HF 2541

as introduced - 89th Legislature (2015 - 2016) Posted on 03/10/2016 05:21pm

A bill for an act
relating to commerce; lowering certain business registration fees; modifying
sales tax and employee withholding requirements for small employers; defining
employees of small employers as independent contractors; amending Minnesota
Statutes 2014, sections 289A.18, subdivision 4; 289A.20, subdivision 4; 290.92,
subdivision 1; 322C.0201, by adding a subdivision; 333.055, by adding a
subdivision; proposing coding for new law in Minnesota Statutes, chapter 181.

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

Section 1.

new text begin [181.173] SMALL EMPLOYER EXEMPTION.
new text end

new text begin Subdivision 1. new text end

new text begin Definition. new text end

new text begin For the purposes of this section, "small employer" means
a private business reporting less than $100,000 in gross annual receipts in the preceding
calendar year and employing one or more employees.
new text end

new text begin Subd. 2. new text end

new text begin Employment law exemption. new text end

new text begin Notwithstanding any law to the contrary, an
employee of a small employer is deemed to be an independent contractor for the purposes
of this chapter and chapter 177.
new text end

Sec. 2.

Minnesota Statutes 2014, section 289A.18, subdivision 4, is amended to read:

Subd. 4.

Sales and use tax returns.

(a) Sales and use tax returns must be filed on or
before the 20th day of the month following the close of the preceding reporting period,
except that annual use tax returns provided for under section 289A.11, subdivision 1, must
be filed by April 15 following the close of the calendar year, in the case of individuals.
Annual use tax returns of businesses, including sole proprietorships, and annual sales tax
returns must be filed by February 5 following the close of the calendar year.

(b) Returns for the June reporting period filed by retailers required to remit their
June liability under section 289A.20, subdivision 4, paragraph (b), are due on or before
August 20.

(c) If a retailer has an average sales and use tax liability, including local sales and
use taxes administered by the commissioner, equal to or less than $500 per month in any
quarter of a calendar year, and has substantially complied with the tax laws during the
preceding four calendar quarters, the retailer may request authorization to file and pay the
taxes quarterly in subsequent calendar quarters. The authorization remains in effect during
the period in which the retailer's quarterly returns reflect sales and use tax liabilities of less
than $1,500 and there is continued compliance with state tax laws.

(d) If a retailer has an average sales and use tax liability, including local sales and
use taxes administered by the commissioner, equal to or less than $100 per month during a
calendar year, and has substantially complied with the tax laws during that period, the
retailer may request authorization to file and pay the taxes annually in subsequent years.
The authorization remains in effect during the period in which the retailer's annual returns
reflect sales and use tax liabilities of less than $1,200 and there is continued compliance
with state tax laws.

(e) The commissioner may also grant quarterly or annual filing and payment
authorizations to retailers if the commissioner concludes that the retailers' future tax
liabilities will be less than the monthly totals identified in paragraphs (c) and (d). An
authorization granted under this paragraph is subject to the same conditions as an
authorization granted under paragraphs (c) and (d).

(f) A taxpayer who is a materials supplier may report gross receipts either on:

(1) the cash basis as the consideration is received; or

(2) the accrual basis as sales are made.

As used in this paragraph, "materials supplier" means a person who provides materials
for the improvement of real property; who is primarily engaged in the sale of lumber and
building materials-related products to owners, contractors, subcontractors, repairers,
or consumers; who is authorized to file a mechanics lien upon real property and
improvements under chapter 514; and who files with the commissioner an election to file
sales and use tax returns on the basis of this paragraph.

(g) Notwithstanding paragraphs (a) to (f), a seller that is not a Model 1, 2, or 3
seller, as those terms are used in the Streamlined Sales and Use Tax Agreement, that does
not have a legal requirement to register in Minnesota, and that is registered under the
agreement, must file a return by February 5 following the close of the calendar year in
which the seller initially registers, and must file subsequent returns on February 5 on an
annual basis in succeeding years. Additionally, a return must be submitted on or before
the 20th day of the month following any month by which sellers have accumulated state
and local tax funds for the state in the amount of $1,000 or more.

new text begin (h) A person reporting less than $100,000 in gross receipts in the preceding calendar
year may elect to file an annual sales tax return.
new text end

Sec. 3.

Minnesota Statutes 2014, section 289A.20, subdivision 4, is amended to read:

Subd. 4.

Sales and use tax.

(a) The taxes imposed by chapter 297A are due and
payable to the commissioner monthly on or before the 20th day of the month following the
month in which the taxable event occurred, or following another reporting period as the
commissioner prescribes or as allowed under section 289A.18, subdivision 4, paragraph (f)
deleted text begin or deleted text end new text begin , new text end (g), new text begin or (h), new text end except that use taxes due on an annual use tax return as provided under section
289A.11, subdivision 1, are payable by April 15 following the close of the calendar year.

