SF 1217

1st Engrossment - 90th Legislature (2017 - 2018) Posted on 02/22/2018 02:57pm

A bill for an act
relating to taxation; making technical and clarifying changes to individual income
taxes, corporate franchise taxes, estate taxes, property taxes, sales and use taxes,
special taxes, local government aids, and other miscellaneous taxes and tax
provisions; amending Minnesota Statutes 2016, sections 115A.1314, subdivision
1; 270.078, subdivision 1; 270C.171, subdivision 1; 273.0755; 273.135, subdivision
1; 290.0132, subdivision 21; 290A.03, subdivision 3; 290A.10; 291.075; 298.01,
subdivisions 3, 4; 298.24, subdivision 1; 298.28, subdivisions 2, 5; 414.09,
subdivision 2; 469.190, subdivisions 1, 7; 477A.0124, subdivision 2; 477A.013,
subdivision 1; repealing Minnesota Statutes 2016, sections 290.9743; 290.9744.

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

ARTICLE 1

INDIVIDUAL INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES

Section 1.

Minnesota Statutes 2016, section 290.0132, subdivision 21, is amended to read:

Subd. 21.

Military service pension; retirement pay.

To the extent included in federal
taxable income, compensation received from a pension or other retirement pay from the
federal government for service in the military, as computed under United States Code, title
10, sections 1401 to 1414, 1447 to 1455, and 12733, is a subtraction. The subtraction deleted text begin must
not include any amount used to claim the credit allowed under section 290.0677 deleted text end new text begin is limited
to individuals who do not claim the credit under section 290.0677 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. 2.

Minnesota Statutes 2016, 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) the amount of deduction allowed under section 199 of the Internal Revenue Code;

(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; and

(xvii) 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" 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; or

(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.

(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 was disabled 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 "exemption amount" means the exemption
amount under section 151(d) of the Internal Revenue Code for the taxable year for which
the income is reported; "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) deleted text begin (D) deleted text end new text begin (C) new text end of the Internal Revenue
Code, without regard to whether the claimant or spouse claimed a deduction; and "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 the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2016, section 290A.10, is amended to read:

290A.10 PROOF OF TAXES PAID.

deleted text begin Every deleted text end new text begin If requested by the commissioner of revenue, a new text end claimant who files a claim for
relief for property taxes payable shall deleted text begin include with the claim deleted text end new text begin provide new text end a property tax statement
or a reproduction thereof in a form deemed satisfactory by the commissioner of revenue
indicating that there are no delinquent property taxes on the homestead. Indication on the
property tax statement from the county treasurer that there are no delinquent taxes on the
homestead shall be sufficient proof. Taxes included in a confession of judgment under
section 277.23 or 279.37 shall not constitute delinquent taxes as long as the claimant is
current on the payments required to be made under section 277.23 or 279.37.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refunds based on rent paid after
December 31, 2015, and property taxes payable after December 31, 2016.
new text end

Sec. 4.

Minnesota Statutes 2016, section 291.075, is amended to read:

291.075 SPECIAL USE VALUATION OF QUALIFIED PROPERTY.

If, after the final determination of the tax imposed by this chapter, the property valued
pursuant to section 2032A of the Internal Revenue Code is disposed of or fails to qualify
and an additional tax is imposed pursuant to section 2032A(c), any increase in deleted text begin the credit
for state death taxes deleted text end new text begin federal gross or taxable estate new text end shall be reported to the commissioner
within 90 days deleted text begin after final determination of the increased credit deleted text end new text begin of the federal adjustment new text end .
Upon notification the commissioner may assess an additional tax in accordance with section
291.03, subdivision 1.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2016, sections 290.9743; and 290.9744, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 2

PROPERTY TAX AND LOCAL GOVERNMENT AIDS

Section 1.

Minnesota Statutes 2016, section 270.078, subdivision 1, is amended to read:

Subdivision 1.

Conformance to federal law.

If any provision of sections 270.071 to
270.079 is contrary to any provision of any law of the United States of America, hereinafter
enacted, providing for or relating to the ad valorem taxation by a state of aircraft or flying
equipment of an airline company, such provision shall be of no effect and the commissioner
is authorized and directed to prescribe by rule such provisions as may be necessary to make
sections 270.071 to 270.079 conform to the federal act and to effectuate the purposes of
sections 270.071 to 270.079, provided such rules do not prescribe a rate of taxation higher
than that provided in section 270.075 or a net tax capacity based on a percentage higher
than that provided in section 270.074, subdivision deleted text begin 2 deleted text end new text begin 3 new text end .

