Engrossments
Introduction		Posted on 03/12/2019

A bill for an act
relating to taxation; providing conformity and nonconformity to certain federal
tax law changes; modifying individual income and corporate franchise taxes, sales
and use taxes, property taxes, local government aids, tobacco taxes, special taxes,
and other miscellaneous taxes and tax provisions; expanding and increasing working
family credit; expanding and modifying threshold for social security subtraction;
modifying the qualified data center exemption; changing qualification and
application provisions for the senior property tax deferral program; providing a
riparian buffer credit; providing an increase to local government aid and county
program aid; reinstating the inflator for the state general levy; reinstating the annual
indexing for the cigarette tax; reinstating a higher rate for premium cigars;
eliminating the increase in the estate tax exclusion amount; modifying sales tax
exemptions for local governments and nonprofits; appropriating money; amending
Minnesota Statutes 2018, sections 116J.8737, subdivisions 1, 2, 3, 4, 5, 6, 12;
270A.03, subdivision 5; 272.115, subdivision 1; 273.124, subdivisions 13, 13c,
13d, 14; 273.1245, subdivision 1; 273.13, subdivision 35; 273.1315, subdivision
2; 273.1384, subdivision 2; 273.1392; 273.1393; 275.025, subdivision 1; 275.065,
subdivision 3; 276.04, subdivision 2; 287.21, subdivision 1; 289A.08, subdivisions
1, 7; 289A.10, subdivision 1; 289A.11, by adding a subdivision; 289A.20, by
adding a subdivision; 289A.60, subdivision 29; 290.01, subdivisions 29a, 31, by
adding subdivisions; 290.0131, subdivisions 1, 3, 12, 13, by adding subdivisions;
290.0132, subdivisions 1, 7, 20, 26, by adding subdivisions; 290.0133, subdivision
6; 290.032, subdivision 2; 290.05, subdivision 3; 290.06, subdivisions 2c, 2d, 2h;
290.0671, subdivisions 1, 7; 290.0672, subdivision 2; 290.0681, subdivisions 3,
4; 290.0684, subdivision 2; 290.0802, subdivision 2; 290.091, subdivision 3;
290.0921, subdivisions 1, 8; 290.0922, subdivision 1; 290.095, subdivision 2;
290.21, by adding a subdivision; 290.92, subdivision 1; 290A.03, subdivision 12;
290A.04, subdivision 4; 290B.03, subdivision 1; 290B.04, subdivision 1; 291.016,
subdivision 3; 297A.66; 297A.68, subdivisions 25, 42; 297A.71, by adding a
subdivision; 297A.75, subdivisions 1, 2, 3; 297A.83, subdivision 1; 297B.03;
297F.01, subdivision 13a; 297F.05, subdivisions 3a, 4a, by adding a subdivision;
469.316, subdivision 1; 477A.03, subdivisions 2a, 2b; Minnesota Statutes 2019
Supplement, sections 289A.02, subdivision 7; 289A.12, subdivision 14; 289A.35;
290.01, subdivision 19; 290.0131, subdivision 10; 290.0132, subdivision 21;
290.0133, subdivision 12; 290.067, subdivision 2b; 290.0672, subdivision 1;
290.0681, subdivisions 1, 2; 290.0684, subdivisions 1, 2; 290.091, subdivision 2;
290.17, subdivision 2; 290A.03, subdivision 15; 291.005, subdivision 1; 462D.06,
subdivisions 1, 2; proposing coding for new law in Minnesota Statutes, chapters
273; 290; repealing Minnesota Statutes 2018, sections 290.0131, subdivisions 7,
11; 290.0133, subdivisions 13, 14; 290.10, subdivision 2.

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

ARTICLE 1

FEDERAL RESPONSE

Section 1.

Minnesota Statutes 2018, section 270A.03, subdivision 5, is amended to read:

Subd. 5.

Debt; debtor.

(a) "Debt" means a legal obligation of a natural person to pay a
fixed and certain amount of money, which equals or exceeds $25 and which is due and
payable to a claimant agency. The term includes criminal fines imposed under section 609.10
or 609.125, fines imposed for petty misdemeanors as defined in section 609.02, subdivision
4a, and restitution. A debt may arise under a contractual or statutory obligation, a court
order, or other legal obligation, but need not have been reduced to judgment.