(b) A vendor having a liability of $250,000 or more during a fiscal year ending June
30 must remit the June liability for the next year in the following manner:

(1) Two business days before June 30 of the year, the vendor must remit 81.4 percent
of the estimated June liability to the commissioner.

(2) On or before August 20 of the year, the vendor must pay any additional amount
of tax not remitted in June.

(c) A vendor having a liability of:

(1) $10,000 or more, but less than $250,000 during a fiscal year ending June 30,
2013, and fiscal years thereafter, must remit by electronic means all liabilities on returns
due for periods beginning in all subsequent calendar years on or before the 20th day of
the month following the month in which the taxable event occurred, or on or before the
20th day of the month following the month in which the sale is reported under section
289A.18, subdivision 4; or

(2) $250,000 or more, during a fiscal year ending June 30, 2013, and fiscal years
thereafter, must remit by electronic means all liabilities in the manner provided in
paragraph (a) on returns due for periods beginning in the subsequent calendar year, except
for 81.4 percent of the estimated June liability, which is due two business days before June
30. The remaining amount of the June liability is due on August 20.

(d) Notwithstanding paragraph (b) or (c), a person prohibited by the person's
religious beliefs from paying electronically shall be allowed to remit the payment by mail.
The filer must notify the commissioner of revenue of the intent to pay by mail before
doing so on a form prescribed by the commissioner. No extra fee may be charged to a
person making payment by mail under this paragraph. The payment must be postmarked
at least two business days before the due date for making the payment in order to be
considered paid on a timely basis.

Sec. 4.

Minnesota Statutes 2014, section 290.92, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(1) Wages. For purposes of this section, the term
"wages" means the same as that term is defined in section 3401(a) and (f) of the Internal
Revenue Code.

(2) Payroll period. For purposes of this section the term "payroll period" means a
period for which a payment of wages is ordinarily made to the employee by the employee's
employer, and the term "miscellaneous payroll period" means a payroll period other
than a daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual, or annual
payroll period.

(3) Employee. For purposes of this section the term "employee" means any resident
individual performing services for an employer, either within or without, or both within
and without the state of Minnesota, and every nonresident individual performing services
within the state of Minnesota, the performance of which services constitute, establish, and
determine the relationship between the parties as that of employer and employee. As
used in the preceding sentence, the term "employee" includes an officer of a corporation,
and an officer, employee, or elected official of the United States, a state, or any political
subdivision thereof, or the District of Columbia, or any agency or instrumentality of
any one or more of the foregoing.

(4) Employer. For purposes of this section the term "employer" means any person,
including individuals, fiduciaries, estates, trusts, partnerships, limited liability companies,
and corporations transacting business in or deriving any income from sources within the
state of Minnesota for whom an individual performs or performed any service, of whatever
nature, as the employee of such person, except that if the person for whom the individual
performs or performed the services does not have control of the payment of the wages
for such services, the term "employer," except for purposes of paragraph (1), means the
person having control of the payment of such wages. As used in the preceding sentence,
the term "employer" includes any corporation, individual, estate, trust, or organization
which is exempt from taxation under section 290.05 and further includes, but is not limited
to, officers of corporations who have control, either individually or jointly with another or
others, of the payment of the wages. new text begin For purposes of this section, "employer" does not
mean a person reporting less than $100,000 in gross receipts in the preceding calendar year.
new text end

(5) Number of withholding exemptions claimed. For purposes of this section, the
term "number of withholding exemptions claimed" means the number of withholding
exemptions claimed in a withholding exemption certificate in effect under subdivision
5, except that if no such certificate is in effect, the number of withholding exemptions
claimed shall be considered to be zero.

Sec. 5.

Minnesota Statutes 2014, section 322C.0201, is amended by adding a
subdivision to read:

new text begin Subd. 5. new text end

new text begin Exception; fees. new text end

new text begin (a) Articles of organization that attest that the limited
liability company anticipates earning less than $100,000 in gross annual receipts in the
first year of operation shall require a fee of $10 to file with the secretary of state.
new text end

new text begin (b) An organizer can only use the reduced filing fee described in paragraph (a) to
organize a single limited liability company.
new text end

Sec. 6.

Minnesota Statutes 2014, section 333.055, is amended by adding a subdivision
to read:

new text begin Subd. 3a. new text end

new text begin Exception; fees. new text end

new text begin (a) The secretary of state shall charge and collect a
fee of $10 for the initial filing of a certificate of assumed name where the filing attests
that the person using the assumed name anticipates earning less than $100,000 in gross
annual receipts in the first year of operation.
new text end

new text begin (b) A person can only use the reduced filing fee described in paragraph (a) to file a
single certificate of assumed name.
new text end