HF 2717

as introduced - 90th Legislature (2017 - 2018) Posted on 05/21/2017 10:46am

A bill for an act
relating to agriculture; establishing a grain credit contract indemnity program;
increasing bond amounts for licensed grain buyers; dedicating a portion of sales
tax revenue derived from the sale of grain bins; eliminating the sales tax on grain
bins; establishing a gross receipts tax for grain bins to fund the indemnity payments
if program funding falls below a threshold amount; appropriating money; amending
Minnesota Statutes 2016, sections 223.15; 223.16, subdivision 1; 223.17,
subdivision 4; 223.19; 297A.61, subdivision 12; proposing coding for new law in
Minnesota Statutes, chapters 223; 295.

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

Section 1.

Minnesota Statutes 2016, section 223.15, is amended to read:

223.15 CITATION.

Sections 223.15 to deleted text begin 223.19 deleted text end new text begin 223.23 new text end may be cited as the "Grain Buyers Act."

Sec. 2.

Minnesota Statutes 2016, section 223.16, subdivision 1, is amended to read:

Subdivision 1.

Applicability.

For the purpose of sections 223.15 to deleted text begin 223.22 deleted text end new text begin 223.23 new text end , the
terms defined in this section have the meanings given them.

Sec. 3.

Minnesota Statutes 2016, section 223.17, subdivision 4, is amended to read:

Subd. 4.

Bond.

(a) Before a grain buyer's license is issued, the applicant for the license
must file with the commissioner a bond in a penal sum prescribed by the commissioner but
not less than the following amounts:

(1) $10,000 for grain buyers whose gross annual purchases are $100,000 or less;

(2) $20,000 for grain buyers whose gross annual purchases are more than $100,000 but
not more than $750,000;

(3) $30,000 for grain buyers whose gross annual purchases are more than $750,000 but
not more than $1,500,000;

(4) $40,000 for grain buyers whose gross annual purchases are more than $1,500,000
but not more than $3,000,000;

(5) deleted text begin $50,000 deleted text end new text begin $300,000 new text end for grain buyers whose gross annual purchases are more than
$3,000,000 but not more than $6,000,000;

(6) deleted text begin $70,000 deleted text end new text begin $400,000 new text end for grain buyers whose gross annual purchases are more than
$6,000,000 but not more than $12,000,000;

(7) deleted text begin $125,000 deleted text end new text begin $500,000 new text end for grain buyers whose gross annual purchases are more than
$12,000,000 but not more than $24,000,000; and

(8) deleted text begin $150,000 deleted text end new text begin $600,000 new text end for grain buyers whose gross annual purchases exceed
$24,000,000.

(b) A grain buyer who has filed a bond with the commissioner prior to July 1, deleted text begin 2004 deleted text end new text begin
2017 new text end , is not required to increase the amount of the bond to comply with this section until
July 1, deleted text begin 2005 deleted text end new text begin 2018 new text end . The commissioner may postpone an increase in the amount of the bond
until July 1, deleted text begin 2006 deleted text end new text begin 2019 new text end , if a licensee demonstrates that the increase will impose undue
financial hardship on the licensee, and that producers will not be harmed as a result of the
postponement. The commissioner may impose other restrictions on a licensee whose bond
increase has been postponed. The amount of the bond shall be based on the most recent
gross annual grain purchase report of the grain buyer.

(c) A first-time applicant for a grain buyer's license shall file a $50,000 bond with the
commissioner. This bond shall remain in effect for the first year of the license. Thereafter,
the licensee shall comply with the applicable bonding requirements contained in paragraph
(a), clauses (1) to (8).

(d) In lieu of the bond required by this subdivision the applicant may deposit with the
commissioner of management and budget cash, a certified check, a cashier's check, a postal,
bank, or express money order, assignable bonds or notes of the United States, or an
assignment of a bank savings account or investment certificate or an irrevocable bank letter
of credit as defined in section 336.5-102, in the same amount as would be required for a
bond.

(e) Bonds must be continuous until canceled. To cancel a bond, a surety must provide
90 days' written notice of the bond's termination date to the licensee and the commissioner.

