HF 4181

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; providing for subtraction from income attributable to herd
eradication; increasing the bovine testing credit in certain areas; providing a state
paid property tax credit for property in bovine tuberculosis management zones in
certain cases; providing for sales tax exemption for certain fencing materials;
appropriating money; amending Minnesota Statutes 2006, sections 290.01,
subdivision 19a, as amended; 290.06, subdivision 33, as amended; 290.091,
subdivision 2, as amended; 297A.69, subdivision 4; Minnesota Statutes 2007
Supplement, sections 273.1393; 290.01, subdivision 19b, as amended; proposing
coding for new law in Minnesota Statutes, chapter 273.

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

Section 1.

new text begin [273.113] TAX CREDIT FOR PROPERTY IN BOVINE
TUBERCULOSIS MANAGEMENT ZONES.
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, "bovine tuberculosis
management zone" means the area within the ten-mile radius around the five presumptive
tuberculosis-positive deer sampled during the fall 2006 hunter-harvested surveillance
effort.
new text end

new text begin Subd. 2. new text end

new text begin Eligibility; credit on agricultural land; cattle herds. new text end

new text begin Agricultural land
classified as class 2a or 2b under section 273.13, subdivision 23, located in a bovine
tuberculosis management zone is eligible for a property tax credit if the property owner has
eradicated a cattle herd that had been kept on that land for at least part of the year in order
to prevent the onset or spread of bovine tuberculosis. The credit is equal to the property
tax on the parcel where the herd had been located. The credit is only on that portion of
the tax relating to the market value of the land. To initially qualify for the tax credit, the
property owner shall file an application with the county by January 2 of the year following
the calendar year when the herd was eradicated. The credit must be given for each taxes
payable year following the calendar year when the herd was eradicated and must terminate
for all taxes payable years beginning after the calendar year when a new herd of cattle was
placed on the land. The auditor shall indicate the amount of the property tax reduction on
the property tax statement of each taxpayer receiving a credit under this section.
new text end

new text begin Subd. 3. new text end

new text begin Eligibility; credit on hunting land; deer and elk herds. new text end

new text begin Land located
in a bovine tuberculosis management zone that is primarily used for hunting purposes is
eligible for a property tax credit if (1) the property owner or the Department of Natural
Resources has eradicated the deer and elk herd on that land in order to prevent the onset
or spread of bovine tuberculosis, (2) the property owner adheres strictly to the deer and
elk feeding ban, and (3) the property owner makes every effort to keep their land free of
deer and elk. The credit is equal to the property tax on the parcel where the herd had been
located. The credit is only on that portion of the tax relating to the market value of the
land. To initially qualify for the tax credit, the property owner shall file an application with
the county by January 2 of the year following the calendar year when the deer or elk herd
was eradicated. To receive the tax credit in subsequent years, the property owner shall file
by January 2 of each subsequent year until the state is upgraded to a bovine tuberculosis
status of modified accredited advanced. The county board must annually approve the
application before the credit is allowed. The credit is for each taxes payable year following
the calendar year when the deer or elk herd was eradicated and must terminate as provided
in subdivision 5. The auditor shall indicate the amount of the property tax reduction on the
property tax statement of each taxpayer receiving a credit under this section.
new text end

new text begin Subd. 4. new text end

new text begin Reimbursement for lost revenue; appropriations. new text end

new text begin The county auditor
shall certify to the commissioner of revenue, as part of the abstracts of tax lists required to
be filed with the commissioner under section 275.29, the amount of tax lost to the county
from the property tax credits under subdivisions 2 and 3. Any prior year adjustments must
also be certified in the abstracts of tax lists. The commissioner of revenue shall review the
certifications to determine their accuracy. The commissioner may make the changes in the
certification that are considered necessary or return a certification to the county auditor
for corrections. The commissioner shall reimburse each taxing district for the taxes
lost. The payments must be made at the time provided in section 273.1398, subdivision
6, for payment to taxing jurisdictions in the same proportion that the ad valorem tax is
distributed. The amount necessary to make the reimbursements under this section is
annually appropriated from the general fund to the commissioner of revenue. The credit
paid under this section shall be deducted from the tax due on the property as provided in
section 273.1393.
new text end

new text begin Subd. 5. new text end

new text begin Termination of credit. new text end

new text begin The credit provided under this section ceases to
be available beginning with any assessment year following the date when the United
States Department of Agriculture publishes notice in the Federal Register that the state is
upgraded to a bovine tuberculosis status of modified accredited advanced.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2009.
new text end

Sec. 2.