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2016, section 273.0755, is amended to read:

273.0755 TRAINING AND EDUCATION OF PROPERTY TAX PERSONNEL.

(a) Beginning with the four-year period starting on July 1, 2000, every person licensed
by the state Board of Assessors at the Accredited Minnesota Assessor level or higher, shall
successfully complete a weeklong Minnesota laws course sponsored by the Department of
Revenue at least once in every four-year period. An assessor need not attend the course if
they successfully pass the test for the course.

(b) The commissioner of revenue may require that each county, and each city for which
the city assessor performs the duties of county assessor, have (i) a person on the assessor's
staff who is certified by the Department of Revenue in sales ratio calculations, (ii) an officer
or employee who is certified by the Department of Revenue in tax calculations, and (iii) an
officer or employee who is certified by the Department of Revenue in the proper preparation
of abstracts of assessment. The commissioner of revenue may require that each county have
an officer or employee who is certified by the Department of Revenue in the proper
preparation of abstracts of tax lists. new text begin Certifications under this paragraph expire after four
years.
new text end

(c) Beginning with the four-year educational licensing period starting on July 1, 2004,
every Minnesota assessor licensed by the State Board of Assessors must attend and participate
in a seminar that focuses on ethics, professional conduct and the need for standardized
assessment practices developed and presented by the commissioner of revenue. This
requirement must be met at least once in every subsequent four-year period. This requirement
applies to all assessors licensed for one year or more in the four-year period.

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 2016, section 273.135, subdivision 1, is amended to read:

Subdivision 1.

Reduction in tax; tax relief area.

The property tax to be paid in respect
to property taxable within a tax relief area as defined in section 273.134, paragraph (b), on
homestead property, as otherwise determined by law and regardless of the market value of
the property, new text begin and on nonhomestead portions of property classified as both homestead and
nonhomestead property as provided in section 273.124, subdivision 11, new text end for all purposes
shall be reduced in the amount prescribed by subdivision 2, subject to the limitations
contained therein.

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2016, section 414.09, subdivision 2, is amended to read:

Subd. 2.

Transmittal of order.

The chief administrative law judge shall see that copies
of the order are mailed to all parties entitled to mailed notice of hearing under subdivision
1, the secretary of state, deleted text begin the Department of Revenue, deleted text end the state demographer, individual
property owners if initiated in that manner, affected county auditor, and any other party of
record. The affected county auditor shall record the order against the affected property.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2016, section 477A.0124, subdivision 2, is amended to read:

Subd. 2.

Definitions.

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

(b) "County program aid" means the sum of "county need aid," "county tax base
equalization aid," and "county transition aid."

(c) "Age-adjusted population" means a county's population multiplied by the county age
index.

(d) "County age index" means the percentage of the population deleted text begin over deleted text end age 65 new text begin and over
new text end within the county divided by the percentage of the population deleted text begin over deleted text end age 65 new text begin and over new text end within
the state, except that the age index for any county may not be greater than 1.8 nor less than
0.8.

(e) "Population deleted text begin over deleted text end age 65 new text begin and over new text end " means the population deleted text begin over deleted text end age 65 new text begin and over
new text end established as of July 15 in an aid calculation year by the most recent federal census, by a
special census conducted under contract with the United States Bureau of the Census, by a
population estimate made by the Metropolitan Council, or by a population estimate of the
state demographer made pursuant to section 4A.02, whichever is the most recent as to the
stated date of the count or estimate for the preceding calendar year and which has been
certified to the commissioner of revenue on or before July 15 of the aid calculation year. A
revision to an estimate or count is effective for these purposes only if certified to the
commissioner on or before July 15 of the aid calculation year. Clerical errors in the
certification or use of estimates and counts established as of July 15 in the aid calculation
year are subject to correction within the time periods allowed under section 477A.014.

(f) "Part I crimes" means the three-year average annual number of Part I crimes reported
for each county by the Department of Public Safety for the most recent years available. By
July 1 of each year, the commissioner of public safety shall certify to the commissioner of
revenue the number of Part I crimes reported for each county for the three most recent
calendar years available.

(g) "Households receiving food stamps" means the average monthly number of
households receiving food stamps for the three most recent years for which data is available.
By July 1 of each year, the commissioner of human services must certify to the commissioner
of revenue the average monthly number of households in the state and in each county that
receive food stamps, for the three most recent calendar years available.