Sec. 4.

Minnesota Statutes 2016, section 223.19, is amended to read:

223.19 RULES.

The commissioner may make rules pursuant to chapter 14 to carry out the provisions of
sections 223.15 to deleted text begin 223.22 deleted text end new text begin 223.23 new text end .

Sec. 5.

new text begin [223.23] INDEMNITY PAYMENTS; APPROPRIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin A grain credit contract indemnity program is established.
The commissioner must administer the program and award indemnity payments to eligible
producers.
new text end

new text begin Subd. 2. new text end

new text begin Eligibility. new text end

new text begin A producer is eligible to receive an indemnity payment from the
commissioner if the producer sold grain by a voluntary extension of credit contract to a
licensed grain buyer or a person licensed as a public grain warehouse operator under chapter
232 and the producer is damaged by the licensee's breach of the voluntary extension of
credit contract.
new text end

new text begin Subd. 3. new text end

new text begin Application. new text end

new text begin (a) A producer asserting eligibility under subdivision 2 must file
a completed claim with the commissioner within 180 days of the alleged breach of contract.
The producer must state the facts constituting the claim and all other information required
by the commissioner.
new text end

new text begin (b) The commissioner shall promptly determine the validity of each filed claim and
notify the claimant accordingly. An aggrieved party may appeal the commissioner's
determination by requesting, within 15 days, that the commissioner initiate a contested case
proceeding under chapter 14.
new text end

new text begin Subd. 4. new text end

new text begin Court order. new text end

new text begin The commissioner may apply to the district court for an order
appointing a trustee or receiver to manage and supervise the operations of a grain buyer or
public grain warehouse operator in default. The commissioner may participate in any
resulting court proceeding as an interested party.
new text end

new text begin Subd. 5. new text end

new text begin Payment limitation. new text end

new text begin (a) For each breach of contract, the commissioner must
pay the eligible producer an amount equal to the lesser of $650,000 or 80 percent of the
amount owed to the producer pursuant to the voluntary extension of credit contract in default.
new text end

new text begin (b) If valid claims exceed funds available in the grain credit contract indemnity account,
the commissioner must prorate the claims and pay prorated amounts to each eligible producer.
When additional funds become available, the commissioner must resume issuing indemnity
payments to each eligible producer until each producer receives the maximum amount
payable under paragraph (a).
new text end

new text begin Subd. 6. new text end

new text begin Debt obligation; subrogated claim. new text end

new text begin (a) Money paid by the commissioner to
satisfy a valid claim constitutes a debt obligation of the grain buyer or public grain warehouse
operator in default. The commissioner may take action against the grain buyer or public
grain warehouse operator to recover the amount of any claim payment plus reasonable costs,
attorney fees, and interest computed at the rate provided in section 270C.40. The
commissioner must deposit any amount recovered under this subdivision in the grain credit
contract indemnity account.
new text end

new text begin (b) As a condition of payment from the commissioner, a producer must subrogate the
producer's interest in the voluntary extension of credit contract to the commissioner in an
amount equal to any claim payment or payments the producer received under this section.
new text end

new text begin Subd. 7. new text end

new text begin Account; appropriation. new text end

new text begin A grain credit contract indemnity account is
established in the agricultural fund. Money in the account, including interest, is appropriated
to the commissioner to pay valid claims and to administer this section.
new text end

Sec. 6.

new text begin [295.80] GRAIN BIN GROSS RECEIPTS TAX.
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) "Commissioner" means the commissioner of revenue.
new text end

new text begin (c) "Grain bin" means a storage bin used in the agricultural production process that is
exempt from sales tax under chapter 297A, as part of exempt farm machinery. Grain bin
does not include accessories to grain bins such as dryers and sweepers.
new text end

new text begin (d) "Grain bin retailer" means a retailer that sells grain bins.
new text end

new text begin (e) "Gross receipts" means the total amount received in money, or by barter or exchange
for all grain bins sold at retail as measured by the sales price.
new text end

new text begin (f) "Retail sale" has the meaning given in section 297A.61, subdivision 4.
new text end

