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Capital IconMinnesota Legislature

HF 991

as introduced - 92nd Legislature (2021 - 2022) Posted on 02/15/2021 04:34pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to taxation; proposing Minnesota's COVID-19 recovery budget raising
revenue for strategic investments in our economy, supporting working families,
and combating youth smoking and nicotine addiction; modifying individual income
taxes, estate taxes, corporate franchise taxes, tobacco taxes, sales and use taxes,
property taxes, local government aids, special taxes, and other miscellaneous taxes
and tax provisions; amending Minnesota Statutes 2020, sections 116J.8737,
subdivisions 5, 12; 270B.12, subdivisions 8, 9; 273.124, subdivisions 13, 13c, 13d,
14; 273.1245, subdivision 1; 273.13, subdivision 23; 273.1315, subdivision 2;
289A.08, subdivision 7; 289A.10, subdivision 1; 290.01, by adding a subdivision;
290.0122, subdivision 8; 290.0131, by adding subdivisions; 290.0132, subdivision
27; 290.0133, subdivision 6, by adding subdivisions; 290.0134, subdivision 18;
290.06, subdivisions 1, 2c, 2d; 290.0671, subdivisions 1, 1a; 290.0674, subdivision
2a; 290.091, subdivision 2; 290.21, subdivision 9, by adding a subdivision;
290A.03, subdivision 3; 290A.25; 291.016, subdivision 3; 297A.68, subdivision
42; 297A.70, subdivision 13; 297A.75, subdivision 2; 297E.021, subdivision 4;
297F.01, subdivisions 19, 22b, 23, by adding subdivisions; 297F.031; 297F.05,
subdivision 1, by adding a subdivision; 297F.09, subdivisions 3, 4a, 7, 10; 297H.04,
subdivision 2; 297H.05; 297I.05, subdivision 7; 298.001, by adding a subdivision;
298.24, subdivision 1; 298.405, subdivision 1; 325F.781, subdivisions 1, 5, 6;
477A.014; proposing coding for new law in Minnesota Statutes, chapters 290;
297F; repealing Minnesota Statutes 2020, sections 290.01, subdivisions 7b, 19i;
290.0131, subdivision 18.

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

ARTICLE 1

INDIVIDUAL INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES

Section 1.

Minnesota Statutes 2020, section 116J.8737, subdivision 5, is amended to read:


Subd. 5.

Credit allowed.

(a) A qualified investor or qualified fund is eligible for a credit
equal to 25 percent of the qualified investment in a qualified small business. Investments
made by a pass-through entity qualify for a credit only if the entity is a qualified fund. The
commissioner must not allocate more than $10,000,000 in credits to qualified investors or
qualified funds for the taxable deleted text beginyears listed in paragraph (i)deleted text endnew text begin year beginning after December
31, 2020, and before January 1, 2022; and $7,000,000 in credits to qualified investors or
qualified funds for the taxable year beginning after December 31, 2021, and before January
1, 2023
new text end. For each taxable year, 50 percent must be allocated to credits for qualified
investments in qualified greater Minnesota businesses and minority-owned, women-owned,
or veteran-owned qualified small businesses in Minnesota. Any portion of a taxable year's
credits that is reserved for qualified investments in greater Minnesota businesses and
minority-owned, women-owned, or veteran-owned qualified small businesses in Minnesota
that is not allocated by September 30 of the taxable year is available for allocation to other
credit applications beginning on October 1. Any portion of a taxable year's credits that is
not allocated by the commissioner does not cancel and may be carried forward to subsequent
taxable years until all credits have been allocated.

(b) The commissioner may not allocate more than a total maximum amount in credits
for a taxable year to a qualified investor for the investor's cumulative qualified investments
as an individual qualified investor and as an investor in a qualified fund; for married couples
filing joint returns the maximum is $250,000, and for all other filers the maximum is
$125,000. The commissioner may not allocate more than a total of $1,000,000 in credits
over all taxable years for qualified investments in any one qualified small business.

(c) The commissioner may not allocate a credit to a qualified investor either as an
individual qualified investor or as an investor in a qualified fund if, at the time the investment
is proposed:

(1) the investor is an officer or principal of the qualified small business; or

(2) the investor, either individually or in combination with one or more members of the
investor's family, owns, controls, or holds the power to vote 20 percent or more of the
outstanding securities of the qualified small business.

A member of the family of an individual disqualified by this paragraph is not eligible for a
credit under this section. For a married couple filing a joint return, the limitations in this
paragraph apply collectively to the investor and spouse. For purposes of determining the
ownership interest of an investor under this paragraph, the rules under section 267(c) and
267(e) of the Internal Revenue Code apply.

(d) Applications for tax credits for 2010 must be made available on the department's
website by September 1, 2010, and the department must begin accepting applications by
September 1, 2010. Applications for subsequent years must be made available by November
1 of the preceding year.

(e) Qualified investors and qualified funds must apply to the commissioner for tax credits.
Tax credits must be allocated to qualified investors or qualified funds in the order that the
tax credit request applications are filed with the department. The commissioner must approve
or reject tax credit request applications within 15 days of receiving the application. The
investment specified in the application must be made within 60 days of the allocation of
the credits. If the investment is not made within 60 days, the credit allocation is canceled
and available for reallocation. A qualified investor or qualified fund that fails to invest as
specified in the application, within 60 days of allocation of the credits, must notify the
commissioner of the failure to invest within five business days of the expiration of the
60-day investment period.

(f) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. If two or more qualified investors or
qualified funds file tax credit request applications on the same day, and the aggregate amount
of credit allocation claims exceeds the aggregate limit of credits under this section or the
lesser amount of credits that remain unallocated on that day, then the credits must be allocated
among the qualified investors or qualified funds who filed on that day on a pro rata basis
with respect to the amounts claimed. The pro rata allocation for any one qualified investor
or qualified fund is the product obtained by multiplying a fraction, the numerator of which
is the amount of the credit allocation claim filed on behalf of a qualified investor and the
denominator of which is the total of all credit allocation claims filed on behalf of all
applicants on that day, by the amount of credits that remain unallocated on that day for the
taxable year.

(g) A qualified investor or qualified fund, or a qualified small business acting on their
behalf, must notify the commissioner when an investment for which credits were allocated
has been made, and the taxable year in which the investment was made. A qualified fund
must also provide the commissioner with a statement indicating the amount invested by
each investor in the qualified fund based on each investor's share of the assets of the qualified
fund at the time of the qualified investment. After receiving notification that the investment
was made, the commissioner must issue credit certificates for the taxable year in which the
investment was made to the qualified investor or, for an investment made by a qualified
fund, to each qualified investor who is an investor in the fund. The certificate must state
that the credit is subject to revocation if the qualified investor or qualified fund does not
hold the investment in the qualified small business for at least three years, consisting of the
calendar year in which the investment was made and the two following years. The three-year
holding period does not apply if:

(1) the investment by the qualified investor or qualified fund becomes worthless before
the end of the three-year period;

(2) 80 percent or more of the assets of the qualified small business is sold before the end
of the three-year period;

(3) the qualified small business is sold before the end of the three-year period;

(4) the qualified small business's common stock begins trading on a public exchange
before the end of the three-year period; or

(5) the qualified investor dies before the end of the three-year period.

(h) The commissioner must notify the commissioner of revenue of credit certificates
issued under this section.

deleted text begin (i) The credit allowed under this subdivision is effective for each of the following taxable
years:
deleted text end

deleted text begin (1) taxable years beginning after December 31, 2018, and before January 1, 2020; and
deleted text end

deleted text begin (2) taxable years beginning after December 31, 2020, and before January 1, 2022.
deleted 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. 2.

Minnesota Statutes 2020, section 116J.8737, subdivision 12, is amended to read:


Subd. 12.

Sunset.

This section expires for taxable years beginning after December 31,
deleted text begin 2021deleted text endnew text begin 2022new text end, except that reporting requirements under subdivision 6 and revocation of credits
under subdivision 7 remain in effect through deleted text begin2023deleted text endnew text begin 2024new text end for qualified investors and qualified
funds, and through deleted text begin2025deleted text endnew text begin 2026new text end for qualified small businesses, reporting requirements under
subdivision 9 remain in effect through deleted text begin2021deleted text endnew text begin 2022new text end, and the appropriation in subdivision 11
remains in effect through deleted text begin2025deleted text endnew text begin 2026new 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. 3.

Minnesota Statutes 2020, section 289A.08, subdivision 7, is amended to read:


Subd. 7.

Composite income tax returns for nonresident partners, shareholders, and
beneficiaries.

(a) The commissioner may allow a partnership with nonresident partners to
file a composite return and to pay the tax on behalf of nonresident partners who have no
other Minnesota source income. This composite return must include the names, addresses,
Social Security numbers, income allocation, and tax liability for the nonresident partners
electing to be covered by the composite return.

(b) The computation of a partner's tax liability must be determined by new text beginfirst new text endmultiplying
the income allocated to that partner by the highest rate used to determine the tax liability
for individuals under section 290.06, subdivision 2cnew text begin, and adding this amount to the
preferential rate income tax determined under section 290.055 allocated to the partner
new text end.
Nonbusiness deductions, standard deductions, or personal exemptions are not allowed.

(c) The partnership must submit a request to use this composite return filing method for
nonresident partners. The requesting partnership must file a composite return in the form
prescribed by the commissioner of revenue. The filing of a composite return is considered
a request to use the composite return filing method.

(d) The electing partner must not have any Minnesota source income other than the
income from the partnership and other electing partnerships. If it is determined that the
electing partner has other Minnesota source income, the inclusion of the income and tax
liability for that partner under this provision will not constitute a return to satisfy the
requirements of subdivision 1. The tax paid for the individual as part of the composite return
is allowed as a payment of the tax by the individual on the date on which the composite
return payment was made. If the electing nonresident partner has no other Minnesota source
income, filing of the composite return is a return for purposes of subdivision 1.

(e) This subdivision does not negate the requirement that an individual pay estimated
tax if the individual's liability would exceed the requirements set forth in section 289A.25.
The individual's liability to pay estimated tax is, however, satisfied when the partnership
pays composite estimated tax in the manner prescribed in section 289A.25.

(f) If an electing partner's share of the partnership's gross income from Minnesota sources
is less than the filing requirements for a nonresident under this subdivision, the tax liability
is zero. However, a statement showing the partner's share of gross income must be included
as part of the composite return.

(g) The election provided in this subdivision is only available to a partner who has no
other Minnesota source income and who is either (1) a full-year nonresident individual or
(2) a trust or estate that does not claim a deduction under either section 651 or 661 of the
Internal Revenue Code.

(h) A corporation defined in section 290.9725 and its nonresident shareholders may
make an election under this paragraph. The provisions covering the partnership apply to
the corporation and the provisions applying to the partner apply to the shareholder.

(i) Estates and trusts distributing current income only and the nonresident individual
beneficiaries of the estates or trusts may make an election under this paragraph. The
provisions covering the partnership apply to the estate or trust. The provisions applying to
the partner apply to the beneficiary.

(j) For the purposes of this subdivision, "income" means the partner's share of federal
adjusted gross income from the partnership modified by the additions provided in section
290.0131, subdivisions 8 to 10 deleted text beginanddeleted text endnew text begin,new text end 16,new text begin 19, and 20,new text end and the subtractions provided in: (1)
section 290.0132, subdivision 9, to the extent the amount is assignable or allocable to
Minnesota under section 290.17; and (2) section 290.0132, subdivision 14. The subtraction
allowed under section 290.0132, subdivision 9, is only allowed on the composite tax
computation to the extent the electing partner would have been allowed the subtraction.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2020.
new text end

Sec. 4.

Minnesota Statutes 2020, section 289A.10, subdivision 1, is amended to read:


Subdivision 1.

Return required.

In the case of a decedent who has an interest in property
with a situs in Minnesota, the personal representative must submit a Minnesota estate tax
return to the commissioner, on a form prescribed by the commissioner, if:

(1) a federal estate tax return is required to be filed; or

(2) the sum of the federal gross estate and federal adjusted taxable gifts, as defined in
section 2001(b) of the Internal Revenue Code, made within three years of the date of the
decedent's death exceeds $1,200,000 for estates of decedents dying in 2014; $1,400,000 for
estates of decedents dying in 2015; $1,600,000 for estates of decedents dying in 2016;
$2,100,000 for estates of decedents dying in 2017; $2,400,000 for estates of decedents dying
in 2018; $2,700,000 for estates of decedents dying in 2019; deleted text beginanddeleted text end $3,000,000 for estates of
decedents dying in 2020new text begin;new text end and deleted text beginthereafterdeleted text endnew text begin $2,700,000 for estates of decedents dying in 2021
and thereafter
new text end.

The return must contain a computation of the Minnesota estate tax due. The return must
be signed by the personal representative.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2020.
new text end

Sec. 5.

Minnesota Statutes 2020, section 290.01, is amended by adding a subdivision to
read:


new text begin Subd. 7c. new text end

new text begin Resident trust. new text end

new text begin (a) "Resident trust" means a trust, except a grantor type trust,
which has sufficient relevant connections with Minnesota during the applicable tax year to
be permissibly taxed, consistent with due process, as a resident trust. Relevant connections
with Minnesota include but are not limited to the following:
new text end

new text begin (1) one or more of the trustees, fiduciaries, nonfiduciary service providers, settlors,
grantors, or beneficiaries of the trust are residents or part-year residents of Minnesota;
new text end

new text begin (2) tangible or intangible assets making up any part of the trust are located in Minnesota;
new text end

new text begin (3) any part of the administration of the trust took place in Minnesota;
new text end

new text begin (4) the laws of Minnesota are specifically made applicable to the trust or to the parties
to the trust, whether by choice of law or by operation of law;
new text end

new text begin (5) the trust was created by a will of a decedent who at death was domiciled in Minnesota;
new text end

new text begin (6) the trust and the will under which it was created were probated in Minnesota or were
otherwise approved or enforced by Minnesota's courts; and
new text end

new text begin (7) Minnesota's courts have a continuing supervisory or other existing relationship with
the trust.
new text end

new text begin (b) The term "grantor type trust" means a trust where the income or gains of the trust
are taxable to the grantor or others treated as substantial owners under sections 671 to 678
of the Internal Revenue Code.
new text end

new text begin (c) The term "administration of the trust" means the performance of any administrative
function for the trust, including but not limited to the following:
new text end

new text begin (1) investing of trust assets;
new text end

new text begin (2) distributing of trust assets;
new text end

new text begin (3) conducting trust business;
new text end

new text begin (4) conducting any litigation or other legal proceedings;
new text end

new text begin (5) conducting administrative services, including but not limited to record keeping and
the preparation and filing of tax returns;
new text end

new text begin (6) making fiduciary decisions, including but not limited to decisions regarding any of
the administrative functions listed in this paragraph; and
new text end

new text begin (7) official keeping of books and records of the trust, including but not limited to the
original minutes of trustee meetings and the original trust instruments, are located in
Minnesota.
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, 2020.
new text end

Sec. 6.

Minnesota Statutes 2020, section 290.0122, subdivision 8, is amended to read:


Subd. 8.

Losses.