Minnesota Statutes 2007 Supplement, section 273.1393, is amended to read:

273.1393 COMPUTATION OF NET PROPERTY TAXES.

Notwithstanding any other provisions to the contrary, "net" property taxes are
determined by subtracting the credits in the order listed from the gross tax:

(1) disaster credit as provided in sections 273.1231 to 273.1235;

(2) powerline credit as provided in section 273.42;

(3) agricultural preserves credit as provided in section 473H.10;

(4) enterprise zone credit as provided in section 469.171;

(5) disparity reduction credit;

(6) conservation tax credit as provided in section 273.119;

(7) homestead and agricultural credits as provided in section 273.1384;

(8) taconite homestead credit as provided in section 273.135; deleted text begin and deleted text end

(9) supplemental homestead credit as provided in section 273.1391 new text begin ; and
new text end

new text begin (10) bovine tuberculosis management credit as provided in section 273.113 new text end .

The combination of all property tax credits must not exceed the gross tax amount.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and
thereafter.
new text end

Sec. 3.

Minnesota Statutes 2006, section 290.01, subdivision 19a, as amended by Laws
2008, chapter 154, article 3, section 2, and Laws 2008, chapter 154, article 4, section 3,
is amended to read:

Subd. 19a.

Additions to federal taxable income.

For individuals, estates, and
trusts, there shall be added to federal taxable income:

(1)(i) interest income on obligations of any state other than Minnesota or a political
or governmental subdivision, municipality, or governmental agency or instrumentality
of any state other than Minnesota exempt from federal income taxes under the Internal
Revenue Code or any other federal statute; and

(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
Code, except the portion of the exempt-interest dividends derived from interest income
on obligations of the state of Minnesota or its political or governmental subdivisions,
municipalities, governmental agencies or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to all shareholders represents
95 percent or more of the exempt-interest dividends that are paid by the regulated
investment company as defined in section 851(a) of the Internal Revenue Code, or the
fund of the regulated investment company as defined in section 851(g) of the Internal
Revenue Code, making the payment; and

(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
government described in section 7871(c) of the Internal Revenue Code shall be treated as
interest income on obligations of the state in which the tribe is located;

(2) the amount of income or sales and use taxes paid or accrued within the taxable
year under this chapter and the amount of taxes based on net income paid or sales and use
taxes paid to any other state or to any province or territory of Canada, to the extent allowed
as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not
be more than the amount by which the itemized deductions as allowed under section 63(d)
of the Internal Revenue Code exceeds the amount of the standard deduction as defined
in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the
disallowance of itemized deductions under section 68 of the Internal Revenue Code of
1986, income or sales and use tax is the last itemized deduction disallowed;

(3) the capital gain amount of a lump sum distribution to which the special tax under
section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;

(4) the amount of income taxes paid or accrued within the taxable year under this
chapter and taxes based on net income paid to any other state or any province or territory
of Canada, to the extent allowed as a deduction in determining federal adjusted gross
income. For the purpose of this paragraph, income taxes do not include the taxes imposed
by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;

(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
other than expenses or interest used in computing net interest income for the subtraction
allowed under subdivision 19b, clause (1);

(6) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(7) 80 percent of the depreciation deduction allowed under section 168(k) of the
Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
in the taxable year generates a deduction for depreciation under section 168(k) and the
activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
limited to excess of the depreciation claimed by the activity under section 168(k) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k) is allowed;

(8) 80 percent of the amount by which the deduction allowed by section 179 of the
Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

(9) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code;

(10) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans;

(11) the amount of expenses disallowed under section 290.10, subdivision 2;

(12) for taxable years beginning after December 31, 2006, and before January 1,
2008, the amount deducted for qualified tuition and related expenses under section 222 of
the Internal Revenue Code, to the extent deducted from gross income; deleted text begin and
deleted text end

(13) for taxable years beginning after December 31, 2006, and before January 1,
2008, the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
from gross income new text begin ; and
new text end

new text begin (14) the amount of subtraction claimed under subdivision 19b, clause (17), in the
first taxable year that begins after the expiration of the required 12-month period to the
extent the taxpayer fails to purchase qualifying property within that period new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 4.

Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19b, as
amended by Laws 2008, chapter 154, article 3, section 3, and Laws 2008, chapter 154,
article 11, section 11, is amended to read:

Subd. 19b.

Subtractions from federal taxable income.

For individuals, estates,
and trusts, there shall be subtracted from federal taxable income:

(1) net interest income on obligations of any authority, commission, or
instrumentality of the United States to the extent includable in taxable income for federal
income tax purposes but exempt from state income tax under the laws of the United States;

(2) if included in federal taxable income, the amount of any overpayment of income
tax to Minnesota or to any other state, for any previous taxable year, whether the amount
is received as a refund or as a credit to another taxable year's income tax liability;

(3) the amount paid to others, less the amount used to claim the credit allowed under
section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
transportation of each qualifying child in attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
resident of this state may legally fulfill the state's compulsory attendance laws, which
is not operated for profit, and which adheres to the provisions of the Civil Rights Act
of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and equipment purchased
or leased for use in elementary and secondary schools in teaching only those subjects
legally and commonly taught in public elementary and secondary schools in this state.
Equipment expenses qualifying for deduction includes expenses as defined and limited in
section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
books and materials used in the teaching of religious tenets, doctrines, or worship, the
purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
or materials for, or transportation to, extracurricular activities including sporting events,
musical or dramatic events, speech activities, driver's education, or similar programs. For
purposes of the subtraction provided by this clause, "qualifying child" has the meaning
given in section 32(c)(3) of the Internal Revenue Code;

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section 290.491;

(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
of the Internal Revenue Code in determining federal taxable income by an individual
who does not itemize deductions for federal income tax purposes for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and
under the provisions of Public Law 109-1;

(7) for taxable years beginning before January 1, 2008, the amount of the federal
small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
which is included in gross income under section 87 of the Internal Revenue Code;

(8) for individuals who are allowed a federal foreign tax credit for taxes that do not
qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
of subnational foreign taxes for the taxable year, but not to exceed the total subnational
foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
"federal foreign tax credit" means the credit allowed under section 27 of the Internal
Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
the extent they exceed the federal foreign tax credit;

(9) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (7), or 19c, clause (14), in the case
of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
subdivision 19c, clause (14), in the case of a shareholder of an S corporation, minus the
positive value of any net operating loss under section 172 of the Internal Revenue Code
generated for the tax year of the addition. The resulting delayed depreciation cannot be
less than zero;

(10) job opportunity building zone income as provided under section 469.316;

(11) to the extent included in federal taxable income, the amount of compensation
paid to members of the Minnesota National Guard or other reserve components of the
United States military for active service performed in Minnesota, excluding compensation
for services performed under the Active Guard Reserve (AGR) program. For purposes of
this clause, "active service" means (i) state active service as defined in section 190.05,
subdivision 5a, clause (1); (ii) federally funded state active service as defined in section
190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05,
subdivision 5c, but "active service" excludes services performed exclusively for purposes
of basic combat training, advanced individual training, annual training, and periodic
inactive duty training; special training periodically made available to reserve members;
and service performed in accordance with section 190.08, subdivision 3;

(12) to the extent included in federal taxable income, the amount of compensation
paid to Minnesota residents who are members of the armed forces of the United States or
United Nations for active duty performed outside Minnesota under United States Code,
title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of
the United Nations;

(13) an amount, not to exceed $10,000, equal to qualified expenses related to a
qualified donor's donation, while living, of one or more of the qualified donor's organs
to another person for human organ transplantation. For purposes of this clause, "organ"
means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
"human organ transplantation" means the medical procedure by which transfer of a human
organ is made from the body of one person to the body of another person; "qualified
expenses" means unreimbursed expenses for both the individual and the qualified donor
for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
may be subtracted under this clause only once; and "qualified donor" means the individual
or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
individual may claim the subtraction in this clause for each instance of organ donation for
transplantation during the taxable year in which the qualified expenses occur;

(14) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (8), or 19c, clause (15), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (15), in the
case of a shareholder of a corporation that is an S corporation, minus the positive value of
any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
subtraction is not allowed under this clause;

(15) to the extent included in federal taxable income, compensation paid to a
nonresident who is a service member as defined in United States Code, title 10, section
101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public
Law 108-189, section 101(2); deleted text begin and
deleted text end