(h) "County net tax capacity" means the county's adjusted net tax capacity under section
273.1325.

new text begin EFFECTIVE DATE. new text end

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

Sec. 6.

Minnesota Statutes 2016, section 477A.013, subdivision 1, is amended to read:

Subdivision 1.

Towns.

new text begin (a) new text end In 2014 and thereafter, each town is eligible for a distribution
under this subdivision equal to the product of (i) its agricultural property factor, (ii) its town
area factor, (iii) its population factor, and (iv) 0.0045. As used in this subdivision, the
following terms have the meanings given them:

(1) "agricultural property factor" means the ratio of the adjusted net tax capacity of
agricultural property located in a town, deleted text begin divided by deleted text end new text begin to new text end the adjusted net tax capacity of all
other property located in the town. The agricultural property factor cannot exceed eight;

(2) "agricultural property" means property classified under section 273.13, as homestead
and nonhomestead agricultural property, rural vacant land, and noncommercial seasonal
recreational property;

(3) "town area factor" means the most recent estimate of total acreage, not to exceed
50,000 acres, located in the township available as of July 1 in the aid calculation year,
estimated or established by:

(i) the United States Bureau of the Census;

(ii) the State Land Management Information Center; or

(iii) the secretary of state; and

(4) "population factor" means the square root of the towns' population.

new text begin (b) new text end If the sum of the aids payable to all towns under this subdivision exceeds the limit
under section 477A.03, subdivision 2c, the distribution to each town must be reduced
proportionately so that the total amount of aids distributed under this section does not exceed
the limit in section 477A.03, subdivision 2c.

new text begin (c) Data used in calculating aids to towns under this subdivision, other than acreage,
shall be the most recently available data as of January 1 in the year in which the aid is
calculated.
new text end

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 3

SALES AND USE, AND SPECIAL TAXES

Section 1.

Minnesota Statutes 2016, section 115A.1314, subdivision 1, is amended to
read:

Subdivision 1.

Registration fee.

(a) Each manufacturer who registers under section
115A.1312 must, by August 15 each year, pay to the commissioner of revenue an annual
registration fee, on a form and in a manner prescribed by the commissioner of revenue. The
commissioner of revenue must deposit the fee in the state treasury and credit the fee to the
environmental fund.

(b) The registration fee for manufacturers that sell 100 or more video display devices
to households in the state during the previous calendar year is $2,500, plus a variable
recycling fee. new text begin The registration fee for manufacturers that sell fewer than 100 video display
devices to households in the state during the previous calendar year is a variable recycling
fee. new text end The variable recycling fee is calculated according to the formula:

[A - (B + C)] x D, where:

A = the manufacturer's recycling obligation as determined under section 115A.1320;

B = the number of pounds of covered electronic devices recycled by a manufacturer
from households during the immediately preceding program year, as reported under section
115A.1316, subdivision 1;

C = the number of phase I or phase II recycling credits a manufacturer elects to use to
calculate the variable recycling fee; and

D = the estimated per-pound cost of recycling, initially set at $0.50 per pound for
manufacturers who recycle less than 50 percent of the manufacturer's recycling obligation;
$0.40 per pound for manufacturers who recycle at least 50 percent but less than 90 percent
of the manufacturer's recycling obligation; $0.30 per pound for manufacturers who recycle
at least 90 percent but less than 100 percent of the manufacturer's recycling obligation; and
$0.00 per pound for manufacturers who recycle 100 percent or more of the manufacturer's
recycling obligation.

(c) A manufacturer may petition the agency to waive the per-pound cost of recycling
fee, element D in the formula in paragraph (b), required under this section. The agency shall
direct the commissioner of revenue to waive the per-pound cost of recycling fee if the
manufacturer demonstrates to the agency's satisfaction a good faith effort to meet its recycling
obligation as determined under section 115A.1320. The petition must include:

(1) documentation that the manufacturer has met at least 75 percent of its recycling
obligation as determined under section 115A.1320;

(2) a list of political subdivisions and public and private collectors with whom the
manufacturer had a formal contract or agreement in effect during the previous program year
to recycle or collect covered electronic devices;

(3) the total amounts of covered electronic devices collected from both within and outside
of the 11-county metropolitan area, as defined in subdivision 2;

(4) a description of the manufacturer's best efforts to meet its recycling obligation as
determined under section 115A.1320; and

(5) any other information requested by the agency.

