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HF 848

as introduced - 89th Legislature (2015 - 2016) Posted on 02/12/2015 02:32pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to taxation; providing for tax reductions to middle class families; closing
loopholes; providing tax fairness; appropriating money; amending Minnesota
Statutes 2014, sections 16D.08, subdivision 2; 270.80, subdivisions 1, 2, 3, 4,
by adding subdivisions; 270.81, subdivisions 1, 3, by adding a subdivision;
270.82; 270.83, subdivisions 1, 2; 270.84; 270.86; 270.87; 270C.03, subdivision
1; 270C.33, subdivision 6; 272.02, subdivision 9; 275.025, subdivisions 1,
4; 289A.60, by adding a subdivision; 290.01, subdivision 4a, by adding
a subdivision; 290.067, subdivisions 1, 2, 2b, 3; 290.0671, subdivision 1;
290.0674, subdivision 2, by adding a subdivision; 290.068, subdivision 2;
290.17, subdivision 4; 290.191, subdivision 5; 290.21, subdivision 4; 290A.03,
subdivision 13; 290B.03, subdivision 1; 290B.04, subdivision 1; 291.03,
by adding a subdivision; 296A.01, subdivision 12; 296A.08, subdivision 2;
297A.815, subdivision 3; 297A.94; 297H.04, subdivision 2; proposing coding
for new law in Minnesota Statutes, chapter 270C; repealing Minnesota Statutes
2014, sections 270.81, subdivision 4; 270.83, subdivision 3; 290.067, subdivision
2a; Minnesota Rules, parts 8106.0100, subparts 1, 2, 3, 4, 5, 6, 7, 8, 10, 12, 13,
14, 17, 17a, 18, 19, 20, 21; 8106.0300, subparts 1, 3; 8106.0400; 8106.0500;
8106.0600; 8106.0700; 8106.0800; 8106.9900.

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

ARTICLE 1

CHILD AND DEPENDENT CARE CREDIT

Section 1.

Minnesota Statutes 2014, section 290.067, subdivision 1, is amended to read:


Subdivision 1.

Amount of credit.

(a) A taxpayer may take as a credit against the
tax deleted text begindue from the taxpayer and a spouse, if any,deleted text endnew text begin imposednew text end under this chapter an amount
equal to the new text beginsum of new text enddependent care deleted text begincreditdeleted text end deleted text beginfor which the taxpayer is eligible pursuant
to the provisions of section 21 of the Internal Revenue Code subject to the limitations
provided in subdivision 2 except that
deleted text endnew text begin credits calculated under paragraphs (b), (d), and
(e).
new text end In determining whether deleted text beginthe child qualified as a dependentdeleted text endnew text begin expenses were paid to
care for a qualifying individual
new text end, income received as a Minnesota family investment
program grant or allowance to or on behalf of the deleted text beginchilddeleted text endnew text begin individualnew text end must not be taken
into account in determining whether the deleted text beginchilddeleted text endnew text begin individualnew text end received more than half of the
deleted text beginchild'sdeleted text endnew text begin individual'snew text end support from the taxpayerdeleted text begin, and the provisions of section 32(b)(1)(D) of
the Internal Revenue Code do not apply
deleted text end.

new text begin (b) A taxpayer who incurs actual employment-related expenses may take as a
credit against the tax imposed under this chapter an amount equal to the dependent care
credit for which the taxpayer is eligible pursuant to the provisions of section 21 of the
Internal Revenue Code.
new text end

new text begin (c) A taxpayer who elects to claim a credit under paragraph (d) or (e) may claim
a credit under paragraph (b) only for employment-related expenses paid to care for
qualifying individuals other than the child for whom deemed expenses were used to claim
the credit under paragraph (d) or (e).
new text end

deleted text begin (b) If a child who has not attained the age of six years at the close of the taxable year
is cared for at a licensed family day care home operated by the child's parent, the taxpayer
is deemed to have paid employment-related expenses.
deleted text endnew text begin (d) In lieu of the credit under
paragraph (b), a taxpayer who operates a licensed family day care home may elect to claim
as a credit against the tax imposed under this chapter an amount equal to the dependent
care credit for which the taxpayer is eligible pursuant to the provisions of section 21
of the Internal Revenue Code calculated using deemed expenses rather than actual
employment-related expenses paid.
new text end If the child is 16 months old or younger at the close of
the taxable year, deleted text beginthe amount ofdeleted text endnew text begin deemednew text end expenses deleted text begindeemed to have been paid equalsdeleted text endnew text begin are equal
to
new text end the maximum deleted text beginlimitdeleted text endnew text begin amount of employment-related expenses incurred during the taxable
year that may be taken into account
new text end for one deleted text beginqualifieddeleted text endnew text begin qualifyingnew text end individual under section
21(c) and (d) of the Internal Revenue Code. If the child is older than 16 months of age but
has not attained the age of six years at the close of the taxable year, deleted text beginthe amount ofdeleted text endnew text begin deemednew text end
expenses deleted text begindeemed to have been paid equalsdeleted text endnew text begin are equal tonew text end the amount the licensee would
charge for the care of a child of the same age for the same number of hours of care.new text begin If the
child has attained the age of six at the close of the taxable year, deemed expenses are zero.
new text end

deleted text begin (c) Ifdeleted text end new text begin (e) In lieu of the credit under paragraph (b), new text enda married couplenew text begin may elect to
claim a credit against the tax imposed under this chapter as computed under paragraph
(f), if the married couple
new text end:

(1) has a child who has not attained the age of one year at the close of the taxable year;

(2) files a joint tax return for the taxable year; deleted text beginand
deleted text end

(3) does not participate in a dependent care assistance program as defined in section
129 of the Internal Revenue Codedeleted text begin, in lieu of the actual employment related expenses paid
for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of
(i) the combined earned income of the couple or (ii) the amount of the maximum limit for
one qualified individual under section 21(c) and (d) of the Internal Revenue Code will
be deemed to be the employment related expense paid for that child. The earned income
limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed
amount. These deemed amounts apply regardless of whether any employment-related
expenses have been paid.
deleted text endnew text begin; and
new text end

new text begin (4) does not operate a licensed family day care center home.
new text end

new text begin (f) A married couple meeting the requirements of paragraph (e) is allowed a credit
against the tax imposed under this chapter equal to the dependent care for which the couple
is eligible pursuant to section 21 of the Internal Revenue Code calculated using deemed
expenses rather than actual employment-related expenses paid. For purposes of this
paragraph, deemed expenses are the lesser of (i) the combined earned income of the couple
or (ii) the maximum amount of employment-related expenses incurred during the taxable
year that may be taken into account for one qualifying individual under section 21(c) and
(d) of the Internal Revenue Code or for two qualifying individuals for a taxpayer with two
children who have not attained the age of one. The earned income limitation of section
21(d) of the Internal Revenue Code does not apply to this deemed amount. These deemed
amounts apply regardless of whether any employment-related expenses have been paid.
new text end

deleted text begin (d)deleted text endnew text begin (g)new text end If the taxpayer is not required and does not file a federal individual income
tax return for the tax year,new text begin or if the taxpayer does file a federal return but does not claim a
federal dependent care credit,
new text end no credit is allowed for any amount paid to any person unless:

(1) the name, address, and taxpayer identification number of the person are included
on the return claiming the credit; or

(2) if the person is an organization described in section 501(c)(3) of the Internal
Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code,
the name and address of the person are included on the return claiming the credit.

In the case of a failure to provide the information required under the preceding sentence,
the preceding sentence does not apply if it is shown that the taxpayer exercised due
diligence in attempting to provide the information required.

deleted text begin (e)deleted text endnew text begin (h)new text end In the case of a nonresident, part-year resident, or a person who has earned
income not subject to tax under this chapter including earned income excluded pursuant to
section 290.01, subdivision 19b, clause (9), the credit determined under new text beginthis new text endsection deleted text begin21
of the Internal Revenue Code
deleted text end must be allocated based on the ratio by which the earned
income of the claimant and the claimant's spouse from Minnesota sources bears to the
total earned income of the claimant and the claimant's spouse.

deleted text begin (f)deleted text endnew text begin (i)new text end For residents of Minnesota, the subtractions for military pay under section
290.01, subdivision 19b, clauses (10) and (11), are not considered "earned income not
subject to tax under this chapter."

deleted text begin (g)deleted text endnew text begin (j)new text end For residents of Minnesota, the exclusion of combat pay under section 112
of the Internal Revenue Code is not considered "earned income not subject to tax under
this chapter."

new text begin (k) For the purposes of this section, the terms "qualifying individual" and
"employment-related expenses" have the meanings given in section 21 of the Internal
Revenue Code.
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, 2014.
new text end

Sec. 2.

Minnesota Statutes 2014, section 290.067, subdivision 2, is amended to read:


Subd. 2.

Limitations.

deleted text begin The credit for expenses incurred for the care of each
dependent shall not exceed $720 in any taxable year, and the total credit for all dependents
of a claimant shall not exceed $1,440 in a taxable year. The maximum total credit shall
be reduced according to the amount of the income of the claimant and a spouse, if any,
as follows:
deleted text end

deleted text begin income up to $18,040, $720 maximum for one dependent, $1,440 for all dependents;
deleted text end

deleted text begin income over $18,040, the maximum credit for one dependent shall be reduced by
$18 for every $350 of additional income, $36 for all dependents.
deleted text end

deleted text begin The commissioner shall construct and make available to taxpayers tables showing
the amount of the credit at various levels of income and expenses. The tables shall follow
the schedule contained in this subdivision, except that the commissioner may graduate the
transitions between expenses and income brackets.
deleted text end

new text begin (a) The maximum credit under subdivision 1, paragraph (b), is:
new text end

new text begin (1) $1,050 for a taxpayer with employment-related expenses for one qualifying
individual;
new text end

new text begin (2) $2,100 for a taxpayer with employment-related expenses for two or more
qualifying individuals;
new text end

new text begin (3) $1,050 for a taxpayer who elects to claim a credit under subdivision 1, paragraph
(d) or (e), if that credit is based on deemed expenses for one child; and
new text end

new text begin (4) $0 for a taxpayer who elects to claim a credit under subdivision 1, paragraph (d)
or (e), if that credit is based on deemed expenses for two or more children.
new text end

new text begin (b) The maximum credit under subdivision 1, paragraphs (d) and (e), is:
new text end

new text begin (1) $720 for a taxpayer with deemed expenses for one child; and
new text end

new text begin (2) $1,440 for a taxpayer with deemed expenses for two or more children.
new text end

new text begin (c) For a taxpayer who claims a credit under subdivision 1, paragraph (b), who
has federal adjusted gross income as defined in the Internal Revenue Code in excess of
$100,000, the credit under subdivision 1, paragraph (b), is equal to the lesser of:
new text end

new text begin (1) the credit calculated under subdivision 1, paragraph (b); or
new text end

new text begin (2) $600 minus five percent of federal adjusted gross income in excess of $100,000
for a taxpayer with one qualifying individual, or $1,200 minus five percent of federal
gross adjusted income in excess of $100,000 for a taxpayer with two or more qualifying
individuals, but in no case is the credit less than zero.
new text end

new text begin (d) For a taxpayer who elects to claim the credit under subdivision 1, paragraph
(d) or (e), with federal adjusted gross income as defined in the Internal Revenue Code
in excess of $25,000, the credit is equal to the lesser of:
new text end

new text begin (1) the credit calculated under subdivision 1, paragraph (d) or (e); or
new text end

new text begin (2) $720 minus five percent of federal adjusted gross income in excess of $25,000
for a taxpayer with one qualifying individual, or $1,440 minus five percent of federal
gross adjusted income in excess of $25,000 for a taxpayer with two or more qualifying
individuals, but in no case is the credit less than zero.
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, 2014.
new text end

Sec. 3.