A debt includes any legal obligation of a current recipient of assistance which is based
on overpayment of an assistance grant where that payment is based on a client waiver or
an administrative or judicial finding of an intentional program violation; or where the debt
is owed to a program wherein the debtor is not a client at the time notification is provided
to initiate recovery under this chapter and the debtor is not a current recipient of food support,
transitional child care, or transitional medical assistance.

(b) A debt does not include any legal obligation to pay a claimant agency for medical
care, including hospitalization if the income of the debtor at the time when the medical care
was rendered does not exceed the following amount:

(1) for an unmarried debtor, an income of $12,560 or less;

(2) for a debtor with one dependent, an income of $16,080 or less;

(3) for a debtor with two dependents, an income of $19,020 or less;

(4) for a debtor with three dependents, an income of $21,580 or less;

(5) for a debtor with four dependents, an income of $22,760 or less; and

(6) for a debtor with five or more dependents, an income of $23,730 or less.

For purposes of this paragraph, "debtor" means the individual whose income, together
with the income of the individual's spouse, other than a separated spouse, brings the
individual within the income provisions of this paragraph. For purposes of this paragraph,
a spouse, other than a separated spouse, shall be considered a dependent.

(c) The commissioner shall adjust the income amounts in paragraph (b) by the percentage
determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, new text begin as
amended through December 16, 2016, new text end except that in section 1(f)(3)(B) the word "2014"
shall be substituted for the word "1992." For 2016, the commissioner shall then determine
the percent change from the 12 months ending on August 31, 2014, to the 12 months ending
on August 31, 2015, and in each subsequent year, from the 12 months ending on August
31, 2014, to the 12 months ending on August 31 of the year preceding the taxable year. The
determination of the commissioner pursuant to this subdivision shall not be considered a
"rule" and shall not be subject to the Administrative Procedure Act contained in chapter 14.
The income amount as adjusted must be rounded to the nearest $10 amount. If the amount
ends in $5, the amount is rounded up to the nearest $10 amount.

(d) Debt also includes an agreement to pay a MinnesotaCare premium, regardless of the
dollar amount of the premium authorized under section 256L.15, subdivision 1a.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 21, 2017.
new text end

Sec. 2.

Minnesota Statutes 2018, section 289A.02, subdivision 7, is amended to read:

Subd. 7.

Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2018, section 289A.08, subdivision 1, is amended to read:

Subdivision 1.

Generally; individuals.

(a) A taxpayer must file a return for each taxable
year the taxpayer is required to file a return under section 6012 of the Internal Revenue
Codenew text begin or meets the requirements under paragraph (d) to file a returnnew text end , except that:

(1) an individual who is not a Minnesota resident for any part of the year is not required
to file a Minnesota income tax return if the individual's gross income derived from Minnesota
sources as determined under sections 290.081, paragraph (a), and 290.17, is less than the
filing requirements for a single individual who is a full year resident of Minnesota; deleted text begin and
deleted text end

(2) an individual who is a Minnesota resident is not required to file a Minnesota income
tax return if the individual's gross income derived from Minnesota sources as determined
under section 290.17, less the subtractions allowed under section 290.0132, subdivisions
12 and 15, is less than the filing requirements for a single individual who is a full-year
resident of Minnesota.

(b) The decedent's final income tax return, and other income tax returns for prior years
where the decedent had gross income in excess of the minimum amount at which an
individual is required to file and did not file, must be filed by the decedent's personal
representative, if any. If there is no personal representative, the return or returns must be
filed by the transferees, as defined in section 270C.58, subdivision 3, who receive property
of the decedent.

(c) The term "gross income," as it is used in this section, has the same meaning given it
in section 290.01, subdivision 20.

new text begin (d) The commissioner of revenue must annually determine the gross income levels at
which individuals are required to file a return for each taxable year based on the amounts
that may be deducted pursuant to the election under section 290.0803 and the personal and
dependent exemptions under section 290.0138, subdivision 1.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 4.

Minnesota Statutes 2018, section 289A.08, subdivision 7, is amended to read:

Subd. 7.