(d) A manufacturer may retain phase I and phase II recycling credits to be added, in
whole or in part, to the actual value of C, as reported under section 115A.1316, subdivision
2, during any succeeding program year, provided that no more than 25 percent of a
manufacturer's recycling obligation (A x B) for any program year may be met with phase
I and phase II recycling credits, separately or in combination, generated in a prior program
year. A manufacturer may sell any portion or all of its phase I and phase II recycling credits
to another manufacturer, at a price negotiated by the parties, who may use the credits in the
same manner.

(e) For the purpose of calculating a manufacturer's variable recycling fee under paragraph
(b), starting with the program year beginning July 1, 2019, and continuing each year
thereafter, the weight of covered electronic devices collected from households located
outside the 11-county metropolitan area, as defined in subdivision 2, paragraph (b), is
calculated at 1.5 times their actual weight.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for registration fees due after June 30,
2017.
new text end

Sec. 2.

Minnesota Statutes 2016, section 270C.171, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) If a special law grants a local government unit or group
of units the authority to impose a local tax other than sales tax, including but not limited to
taxes such as lodging, entertainment, admissions, or food and beverage taxes, and the
Department of Revenue either has agreed to or is required to administer the tax, such that
the tax is reported and paid with the chapter 297A taxes, then deleted text begin the local government unit or
group of units must adopt deleted text end each deleted text begin definition deleted text end new text begin term new text end used in the special law new text begin is defined new text end as follows:

(1) deleted text begin the definition must be identical to the definition found deleted text end new text begin as defined new text end in chapter 297A
or in Minnesota Rules, chapter 8130; or

(2) if the specific term is not defined either in chapter 297A or in Minnesota Rules,
chapter 8130, then deleted text begin the definition must be deleted text end new text begin defined new text end consistent with the position of the
Department of Revenue as to the extent of the tax base.

(b) This subdivision does not apply to terms that are defined by the authorizing special
law.

new text begin (c) This subdivision applies notwithstanding whether a local government unit or group
of units adopts consistent definitions into local law.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2016, section 298.01, subdivision 3, is amended to read:

Subd. 3.

Occupation tax; other ores.

Every person engaged in the business of mining,
refining, or producing ores, metals, or minerals in this state, except iron ore or taconite
concentrates, shall pay an occupation tax to the state of Minnesota as provided in this
subdivision. For purposes of this subdivision, mining includes the application of
hydrometallurgical processes. Hydrometallurgical processes are processes that extract the
ores, metals, or minerals, by use of aqueous solutions that leach, concentrate, and recover
the ore, metal, or mineral. The tax is determined in the same manner as the tax imposed by
section 290.02, except that sections 290.05, subdivision 1, clause (a), 290.17, subdivision
4, and 290.191, subdivision 2, do not apply, and the occupation tax must be computed by
applying to taxable income the rate of 2.45 percent. deleted text begin A person subject to occupation tax
under this section shall apportion its net income on the basis of the percentage obtained by
taking the sum of:
deleted text end

deleted text begin (1) 75 percent of the percentage which the sales made within this state in connection
with the trade or business during the tax period are of the total sales wherever made in
connection with the trade or business during the tax period;
deleted text end

deleted text begin (2) 12.5 percent of the percentage which the total tangible property used by the taxpayer
in this state in connection with the trade or business during the tax period is of the total
tangible property, wherever located, used by the taxpayer in connection with the trade or
business during the tax period; and
deleted text end

deleted text begin (3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or incurred
in this state or paid in respect to labor performed in this state in connection with the trade
or business during the tax period are of the taxpayer's total payrolls paid or incurred in
connection with the trade or business during the tax period.
deleted text end

The tax is in addition to all other taxes.

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2016, section 298.01, subdivision 4, is amended to read:

Subd. 4.

Occupation tax; iron ore; taconite concentrates.

