SF 31

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

A bill for an act
relating to taxation; conforming to federal tax rules for public safety retiree
pensions; authorizing pension funds to withhold and pay insurance premiums;
amending Minnesota Statutes 2006, sections 290.01, subdivisions 19, 31; 356.87.

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

Section 1.

Minnesota Statutes 2006, section 290.01, subdivision 19, is amended to read:

Subd. 19.

Net income.

The term "net income" means the federal taxable income,
as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
date named in this subdivision, incorporating the federal effective dates of changes to the
Internal Revenue Code and any elections made by the taxpayer in accordance with the
Internal Revenue Code in determining federal taxable income for federal income tax
purposes, and with the modifications provided in subdivisions 19a to 19f.

In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:

(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;

(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
Revenue Code must be applied by allowing a deduction for capital gain dividends and
exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
Revenue Code; and

(3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.

The net income of a real estate investment trust as defined and limited by section
856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
taxable income as defined in section 857(b)(2) of the Internal Revenue Code.

The net income of a designated settlement fund as defined in section 468B(d) of
the Internal Revenue Code means the gross income as defined in section 468B(b) of the
Internal Revenue Code.

The Internal Revenue Code of 1986, as amended through May 18, 2006, shall be
in effect for taxable years beginning after December 31, 1996 new text begin , and section 485 of Public
Law 109-28, the Pension Protection Act of 2006, is in effect for taxable years beginning
after December 31, 2006 new text end .

Except as otherwise provided, references to the Internal Revenue Code in
subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
the applicable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2006.
new text end

Sec. 2.

Minnesota Statutes 2006, section 290.01, subdivision 31, is amended to read:

Subd. 31.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through May 18,
2006 new text begin , and as amended by section 485 of Public Law 109-28, the Pension Protection Act
of 2006 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, 2006.
new text end

Sec. 3.

Minnesota Statutes 2006, section 356.87, is amended to read:

356.87 HEALTH INSURANCE WITHHOLDING.

new text begin Subdivision. 1. new text end

new text begin Public employees insurance program withholding. new text end

(a) Upon
authorization of a person entitled to receive a retirement annuity, disability benefit or
survivor benefit, the executive director of a public pension fund enumerated in section
356.20, subdivision 2, shall withhold health insurance premium amounts from the
retirement annuity, disability benefit or survivor benefit, and shall pay the premium
amounts to the public employees insurance program.

(b) The public employees insurance program shall reimburse a public pension fund
for the administrative expense of withholding the premium amounts and shall assume
liability for the failure of a public pension fund to properly withhold the premium amounts.

new text begin Subd. 2. new text end

new text begin Public safety retiree insurance withholding. new text end

new text begin (a) For purposes of this
subdivision, "governing board" means the governing board or body that has been assigned
the chief policy-making powers and management duties of the applicable pension plan.
new text end

new text begin (b) For a pension plan covered under section 356.20, subdivision 2, that provides
monthly annuity payments, the governing board may direct the plan's chief administrative
officer to withhold health, accident, and long-term care insurance premiums from the
retirement annuity or disability benefit and to transmit the amount to an approved
insurance provider specified by the eligible person. A governing board which agrees
to participate may revise or revoke that decision at a later date if the board provides
reasonable notice to the applicable parties.
new text end

new text begin (c) An eligible person is a person who:
new text end

new text begin (1) is a retiree or disabilitant from a participating plan;
new text end

new text begin (2) was a public safety officer as defined in United States Code, title 42, section
3796b;
new text end

new text begin (3) terminated service as a public safety officer due to disability or attainment
of normal retirement age and commences receipt of an annuity without any period of
deferral; and
new text end

new text begin (4) satisfies any other requirements to have all or a portion of the health, accident,
or long-term care insurance premiums excluded from income for taxation purposes, as
specified in the Pension Protection Act of 2006, section 845.
new text end

new text begin (d) An approved insurance provider is:
new text end

new text begin (1) any regulated, licensed insurance company;
new text end

new text begin (2) a fraternal or any other organization sponsoring a regulated, licensed insurance
program; or
new text end

new text begin (3) an employer-sponsored insurance program, whether directly through the
employer or a third-party administrator.
new text end

new text begin (e) An eligible person may elect to have the applicable plan administrator withhold
and transmit the insurance amounts described in paragraph (b). The eligible person
must make this election on a form prescribed by the chief administrative officer of the
applicable plan.
new text end

new text begin (f) A pension fund and the plan fiduciaries which authorize or administer
withholding of insurance premiums under this subdivision is not liable for failure to
properly withhold or transmit the premium amounts.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end