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SF 10

as introduced - 91st Legislature, 2020 2nd Special Session (2020 - 2020) Posted on 07/21/2020 09:13am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to taxation; modifying income and corporate franchise, special taxes, and
property taxes; modifying the K-12 education expense credit, charitable contribution
subtraction, and section 179 expensing provisions; providing ongoing funding for
the small business investment tax credit; extending certain deadlines; modifying
certain lawful gambling tax and other provisions; providing for certain federal
conformity; modifying referendum equalization levy; requiring a moratorium on
reclassifying certain property; amending Minnesota Statutes 2018, sections 273.13,
subdivision 25; 290.0131, subdivision 10; 290.0133, subdivision 12; 290.0674,
subdivision 2; 297E.02, subdivision 6, as amended; 297E.021, subdivision 2;
349.15, subdivision 1; 349.151, subdivision 4; Minnesota Statutes 2019 Supplement,
sections 116J.8737, subdivision 5, as amended; 126C.17, subdivision 6; 289A.02,
subdivision 7; 290.01, subdivisions 19, 31; 290.0132, subdivision 7; 290.0921,
subdivision 2; 290A.03, subdivision 15; 291.005, subdivision 1; repealing
Minnesota Statutes 2018, sections 290.0674, subdivision 2a; 290.0692, subdivision
6; Minnesota Statutes 2019 Supplement, section 116J.8737, subdivision 12.

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

ARTICLE 1

PROPERTY TAXES AND AIDS AND CREDITS

Section 1.

Minnesota Statutes 2019 Supplement, section 126C.17, subdivision 6, is amended
to read:


Subd. 6.

Referendum equalization levy.

(a) A district's referendum equalization levy
equals the sum of the first tier referendum equalization levy and the second tier referendum
equalization levy.

(b) A district's first tier referendum equalization levy equals the district's first tier
referendum equalization revenue times the lesser of new text begin(1) new text endone deleted text beginordeleted text endnew text begin, (2)new text end the ratio of the district's
referendum market value per resident pupil unit to deleted text begin$567,000deleted text endnew text begin $650,000, or (3) the ratio of
the district's referendum market value per adjusted pupil unit to $650,000
new text end.

(c) A district's second tier referendum equalization levy equals the district's second tier
referendum equalization revenue times the lesser of new text begin(1) new text endone deleted text beginordeleted text endnew text begin, (2)new text end the ratio of the district's
referendum market value per resident pupil unit to deleted text begin$290,000deleted text endnew text begin $320,000, or (3) the ratio of
the district's referendum market value per adjusted pupil unit to $320,000
new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue in fiscal year 2022 and later.
new text end

Sec. 2.

Minnesota Statutes 2018, section 273.13, subdivision 25, is amended to read:


Subd. 25.

Class 4.

(a) Class 4a is residential real estate containing four or more units
and used or held for use by the owner or by the tenants or lessees of the owner as a residence
for rental periods of 30 days or more, excluding property qualifying for class 4d. Class 4a
also includes hospitals licensed under sections 144.50 to 144.56, other than hospitals exempt
under section 272.02, and contiguous property used for hospital purposes, without regard
to whether the property has been platted or subdivided. The market value of class 4a property
has a classification rate of 1.25 percent.

(b) Class 4b includes:

(1) residential real estate containing less than four units that does not qualify as class
4bb, other than seasonal residential recreational property;

(2) manufactured homes not classified under any other provision;

(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead farm
classified under subdivision 23, paragraph (b) containing two or three units; and

(4) unimproved property that is classified residential as determined under subdivision
33.

The market value of class 4b property has a classification rate of 1.25 percent.

(c) Class 4bb includes:

(1) nonhomestead residential real estate containing one unit, other than seasonal
residential recreational property;

(2) a single family dwelling, garage, and surrounding one acre of property on a
nonhomestead farm classified under subdivision 23, paragraph (b); and

(3) a condominium-type storage unit having an individual property identification number
that is not used for a commercial purpose.

Class 4bb property has the same classification rates as class 1a property under subdivision
22.

Property that has been classified as seasonal residential recreational property at any time
during which it has been owned by the current owner or spouse of the current owner does
not qualify for class 4bb.

(d) Class 4c property includes:

(1) except as provided in subdivision 22, paragraph (c), real and personal property
devoted to commercial temporary and seasonal residential occupancy for recreation purposes,
for not more than 250 days in the year preceding the year of assessment. For purposes of
this clause, property is devoted to a commercial purpose on a specific day if any portion of
the property is used for residential occupancy, and a fee is charged for residential occupancy.
Class 4c property under this clause must contain three or more rental units. A "rental unit"
is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site
equipped with water and electrical hookups for recreational vehicles. A camping pad offered
for rent by a property that otherwise qualifies for class 4c under this clause is also class 4c
under this clause regardless of the term of the rental agreement, as long as the use of the
camping pad does not exceed 250 days. In order for a property to be classified under this
clause, either (i) the business located on the property must provide recreational activities,
at least 40 percent of the annual gross lodging receipts related to the property must be from
business conducted during 90 consecutive days, and either (A) at least 60 percent of all paid
bookings by lodging guests during the year must be for periods of at least two consecutive
nights; or (B) at least 20 percent of the annual gross receipts must be from charges for
providing recreational activities, or (ii) the business must contain 20 or fewer rental units,
and must be located in a township or a city with a population of 2,500 or less located outside
the metropolitan area, as defined under section 473.121, subdivision 2, that contains a portion
of a state trail administered by the Department of Natural Resources. For purposes of item
(i)(A), a paid booking of five or more nights shall be counted as two bookings. Class 4c
property also includes commercial use real property used exclusively for recreational
purposes in conjunction with other class 4c property classified under this clause and devoted
to temporary and seasonal residential occupancy for recreational purposes, up to a total of
two acres, provided the property is not devoted to commercial recreational use for more
than 250 days in the year preceding the year of assessment and is located within two miles
of the class 4c property with which it is used. In order for a property to qualify for
classification under this clause, the owner must submit a declaration to the assessor
designating the cabins or units occupied for 250 days or less in the year preceding the year
of assessment by January 15 of the assessment year. Those cabins or units and a proportionate
share of the land on which they are located must be designated class 4c under this clause
as otherwise provided. The remainder of the cabins or units and a proportionate share of
the land on which they are located will be designated as class 3a. The owner of property
desiring designation as class 4c property under this clause must provide guest registers or
other records demonstrating that the units for which class 4c designation is sought were not
occupied for more than 250 days in the year preceding the assessment if so requested. The
portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center
or meeting room, and (5) other nonresidential facility operated on a commercial basis not
directly related to temporary and seasonal residential occupancy for recreation purposes
does not qualify for class 4c. For the purposes of this paragraph, "recreational activities"
means renting ice fishing houses, boats and motors, snowmobiles, downhill or cross-country
ski equipment; providing marina services, launch services, or guide services; or selling bait
and fishing tackle;

(2) qualified property used as a golf course if:

(i) it is open to the public on a daily fee basis. It may charge membership fees or dues,
but a membership fee may not be required in order to use the property for golfing, and its
green fees for golfing must be comparable to green fees typically charged by municipal
courses; and

(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction with
the golf course is classified as class 3a property;

(3) real property up to a maximum of three acres of land owned and used by a nonprofit
community service oriented organization and not used for residential purposes on either a
temporary or permanent basis, provided that:

(i) the property is not used for a revenue-producing activity for more than six days in
the calendar year preceding the year of assessment; or

(ii) the organization makes annual charitable contributions and donations at least equal
to the property's previous year's property taxes and the property is allowed to be used for
public and community meetings or events for no charge, as appropriate to the size of the
facility.

For purposes of this clause:

(A) "charitable contributions and donations" has the same meaning as lawful gambling
purposes under section 349.12, subdivision 25, excluding those purposes relating to the
payment of taxes, assessments, fees, auditing costs, and utility payments;

(B) "property taxes" excludes the state general tax;

(C) a "nonprofit community service oriented organization" means any corporation,
society, association, foundation, or institution organized and operated exclusively for
charitable, religious, fraternal, civic, or educational purposes, and which is exempt from
federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal
Revenue Code; and

(D) "revenue-producing activities" shall include but not be limited to property or that
portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt
liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling
alley, a retail store, gambling conducted by organizations licensed under chapter 349, an
insurance business, or office or other space leased or rented to a lessee who conducts a
for-profit enterprise on the premises.

Any portion of the property not qualifying under either item (i) or (ii) is class 3a. The
use of the property for social events open exclusively to members and their guests for periods
of less than 24 hours, when an admission is not charged nor any revenues are received by
the organization shall not be considered a revenue-producing activity.

The organization shall maintain records of its charitable contributions and donations
and of public meetings and events held on the property and make them available upon
request any time to the assessor to ensure eligibility. An organization meeting the requirement
under item (ii) must file an application by May 1 with the assessor for eligibility for the
current year's assessment. The commissioner shall prescribe a uniform application form
and instructions;

(4) postsecondary student housing of not more than one acre of land that is owned by a
nonprofit corporation organized under chapter 317A and is used exclusively by a student
cooperative, sorority, or fraternity for on-campus housing or housing located within two
miles of the border of a college campus;

(5)(i) manufactured home parks as defined in section 327.14, subdivision 3, excluding
manufactured home parks described in items (ii) and (iii), (ii) manufactured home parks as
defined in section 327.14, subdivision 3, that are described in section 273.124, subdivision
3a
, and (iii) class I manufactured home parks as defined in section 327C.01, subdivision
13
;

(6) real property that is actively and exclusively devoted to indoor fitness, health, social,
recreational, and related uses, is owned and operated by a not-for-profit corporation, and is
located within the metropolitan area as defined in section 473.121, subdivision 2;

(7) a leased or privately owned noncommercial aircraft storage hangar not exempt under
section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan
Airports Commission, or group thereof; and

(ii) the land lease, or any ordinance or signed agreement restricting the use of the leased
premise, prohibits commercial activity performed at the hangar.

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must be
filed by the new owner with the assessor of the county where the property is located within
60 days of the sale;

(8) a privately owned noncommercial aircraft storage hangar not exempt under section
272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land abuts a public airport; and

(ii) the owner of the aircraft storage hangar provides the assessor with a signed agreement
restricting the use of the premises, prohibiting commercial use or activity performed at the
hangar; and

(9) residential real estate, a portion of which is used by the owner for homestead purposes,
and that is also a place of lodging, if all of the following criteria are met:

(i) rooms are provided for rent to transient guests that generally stay for periods of 14
or fewer days;

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated in
the basic room rate;

(iii) meals are not provided to the general public except for special events on fewer than
seven days in the calendar year preceding the year of the assessment; and

(iv) the owner is the operator of the property.