A person engaged in the
business of mining or producing of iron ore, taconite concentrates or direct reduced ore in
this state shall pay an occupation tax to the state of Minnesota. The tax is determined in the
same manner as the tax imposed by section 290.02, except that sections 290.05, subdivision
1, clause (a), 290.17, subdivision 4, and 290.191, subdivision 2, do not apply, and the
occupation tax shall be computed by applying to taxable income the rate of 2.45 percent.
deleted text begin A person subject to occupation tax under this section shall apportion its net income on the
basis of the percentage obtained by taking the sum of:
deleted text end

deleted text begin (1) 75 percent of the percentage which the sales made within this state in connection
with the trade or business during the tax period are of the total sales wherever made in
connection with the trade or business during the tax period;
deleted text end

deleted text begin (2) 12.5 percent of the percentage which the total tangible property used by the taxpayer
in this state in connection with the trade or business during the tax period is of the total
tangible property, wherever located, used by the taxpayer in connection with the trade or
business during the tax period; and
deleted text end

deleted text begin (3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or incurred
in this state or paid in respect to labor performed in this state in connection with the trade
or business during the tax period are of the taxpayer's total payrolls paid or incurred in
connection with the trade or business during the tax period.
deleted text end

The tax is in addition to all other taxes.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2016, 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. deleted text begin The
tax is also imposed upon other iron-bearing material.
deleted text end

(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. deleted text begin The tax on other iron-bearing material shall be imposed on the
current year production.
deleted text end

new text begin (e) The tax under paragraph (a) is also imposed upon other iron-bearing material. 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.
new text end

deleted text begin (e) deleted text end new text begin (f) new text end 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.

deleted text begin (f) deleted text end new text begin (g) new text end 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.

deleted text begin (g) deleted text end new text begin (h) new text end (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. As used in this paragraph, "commercial production" is
production of more than 50,000 tons of direct reduced ore in the current year or in any prior
year, "noncommercial production" is production of 50,000 tons or less of direct reduced
ore in any year, and "direct reduced ore" is ore that results in a product that has an iron
content of at least 75 percent. 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 deleted text begin iron deleted text end new text begin ore new text end
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. 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.

(4) 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 the day following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2016, section 298.28, subdivision 2, is amended to read:

Subd. 2.

City or town where quarried or produced.

(a) 4.5 cents per gross ton of
merchantable iron ore concentrate, hereinafter referred to as "taxable ton," plus the amount
provided in paragraph (c), must be allocated to the city or town in the county in which the
lands from which taconite was mined or quarried were located or within which the
concentrate was produced. If the mining, quarrying, and concentration, or different steps
in either thereof are carried on in more than one taxing district, the commissioner shall
apportion equitably the proceeds of the part of the tax going to cities and towns among such
subdivisions upon the basis of attributing 50 percent of the proceeds of the tax to the operation
of mining or quarrying the taconite, and the remainder to the concentrating plant and to the
processes of concentration, and with respect to each thereof giving due consideration to the
relative extent of such operations performed in each such taxing district. The commissioner's
order making such apportionment shall be subject to review by the Tax Court at the instance
of any of the interested taxing districts, in the same manner as other orders of the
commissioner.

(b) new text begin (1) new text end Four cents per taxable ton shall be allocated to cities and organized townships
affected by mining because their boundaries are within three miles of a taconite mine pit
that new text begin :
new text end

new text begin (i) was actively mined by LTV Steel Mining Company in 1999; or
new text end

new text begin (ii) new text end has been actively mined in at least one of the prior three years.

new text begin (2) new text end If a city or town is located near more than one mine meeting deleted text begin these deleted text end new text begin the new text end criteria new text begin under
this paragraph new text end , the city or town is eligible to receive aid calculated from only the mine
producing the largest taxable tonnage. When more than one municipality qualifies for aid
based on one company's production, the aid must be apportioned among the municipalities
in proportion to their populations. The amounts distributed under this paragraph to each
municipality must be used for infrastructure improvement projects.

(c) The amount that would have been computed for the current year under Minnesota
Statutes 2008, section 126C.21, subdivision 4, for a school district shall be distributed to
the cities and townships within the school district in the proportion that their taxable net tax
capacity within the school district bears to the taxable net tax capacity of the school district
for property taxes payable in the year prior to distribution.

new text begin EFFECTIVE DATE. new text end

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

Sec. 7.

Minnesota Statutes 2016, section 298.28, subdivision 5, is amended to read:

Subd. 5.

Counties.

(a) 21.05 cents per taxable ton for distributions in 2015 through 2023,
and 26.05 cents per taxable ton for distributions beginning in 2024, is allocated to counties
to be distributed, based upon certification by the commissioner of revenue, under paragraphs
(b) to (d).

(b) 10.525 cents per taxable ton shall be distributed to the county in which the taconite
is mined or quarried or in which the concentrate is produced, less any amount which is to
be distributed pursuant to paragraph (c). The apportionment formula prescribed in subdivision
2 is the basis for the distribution.