Minnesota Statutes 2014, section 290.067, subdivision 2b, is amended to read:


Subd. 2b.

Inflation adjustment.

The commissioner shall adjust the dollar amount
of the income threshold at which the deleted text beginmaximumdeleted text end credit begins to be reduced under
subdivision 2 by the percentage determined pursuant to the provisions of section 1(f) of
the Internal Revenue Code, except that in section 1(f)(3)(B) the word deleted text begin"1999"deleted text endnew text begin "2014"new text end shall
be substituted for the word "1992." For deleted text begin2001deleted text endnew text begin 2016new text end, the commissioner shall then determine
the percent change from the 12 months ending on August 31, deleted text begin1999deleted text endnew text begin 2014new text end, to the 12 months
ending on August 31, deleted text begin2000deleted text endnew text begin 2015new text end, and in each subsequent year, from the 12 months ending
on August 31, deleted text begin1999deleted text endnew text begin 2014new text end, to the 12 months ending on August 31 of the year preceding the
taxable year. The determination of the commissioner pursuant to this subdivision must not
be considered a "rule" and is not subject to the Administrative Procedure Act contained in
chapter 14. The threshold amount as adjusted must be rounded to the nearest $10 amount.
If the amount ends in $5, the amount is rounded up to the nearest $10 amount.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 4.

Minnesota Statutes 2014, section 290.067, subdivision 3, is amended to read:


Subd. 3.

Credit to be refundable.

If the amount of credit which a claimant
would be eligible to receive pursuant to this deleted text beginsubdivisiondeleted text endnew text begin sectionnew text end exceeds the claimant's
tax liability under chapter 290, the excess amount of the credit shall be refunded to the
claimant by the commissioner deleted text beginof revenuedeleted text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 5.

Minnesota Statutes 2014, section 290.0674, subdivision 2, is amended to read:


Subd. 2.

Limitations.

(a) For claimants with income not greater than $33,500, the
maximum credit allowed for a family is $1,000 multiplied by the number of qualifying
children in kindergarten through grade 12 in the family. The maximum credit for families
with one qualifying child in kindergarten through grade 12 is reduced by $1 for each $4 of
household income over $33,500, and the maximum credit for families with two or more
qualifying children in kindergarten through grade 12 is reduced by $2 for each $4 of
household income over $33,500, but in no case is the credit less than zero.

deleted text begin For purposes of this section "income" has the meaning given in section 290.067,
subdivision 2a
.
deleted text end In the case of a married claimant, a credit is not allowed unless a joint
income tax return is filed.

(b) For a nonresident or part-year resident, the credit determined under subdivision 1
and the maximum credit amount in paragraph (a) must be allocated using the percentage
calculated in section 290.06, subdivision 2c, paragraph (e).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 6.

Minnesota Statutes 2014, section 290.0674, is amended by adding a subdivision
to read:


new text begin Subd. 2a. new text end

new text begin Income defined. new text end

new text begin (a) For purposes of this section, "income" means the
sum of the following:
new text end

new text begin (1) federal adjusted gross income as defined in the Internal Revenue Code; and
new text end

new text begin (2) the sum of the following amounts to the extent not included in clause (1):
new text end

new text begin (i) all nontaxable income;
new text end

new text begin (ii) the amount of a passive activity loss that is not disallowed as a result of section
469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity
loss carryover allowed under section 469(b) of the Internal Revenue Code;
new text end

new text begin (iii) an amount equal to the total of any discharge of qualified farm indebtedness
of a solvent individual excluded from gross income under section 108(g) of the Internal
Revenue Code;
new text end

new text begin (iv) cash public assistance and relief;
new text end

new text begin (v) any pension or annuity (including railroad retirement benefits, all payments
received under the federal Social Security Act, Supplemental Security Income, and
veterans benefits), which was not exclusively funded by the claimant or spouse, or which
was funded exclusively by the claimant or spouse and which funding payments were
excluded from federal adjusted gross income in the years when the payments were made;
new text end

new text begin (vi) interest received from the federal or state government or any instrumentality
or political subdivision thereof;
new text end

new text begin (vii) workers' compensation;
new text end

new text begin (viii) nontaxable strike benefits;
new text end

new text begin (ix) the gross amounts of payments received in the nature of disability income or
sick pay as a result of accident, sickness, or other disability, whether funded through
insurance or otherwise;
new text end

new text begin (x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
1986, as amended through December 31, 1995;
new text end

new text begin (xi) contributions made by the claimant to an individual retirement account,
including a qualified voluntary employee contribution; simplified employee pension plan;
self-employed retirement plan; cash or deferred arrangement plan under section 401(k)
of the Internal Revenue Code; or deferred compensation plan under section 457 of the
Internal Revenue Code, to the extent the sum of amounts exceeds the retirement base
amount for the claimant and spouse;
new text end

new text begin (xii) nontaxable scholarship or fellowship grants;
new text end

new text begin (xiii) the amount of the deduction allowed under section 199 of the Internal Revenue
Code;
new text end

new text begin (xiv) the amount of the deduction allowed under section 220 or 223 of the Internal
Revenue Code;
new text end

new text begin (xv) the amount deducted for tuition expenses under section 222 of the Internal
Revenue Code; and
new text end

new text begin (xvi) the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code.
new text end

new text begin In the case of an individual who files an income tax return on a fiscal year basis, the
term "federal adjusted gross income" shall mean federal adjusted gross income reflected
in the fiscal year ending in the calendar year. Federal adjusted gross income shall not be
reduced by the amount of a net operating loss carryback or carryforward or a capital loss
carryback or carryforward allowed for the year.
new text end

new text begin (b) For purposes of this section, "income" does not include:
new text end

new text begin (1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
new text end

new text begin (2) amounts of any pension or annuity that was exclusively funded by the claimant
or spouse and which funding payments were not excluded from federal adjusted gross
income in the years when the payments were made;
new text end

new text begin (3) surplus food or other relief in kind supplied by a governmental agency;
new text end

new text begin (4) relief granted under chapter 290A;
new text end

new text begin (5) child support payments received under a temporary or final decree of dissolution
or legal separation; or
new text end

new text begin (6) restitution payments received by eligible individuals and excludable interest as
defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of
2001, Public Law 107-16.
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, 2014.
new text end

Sec. 7. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2014, section 290.067, subdivision 2a, new text end new text begin is repealed.
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, 2014.
new text end

ARTICLE 2

RAILROAD RECODIFICATION

Section 1.

Minnesota Statutes 2014, section 270.80, subdivision 1, is amended to read:


Subdivision 1.

Applicability.

The following words and phrases when used
in sections deleted text begin270.80deleted text endnew text begin 273.3712new text end to deleted text begin270.87deleted text endnew text begin 273.3719new text end, unless the context clearly indicates
otherwise, have the meanings ascribed to them in this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 2.

Minnesota Statutes 2014, section 270.80, subdivision 2, is amended to read:


Subd. 2.

Railroad company.

"Railroad company" means:

(1) any company which as a common carrier operates a railroad or a line or lines of
deleted text beginrailwaydeleted text endnew text begin railroadnew text end situated within or partly within Minnesota; or

(2) any company owning or operating, other than as a common carrier, a railway
principally used for transportation of taconite concentrates from the plant at which the
taconite concentrates are produced in shipping form to a point of consumption or port
for shipment beyond the state; or

(3) any company that produces concentrates from taconite and transports that
taconite in the course of the concentrating process and before the concentrating process is
completed to a concentrating plant located within the state over a railroad that is not a
common carrier and deleted text beginshalldeleted text endnew text begin doesnew text end not use a common carrier or taconite railroad company as
defined in clause (2) for the movement of the concentrate to a point of consumption or
port for shipment beyond the state.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 3.

Minnesota Statutes 2014, section 270.80, subdivision 3, is amended to read:


Subd. 3.

Operating property.

"Operating property" means all property owned
or used by a railroad company in the performance of railroad transportation services,
including deleted text beginwithout limitation franchises, rights-of-way, bridges, trestles, shops, docks,
wharves, buildings and structures
deleted text endnew text begin, but not limited to, roads, locomotives, freight cars,
and improvements on leased property. Operating property is listed and assessed by the
commissioner where the property is located
new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 4.

Minnesota Statutes 2014, section 270.80, subdivision 4, is amended to read:


Subd. 4.

Nonoperating property.

"Nonoperating property" means deleted text beginand includesdeleted text end all
property other than property defined in subdivision 3. Nonoperating property deleted text beginshall includedeleted text endnew text begin
includes
new text end real property deleted text beginwhichdeleted text endnew text begin thatnew text end is leased or rented or available for lease or rent to any
person deleted text beginwhichdeleted text endnew text begin thatnew text end is not a railroad company. Vacant land shall be presumed to be available
for lease or rent if it has not been used as operating property for a period of one year
new text beginimmediately new text endpreceding the valuation date. Nonoperating property also includes land deleted text beginwhichdeleted text endnew text begin
that
new text end is not necessary and integral to the performance of railroad transportation services
and deleted text beginwhichdeleted text endnew text begin thatnew text end is not used on a regular and continual basis in the performance of these
services. Nonoperating property also includes that portion of a deleted text begingeneraldeleted text end corporation office
building and its proportionate share of land deleted text beginwhichdeleted text endnew text begin thatnew text end is not used for deleted text beginrailwaydeleted text endnew text begin railroadnew text end
operation or purpose.new text begin Nonoperating property is assessed by the local or county assessor.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 5.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


new text begin Subd. 6. new text end

new text begin Company. new text end

new text begin "Company" means any corporation, limited liability company,
association, partnership, trust, estate, fiduciary, public or private organization of any kind,
or any other legal entity.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 6.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


new text begin Subd. 7. new text end

new text begin Unit value. new text end

new text begin "Unit value" means the value of the whole integrated system
of a railroad company operating as a going concern without regard to the value of its
component parts.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 7.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


new text begin Subd. 8. new text end

new text begin Book depreciation. new text end

new text begin "Book depreciation" means the accumulated
depreciation shown by a railroad company on its books or allowed to the company by
the Surface Transportation Board.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 8.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


new text begin Subd. 9. new text end

new text begin Equalization. new text end

new text begin "Equalization" means the adjustment of the estimated value
of railroad operating property to the apparent sales ratio of commercial and industrial
property.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 9.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


new text begin Subd. 10. new text end

new text begin Exempt property. new text end

new text begin "Exempt property" means property which is
nontaxable for ad valorem tax purposes under Minnesota Statutes, including personal
property exempt from taxation under chapter 272.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 10.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


new text begin Subd. 11. new text end

new text begin Original cost. new text end

new text begin "Original cost" means the amount paid for an asset by the
current owner as recorded on the railroad's books or allowed by the Surface Transportation
Board.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 11.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


new text begin Subd. 12. new text end

new text begin System. new text end

new text begin "System" means the total property, real and personal, of a
railroad, that is used in its railroad operations.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 12.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


new text begin Subd. 14. new text end

new text begin Minnesota allocated value. new text end

new text begin "Minnesota allocated value" means the value
of a railroad company's operating property that is assigned to Minnesota for tax purposes.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 13.

Minnesota Statutes 2014, section 270.81, subdivision 1, is amended to read:


Subdivision 1.

Valuation of operating property.

The operating property of every
railroad company doing business in Minnesota shall be valued by the commissioner in the
manner prescribed by sections deleted text begin270.80deleted text endnew text begin 273.3712new text end to deleted text begin270.87deleted text endnew text begin 273.3719new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 14.

Minnesota Statutes 2014, section 270.81, subdivision 3, is amended to read:


Subd. 3.

