3.10     (b) "Claimant" means a person, other than a dependent, who 
  3.11  filed a claim authorized by this section and who was a resident 
  3.12  of this state during the taxable year for which the claim for 
  3.13  relief was filed. 
  3.14     (c) "Dependent" means any person who is considered a 
  3.15  dependent under sections 151 and 152 of the Internal Revenue 
  3.16  Code.  For a son, stepson, daughter, or stepdaughter of the 
  3.17  claimant, the following amounts must not be taken into account 
  3.18  in determining whether the child received more than half of the 
  3.19  child's support from the claimant: 
  3.20     (1) amounts received as an aid to families with dependent 
  3.21  children grant; allowance to or on behalf of the child, or as a 
  3.22  grant or allowance to or on behalf of the child under the 
  3.23  successor program under Public Law Number 104-193; and 
  3.24     (2) surplus food or other relief in kind supplied by a 
  3.25  governmental agency must not be taken into account in 
  3.26  determining whether the child received more than half of the 
  3.27  child's support from the claimant. 
  3.28     (d) "Homestead" means a dwelling occupied as the claimant's 
  3.29  principal residence. 
  3.30     (e) "Household income" means all of the income of the 
  3.31  claimant, the claimant's spouse, and any dependent that was 
  3.32  received in the taxable year. 
  3.33     (f) "Income" means the sum of the following: 
  3.34     (1) federal adjusted gross income as defined in the 
  3.35  Internal Revenue Code; and 
  3.36     (2) the sum of the following amounts to the extent not 
  4.1   included in clause (1): 
  4.2      (i) all nontaxable income; 
  4.3      (ii) the amount of a passive activity loss that is not 
  4.4   disallowed as a result of section 469, paragraph (i) or (m), of 
  4.5   the Internal Revenue Code and the amount of passive activity 
  4.6   loss carryover allowed under section 469(b) of the Internal 
  4.7   Revenue Code; 
  4.8      (iii) an amount equal to the total of any discharge of 
  4.9   qualified farm indebtedness of a solvent individual excluded 
  4.10  from gross income under section 108(g) of the Internal Revenue 
  4.11  Code; 
  4.12     (iv) cash public assistance and relief; 
  4.13     (v) any pension or annuity, including railroad retirement 
  4.14  benefits, all payments received under the federal Social 
  4.15  Security Act, supplemental security income, and veterans 
  4.16  benefits, which was not exclusively funded by the claimant or 
  4.17  spouse, or which was funded exclusively by the claimant or 
  4.18  spouse and which funding payments were excluded from federal 
  4.19  adjusted gross income in the years when the payments were made; 
  4.20     (vi) interest received from the federal or a state 
  4.21  government or any instrumentality or political subdivision 
  4.22  thereof; 
  4.23     (vii) workers' compensation; 
  4.24     (viii) nontaxable strike benefits; 
  4.25     (ix) the gross amounts of payments received in the nature 
  4.26  of disability income or sick pay as a result of accident, 
  4.27  sickness, or other disability, whether funded through insurance 
  4.28  or otherwise; 
  4.29     (x) a lump-sum distribution under section 402(e)(3) of the 
  4.30  Internal Revenue Code; 
  4.31     (xi) contributions made by the claimant to an individual 
  4.32  retirement account, including a qualified voluntary employee 
  4.33  contribution, simplified employee pension plan, self-employed 
  4.34  retirement plan, cash or deferred arrangement plan under section 
  4.35  401(k) of the Internal Revenue Code, or deferred compensation 
  4.36  plan under section 457 of the Internal Revenue Code; 
  5.1      (xii) nontaxable scholarship or fellowship grants; 
  5.2      (xiii) nontaxable distributions from a Roth IRA under 
  5.3   section 408A of the Internal Revenue Code, received after total 
  5.4   Roth IRA distributions exceed the amount of taxable 
  5.5   contributions made by the claimant; and 
  5.6      (xiv) child support received. 
  5.7      Federal adjusted gross income must not be reduced by the 
  5.8   amount of a net operating loss carryback or carryforward or a 
  5.9   capital loss carryback or carryforward allowed for the year. 
  5.10     (3) "Income" does not include: 
  5.11     (i) amounts excluded pursuant to sections 101(a) and 102 of 
  5.12  the Internal Revenue Code; 
  5.13     (ii) amounts of any pension or annuity that was exclusively 
  5.14  funded by the claimant or spouse and which funding payments were 
  5.15  not excluded from federal adjusted gross income in the years 
  5.16  when the payments were made, except distributions from a Roth 
  5.17  IRA as provided in clause (2), item (xi); and 
  5.18     (iii) surplus food or other relief in kind supplied by a 
  5.19  governmental agency. 
  5.20     Subd. 2.  [CREDIT ALLOWED.] (a) A claimant is allowed a 
  5.21  credit against the tax under this chapter as computed under this 
  5.22  subdivision. 