The market value subject to the 4c classification under this clause is limited to five rental
units. Any rental units on the property in excess of five, must be valued and assessed as
class 3a. The portion of the property used for purposes of a homestead by the owner must
be classified as class 1a property under subdivision 22;

(10) real property up to a maximum of three acres and operated as a restaurant as defined
under section 157.15, subdivision 12, provided it: (i) is located on a lake as defined under
section 103G.005, subdivision 15, paragraph (a), clause (3); and (ii) is either devoted to
commercial purposes for not more than 250 consecutive days, or receives at least 60 percent
of its annual gross receipts from business conducted during four consecutive months. Gross
receipts from the sale of alcoholic beverages must be included in determining the property's
qualification under item (ii). The property's primary business must be as a restaurant and
not as a bar. Gross receipts from gift shop sales located on the premises must be excluded.
Owners of real property desiring 4c classification under this clause must submit an annual
declaration to the assessor by February 1 of the current assessment year, based on the
property's relevant information for the preceding assessment year;

(11) lakeshore and riparian property and adjacent land, not to exceed six acres, used as
a marina, as defined in section 86A.20, subdivision 5, which is made accessible to the public
and devoted to recreational use for marina services. The marina owner must annually provide
evidence to the assessor that it provides services, including lake or river access to the public
by means of an access ramp or other facility that is either located on the property of the
marina or at a publicly owned site that abuts the property of the marina. No more than 800
feet of lakeshore may be included in this classification. Buildings used in conjunction with
a marina for marina services, including but not limited to buildings used to provide food
and beverage services, fuel, boat repairs, or the sale of bait or fishing tackle, are classified
as class 3a property; and

(12) real and personal property devoted to noncommercial temporary and seasonal
residential occupancy for recreation purposes.

Class 4c property has a classification rate of 1.5 percent of market value, except that (i)
each parcel of noncommercial seasonal residential recreational property under clause (12)
has the same classification rates as class 4bb property, (ii) manufactured home parks assessed
under clause (5), item (i), have the same classification rate as class 4b property, the market
value of manufactured home parks assessed under clause (5), item (ii), have a classification
rate of 0.75 percent if more than 50 percent of the lots in the park are occupied by
shareholders in the cooperative corporation or association and a classification rate of one
percent if 50 percent or less of the lots are so occupied, and class I manufactured home
parks as defined in section 327C.01, subdivision 13, have a classification rate of 1.0 percent,
(iii) commercial-use seasonal residential recreational property and marina recreational land
as described in clause (11), has a classification rate of one percent for the first $500,000 of
market value, and 1.25 percent for the remaining market value, (iv) the market value of
property described in clause (4) has a classification rate of one percent, (v) the market value
of property described in clauses (2), (6), and (10) has a classification rate of 1.25 percent,
(vi) that portion of the market value of property in clause (9) qualifying for class 4c property
has a classification rate of 1.25 percent, and (vii) property qualifying for classification under
clause (3) that is owned or operated by a congressionally chartered veterans organization
has a classification rate of one percent. The commissioner of veterans affairs must provide
a list of congressionally chartered veterans organizations to the commissioner of revenue
by June 30, 2017, and by January 1, 2018, and each year thereafter.

(e) Class 4d property is qualifying low-income rental housing certified to the assessor
by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion of
the units in the building qualify as low-income rental housing units as certified under section
273.128, subdivision 3, only the proportion of qualifying units to the total number of units
in the building qualify for class 4d. The remaining portion of the building shall be classified
by the assessor based upon its use. Class 4d also includes the same proportion of land as
the qualifying low-income rental housing units are to the total units in the building. For all
properties qualifying as class 4d, the market value determined by the assessor must be based
on the normal approach to value using normal unrestricted rents.new text begin Class 4d property has a
classification rate of 0.25 percent.
new text end

deleted text begin (f) The first tier of market value of class 4d property has a classification rate of 0.75
percent. The remaining value of class 4d property has a classification rate of 0.25 percent.
For the purposes of this paragraph, the "first tier of market value of class 4d property" means
the market value of each housing unit up to the first tier limit. For the purposes of this
paragraph, all class 4d property value must be assigned to individual housing units. The
first tier limit is $100,000 for assessment year 2014. For subsequent years, the limit is
adjusted each year by the average statewide change in estimated market value of property
classified as class 4a and 4d under this section for the previous assessment year, excluding
valuation change due to new construction, rounded to the nearest $1,000, provided, however,
that the limit may never be less than $100,000. Beginning with assessment year 2015, the
commissioner of revenue must certify the limit for each assessment year by November 1
of the previous year.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2021.
new text end