Composite income tax returns for nonresident partners, shareholders, and
beneficiaries.

(a) The commissioner may allow a partnership with nonresident partners to
file a composite return and to pay the tax on behalf of nonresident partners who have no
other Minnesota source income. This composite return must include the names, addresses,
Social Security numbers, income allocation, and tax liability for the nonresident partners
electing to be covered by the composite return.

(b) The computation of a partner's tax liability must be determined by multiplying the
income allocated to that partner by the highest rate used to determine the tax liability for
individuals under section 290.06, subdivision 2c. Nonbusiness deductions, standard
deductions, or personal exemptions are not allowed.

(c) The partnership must submit a request to use this composite return filing method for
nonresident partners. The requesting partnership must file a composite return in the form
prescribed by the commissioner of revenue. The filing of a composite return is considered
a request to use the composite return filing method.

(d) The electing partner must not have any Minnesota source income other than the
income from the partnership and other electing partnerships. If it is determined that the
electing partner has other Minnesota source income, the inclusion of the income and tax
liability for that partner under this provision will not constitute a return to satisfy the
requirements of subdivision 1. The tax paid for the individual as part of the composite return
is allowed as a payment of the tax by the individual on the date on which the composite
return payment was made. If the electing nonresident partner has no other Minnesota source
income, filing of the composite return is a return for purposes of subdivision 1.

(e) This subdivision does not negate the requirement that an individual pay estimated
tax if the individual's liability would exceed the requirements set forth in section 289A.25.
The individual's liability to pay estimated tax is, however, satisfied when the partnership
pays composite estimated tax in the manner prescribed in section 289A.25.

(f) If an electing partner's share of the partnership's gross income from Minnesota sources
is less than the filing requirements for a nonresident under this subdivision, the tax liability
is zero. However, a statement showing the partner's share of gross income must be included
as part of the composite return.

(g) The election provided in this subdivision is only available to a partner who has no
other Minnesota source income and who is either (1) a full-year nonresident individual or
(2) a trust or estate that does not claim a deduction under either section 651 or 661 of the
Internal Revenue Code.

(h) A corporation defined in section 290.9725 and its nonresident shareholders may
make an election under this paragraph. The provisions covering the partnership apply to
the corporation and the provisions applying to the partner apply to the shareholder.

(i) Estates and trusts distributing current income only and the nonresident individual
beneficiaries of the estates or trusts may make an election under this paragraph. The
provisions covering the partnership apply to the estate or trust. The provisions applying to
the partner apply to the beneficiary.

(j) For the purposes of this subdivision, "income" means the partner's share of federal
adjusted gross income from the partnership modified by the additions provided in section
290.0131, subdivisions 8 to deleted text begin 11deleted text end new text begin 10 and 17new text end , and the subtractions provided in: (1) section
290.0132, subdivision 9, to the extent the amount is assignable or allocable to Minnesota
under section 290.17; and (2) section 290.0132, subdivision 14. The subtraction allowed
under section 290.0132, subdivision 9, is only allowed on the composite tax computation
to the extent the electing partner would have been allowed the subtraction.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 5.

Minnesota Statutes 2018, section 289A.12, subdivision 14, is amended to read:

Subd. 14.

Reporting exempt interest and exempt-interest dividends.

(a) A regulated
investment company paying $10 or more in exempt-interest dividends to an individual who
is a resident of Minnesota, or any person receiving $10 or more of exempt interest or
exempt-interest dividends and paying as nominee to an individual who is a resident of
Minnesota, must make a return indicating the amount of the exempt interest or
exempt-interest dividends, the name, address, and Social Security number of the recipient,
and any other information that the commissioner specifies. The return must be provided to
the recipient by February 15 of the year following the year of the payment. The return
provided to the recipient must include a clear statement, in the form prescribed by the
commissioner, that the exempt interest or exempt-interest dividends must be included in
the computation of Minnesota taxable income. By June 1 of each year, the payer must file
a copy of the return with the commissioner.

(b) For purposes of this subdivision, the following definitions apply.

