SF 2008

as introduced - 91st Legislature (2019 - 2020) Posted on 03/05/2019 11:52am

A bill for an act
relating to taxation; exempting certain improvements made by a qualified business;
amending Minnesota Statutes 2018, sections 116J.8738, subdivisions 2, 4; 275.025,
subdivisions 2, 4.

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

Section 1.

Minnesota Statutes 2018, section 116J.8738, subdivision 2, is amended to read:

Subd. 2.

Qualified business.

(a) A business is a qualified business if it satisfies the
requirement of this paragraph and is not disqualified under the provisions of paragraph (b).
To qualify, the business must:

(1) have operated its trade or business in deleted text begin a city or cities in greater deleted text end Minnesota for at least
one year before applying under subdivision 3;

(2) new text begin be operating its trade or business in a city or cities in greater Minnesota at the time
of applying under subdivision 3;
new text end

new text begin (3) new text end pay or agree to pay in the future each employee compensation, including benefits
not mandated by law, that on an annualized basis equal at least 120 percent of the federal
poverty level for a family of four;

deleted text begin (3) deleted text end new text begin (4) new text end plan and agree to expand its employment in one or more cities in greater Minnesota
by the minimum number of employees required under subdivision 3, paragraph (c); and

deleted text begin (4) deleted text end new text begin (5) new text end have received certification from the commissioner under subdivision 3 that it is
a qualified business.

(b) A business is not a qualified business if it is either:

(1) primarily engaged in making retail sales to purchasers who are physically present at
the business's location or locations in greater Minnesota;

(2) a public utility, as defined in section 336B.01; or

(3) primarily engaged in lobbying; gambling; entertainment; professional sports; political
consulting; leisure; hospitality; or professional services provided by attorneys, accountants,
business consultants, physicians, or health care consultants.

(c) The requirements in paragraph (a) that the business's operations and expansion be
located in a city do not apply to an agricultural processing facility or a project designed to
qualify under section 41A.20.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2019.
new text end

Sec. 2.

Minnesota Statutes 2018, section 116J.8738, subdivision 4, is amended to read:

Subd. 4.

Available tax incentives.

new text begin (a) new text end A qualified business is entitled to a sales tax
exemption, up to $5,000,000 annually and $40,000,000 during the total period of the
agreement, as provided in section 297A.68, subdivision 44, for purchases made during the
period the business was certified as a qualified business under this section. The commissioner
has discretion to set the maximum amounts of the annual and total sales tax exemption
allowed for each qualifying business as part of the business subsidy agreement.

new text begin (b) Any improvements to real property owned or leased by a qualified business during
the period the business is certified as a qualified business under this section is not subject
to the state general tax under section 275.025, provided that the improvement is used in the
conduct of the trade or business of the qualified business.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessments beginning in 2019.
new text end

Sec. 3.

Minnesota Statutes 2018, section 275.025, subdivision 2, is amended to read:

Subd. 2.

Commercial-industrial tax capacity.

For the purposes of this section,
"commercial-industrial tax capacity" means the tax capacity of all taxable property classified
as class 3 or class 5(1) under section 273.13, excluding:

(1) the tax capacity attributable to the first $100,000 of market value of each parcel of
commercial-industrial property as defined under section 273.13, subdivision 24, clauses (1)
and (2);

(2) electric generation attached machinery under class 3; deleted text begin and
deleted text end

(3) property described in section 473.625 deleted text begin . deleted text end new text begin ; and
new text end

new text begin (4) property described in section 116J.8738, subdivision 4, paragraph (b).
new text end

County commercial-industrial tax capacity amounts are not adjusted for the captured
net tax capacity of a tax increment financing district under section 469.177, subdivision 2,
the net tax capacity of transmission lines deducted from a local government's total net tax
capacity under section 273.425, or fiscal disparities contribution and distribution net tax
capacities under chapter 276A or 473F. For purposes of this subdivision, the procedures
for determining eligibility for tier 1 under section 273.13, subdivision 24, clauses (1) and
(2), shall apply in determining the portion of a property eligible to be considered within the
first $100,000 of market value.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessments beginning in 2019.
new text end

Sec. 4.

Minnesota Statutes 2018, section 275.025, subdivision 4, is amended to read:

Subd. 4.

Apportionment and levy of state general tax.

The state general tax must be
levied by applying a uniform rate to all commercial-industrial tax capacity and a uniform
rate to all seasonal residential recreational tax capacity. new text begin The commercial-industrial share of
the levy must be reduced by a fraction equal to the tax capacity of property defined under
section 116J.8738, subdivision 4, paragraph (b), divided by the sum of (1) total statewide
commercial-industrial tax capacity, plus (2) the tax capacity of property defined under
section 116J.8738, subdivision 4, paragraph (b). new text end On or before October 1 each year, the
commissioner of revenue shall certify the preliminary state general levy rates to each county
auditor that must be used to prepare the notices of proposed property taxes for taxes payable
in the following year. By January 1 of each year, the commissioner shall certify the final
state general levy rates to each county auditor that shall be used in spreading taxes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2020.
new text end