A taxpayer is allowed a deduction for lossesdeleted text begin. The deduction equals the
amount
deleted text end allowed under deleted text beginsections 165(d) and 165(h) of the Internal Revenue Code, disregarding
the limitation on personal casualty losses in paragraph (h)(5).
deleted text endnew text begin section 165(a) of the Internal
Revenue Code, including the limitation provided in section 67(b)(3) of the Internal Revenue
Code, for the following:
new text end

new text begin (1) losses described in paragraphs (2) and (3) of section 165(c) of the Internal Revenue
Code, including the provisions of section 165(h) of the Internal Revenue Code but
disregarding paragraph (h)(5); and
new text end

new text begin (2) losses described in section 165(d) of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment, except
that the reference to paragraph (2) of section 165(c) of the Internal Revenue Code is effective
retroactively for taxable years beginning after December 31, 2018.
new text end

Sec. 7.

Minnesota Statutes 2020, section 290.0131, is amended by adding a subdivision
to read:


new text begin Subd. 19. new text end

new text begin Previously taxed deferred foreign income. new text end

new text begin The amount received by a resident
or part-year resident that is excluded from federal adjusted gross income or federal taxable
income under section 959 of the Internal Revenue Code, because the amount was previously
included under sections 951A or 965 of the Internal Revenue Code, is an addition.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2015, except that the changes incorporated by federal changes are
effective retroactively at the same time the changes became effective for federal purposes.
new text end

Sec. 8.

Minnesota Statutes 2020, section 290.0131, is amended by adding a subdivision
to read:


new text begin Subd. 20. new text end

new text begin Income attributable to domestic production activities of cooperatives. new text end

new text begin The
amount of the deduction allowable under section 199A(g) of the Internal Revenue Code is
an addition.
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, 2020.
new text end

Sec. 9.

Minnesota Statutes 2020, section 290.0132, subdivision 27, is amended to read:


Subd. 27.

Deferred foreign income.

The amount of deferred foreign income deleted text beginrecognized
because of
deleted text endnew text begin undernew text end section 965 of the Internal Revenue Code is a subtraction.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2015, except the changes incorporated by federal changes are effective
retroactively at the same time the changes became effective for federal purposes.
new text end

Sec. 10.

Minnesota Statutes 2020, section 290.0133, subdivision 6, is amended to read:


Subd. 6.

Special deductions.

The amount of any special deductions under sections 241
to 247, new text beginand new text end250deleted text begin, and 965deleted text end of the Internal Revenue Code is an addition.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2015, except that the changes incorporated by federal changes are
effective retroactively at the same time the changes became effective for federal purposes.
new text end

Sec. 11.

Minnesota Statutes 2020, section 290.0133, is amended by adding a subdivision
to read:


new text begin Subd. 15. new text end

new text begin Previously taxed deferred foreign income. new text end

new text begin The amount received by a
corporation that is excluded from gross income under section 959 of the Internal Revenue
Code, because the amount was previously included under sections 951A or 965 of the
Internal Revenue Code, is an addition.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2015, except that the changes incorporated by federal changes are
effective retroactively at the same time the changes became effective for federal purposes.
new text end

Sec. 12.

Minnesota Statutes 2020, section 290.0133, is amended by adding a subdivision
to read:


new text begin Subd. 16. new text end

new text begin Income attributable to domestic production activities of cooperatives. new text end

new text begin The
amount of the deduction allowable under section 199A(g) of the Internal Revenue Code is
an addition.
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, 2020.
new text end

Sec. 13.

Minnesota Statutes 2020, section 290.0134, subdivision 18, is amended to read:


Subd. 18.

Deferred foreign income.

The amount of deferred foreign income deleted text beginrecognized
because of
deleted text endnew text begin undernew text end section 965 of the Internal Revenue Code is a subtraction.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2015, except that the changes incorporated by federal changes are
effective retroactively at the same time the changes became effective for federal purposes.
new text end

Sec. 14.

new text begin [290.055] CAPITAL GAINS TAX.
new text end

new text begin (a) For purposes of this subdivision, "preferential rate income" means the sum of net
long-term capital gain income as defined in section 1222 of the Internal Revenue Code, and
qualified dividend income as defined in section 1(h)(11)(B) of the Internal Revenue Code.
new text end

new text begin (b) In addition to the tax computed under section 290.06, subdivision 2c, an additional
amount of tax is imposed on the preferential rate income of individuals, estates, and trusts
applying the following schedule of rates:
new text end

new text begin (1) On all preferential rate income over $500,000, but not over $1,000,000, 1.5 percent;
new text end

new text begin (2) On all preferential rate income over $1,000,000, four percent;
new text end

new text begin (3) For an individual that is not a Minnesota resident for the entire taxable year, the tax
under this subdivision must be calculated as if the individual is a Minnesota resident for the
entire year, and that amount must be multiplied by a fraction in which:
new text end

new text begin (i) the numerator is preferential rate income allocable under section 290.17 to Minnesota;
and
new text end

new text begin (ii) the denominator is the total amount of preferential rate income for the taxable year;
new text end

new text begin (4) For an estate or trust, the tax on preferential rate income must be computed by
multiplying the preferential rate income tax liability by a fraction, the numerator of which
is the amount of the estate or trust's preferential rate income allocated to the state pursuant
to the provisions of sections 290.17, 290.191, and 290.20, and the denominator of which is
the taxpayer's total preferential rate 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, 2020.
new text end

Sec. 15.

Minnesota Statutes 2020, section 290.06, subdivision 1, is amended to read:


Subdivision 1.

Computation, corporations.

The franchise tax imposed upon corporations
shall be computed by applying to their taxable income the rate of deleted text begin9.8deleted text endnew text begin 11.25new text end percent.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2020.
new text end

Sec. 16.

Minnesota Statutes 2020, section 290.06, subdivision 2c, is amended to read:


Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income taxes
imposed by this chapter upon married individuals filing joint returns and surviving spouses
as defined in section 2(a) of the Internal Revenue Code must be computed by applying to
their taxable net income the following schedule of rates:

(1) On the first deleted text begin$38,770deleted text endnew text begin $42,800new text end, 5.35 percent;

(2) On all over deleted text begin$38,770deleted text endnew text begin $42,800new text end, but not over deleted text begin$154,020deleted text endnew text begin $154,010new text end, 6.8 percent;

(3) On all over deleted text begin$154,020deleted text endnew text begin $154,010new text end, but not over deleted text begin$269,010deleted text endnew text begin $276,200new text end, 7.85 percent;

(4) On all over deleted text begin$269,010deleted text endnew text begin $276,200, but not over $1,000,000new text end, 9.85 percentdeleted text begin.deleted text endnew text begin;
new text end

new text begin (5) On all over $1,000,000, 10.85 percent.
new text end

Married individuals filing separate returns, estates, and trusts must compute their income
tax by applying the above rates to their taxable income, except that the income brackets
will be one-half of the above amounts after the adjustment required in subdivision 2d.

(b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first deleted text begin$26,520deleted text endnew text begin $29,270new text end, 5.35 percent;

(2) On all over deleted text begin$26,520deleted text endnew text begin $29,270new text end, but not over deleted text begin$87,110deleted text endnew text begin $86,620new text end, 6.8 percent;

(3) On all over deleted text begin$87,110deleted text endnew text begin $86,620new text end, but not over deleted text begin$161,720deleted text endnew text begin $166,040new text end, 7.85 percent;

(4) On all over deleted text begin$161,720deleted text endnew text begin $166,040, but not over $500,000new text end, 9.85 percentdeleted text begin.deleted text endnew text begin;
new text end

new text begin (5) On all over $500,000, 10.85 percent.
new text end

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying as
a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first deleted text begin$32,650deleted text endnew text begin $36,030new text end, 5.35 percent;

(2) On all over deleted text begin$32,650deleted text endnew text begin $36,030new text end, but not over deleted text begin$131,190deleted text endnew text begin $131,230new text end, 6.8 percent;

(3) On all over deleted text begin$131,190deleted text endnew text begin $131,230new text end, but not over deleted text begin$214,980deleted text endnew text begin $220,730new text end, 7.85 percent;

(4) On all over deleted text begin$214,980deleted text endnew text begin $220,730, but not over $750,000new text end, 9.85 percentdeleted text begin.deleted text endnew text begin;
new text end

new text begin (5) On all over $750,000, 10.85 percent.
new text end

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the tax
of any individual taxpayer whose taxable net income for the taxable year is less than an
amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not more
than $100. The amount of tax for each bracket shall be computed at the rates set forth in
this subdivision, provided that the commissioner may disregard a fractional part of a dollar
unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute the
individual's Minnesota income tax as provided in this subdivision. After the application of
the nonrefundable credits provided in this chapter, the tax liability must then be multiplied
by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross income as
defined in section 62 of the Internal Revenue Code and increased by:

(i) the additions required under sections 290.0131, subdivisions 2, 6deleted text begin, 8 to 10, 16, and
17
deleted text endnew text begin to 11, 19, and 20new text end, and 290.0137, paragraph (a); and reduced by

(ii) the Minnesota assignable portion of the subtraction for United States government
interest under section 290.0132, subdivision 2, the subtractions under sections 290.0132,
subdivisions 9
, 10, 14, 15, 17, 18, and 27, and 290.0137, paragraph (c), after applying the
allocation and assignability provisions of section 290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in section
62 of the Internal Revenue Code, increased by:

(i) the additions required under sections 290.0131, subdivisions 2, 6deleted text begin, 8 to 10, 16, and
17
deleted text endnew text begin to 11, 19, and 20new text end, and 290.0137, paragraph (a); and reduced by

(ii) the subtractions under sections 290.0132, subdivisions 2, 9, 10, 14, 15, 17, 18, and
27, and 290.0137, paragraph (c).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2020.
new text end

Sec. 17.

Minnesota Statutes 2020, section 290.06, subdivision 2d, is amended to read:


Subd. 2d.

Inflation adjustment of brackets.

The commissioner shall annually adjust
the minimum and maximum dollar amounts for each rate bracket for which a tax is imposed
in subdivision 2c as provided in section 270C.22. The statutory year is taxable year deleted text begin2019deleted text endnew text begin
2021
new text end. The rate applicable to any rate bracket must not be changed. The dollar amounts
setting forth the tax shall be adjusted to reflect the changes in the rate brackets. The rate
brackets as adjusted must be rounded to the nearest $10 amount. If the rate bracket ends in
$5, it must be rounded up to the nearest $10 amount. The commissioner shall determine the
rate bracket for married filing separate returns after this adjustment is done. The rate bracket
for married filing separate must be one-half of the rate bracket for married filing joint.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2021.
new text end

Sec. 18.

Minnesota Statutes 2020, section 290.0671, subdivision 1, is amended to read:


Subdivision 1.

Credit allowed.

(a) An individual who is a resident of Minnesota 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, except that:

(1) a taxpayer with no qualifying children who has attained the age of 21, but not attained
age 65 before the close of the taxable year and is otherwise eligible for a credit under section
32 of the Internal Revenue Code may also receive a credit; deleted text beginand
deleted text end

(2) a taxpayer who is otherwise eligible for a credit under section 32 of the Internal
Revenue Code remains eligible for the credit even if the taxpayer's earned income or adjusted
gross income exceeds the income limitation under section 32 of the Internal Revenue Codedeleted text begin.deleted text endnew text begin;
and
new text end

new text begin (3) a taxpayer who is otherwise eligible for a credit under section 32 of the Internal
Revenue Code remains eligible for the credit even if the requirements of section 32(m) of
the Internal Revenue Code are not met if the taxpayer provides an individual taxpayer
identification number.
new text end

(b) For individuals with no qualifying children, the credit equals deleted text begin3.9deleted text endnew text begin 4.6new text end percent of the
first $7,150 of earned income. The credit is reduced by deleted text begin2.0deleted text endnew text begin 2.3new text end percent of earned income or
adjusted gross income, whichever is greater, in excess of the phaseout threshold, but in no
case is the credit less than zero.

(c) For individuals with one qualifying child, the credit equals deleted text begin9.35deleted text endnew text begin 11new text end percent of the
first $11,950 of earned income. The credit is reduced by deleted text begin6.0deleted text endnew text begin 7.0new text end percent of earned income
or adjusted gross income, whichever is greater, in excess of the phaseout threshold, but in
no case is the credit less than zero.

(d) For individuals with two qualifying children, the credit equals deleted text begin11deleted text endnew text begin 13new text end percent of the
first $19,600 of earned income. The credit is reduced by deleted text begin10.5deleted text endnew text begin 12.3new text end percent of earned income
or adjusted gross income, whichever is greater, in excess of the phaseout threshold, but in
no case is the credit less than zero.

(e) For individuals with three or more qualifying children, the credit equals deleted text begin12.5deleted text endnew text begin 14.8new text end
percent of the first $20,000 of earned income. The credit is reduced by deleted text begin10.5deleted text endnew text begin 12.3new text end percent
of earned income or adjusted gross income, whichever is greater, in excess of the phaseout
threshold, but in no case is the credit less than zero.

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

(g) 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 290.0132,
subdivision 10
, 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 following clauses are not
considered "earned income not subject to tax under this chapter":

(1) the subtractions for military pay under section 290.0132, subdivisions 11 and 12;

(2) the exclusion of combat pay under section 112 of the Internal Revenue Code; and

(3) income derived from an Indian reservation by an enrolled member of the reservation
while living on the reservation.

(h) For the purposes of this section, the phaseout threshold equals:

(1) $14,570 for married taxpayers filing joint returns with no qualifying children;

(2) $8,730 for all other taxpayers with no qualifying children;

(3) $28,610 for married taxpayers filing joint returns with one qualifying child;

(4) $22,770 for all other taxpayers with one qualifying child;

(5) $32,840 for married taxpayers filing joint returns with two qualifying children;

(6) $27,000 for all other taxpayers with two qualifying children;

(7) $33,140 for married taxpayers filing joint returns with three or more qualifying
children; and

(8) $27,300 for all other taxpayers with three or more qualifying children.

(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, 2020.
new text end

Sec. 19.

Minnesota Statutes 2020, section 290.0671, subdivision 1a, is amended to read:


Subd. 1a.

Definitions.

For purposes of this section, the terms "qualifying child," and
"earned income," have the meanings given in section 32(c) of the Internal Revenue Code,
new text begin except that the requirements of section 32(m) of the Internal Revenue Code do not apply
to the definition of a "qualifying child" if all other requirements are met and an individual
taxpayer identification number is provided,
new text endand the term "adjusted gross income" has the
meaning given in section 62 of the Internal Revenue Code.

"Earned income of the lesser-earning spouse" has the meaning given in section 290.0675,
subdivision 1
, paragraph (d).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2020.
new text end

Sec. 20.

Minnesota Statutes 2020, section 290.0674, subdivision 2a, is amended to read:


Subd. 2a.

Income.

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

(1) federal adjusted gross income as defined in section 62 of the Internal Revenue Code;
and

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

(i) all nontaxable income;

(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;

(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;

(iv) cash public assistance and relief;

(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;

(vi) interest received from the federal or a state government or any instrumentality or
political subdivision thereof;

(vii) workers' compensation;

(viii) nontaxable strike benefits;

(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;

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

(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;

(xii) nontaxable scholarship or fellowship grants;

(xiii) the amount of deduction allowed under section deleted text begin199deleted text endnew text begin 199A(g)new text end of the Internal Revenue
Code;

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

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

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

In the case of an individual who files an income tax return on a fiscal year basis, the
term "federal adjusted gross income" means federal adjusted gross income reflected in the
fiscal year ending in the next calendar year. Federal adjusted gross income may 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.

(b) "Income" does not include:

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

(2) amounts of any pension or annuity that were exclusively funded by the claimant or
spouse if the funding payments were not excluded from federal adjusted gross income in
the years when the payments were made;

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

(4) relief granted under chapter 290A;

(5) child support payments received under a temporary or final decree of dissolution or
legal separation; and

(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 begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2020.
new text end

Sec. 21.