Sec. 3. new text beginEXTENSION OF PROPERTY TAX DUE DATE; STATE GENERAL TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Due date extension. new text end

new text begin Notwithstanding Minnesota Statutes, section 279.01,
subdivision 1, for taxes payable in 2020 only, payment of the first half of the state general
tax imposed under Minnesota Statutes, section 275.025, must be made on or before July
15, 2020. Penalties on the first half payment of the state general tax shall not begin to accrue
until July 16, 2020.
new text end

new text begin Subd. 2. new text end

new text begin Distribution of funds. new text end

new text begin Notwithstanding Minnesota Statutes, section 276.112,
by July 30, 2020, the county treasurer must make full settlement with the county auditor
for all receipts of the state general tax collected from the date of the last settlement up to
and including July 15, 2020, and must transmit those receipts to the commissioner of revenue.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from May 15, 2020.
new text end

Sec. 4. new text beginMORATORIUM ON CHANGES IN ASSESSMENT; SHORT-TERM
RENTAL PROPERTIES.
new text end

new text begin For assessment years 2020 and 2021, unless there is a change in primary use or a change
is necessary to correct a clerical error, property that the assessor determines to be used for
short-term rental purposes based on the assessor's determination of the property's primary
use must receive the same classification under Minnesota Statutes, section 273.13, as the
property received for assessment year 2019.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment years 2020 and 2021
only.
new text end

ARTICLE 2

INDIVIDUAL INCOME, BUSINESS, AND MISCELLANEOUS TAXES

Section 1.

Minnesota Statutes 2019 Supplement, section 116J.8737, subdivision 5, as
amended by Laws 2020, chapter 83, article 1, section 21, 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 years listed in paragraph (i). 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 deleted text begin2010deleted text endnew text begin 2020new text end must be made available on the department's
website by September 1, deleted text begin2010deleted text endnew text begin 2020new text end, and the department must begin accepting applications
by September 1, deleted text begin2010deleted text endnew text begin 2020new text end. 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.

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

deleted text begin (1)deleted text end taxable years beginning after December 31, 2018deleted text begin, and before January 1, 2020; anddeleted text endnew text begin.
new 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 2019 Supplement, section 289A.02, subdivision 7, is amended
to read:


Subd. 7.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through December
31, 2018new text begin, except that for purposes of exclusion from gross income of paycheck protection
loans under section 1106 of Public Law 116-136, "Internal Revenue Code" means the
Internal Revenue Code as amended through March 27, 2020
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 changes incorporated by federal changes are effective retroactively at the same time
the changes were effective for federal purposes.
new text end

Sec. 3.

Minnesota Statutes 2019 Supplement, section 290.01, subdivision 19, is amended
to read:


Subd. 19.

Net income.

(a) For a trust or estate taxable under section 290.03, and a
corporation taxable under section 290.02, 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 sections 290.0131 to 290.0136.

(b) For an individual, the term "net income" means federal adjusted gross income with
the modifications provided in sections 290.0131, 290.0132, and 290.0135 to 290.0137.

(c) 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.

(d) 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.

(e) 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.

(f) The Internal Revenue Code of 1986, as amended through December 31, 2018, shall
be in effect for taxable years beginning after December 31, 1996new text begin, except that for purposes
of exclusion from gross income of paycheck protection loans under section 1106 of Public
Law 116-136, "Internal Revenue Code" means the Internal Revenue Code as amended
through March 27, 2020
new text end.

(g) Except as otherwise provided, references to the Internal Revenue Code in this
subdivision and sections 290.0131 to 290.0136 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 the day following final enactment, except
that changes incorporated by federal changes are effective retroactively at the same time
the changes were effective for federal purposes.
new text end

Sec. 4.

Minnesota Statutes 2019 Supplement, 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 December
31, 2018. Internal Revenue Code also includes any uncodified provision in federal law that
relates to provisions of the Internal Revenue Code that are incorporated into Minnesota lawnew text begin,
except that for purposes of exclusion from gross income of paycheck protection loans under
section 1106 of Public Law 116-136, "Internal Revenue Code" means the Internal Revenue
Code as amended through March 27, 2020
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 changes incorporated by federal changes are effective retroactively at the same time
the changes were effective for federal purposes.
new text end

Sec. 5.

Minnesota Statutes 2018, section 290.0131, subdivision 10, is amended to read:


Subd. 10.

Section 179 expensing.

new text beginFor property placed in service in taxable years
beginning before January 1, 2018,
new text end80 percent of the amount by which the deduction allowed
under the dollar limits of section 179 of the Internal Revenue Code exceeds the deduction
allowable by section 179 of the Internal Revenue Code, as amended through December 31,
2003, 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, 2017.
new text end

Sec. 6.

Minnesota Statutes 2019 Supplement, section 290.0132, subdivision 7, is amended
to read:


Subd. 7.

Charitable contributions for taxpayers who do not itemize.

For an individual
who does not itemize deductions under section 290.0132, subdivision 19, for the taxable
year, an amount equal to deleted text begin50deleted text endnew text begin 60new text end percent of the excess of charitable contributions over deleted text begin$500deleted text endnew text begin
$300
new text end allowable as a deduction for the taxable year under section 290.0122, subdivision 4,
is a subtraction. The subtraction under this subdivision must not include a distribution that
is excluded from federal adjusted gross income and that is not deductible under section
408(d)(8)(E) 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, 2019.
new text end

Sec. 7.

Minnesota Statutes 2018, section 290.0133, subdivision 12, is amended to read:


Subd. 12.