(1) "Exempt-interest dividends" mean exempt-interest dividends as defined in section
852(b)(5) of the Internal Revenue Code, but does not include the portion of exempt-interest
dividends that are not required to be added to federal deleted text begin taxabledeleted text end new text begin adjusted grossnew text end income under
section 290.0131, subdivision 2, paragraph (b).

(2) "Regulated investment company" means regulated investment company as defined
in section 851(a) of the Internal Revenue Code or a fund of the regulated investment company
as defined in section 851(g) of the Internal Revenue Code.

(3) "Exempt interest" means income on obligations of any state other than Minnesota,
or a political or governmental subdivision, municipality, or governmental agency or
instrumentality of any state other than Minnesota, and exempt from federal income taxes
under the Internal Revenue Code or any other federal statute.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 6.

Minnesota Statutes 2018, section 289A.20, is amended by adding a subdivision to
read:

new text begin Subd. 1a. new text end

new text begin Tax on deferred foreign income; election to pay in installments. new text end

new text begin (a) A
taxpayer subject to tax under section 290.06, subdivision 1, may elect to pay the net tax
liability on the deferred foreign income in installments in the same percentages of the net
tax liability for each taxable year as provided in section 965(h)(1) of the Internal Revenue
Code. Payment of an installment for a taxable year is due on the due date, determined without
regard to any extensions of time for filing the return, for the tax return for that taxable year.
new text end

new text begin (b) If an acceleration of payment applies for federal income tax purposes under section
965(h)(3) of the Internal Revenue Code, the unpaid portion of the remaining installments
due under chapter 290 must be paid on the same date as the federal tax is due. Assessment
of deficiencies must be prorated as provided under section 965(h)(4) of the Internal Revenue
Code.
new text end

new text begin (c) For purposes of determining date and time limits under sections 270C.62, 270C.63,
270C.67, and 270C.68, the date on which an installment is due under paragraph (a), including
any acceleration under paragraph (b), must be treated as the assessment date, due date, or
other date from which the time limit must be determined for that payment.
new text end

new text begin (d) For purposes of this subdivision, "net tax liability" means the excess of:
new text end

new text begin (1) the tax liability, determined under chapter 290, for the taxable year in which the
deferred foreign income was includable in federal taxable income; over
new text end

new text begin (2) the tax liability, determined under chapter 290, for that taxable year computed after
excluding the deferred foreign income under section 965 of the Internal Revenue Code.
new text end

new text begin (e) If a taxpayer has not made the first installment payment under paragraph (a), the
taxpayer must pay the first installment payment at the same time and due date as the second
installment payment. For purposes of paragraph (c), payments under this paragraph are
deemed to be due at the same time the second installment is due.
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, 2016.
new text end

Sec. 7.

Minnesota Statutes 2018, section 289A.35, is amended to read:

289A.35 ASSESSMENTS ON RETURNS.

(a) The commissioner may audit and adjust the taxpayer's computation of new text begin federal adjusted
gross income, new text end federal taxable income, items of federal tax preferences, or federal credit
amounts to make them conform with the provisions of chapter 290 or section 298.01. If a
return has been filed, the commissioner shall enter the liability reported on the return and
may make any audit or investigation that is considered necessary.

(b) Upon petition by a taxpayer, and when the commissioner determines that it is in the
best interest of the state, the commissioner may allow S corporations and partnerships to
receive orders of assessment issued under section 270C.33, subdivision 4, on behalf of their
owners, and to pay liabilities shown on such orders. In such cases, the owners' liability must
be calculated using the method provided in section 289A.08, subdivision 7, paragraph (b).

(c) A taxpayer may petition the commissioner for the use of the method described in
paragraph (b) after the taxpayer is notified that an audit has been initiated and before an
order of assessment has been issued.

(d) A determination of the commissioner under paragraph (b) to grant or deny the petition
of a taxpayer cannot be appealed to the Tax Court or any other court.

(e) The commissioner may audit and adjust the taxpayer's computation of tax under
chapter 291. In the case of a return filed pursuant to section 289A.10, the commissioner
shall notify the estate no later than nine months after the filing date, as provided by section
289A.38, subdivision 2, whether the return is under examination or the return has been
processed as filed.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 8.

Minnesota Statutes 2018, section 290.01, is amended by adding a subdivision to
read:

new text begin Subd. 3c. new text end

new text begin Determination of marital status. new text end

new text begin The determination of marital status is made
by section 7703 of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 9.

