SF 2126

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; requiring the department of 
  1.3             revenue to notify taxpayers when tax liabilities have 
  1.4             been compromised; providing a subtraction from taxable 
  1.5             income for gains realized on disposition of certain 
  1.6             farm property; amending Minnesota Statutes 1998, 
  1.7             sections 8.30; and 290.491. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 1998, section 8.30, is 
  1.10  amended to read: 
  1.11     8.30 [COMPROMISE OF TAX CLAIMS.] 
  1.12     Subdivision 1.  [AUTHORITY.] Notwithstanding any other 
  1.13  provisions of law to the contrary, the attorney general shall 
  1.14  have authority to compromise taxes, penalties, and interest in 
  1.15  any case referred to the attorney general, whether reduced to 
  1.16  judgment or not, where, in the attorney general's opinion, it 
  1.17  shall be in the best interests of the state to do so.  
  1.18     Subd. 2.  [FORM.] A compromise of a tax debt shall be in 
  1.19  such form as the attorney general shall prescribe and shall be 
  1.20  in writing signed by the attorney general, the taxpayer or 
  1.21  taxpayer's representative, and the commissioner of revenue. 
  1.22     Subd. 3.  [NOTICE.] If the attorney general accepts an 
  1.23  offer to compromise a tax debt, the attorney general must notify 
  1.24  the taxpayer of the compromise within 30 days of the acceptance 
  1.25  and the commissioner of revenue must notify the taxpayer of the 
  1.26  release of any liens imposed under section 270.69 related to the 
  2.1   liability that is the subject of the compromise within 30 days 
  2.2   of the release of the liens. 
  2.3      Sec. 2.  Minnesota Statutes 1998, section 290.491, is 
  2.4   amended to read: 
  2.5      290.491 [TAX ON GAIN; DISCHARGE IN BANKRUPTCY.] 
  2.6      (a) Any tax due under this chapter on a gain realized on a 
  2.7   forced sale pursuant to foreclosure of a mortgage or other 
  2.8   security interest in agricultural production property, other 
  2.9   real property, or equipment, used in a farm business that was 
  2.10  owned and operated by the taxpayer shall be a dischargeable debt 
  2.11  in a bankruptcy proceeding under United States Code, title 11, 
  2.12  section 727. 
  2.13     (b) Income realized on a sale or exchange of agricultural 
  2.14  production property, other real property, or equipment, used in 
  2.15  a farm business that was owned and operated by the taxpayer 
  2.16  shall be exempt from taxation under this chapter, if the 
  2.17  taxpayer was insolvent at the time of the sale and the proceeds 
  2.18  of the sale were used solely to discharge indebtedness secured 
  2.19  by a mortgage, lien, or other security interest on the property 
  2.20  sold.  For purposes of this section, "insolvent" means insolvent 
  2.21  as defined in section 108(d)(3) of the Internal Revenue Code. 
  2.22  This paragraph applies only to the extent that the gain is 
  2.23  includable in federal taxable income or in the computation of 
  2.24  the alternative minimum taxable income under section 290.091 for 
  2.25  purposes of the alternative minimum tax.  The amount of the 
  2.26  exemption is limited to the excess of the taxpayer's (1) 
  2.27  liabilities over (2) the total assets and any exclusion claimed 
  2.28  under section 108 of the Internal Revenue Code determined 
  2.29  immediately before application of this paragraph. 
  2.30     (c) For purposes of this section, any tax due under this 
  2.31  chapter specifically includes, but is not limited to, tax 
  2.32  imposed under sections 290.02 and 290.03 on income derived from 
  2.33  a sale or exchange, whether constituting gain, discharge of 
  2.34  indebtedness or recapture of depreciation deductions, or the 
  2.35  alternative minimum tax imposed under section 290.091. 
  2.36     (d) For a person, a family farm corporation, an authorized 
  3.1   farm corporation, or an authorized livestock farm corporation, 
  3.2   gross income does not include any gain realized upon termination 
  3.3   of a contract for deed, foreclosure of a mortgage, or deed in 
  3.4   lieu of foreclosure if a foreclosure proceeding has been 
  3.5   initiated or threatened in writing on real or personal property 
  3.6   used in a farm business that was owned and operated by the 
  3.7   taxpayer as the taxpayer's principal business.  For the purposes 
  3.8   of this subdivision, real property includes any dwellings 
  3.9   located on the property and personal property includes breeding 
  3.10  stock, livestock, and farm commodities.  This modification does 
  3.11  not apply to any net cash proceeds distributed to the taxpayer 
  3.12  after discharge of the debt.  For purposes of this subdivision, 
  3.13  "family farm corporation" and "authorized farm corporation" are 
  3.14  as defined in section 500.24, subdivision 2, except that the 
  3.15  term "farming" as used in those definitions includes the 
  3.16  production of livestock, dairy animals or dairy products, 
  3.17  poultry or poultry products, fur-bearing animals, horticultural 
  3.18  and nursery stock that is covered by sections 18.44 to 18.61, 
  3.19  fruit, vegetables, forage, grain, and bees and apiary products. 
  3.20     Sec. 3.  [EFFECTIVE DATE.] 
  3.21     Section 1 is effective the day following final enactment, 
  3.22  and applies to claims compromised after June 30, 1999.  Section 
  3.23  2 is effective for taxable years beginning after December 31, 
  3.24  1997.