Section 179 expensing.

new text beginFor property placed in service in taxable years
beginning before January 1, 2018,
new text end80 percent of the amount by which the deduction allowed
under the dollar limits of section 179 of the Internal Revenue Code exceeds the deduction
allowable by section 179 of the Internal Revenue Code, as amended through December 31,
2003, 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, 2017.
new text end

Sec. 8.

Minnesota Statutes 2018, section 290.0674, subdivision 2, is amended to read:


Subd. 2.

Limitations.

(a) For claimants with new text beginadjusted gross new text endincome not greater than
deleted text begin $33,500deleted text endnew text begin the income eligibility guidelinenew text end, the maximum credit allowed for a family is $1,000
multiplied by the number of qualifying children in kindergarten through grade 12 in the
family. The maximum credit for families with one qualifying child in kindergarten through
grade 12 is reduced by $1 for each $4 of deleted text beginhouseholddeleted text end new text beginadjusted gross new text endincome over deleted text begin$33,500deleted text endnew text begin
the income eligibility guideline
new text end, and the maximum credit for families with two or more
qualifying children in kindergarten through grade 12 is reduced by $2 for each $4 of
deleted text begin householddeleted text end new text beginadjusted gross new text endincome over deleted text begin$33,500deleted text endnew text begin the income eligibility guidelinenew text end, but in no
case is the credit less than zero.

new text begin (b) For purposes of this subdivision, "income eligibility guideline" means the greater of
$33,500 or the amounts determined under United States Code, title 42, section 1758(b)(1),
for reduced-price lunch as of July 1 of the taxable year. For purposes of determining the
income eligibility guideline, the taxpayer's household size equals the sum of:
new text end

new text begin (1) two for a married couple filing a joint return, or one for all other taxpayers; plus
new text end

new text begin (2) the number of the taxpayer's dependents, as defined in section 32(c)(3) of the Internal
Revenue Code.
new text end

deleted text begin (b)deleted text endnew text begin (c)new text end In the case of a married claimant, a credit is not allowed unless a joint income
tax return is filed.

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2019.
new text end

Sec. 9.

Minnesota Statutes 2019 Supplement, section 290.0921, subdivision 2, is amended
to read:


Subd. 2.

Definitions.

(a) For purposes of this section, the following terms have the
meanings given them.

(b) "Alternative minimum taxable net income" is alternative minimum taxable income,

(1) less the exemption amount, and

(2) apportioned or allocated to Minnesota under section 290.17, 290.191, or 290.20.

(c) The "exemption amount" is $40,000, reduced, but not below zero, by 25 percent of
the excess of alternative minimum taxable income over $150,000.

(d) "Minnesota alternative minimum taxable income" is alternative minimum taxable
net income, less the deductions for alternative tax net operating loss under subdivision 4;
and dividends received under subdivision 6. The sum of the deductions under this paragraph
may not exceed 90 percent of alternative minimum taxable net income. This limitation does
not apply to:

(1) a deduction for dividends paid to or received from a corporation which is subject to
tax under section 290.36 and which is a member of an affiliated group of corporations as
defined by the Internal Revenue Code; or

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

(e) "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
through December 16, 2016new text begin, except that for purposes of exclusion from gross income of
paycheck protection loans under section 1106 of Public Law 116-136, "Internal Revenue
Code" means the Internal Revenue Code as amended through March 27, 2020
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 changes incorporated by federal changes are effective retroactively at the same time
the changes were effective for federal purposes.
new text end

Sec. 10.

Minnesota Statutes 2019 Supplement, section 290A.03, subdivision 15, is amended
to read:


Subd. 15.

Internal Revenue Code.

"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended through December 31, 2018new text begin, except that for purposes of exclusion
from gross income of paycheck protection loans under section 1106 of Public Law 116-136,
"Internal Revenue Code" means the Internal Revenue Code as amended through March 27,
2020
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 changes incorporated by federal changes are effective retroactively at the same time
the changes were effective for federal purposes.
new text end

Sec. 11.

Minnesota Statutes 2019 Supplement, section 291.005, subdivision 1, is amended
to read:


Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following terms
used in this chapter shall have the following meanings:

(1) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.

(2) "Federal gross estate" means the gross estate of a decedent as required to be valued
and otherwise determined for federal estate tax purposes under the Internal Revenue Code,
increased by the value of any property in which the decedent had a qualifying income interest
for life and for which an election was made under section 291.03, subdivision 1d, for
Minnesota estate tax purposes, but was not made for federal estate tax purposes.

(3) "Internal Revenue Code" means the United States Internal Revenue Code of 1986,
as amended through December 31, 2018new text begin, except that for purposes of exclusion from gross
income of paycheck protection loans under section 1106 of Public Law 116-136, "Internal
Revenue Code" means the Internal Revenue Code as amended through March 27, 2020
new text end.

(4) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included in the estate which has its situs outside Minnesota,
and (b) including any property omitted from the federal gross estate which is includable in
the estate, has its situs in Minnesota, and was not disclosed to federal taxing authorities.

(5) "Nonresident decedent" means an individual whose domicile at the time of death
was not in Minnesota.

(6) "Personal representative" means the executor, administrator or other person appointed
by the court to administer and dispose of the property of the decedent. If there is no executor,
administrator or other person appointed, qualified, and acting within this state, then any
person in actual or constructive possession of any property having a situs in this state which
is included in the federal gross estate of the decedent shall be deemed to be a personal
representative to the extent of the property and the Minnesota estate tax due with respect
to the property.