Minnesota Statutes 2018, section 290.01, is amended by adding a subdivision to
read:

new text begin Subd. 14a. new text end

new text begin Surviving spouse. new text end

new text begin The term "surviving spouse" means an individual who is
a surviving spouse under section 2(a) of the Internal Revenue Code for the taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 10.

Minnesota Statutes 2018, section 290.01, subdivision 19, is amended to read:

Subd. 19.

Net income.

new text begin (a) For a trust or estate taxable under section 290.03, and a
corporation taxable under section 290.02, new text end 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.

new text begin (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.
new text end

new text begin (c) new text end 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.

new text begin (d) new text end 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.

new text begin (e) new text end 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.

new text begin (f) new text end The Internal Revenue Code of 1986, as amended through deleted text begin December 16, 2016deleted text end new text begin
December 31, 2018new text end , shall be in effect for taxable years beginning after December 31, 1996.

new text begin (g) new text end 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 (a) The amendments to paragraphs (a) and (b) are effective for
taxable years beginning after December 31, 2018.
new text end

new text begin (b) The amendment to paragraph (f) is effective the day following final enactment, except
the changes incorporated by federal changes are effective retroactively at the same time as
the changes became effective for federal purposes.
new text end

Sec. 11.

Minnesota Statutes 2018, section 290.01, is amended by adding a subdivision to
read:

new text begin Subd. 19i. new text end

new text begin Deferred foreign income. new text end

new text begin "Deferred foreign income" means the income of
a domestic corporation that is included in net income under section 965 of the Internal
Revenue Code, exclusive of the deduction allowed under section 965(c) of the Internal
Revenue Code.
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, 2016.
new text end

Sec. 12.

Minnesota Statutes 2018, section 290.01, is amended by adding a subdivision to
read:

new text begin Subd. 21a. new text end

new text begin Adjusted gross income; federal adjusted gross income. new text end

new text begin The terms "adjusted
gross income" and "federal adjusted gross income" mean adjusted gross income, as defined
in section 62 of the Internal Revenue Code, as amended through the date named in
subdivision 19, incorporating the federal effective date of changes to the Internal Revenue
Code and any elections made by the taxpayer under the Internal Revenue Code in determining
federal adjusted gross income for federal income tax purposes.
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. 13.

Minnesota Statutes 2018, section 290.01, subdivision 29a, is amended to read:

Subd. 29a.

State itemized deduction.

new text begin (a) new text end "State itemized deduction" means deleted text begin federal
itemized deductions, as defined in section 63(d) of the Internal Revenue Code, disregarding
any limitation under section 68 of the Internal Revenue Code, and reduced by the amount
of the addition required under section 290.0131, subdivision 13deleted text end new text begin the individual itemized
deductions for individual income tax listed in section 290.0139new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 14.

Minnesota Statutes 2018, 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 deleted text begin December
16, 2016deleted text end new text begin December 31, 2018new text end . 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 law.

new text begin EFFECTIVE DATE. new text end

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

Sec. 15.

Minnesota Statutes 2018, section 290.0131, subdivision 1, is amended to read:

Subdivision 1.

Definition; scope.

(a) For the purposes of this section, "addition" means
an amount that must be added to federal taxable income new text begin in the case of a trust or an estate
or federal adjusted gross income in the case of an individual new text end in computing net income for
the taxable year to which the amounts relate.

(b) The additions in this section apply to individuals, estates, and trusts.

(c) Unless specifically indicated or unless the context clearly indicates otherwise, only
amounts that were deducted or excluded in computing federal taxable income new text begin in the case
of a trust or an estate or federal adjusted gross income in the case of individuals new text end are an
addition under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 16.

Minnesota Statutes 2018, section 290.0131, subdivision 3, is amended to read:

Subd. 3.