Determination of type of property.

new text begin(a) new text endThe commissioner deleted text beginshall havedeleted text endnew text begin hasnew text end
exclusive primary jurisdiction to determine deleted text beginwhatdeleted text endnew text begin whether railroad propertynew text end is operating
property deleted text beginand what isdeleted text endnew text begin ornew text end nonoperating property. In making deleted text beginsuchdeleted text endnew text begin thenew text end determination, the
commissioner deleted text beginshalldeleted text endnew text begin maynew text end solicit information and opinions from outside the department
and afford all interested persons an opportunity to submit data or views on the subject
in writing or orally.

new text begin (b)new text end Local new text beginand county new text endassessors may submit written requests to the commissioner,
asking for a determination of deleted text beginthe nature of specificdeleted text endnew text begin whethernew text end property owned by a
railroad and located within their assessing jurisdictionnew text begin is operating or nonoperatingnew text end. deleted text beginAny
determination made by the commissioner may be appealed by the assessor to the Tax Court
pursuant to chapter 271.
deleted text endnew text begin The requests must be submitted by April 1 of the assessing year.
The commissioner must send the assessor a written determination by May 1. Assessors may
appeal determinations made by the commissioner to the Tax Court pursuant to chapter 271.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 15.

Minnesota Statutes 2014, section 270.81, is amended by adding a subdivision
to read:


new text begin Subd. 6. new text end

new text begin Deduction for nonoperating and exempt property. new text end

new text begin Property that was part
of the system, but is nonoperating property, or that is exempt from ad valorem taxation, is
excluded from the Minnesota allocated value under section 273.3718, subdivision 1a. Only
qualifying property located in Minnesota may be deducted from the Minnesota allocated
value. The commissioner must deduct the market value of the property to be excluded. This
must be calculated by multiplying the book value of the property by the market-to-book
ratio of the unit. The company has the burden of proof to establish that property should
be excluded from the Minnesota allocated value. The railroad company must submit
schedules of exempt or nonoperating property as the commissioner may require. The
remaining amount after this deduction is the Minnesota apportionable market value.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 16.

Minnesota Statutes 2014, section 270.82, is amended to read:


270.82 REPORTS OF RAILROAD COMPANIES.

Subdivision 1.

Annual report required.

new text beginBefore March 31, new text endevery railroad company
doing business in Minnesota deleted text beginshall annuallydeleted text endnew text begin mustnew text end file with the commissioner deleted text beginon or before
March 31 a
deleted text endnew text begin an annualnew text end report under oath setting forth the information prescribed by the
commissioner to enable the commissioner to make the valuation and equalization required
by sections deleted text begin270.80deleted text endnew text begin 273.3712new text end to deleted text begin270.87.deleted text endnew text begin 273.3719. The commissioner shall prescribe the
content, format, and manner of the report pursuant to section 270C.30. If a report is made
by electronic means, the taxpayer's signature is defined pursuant to section 270C.304,
except that a "law administered by the commissioner" includes the property tax laws.
new text end

Subd. 2.

Extension of time.

new text beginIf new text endthe commissioner deleted text beginfor gooddeleted text endnew text begin determines that there is
reasonable
new text end causenew text begin, the commissionernew text end may extend new text beginthe time for filing the report required by
subdivision 1
new text endfor up to 15 days deleted text beginthe time for filing the report required by subdivision 1deleted text end.

new text begin Subd. 3. new text end

new text begin Amended reports. new text end

new text begin A railroad company may file an amended report to
correct or add information to the original report. Amended reports must be filed with
the commissioner by April 30.
new text end

new text begin Subd. 4. new text end

new text begin Failure to file reports. new text end

new text begin (a) The commissioner may make the valuation
provided for by sections 273.3712 to 237.3719, according to the commissioner's best
judgment based on available information, if any railroad company does not:
new text end

new text begin (1) make the report required by this section;
new text end

new text begin (2) permit an inspection and examination of its property, records, books, accounts,
or other papers when requested by the commissioner; or
new text end

new text begin (3) appear before the commissioner or a person appointed under 273.3715, when
required to do so.
new text end

new text begin (b) If the commissioner makes the valuation pursuant to paragraph (a), the
commissioner's valuation is final. Notwithstanding any other law to the contrary,
the commissioner's valuation made pursuant to this subdivision is not appealable
administratively.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 17.

Minnesota Statutes 2014, section 270.83, subdivision 1, is amended to read:


Subdivision 1.

Powers of commissioner.

The commissioner deleted text beginshall havedeleted text endnew text begin hasnew text end the
power to examine or cause to be examined any books, papers, records, or memoranda
relevant to the determination of the valuation of operating property deleted text beginas herein provideddeleted text end.
The commissioner deleted text beginshall have the further power todeleted text endnew text begin maynew text end require the attendance of any
person having knowledge or information deleted text beginin the premisesdeleted text endnew text begin concerning the valuation of the
operating property
new text end, deleted text begintodeleted text end compel the production of books, papers, records, or memoranda by
persons so required to attend, deleted text begintodeleted text end take testimony on matters material to deleted text beginsuch determinationdeleted text endnew text begin
determine the valuation of operating property
new text end and administer oaths or affirmations.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 18.

Minnesota Statutes 2014, section 270.83, subdivision 2, is amended to read:


Subd. 2.

Appointment of persons; subpoenas.

deleted text beginFor the purpose of making such
examinations,
deleted text end The commissioner may appoint such persons as the commissioner deleted text beginmay
deem
deleted text endnew text begin deemsnew text end necessarynew text begin to make the examinations described in subdivision 1new text end. deleted text beginSuch
persons shall have the rights and powers of the examining of
deleted text endnew text begin Persons appointed may
examine
new text end books, papers, records or memoranda, deleted text beginand of subpoenaingdeleted text endnew text begin subpoenanew text end witnesses,
deleted text beginadministeringdeleted text endnew text begin administernew text end oaths and affirmations, and deleted text begintaking ofdeleted text endnew text begin takenew text end testimonydeleted text begin, which are
conferred upon the commissioner hereby
deleted text end. The court administrator of any court of record,
upon demand of any deleted text beginsuchdeleted text end personnew text begin appointednew text end, shall issue a subpoena for the attendance of
any witness or the production of any books, papers, records, or memoranda before such
person. The commissioner may also issue subpoenas for the appearance of witnesses
deleted text beginbefore the commissioner or before such persons. Disobedience of subpoenas so issued
shall be punished by the district court of the district in which the subpoena is issued for a
contempt of the district court
deleted text end.new text begin Failure to comply with a subpoena shall be punished in the
same manner as contempt of the district court.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 19.

Minnesota Statutes 2014, section 270.84, is amended to read:


270.84 ANNUAL VALUATION OF OPERATING PROPERTY.

Subdivision 1.

Annual valuation; rules.

new text begin(a) new text endnew text beginBefore July 1, new text endthe commissioner
deleted text beginshall annually between March 31 and May 31 make a determination ofdeleted text endnew text begin must determinenew text end
the deleted text beginfairdeleted text end market value of the operating property of every railroad company doing business
in this state as of January 2 of the year in which the valuation is made. deleted text beginIn making
this determination,
deleted text end The commissioner deleted text beginshalldeleted text endnew text begin mustnew text end employ generally accepted appraisal
principles and practices which may include the unit method of determining valuedeleted text begin.deleted text endnew text begin, and
approaches approved by the Western States Association of Tax Administrators, National
Conference of Unit Valuation States, and the International Association of Assessing
Officers.
new text end

new text begin (b) The unit value of railroad property is the reconciled value considering the cost,
income, and market approaches under subdivisions 1a, 1b, and 1c. Each approach must
be weighted in accordance with the reliability of the information and the commissioner's
judgment.
new text end

new text begin Subd. 1a. new text end

new text begin Cost approach. new text end

new text begin (a) The commissioner may use the cost approach,
including but not limited to original cost less book depreciation and replacement cost
less depreciation.
new text end

new text begin (b) Book depreciation is allowed as a deduction from an original cost model. Book
depreciation is assumed to include all forms of appraisal depreciation.
new text end

new text begin (c) Explicitly calculated appraisal depreciation, including physical, functional, and
external obsolescence, is allowed as a deduction from the replacement cost model.
new text end

new text begin Subd. 1b. new text end

new text begin Income approach. new text end

new text begin (a) The commissioner may use the income approach,
including but not limited to direct capitalization models and yield capitalization models.
new text end

new text begin (b) The yield rate is calculated using market data on selected comparable companies
in the band of investment method.
new text end

new text begin (1) Discounted cash flows is a yield capitalization model that calculates the present
value of explicit cash flow forecasts capitalized using the yield rate, plus revision to stable
growth yield capitalization after the period of explicit forecasts.
new text end

new text begin (2) Stable growth yield capitalization is a yield capitalization model that calculates
the present value of anticipated future cash flows, capitalized using the yield rate and
considering growth.
new text end

new text begin (c) Direct capitalization is the expected net operating income for the following year,
divided by the direct capitalization rate. The direct capitalization rate is calculated by
using direct market observations from comparable sales or using market earning-to-price
information in the band of investment method.
new text end

new text begin Subd. 1c. new text end

new text begin Market approach. new text end

new text begin The commissioner may use the market approach,
including but not limited to a sales comparison model, a stock and debt model, or other
market models that are available and reliable.
new text end

Subd. 2.

Notice.

The commissioner, after determining the deleted text beginfairdeleted text end market value of the
operating property of each railroad company, deleted text beginshall give notice todeleted text endnew text begin must notifynew text end the railroad
company of the valuation deleted text beginby first class mail, overnight delivery, or messenger servicedeleted text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 20.

Minnesota Statutes 2014, section 270.86, is amended to read:


270.86 APPORTIONMENT AND EQUALIZATION OF VALUATION.

Subdivision 1.

Apportionment of value.

deleted text beginUpon determiningdeleted text endnew text begin After allocating to
Minnesota
new text end the deleted text beginfairdeleted text end market value of the operating property of each railroad company, the
commissioner deleted text beginshalldeleted text endnew text begin mustnew text end apportion deleted text beginsuchdeleted text endnew text begin thenew text end value to deleted text beginthe respective counties and to the
deleted text enddeleted text begintaxing districts therein in conformity with fair and reasonable rules and standards to be
established by the commissioner pursuant to notice and hearing, except as provided in
section 270.81. In establishing such rules and standards the commissioner may consider
(a) the physical situs of all station houses, depots, docks, wharves, and other buildings and
structures with an original cost in excess of $10,000; (b) the proportion that the length and
type of all the tracks used by the railroad in such county and taxing district bears to the
length and type of all the track used in the state; and (c) other facts as will result in a fair
and equitable apportionment of value
deleted text endnew text begin the operating parcels in Minnesotanew text end.

new text begin The apportioned market value of each company's operating parcel in Minnesota is
the current original cost of each parcel as of the last assessment date plus original cost
of new construction minus the original cost of property retired since the last assessment
date. The total Minnesota apportionable market value of the railroad is divided by the
total current original cost of the railroad in Minnesota to determine a percentage. The
resulting percentage is multiplied by the current original cost of each parcel to determine
the apportioned market value of each parcel.
new text end

new text begin Subd. 1a. new text end

new text begin Allocation of value. new text end

new text begin (a) After the market value of operating property has
been estimated, the portion of value that is attributable to Minnesota must be determined
by calculating an allocation percentage using factors relevant to the industry segment of
the railroad company. The allocation percentage must be multiplied by the value of the
operating property to determine the Minnesota allocated value.
new text end

new text begin (b) The Minnesota allocated value is determined by averaging the following factors:
new text end

new text begin (1) miles of railroad track operated in Minnesota divided by miles of railroad track
operated in all states;
new text end

new text begin (2) ton miles of revenue freight transported in Minnesota divided by ton miles of
revenue freight transported in all states;
new text end

new text begin (3) gross revenues from transportation operations within Minnesota divided by gross
revenues from transportation operations in all states; and
new text end

new text begin (4) cost of railroad property in Minnesota divided by cost of railroad property in
all states.
new text end

new text begin (c) Each of the available factors must be weighted equally.
new text end

Subd. 2.