(7) "Resident decedent" means an individual whose domicile at the time of death was
in Minnesota. The provisions of section 290.01, subdivision 7, paragraphs (c) and (d), apply
to determinations of domicile under this chapter.

(8) "Situs of property" means, with respect to:

(i) real property, the state or country in which it is located;

(ii) tangible personal property, the state or country in which it was normally kept or
located at the time of the decedent's death or for a gift of tangible personal property within
three years of death, the state or country in which it was normally kept or located when the
gift was executed;

(iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue
Code, owned by a nonresident decedent and that is normally kept or located in this state
because it is on loan to an organization, qualifying as exempt from taxation under section
501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is
deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and

(iv) intangible personal property, the state or country in which the decedent was domiciled
at death or for a gift of intangible personal property within three years of death, the state or
country in which the decedent was domiciled when the gift was executed.

For a nonresident decedent with an ownership interest in a pass-through entity with
assets that include real or tangible personal property, situs of the real or tangible personal
property, including qualified works of art, is determined as if the pass-through entity does
not exist and the real or tangible personal property is personally owned by the decedent. If
the pass-through entity is owned by a person or persons in addition to the decedent, ownership
of the property is attributed to the decedent in proportion to the decedent's capital ownership
share of the pass-through entity.

(9) "Pass-through entity" includes the following:

(i) an entity electing S corporation status under section 1362 of the Internal Revenue
Code;

(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;

(iii) a single-member limited liability company or similar entity, regardless of whether
it is taxed as an association or is disregarded for federal income tax purposes under Code
of Federal Regulations, title 26, section 301.7701-3; or

(iv) a trust to the extent the property is includable in the decedent's federal gross estate;
but excludes

(v) an entity whose ownership interest securities are traded on an exchange regulated
by the Securities and Exchange Commission as a national securities exchange under section
6 of the Securities Exchange Act, United States Code, title 15, section 78f.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment, except
that changes incorporated by federal changes are effective retroactively at the same time
the changes were effective for federal purposes.
new text end

Sec. 12.

Minnesota Statutes 2018, section 297E.02, subdivision 6, as amended by Laws
2020, chapter 83, article 1, section 76, is amended to read:


Subd. 6.

Combined net receipts tax.

(a) In addition to the taxes imposed under
subdivision 1, a tax is imposed on the combined net receipts of the organization. As used
in this section, "combined net receipts" is the sum of the organization's gross receipts from
lawful gambling less gross receipts directly derived from the conduct of paper bingo, raffles,
and paddlewheels, as defined in section 297E.01, subdivision 8, and less the net prizes
actually paid, other than prizes actually paid for paper bingo, raffles, and paddlewheels, for
the fiscal year. The combined net receipts of an organization are subject to a tax computed
according to the following schedule:

If the combined net receipts
for the fiscal year are:
The tax is:
Not over $87,500
deleted text beginninedeleted text endnew text begin eightnew text end percent
Over $87,500, but not over
$122,500
deleted text begin$7,875deleted text endnew text begin $7,000new text end plus deleted text begin18deleted text endnew text begin 16new text end percent of
the amount over $87,500, but not over
$122,500
Over $122,500, but not
over $157,500
deleted text begin$14,175deleted text endnew text begin $12,600new text end plus deleted text begin27deleted text endnew text begin 24new text end percent
of the amount over $122,500, but not
over $157,500
Over $157,500
deleted text begin$23,625deleted text endnew text begin $21,000new text end plus deleted text begin36deleted text endnew text begin 32new text end percent
of the amount over $157,500

(b) Gross receipts derived from sports-themed tipboards are exempt from taxation under
this section. For purposes of this paragraph, a sports-themed tipboard means a sports-themed
tipboard as defined in section 349.12, subdivision 34, under which the winning numbers
are determined by the numerical outcome of a professional sporting event.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for games reported as played
after June 30, 2020.
new text end

Sec. 13.

Minnesota Statutes 2018, section 297E.021, subdivision 2, is amended to read:


Subd. 2.

Determination of revenue increase.

By March 15 of each fiscal year, the
commissioner of management and budget, in consultation with the commissioner, shall
determine the estimated increase in revenues received from taxes imposed under this chapter
over deleted text beginthe estimated revenues under the February 2012 state budget forecast for that fiscal
year. For fiscal years after fiscal year 2015, the commissioner of management and budget
shall use the February 2012 state budget forecast for fiscal year 2015 as the
deleted text endnew text begin anew text end baselinenew text begin of:
(1) $....... in fiscal year 2021; (2)$....... in fiscal year 2022; and (3) $....... in fiscal year 2023
and thereafter
new text end. All calculations under this subdivision must be made net of estimated refunds
of the taxes required to be paid.

new text begin EFFECTIVE DATE. new text end

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

Sec. 14.

Minnesota Statutes 2018, section 349.15, subdivision 1, is amended to read:


Subdivision 1.

Expenditure restrictions, requirements, and civil penalties.

(a) Gross
profits from lawful gambling may be expended only for lawful purposes or allowable
expenses as authorized by the membership of the conducting organization at a monthly
meeting of the organization's membership.