new text begin Subd. 2. new text end

new text begin Gross receipts tax imposed. new text end

new text begin Beginning with fiscal year 2020, if the grain
contract indemnity account in the agricultural fund, established under section 223.23, is
anticipated by the commissioner to be less than $2,000,000, as provided under subdivision
3, a tax is imposed on each grain bin retailer in the state equal to 2.0 percent of gross receipts
of retail sales of grain bins in Minnesota. The tax remains in effect until such time as
determined by the commissioner under subdivision 3.
new text end

new text begin Subd. 3. new text end

new text begin Imposition and expiration of the tax. new text end

new text begin (a) By December 1 of 2018, and each
December 1 thereafter, the commissioner of management and budget, in consultation with
the commissioner of agriculture, shall determine the projected balance in the grain contract
indemnity account for the next fiscal year. If the commissioner of management and budget
determines that the projected balance in the account will be less than $2,000,000 for the
fiscal year, the commissioner of management and budget shall impose the tax under
subdivision 2, beginning with sales and purchases made after the last day of the current
fiscal year.
new text end

new text begin (b) The tax under subdivision 2 shall expire on the first day of a calendar quarter after
the first calendar quarter in which the revenue raised from the tax is projected to be sufficient
to raise the amount in the grain contract indemnity account to at least $6,000,000. The
commissioner of management and budget shall, in consultation with the commissioner of
revenue, determine the projected expiration date of the tax at the time that the tax is imposed.
The tax shall expire on that date unless the commissioner of management and budget
estimates that the revenue in the grain contract indemnity account at the time of the expiration
will still be less than $6,000,000 in which case the commissioner shall announce, at least
60 days before the current expiration date, a new expiration date for the tax. The new
expiration date would be determined by the commissioner of management and budget, in
consultation with the commissioner of revenue, as the next calendar quarter in which the
amount in the account would be projected to reach or exceed $6,000,000.
new text end

new text begin Subd. 4. new text end

new text begin Use tax imposed; credit for taxes paid. new text end

new text begin (a) A person that receives a grain bin
for use or storage in Minnesota, other than from a grain bin retailer that paid the tax under
subdivision 2, is subject to tax at the rate imposed under subdivision 2. Liability for the tax
is incurred when the person has possession of the grain bin in Minnesota. The tax must be
remitted to the commissioner in the same manner prescribed for taxes imposed under chapter
297A.
new text end

new text begin (b) A person that has paid taxes to another jurisdiction on the same transaction and is
subject to tax under this section is entitled to a credit for the tax legally due and paid to
another jurisdiction to the extent of the lesser of: (1) the tax actually paid to the other
jurisdiction, or (2) the amount of tax imposed by Minnesota on the transaction subject to
tax in the other jurisdiction.
new text end

new text begin Subd. 5. new text end

new text begin Tax collection required. new text end

new text begin A grain bin retailer with nexus in Minnesota who is
not subject to tax under subdivision 2 is required to collect the tax imposed under subdivision
4, from the purchaser of the grain bin and to give the purchaser a receipt for the tax paid.
The tax collected must be remitted to the commissioner in the same manner prescribed for
the taxes imposed under chapter 297A.
new text end

new text begin Subd. 6. new text end

new text begin Taxes paid to another jurisdiction; credit. new text end

new text begin A grain bin retailer that has paid
taxes to another jurisdiction measured by gross receipts and is subject to tax under this
section on the same gross receipts is entitled to a credit for the tax legally due and paid to
another jurisdiction to the extent of the lesser of: (1) the tax actually paid to the other
jurisdiction, or (2) the amount of tax imposed by Minnesota on the gross receipts subject
to tax in the other taxing jurisdictions.
new text end

new text begin Subd. 7. new text end

new text begin Sourcing of sales. new text end

new text begin All of the provisions of section 297A.668 apply to the taxes
imposed by this section.
new text end

new text begin Subd. 8. new text end

new text begin Payment; reporting. new text end

new text begin A grain bin retailer shall report the tax on a return
prescribed by the commissioner and shall remit the tax with the return. The return and the
tax must be filed and paid using the filing cycle and due dates provided for taxes imposed
under chapter 297A.
new text end