Minnesota Statutes 2020, section 290.091, subdivision 2, is amended to read:


Subd. 2.

Definitions.

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

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

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

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

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

(ii) the medical expense deduction;

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

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

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

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

(5) to the extent not included in federal alternative minimum taxable income, the amount
of interest income as provided by section 290.0131, subdivision 2;

(6) the amount of addition required by section 290.0131, subdivisions 9, 10, deleted text beginanddeleted text end 16new text begin, 19
and 20
new text end;

(7) the deduction allowed under section 199A of the Internal Revenue Code, to the extent
not included in the addition required under clause (6); and

(8) to the extent not included in federal alternative minimum taxable income, the amount
of foreign-derived intangible income deducted under section 250 of the Internal Revenue
Code;

less the sum of the amounts determined under the following:

(i) interest income as defined in section 290.0132, subdivision 2;

(ii) an overpayment of state income tax as provided by section 290.0132, subdivision
3
, to the extent included in federal alternative minimum taxable income;

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

(iv) amounts subtracted from federal taxable or adjusted gross income as provided by
section 290.0132, subdivisions 7, 9 to 15, 17, 21, 24, and 26 to 29;

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c); and

(vi) the amount allowable as a Minnesota itemized deduction under section 290.0122,
subdivision 7.

In the case of an estate or trust, alternative minimum taxable income must be computed
as provided in section 59(c) of the Internal Revenue Code, except alternative minimum
taxable income must be increased by the addition in section 290.0131, subdivision 16.

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

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

(d) "Regular tax" means the tax that would be imposed under this chapter (without regard
to this section and deleted text beginsectiondeleted text endnew text begin sectionsnew text end 290.032new text begin and 290.055new text end), reduced by the sum of the
nonrefundable credits allowed under this chapter.

(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
after subtracting the exemption amount determined under subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2020.
new text end

Sec. 22.

Minnesota Statutes 2020, section 290.21, subdivision 9, is amended to read:


Subd. 9.

Controlled foreign corporations.

The net income of a deleted text begindomesticdeleted text end corporation
that is included pursuant to section 951 of the Internal Revenue Code is dividend income.

new text begin EFFECTIVE DATE. new text end

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

Sec. 23.

Minnesota Statutes 2020, section 290.21, is amended by adding a subdivision to
read:


new text begin Subd. 10. new text end

new text begin Previously taxed deferred foreign income. new text end

new text begin The amount included under
section 290.0133, subdivision 15, is dividend income.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 24.

Minnesota Statutes 2020, section 290A.03, subdivision 3, is amended to read:


Subd. 3.

Income.

(a) "Income" means the sum of the following:

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

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

(i) all nontaxable income;

(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;

(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;

(iv) cash public assistance and relief;

(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;

(vi) interest received from the federal or a state government or any instrumentality or
political subdivision thereof;

(vii) workers' compensation;

(viii) nontaxable strike benefits;

(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;

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

(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;

(xii) to the extent not included in federal adjusted gross income, distributions received
by the claimant or spouse from a traditional or Roth style retirement account or plan;

(xiii) nontaxable scholarship or fellowship grants;

(xiv) alimony received to the extent not included in the recipient's income;

(xv) the amount of deduction allowed under section 220 or 223 of the Internal Revenue
Code;

(xvi) the amount deducted for tuition expenses under section 222 of the Internal Revenue
Code; deleted text beginand
deleted text end

(xvii) the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Codedeleted text begin.deleted text endnew text begin; and
new text end

new text begin (xviii) the amount of deduction allowed under section 199A(g) of the Internal Revenue
Code.
new text end

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.

(b) "Income" does not include:

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

(2) amounts of any pension or annuity which 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;

(3) to the extent included in federal adjusted gross income, amounts contributed by the
claimant or spouse to a traditional or Roth style retirement account or plan, but not to exceed
the retirement base amount reduced by the amount of contributions excluded from federal
adjusted gross income, but not less than zero;

(4) surplus food or other relief in kind supplied by a governmental agency;

(5) relief granted under this chapter;

(6) child support payments received under a temporary or final decree of dissolution or
legal separation;

(7) 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; or

(8) alimony paid.

(c) The sum of the following amounts may be subtracted from income:

(1) for the claimant's first dependent, the exemption amount multiplied by 1.4;

(2) for the claimant's second dependent, the exemption amount multiplied by 1.3;

(3) for the claimant's third dependent, the exemption amount multiplied by 1.2;

(4) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;

(5) for the claimant's fifth dependent, the exemption amount; and

(6) if the claimant or claimant's spouse had a disability or attained the age of 65 on or
before December 31 of the year for which the taxes were levied or rent paid, the exemption
amount.

(d) For purposes of this subdivision, the following terms have the meanings given:

(1) "exemption amount" means the exemption amount under section 290.0121,
subdivision 1
, paragraph (b), for the taxable year for which the income is reported;

(2) "retirement base amount" means the deductible amount for the taxable year for the
claimant and spouse under section 219(b)(5)(A) of the Internal Revenue Code, adjusted for
inflation as provided in section 219(b)(5)(C) of the Internal Revenue Code, without regard
to whether the claimant or spouse claimed a deduction; and

(3) "traditional or Roth style retirement account or plan" means retirement plans under
sections 401, 403, 408, 408A, and 457 of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2020.
new text end

Sec. 25.

Minnesota Statutes 2020, section 291.016, subdivision 3, is amended to read:


Subd. 3.

Subtraction.

(a) For estates of decedents dying after December 31, 2016, a
subtraction is allowed in computing the Minnesota taxable estate, equal to the sum of:

(1) the exclusion amount for the year of death under paragraph (b); and

(2) the lesser of:

(i) the value of qualified small business property under section 291.03, subdivision 9,
and the value of qualified farm property under section 291.03, subdivision 10; or

(ii) $5,000,000 minus the exclusion amount for the year of death under paragraph (b).

(b) The following exclusion amounts apply for the year of death:

(1) $2,100,000 for decedents dying in 2017;

(2) $2,400,000 for decedents dying in 2018;

(3) $2,700,000 for decedents dying in 2019; deleted text beginand
deleted text end

(4) $3,000,000 for decedents dying in 2020new text begin;new text end and deleted text beginthereafter.
deleted text end

new text begin (5) $2,700,000 for decedents dying in 2021 and thereafter.
new text end

(c) The subtraction under this subdivision must not reduce the Minnesota taxable estate
to less than zero.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2020.
new text end

Sec. 26. new text beginREPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2020, section 290.01, subdivision 7b, new text end new text begin is repealed effective for
taxable years beginning after December 31, 2020.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2020, sections 290.01, subdivision 19i; and 290.0131, subdivision
18,
new text end new text begin are repealed effective retroactively for taxable years beginning after December 31, 2015.
new text end

ARTICLE 2

VAPOR AND TOBACCO TAXES

Section 1.

Minnesota Statutes 2020, section 297F.01, is amended by adding a subdivision
to read:


new text begin Subd. 7a. new text end

new text begin Delivery sale. new text end

new text begin "Delivery sale" has the meaning given in section 325F.781,
subdivision 1.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2022.
new text end

Sec. 2.

Minnesota Statutes 2020, section 297F.01, is amended by adding a subdivision to
read:


new text begin Subd. 7b. new text end

new text begin Heat device. new text end

new text begin "Heat device" means any electronic heat device, heat system,
or similar product or device, meant to be used with a cigarette to produce a vapor or aerosol,
regardless of whether sold with a cigarette. A heat device includes any batteries, heating
elements, components, parts, accessories, apparel, or other items that are packaged with,
connected to, attached to, or contained within the product or device.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2022.
new text end

Sec. 3.

Minnesota Statutes 2020, section 297F.01, subdivision 19, is amended to read:


Subd. 19.

Tobacco products.

(a) "Tobacco products" means any product containing,
made, or derived from tobacco that is intended for human consumption, whether chewed,
smoked, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means, or
any component, part, or accessory of a tobacco product, including, but not limited to, cigars;
cheroots; stogies; periques; granulated, plug cut, crimp cut, ready rubbed, and other smoking
tobacco; snuff; snuff flour; cavendish; plug and twist tobacco; fine-cut and other chewing
tobacco; shorts; refuse scraps, clippings, cuttings and sweepings of tobacco, and other kinds
and forms of tobacco; but does not include cigarettes as defined in this section. Tobacco
products includes nicotine solution productsnew text begin and heat devicesnew text end. Tobacco products excludes
any tobacco product that has been approved by the United States Food and Drug
Administration for sale as a tobacco cessation product, as a tobacco dependence product,
or for other medical purposes, and is being marketed and sold solely for such an approved
purpose.

(b) Except for the imposition of tax under section 297F.05, subdivisions 3 and 4, tobacco
products includes a premium cigar, as defined in subdivision 13a.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2022.
new text end

Sec. 4.

Minnesota Statutes 2020, section 297F.01, subdivision 22b, is amended to read:


Subd. 22b.

Nicotine solution products.

(a) "Nicotine solution products" means any
cartridge, bottle, or other package that contains nicotine made or derived from tobacco, that
is in a solution that is consumed, or meant to be consumed, through the use of a heating
element, power source, electronic circuit, or other electronic, chemical, or mechanical means
that produces vapor or aerosol. This paragraph expires December 31, 2019.

(b) Beginning January 1, 2020, "nicotine solution products" means any cartridge, bottle,
or other package that contains nicotine, including nicotine made or derived from tobacco
or sources other than tobacco, that is in a solution that is consumed, or meant to be consumed,
through the use of a heating element, power source, electronic circuit, or other electronic,
chemical, or mechanical means that produces vapor or aerosol.

(c) Nicotine solution products includes any electronic cigarette, electronic cigar, electronic
cigarillo, electronic pipe, new text beginelectronic nicotine delivery system, electronic vaping device,
electronic vape pen, electronic oral device, electronic delivery device,
new text endor similar product
or devicedeleted text begin, anddeleted text end new text beginmeant to be used in the consumption of a solution containing nicotine
regardless of whether sold with a solution containing nicotine. Nicotine solution products
include
new text endany batteries, heating elements, deleted text beginor otherdeleted text end components, parts, deleted text beginordeleted text end accessories deleted text beginsold with
and meant to be used in the consumption of a solution containing nicotine
deleted text endnew text begin, apparel, or other
items that are packaged with, connected to, attached to, or contained within the product or
device
new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2022.
new text end

Sec. 5.

Minnesota Statutes 2020, section 297F.01, subdivision 23, is amended to read:


Subd. 23.

Wholesale sales price.

(a) "Wholesale sales price" means the price at which
a distributor purchases a tobacco product.

(b) When a distributor sells a cartridge, bottle, or other package of a solution containing
nicotine that is part of a kit that also includes a product, device, component, part, deleted text beginordeleted text end accessory
deleted text begin described in subdivision 22b:
deleted text end

deleted text begin (1)deleted text endnew text begin, or other item,new text end the wholesale sales price is the price at which the distributor purchases
the kitdeleted text begin; except thatdeleted text endnew text begin.
new text end

deleted text begin (2) if the distributor also separately sells the same package of solution containing nicotine
that is sold with the kit and can isolate the cost of the package of solution containing nicotine,
then the wholesale sales price includes only the price at which the distributor separately
purchases the package of the solution containing nicotine and any taxes, charges, and costs
listed in paragraph (c).
deleted text end

new text begin (c) When a distributor sells a heat device that is part of a kit that also includes a product,
device, component, part, accessory, or other item, the wholesale sales price is the price at
which the distributor purchases the kit.
new text end

deleted text begin (c)deleted text endnew text begin (d)new text end Wholesale sales price includes the applicable federal excise tax, freight charges,
or packaging costs, regardless of whether they were included in the purchase price.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for kits purchased by distributors after
December 31, 2021.
new text end

Sec. 6.

Minnesota Statutes 2020, section 297F.031, is amended to read:


297F.031 REGISTRATION REQUIREMENT.

Prior to making delivery sales deleted text beginor shipping cigarettes or tobacco products in connection
with any sales
deleted text end, an out-of-state retailer deleted text beginshalldeleted text endnew text begin mustnew text end file with the Department of Revenue a
statement setting forth the out-of-state retailer's name, trade name, deleted text beginand thedeleted text end address deleted text beginof the
out-of-state retailer's
deleted text endnew text begin,new text end principal place of businessnew text begin,new text end and any other place of business.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all delivery sales occurring after
December 31, 2021.
new text end

Sec. 7.

Minnesota Statutes 2020, section 297F.05, subdivision 1, is amended to read:


Subdivision 1.

Rates; cigarettes.

A tax is imposed upon the sale of cigarettes in this
state, upon having cigarettes in possession in this state with intent to sell, upon any person
engaged in business as a distributor, and upon the use or storage by consumers, at the rate
of deleted text begin152deleted text endnew text begin 202new text end mills, or deleted text begin15.2deleted text endnew text begin 20.2new text end cents, on each cigarette.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

Sec. 8.

Minnesota Statutes 2020, section 297F.05, is amended by adding a subdivision to
read:


new text begin Subd. 4b. new text end

new text begin Retailer collection and remittance of use tax. new text end

new text begin A retailer or out-of-state
retailer must, for any delivery sale, collect and pay to the state any use tax imposed by this
section. The retailer or out-of-state retailer must give the purchaser a receipt for the tax paid.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all delivery sales occurring after
December 31, 2021.
new text end

Sec. 9.

Minnesota Statutes 2020, section 297F.09, subdivision 3, is amended to read:


Subd. 3.

Use tax return; cigarette or tobacco products consumernew text begin and retailers
making delivery sales
new text end.

new text begin(a) new text endOn or before the 18th day of each calendar month, a consumer
who, during the preceding calendar month, has acquired title to or possession of cigarettes
or tobacco products for use or storage in this state, upon which cigarettes or tobacco products
the tax imposed by this chapter has not been paid, shall file a return with the commissioner
showing the quantity of cigarettes or tobacco products so acquired. The return must be made
in the form and manner prescribed by the commissioner, and must contain any other
information required by the commissioner. The return must be accompanied by a remittance
for the full unpaid tax liability shown by it.

new text begin (b) On or before the 18th day of each calendar month, a retailer or out-of-state retailer
who, during the preceding calendar month, made delivery sales must file a return with the
commissioner showing the quantity of cigarettes or tobacco products so delivered. The
commissioner shall prescribe the content, format, and manner of returns pursuant to section
270C.30. The return must be accompanied by a remittance for the full unpaid tax liability.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all delivery sales occurring after
December 31, 2021.
new text end

Sec. 10.

Minnesota Statutes 2020, section 297F.09, subdivision 4a, is amended to read:


Subd. 4a.

Reporting requirements.

No later than the 18th day of each calendar month,
deleted text begin andeleted text endnew text begin a retailer ornew text end out-of-state retailer that has made deleted text begina delivery of cigarettes or tobacco products
or shipped or delivered cigarettes or tobacco products into the state in
deleted text end a delivery sale in the
previous calendar month shall file with the Department of Revenue deleted text beginreportsdeleted text endnew text begin a reportnew text end in the
form and in the manner prescribed by the commissioner of revenue that provides for each
delivery sale, the name and address of the purchaser and the brand or brands and quantity
of cigarettes or tobacco products sold. A deleted text begintobaccodeleted text end retailer new text beginor out-of-state retailer new text endthat meets
the requirements of United States Code, title 15, section 375 et seq. satisfies the requirements
of this subdivision.new text begin The filing of a return under subdivision 3, paragraph (b), satisfies the
requirements of this subdivision for the applicable month.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all delivery sales occurring after
December 31, 2021.
new text end

Sec. 11.