Income, sales and use, motor vehicle sales, or excise taxes paid.

deleted text begin (a)deleted text end new text begin For trusts
and estates,new text end the amount of income, sales and use, motor vehicle sales, or excise taxes paid
or accrued within the taxable year under this chapter and the amount of taxes based on net
income, sales and use, motor vehicle sales, or excise taxes paid to any other state or to any
province or territory of Canada is an addition to the extent deducted under section 63(d) of
the Internal Revenue Code.

deleted text begin (b) The addition under paragraph (a) may not be more than the amount by which the
state itemized deduction exceeds the amount of the standard deduction as defined in section
63(c) of the Internal Revenue Code. For the purpose of this subdivision, income, sales and
use, motor vehicle sales, or excise taxes are the last itemized deductions disallowed under
subdivision 12.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 17.

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

Subd. 10.

Section 179 expensing.

new text begin For property placed in service in taxable years
beginning before January 1, 2018, new text end 80 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. 18.

Minnesota Statutes 2018, section 290.0131, subdivision 12, is amended to read:

Subd. 12.

Disallowed itemized deductions.

(a) The amount of disallowed itemized
deductions is an addition. The amount of disallowed itemized deductionsdeleted text begin , plus the addition
required under subdivision 3,deleted text end may not be more than the amount by which thenew text begin statenew text end itemized
deductionsdeleted text begin , as allowed under section 63(d) of the Internal Revenue Code,deleted text end exceeds the amount
of the new text begin state new text end standard deduction deleted text begin as defined in section 63(c) of the Internal Revenue Codedeleted text end .

(b) The amount of disallowed itemized deductions is equal to the lesser of:

(1) three percent of the excess of the taxpayer's federal adjusted gross income over the
applicable amount; or

(2) 80 percent of the amount of the new text begin state new text end itemized deductions otherwise allowable to the
taxpayer under deleted text begin the Internal Revenue Codedeleted text end new text begin section 290.0139new text end for the taxable year.

(c) "Applicable amount" means $100,000, or $50,000 for a married individual filing a
separate return. Each dollar amount is increased by an amount equal to:

(1) that dollar amount, multiplied by

(2) the cost-of-living adjustment determined under section 1(f)(3) of the Internal Revenue
Codenew text begin , as amended through December 16, 2016,new text end for the calendar year in which the taxable
year begins, by substituting "calendar year 1990" for "calendar year 1992" in subparagraph
(B) of section 1(f)(3).

(d) "Itemized deductions" excludes:

(1) the deduction for medical expenses under section deleted text begin 213 of the Internal Revenue Codedeleted text end new text begin
290.0139, subdivision 2new text end ;

(2) any deduction for investment interest as defined in section 163(d) of the Internal
Revenue Code; and

(3) the deduction under section deleted text begin 165(a) of the Internal Revenue Codedeleted text end new text begin 290.0139,
subdivision 7,new text end for casualty or theft losses described in paragraph (2) or (3) of section 165(c)
of the Internal Revenue Code or for losses described in section 165(d) of the Internal Revenue
Code.

new text begin EFFECTIVE DATE. new text end

new text begin (a) The amendments to paragraphs (a), (b), and (d) are effective
for taxable years beginning after December 31, 2018.
new text end

new text begin (b) The amendment to paragraph (c) is effective retroactively for taxable years beginning
after December 31, 2017.
new text end

Sec. 19.

Minnesota Statutes 2018, section 290.0131, subdivision 13, is amended to read:

Subd. 13.

Disallowed personal exemption amount.

(a) The amount of disallowed
personal exemptions for taxpayers with federal adjusted gross income over the threshold
amount is an addition.

(b) The disallowed personal exemption amount is equal to the deleted text begin number ofdeleted text end personal
deleted text begin exemptionsdeleted text end new text begin and dependent exemption subtractionnew text end allowed under section deleted text begin 151(b) and (c) of
the Internal Revenue Codedeleted text end new text begin 290.0132, subdivision 20,new text end multiplied by the deleted text begin dollar amount for
personal exemptions under section 151(d)(1) and (2) of the Internal Revenue Code, as
adjusted for inflation by section 151(d)(4) of the Internal Revenue Code, and by thedeleted text end
applicable percentage.

(c) For a married individual filing a separate return, "applicable percentage" means two
percentage points for each $1,250, or fraction of that amount, by which the taxpayer's federal
adjusted gross income for the taxable year exceeds the threshold amount. For all other filers,
applicable percentage means two percentage points for each $2,500, or fraction of that
amount, by which the taxpayer's federal adjusted gross income for the taxable year exceeds
the threshold amount. The applicable percentage must not exceed 100 percent.