Equalized valuation.

After making the apportionment provided in
subdivision 1, the commissioner deleted text beginshalldeleted text endnew text begin mustnew text end determine the equalized valuation of the
operating property in each county by applying to the apportioned value an estimated
current year median sales ratio for all commercial and industrial property in that county.
If the commissioner deleted text begindecidesdeleted text endnew text begin determines thatnew text end there are insufficient sales to determine a
median commercial-industrial sales ratio, an estimated current year countywide median
sales ratio for all property deleted text beginshalldeleted text endnew text begin mustnew text end be applied to the apportioned value. deleted text beginNo equalization
shall
deleted text endnew text begin Equalization must notnew text end be made to the market value of the operating property if the
median sales ratio determined pursuant to this subdivision is deleted text beginwithin fivedeleted text endnew text begin at least 90 but less
than 105
new text end percent of the assessment ratio of the railroad operating property.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 21.

Minnesota Statutes 2014, section 270.87, is amended to read:


270.87 CERTIFICATION TO COUNTY ASSESSORS.

deleted text begin After making an annual determination of the equalized fair market value of the
operating property of each company in each of the respective counties, and in the taxing
districts therein,
deleted text end The commissioner deleted text beginshalldeleted text endnew text begin mustnew text end certify the equalized deleted text beginfairdeleted text end market value new text beginof
the operating property
new text endto the county assessor deleted text beginon ordeleted text end before deleted text beginJune 30deleted text endnew text begin August 1new text end. The equalized
deleted text beginfairdeleted text end market value of the operating property of the railroad company in the county and the
taxing districts therein is the value on which taxes must be levied and collected in the
same manner as on the commercial and industrial property deleted text beginof such county and the taxing
districts therein
deleted text endnew text begin in the counties and taxing districtsnew text end. If the commissioner determines that
the equalized deleted text beginfairdeleted text end market value certified deleted text beginon ordeleted text end before deleted text beginJune 30deleted text endnew text begin August 1new text end is in error, the
commissioner may issue a corrected certification deleted text beginon ordeleted text end before deleted text beginAugust 31deleted text endnew text begin October 1new text end. The
commissioner may correct errors that are merely clerical in nature until December 31.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 22.

Minnesota Statutes 2014, section 272.02, subdivision 9, is amended to read:


Subd. 9.

Personal property; exceptions.

Except for the taxable personal property
enumerated below, all personal property and the property described in section 272.03,
subdivision 1
, paragraphs (c) and (d), shall be exempt.

The following personal property shall be taxable:

(a) personal property which is part of an electric generating, transmission, or
distribution system or a pipeline system transporting or distributing water, gas, crude
oil, or petroleum products or mains and pipes used in the distribution of steam or hot or
chilled water for heating or cooling buildings and structures;

(b) deleted text beginrailroad docks and wharves which are part of thedeleted text end new text beginpersonal property that is part of
the
new text endoperating property of a railroad company as defined in section deleted text begin270.80deleted text endnew text begin 273.3712new text end;

(c) personal property defined in section 272.03, subdivision 2, clause (3);

(d) leasehold or other personal property interests which are taxed pursuant to section
272.01, subdivision 2; 273.124, subdivision 7; or 273.19, subdivision 1; or any other law
providing the property is taxable as if the lessee or user were the fee owner;

(e) manufactured homes and sectional structures, including storage sheds, decks,
and similar removable improvements constructed on the site of a manufactured home,
sectional structure, park trailer or travel trailer as provided in section 273.125, subdivision
8
, paragraph (f); and

(f) flight property as defined in section 270.071.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 23.

Minnesota Statutes 2014, section 275.025, subdivision 1, is amended to read:


Subdivision 1.

Levy amount.

The state general levy is levied against
commercial-industrial property and seasonal residential recreational property, as defined in
this section. The state general levy base amount is deleted text begin$592,000,000deleted text endnew text begin $889,600,000new text end for taxes
payable in deleted text begin2002deleted text endnew text begin 2016new text end. For taxes payable in subsequent years, the levy base amount is
increased each year by multiplying the levy base amount for the prior year by the sum
of one plus the rate of increase, if any, in the implicit price deflator for government
consumption expenditures and gross investment for state and local governments prepared
by the Bureau of Economic Analysts of the United States Department of Commerce for
the 12-month period ending March 31 of the year prior to the year the taxes are payable.
The tax under this section is not treated as a local tax rate under section 469.177 and is not
the levy of a governmental unit under chapters 276A and 473F.

The commissioner shall increase or decrease the preliminary or final rate for a year
as necessary to account for errors and tax base changes that affected a preliminary or final
rate for either of the two preceding years. Adjustments are allowed to the extent that the
necessary information is available to the commissioner at the time the rates for a year must
be certified, and for the following reasons:

(1) an erroneous report of taxable value by a local official;

(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for commercial-industrial or seasonal
residential recreational property reported on the abstracts of tax lists submitted under
section 275.29 that was not reported on the abstracts of assessment submitted under
section 270C.89 for the same year.

The commissioner may, but need not, make adjustments if the total difference in the tax
levied for the year would be less than $100,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 24.

Minnesota Statutes 2014, section 275.025, subdivision 4, is amended to read:


Subd. 4.

Apportionment and levy of state general tax.

deleted text beginNinety-fivedeleted text endnew text begin 95.1new text end percent of
the state general tax must be levied by applying a uniform rate to all commercial-industrial
tax capacity and deleted text beginfivedeleted text endnew text begin 4.9new text end percent of the state general tax must be levied by applying a
uniform rate to all seasonal residential recreational tax capacity. On or before October 1
each year, the commissioner of revenue shall certify the preliminary state general levy
rates to each county auditor that must be used to prepare the notices of proposed property
taxes for taxes payable in the following year. By January 1 of each year, the commissioner
shall certify the final state general levy rate to each county auditor that shall be used
in spreading taxes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 25. new text beginAPPROPRIATIONS.
new text end

new text begin The following sums are appropriated from the general fund to the agency to
implement the provisions of this article as follows: $266,000 in fiscal year 2016, $14,000
in fiscal year 2017, $13,000 in fiscal year 2018, and $11,000 in fiscal year 2019. The sums
indicated in this section for fiscal years 2016, 2017, and 2018 are onetime appropriations
and are not added to the agency's permanent base. The sum indicated in this section for
fiscal year 2019 shall become part of the agency's base.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 26. new text beginREVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall renumber the provisions of Minnesota Statutes listed
in column A to the references listed in column B. The revisor shall also make necessary
cross-reference changes in Minnesota Statutes and Minnesota Rules consistent with
renumbering.
new text end

new text begin Column A
new text end
new text begin Column B
new text end
new text begin 270.80
new text end
new text begin 273.3712
new text end
new text begin 270.81
new text end
new text begin 273.3713
new text end
new text begin 270.82
new text end
new text begin 273.3714
new text end
new text begin 270.83
new text end
new text begin 273.3715
new text end
new text begin 270.84
new text end
new text begin 273.3716
new text end
new text begin 270.85
new text end
new text begin 273.3717
new text end
new text begin 270.86
new text end
new text begin 273.3718
new text end
new text begin 270.87
new text end
new text begin 273.3719
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

Sec. 27. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2014, sections 270.81, subdivision 4; and 270.83, subdivision 3, new text end new text begin
and
new text end new text begin Minnesota Rules, parts 8106.0100, subparts 1, 2, 3, 4, 5, 6, 7, 8, 10, 12, 13, 14, 17,
17a, 18, 19, 20, and 21; 8106.0300, subparts 1 and 3; 8106.0400; 8106.0500; 8106.0600;
8106.0700; 8106.0800; and 8106.9900,
new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2016 and
thereafter.
new text end

ARTICLE 3

CORPORATE TAX REFORM

Section 1.

Minnesota Statutes 2014, section 16D.08, subdivision 2, is amended to read:


Subd. 2.

Powers.

(a) In addition to the collection remedies available to private
collection agencies in this state, the commissioner, with legal assistance from the attorney
general, may utilize any statutory authority granted to a referring agency for purposes of
collecting debt owed to that referring agency. The commissioner may also use the tax
collection remedies in sections 270C.03, subdivision 1, clause deleted text begin(8)deleted text endnew text begin (9)new text end, 270C.31, 270C.32,
270C.52, subdivisions 2 and 3, 270C.63, 270C.65, and 270C.67 to 270C.72. A debtor
may take advantage of any administrative or appeal rights contained in the listed sections.
For administrative and appeal rights for nontax debts, references to administrative
appeals or to the taxpayer rights advocate shall be construed to be references to the case
reviewer, references to Tax Court shall be construed to mean district court, and offers
in compromise shall be submitted to the referring agency. A debtor who qualifies for
cancellation of collection costs under section 16D.11, subdivision 3, clause (1), can apply
to the commissioner for reduction or release of a continuous wage levy, if the debtor
establishes that the debtor needs all or a portion of the wages being levied upon to pay
for essential living expenses, such as food, clothing, shelter, medical care, or expenses
necessary for maintaining employment. The commissioner's determination not to reduce
or release a continuous wage levy is appealable to district court. The word "tax" or "taxes"
when used in the tax collection statutes listed in this subdivision also means debts referred
under this chapter.

(b) Before using the tax collection remedies listed in this subdivision, notice and
demand for payment of the amount due must be given to the person liable for the payment
or collection of the debt at least 30 days prior to the use of the remedies. The notice must
be sent to the person's last known address and must include a brief statement that sets forth
in simple and nontechnical terms the amount and source of the debt, the nature of the
available collection remedies, and remedies available to the debtor.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2014, section 270C.03, subdivision 1, is amended to read:


Subdivision 1.

Powers and duties.

The commissioner shall have and exercise
the following powers and duties:

(1) administer and enforce the assessment and collection of taxes;

(2) make determinations, corrections, and assessments with respect to taxes,
including interest, additions to taxes, and assessable penalties;

new text begin (3) disallow the tax effects of a transaction that does not have economic substance;
new text end

deleted text begin (3)deleted text endnew text begin (4)new text end use statistical or other sampling techniques consistent with generally accepted
auditing standards in examining returns or records and making assessments;

deleted text begin (4)deleted text endnew text begin (5)new text end investigate the tax laws of other states and countries, and formulate and
submit to the legislature such legislation as the commissioner may deem expedient
to prevent evasions of state revenue laws and to secure just and equal taxation and
improvement in the system of state revenue laws;

deleted text begin (5)deleted text endnew text begin (6)new text end consult and confer with the governor upon the subject of taxation, the
administration of the laws in regard thereto, and the progress of the work of the
department, and furnish the governor, from time to time, such assistance and information
as the governor may require relating to tax matters;

deleted text begin (6)deleted text endnew text begin (7)new text end execute and administer any agreement with the secretary of the treasury or the
Bureau of Alcohol, Tobacco, Firearms and Explosives in the Department of Justice of the
United States or a representative of another state regarding the exchange of information
and administration of the state revenue laws;

deleted text begin (7)deleted text endnew text begin (8)new text end require town, city, county, and other public officers to report information
as to the collection of taxes received from licenses and other sources, and such other
information as may be needful in the work of the commissioner, in such form as the
commissioner may prescribe;

deleted text begin (8)deleted text endnew text begin (9)new text end authorize the use of unmarked motor vehicles to conduct seizures or criminal
investigations pursuant to the commissioner's authority;

deleted text begin (9)deleted text endnew text begin (10)new text end authorize the participation in audits performed by the Multistate Tax
Commission. For the purposes of chapter 270B, the Multistate Tax Commission will be
considered to be a state for the purposes of auditing corporate sales, excise, and income
tax returns;

deleted text begin (10)deleted text endnew text begin (11)new text end maintain toll-free telephone access for taxpayer assistance for calls from
locations within the state; and

deleted text begin (11)deleted text endnew text begin (12)new text end exercise other powers and authority and perform other duties required of or
imposed upon the commissioner by law.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 3.