Minnesota Statutes 2020, section 297F.09, subdivision 7, is amended to read:


Subd. 7.

Electronic payment.

A cigarette deleted text beginordeleted text endnew text begin distributor,new text end tobacco products distributornew text begin,
retailer, or out-of-state retailer
new text end having a liability of $10,000 or more during a fiscal year
ending June 30 must remit all liabilities in all subsequent calendar years by electronic means.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all delivery sales occurring after
December 31, 2021.
new text end

Sec. 12.

Minnesota Statutes 2020, section 297F.09, subdivision 10, is amended to read:


Subd. 10.

Accelerated tax paymentdeleted text begin; cigarette or tobacco products distributordeleted text end.

A
cigarette deleted text beginordeleted text endnew text begin distributor,new text end tobacco products distributornew text begin, retailer, or out-of-state retailernew text end having
a liability of $250,000 or more during a fiscal year ending June 30, shall remit the June
liability for the next year in the following manner:

(a) Two business days before June 30 of calendar years 2020 and 2021, the distributor
shall remit the actual May liability and 87.5 percent of the estimated June liability to the
commissioner and file the return in the form and manner prescribed by the commissioner.

(b) On or before August 18 of the year, the distributornew text begin, retailer, or out-of-state retailernew text end
shall submit a return showing the actual June liability and pay any additional amount of tax
not remitted in June. A penalty is imposed equal to ten percent of the amount of June liability
required to be paid in June, less the amount remitted in June. However, the penalty is not
imposed if the amount remitted in June equals the lesser of:

(1) 87.5 percent of the actual June liability for the calendar year 2020 and 2021 June
liabilities and 84.5 of the actual June liability for June 2022 and thereafter; or

(2) 87.5 percent of the preceding May liability for the calendar year 2020 and 2021 June
liabilities and 84.5 percent of the preceding May liability for June 2022 and thereafter.

(c) For calendar year 2022 and thereafter, the percent of the estimated June liability the
vendor must remit by two business days before June 30 is 84.5 percent.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all delivery sales occurring after
December 31, 2021.
new text end

Sec. 13.

new text begin [297F.26] NICOTINE SOLUTION PRODUCT AND HEAT DEVICE
RETAIL GROSS RECEIPTS TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, the following terms have the
meanings given.
new text end

new text begin (1) "Gross receipts" means the total amount received, in money or by barter or exchange,
for all nicotine solution product and heat device sales at retail as measured by the sales
price, but does not include any taxes imposed directly on the consumer that are separately
stated on the invoice, bill of sale, or similar document given to the purchaser.
new text end

new text begin (2) "Retail sale" has the meaning given in section 297A.61, subdivision 4, but includes
only sales sourced to Minnesota under section 297A.668.
new text end

new text begin (3) "Retailer" has the meaning given in section 297A.61, subdivision 9.
new text end

new text begin Subd. 2. new text end

new text begin Tax imposed. new text end

new text begin (a) A tax is imposed on each retailer equal to 35 percent of gross
receipts from retail sales of:
new text end

new text begin (1) nicotine solution products, including kits as described in section 297F.01, subdivision
23, paragraph (b); and
new text end

new text begin (2) heat devices, including kits as described in section 297F.01, subdivision 23, paragraph
(c).
new text end

new text begin (b) A tax is imposed on the use or storage by a consumer in Minnesota of:
new text end

new text begin (1) nicotine solution products, including kits as described in section 297F.01, subdivision
23, paragraph (b); and
new text end

new text begin (2) heat devices, including kits as described in section 297F.01, subdivision 23, paragraph
(c).
new text end

new text begin The tax is imposed on the consumer at the rate of 35 percent of the cost to the consumer
for the nicotine solution products and heat devices. The tax does not apply if the tax imposed
under paragraph (a) has been paid by the retailer.
new text end

new text begin (c) A retailer with nexus in Minnesota, who is not subject to tax under paragraph (a), is
required to collect and remit the tax imposed on the consumer under paragraph (b) and must
give the purchaser a receipt for the tax paid.
new text end

new text begin (d) A retailer may but is not required to collect the tax imposed under paragraph (a) from
the purchaser as long as the tax is separately stated on the receipt, invoice, bill of sale, or
similar document given to the purchaser.
new text end

new text begin (e) Tax imposed under this section must be reported on a return prescribed by the
commissioner, and the tax must be paid with the return. The return and tax must be filed
and paid using the filing cycle and due date provided for taxes imposed under chapter 297A.
new text end

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

new text begin (g) The tax imposed under this section is in addition to any other tax imposed on the
sale or use of nicotine solution products and heat devices.
new text end

new text begin Subd. 3. new text end

new text begin Exemptions. new text end

new text begin (a) The tax imposed under this section does not apply to gross
receipts from retail sales, or the use or storage, of products approved by the United States
Food and Drug Administration for sale as a tobacco cessation product, as a tobacco
dependence product, or for other medical purposes, and that are being marketed and sold
solely for such an approved purpose.
new text end

new text begin (b) The tax imposed by this section does not apply to gross receipts from retail sales, or
the use or storage, of products which under the Constitution and laws of the United States
may not be subject to taxation by the state.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all retail sales occurring after
December 31, 2021, and for all products received for use or storage in Minnesota after
December 31, 2021.
new text end

Sec. 14.

Minnesota Statutes 2020, section 325F.781, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given, unless the language or context clearly provides otherwise.

(b) "Consumer" means an individual who purchases, receives, or possesses tobacco
products for personal consumption and not for resale.

(c) "Delivery sale" means:

(1) a sale of tobacco products to a consumer in this state when:

(i) the purchaser submits the order for the sale by means of a telephonic or other method
of voice transmission, the mail or any other delivery service, or the Internet or other online
service; or

(ii) the tobacco products are delivered by use of the mail or other delivery service; or

(2) a sale of tobacco products that satisfies the criteria in clause (1), item (i), regardless
of whether the seller is located inside or outside of the state.

A sale of tobacco products to an individual in this state must be treated as a sale to a
consumer, unless the individual is licensed as a distributor or retailer of tobacco products.

(d) "Delivery service" means a person, including the United States Postal Service, that
is engaged in the commercial delivery of letters, packages, or other containers.

(e) "Distributor" means a person, whether located inside or outside of this state, other
than a retailer, who sells or distributes tobacco products in the state. Distributor does not
include a tobacco products manufacturer, export warehouse proprietor, or importer with a
valid permit under United States Code, title 26, section 5712 (1997), if the person sells or
distributes tobacco products in this state only to distributors who hold valid and current
licenses under the laws of a state, or to an export warehouse proprietor or another
manufacturer. Distributor does not include a common or contract carrier that is transporting
tobacco products under a proper bill of lading or freight bill that states the quantity, source,
and destination of tobacco products, or a person who ships tobacco products through this
state by common or contract carrier under a bill of lading or freight bill.

(f) "Retailer" means a person, whether located inside or outside this state, who sells or
distributes tobacco products to a consumer in this state.

(g) "Tobacco products" meansdeleted text begin:deleted text endnew text begin cigarettes and tobacco products as defined in section
297F.01.
new text end

deleted text begin (1) cigarettes, as defined in section 297F.01, subdivision 3;
deleted text end

deleted text begin (2) smokeless tobacco as defined in section 325F.76; and
deleted text end

deleted text begin (3) premium cigars as defined in section 297F.01, subdivision 13a.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2022.
new text end

Sec. 15.

Minnesota Statutes 2020, section 325F.781, subdivision 5, is amended to read:


Subd. 5.

Registration requirement.

Prior to making delivery sales deleted text beginor shipping tobacco
products in connection with any sales
deleted text end, an out-of-state retailer must deleted text beginmeet the requirements
of
deleted text endnew text begin register with the commissioner of revenue as required undernew text end section 297F.031.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all delivery sales occurring after
December 31, 2021.
new text end

Sec. 16.

Minnesota Statutes 2020, section 325F.781, subdivision 6, is amended to read:


Subd. 6.

Collection of taxes.

(a) deleted text beginPrior to shipping any tobacco products to a purchaser
in this state, the out-of-state
deleted text endnew text begin Anew text end retailer deleted text beginshall comply with all requirements ofdeleted text endnew text begin making delivery
sales must file all returns and reports, collect and pay all taxes, and maintain all records
required under
new text end chapter 297F deleted text beginand shall ensure that all state excise taxes and fees that apply
to such tobacco products have been collected and paid to the state and that all related state
excise tax stamps or other indicators of state excise tax payment have been properly affixed
to those tobacco products
deleted text end.

(b) In addition to any penalties under chapter 297F, deleted text begina distributordeleted text endnew text begin a retailer making delivery
sales
new text end who fails to pay any tax due deleted text beginaccording to paragraph (a)deleted text endnew text begin under chapter 297F,new text end shall pay,
in addition to any other penalty, a penalty of 50 percent of the tax due but unpaid.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all delivery sales occurring after
December 31, 2021.
new text end

Sec. 17. new text beginFLOOR STOCKS TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Cigarettes. new text end

new text begin (a) A floor stocks tax is imposed on every person engaged
in the business in this state as a distributor, retailer, subjobber, vendor, manufacturer, or
manufacturer's representative of cigarettes, on cigarettes in packages upon which a stamp
is affixed and unaffixed stamps in the person's possession or under the person's control at
12:01 a.m. on July 1, 2021. The tax is imposed at the rate of five cents on each cigarette,
or one dollar per unaffixed stamp for packages of 20 cigarettes, plus the additional cigarette
sales tax determined by an adjustment to the weighted average retail price which reflects
the price including the increased tax. For unaffixed stamps for packages with other than 20
cigarettes, the floor stocks tax and cigarette sales tax must be adjusted proportionally.
new text end

new text begin (b) Each distributor, on or before July 11, 2021, shall file a return with the commissioner
of revenue, in the form the commissioner prescribes, showing the amount of cigarettes in
packages upon which a cigarette tax stamp is affixed and unaffixed stamps in the distributor's
possession or under the distributor's control at 12:01 a.m. on July 1, 2021, and the amount
of tax due on the cigarettes and unaffixed stamps. Each retailer, subjobber, vendor,
manufacturer, or manufacturer's representative, on or before July 11, 2021, shall file a return
with the commissioner, in the form the commissioner prescribes, showing the amount of
cigarettes in the person's possession or under the person's control at 12:01 a.m. on July 1,
2021, and the amount of tax due on the cigarettes. The tax imposed by this section is due
and payable on or before September 7, 2021, and after that date bears interest at the rate
specified in Minnesota Statutes, section 270C.40.
new text end

new text begin Subd. 2. new text end

new text begin Audit and enforcement. new text end

new text begin The tax imposed by this section is subject to the audit,
assessment, interest, appeal, refund, penalty, enforcement, administrative, and collection
provisions of Minnesota Statutes, chapters 270C and 297F.
new text end

new text begin Subd. 3. new text end

new text begin Deposit of proceeds. new text end

new text begin All tax, penalty, and interest received under this section
shall be deposited by the commissioner of revenue into the state treasury and credited to
the general fund.
new text end

new text begin Subd. 4. new text end

new text begin Definitions. new text end

new text begin The definitions in Minnesota Statutes, chapter 297F, apply to this
section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

Sec. 18. new text beginINTERIM SALES TAX RATE.
new text end

new text begin Subdivision 1. new text end

new text begin Adjustments. new text end

new text begin Notwithstanding the provisions of Minnesota Statutes,
section 297F.25, the commissioner shall adjust the weighted average retail price in Minnesota
Statutes, section 297F.25, subdivision 1, on July 1, 2021, to reflect the price changes under
this act. This weighted average shall be used to compute cigarette sales tax under Minnesota
Statutes, section 297F.25, subdivision 1, through December 31, 2021, when the commissioner
shall resume annual adjustments to the weighted average sales price. The commissioner's
determination of the adjustment that takes effect on January 1, 2022, must be limited to the
change in the weighted average retail price that occurs during calendar year 2021 but after
July 15, 2021.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin The definitions in Minnesota Statutes, chapter 297F, apply to this
section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

ARTICLE 3

SALES AND USE TAXES

Section 1.

Minnesota Statutes 2020, section 297A.68, subdivision 42, is amended to read:


Subd. 42.

Qualified data centers.

(a) new text beginPurchases of enterprise information technology
equipment and computer software are exempt from tax as follows:
new text end

new text begin (1) new text endpurchases of enterprise information technology equipment deleted text beginand computer softwaredeleted text endnew text begin,
and replacements or upgrades to the equipment,
new text end for use in a qualified data centerdeleted text begin,deleted text end or a
qualified refurbished data center, are exemptdeleted text begin,deleted text endnew text begin;
new text end

new text begin (2) purchases of prewritten computer software, and replacements or upgrades to the
software, for use by or in a qualified data center or a qualified refurbished data center are
exempt as follows:
new text end

new text begin (i) for purchases prior to July 1, 2021, computer software is exempt if both:
new text end

new text begin (A) the software is loaded at the data center; and
new text end

new text begin (B) either the original software or original software license remains on the equipment
in the data center;
new text end

new text begin (ii) for purchases after June 30, 2021, all software that is loaded at the data center is
exempt, but the refund provided in clause (3) is limited to 50 percent of the tax paid on the
software; and
new text end

new text begin (iii) purchases of software exempt under this clause include licenses to use the software
and maintenance agreements for the software,
new text end except that computer software maintenance
agreements are exempt for purchases made after June 30, 2013deleted text begin.deleted text endnew text begin; and
new text end

new text begin (3)new text end the tax on purchases exempt under this paragraph must be imposed and collected as
if the rate under section 297A.62, subdivision 1, applied, and then refunded after June 30,
2013, in the manner providednew text begin under clause (2), item (ii), andnew text end in section 297A.75. deleted text beginThis
exemption includes enterprise information technology equipment and computer software
purchased to replace or upgrade enterprise information technology equipment and computer
software in a qualified data center, or a qualified refurbished data center.
deleted text end

(b) Electricity used or consumed in the operation of a qualified data center or qualified
refurbished data center is exempt.

(c) For purposes of this subdivision, "qualified data center" means a facility in Minnesota:

(1) that is comprised of one or more buildings that consist in the aggregate of at least
25,000 square feet, and that are located on a single parcel or on contiguous parcels, where
the total cost of construction or refurbishment, investment in enterprise information
technology equipment, and computer software is at least $30,000,000 within a 48-month
period. The 48-month period begins no sooner than July 1, 2012, except that costs for
computer software maintenance agreements purchased before July 1, 2013, are not included
in determining if the $30,000,000 threshold has been met;

(2) that is constructed or substantially refurbished after June 30, 2012, where
"substantially refurbished" means that at least 25,000 square feet have been rebuilt or
modified, including:

(i) installation of enterprise information technology equipment; environmental control,
computer software, and energy efficiency improvements; and

(ii) building improvements; and

(3) that is used to house enterprise information technology equipment, where the facility
has the following characteristics:

(i) uninterruptible power supplies, generator backup power, or both;

(ii) sophisticated fire suppression and prevention systems; and

(iii) enhanced security. A facility will be considered to have enhanced security if it has
restricted access to the facility to selected personnel; permanent security guards; video
camera surveillance; an electronic system requiring pass codes, keycards, or biometric scans,
such as hand scans and retinal or fingerprint recognition; or similar security features.