(d) "Threshold amount" means:

(1) $150,000 for a joint return or a surviving spouse;

(2) $125,000 for a head of a household;

(3) $100,000 for an individual who is not married and who is not a surviving spouse or
head of a household; and

(4) $75,000 for a married individual filing a separate return.

(e) The thresholds must be increased by an amount equal to:

(1) the threshold dollar amount, multiplied by

new text begin EFFECTIVE DATE. new text end

new text begin (a) The amendment to paragraph (b) is effective for taxable years
beginning after December 31, 2018.
new text end

new text begin (b) The amendment to paragraph (e) is effective retroactively for taxable years beginning
after December 31, 2017.
new text end

Sec. 20.

Minnesota Statutes 2018, section 290.0131, is amended by adding a subdivision
to read:

new text begin Subd. 15. new text end

new text begin 529 plan addition. new text end

new text begin (a) The definitions under sections 290.06, subdivision 2h,
and 290.0684, apply for the purposes of this subdivision.
new text end

new text begin (b) The amount of a distribution attributed to gain from a qualified account that is not
used to pay qualified higher education expenses as defined in section 290.0684, subdivision
1, paragraph (e), is an addition to the distributee to the extent it is not included in federal
taxable income.
new text end

new text begin (c) The amount of distribution attributed to gain is determined by:
new text end

new text begin (1) the total amount of contributions minus any distributions made for qualified higher
education expenses made prior to the distribution that was not used to pay qualified higher
education expenses;
new text end

new text begin (2) divided by account value on the date of the distribution;
new text end

new text begin (3) multiplied by the amount of the distribution;
new text end

new text begin (4) the result of which is then subtracted from the amount of the distribution.
new text end

new text begin (d) "Distributee" means the person who received the benefit of the distribution, but in
the case of a dependent as defined under section 152 of the Internal Revenue Code, the
distributee is the taxpayer who claims the dependent under section 151 of the Internal
Revenue Code.
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, 2017.
new text end

Sec. 21.

Minnesota Statutes 2018, section 290.0131, is amended by adding a subdivision
to read:

new text begin Subd. 16. new text end

new text begin Section 199A addition. new text end

new text begin For trusts and estates, the amount deducted under
section 199A of the Internal Revenue Code in computing the trust or estate's federal taxable
income is an addition.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 22.

Minnesota Statutes 2018, section 290.0132, subdivision 1, is amended to read:

Subdivision 1.

Definition; scope.

(a) For the purposes of this section, "subtraction"
means an amount that shall be subtracted from federal taxable income new text begin in the case of a trust
or an estate or federal adjusted gross income in the case of an individual new text end in computing net
income for the taxable year to which the amounts relate.

(b) The subtractions in this section apply to individuals, estates, and trusts.

(c) Unless specifically indicated or unless the context clearly indicates otherwise, no
amount deducted, subtracted, or otherwise excluded in computing federal taxable income
new text begin in the case of a trust or an estate or federal adjusted gross income in the case of an individual
new text end is a subtraction under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 23.

Minnesota Statutes 2018, section 290.0132, subdivision 7, is amended to read:

Subd. 7.

Charitable contributions for taxpayers who do not itemize.

deleted text begin To the extent
not deducted or not deductible under section 408(d)(8)(E) of the Internal Revenue Code in
determining federal taxable income bydeleted text end new text begin Fornew text end an individual who does not new text begin elect to new text end itemize
deductions deleted text begin for federal income tax purposesdeleted text end new text begin under section 290.0803new text end for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section deleted text begin 170(a) of the Internal Revenue Codedeleted text end new text begin
290.0139, subdivision 5,new text end is a subtraction.new text begin 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 end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 24.

Minnesota Statutes 2018, section 290.0132, subdivision 20, is amended to read:

Subd. 20.

deleted text begin Disalloweddeleted text end Personal new text begin and dependent new text end exemption.

deleted text begin The amount of the phaseout
of personal exemptions under section 151(d) of the Internal Revenue Code is a subtraction. deleted text end new text begin
The amount of personal and dependent exemptions calculated under section 290.0138 is a
subtraction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 25.