(b) For each 12-month period beginning July 1, a licensed organization will be evaluated
by the board to determine a rating based on the percentage of annual lawful purpose
expenditures when compared to available gross profits for the same period. The rating will
be used to determine the organization's profitability percent and is not a rating of the
organization's lawful gambling operation. An organization will be evaluated according to
the following criteria:

(1) an organization that expends deleted text begin50deleted text endnew text begin 70new text end percent or more of gross profits on lawful purposes
will receive a five-star rating;

(2) an organization that expends deleted text begin40deleted text endnew text begin 55new text end percent or more but less than deleted text begin50deleted text endnew text begin 70new text end percent of
gross profits on lawful purposes will receive a four-star rating;

(3) an organization that expends deleted text begin30deleted text endnew text begin 40new text end percent or more but less than deleted text begin40deleted text endnew text begin 55new text end percent of
gross profits on lawful purposes will receive a three-star rating;

(4) an organization that expends deleted text begin20deleted text endnew text begin 25new text end percent or more but less than deleted text begin30deleted text endnew text begin 40new text end percent of
gross profits on lawful purposes will receive a two-star rating; and

(5) an organization that expends less than deleted text begin20deleted text end new text begin25new text end percent of gross profits on lawful
purposes will receive a one-star rating.

(c) An organization that fails to expend a minimum of deleted text begin30deleted text endnew text begin 40new text end percent annually of gross
profits on lawful purposes, or deleted text begin20deleted text endnew text begin 25new text end percent annually for organizations that conduct lawful
gambling in a location where the primary business is bingo, is automatically on probation
effective July 1 for a period of one year. The organization must increase its rating to the
required minimum or be subject to sanctions by the board. If an organization fails to meet
the minimum after a one-year probation, the board may suspend the organization's license
or impose a civil penalty as follows:

(1) in determining any suspension or penalty for a violation of this paragraph, the board
must consider any unique factors or extraordinary circumstances that caused the organization
to not meet the minimum rate of profitability. Unique factors or extraordinary circumstances
include, but are not limited to, the purchase of capital assets necessary to conduct lawful
gambling; road or other construction causing impaired access to the lawful gambling
premises; and flood, tornado, or other catastrophe that had a direct impact on the continuing
lawful gambling operation; and

(2) notwithstanding section 349.151, subdivision 4, paragraph (a), clause (10), the board
may impose a civil penalty under this subdivision up to $10,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from July 1, 2020.
new text end

Sec. 15.

Minnesota Statutes 2018, section 349.151, subdivision 4, is amended to read:


Subd. 4.

Powers and duties.

(a) The board has the following powers and duties:

(1) to regulate lawful gambling to ensure it is conducted in the public interest;

(2) to issue licenses to organizations and gambling managers, and to issue licenses and
renewals to distributors, distributor salespersons, manufacturers, and linked bingo game
providers;

(3) to collect and deposit fees due under this chapter;

(4) to receive reports required by this chapter and inspect all premises, records, books,
and other documents of organizations, distributors, manufacturers, and linked bingo game
providers to insure compliance with all applicable laws and rules;

(5) to make rules authorized by this chapter;

(6) to register gambling equipment and issue registration stamps;

(7) to provide by rule for the mandatory posting by organizations conducting lawful
gambling of rules of play and the odds and/or house percentage on each form of lawful
gambling;

(8) to report annually to the governor and legislature on its activities and on recommended
changes in the laws governing gamblingnew text begin, including an annual report that provides: a tabulation
of the number of compliance reviews completed; the percentage of organizations reviewed;
an average of the number of months between reviews; the number, location, and organization
of site inspections; and the number of allegations awaiting investigation by the board
new text end;

(9) to report annually to the governor and legislature a financial summary for each
licensed organization identifying the gross receipts, prizes paid, allowable expenses, lawful
purpose expenditures including charitable contributions and all taxes and fees as per section
349.12, subdivision 25, paragraph (a), clauses (8) and (18), and the percentage of annual
gross profit used for lawful purposes;

(10) to impose civil penalties of not more than $1,000 per violation on organizations,
distributors, distributor salespersons, manufacturers, linked bingo game providers, and
gambling managers for violating or failing to comply with any provision of this chapter,
chapter 297E, or any rule or order of the board;

(11) to issue premises permits to organizations licensed to conduct lawful gambling;

(12) to delegate to the director the authority to issue or deny license and premises permit
applications and renewals under criteria established by the board;

(13) to delegate to the director the authority to approve or deny fund loss requests,
contribution of gambling funds to another licensed organization, and property expenditure
requests under criteria established by the board;

(14) to suspend or revoke licenses and premises permits of organizations, distributors,
distributor salespersons, manufacturers, linked bingo game providers, or gambling managers
as provided in this chapter;

(15) to approve or deny requests from licensees for:

(i) waivers from fee requirements as provided in section 349.16, subdivision 6; and

(ii) variances from Gambling Control Board rules under section 14.055; and

(16) to register employees of organizations licensed to conduct lawful gambling;

(17) to require fingerprints from persons determined by board rule to be subject to
fingerprinting;

(18) to delegate to a compliance review group of the board the authority to investigate
alleged violations, issue consent orders, and initiate contested cases on behalf of the board;

(19) to order organizations, distributors, distributor salespersons, manufacturers, linked
bingo game providers, and gambling managers to take corrective actions; and

(20) to take all necessary steps to ensure the integrity of and public confidence in lawful
gambling.