In determining whether the facility has the required square footage, the square footage
of the following spaces shall be included if the spaces support the operation of enterprise
information technology equipment: office space, meeting space, and mechanical and other
support facilities. For purposes of new text beginmeeting investment and square footage criteria in new text endthis
deleted text begin subdivisiondeleted text endnew text begin paragraphnew text end, "computer software" deleted text beginincludes, but is not limited to, software utilized
or loaded at a qualified data center or qualified refurbished data center, including
maintenance, licensing,
deleted text endnew text begin means both software that is exempt under paragraph (a), clause (2),new text end
and software customization.

(d) For purposes of this subdivision, a "qualified refurbished data center" means an
existing facility that qualifies as a data center under paragraph (c), clauses (2) and (3), but
that is comprised of one or more buildings that consist in the aggregate of at least 25,000
square feet, and that are located on a single parcel or contiguous parcels, where the total
cost of construction or refurbishment, investment in enterprise information technology
equipment, and computer software is at least $50,000,000 within a 24-month period.

(e) For purposes of this subdivision, "enterprise information technology equipment"
means computers and equipment supporting computing, networking, or data storage,
including servers and routers. It includes, but is not limited to: cooling systems, cooling
towers, and other temperature control infrastructure; power infrastructure for transformation,
distribution, or management of electricity used for the maintenance and operation of a
qualified data center or qualified refurbished data center, including but not limited to exterior
dedicated business-owned substations, backup power generation systems, battery systems,
and related infrastructure; and racking systems, cabling, and trays, which are necessary for
the maintenance and operation of the qualified data center or qualified refurbished data
center.

(f) A qualified data center or qualified refurbished data center may claim new text beginthe following:
new text end

new text begin (1) new text endthe exemptions deleted text beginin this subdivisiondeleted text endnew text begin provided under paragraphs (a), clause (1), and
(b),
new text end for purchases made either within 20 years of the date of its first purchase qualifying for
the deleted text beginexemptiondeleted text endnew text begin exemptionsnew text end under paragraph (a), or by June 30, 2042, whichever is earlierdeleted text begin.deleted text endnew text begin;
new text end

new text begin (2) where the first purchase qualifying for the exemptions under paragraph (a) was made
between July 1, 2012, and June 30, 2016, the exemption provided under paragraph (a),
clause (2), item (i), for those purchases of software made within a period starting on the
date of the first purchase qualifying for the exemption under paragraph (a) and ending with
the last purchase made prior to July 1, 2021;
new text end

new text begin (3) where the first purchase qualifying for the exemptions under paragraph (a) was made
after June 30, 2021, the exemption provided under paragraph (a), clause (2), item (ii), for
purchases of software made within five years of the date of its first purchase qualifying for
the exemption under paragraph (a), or by June 30, 2042, whichever is earlier;
new text end

new text begin (4) where the first purchase qualifying for the exemptions under paragraph (a) was made
between July 1, 2016, and June 30, 2021, the exemption provided under paragraph (a),
clause (2), item (i), for purchases of software made prior to July 1, 2021, and the exemption
provided under paragraph (a), clause (2), item (ii), for purchases of software made after
June 30, 2021, for purchases made within five years of the first purchase qualifying for the
exemptions under paragraph (a); and
new text end

new text begin (5) notwithstanding clauses (2) to (4), and paragraph (a), clause (2), a qualified data
center or qualified refurbished data center may claim the exemption for purchases of software
under paragraph (a), clause (2), during only one exemption period, as described in either
clause (2), (3), or (4), per data center location. If the commissioner of employment and
economic development subsequently certifies the data center as newly meeting the
requirements under paragraph (c) or (d) at the same data center location, a data center that
previously qualified for the exemption on purchases of software under paragraph (a), clause
(2), as either a qualified data center or a qualified refurbished data center for the relevant
period described in clause (2), (3), or (4), is not eligible for the exemption on purchases of
software under the subsequent certification.
new text end

(g) The purpose of this exemption is to create jobs in the construction and data center
industries.

(h) This subdivision is effective for sales and purchases made before July 1, 2042new text begin, as
limited by paragraph (f)
new text end.

(i) The commissioner of employment and economic development must certify to the
commissioner of revenue, in a format approved by the commissioner of revenue, when a
qualified data center has met the requirements under paragraph (c) or a qualified refurbished
data center has met the requirements under paragraph (d). The certification must provide
the following information regarding each qualified data center or qualified refurbished data
center:

(1) the total square footage amount;

(2) the total amount of construction or refurbishment costs and the total amount of
qualifying investments in enterprise information technology equipment and computer
software;

(3) the beginning and ending of the applicable period under either paragraph (c) or (d)
in which the qualifying expenditures and purchases under clause (2) were made, but in no
case shall the period begin before July 1, 2012; and

(4) the date upon which the qualified data center first met the requirements under
paragraph (c) or a qualified refurbished data center first met the requirements under paragraph
(d).

(j) Any refund for sales tax paid on qualifying purchases under this subdivision must
not be issued unless the commissioner of revenue has received the certification required
under paragraph (i) issued by the commissioner of employment and economic development.

(k) The commissioner of employment and economic development must annually notify
the commissioner of revenue of the qualified data centers that are projected to meet the
requirements under paragraph (c) and the qualified refurbished data centers that are projected
to meet the requirements under paragraph (d) in each of the next four years. The notification
must provide the information required under paragraph (i), clauses (1) to (4), for each
qualified data center or qualified refurbished data center.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2021; except that paragraph (a), clause (2), item (i), and those portions of paragraph (f)
relating to the exemption provided under paragraph (a), clause (2), item (i), are effective
retroactively to the first purchase qualifying for the exemptions under paragraph (a) made
after June 30, 2012, for sales and purchases of software made prior to July 1, 2021.
new text end

Sec. 2.

Minnesota Statutes 2020, section 297A.70, subdivision 13, is amended to read:


Subd. 13.

Fund-raising sales by or for nonprofit groups.

(a) The following sales by
the specified organizations for fund-raising purposes are exempt, subject to the limitations
listed in paragraph (b):

(1) all sales made by a nonprofit organization that exists solely for the purpose of
providing educational or social activities for young people primarily age 18 and under;

(2) all sales made by an organization that is a senior citizen group or association of
groups if (i) in general it limits membership to persons age 55 or older; (ii) it is organized
and operated exclusively for pleasure, recreation, and other nonprofit purposes; and (iii) no
part of its net earnings inures to the benefit of any private shareholders;

(3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if the
beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization under
section 501(c)(3) of the Internal Revenue Code; and

(4) sales of candy sold for fund-raising purposes by a nonprofit organization that provides
educational and social activities primarily for young people age 18 and under.

(b) The exemptions listed in paragraph (a) are limited in the following manner:

(1) the exemption under paragraph (a), clauses (1) and (2), applies only to the first
$20,000 of the gross annual receipts of the organization from fund-raising; deleted text beginand
deleted text end

(2) the exemption under paragraph (a), clause (1), does not apply if the sales are derived
from admission charges or from activities for which the money must be deposited with the
school district treasurer under section 123B.49, subdivision 2deleted text begin, ordeleted text endnew text begin; and
new text end

new text begin (3) the exemption under paragraph (a), clause (1), does not apply if the sales are derived
from admission charges or from activities for which the money must
new text end be recorded in the
same manner as other revenues or expenditures of the school district under section 123B.49,
subdivision 4
deleted text begin.deleted text endnew text begin, unless the following conditions are both met:
new text end

new text begin (i) the sales are made for fund-raising purposes of a club, association, or other
organization of elementary or secondary school students organized for the purpose of
carrying on sports activities, educational activities, or other extracurricular activities; and
new text end

new text begin (ii) the school district reserves revenue raised for extracurricular activities, as provided
in section 123B.49, subdivision 4, paragraph (e), and spends the revenue raised by a particular
extracurricular activity only for that extracurricular activity.
new text end

(c) Sales of tangible personal property and services are exempt if the entire proceeds,
less the necessary expenses for obtaining the property or services, will be contributed to a
registered combined charitable organization described in section 43A.50, to be used
exclusively for charitable, religious, or educational purposes, and the registered combined
charitable organization has given its written permission for the sale. Sales that occur over
a period of more than 24 days per year are not exempt under this paragraph.

(d) For purposes of this subdivision, a club, association, or other organization of
elementary or secondary school students organized for the purpose of carrying on sports,
educational, or other extracurricular activities is a separate organization from the school
district or school for purposes of applying the $20,000 limit.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after the
date of final enactment.
new text end

Sec. 3.

Minnesota Statutes 2020, section 297A.75, subdivision 2, is amended to read:


Subd. 2.

Refund; eligible persons.

Upon application on forms prescribed by the
commissioner, a refund equal to the tax paid on the gross receipts of the exempt itemsnew text begin,
except as otherwise provided in this chapter,
new text end must be paid to the applicant. Only the following
persons may apply for the refund:

(1) for subdivision 1, clauses (1), (2), and (14), the applicant must be the purchaser;

(2) for subdivision 1, clause (3), the applicant must be the governmental subdivision;

(3) for subdivision 1, clause (4), the applicant must be the recipient of the benefits
provided in United States Code, title 38, chapter 21;

(4) for subdivision 1, clause (5), the applicant must be the owner of the homestead
property;

(5) for subdivision 1, clause (6), the owner of the qualified low-income housing project;

(6) for subdivision 1, clause (7), the applicant must be a municipal electric utility or a
joint venture of municipal electric utilities;

(7) for subdivision 1, clauses (8), (11), (12), and (15), the owner of the qualifying
business;

(8) for subdivision 1, clauses (9), (10), (13), and (17), the applicant must be the
governmental entity that owns or contracts for the project or facility; and

(9) for subdivision 1, clause (16), the applicant must be the owner or developer of the
building or project.

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 4

PROPERTY TAX AND LOCAL GOVERNMENT AID

Section 1.

Minnesota Statutes 2020, section 270B.12, subdivision 8, is amended to read:


Subd. 8.

County assessors; homestead classification and renter credit.

The
commissioner may disclose names and Social Security numbers new text beginor names and individual
taxpayer identification numbers
new text endof individuals who have applied for both homestead
classification under section 273.13 and a property tax refund as a renter under chapter 290A
for the purpose of and to the extent necessary to administer section 290A.25.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for allowed disclosures made in 2021
and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2020, section 270B.12, subdivision 9, is amended to read:


Subd. 9.

County assessors; homestead application, determination, and income tax
status.

(a) If, as a result of an audit, the commissioner determines that a person is a Minnesota
nonresident or part-year resident for income tax purposes, the commissioner may disclose
the person's name, address, and Social Security number new text beginor the person's name, address, and
individual taxpayer identification number
new text endto the assessor of any political subdivision in the
state, when there is reason to believe that the person may have claimed or received homestead
property tax benefits for a corresponding assessment year in regard to property apparently
located in the assessor's jurisdiction.

(b) To the extent permitted by section 273.124, subdivision 1, paragraph (a), the
Department of Revenue may verify to a county assessor whether an individual who is
requesting or receiving a homestead classification has filed a Minnesota income tax return
as a resident for the most recent taxable year for which the information is available.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for allowed disclosures made in 2021
and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2020, section 273.124, subdivision 13, is amended to read:


Subd. 13.

Homestead application.

(a) A person who meets the homestead requirements
under subdivision 1 must file a homestead application with the county assessor to initially
obtain homestead classification.

(b) The commissioner shall prescribe the content, format, and manner of the homestead
application required to be filed under this chapter pursuant to section 270C.30. The
application must clearly inform the taxpayer that this application must be signed by all
owners who occupy the property or by the qualifying relative and returned to the county
assessor in order for the property to receive homestead treatment.

(c) Every property owner applying for homestead classification must furnish to the
county assessor the Social Security number new text beginor individual tax identification number new text endof each
occupant who is listed as an owner of the property on the deed of record, the name and
address of each owner who does not occupy the property, and the name and Social Security
number new text beginor individual tax identification number new text endof the spouse of each occupying owner. The
application must be signed by each owner who occupies the property and by each owner's
spouse who occupies the property, or, in the case of property that qualifies as a homestead
under subdivision 1, paragraph (c), by the qualifying relative.

If a property owner occupies a homestead, the property owner's spouse may not claim
another property as a homestead unless the property owner and the property owner's spouse
file with the assessor an affidavit or other proof required by the assessor stating that the
property qualifies as a homestead under subdivision 1, paragraph (e).

Owners or spouses occupying residences owned by their spouses and previously occupied
with the other spouse, either of whom fail to include the other spouse's name and Social
Security number new text beginor individual tax identification number new text endon the homestead application or
provide the affidavits or other proof requested, will be deemed to have elected to receive
only partial homestead treatment of their residence. The remainder of the residence will be
classified as nonhomestead residential. When an owner or spouse's name and Social Security
number new text beginor individual tax identification number new text endappear on homestead applications for two
separate residences and only one application is signed, the owner or spouse will be deemed
to have elected to homestead the residence for which the application was signed.

(d) If residential real estate is occupied and used for purposes of a homestead by a relative
of the owner and qualifies for a homestead under subdivision 1, paragraph (c), in order for
the property to receive homestead status, a homestead application must be filed with the
assessor. The Social Security number new text beginor individual tax identification number new text endof each relative
occupying the property and the name and Social Security number new text beginor individual tax
identification number
new text endof the spouse of a relative occupying the property shall be required
on the homestead application filed under this subdivision. If a different relative of the owner
subsequently occupies the property, the owner of the property must notify the assessor
within 30 days of the change in occupancy. The Social Security number new text beginor individual tax
identification number
new text endof a relative occupying the property or the spouse of a relative
occupying the property is private data on individuals as defined by section 13.02, subdivision
12
, but may be disclosed to the commissioner of revenue, or, for the purposes of proceeding
under the Revenue Recapture Act to recover personal property taxes owing, to the county
treasurer.

(e) The homestead application shall also notify the property owners that if the property
is granted homestead status for any assessment year, that same property shall remain
classified as homestead until the property is sold or transferred to another person, or the
owners, the spouse of the owner, or the relatives no longer use the property as their
homestead. Upon the sale or transfer of the homestead property, a certificate of value must
be timely filed with the county auditor as provided under section 272.115. Failure to notify
the assessor within 30 days that the property has been sold, transferred, or that the owner,
the spouse of the owner, or the relative is no longer occupying the property as a homestead,
shall result in the penalty provided under this subdivision and the property will lose its
current homestead status.

(f) If a homestead application has not been filed with the county by December 15, the
assessor shall classify the property as nonhomestead for the current assessment year for
taxes payable in the following year, provided that the owner may be entitled to receive the
homestead classification by proper application under section 375.192.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for homestead filed in
2021 and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2020, section 273.124, subdivision 13c, is amended to read:


Subd. 13c.

Property lists.

In addition to lists of homestead properties, the commissioner
may ask the counties to furnish lists of all properties and the record owners. The Social
Security numbersnew text begin, individual tax identification numbers,new text end and federal identification numbers
that are maintained by a county or city assessor for property tax administration purposes,
and that may appear on the lists retain their classification as private or nonpublic data; but
may be viewed, accessed, and used by the county auditor or treasurer of the same county
for the limited purpose of assisting the commissioner in the preparation of microdata samples
under section 270C.12. The commissioner shall use the information provided on the lists
as appropriate under the law, including for the detection of improper claims by owners, or
relatives of owners, under chapter 290A.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for homestead data provided to the
commissioner of revenue in 2022 and thereafter.
new text end

Sec. 5.

