HF 2838

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to tax shelters; limiting the property tax 
  1.3             exemption for property used in certain tax shelter 
  1.4             transactions; prohibiting political subdivisions from 
  1.5             engaging in tax shelter transactions; amending 
  1.6             Minnesota Statutes 2002, section 272.01, by adding a 
  1.7             subdivision; proposing coding for new law in Minnesota 
  1.8             Statutes, chapter 465. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2002, section 272.01, is 
  1.11  amended by adding a subdivision to read: 
  1.12     Subd. 5.  [EFFECTS OF TRANSFER OF INCOME TAX OWNERSHIP 
  1.13  INCIDENTS.] If property that is exempt from ad valorem taxes 
  1.14  under section 272.02, subdivision 3, 4, 5, 7, or 8, is leased or 
  1.15  otherwise subject to legal arrangements that permit an 
  1.16  individual, corporation, or other entity to claim the income tax 
  1.17  benefits of ownership, such as depreciation, cost recovery 
  1.18  allowances, or similar benefits, a tax is imposed for the 
  1.19  privilege of so using the property.  The tax is imposed in the 
  1.20  same amount and to the same extent as though the private 
  1.21  individual, corporation, or other entity was the owner of the 
  1.22  property.  Taxes under this subdivision must be paid and 
  1.23  administered in the manner provided for taxes imposed under 
  1.24  subdivision 2. 
  1.25     [EFFECTIVE DATE.] This section is effective beginning with 
  1.26  property taxes payable in 2005. 
  1.27     Sec. 2.  [465.716] [TAX SHELTER TRANSACTION PROHIBITED.] 
  2.1      (a) No political subdivision may enter into a lease, 
  2.2   sublease, sale-leaseback, service contract, or similar 
  2.3   ownership, use, or legal arrangement governing property or 
  2.4   facilities of the political subdivision with a private person, 
  2.5   if the arrangement: 
  2.6      (1) is intended to transfer the tax title to the private 
  2.7   person, permitting it to claim the income tax benefits of 
  2.8   ownership, such as depreciation, cost recovery allowances, or 
  2.9   similar benefits under the federal or state income or corporate 
  2.10  income taxes; 
  2.11     (2) permits or requires the political subdivision to 
  2.12  continue operating or using the property or facilities for ten 
  2.13  or more years in substantially the same manner as it did prior 
  2.14  to the effective date of the arrangement; and 
  2.15     (3) considering the totality of the legal and financial 
  2.16  arrangements, does not impose the risk of loss, obsolescence, or 
  2.17  other incidents of equity ownership on the private person for a 
  2.18  period of 20 years or more. 
  2.19     (b) For purposes of this section, "political subdivision" 
  2.20  has the meaning given in section 465.719, subdivision 1. 
  2.21     (c) The political subdivision may rely on the 
  2.22  representations of the advisors to the private person in 
  2.23  determining whether an arrangement is intended to transfer tax 
  2.24  title to the property or facilities. 
  2.25     [EFFECTIVE DATE.] This section is effective the day 
  2.26  following final enactment.