(b) The board, or director if authorized to act on behalf of the board, may by citation
assess any organization, distributor, distributor salesperson, manufacturer, linked bingo
game provider, or gambling manager a civil penalty of not more than $1,000 per violation
for a failure to comply with any provision of this chapter, chapter 297E, or any rule adopted
or order issued by the board. Any organization, distributor, distributor salesperson, gambling
manager, linked bingo game provider, or manufacturer assessed a civil penalty under this
paragraph may request a hearing before the board. Appeals of citations imposing a civil
penalty are not subject to the provisions of the Administrative Procedure Act.

(c) All penalties received by the board must be deposited in the general fund.

(d) All fees imposed by the board under sections 349.16 to 349.167 must be deposited
in the state treasury and credited to a lawful gambling regulation account in the special
revenue fund. Receipts in this account are available for the operations of the board up to
the amount authorized in biennial appropriations from the legislature.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from July 1, 2020.
new text end

Sec. 16. new text beginSECTION 179 EXPENSING; SUBTRACTIONS.
new text end

new text begin (a) Under the modifications to the additions in Minnesota Statutes, section 290.0131,
subdivision 10, in section 5, and Minnesota Statutes, section 290.0133, subdivision 12, in
section 7, a taxpayer is not allowed a subtraction in computing net income for property
placed in service in taxable years beginning after December 31, 2017.
new text end

new text begin (b) A taxpayer who claimed a subtraction under Minnesota Statutes, section 290.0132,
subdivision 14, or 290.0134, subdivision 14, for property for which an addition was made
under paragraph (a), must add back any subtraction claimed in a taxable year in which the
property was placed in service.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies retroactively for property placed in service in taxable years beginning after December
31, 2017.
new text end

Sec. 17. new text beginSPECIAL PENALTY EXCEPTION.
new text end

new text begin (a) The interest provisions under Minnesota Statutes, section 289A.55, and penalty for
failure to pay tax provisions under Minnesota Statutes, section 289A.60, subdivision 1, do
not apply to late payments of tax arising from an order of the commissioner assessing
additional income tax on a capital gain that was previously deferred under section 1031 of
the Internal Revenue Code of 1986, as amended through December 16, 2016, for taxable
years beginning after December 31, 2017, and ending before January 1, 2019. The penalty
and interest exceptions under this section only apply to a taxpayer:
new text end

new text begin (1) who is subject to the retroactive application of section 13303 of Public Law 115-97
in Laws 2019, First Special Session chapter 6, article 1, section 61, paragraph (b); and
new text end

new text begin (2) whose total amount of income tax due for taxable years beginning after December
31, 2017, and ending before January 1, 2019, increased by at least 12 percent due to the
retroactive application of law described in clause (1).
new text end

new text begin (b) Within 60 days following final enactment, the commissioner must refund to a taxpayer
the amount of interest and penalties paid by the taxpayer that are subject to the exception
in paragraph (a).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies retroactively for interest and penalties on assessments ordered after June 1, 2019.
new text end

Sec. 18. new text beginNO DOUBLE BENEFIT.
new text end

new text begin In calculating net income, as defined under Minnesota Statutes, section 290.01,
subdivision 19, a taxpayer must not take into account both the amount of paycheck protection
loans excluded from gross income under section 1106 of Public Law 116-136, and amounts
deducted as trade or business expenses under section 162 of the Internal Revenue Code as
amended through December 31, 2018. For purposes of Minnesota Statutes, chapter 290,
the calculation of net income includes the greater of the calculation resulting from:
new text end

new text begin (1) the amount of paycheck protection loans excluded from gross income under section
1106 of Public Law 116-136; or
new text end

new text begin (2) the amount deducted as trade or business expenses under section 162 of the Internal
Revenue Code as amended through December 31, 2018.
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 changes incorporated by federal changes are effective retroactively at the same time
the changes were effective for federal purposes.
new text end

Sec. 19. new text beginREPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2018, section 290.0674, subdivision 2a, new text end new text begin is repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2018, section 290.0692, subdivision 6, new text end new text begin is repealed.
new text end

new text begin (c) new text end new text begin Minnesota Statutes 2019 Supplement, section 116J.8737, subdivision 12, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective for taxable years beginning after
December 31, 2019. Paragraphs (b) and (c) are effective the day following final enactment.
new text end

APPENDIX

Repealed Minnesota Statutes: 20-8953

116J.8737 SMALL BUSINESS INVESTMENT TAX CREDIT.

Subd. 12.

Sunset.

This section expires for taxable years beginning after December 31, 2021, except that reporting requirements under subdivision 6 and revocation of credits under subdivision 7 remain in effect through 2023 for qualified investors and qualified funds, and through 2025 for qualified small businesses, reporting requirements under subdivision 9 remain in effect through 2021, and the appropriation in subdivision 11 remains in effect through 2025.

290.0674 MINNESOTA EDUCATION CREDIT.

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 199 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.

290.0692 SMALL BUSINESS INVESTMENT CREDIT.

Subd. 6.

Sunset.

This section expires at the same time and on the same terms as section 116J.8737, except that the expiration of this section does not affect the commissioner of revenue's authority to audit or power of examination and assessment for credits claimed under this section.