Minnesota Statutes 2020, section 273.124, subdivision 13d, is amended to read:


Subd. 13d.

Homestead data.

On or before April 30 each year beginning in 2007, each
county must provide the commissioner with the following data for each parcel of homestead
property by electronic means as defined in section 289A.02, subdivision 8:

(1) the property identification number assigned to the parcel for purposes of taxes payable
in the current year;

(2) the name and Social Security number new text beginor individual tax identification number new text endof each
occupant of homestead property who is the property owner or qualifying relative of a property
owner, and the spouse of the property owner who occupies homestead property or spouse
of a qualifying relative of a property owner who occupies homestead property;

(3) the classification of the property under section 273.13 for taxes payable in the current
year and in the prior year;

(4) an indication of whether the property was classified as a homestead for taxes payable
in the current year because of occupancy by a relative of the owner or by a spouse of a
relative;

(5) the property taxes payable as defined in section 290A.03, subdivision 13, for the
current year and the prior year;

(6) the market value of improvements to the property first assessed for tax purposes for
taxes payable in the current year;

(7) the assessor's estimated market value assigned to the property for taxes payable in
the current year and the prior year;

(8) the taxable market value assigned to the property for taxes payable in the current
year and the prior year;

(9) whether there are delinquent property taxes owing on the homestead;

(10) the unique taxing district in which the property is located; and

(11) such other information as the commissioner decides is necessary.

The commissioner shall use the information provided on the lists as appropriate under
the law, including for the detection of improper claims by owners, or relatives of owners,
under chapter 290A.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for homestead data provided to the
commissioner of revenue in 2022 and thereafter.
new text end

Sec. 6.

Minnesota Statutes 2020, section 273.124, subdivision 14, is amended to read:


Subd. 14.

Agricultural homesteads; special provisions.

(a) Real estate of less than ten
acres that is the homestead of its owner must be classified as class 2a under section 273.13,
subdivision 23
, paragraph (a), if:

(1) the parcel on which the house is located is contiguous on at least two sides to (i)
agricultural land, (ii) land owned or administered by the United States Fish and Wildlife
Service, or (iii) land administered by the Department of Natural Resources on which in lieu
taxes are paid under sections 477A.11 to 477A.14;

(2) its owner also owns a noncontiguous parcel of agricultural land that is at least 20
acres;

(3) the noncontiguous land is located not farther than four townships or cities, or a
combination of townships or cities from the homestead; and

(4) the agricultural use value of the noncontiguous land and farm buildings is equal to
at least 50 percent of the market value of the house, garage, and one acre of land.

Homesteads initially classified as class 2a under the provisions of this paragraph shall
remain classified as class 2a, irrespective of subsequent changes in the use of adjoining
properties, as long as the homestead remains under the same ownership, the owner owns a
noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use
value qualifies under clause (4). Homestead classification under this paragraph is limited
to property that qualified under this paragraph for the 1998 assessment.

(b)(i) Agricultural property shall be classified as the owner's homestead, to the same
extent as other agricultural homestead property, if all of the following criteria are met:

(1) the agricultural property consists of at least 40 acres including undivided government
lots and correctional 40's;

(2) the owner, the owner's spouse, or a grandchild, child, sibling, or parent of the owner
or of the owner's spouse, is actively farming the agricultural property, either on the person's
own behalf as an individual or on behalf of a partnership operating a family farm, family
farm corporation, joint family farm venture, or limited liability company of which the person
is a partner, shareholder, or member;

(3) both the owner of the agricultural property and the person who is actively farming
the agricultural property under clause (2), are Minnesota residents;

(4) neither the owner nor the spouse of the owner claims another agricultural homestead
in Minnesota; and

(5) neither the owner nor the person actively farming the agricultural property lives
farther than four townships or cities, or a combination of four townships or cities, from the
agricultural property, except that if the owner or the owner's spouse is required to live in
employer-provided housing, the owner or owner's spouse, whichever is actively farming
the agricultural property, may live more than four townships or cities, or combination of
four townships or cities from the agricultural property.

The relationship under this paragraph may be either by blood or marriage.

(ii) Property containing the residence of an owner who owns qualified property under
clause (i) shall be classified as part of the owner's agricultural homestead, if that property
is also used for noncommercial storage or drying of agricultural crops.

(iii) As used in this paragraph, "agricultural property" means class 2a property and any
class 2b property that is contiguous to and under the same ownership as the class 2a property.

(c) Noncontiguous land shall be included as part of a homestead under section 273.13,
subdivision 23
, paragraph (a), only if the homestead is classified as class 2a and the detached
land is located in the same township or city, or not farther than four townships or cities or
combination thereof from the homestead. Any taxpayer of these noncontiguous lands must
notify the county assessor that the noncontiguous land is part of the taxpayer's homestead,
and, if the homestead is located in another county, the taxpayer must also notify the assessor
of the other county.

(d) Agricultural land used for purposes of a homestead and actively farmed by a person
holding a vested remainder interest in it must be classified as a homestead under section
273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a, any other
dwellings on the land used for purposes of a homestead by persons holding vested remainder
interests who are actively engaged in farming the property, and up to one acre of the land
surrounding each homestead and reasonably necessary for the use of the dwelling as a home,
must also be assessed class 2a.

(e) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain classified as
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of the April 1997 floods;

(2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman, or
Wilkin;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 1997 assessment year and continue to be used for
agricultural purposes;

(4) the dwelling occupied by the owner is located in Minnesota and is within 30 miles
of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the 1997 floods,
and the owner furnishes the assessor any information deemed necessary by the assessor in
verifying the change in dwelling. Further notifications to the assessor are not required if the
property continues to meet all the requirements in this paragraph and any dwellings on the
agricultural land remain uninhabited.

(f) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain classified
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of damage caused by a March 29, 1998, tornado;

(2) the property is located in the county of Blue Earth, Brown, Cottonwood, LeSueur,
Nicollet, Nobles, or Rice;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 1998 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles of
one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to a March 29,
1998, tornado, and the owner furnishes the assessor any information deemed necessary by
the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the
owner must notify the assessor by December 1, 1998. Further notifications to the assessor
are not required if the property continues to meet all the requirements in this paragraph and
any dwellings on the agricultural land remain uninhabited.

(g) Agricultural property of a family farm corporation, joint family farm venture, family
farm limited liability company, or partnership operating a family farm as described under
subdivision 8 shall be classified homestead, to the same extent as other agricultural homestead
property, if all of the following criteria are met:

(1) the property consists of at least 40 acres including undivided government lots and
correctional 40's;

(2) a shareholder, member, or partner of that entity is actively farming the agricultural
property;

(3) that shareholder, member, or partner who is actively farming the agricultural property
is a Minnesota resident;

(4) neither that shareholder, member, or partner, nor the spouse of that shareholder,
member, or partner claims another agricultural homestead in Minnesota; and

(5) that shareholder, member, or partner does not live farther than four townships or
cities, or a combination of four townships or cities, from the agricultural property.

Homestead treatment applies under this paragraph even if:

(i) the shareholder, member, or partner of that entity is actively farming the agricultural
property on the shareholder's, member's, or partner's own behalf; or

(ii) the family farm is operated by a family farm corporation, joint family farm venture,
partnership, or limited liability company other than the family farm corporation, joint family
farm venture, partnership, or limited liability company that owns the land, provided that:

(A) the shareholder, member, or partner of the family farm corporation, joint family
farm venture, partnership, or limited liability company that owns the land who is actively
farming the land is a shareholder, member, or partner of the family farm corporation, joint
family farm venture, partnership, or limited liability company that is operating the farm;
and

(B) more than half of the shareholders, members, or partners of each family farm
corporation, joint family farm venture, partnership, or limited liability company are persons
or spouses of persons who are a qualifying relative under section 273.124, subdivision 1,
paragraphs (c) and (d).

Homestead treatment applies under this paragraph for property leased to a family farm
corporation, joint farm venture, limited liability company, or partnership operating a family
farm if legal title to the property is in the name of an individual who is a member, shareholder,
or partner in the entity.

(h) To be eligible for the special agricultural homestead under this subdivision, an initial
full application must be submitted to the county assessor where the property is located.
Owners and the persons who are actively farming the property shall be required to complete
only a one-page abbreviated version of the application in each subsequent year provided
that none of the following items have changed since the initial application:

(1) the day-to-day operation, administration, and financial risks remain the same;

(2) the owners and the persons actively farming the property continue to live within the
four townships or city criteria and are Minnesota residents;

(3) the same operator of the agricultural property is listed with the Farm Service Agency;

(4) a Schedule F or equivalent income tax form was filed for the most recent year;

(5) the property's acreage is unchanged; and

(6) none of the property's acres have been enrolled in a federal or state farm program
since the initial application.

The owners and any persons who are actively farming the property must include the
appropriate Social Security numbersnew text begin or individual tax identification numbersnew text end, and sign and
date the application. If any of the specified information has changed since the full application
was filed, the owner must notify the assessor, and must complete a new application to
determine if the property continues to qualify for the special agricultural homestead. The
commissioner of revenue shall prepare a standard reapplication form for use by the assessors.

(i) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 2007 assessment shall remain classified
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of damage caused by the August 2007 floods;

(2) the property is located in the county of Dodge, Fillmore, Houston, Olmsted, Steele,
Wabasha, or Winona;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 2007 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles of
one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the August 2007
floods, and the owner furnishes the assessor any information deemed necessary by the
assessor in verifying the change in homestead dwelling. For taxes payable in 2009, the
owner must notify the assessor by December 1, 2008. Further notifications to the assessor
are not required if the property continues to meet all the requirements in this paragraph and
any dwellings on the agricultural land remain uninhabited.

(j) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 2008 assessment shall remain classified as
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of the March 2009 floods;

(2) the property is located in the county of Marshall;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 2008 assessment year and continue to be used for
agricultural purposes;

(4) the dwelling occupied by the owner is located in Minnesota and is within 50 miles
of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the 2009 floods,
and the owner furnishes the assessor any information deemed necessary by the assessor in
verifying the change in dwelling. Further notifications to the assessor are not required if the
property continues to meet all the requirements in this paragraph and any dwellings on the
agricultural land remain uninhabited.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for homestead filed in
2021 and thereafter.
new text end

Sec. 7.

Minnesota Statutes 2020, section 273.1245, subdivision 1, is amended to read:


Subdivision 1.

Private or nonpublic data.

The following data are private or nonpublic
data as defined in section 13.02, subdivisions 9 and 12, when they are submitted to a county
or local assessor under section 273.124, 273.13, or another section, to support a claim for
the property tax homestead classification under section 273.13, or other property tax
classification or benefit:

(1) Social Security numbers;

new text begin (2) individual tax identification numbers;
new text end

deleted text begin (2)deleted text endnew text begin (3)new text end copies of state or federal income tax returns; and

deleted text begin (3)deleted text endnew text begin (4)new text end state or federal income tax return information, including the federal income tax
schedule F.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for homestead filed in
2021 and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2020, section 273.13, subdivision 23, is amended to read:


Subd. 23.

Class 2.

(a) An agricultural homestead consists of class 2a agricultural land
that is homesteaded, along with any class 2b rural vacant land that is contiguous to the class
2a land under the same ownership. The market value of the house and garage and immediately
surrounding one acre of land has the same classification rates as class 1a deleted text beginor 1bdeleted text end property
under subdivision 22. The value of the remaining land including improvements up to the
first tier valuation limit of agricultural homestead property has a classification rate of 0.5
percent of market value. The remaining property over the first tier has a classification rate
of one percent of market value. For purposes of this subdivision, the "first tier valuation
limit of agricultural homestead property" and "first tier" means the limit certified under
section 273.11, subdivision 23.

(b) Class 2a agricultural land consists of parcels of property, or portions thereof, that
are agricultural land and buildings. Class 2a property has a classification rate of one percent
of market value, unless it is part of an agricultural homestead under paragraph (a). Class 2a
property must also include any property that would otherwise be classified as 2b, but is
interspersed with class 2a property, including but not limited to sloughs, wooded wind
shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback requirement,
and other similar land that is impractical for the assessor to value separately from the rest
of the property or that is unlikely to be able to be sold separately from the rest of the property.

An assessor may classify the part of a parcel described in this subdivision that is used
for agricultural purposes as class 2a and the remainder in the class appropriate to its use.

(c) Class 2b rural vacant land consists of parcels of property, or portions thereof, that
are unplatted real estate, rural in character and not used for agricultural purposes, including
land used for growing trees for timber, lumber, and wood and wood products, that is not
improved with a structure. The presence of a minor, ancillary nonresidential structure as
defined by the commissioner of revenue does not disqualify the property from classification
under this paragraph. Any parcel of 20 acres or more improved with a structure that is not
a minor, ancillary nonresidential structure must be split-classified, and ten acres must be
assigned to the split parcel containing the structure. new text beginIf a parcel of 20 acres or more is enrolled
in the sustainable forest management incentive program under chapter 290C, the number
of acres assigned to the split parcel improved with a structure that is not a minor, ancillary
nonresidential structure must equal three acres or the number of acres excluded from the
sustainable forest incentive act covenant due to the structure, whichever is greater.
new text endClass
2b property has a classification rate of one percent of market value unless it is part of an
agricultural homestead under paragraph (a), or qualifies as class 2c under paragraph (d).

(d) Class 2c managed forest land consists of no less than 20 and no more than 1,920
acres statewide per taxpayer that is being managed under a forest management plan that
meets the requirements of chapter 290C, but is not enrolled in the sustainable forest resource
management incentive program. It has a classification rate of .65 percent, provided that the
owner of the property must apply to the assessor in order for the property to initially qualify
for the reduced rate and provide the information required by the assessor to verify that the
property qualifies for the reduced rate. If the assessor receives the application and information
before May 1 in an assessment year, the property qualifies beginning with that assessment
year. If the assessor receives the application and information after April 30 in an assessment
year, the property may not qualify until the next assessment year. The commissioner of
natural resources must concur that the land is qualified. The commissioner of natural
resources shall annually provide county assessors verification information on a timely basis.
The presence of a minor, ancillary nonresidential structure as defined by the commissioner
of revenue does not disqualify the property from classification under this paragraph.

(e) Agricultural land as used in this section means:

(1) contiguous acreage of ten acres or more, used during the preceding year for
agricultural purposes; or

(2) contiguous acreage used during the preceding year for an intensive livestock or
poultry confinement operation, provided that land used only for pasturing or grazing does
not qualify under this clause.

"Agricultural purposes" as used in this section means the raising, cultivation, drying, or
storage of agricultural products for sale, or the storage of machinery or equipment used in
support of agricultural production by the same farm entity. For a property to be classified
as agricultural based only on the drying or storage of agricultural products, the products
being dried or stored must have been produced by the same farm entity as the entity operating
the drying or storage facility. "Agricultural purposes" also includes (i) enrollment in a local
conservation program or the Reinvest in Minnesota program under sections 103F.501 to
103F.535 or the federal Conservation Reserve Program as contained in Public Law 99-198
or a similar state or federal conservation program if the property was classified as agricultural
(A) under this subdivision for taxes payable in 2003 because of its enrollment in a qualifying
program and the land remains enrolled or (B) in the year prior to its enrollment, or (ii) use
of land, not to exceed three acres, to provide environmental benefits such as buffer strips,
old growth forest restoration or retention, or retention ponds to prevent soil erosion. For
purposes of this section, a "local conservation program" means a program administered by
a town, statutory or home rule charter city, or county, including a watershed district, water
management organization, or soil and water conservation district, in which landowners
voluntarily enroll land and receive incentive payments equal to at least $50 per acre in
exchange for use or other restrictions placed on the land. In order for property to qualify
under the local conservation program provision, a taxpayer must apply to the assessor by
February 1 of the assessment year and must submit the information required by the assessor,
including but not limited to a copy of the program requirements, the specific agreement
between the land owner and the local agency, if applicable, and a map of the conservation
area. Agricultural classification shall not be based upon the market value of any residential
structures on the parcel or contiguous parcels under the same ownership.