(c) deleted text begin If deleted text end new text begin 1.0 cent per taxable ton of the tax distributed to the counties under paragraph (b)
shall be paid to a county that received a distribution under this section in 2000 because there
was located in the county new text end an electric power plant owned by and providing the primary source
of power for a taxpayer mining and concentrating taconite deleted text begin is located deleted text end in a new text begin different new text end county
deleted text begin other than the county in which the mining and the concentrating processes are conducted,
one cent per taxable ton of the tax distributed to the counties pursuant to paragraph (b) and
imposed on and collected from such taxpayer shall be paid to the county in which the power
plant is located deleted text end .

(d) 10.525 cents per taxable ton for distributions in 2015 through 2023, and 15.525 cents
per taxable ton for distributions beginning in 2024, shall be paid to the county from which
the taconite was mined, quarried or concentrated to be deposited in the county road and
bridge fund. If the mining, quarrying and concentrating, or separate steps in any of those
processes are carried on in more than one county, the commissioner shall follow the
apportionment formula prescribed in subdivision 2.

new text begin EFFECTIVE DATE. new text end

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

Sec. 8.

Minnesota Statutes 2016, section 469.190, subdivision 1, is amended to read:

Subdivision 1.

Authorization new text begin ; tax base new text end .

new text begin (a) new text end Notwithstanding section 477A.016 or any
other law, a statutory or home rule charter city may by ordinance, and a town may by the
affirmative vote of the electors at the annual town meeting, or at a special town meeting,
impose a tax of up to three percent on the gross receipts from the furnishing for consideration
of lodging at a hotel, motel, rooming house, tourist court, or resort, other than the renting
or leasing of it for a continuous period of 30 days or more. A statutory or home rule charter
city may by ordinance impose the tax authorized under this subdivision on the camping site
receipts of a municipal campground.

new text begin (b) Regardless of whether the tax is collected locally or by the state, the tax imposed
under this subdivision or under a special law applies to the entire consideration paid to
obtain access to lodging, including ancillary or related services, such as services provided
by an accommodations intermediary as defined in section 297A.61, and similar services.
new text end

new text begin EFFECTIVE DATE; APPLICATION. new text end

new text begin This section is effective the day following
final enactment. In enacting this section, the legislature confirms that Minnesota Statutes,
section 469.190, its predecessor provisions, and any special laws authorizing political
subdivisions to impose local lodging taxes, were and are intended to apply to the entire
consideration paid to obtain access to transient lodging, including ancillary or related services,
such as services provided by an accommodations intermediary as defined in Minnesota
Statutes, section 297A.61, and similar services. The provisions of this section must not be
interpreted to imply a narrower construction of the tax base under the lodging tax provisions
of Minnesota law prior to the enactment of this section.
new text end

Sec. 9.

Minnesota Statutes 2016, section 469.190, subdivision 7, is amended to read:

Subd. 7.

Collection.

new text begin (a) new text end The statutory or home rule charter city may agree with the
commissioner of revenue that a tax imposed pursuant to this section shall be collected by
the commissioner together with the tax imposed by chapter 297A, and subject to the same
interest, penalties, and other rules and that its proceeds, less the cost of collection, shall be
remitted to the city.

new text begin (b) If a tax under this section or a special law is not collected by the commissioner of
revenue, the local government imposing the tax may by ordinance limit the required filing
and remittance of the tax by an accommodations intermediary as defined in section 297A.61,
subdivision 47, to once every calendar year. The local government must inform the
accommodations intermediary of the date when the return or remittance is due and the date
must coincide with one of the monthly dates for filing and remitting state sales tax under
chapter 297A. The local government must also electronically provide an accommodations
intermediary with geographic and zip code information necessary to collect the tax.
new text end

new text begin EFFECTIVE DATE. new text end

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

APPENDIX

Repealed Minnesota Statutes: SF1217-1

290.9743 ELECTION BY FASIT.

An entity having a valid election as a financial asset securitization investment trust in effect for a taxable year under section 860L(a) of the Internal Revenue Code shall not be subject to the taxes imposed by this chapter, except the tax imposed under section 290.92.

290.9744 FASIT INCOME TAXABLE TO HOLDERS OF INTERESTS.

The income of a financial asset securitization investment trust is taxable to the holders of interests in the financial asset securitization investment trust as provided in sections 860H to 860L of the Internal Revenue Code. The income of the holders must be computed under the provisions of this chapter.