Minnesota Statutes 2014, section 270C.33, subdivision 6, is amended to read:


Subd. 6.

Assessment presumed valid.

new text begin(a) new text endA return or assessment of tax made
by the commissioner is prima facie correct and valid. The taxpayer has the burden of
establishing its incorrectness or invalidity in any related action or proceeding.

new text begin (b) To overcome the presumption that an order of the commissioner that disallows
the tax effects of a transaction because the commissioner determined the transaction
does not have economic substance pursuant to section 270.03, subdivision 1, clause (3),
is prima facie correct and valid, the taxpayer must prove the transaction has economic
substance with clear and convincing evidence.
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, 2014.
new text end

Sec. 4.

new text begin [270C.331] ECONOMIC SUBSTANCE.
new text end

new text begin Subdivision 1. new text end

new text begin Economic substance. new text end

new text begin (a) For the purposes of disallowing the
tax effects of a transaction that does not have substance pursuant to section 270C.03,
subdivision 1, clause (3), a transaction shall be treated as having economic substance
only if:
new text end

new text begin (1) the transaction changes in a meaningful way, apart from tax effects, the taxpayer's
economic position; and
new text end

new text begin (2) the taxpayer has a substantial purpose, apart from tax effects, for entering into
the transaction.
new text end

new text begin (b) In determining whether the requirements of paragraph (a), clauses (1) and (2),
are met, the potential for profit of a transaction shall be taken into account only if the
present value of the reasonable expected pretax profit from the transaction is substantial in
relation to the present value of the expected net tax benefits that would be allowed if the
transaction was respected. Fees and other transaction expenses shall be taken into account
as expenses in determining pretax profit.
new text end

new text begin (c) For the purposes of paragraph (a), clause (2), achieving a financial accounting
benefit shall not be taken into account as a purpose for entering into a transaction if the
origin of such financial accounting benefit is a reduction of federal, state, or local tax.
new text end

new text begin Subd. 2. new text end

new text begin Apart from tax effects. new text end

new text begin For purposes of this section, "apart from tax
effects" means without regard to the state and local tax effects arising from the application
of the laws of any state or local unit of government to the form of the transaction, the
federal tax effects, or both.
new text end

new text begin Subd. 3. new text end

new text begin Transaction. new text end

new text begin For purposes of this section and section 270C.03, subdivision
1, clause (3), "transaction" includes a series of transactions.
new text end

new text begin Subd. 4. new text end

new text begin Personal transactions of individuals. new text end

new text begin In the case of an individual,
subdivision 1 shall only apply to transactions entered into in connection with the trade or
business activity engaged in for the production of income.
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, 2014.
new text end

Sec. 5.

Minnesota Statutes 2014, section 289A.60, is amended by adding a subdivision
to read:


new text begin Subd. 27a. new text end

new text begin Noneconomic substance transaction understatement penalty. new text end

new text begin (a) If a
transaction is disallowed pursuant to section 270C.03, subdivision 1, clause (3), a penalty
equal to 20 percent of the amount of the disclosed noneconomic substance transaction
understatement must be added to the tax. This subdivision applies to any income or item
of income that is attributable to any transaction disallowed pursuant to section 270C.03,
subdivision 1, clause (3).
new text end

new text begin (b) If a transaction is disallowed pursuant to section 270C.03, subdivision 1, clause
(3), a penalty equal to 40 percent of the amount of the undisclosed noneconomic substance
transaction understatement must be added to the tax. This subdivision applies to any
income or item of income that is attributable to any transaction disallowed pursuant to
section 270C.03, subdivision 1, clause (3).
new text end

new text begin (c) For purposes of this subdivision, the term "disclosed noneconomic substance
transaction" means a transaction that fails to meet the criteria for having economic
substance as described in section 270C.03, subdivision 1, clause (3), with respect to which
the relevant facts affecting tax treatment are adequately disclosed in the return or in a
statement attached to the return.
new text end

new text begin (d) For purposes of this subdivision, the term "undisclosed noneconomic substance
transaction" means a transaction that fails to meet the criteria for having economic
substance as described in section 270C.03, subdivision 1, clause (3), with respect to which
the relevant facts affecting tax treatment are not adequately disclosed in the return or in a
statement attached to the return.
new text end

new text begin (e) For purposes of this subdivision, if amendments or supplements to a return of
tax are filed after the date the taxpayer is first contacted by the commissioner regarding
examination of the return, the amendments or supplements may not be taken into account
to reduce the noneconomic substance transaction understatement.
new text end

new text begin (f) For purposes of this subdivision, "understatement" means the product of:
new text end

new text begin (1) the amount of increase, if any, in taxable income that results from a difference
between the proper tax treatment of an item to which section 270C.03, subdivision 1, clause
(3), applies and the taxpayer's treatment of that item as shown on the taxpayer's tax return.
For the purposes of this paragraph, any reduction of the excess of deductions allowed for
the taxable year over gross income for that year, and any reduction in the amount of
capital losses which would, without regard to section 1211 of the Internal Revenue Code,
be allowed for that year, must be treated as an increase in taxable income; and
new text end

new text begin (2) the highest rate of tax imposed on the taxpayer under section 290.06, determined
without regard to the understatement.
new text end

new text begin (g) If the noneconomic substance transaction understatement penalty is imposed
under this subdivision, the penalties imposed under subdivision 27 do not apply.
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, 2014.
new text end

Sec. 6.

Minnesota Statutes 2014, section 290.01, subdivision 4a, is amended to read:


Subd. 4a.

Financial institution.

(a) "Financial institution" means:

(1) deleted text begina holding companydeleted text endnew text begin any corporation or other business entity registered (i) under
state law as a bank holding company; (ii) under the federal Bank Holding Company Act
of 1956, as amended; or (iii) as a savings and loan holding company under the federal
National Housing Act, as amended
new text end;

(2) deleted text beginany regulated financial corporation; ordeleted text endnew text begin a national bank organized and existing
as a national bank association pursuant to the provisions of United States Code, title
12, chapter 2;
new text end

(3) deleted text beginany other corporation organized under the laws of the United States or organized
under the laws of this state or any other state or country that is carrying on the business of
a financial institution.
deleted text endnew text begin a savings association or federal savings bank as defined in United
States Code, title 12, section 1813(b)(1);
new text end

new text begin (4) any bank or thrift institution incorporated or organized under the laws of any state;
new text end

new text begin (5) any corporation organized under United States Code, title 12, sections 611 to 631;
new text end

new text begin (6) any agency or branch of a foreign depository as defined under United States
Code, title 12, section 3101;
new text end

new text begin (7) any corporation or other business entity that is more than 50 percent owned,
directly or indirectly, by any person or business entity described in clauses (1) to (6), other
than an insurance company taxable under chapter 297I;
new text end

new text begin (8) a corporation or other business entity that derives more than 50 percent of its
total gross income for financial accounting purposes from finance leases. For the purposes
of this clause, "gross income" is the average from the current tax year and immediately
preceding two years and excludes gross income from incidental or occasional transactions.
For purposes of this clause, "finance lease" means any lease transaction which is the
functional equivalent of an extension of credit, and that transfers substantially all of the
benefits and risks incident to the ownership of property, including any direct financing
lease or leverage lease that meets the criteria of Financial Accounting Standards Board
Statement No. 13, accounting for leases, or any other lease that is accounted for as
financing by a lessor under generally accepted accounting principles; or
new text end

new text begin (9) any other person or business entity, other than an insurance company taxable under
chapter 297I, which derives more than 50 percent of its gross income from activities that an
entity described in clauses (2) to (6), or (8), is authorized to transact. For the purposes of
this clause, gross income does not include income from nonrecurring, extraordinary items.
new text end

(b) deleted text begin"Holding company" means any corporation registered under the Federal Bank
Holding Company Act of 1956, as amended, or registered as a savings and loan holding
company under the Federal National Housing Act, as amended, or a federal savings
bank holding company.
deleted text endnew text begin The commissioner is authorized to exclude any person from the
application of paragraph (a), clause (9), if the person proves by clear and convincing
evidence that the person's income-producing activity is not in substantial competition with
any person described in paragraph (a), clauses (2) to (6), or (8).
new text end

deleted text begin (c) "Regulated financial corporation" means an institution, the deposits or accounts
of which are insured under the Federal Deposit Insurance Act or by the Federal Savings
and Loan Insurance Corporation, any institution which is a member of a Federal Home
Loan Bank, any other bank or thrift institution incorporated or organized under the laws of
any state or any foreign country which is engaged in the business of receiving deposits,
any corporation organized under the provisions of United States Code, title 12, sections
611 to 631 (Edge Act Corporations), and any agency of a foreign depository as defined in
United States Code, title 12, section 3101.
deleted text end

deleted text begin (d) "Business of a financial institution" means:
deleted text end

deleted text begin (1) the business that any corporation organized under the authority of the United
States or organized under the laws of this state or any other state or country does or has
authority to do which is substantially similar to the business which a corporation may be
created to do under chapters 46 to 55 or any business which a corporation is authorized
to do by those laws; or
deleted text end

deleted text begin (2) the business that any corporation organized under the authority of the United
States or organized under the laws of this state or any other state or country does or has
authority to do if the corporation derives more than 50 percent of its gross income from
lending activities (including discounting obligations) in substantial competition with the
businesses described in clause (1). For purposes of this clause, the computation of the gross
income of a corporation does not include income from nonrecurring, extraordinary items.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 7.

Minnesota Statutes 2014, section 290.01, is amended by adding a subdivision
to read:


new text begin Subd. 19i. new text end

new text begin Accelerated recognition of certain installment sale gains. new text end

new text begin (a) For the
purposes of this subdivision, the following definitions apply:
new text end

new text begin (1) "realized" means realized as defined by section 1001(b) of the Internal Revenue
Code;
new text end

new text begin (2) "installment sale" means any installment sale under section 453 of the Internal
Revenue Code, and any other sale which is reported utilizing a method of accounting
authorized under subchapter E of the Internal Revenue Code, which allows taxpayers to
delay reporting or recognition of a realized gain until a future year; and
new text end

new text begin (3) "allocable amount" means the full amount to be apportioned to Minnesota under
section 291.191, or the full amount to be assigned under section 290.17.
new text end

new text begin (b) In the case of a nonresident individual or a person who becomes a nonresident
individual during the tax year, net income includes the allocable amount realized upon a
sale of the assets of, or the sale of any interest in, an S corporation or partnership which
operated in Minnesota during the taxable year of sale, including any income or gain to be
recognized in future years pursuant to an installment sale method of reporting under the
Internal Revenue Code.
new text end

new text begin (c) An individual who becomes a nonresident of Minnesota in any year after an
installment sale is required to recognize the full amount of any income or gain not
recognized in a prior year on the individual's final Minnesota resident tax return.
new text end

new text begin (d) Notwithstanding paragraphs (b) and (c), taxpayers may elect to defer the
recognition of installment sale gains by making an election under this paragraph. The
election must be filed on a form prescribed by the commissioner and must be filed by
the due date of the individual tax return, including any extension. Electing taxpayers
are required to:
new text end

new text begin (1) file Minnesota tax returns in all subsequent years when gains from the installment
sale are recognized and reported to the Internal Revenue Service;
new text end

new text begin (2) allocate gains to the state of Minnesota as though the gains were incurred in the
year of sale under section 290.191 or 290.17; and
new text end

new text begin (3) include all relevant federal tax documents reporting the installment sale with
subsequent Minnesota tax returns.
new text end

new text begin (e) Income or gain recognized for Minnesota purposes under paragraphs (b) and (c)
and subjected to tax, is excluded from net income in future years.
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, 2014.
new text end

Sec. 8.