"Contiguous acreage," for purposes of this paragraph, means all of, or a contiguous
portion of, a tax parcel as described in section 272.193, or all of, or a contiguous portion
of, a set of contiguous tax parcels under that section that are owned by the same person.

(f) Agricultural land under this section also includes:

(1) contiguous acreage that is less than ten acres in size and exclusively used in the
preceding year for raising or cultivating agricultural products; or

(2) contiguous acreage that contains a residence and is less than 11 acres in size, if the
contiguous acreage exclusive of the house, garage, and surrounding one acre of land was
used in the preceding year for one or more of the following three uses:

(i) for an intensive grain drying or storage operation, or for intensive machinery or
equipment storage activities used to support agricultural activities on other parcels of property
operated by the same farming entity;

(ii) as a nursery, provided that only those acres used intensively to produce nursery stock
are considered agricultural land; or

(iii) for intensive market farming; for purposes of this paragraph, "market farming"
means the cultivation of one or more fruits or vegetables or production of animal or other
agricultural products for sale to local markets by the farmer or an organization with which
the farmer is affiliated.

"Contiguous acreage," for purposes of this paragraph, means all of a tax parcel as
described in section 272.193, or all of a set of contiguous tax parcels under that section that
are owned by the same person.

(g) Land shall be classified as agricultural even if all or a portion of the agricultural use
of that property is the leasing to, or use by another person for agricultural purposes.

Classification under this subdivision is not determinative for qualifying under section
273.111.

(h) The property classification under this section supersedes, for property tax purposes
only, any locally administered agricultural policies or land use restrictions that define
minimum or maximum farm acreage.

(i) The term "agricultural products" as used in this subdivision includes production for
sale of:

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, bees,
and apiary products by the owner;

(2) aquacultural products for sale and consumption, as defined under section 17.47, if
the aquaculture occurs on land zoned for agricultural use;

(3) the commercial boarding of horses, which may include related horse training and
riding instruction, if the boarding is done on property that is also used for raising pasture
to graze horses or raising or cultivating other agricultural products as defined in clause (1);

(4) property which is owned and operated by nonprofit organizations used for equestrian
activities, excluding racing;

(5) game birds and waterfowl bred and raised (i) on a game farm licensed under section
97A.105, provided that the annual licensing report to the Department of Natural Resources,
which must be submitted annually by March 30 to the assessor, indicates that at least 500
birds were raised or used for breeding stock on the property during the preceding year and
that the owner provides a copy of the owner's most recent schedule F; or (ii) for use on a
shooting preserve licensed under section 97A.115;

(6) insects primarily bred to be used as food for animals;

(7) trees, grown for sale as a crop, including short rotation woody crops, and not sold
for timber, lumber, wood, or wood products; and

(8) maple syrup taken from trees grown by a person licensed by the Minnesota
Department of Agriculture under chapter 28A as a food processor.

(j) If a parcel used for agricultural purposes is also used for commercial or industrial
purposes, including but not limited to:

(1) wholesale and retail sales;

(2) processing of raw agricultural products or other goods;

(3) warehousing or storage of processed goods; and

(4) office facilities for the support of the activities enumerated in clauses (1), (2), and
(3),

the assessor shall classify the part of the parcel used for agricultural purposes as class
deleted text begin 1b,deleted text end 2adeleted text begin,deleted text end or 2b, whichever is appropriate, and the remainder in the class appropriate to its use.
The grading, sorting, and packaging of raw agricultural products for first sale is considered
an agricultural purpose. A greenhouse or other building where horticultural or nursery
products are grown that is also used for the conduct of retail sales must be classified as
agricultural if it is primarily used for the growing of horticultural or nursery products from
seed, cuttings, or roots and occasionally as a showroom for the retail sale of those products.
Use of a greenhouse or building only for the display of already grown horticultural or nursery
products does not qualify as an agricultural purpose.

(k) The assessor shall determine and list separately on the records the market value of
the homestead dwelling and the one acre of land on which that dwelling is located. If any
farm buildings or structures are located on this homesteaded acre of land, their market value
shall not be included in this separate determination.

(l) Class 2d airport landing area consists of a landing area or public access area of a
privately owned public use airport. It has a classification rate of one percent of market value.
To qualify for classification under this paragraph, a privately owned public use airport must
be licensed as a public airport under section 360.018. For purposes of this paragraph, "landing
area" means that part of a privately owned public use airport properly cleared, regularly
maintained, and made available to the public for use by aircraft and includes runways,
taxiways, aprons, and sites upon which are situated landing or navigational aids. A landing
area also includes land underlying both the primary surface and the approach surfaces that
comply with all of the following:

(i) the land is properly cleared and regularly maintained for the primary purposes of the
landing, taking off, and taxiing of aircraft; but that portion of the land that contains facilities
for servicing, repair, or maintenance of aircraft is not included as a landing area;

(ii) the land is part of the airport property; and

(iii) the land is not used for commercial or residential purposes.

The land contained in a landing area under this paragraph must be described and certified
by the commissioner of transportation. The certification is effective until it is modified, or
until the airport or landing area no longer meets the requirements of this paragraph. For
purposes of this paragraph, "public access area" means property used as an aircraft parking
ramp, apron, or storage hangar, or an arrival and departure building in connection with the
airport.

(m) Class 2e consists of land with a commercial aggregate deposit that is not actively
being mined and is not otherwise classified as class 2a or 2b, provided that the land is not
located in a county that has elected to opt-out of the aggregate preservation program as
provided in section 273.1115, subdivision 6. It has a classification rate of one percent of
market value. To qualify for classification under this paragraph, the property must be at
least ten contiguous acres in size and the owner of the property must record with the county
recorder of the county in which the property is located an affidavit containing:

(1) a legal description of the property;

(2) a disclosure that the property contains a commercial aggregate deposit that is not
actively being mined but is present on the entire parcel enrolled;

(3) documentation that the conditional use under the county or local zoning ordinance
of this property is for mining; and

(4) documentation that a permit has been issued by the local unit of government or the
mining activity is allowed under local ordinance. The disclosure must include a statement
from a registered professional geologist, engineer, or soil scientist delineating the deposit
and certifying that it is a commercial aggregate deposit.

For purposes of this section and section 273.1115, "commercial aggregate deposit"
means a deposit that will yield crushed stone or sand and gravel that is suitable for use as
a construction aggregate; and "actively mined" means the removal of top soil and overburden
in preparation for excavation or excavation of a commercial deposit.

(n) When any portion of the property under this subdivision or subdivision 22 begins to
be actively mined, the owner must file a supplemental affidavit within 60 days from the
day any aggregate is removed stating the number of acres of the property that is actively
being mined. The acres actively being mined must be (1) valued and classified under
subdivision 24 in the next subsequent assessment year, and (2) removed from the aggregate
resource preservation property tax program under section 273.1115, if the land was enrolled
in that program. Copies of the original affidavit and all supplemental affidavits must be
filed with the county assessor, the local zoning administrator, and the Department of Natural
Resources, Division of Land and Minerals. A supplemental affidavit must be filed each
time a subsequent portion of the property is actively mined, provided that the minimum
acreage change is five acres, even if the actual mining activity constitutes less than five
acres.

(o) The definitions prescribed by the commissioner under paragraphs (c) and (d) are not
rules and are exempt from the rulemaking provisions of chapter 14, and the provisions in
section 14.386 concerning exempt rules do not apply.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2022 and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2020, section 273.1315, subdivision 2, is amended to read:


Subd. 2.

Class 1b homestead declaration 2009 and thereafter.

(a) Any property owner
seeking classification and assessment of the owner's homestead as class 1b property pursuant
to section 273.13, subdivision 22, paragraph (b), after October 1, 2008, shall file with the
county assessor a class 1b homestead declaration, on a form prescribed by the commissioner
of revenue. The declaration must contain the following information:

(1) the information necessary to verify that, on or before June 30 of the filing year, the
property owner or the owner's spouse satisfies the requirements of section 273.13, subdivision
22, paragraph (b), for class 1b classification; and

(2) any additional information prescribed by the commissioner.

(b) The declaration must be filed on or before October 1 to be effective for property
taxes payable during the succeeding calendar year. The Social Security numbersnew text begin, individual
tax identification numbers,
new text end and income and medical information received from the property
owner pursuant to this subdivision are private data on individuals as defined in section
13.02. If approved by the assessor, the declaration remains in effect until the property no
longer qualifies under section 273.13, subdivision 22, paragraph (b). Failure to notify the
assessor within 30 days that the property no longer qualifies under that paragraph because
of a sale, change in occupancy, or change in the status or condition of an occupant shall
result in the penalty provided in section 273.124, subdivision 13b, computed on the basis
of the class 1b benefits for the property, and the property shall lose its current class 1b
classification.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for homestead filed in
2021 and thereafter.
new text end

Sec. 10.

Minnesota Statutes 2020, section 290A.25, is amended to read:


290A.25 VERIFICATION OF SOCIAL SECURITY NUMBERS.

Annually, the commissioner of revenue shall furnish a list to the county assessor
containing the names deleted text beginanddeleted text endnew text begin,new text end Social Security numbersnew text begin, and individual tax identification numbersnew text end
of persons who have applied for both homestead classification under section 273.13 and a
property tax refund as a renter under this chapter.

Within 90 days of the notification, the county assessor shall investigate to determine if
the homestead classification was improperly claimed. If the property owner does not qualify,
the county assessor shall notify the county auditor who will determine the amount of
homestead benefits that has been improperly allowed. For the purpose of this section,
"homestead benefits" has the meaning given in section 273.124, subdivision 13b. The county
auditor shall send a notice to persons who owned the affected property at the time the
homestead application related to the improper homestead was filed, demanding
reimbursement of the homestead benefits plus a penalty equal to 100 percent of the homestead
benefits. The person notified may appeal the county's determination with the Minnesota
Tax Court within 60 days of the date of the notice from the county as provided in section
273.124, subdivision 13b.

If the amount of homestead benefits and penalty is not paid within 60 days, and if no
appeal has been filed, the county auditor shall certify the amount of taxes and penalty to
the county treasurer. The county treasurer will add interest to the unpaid homestead benefits
and penalty amounts at the rate provided for delinquent personal property taxes for the
period beginning 60 days after demand for payment was made until payment. If the person
notified is the current owner of the property, the treasurer may add the total amount of
benefits, penalty, interest, and costs to the real estate taxes otherwise payable on the property
in the following year. If the person notified is not the current owner of the property, the
treasurer may collect the amounts due under the Revenue Recapture Act in chapter 270A,
or use any of the powers granted in sections 277.20 and 277.21 without exclusion, to enforce
payment of the benefits, penalty, interest, and costs, as if those amounts were delinquent
tax obligations of the person who owned the property at the time the application related to
the improperly allowed homestead was filed. The treasurer may relieve a prior owner of
personal liability for the benefits, penalty, interest, and costs, and instead extend those
amounts on the tax lists against the property for taxes payable in the following year to the
extent that the current owner agrees in writing.

Any amount of homestead benefits recovered by the county from the property owner
shall be distributed to the county, city or town, and school district where the property is
located in the same proportion that each taxing district's levy was to the total of the three
taxing districts' levy for the current year. Any amount recovered attributable to taconite
homestead credit shall be transmitted to the St. Louis County auditor to be deposited in the
taconite property tax relief account. Any amount recovered that is attributable to supplemental
homestead credit is to be transmitted to the commissioner of revenue for deposit in the
general fund of the state treasury. The total amount of penalty collected must be deposited
in the county general fund.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for lists furnished by the commissioner
of revenue to county assessors in 2021 and thereafter.
new text end

Sec. 11.

Minnesota Statutes 2020, section 477A.014, is amended to read:


477A.014 COMMISSIONER'S RESPONSIBILITIES.

Subdivision 1.

Calculations and payments.

(a) The commissioner of revenue shall
make all necessary calculations and make payments deleted text beginpursuant to sections 477A.013 and
477A.03
deleted text endnew text begin under this chapternew text end directly to the affected deleted text begintaxing authoritiesdeleted text endnew text begin political subdivisionsnew text end
annually. In addition, the commissioner shall notify the authorities of their aid amounts, as
well as the computational factors used in making the calculations for their authority, and
those statewide total figures that are pertinent, before August 1 of the year preceding the
aid distribution yearnew text begin, unless a different date is specifiednew text end.

(b) For the purposes of this subdivision, aid is determined for a city or town based on
its city or town status as of June 30 of the year preceding the aid distribution year. If the
effective date for a municipal incorporation, consolidation, annexation, detachment,
dissolution, or township organization is on or before June 30 of the year preceding the aid
distribution year, such change in boundaries or form of government shall be recognized for
aid determinations for the aid distribution year. If the effective date for a municipal
incorporation, consolidation, annexation, detachment, dissolution, or township organization
is after June 30 of the year preceding the aid distribution year, such change in boundaries
or form of government shall not be recognized for aid determinations until the following
year.

(c) Changes in boundaries or form of government will only be recognized for the purposes
of this subdivision, to the extent that: (1) changes in market values are included in market
values reported by assessors to the commissioner, and changes in population and household
size are included in their respective certifications to the commissioner as referenced in
section 477A.011, or (2) an annexation information report as provided in paragraph (d) is
received by the commissioner on or before July 15 of the aid calculation year. Revisions to
estimates or data for use in recognizing changes in boundaries or form of government are
not effective for purposes of this subdivision unless received by the commissioner on or
before July 15 of the aid calculation year. Clerical errors in the certification or use of
estimates and data established as of July 15 in the aid calculation year are subject to correction
within the time periods allowed under subdivision 3.

(d) In the case of an annexation, an annexation information report may be completed by
the annexing jurisdiction and submitted to the commissioner for purposes of this subdivision
if the net tax capacity of annexed area for the assessment year preceding the effective date
of the annexation exceeds five percent of the city's net tax capacity for the same year. The
form and contents of the annexation information report shall be prescribed by the
commissioner. The commissioner shall change the net tax capacity, the population, the
population decline, the commercial industrial percentage, and the transformed population
for the annexing jurisdiction only if the annexation information report provides data the
commissioner determines to be reliable for all of these factors used to compute city revenue
need for the annexing jurisdiction. The commissioner shall adjust the pre-1940 housing
percentage and household size only if the entire area of an existing city or town is annexed
or consolidated and only if reliable data is available for all of these factors used to compute
city revenue need for the annexing jurisdiction.

Subd. 2.

Errors.

A deleted text begintaxing authoritydeleted text endnew text begin political subdivisionnew text end may object to the commissioner
of revenue with respect to the amount of the distribution it has been certified to receive
pursuant to deleted text beginsubdivision 1deleted text endnew text begin any section under this chapternew text end. No objection shall be raised later
than 60 days after the deleted text begintaxing authoritydeleted text endnew text begin political subdivisionnew text end has received notice from the
commissioner of the amount which it has been certified to receive.

Subd. 3.