  5.23     (b) For married couples filing joint returns, the credit 
  5.24  equals the following amounts: 
  5.25     (1) for household income of less than $2,000, $300 plus $50 
  5.26  for each dependent; 
  5.27     (2) for household income of at least $2,000 but less than 
  5.28  $4,000, $400 plus $50 for each dependent; 
  5.29     (3) for household income of at least $4,000 but less than 
  5.30  $6,000, $450 plus $75 for each dependent; 
  5.31     (4) for household income of at least $6,000 but less than 
  5.32  $8,000, $500 plus $75 for each dependent; 
  5.33     (5) for household income of at least $8,000 but less than 
  5.34  $10,000, $600 plus $100 for each dependent; 
  5.35     (6) for household income of at least $10,000 but less than 
  5.36  $12,500, $700 plus $100 for each dependent; 
  6.1      (7) for household income of at least $12,500 but less than 
  6.2   $15,000, $800 plus $100 for each dependent; 
  6.3      (8) for household income of at least $15,000 but less than 
  6.4   $17,500, $900 plus $100 for each dependent; 
  6.5      (9) for household income of at least $17,500 but less than 
  6.6   $20,000, $1,000 plus $100 for each dependent; 
  6.7      (10) for household income of at least $20,000 but less than 
  6.8   $22,500, $1,000 plus $100 for each dependent; 
  6.9      (11) for household income of at least $22,500 but less than 
  6.10  $25,000, $900 plus $100 for each dependent; 
  6.11     (12) for household income of at least $25,000 but less than 
  6.12  $27,500, $800 plus $100 for each dependent; 
  6.13     (13) for household income of at least $27,500 but less than 
  6.14  $30,000, $700 plus $100 for each dependent; 
  6.15     (14) for household income of at least $30,000 but less than 
  6.16  $31,000, $600 plus $100 for each dependent; 
  6.17     (15) for household income of at least $31,000 but less than 
  6.18  $32,000, $500 plus $75 for each dependent; 
  6.19     (16) for household income of at least $32,000 but less than 
  6.20  $33,000, $450 plus $75 for each dependent; 
  6.21     (17) for household income of at least $33,000 but less than 
  6.22  $34,000, $400 plus $50 for each dependent; 
  6.23     (18) for household income of at least $34,000 but less than 
  6.24  $35,000, $350 plus $50 for each dependent; 
  6.25     (19) for household income of at least $35,000 but less than 
  6.26  $36,000, $300 plus $50 for each dependent; 
  6.27     (20) for household income of at least $36,000 but less than 
  6.28  $37,000, $250 plus $35 for each dependent; 
  6.29     (21) for household income of at least $37,000 but less than 
  6.30  $38,000, $200 plus $25 for each dependent; 
  6.31     (22) for household income of at least $38,000 but less than 
  6.32  $39,000, $150 plus $20 for each dependent; 
  6.33     (23) for household income of at least $39,000 but less than 
  6.34  $40,000, $100 plus $10 for each dependent; 
  6.35     (24) for household income of $40,000 or more, zero. 
  6.36     (c) For all other filers, the amount of the credit equals 
  7.1   the amount allowed under paragraph (b) for dependents plus 
  7.2   one-half of the basic credit amount under paragraph (b). 
  7.3      (d) The allowances for dependents are limited to no more 
  7.4   than five per claimant. 
  7.5      Subd. 3.  [TABLES; AUTHORITY TO SMOOTH TRANSITIONS.] The 
  7.6   commissioner shall construct and make available to taxpayers 
  7.7   tables showing the credit entitlements at various income 
  7.8   levels.  The tables must follow the schedule in subdivision 2, 
  7.9   except that the commissioner may increase or decrease dollar 
  7.10  amounts of credits to graduate the transition between income 
  7.11  brackets. 
  7.12     Subd. 4.  [PART-YEAR RESIDENTS.] For a part-year resident, 
  7.13  the credit must be allocated based on the percentage calculated 
  7.14  under section 290.06, subdivision 2c, paragraph (e). 
  7.15     Subd. 5.  [REFUNDABLE.] If the amount of credit that the 
  7.16  individual is eligible to receive under this section exceeds the 
  7.17  claimant's tax liability under this chapter, the commissioner 
  7.18  shall refund the excess to the claimant. 
  7.19     Subd. 6.  [INFLATION ADJUSTMENT.] The dollar amounts of the 
  7.20  income brackets, the basic credit, and the additional amount for 
  7.21  dependents under this section must be adjusted for inflation.  
  7.22  The commissioner shall adjust the threshold amount by the 
  7.23  percentage determined under section 290.06, subdivision 2d, for 
  7.24  the taxable year. 
  7.25     Subd. 7.  [APPROPRIATION.] An amount sufficient to pay the 
  7.26  refunds required by this section is appropriated to the 
  7.27  commissioner from the general fund. 
  7.28     Sec. 3.  [REPEALER.] 
  7.29     (a) Minnesota Statutes 1998, sections 290.067; 290.0671; 
  7.30  and 290.0674, are repealed. 
  7.31     (b) Minnesota Statutes 1998, sections 290A.01; 290A.02; 
  7.32  290A.03; 290A.04; 290A.05; 290A.07; 290A.08; 290A.09; 290A.091; 
  7.33  290A.10; 290A.13; 290A.14; 290A.15; 290A.18; 290A.20; 290A.22; 
  7.34  290A.23; 290A.25; and 290A.27, are repealed. 
  7.35     Sec. 4.  [EFFECTIVE DATE.] 
  7.36     Sections 1, 2, and 3, paragraph (a), are effective for 
  8.1   taxable years beginning after December 31, 1999. 
  8.2      Section 3, paragraph (b), is effective for claims based on 
  8.3   property taxes paid in calendar year 2000 and rent paid in 
  8.4   calendar year 1999.