Minnesota Statutes 2014, section 290.068, subdivision 2, is amended to read:


Subd. 2.

Definitions.

For purposes of this section, the following terms have the
meanings given.

(a) "Qualified research expenses" means (i) qualified research expenses and basic
research payments as defined in section 41(b) and (e) of the Internal Revenue Code, except
it does not include expenses incurred for qualified research or basic research conducted
outside the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue
Code; and (ii) contributions to a nonprofit corporation established and operated pursuant
to the provisions of chapter 317A for the purpose of promoting the establishment and
expansion of business in this state, provided the contributions are invested by the nonprofit
corporation for the purpose of providing funds for small, technologically innovative
enterprises in Minnesota during the early stages of their development.

(b) "Qualified research" means qualified research as defined in section 41(d) of the
Internal Revenue Code, except that the term does not include qualified research conducted
outside the state of Minnesota.

(c) "Base amount" means base amount as defined in section 41(c) of the Internal
Revenue Code, except that the average annual gross receipts must be calculated using
Minnesota sales or receipts under section 290.191 and the definitions contained in clauses
(a) and (b) shall apply.new text begin If there are inadequate records or the records are unavailable to
compute or verify the base percentage, a fixed base percentage of 16 percent must be used.
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, 2014.
new text end

Sec. 9.

Minnesota Statutes 2014, section 290.17, subdivision 4, is amended to read:


Subd. 4.

Unitary business principle.

(a) If a trade or business conducted wholly
within this state or partly within and partly without this state is part of a unitary business,
the entire income of the unitary business is subject to apportionment pursuant to section
290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
business is considered to be derived from any particular source and none may be allocated
to a particular place except as provided by the applicable apportionment formula. The
provisions of this subdivision do not apply to business income subject to subdivision 5,
income of an insurance company, or income of an investment company determined under
section 290.36.

(b) The term "unitary business" means business activities or operations which
result in a flow of value between them. The term may be applied within a single legal
entity or between multiple entities and without regard to whether each entity is a sole
proprietorship, a corporation, a partnership or a trust.

(c) Unity is presumed whenever there is unity of ownership, operation, and use,
evidenced by centralized management or executive force, centralized purchasing,
advertising, accounting, or other controlled interaction, but the absence of these
centralized activities will not necessarily evidence a nonunitary business. Unity is also
presumed when business activities or operations are of mutual benefit, dependent upon or
contributory to one another, either individually or as a group.

(d) Where a business operation conducted in Minnesota is owned by a business
entity that carries on business activity outside the state different in kind from that
conducted within this state, and the other business is conducted entirely outside the state, it
is presumed that the two business operations are unitary in nature, interrelated, connected,
and interdependent unless it can be shown to the contrary.

(e) Unity of ownership does not exist when two or more corporations are involved
unless more than 50 percent of the voting stock of each corporation is directly or indirectly
owned by a common owner or by common owners, either corporate or noncorporate, or
by one or more of the member corporations of the group. For this purpose, the term
"voting stock" shall include membership interests of mutual insurance holding companies
formed under section 66A.40.

(f) The net income and apportionment factors under section 290.191 or 290.20 of
foreign corporations and other foreign entities which are part of a unitary business shall
not be included in the net income or the apportionment factors of the unitary business;
except that the income and apportionment factors of a foreign entity, other than an entity
treated as a C corporation for federal income tax purposes, that are included in the federal
taxable income, as defined in section 63 of the Internal Revenue Code as amended through
the date named in section 290.01, subdivision 19, of a domestic corporation, domestic
entity, or individual must be included in determining net income and the factors to be used
in the apportionment of net income pursuant to section 290.191 or 290.20. A foreign
corporation or other foreign entity which is not included on a combined report and which
is required to file a return under this chapter shall file on a separate return basis.

(g) For purposes of determining the net income of a unitary business and the factors
to be used in the apportionment of net income pursuant to section 290.191 or 290.20, there
must be included only the income and apportionment factors of domestic corporations
or other domestic entities that are determined to be part of the unitary business pursuant
to this subdivision, notwithstanding that foreign corporations or other foreign entities
might be included in the unitary business; except that the income and apportionment
factors of a foreign entity, other than an entity treated as a C corporation for federal
income tax purposes, that is included in the federal taxable income, as defined in section
63 of the Internal Revenue Code as amended through the date named in section 290.01,
subdivision 19
, of a domestic corporation, domestic entity, or individual must be included
in determining net income and the factors to be used in the apportionment of net income
pursuant to section 290.191 or 290.20.

(h) Each corporation or other entity, except a sole proprietorship, that is part of a
unitary business must file combined reports as the commissioner determines. On the
reports, all intercompany transactions between entities included pursuant to paragraph
(g) must be eliminated and the entire net income of the unitary business determined in
accordance with this subdivision is apportioned among the entities by using each entity's
Minnesota factors for apportionment purposes in the numerators of the apportionment
formula and the total factors for apportionment purposes of all entities included pursuant
to paragraph (g) in the denominators of the apportionment formula. Except as otherwise
provided by paragraph (f), all sales of the unitary business made within this state pursuant
to section 290.191 or 290.20 must be included on the combined report of a corporation or
other entity that is a member of the unitary business and is subject to the jurisdiction of
this state to impose tax under this chapter.

(i) If a corporation has been divested from a unitary business and is included in a
combined report for a fractional part of the common accounting period of the combined
report:

(1) its income includable in the combined report is its income incurred for that part
of the year determined by proration or separate accounting; and

(2) its sales, property, and payroll included in the apportionment formula must
be prorated or accounted for separately.

new text begin (j) For purposes of this subdivision, "insurance company" means any company that is:
new text end

new text begin (1) licensed to engage in the business of insurance in Minnesota pursuant to chapter
60A; or
new text end

new text begin (2) domiciled and licensed to engage in the business of insurance in another state
or country that imposes retaliatory taxes, and that does not grant, on a reciprocal basis,
exemption from such retaliatory taxes to insurance companies or their agents domiciled
in Minnesota.
new text end

new text begin (k) For the purposes of this subdivision, "retaliatory taxes" means taxes imposed on
insurance companies organized in another state or country that result from the fact that an
insurance company organized in the taxing jurisdiction and doing business in the other
jurisdiction is subject to taxes, fines, deposits, penalties, licenses, or fees in an amount
exceeding that imposed by the taxing jurisdiction upon an insurance company organized in
the other state or country and doing business to the same extent in the taxing jurisdiction.
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, 2014.
new text end

Sec. 10.

Minnesota Statutes 2014, section 290.191, subdivision 5, is amended to read:


Subd. 5.

Determination of sales factor.

For purposes of this section, the following
rules apply in determining the sales factor.

(a) The sales factor includes all sales, gross earnings, or receipts received in the
ordinary course of the business, except that the following types of income are not included
in the sales factor:

(1) interest;

(2) dividends;

(3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;

(4) sales of property used in the trade or business, except sales of leased property of
a type which is regularly sold as well as leased; deleted text beginand
deleted text end

(5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
Code or sales of stockdeleted text begin.deleted text endnew text begin; and
new text end

new text begin (6) sales of derivatives including, but not limited to, swaps, options, futures, and
forwards.
new text end

(b) Sales of tangible personal property are made within this state if the property is
received by a purchaser at a point within this state, regardless of the f.o.b. point, other
conditions of the sale, or the ultimate destination of the property.

(c) Tangible personal property delivered to a common or contract carrier or foreign
vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
regardless of f.o.b. point or other conditions of the sale.

(d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
licensed by a state or political subdivision to resell this property only within the state of
ultimate destination, the sale is made in that state.

(e) Sales made by or through a corporation that is qualified as a domestic
international sales corporation under section 992 of the Internal Revenue Code are not
considered to have been made within this state.

(f) Sales, rents, royalties, and other income in connection with real property is
attributed to the state in which the property is located.

(g) Receipts from the lease or rental of tangible personal property, including finance
leases and true leases, must be attributed to this state if the property is located in this
state and to other states if the property is not located in this state. Receipts from the
lease or rental of moving property including, but not limited to, motor vehicles, rolling
stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
factor to the extent that the property is used in this state. The extent of the use of moving
property is determined as follows:

(1) A motor vehicle is used wholly in the state in which it is registered.

(2) The extent that rolling stock is used in this state is determined by multiplying
the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
which is the miles traveled within this state by the leased or rented rolling stock and the
denominator of which is the total miles traveled by the leased or rented rolling stock.

(3) The extent that an aircraft is used in this state is determined by multiplying the
receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
the number of landings of the aircraft in this state and the denominator of which is the
total number of landings of the aircraft.

(4) The extent that a vessel, mobile equipment, or other mobile property is used in
the state is determined by multiplying the receipts from the lease or rental of the property
by a fraction, the numerator of which is the number of days during the taxable year the
property was in this state and the denominator of which is the total days in the taxable year.

(h) Royalties and other income received for the use of or for the privilege of using
intangible property, including patents, know-how, formulas, designs, processes, patterns,
copyrights, trade names, service names, franchises, licenses, contracts, customer lists, or
similar items, must be attributed to the state in which the property is used by the purchaser.
If the property is used in more than one state, the royalties or other income must be
apportioned to this state pro rata according to the portion of use in this state. If the portion
of use in this state cannot be determined, the royalties or other income must be excluded
from both the numerator and the denominator. Intangible property is used in this state if
the purchaser uses the intangible property or the rights therein in the regular course of its
business operations in this state, regardless of the location of the purchaser's customers.

(i) Sales of intangible property are made within the state in which the property is
used by the purchaser. If the property is used in more than one state, the sales must be
apportioned to this state pro rata according to the portion of use in this state. If the
portion of use in this state cannot be determined, the sale must be excluded from both the
numerator and the denominator of the sales factor. Intangible property is used in this
state if the purchaser used the intangible property in the regular course of its business
operations in this state.

(j) Receipts from the performance of services must be attributed to the state where
the services are received. For the purposes of this section, receipts from the performance
of services provided to a corporation, partnership, or trust may only be attributed to a state
where it has a fixed place of doing business. If the state where the services are received is
not readily determinable or is a state where the corporation, partnership, or trust receiving
the service does not have a fixed place of doing business, the services shall be deemed
to be received at the location of the office of the customer from which the services were
ordered in the regular course of the customer's trade or business. If the ordering office
cannot be determined, the services shall be deemed to be received at the office of the
customer to which the services are billed.

(k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts
from management, distribution, or administrative services performed by a corporation
or trust for a fund of a corporation or trust regulated under United States Code, title 15,
sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of
the fund resides. Under this paragraph, receipts for services attributed to shareholders are
determined on the basis of the ratio of: (1) the average of the outstanding shares in the
fund owned by shareholders residing within Minnesota at the beginning and end of each
year; and (2) the average of the total number of outstanding shares in the fund at the
beginning and end of each year. Residence of the shareholder, in the case of an individual,
is determined by the mailing address furnished by the shareholder to the fund. Residence
of the shareholder, when the shares are held by an insurance company as a depositor for
the insurance company policyholders, is the mailing address of the policyholders. In
the case of an insurance company holding the shares as a depositor for the insurance
company policyholders, if the mailing address of the policyholders cannot be determined
by the taxpayer, the receipts must be excluded from both the numerator and denominator.
Residence of other shareholders is the mailing address of the shareholder.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 11.