(16) international economic development zone income as provided under section
469.325 new text begin ; and
new text end

new text begin (17) to the extent included in federal taxable income, net capital gain, as that term
is used in section 1(h) of the Internal Revenue Code, or any other income attributable to
or directly resulting from the eradication of a cattle herd to prevent the spread of bovine
tuberculosis or the receipt of payments to compensate the taxpayer for the eradication.
A taxpayer qualifies for the subtraction under this clause only if the taxpayer agrees, in
a form prescribed by the commissioner, to purchase an amount of qualifying property
equal in value to the subtraction claimed within the 12-month period that begins on the
date the area of the taxpayer's farm has been declared free of bovine tuberculosis. For
purpose of this clause, "qualifying property" means cattle, including all the costs related
to their purchase such as commissions, fees, and transportation, and any other property
related to their husbandry new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 5.

Minnesota Statutes 2006, section 290.06, subdivision 33, as amended by Laws
2008, chapter 154, article 11, section 13, is amended to read:

Subd. 33.

Bovine testing credit.

(a) An owner of cattle in Minnesota may take a
credit against the tax due under this chapter for an amount equal to deleted text begin one-half deleted text end new text begin a percentage
of new text end the expenses incurred during the taxable year to conduct tuberculosis testing on
those cattle. new text begin The percentage equals 100 percent for testing of cattle in a split state zone
designated by the United States Department of Agriculture as modified accredited or
accreditation preparatory for bovine tuberculosis, and 50 percent for testing of all other
cattle.
new text end

(b) If the amount of credit which the taxpayer is eligible to receive under this
subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of
revenue shall refund the excess to the taxpayer.

(c) The amount necessary to pay claims for the refund provided in this subdivision is
appropriated from the general fund to the commissioner of revenue.

(d) Expenses incurred in a calendar year in which tuberculosis testing of cattle in
Minnesota is not federally required are not allowed in claiming the credit under paragraph
(a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 6.

Minnesota Statutes 2006, section 290.091, subdivision 2, as amended by Laws
2008, chapter 154, article 4, section 7, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of the following for
the taxable year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative
minimum taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue
Code:

(A) for taxable years beginning before January 1, 2006, to the extent that the
deduction exceeds 1.0 percent of adjusted gross income;

(B) for taxable years beginning after December 31, 2005, to the full extent of the
deduction.

For purposes of this clause, "adjusted gross income" has the meaning given in
section 62 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal
Revenue Code, with respect to each property (as defined in section 614 of the Internal
Revenue Code), to the extent not included in federal alternative minimum taxable income,
the excess of the deduction for depletion allowable under section 611 of the Internal
Revenue Code for the taxable year over the adjusted basis of the property at the end of the
taxable year (determined without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the
amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
Internal Revenue Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the
amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and

(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7)
to (9), (11), deleted text begin and deleted text end (12) new text begin , and (14) new text end ;

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.01, subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by section 290.01, subdivision
19b, clause (2), to the extent included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as
defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
amounts deducted in computing federal adjusted gross income; and

(4) amounts subtracted from federal taxable income as provided by section 290.01,
subdivision 19b, clauses (9) to deleted text begin (16) deleted text end new text begin (17) new text end .

In the case of an estate or trust, alternative minimum taxable income must be
computed as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3)
of the Internal Revenue Code.

(c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
income after subtracting the exemption amount determined under subdivision 3.

(d) "Regular tax" means the tax that would be imposed under this chapter (without
regard to this section and section 290.032), reduced by the sum of the nonrefundable
credits allowed under this chapter.

(e) "Net minimum tax" means the minimum tax imposed by this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 7.

Minnesota Statutes 2006, section 297A.69, subdivision 4, is amended to read:

Subd. 4.

Machinery, equipment, and fencing.

The following machinery,
equipment, and fencing is exempt:

(1) farm machinery;

(2) logging equipment, including chain saws used for commercial logging;

(3) fencing new text begin and fencing materials new text end used for the containment of deleted text begin farmed cervidae,
as defined in section 35.153, subdivision 3 deleted text end new text begin livestock as defined in section 17A.03,
subdivision 5 new text end ;

(4) primary and backup generator units used to generate electricity for the purpose of
operating farm machinery, aquacultural production equipment, or logging equipment, or
providing light or space heating necessary for the production of livestock, dairy animals,
dairy products, or poultry and poultry products; and

(5) aquaculture production equipment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2008.
new text end