new text begin Subd. 9. new text end

new text begin Administration. new text end

new text begin Unless specifically provided otherwise by this section, the
audit, assessment, refund, penalty, interest, enforcement, collection remedies, appeal, and
administrative provisions of chapters 270C and 289A that are applicable to taxes imposed
under chapter 297A apply to taxes imposed under this section.
new text end

new text begin Subd. 10. new text end

new text begin Interest on overpayments. new text end

new text begin Interest must be paid on an overpayment refunded
or credited to the taxpayer from the date of payment of the tax until the date the refund is
paid or credited. For purposes of this subdivision, the date of payment is the due date of the
return or the date of actual payment of the tax, whichever is later.
new text end

new text begin Subd. 11. new text end

new text begin Deposit of revenues. new text end

new text begin The commissioner shall deposit all revenues, including
penalties and interest, derived from the tax imposed by this section in the state treasury and
credit it to the grain contract indemnity account in the agricultural fund established under
section 223.30.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment, and
the earliest the grain bin gross receipts tax may be imposed is July 1, 2019, for sales and
purchases made on or after that date.
new text end

Sec. 7.

Minnesota Statutes 2016, section 297A.61, subdivision 12, is amended to read:

Subd. 12.

Farm machinery.

(a) "Farm machinery" means new or used machinery,
equipment, implements, accessories, and contrivances used directly and principally in
agricultural production of tangible personal property intended to be sold ultimately at retail
including, but not limited to:

(1) machinery for the preparation, seeding, or cultivation of soil for growing agricultural
crops;

(2) barn cleaners, milking systems, grain dryers, new text begin grain bins, new text end feeding systems including
stationary feed bunks, and similar installations, whether or not the equipment is installed
by the seller and becomes part of the real property; and

(3) irrigation equipment sold for exclusively agricultural use, including pumps, pipe
fittings, valves, sprinklers, and other equipment necessary to the operation of an irrigation
system when sold as part of an irrigation system, whether or not the equipment is installed
by the seller and becomes part of the real property.

(b) Farm machinery does not include:

(1) repair or replacement parts;

(2) tools, shop equipment, grain bins, fencing material, communication equipment, and
other farm supplies;

(3) motor vehicles taxed under chapter 297B;

(4) snowmobiles or snow blowers;

(5) lawn mowers except those used in the production of sod for sale, or garden-type
tractors or garden tillers; or

(6) machinery, equipment, implements, accessories, and contrivances used directly in
the production of horses not raised for slaughter, fur-bearing animals, or research animals.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2018.
new text end

Sec. 8. new text begin DEPOSITS OF REVENUES; GRAIN CONTRACT INDEMNITY ACCOUNT.
new text end

new text begin In fiscal year 2018, the commissioner shall deposit $2,500,000 of the revenue derived
from taxes imposed under Minnesota Statutes, chapter 297A, in the grain contract indemnity
account in the agricultural fund, established under Minnesota Statutes, section 223.23, as
a proxy for a portion of sales tax revenues collected on the sales of grain bins during that
fiscal year. The amount shall be deposited as soon as possible after the enactment of this
section. For fiscal years 2019 and 2020, if the grain credit contract indemnity account in
the agricultural fund, established under Minnesota Statutes, section 223.23, is less than
$6,000,000, the commissioner shall deposit up to $2,500,000 per fiscal year of the revenue,
including interest and penalties, derived from the taxes imposed by Minnesota Statutes,
chapter 297A, on grain bins into that account on a quarterly basis until the fund contains
$6,000,000. For purposes of this section, the amount of sales tax revenue generated from
the sale of grain bins deposited under this paragraph is $625,000 per calendar quarter.
new text end

Sec. 9. new text begin EFFECTIVE DATE.
new text end

new text begin Unless otherwise provided, this act is effective the day following final enactment. Section
5 applies to voluntary extension of credit contracts in default on or after January 1, 2017.
Notwithstanding section 5, subdivision 3, paragraph (a), for a voluntary extension of credit
contract in default prior to final enactment of this act, a producer has 90 days from the date
of final enactment to file a claim with the commissioner.
new text end