Aid amount new text beginand payment new text endcorrection.

new text begin(a) new text endIf, due to an error in the factors used
to calculate a deleted text begintaxing authority'sdeleted text endnew text begin political subdivision'snew text end aid pursuant to new text beginany new text endsection deleted text begin477A.013deleted text endnew text begin
under this chapter,
new text end the amount indicated in the certification of the commissioner to deleted text beginthe
taxing authority
deleted text endnew text begin a political subdivisionnew text end for a year deleted text beginis less thandeleted text endnew text begin does not equalnew text end the amount to
which it is entitled deleted text beginpursuant to this sectiondeleted text end, the commissioner of revenue deleted text beginshalldeleted text endnew text begin must recertify
the aid. The commissioner must use the recertified amounts, before any adjustments under
paragraph (b), for any subsequent calculations under this chapter that rely on prior year
calculations.
new text end

new text begin (b) The commissioner mustnew text end additionally distribute the amount necessary to make the
full correct distribution to deleted text beginthe taxing authoritydeleted text endnew text begin any political subdivision originally certified
an amount less than the amount to which it is entitled
new text end. deleted text beginThedeleted text endnew text begin Anynew text end additional deleted text begindistribution shalldeleted text endnew text begin
distribution must
new text end be paid from the general fund deleted text beginand shall not diminish the distributions
made to other taxing authorities under this section
deleted text end.new text begin If the recertified amount is less than the
amount originally certified to the political subdivision, the commissioner must pay the
amount that was originally certified. The commissioner of revenue must deduct the difference
between the originally certified amount and the recertified amount from the aid payable in
the next subsequent year.
new text end

new text begin (c) If, after the adjustments in paragraph (b), the amount paid to a political subdivision
pursuant to any section under this chapter does not equal the amount to which it is entitled,
the commissioner of revenue must distribute or collect the amount necessary to correct the
distribution received by the political subdivision. The commissioner of revenue may establish
a payment plan with a political subdivision that was overpaid, but in no event may the
commissioner require more than 12 installments annually, and the payment plan must not
be for more than five years. Any additional distribution under this paragraph must be made
from the general fund. No payment discrepancies may be raised later than three years after
the political subdivision received the disputed payment.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2022 and thereafter.
new text end

Sec. 12. new text beginSUSTAINABLE FOREST INCENTIVE ACT; VIOLATIONS.
new text end

new text begin Land that was split-classified under Minnesota Statutes 2018, section 273.13, subdivision
23, paragraph (c), while enrolled in the sustainable forest incentive act management program
under Minnesota Statutes, chapter 290C, is not in violation of the conditions of enrollment
under Minnesota Statutes, sections 290C.03 and 290C.11, if, at the time of enrollment, a
structure that is not a minor, ancillary nonresidential structure, was identified on the covenant
required under Minnesota Statutes, section 290C.04, and appropriate acreage was excluded
in accordance with Minnesota Statutes, section 290C.03.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for determinations of violations of the
conditions of enrollment after June 30, 2021.
new text end

ARTICLE 5

MISCELLANEOUS TAXES AND TAX PROVISIONS

Section 1.

Minnesota Statutes 2020, section 297E.021, subdivision 4, is amended to read:


Subd. 4.

Appropriation; general reserve account.

To the extent the commissioner
determines that revenues are available under subdivision 3 for the fiscal year, those amounts
are appropriated from the general fund for deposit in a general reserve account established
by order of the commissioner of management and budgetnew text begin until the amount in the reserve is
equal to $100,000,000
new text end. Amounts in this reserve are appropriated as necessary for application
against any shortfall in the amounts deposited to the general fund under section 297A.994
or, after consultation with the Legislative Commission on Planning and Fiscal Policy,
amounts in this reserve are appropriated to the commissioner of management and budget
for other uses related to the stadium authorized under section 473J.03, subdivision 8, that
the commissioner deems financially prudent including but not limited to reimbursements
for capital and operating costs relating to the stadium, refundings, and prepayment of debt.
In no event, shall available revenues be pledged, nor shall the appropriations of available
revenues made by this section constitute a pledge of available revenues as security for the
prepayment of principal and interest on the appropriation bonds under section 16A.965.

Sec. 2.

Minnesota Statutes 2020, 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 deleted text beginweight-to-volume conversion scheduledeleted text endnew text begin taxnew text end for:

(1) construction debris as defined in section 115A.03, subdivision 7, 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 deleted text beginmaydeleted text end publish by notice a new text beginweight-to-volume
new text end conversion schedule for construction debris;

(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 determinedeleted text begin,deleted text end and deleted text beginmaydeleted text end publish by noticedeleted text begin,deleted text end a
new text begin weight-to-volume new text endconversion 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 July 1, 2021.
new text end

Sec. 3.

Minnesota Statutes 2020, section 297H.05, is amended to read:


297H.05 SELF-HAULERS.

(a) A self-hauler of mixed municipal solid waste shall pay the tax to the operator of the
waste management facility to which the waste is delivered at the rate imposed under section
297H.03, based on the sales price of the waste management services.

(b) A self-hauler of nonmixed municipal solid waste shall pay the tax to the operator of
the waste management facility to which the waste is delivered at the rate imposed under
section 297H.04.

(c) The tax imposed on the self-hauler of nonmixed municipal solid waste may be based
either on the capacity of the container, the actual volume, or the weight-to-volume conversion
schedule in paragraph (d). However, the tax must be calculated by the operator using the
same method for calculating the tipping fee so that both are calculated according to container
capacity, actual volume, or weight.

(d) The deleted text beginweight-to-volume conversion scheduledeleted text endnew text begin taxnew text end 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 publish by notice a weight-to-volume 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 determinedeleted text begin,deleted text end and deleted text beginmaydeleted text end publish by noticedeleted text begin,deleted text end a
new text begin weight-to-volume new text endconversion 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.

(e) For mixed municipal solid waste the tax is imposed upon the difference between the
market price and the tip fee at a processing or disposal facility if the tip fee is less than the
market price and the political subdivision subsidizes the cost of service at the facility. The
political subdivision is liable for the tax.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021, except the new rate for
construction debris applies to waste delivered after June 30, 2021.
new text end

Sec. 4.

Minnesota Statutes 2020, section 297I.05, subdivision 7, is amended to read:


Subd. 7.

Nonadmitted insurance premium tax.

(a) A tax is imposed on surplus lines
brokers. The rate of tax is equal to three percent of the gross premiums less return premiums
paid by an insured whose home state is Minnesota.

(b) A tax is imposed on a person, firm, corporation, or purchasing group as defined in
section 60E.02, or any member of a purchasing group, that procures insurance directly from
a nonadmitted insurer. The rate of tax is equal to deleted text begintwodeleted text endnew text begin threenew text end percent of the gross premiums
less return premiums paid by an insured whose home state is Minnesota.

(c) No state other than the home state of an insured may require any premium tax payment
for nonadmitted insurance. When Minnesota is the home state of the insured, as provided
under section 297I.01, 100 percent of the gross premiums are taxable in Minnesota with no
allocation of the tax to other states.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for policies with an effective date after
December 31, 2021.
new text end

Sec. 5.

Minnesota Statutes 2020, section 298.001, is amended by adding a subdivision to
read:


new text begin Subd. 13. new text end

new text begin Merchantable iron ore concentrate. new text end

new text begin "Merchantable iron ore concentrate"
means iron-bearing material that has been treated in Minnesota by any means of beneficiation,
separation, concentration, or refinement for the purpose of making it salable for its iron ore
content.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2022 and thereafter.
new text end

Sec. 6.

Minnesota Statutes 2020, section 298.24, subdivision 1, is amended to read:


Subdivision 1.

Imposed; calculation.

(a) For concentrate produced in 2013, there is
imposed upon taconite and iron sulphides, and upon the mining and quarrying thereof, and
upon the production of iron ore concentrate therefrom, and upon the concentrate so produced,
a tax of $2.56 per gross ton of merchantable iron ore concentrate produced therefrom.

(b) For concentrates produced in 2014 and subsequent years, the tax rate shall be equal
to the preceding year's tax rate plus an amount equal to the preceding year's tax rate multiplied
by the percentage increase in the implicit price deflator from the fourth quarter of the second
preceding year to the fourth quarter of the preceding year. "Implicit price deflator" means
the implicit price deflator for the gross domestic product prepared by the Bureau of Economic
Analysis of the United States Department of Commerce.

(c) An additional tax is imposed equal to three cents per gross ton of merchantable iron
ore concentrate for each one percent that the iron content of the product exceeds 72 percent,
when dried at 212 degrees Fahrenheit.

(d) The tax on taconite and iron sulphides shall be imposed on the average of the
production for the current year and the previous two years. The rate of the tax imposed will
be the current year's tax rate. This clause shall not apply in the case of the closing of a
taconite facility if the property taxes on the facility would be higher if this clause and section
298.25 were not applicable.

(e) The tax under paragraph (a) is also imposed upon other iron-bearing materialnew text begin as
described in section 298.405 on the tonnage of merchantable iron ore concentrate produced
therefrom
new text end. The tax on other iron-bearing material shall be imposed on the current year
production. The rate of the tax imposed is the current year's tax rate.

(f) If the tax or any part of the tax imposed by this subdivision is held to be
unconstitutional, a tax of $2.56 per gross ton of merchantable iron ore concentrate produced
shall be imposed.

(g) Consistent with the intent of this subdivision to impose a tax based upon the weight
of merchantable iron ore concentrate, the commissioner of revenue may indirectly determine
the weight of merchantable iron ore concentrate included in fluxed pellets by subtracting
the weight of the limestone, dolomite, or olivine derivatives or other basic flux additives
included in the pellets from the weight of the pellets. For purposes of this paragraph, "fluxed
pellets" are pellets produced in a process in which limestone, dolomite, olivine, or other
basic flux additives are combined with merchantable iron ore concentrate. No subtraction
from the weight of the pellets shall be allowed for binders, mineral and chemical additives
other than basic flux additives, or moisture.

(h)(1) Notwithstanding any other provision of this subdivision, for the first two years
of a plant's commercial production of direct reduced ore from ore mined in this state, no
tax is imposed under this section. For the third year of a plant's commercial production of
direct reduced ore, the rate to be applied to direct reduced ore is 25 percent of the rate
otherwise determined under this subdivision. For the fourth commercial production year,
the rate is 50 percent of the rate otherwise determined under this subdivision; for the fifth
commercial production year, the rate is 75 percent of the rate otherwise determined under
this subdivision; and for all subsequent commercial production years, the full rate is imposed.

(2) Subject to clause (1), production of direct reduced ore in this state is subject to the
tax imposed by this section, but if that production is not produced by a producer of taconite,
iron sulfides, or other iron-bearing material, the production of taconite, iron sulfides, or
other iron-bearing material, that is consumed in the production of direct reduced ore in this
state is not subject to the tax imposed by this section on taconite, iron sulfides, or other
iron-bearing material.

(3) Notwithstanding any other provision of this subdivision, no tax is imposed on direct
reduced ore under this section during the facility's noncommercial production of direct
reduced ore. The taconite or iron sulphides consumed in the noncommercial production of
direct reduced ore is subject to the tax imposed by this section on taconite and iron sulphides.
Three-year average production of direct reduced ore does not include production of direct
reduced ore in any noncommercial year.

(4) Three-year average production for a direct reduced ore facility that has noncommercial
production is the average of the commercial production of direct reduced ore for the current
year and the previous two commercial years.

(5) As used in this paragraph, "commercial production" means production of more than
50,000 tons of direct reduced ore in the current year or in any prior year, and "noncommercial
production" means production of 50,000 tons or less of direct reduced ore in any year.

(6) This paragraph applies only to plants for which all environmental permits have been
obtained and construction has begun before July 1, 2008.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2022 and thereafter.
new text end

Sec. 7.

Minnesota Statutes 2020, section 298.405, subdivision 1, is amended to read:


Subdivision 1.

Definition.

Iron-bearing materialnew text begin,new text end other than taconite and semitaconite,
having not more than 46.5 percent natural iron content on the average, is subject to taxation
under section 298.24. The tax under that section applies to material that isdeleted text begin:
deleted text end

deleted text begin (1) finer than or ground to 90 percent passing 20 mesh; and
deleted text end

deleted text begin (2)deleted text end treated in Minnesota for the purpose of deleted text beginseparating the iron particles from silica,
alumina, or other detrimental compounds or elements unless used in a direct reduction
process:
deleted text endnew text begin making the iron-bearing material merchantable by any means of beneficiation,
separation, concentration, or refinement. The tax under section 298.24 does not apply to
unmined iron ore and low-grade iron-bearing formations as described in section 273.13,
subdivision 31, clause (1).
new text end

deleted text begin (i) by electrostatic separation, roasting and magnetic separation, or flotation;
deleted text end

deleted text begin (ii) by a direct reduction process;
deleted text end

deleted text begin (iii) by any combination of such processes; or
deleted text end

deleted text begin (iv) by any other process or method not presently employed in gravity separation plants
employing only crushing, screening, washing, jigging, heavy media separation, spirals,
cyclones, drying or any combination thereof.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2022 and thereafter.
new text end

Sec. 8. new text beginAPPROPRIATION.
new text end

new text begin $2,209,000 in fiscal year 2022 and $1,860,000 in fiscal year 2023 are appropriated from
the general fund to the commissioner of revenue to administer this act. The base funding is
$1,860,000 in fiscal year 2024 and thereafter.
new text end

APPENDIX

Repealed Minnesota Statutes: 21-00016

290.01 DEFINITIONS.

Subd. 7b.

Resident trust.

(a) Resident trust means a trust, except a grantor type trust, which either (1) was created by a will of a decedent who at death was domiciled in this state or (2) is an irrevocable trust, the grantor of which was domiciled in this state at the time the trust became irrevocable. For the purpose of this subdivision, a trust is considered irrevocable to the extent the grantor is not treated as the owner thereof under sections 671 to 678 of the Internal Revenue Code. The term "grantor type trust" means a trust where the income or gains of the trust are taxable to the grantor or others treated as substantial owners under sections 671 to 678 of the Internal Revenue Code. This paragraph applies to trusts, except grantor type trusts, that became irrevocable after December 31, 1995, or are first administered in Minnesota after December 31, 1995.

(b) This paragraph applies to trusts, except grantor type trusts, that are not governed under paragraph (a). A trust, except a grantor type trust, is a resident trust only if two or more of the following conditions are satisfied:

(1) a majority of the discretionary decisions of the trustees relative to the investment of trust assets are made in Minnesota;

(2) a majority of the discretionary decisions of the trustees relative to the distributions of trust income and principal are made in Minnesota;

(3) the official books and records of the trust, consisting of the original minutes of trustee meetings and the original trust instruments, are located in Minnesota.

(c) For purposes of paragraph (b), if the trustees delegate decisions and actions to an agent or custodian, the actions and decisions of the agent or custodian must not be taken into account in determining whether the trust is administered in Minnesota, if:

(1) the delegation was permitted under the trust agreement;

(2) the trustees retain the power to revoke the delegation on reasonable notice; and

(3) the trustees monitor and evaluate the performance of the agent or custodian on a regular basis as is reasonably determined by the trustees.

Subd. 19i.

Deferred foreign income.

"Deferred foreign income" means the income of a domestic corporation that is included in net income under section 965 of the Internal Revenue Code.

290.0131 INDIVIDUALS; ADDITIONS TO FEDERAL TAXABLE INCOME.

Subd. 18.

Special deductions.

For trusts and estates, the amount of any special deduction under section 250 or 965 of the Internal Revenue Code is an addition, to the extent not included in taxable income.