Minnesota Statutes 2014, section 290.21, subdivision 4, is amended to read:


Subd. 4.

Dividends received from another corporation.

(a)(1) Eighty percent
of dividends received by a corporation during the taxable year from another corporation,
in which the recipient owns 20 percent or more of the stock, by vote and value, not
including stock described in section 1504(a)(4) of the Internal Revenue Code when the
corporate stock with respect to which dividends are paid does not constitute the stock in
trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not
constitute property held by the taxpayer primarily for sale to customers in the ordinary
course of the taxpayer's trade or business, or when the trade or business of the taxpayer
does not consist principally of the holding of the stocks and the collection of the income
and gains therefrom; and

(2)(i) the remaining 20 percent of dividends if the dividends received are the stock in
an affiliated company transferred in an overall plan of reorganization and the dividend
is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
amended through December 31, 1989;

(ii) the remaining 20 percent of dividends if the dividends are received from a
corporation which is subject to tax under section 290.36 and which is a member of an
affiliated group of corporations as defined by the Internal Revenue Code and the dividend
is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
amended through December 31, 1989, or is deducted under an election under section
243(b) of the Internal Revenue Code; or

(iii) the remaining 20 percent of the dividends if the dividends are received from a
property and casualty insurer as defined under section 60A.60, subdivision 8, which is a
member of an affiliated group of corporations as defined by the Internal Revenue Code
and either: (A) the dividend is eliminated in consolidation under Treasury Regulation
1.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted
under an election under section 243(b) of the Internal Revenue Code.

(b) Seventy percent of dividends received by a corporation during the taxable year
from another corporation in which the recipient owns less than 20 percent of the stock,
by vote or value, not including stock described in section 1504(a)(4) of the Internal
Revenue Code when the corporate stock with respect to which dividends are paid does not
constitute the stock in trade of the taxpayer, or does not constitute property held by the
taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or
business, or when the trade or business of the taxpayer does not consist principally of the
holding of the stocks and the collection of income and gain therefrom.

(c) The dividend deduction provided in this subdivision shall be allowed only with
respect to dividends that are included in a corporation's Minnesota taxable net income
for the taxable year.

The dividend deduction provided in this subdivision does not apply to a dividend
from a corporation which, for the taxable year of the corporation in which the distribution
is made or for the next preceding taxable year of the corporation, is a corporation exempt
from tax under section 501 of the Internal Revenue Code.

The dividend deduction provided in this subdivision does not apply to a dividend
received from a real estate investment trust as defined in section 856 of the Internal
Revenue Code.

The dividend deduction provided in this subdivision applies to the amount of
regulated investment company dividends only to the extent determined under section
854(b) of the Internal Revenue Code.

The dividend deduction provided in this subdivision shall not be allowed with
respect to any dividend for which a deduction is not allowed under the provisions of
section 246(c) new text beginor 246A new text endof the Internal Revenue Code.

(d) If dividends received by a corporation that does not have nexus with Minnesota
under the provisions of Public Law 86-272 are included as income on the return of
an affiliated corporation permitted or required to file a combined report under section
290.17, subdivision 4, or 290.34, subdivision 2, then for purposes of this subdivision the
determination as to whether the trade or business of the corporation consists principally
of the holding of stocks and the collection of income and gains therefrom shall be made
with reference to the trade or business of the affiliated corporation having a nexus with
Minnesota.

(e) The deduction provided by this subdivision does not apply if the dividends are
paid by a FSC as defined in section 922 of the Internal Revenue Code.

(f) If one or more of the members of the unitary group whose income is included on
the combined report received a dividend, the deduction under this subdivision for each
member of the unitary business required to file a return under this chapter is the product
of: (1) 100 percent of the dividends received by members of the group; (2) the percentage
allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business
income apportionable to this state for the taxable year under section 290.191 or 290.20.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

ARTICLE 4

MISCELLANEOUS

Section 1.

Minnesota Statutes 2014, section 290.0671, subdivision 1, is amended to read:


Subdivision 1.

Credit allowed.

(a) An individualnew text begin who is a resident of Minnesotanew text end is
allowed a credit against the tax imposed by this chapter equal to a percentage of earned
income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the
Internal Revenue Code.

(b) For individuals with no qualifying children, the credit equals 2.10 percent of the
first $6,180 of earned income. The credit is reduced by 2.01 percent of earned income
or adjusted gross income, whichever is greater, in excess of $8,130, but in no case is
the credit less than zero.

(c) For individuals with one qualifying child, the credit equals 9.35 percent of the
first $11,120 of earned income. The credit is reduced by 6.02 percent of earned income
or adjusted gross income, whichever is greater, in excess of $21,190, but in no case is
the credit less than zero.

(d) For individuals with two or more qualifying children, the credit equals 11 percent
of the first $18,240 of earned income. The credit is reduced by 10.82 percent of earned
income or adjusted gross income, whichever is greater, in excess of $25,130, but in no
case is the credit less than zero.

(e) For a deleted text beginnonresident ordeleted text end part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).

(f) For a person who was a resident for the entire tax year and has earned income
not subject to tax under this chapter, including income excluded under section 290.01,
subdivision 19b
, clause (9), the credit must be allocated based on the ratio of federal
adjusted gross income reduced by the earned income not subject to tax under this chapter
over federal adjusted gross income. For purposes of this paragraph, the subtractions
for military pay under section 290.01, subdivision 19b, clauses (10) and (11), are not
considered "earned income not subject to tax under this chapter."

For the purposes of this paragraph, the exclusion of combat pay under section 112
of the Internal Revenue Code is not considered "earned income not subject to tax under
this chapter."

(g) For tax years beginning after December 31, 2007, and before December 31,
2010, and for tax years beginning after December 31, 2017, the $8,130 in paragraph (b),
the $21,190 in paragraph (c), and the $25,130 in paragraph (d), after being adjusted for
inflation under subdivision 7, are each increased by $3,000 for married taxpayers filing joint
returns. For tax years beginning after December 31, 2008, the commissioner shall annually
adjust the $3,000 by the percentage determined pursuant to the provisions of section 1(f)
of the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2007" shall be
substituted for the word "1992." For 2009, the commissioner shall then determine the
percent change from the 12 months ending on August 31, 2007, to the 12 months ending on
August 31, 2008, and in each subsequent year, from the 12 months ending on August 31,
2007, to the 12 months ending on August 31 of the year preceding the taxable year. The
earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the
amount ends in $5, the amount is rounded up to the nearest $10. The determination of the
commissioner under this subdivision is not a rule under the Administrative Procedure Act.

(h)(1) For tax years beginning after December 31, 2012, and before January 1, 2014,
the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph (d),
after being adjusted for inflation under subdivision 7, are increased by $5,340 for married
taxpayers filing joint returns; and (2) for tax years beginning after December 31, 2013, and
before January 1, 2018, the $8,130 in paragraph (b), the $21,190 in paragraph (c), and the
$25,130 in paragraph (d), after being adjusted for inflation under subdivision 7, are each
increased by $5,000 for married taxpayers filing joint returns. For tax years beginning
after December 31, 2010, and before January 1, 2012, and for tax years beginning after
December 31, 2013, and before January 1, 2018, the commissioner shall annually adjust
the $5,000 by the percentage determined pursuant to the provisions of section 1(f) of
the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2008" shall be
substituted for the word "1992." For 2011, the commissioner shall then determine the
percent change from the 12 months ending on August 31, 2008, to the 12 months ending on
August 31, 2010, and in each subsequent year, from the 12 months ending on August 31,
2008, to the 12 months ending on August 31 of the year preceding the taxable year. The
earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the
amount ends in $5, the amount is rounded up to the nearest $10. The determination of the
commissioner under this subdivision is not a rule under the Administrative Procedure Act.

(i) The commissioner shall construct tables showing the amount of the credit at
various income levels and make them available to taxpayers. The tables shall follow
the schedule contained in this subdivision, except that the commissioner may graduate
the transition between income brackets.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 2.

Minnesota Statutes 2014, section 290A.03, subdivision 13, is amended to read:


Subd. 13.

Property taxes payable.

"Property taxes payable" means the property tax
exclusive of special assessments, penalties, and interest payable on a claimant's homestead
after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2,
and any other state paid property tax credits in any calendar year, and after any refund
claimed and allowable under section 290A.04, subdivision 2h, that is first payable in
the year that the property tax is payable. In the case of a claimant who makes ground
lease payments, "property taxes payable" includes the amount of the payments directly
attributable to the property taxes assessed against the parcel on which the house is located.
No apportionment or reduction of the "property taxes payable" shall be required for the
use of a portion of the claimant's homestead for a business purpose if the claimant does not
deduct any business depreciation expenses for the use of a portion of the homesteadnew text begin, or
elects to deduct expenses under section 280A of the Internal Revenue Code for a business
operated in a home,
new text end in the determination of federal adjusted gross income. For homesteads
which are manufactured homes as defined in section 273.125, subdivision 8, and for
homesteads which are park trailers taxed as manufactured homes under section 168.012,
subdivision 9
, "property taxes payable" shall also include 17 percent of the gross rent paid
in the preceding year for the site on which the homestead is located. When a homestead
is owned by two or more persons as joint tenants or tenants in common, such tenants
shall determine between them which tenant may claim the property taxes payable on the
homestead. If they are unable to agree, the matter shall be referred to the commissioner of
revenue whose decision shall be final. Property taxes are considered payable in the year
prescribed by law for payment of the taxes.

In the case of a claim relating to "property taxes payable," the claimant must have
owned and occupied the homestead on January 2 of the year in which the tax is payable
and (i) the property must have been classified as homestead property pursuant to section
273.124, on or before December 15 of the assessment year to which the "property taxes
payable" relate; or (ii) the claimant must provide documentation from the local assessor
that application for homestead classification has been made on or before December 15
of the year in which the "property taxes payable" were payable and that the assessor has
approved the application.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refunds based on rent paid after
December 31, 2013, and property taxes payable after December 31, 2014.
new text end

Sec. 3.

Minnesota Statutes 2014, section 290B.03, subdivision 1, is amended to read:


Subdivision 1.

Program qualifications.

The qualifications for the senior citizens'
property tax deferral program are as follows:

(1) the property must be owned and occupied as a homestead by a person 65 years of
age or older. In the case of a married couple, at least one of the spouses must be at least 65
years old at the time the first property tax deferral is granted, regardless of whether the
property is titled in the name of one spouse or both spouses, or titled in another way that
permits the property to have homestead status, and the other spouse must be at least 62
years of age;

(2) the total household income of the qualifying homeowners, as defined in section
290A.03, subdivision 5, for the calendar year preceding the year of the initial application
may not exceed $60,000;

(3) the homestead must have been owned and occupied as the homestead of at least
one of the qualifying homeowners for at least deleted text begin15deleted text endnew text begin fivenew text end years prior to the year the initial
application is filed;

(4) there are no state or federal tax liens or judgment liens on the homesteaded
property;

(5) there are no mortgages or other liens on the property that secure future advances,
except for those subject to credit limits that result in compliance with clause (6); and

(6) the total unpaid balances of debts secured by mortgages and other liens on the
property, including unpaid and delinquent special assessments and interest and any
delinquent property taxes, penalties, and interest, but not including property taxes payable
during the year, does not exceed 75 percent of the assessor's estimated market value for
the year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for deferral of taxes
payable in 2016 and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2014, section 290B.04, subdivision 1, is amended to read:


Subdivision 1.

Initial application.

(a) A taxpayer meeting the program
qualifications under section 290B.03 may apply to the commissioner of revenue for the
deferral of taxes. Applications are due on or before deleted text beginJulydeleted text endnew text begin Novembernew text end 1 for deferral of any
of the following year's property taxes. A taxpayer may apply in the year in which the
taxpayer becomes 65 years old, provided that no deferral of property taxes will be made
until the calendar year after the taxpayer becomes 65 years old. The application, which
shall be prescribed by the commissioner of revenue, shall include the following items and
any other information which the commissioner deems necessary:

(1) the name, address, and Social Security number of the owner or owners;

(2) a copy of the property tax statement for the current payable year for the
homesteaded property;

(3) the initial year of ownership and occupancy as a homestead;

(4) the owner's household income for the previous calendar year; and

(5) information on any mortgage loans or other amounts secured by mortgages or
other liens against the property, for which purpose the commissioner may require the
applicant to provide a copy of the mortgage note, the mortgage, or a statement of the
balance owing on the mortgage loan provided by the mortgage holder. The commissioner
may require the appropriate documents in connection with obtaining and confirming
information on unpaid amounts secured by other liens.

The application must state that program participation is voluntary. The application
must also state that the deferred amount depends directly on the applicant's household
income, and that program participation includes authorization for the annual deferred
amount, the cumulative deferral and interest that appear on each year's notice prepared by
the county under subdivision 6, is public data.

The application must state that program participants may claim the property tax
refund based on the full amount of property taxes eligible for the refund, including any
deferred amounts. The application must also state that property tax refunds will be used to
offset any deferral and interest under this program, and that any other amounts subject to
revenue recapture under section 270A.03, subdivision 7, will also be used to offset any
deferral and interest under this program.

(b) As part of the initial application process, the commissioner may require the
applicant to obtain at the applicant's own cost and submit:

(1) if the property is registered property under chapter 508 or 508A, a copy of the
original certificate of title in the possession of the county registrar of titles (sometimes
referred to as "condition of register"); or

(2) if the property is abstract property, a report prepared by a licensed abstracter
showing the last deed and any unsatisfied mortgages, liens, judgments, and state and
federal tax lien notices which were recorded on or after the date of that last deed with
respect to the property or to the applicant.

The certificate or report under clauses (1) and (2) need not include references to
any documents filed or recorded more than 40 years prior to the date of the certification
or report. The certification or report must be as of a date not more than 30 days prior
to submission of the application.

The commissioner may also require the county recorder or county registrar of the
county where the property is located to provide copies of recorded documents related to
the applicant or the property, for which the recorder or registrar shall not charge a fee. The
commissioner may use any information available to determine or verify eligibility under
this section. The household income from the application is private data on individuals as
defined in section 13.02, subdivision 12.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for deferral of taxes
payable in 2016 and thereafter.
new text end

Sec. 5.

Minnesota Statutes 2014, section 291.03, is amended by adding a subdivision
to read:


new text begin Subd. 12. new text end

new text begin Certain dispositions to government entities. new text end

new text begin Notwithstanding any
provision of this section, no taxpayer shall be disqualified for the subtraction provided
under section 291.016, subdivision 3, nor shall any taxpayer be liable for the recapture tax
provided in subdivision 11, solely because the state, any local government unit, or any
other entity that has the power of eminent domain acquires title or possession of the land
for a public purpose within the three-year holding period.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after June 30, 2011.
new text end

Sec. 6.

Minnesota Statutes 2014, section 296A.01, subdivision 12, is amended to read:


Subd. 12.

Compressed natural gas or CNG.

"Compressed natural gas" or "CNG"
means natural gas, primarily methane, condensed under high pressure and stored in
specially designed storage tanks at between 2,000 and 3,600 pounds per square inch.
For purposes of this chapter, the energy content of CNG is considered to be deleted text begin1,000deleted text endnew text begin 900new text end
BTUs per cubic foot.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2015.
new text end

Sec. 7.

Minnesota Statutes 2014, section 296A.08, subdivision 2, is amended to read:


Subd. 2.

Rate of tax.

The special fuel excise tax is imposed at the following rates:

(a) Liquefied petroleum gas or propane is taxed at the rate of 18.75 cents per gallon.

(b) Liquefied natural gas is taxed at the rate of 15 cents per gallon.

(c) Compressed natural gas is taxed at the rate of deleted text begin$2.174deleted text endnew text begin $1.974new text end per thousand cubic
feet; or 25 cents per gasoline equivalent. For purposes of this paragraph, "gasoline
equivalent," as defined by the National Conference on Weights and Measures, is 5.66
pounds of natural gasnew text begin or 126.67 cubic feetnew text end.

(d) All other special fuel is taxed at the same rate as the gasoline excise tax as
specified in section 296A.07, subdivision 2. The tax is payable in the form and manner
prescribed by the commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2015.
new text end

Sec. 8.

Minnesota Statutes 2014, section 297A.815, subdivision 3, is amended to read:


Subd. 3.

Motor vehicle lease sales tax revenue.

(a) For purposes of this subdivision,
"net revenue" means an amount equal to the revenues, including interest and penalties,
collected under this section, during the fiscal year; less $32,000,000 in each fiscal year.

(b) On or before June 30 of each fiscal year, the commissioner of revenue shall
estimate the amount of the net revenue for the current fiscal year.

(c) On or after July 1 of the subsequent fiscal year, the commissioner of management
and budget shall transfer the net revenue as estimated in paragraph (b) from the general
fund, as follows:

(1) $9,000,000 annually until January 1, 2015, and 50 percent annually thereafter to
the county state-aid highway fund. Notwithstanding any other law to the contrary, the
commissioner of transportation shall allocate the funds transferred under this clause to the
counties in the metropolitan area, as defined in section 473.121, subdivision 4, excluding
the counties of Hennepin and Ramsey, so that each county shall receive of such amount
the percentage that its population, as defined in section 477A.011, subdivision 3, estimated
or established by July 15 of the year prior to the current calendar year, bears to the total
population of the counties receiving funds under this clause; and

(2) the remainder to the greater Minnesota transit account.

new text begin (d) The revenues deposited under this subdivision do not include the revenues,
including interest and penalties, generated by the sales tax imposed under section
297A.62, subdivision 1a, which must be deposited as provided under the Minnesota
Constitution, article XI, section 15.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 9.

Minnesota Statutes 2014, section 297A.94, is amended to read:


297A.94 DEPOSIT OF REVENUES.

(a) Except as provided in this section, the commissioner shall deposit the revenues,
including interest and penalties, derived from the taxes imposed by this chapter in the state
treasury and credit them to the general fund.

(b) The commissioner shall deposit taxes in the Minnesota agricultural and economic
account in the special revenue fund if:

(1) the taxes are derived from sales and use of property and services purchased for
the construction and operation of an agricultural resource project; and

(2) the purchase was made on or after the date on which a conditional commitment
was made for a loan guaranty for the project under section 41A.04, subdivision 3.

The commissioner of management and budget shall certify to the commissioner the date
on which the project received the conditional commitment. The amount deposited in
the loan guaranty account must be reduced by any refunds and by the costs incurred by
the Department of Revenue to administer and enforce the assessment and collection of
the taxes.

(c) The commissioner shall deposit the revenues, including interest and penalties,
derived from the taxes imposed on sales and purchases included in section 297A.61,
subdivision 3
, paragraph (g), clauses (1) and (4), in the state treasury, and credit them
as follows:

(1) first to the general obligation special tax bond debt service account in each fiscal
year the amount required by section 16A.661, subdivision 3, paragraph (b); and

(2) after the requirements of clause (1) have been met, the balance to the general fund.

(d) The commissioner shall deposit the revenues, including interest and penalties,
collected under section 297A.64, subdivision 5, in the state treasury and credit them to the
general fund. By July 15 of each year the commissioner shall transfer to the highway user
tax distribution fund an amount equal to the excess fees collected under section 297A.64,
subdivision 5
, for the previous calendar year.

(e) 72.43 percent of the revenues, including interest and penalties, transmitted to
the commissioner under section 297A.65, must be deposited by the commissioner in the
state treasury as follows:

(1) 50 percent of the receipts must be deposited in the heritage enhancement account
in the game and fish fund, and may be spent only on activities that improve, enhance, or
protect fish and wildlife resources, including conservation, restoration, and enhancement
of land, water, and other natural resources of the state;

(2) 22.5 percent of the receipts must be deposited in the natural resources fund, and
may be spent only for state parks and trails;

(3) 22.5 percent of the receipts must be deposited in the natural resources fund, and
may be spent only on metropolitan park and trail grants;

(4) three percent of the receipts must be deposited in the natural resources fund, and
may be spent only on local trail grants; and

(5) two percent of the receipts must be deposited in the natural resources fund,
and may be spent only for the Minnesota Zoological Garden, the Como Park Zoo and
Conservatory, and the Duluth Zoo.

(f) The revenue dedicated under paragraph (e) may not be used as a substitute
for traditional sources of funding for the purposes specified, but the dedicated revenue
shall supplement traditional sources of funding for those purposes. Land acquired with
money deposited in the game and fish fund under paragraph (e) must be open to public
hunting and fishing during the open season, except that in aquatic management areas or
on lands where angling easements have been acquired, fishing may be prohibited during
certain times of the year and hunting may be prohibited. At least 87 percent of the money
deposited in the game and fish fund for improvement, enhancement, or protection of fish
and wildlife resources under paragraph (e) must be allocated for field operations.

(g) The revenues deposited deleted text beginunder paragraphs (a) to (f)deleted text endnew text begin in, transferred to, or credited
to a fund other than the general fund by a provision in this chapter
new text end do not include the
revenues, including interest and penalties, generated by the sales tax imposed under
section 297A.62, subdivision 1a, which must be deposited as provided under the
Minnesota Constitution, article XI, section 15.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 10.

Minnesota Statutes 2014, section 297H.04, subdivision 2, is amended to read:


Subd. 2.

Rate.

(a) Commercial generators that generate nonmixed municipal
solid waste shall pay a solid waste management tax of 60 cents per noncompacted
cubic yard of periodic waste collection capacity purchased by the generator, based on
the size of the container for the nonmixed municipal solid waste, the actual volume,
or the weight-to-volume conversion schedule in paragraph (c). However, the tax must
be calculated by the waste management service provider using the same method for
calculating the waste management service fee so that both are calculated according to
container capacity, actual volume, or weight.

(b) Notwithstanding section 297H.02, a residential generator that generates
nonmixed municipal solid waste shall pay a solid waste management tax in the same
manner as provided in paragraph (a).

(c) The weight-to-volume conversion schedule for:

(1) construction debris as defined in section 115A.03, subdivision 7, is deleted text beginone ton
equals 3.33 cubic yards, or $2 per ton
deleted text endnew text begin equal to 60 cents per cubic yard. The commissioner
of revenue, after consultation with the commissioner of the Pollution Control Agency,
shall determine and may publish by notice a conversion schedule for construction debris
new text end;

(2) industrial waste as defined in section 115A.03, subdivision 13a, is equal to
60 cents per cubic yard. The commissioner of revenue after consultation with the
commissioner of the Pollution Control Agency, shall determine, and may publish by
notice, a conversion schedule for various industrial wastes; and

(3) infectious waste as defined in section 116.76, subdivision 12, and pathological
waste as defined in section 116.76, subdivision 14, is 150 pounds equals one cubic yard, or
60 cents per 150 pounds.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2015.
new text end

Sec. 11. new text beginAPPROPRIATION.
new text end

new text begin $35,000 for fiscal year 2016 is appropriated from the general fund to the
commissioner of revenue to carry out the provisions of section 1 of this article. This is a
onetime appropriation and is not added to the agency's permanent base.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end