Minnesota Statutes 2018, section 290.0132, subdivision 21, is amended to read:

Subd. 21.

Military service pension; retirement pay.

To the extent included in federal
deleted text begin taxabledeleted text end new text begin adjusted grossnew text end 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 is limited to individuals who do not claim the credit under section 290.0677.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 26.

Minnesota Statutes 2018, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 27. new text end

new text begin Moving expenses. new text end

new text begin Moving expenses that qualify as a deduction under section
217(a) through (f) of the Internal Revenue Code to the extent the expenses are not deducted
in the computation of federal adjusted gross income is a subtraction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 27.

Minnesota Statutes 2018, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 28. new text end

new text begin Standard or itemized deduction. new text end

new text begin The amount allowed under section 290.0138
or 290.0139, as elected under section 290.0803, is a subtraction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 28.

Minnesota Statutes 2018, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 29. new text end

new text begin Deferred foreign income of nonresidents. new text end

new text begin In the case of a nonresident
individual the amount of deferred foreign income as defined in section 290.01, subdivision
19, is a subtraction.
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, 2016.
new text end

Sec. 29.

Minnesota Statutes 2018, section 290.0133, subdivision 6, is amended to read:

Subd. 6.

Special deductions.

new text begin (a) new text end The amount of any special deductions under sections
241 to 247 and 965new text begin , except paragraph (h) of section 965,new text end of the Internal Revenue Code is
an addition.

new text begin (b) The addition under this subdivision is reduced by the amount of the deduction under
section 245A of the Internal Revenue Code equal to any amount included in federal taxable
income in a prior taxable year under section 965 of the Internal Revenue Code.
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, 2016.
new text end

Sec. 30.

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

Subd. 12.

Section 179 expensing.

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. 31.

new text begin [290.0138] PERSONAL AND DEPENDENT EXEMPTIONS; STANDARD
DEDUCTION.
new text end

new text begin Subdivision 1. new text end

new text begin Personal and dependent exemptions. new text end

new text begin (a) A taxpayer is allowed a
subtraction from federal adjusted gross income equal to:
new text end

new text begin (1) a personal exemption in the amount of $4,250, and in the case of a married couple
filing a joint return or a surviving spouse an additional personal exemption of $4,250; plus
new text end

new text begin (2) a dependent exemption of $4,250 multiplied by the number of dependents of the
taxpayer, as defined under sections 151 and 152 of the Internal Revenue Code.
new text end

new text begin (b) The personal and dependent exemptions are not allowed to an individual who is
eligible to be claimed as a dependent, as defined in sections 151 or 152 of the Internal
Revenue Code, by another taxpayer.
new text end

new text begin Subd. 2. new text end

new text begin Standard deduction. new text end

new text begin (a) In addition to the exemptions allowed under
subdivision 1, an individual is allowed a standard deduction as provided in this subdivision.
new text end

new text begin (b) The standard deduction is equal to:
new text end

new text begin (1) for married filing jointly or surviving spouse, $13,000;
new text end

new text begin (2) for a head of household, $9,750; or
new text end

new text begin (3) for any other taxpayer, $6,650.
new text end

new text begin (c) Taxpayers who are elderly or blind are entitled to an additional standard deduction
amount equal to:
new text end

new text begin (1) $1,300 if the taxpayer has attained age 65 before the close of the taxable year, plus
$1,300 for the spouse of the taxpayer if the spouse has obtained age 65 before the close of
the taxable year and meets the requirements of section 151(b) of the Internal Revenue Code;
new text end

new text begin (2) $1,300, if the taxpayer is blind before the close of the taxable year, plus $1,300 for
the spouse of the taxpayer if the spouse is blind as of the close of the taxable year and meets
the requirements of section 151(b) of the Internal Revenue Code. If the spouse dies during
the taxable year, the determination of whether the spouse is blind shall be made as of the
time of the death of the spouse; or
new text end

new text begin (3) In the case if an individual who is not married and is not a surviving spouse, $1,650
if the taxpayer has attained the age of 65 before the close of the taxable year and $1,650 if
the taxpayer has not attained the age of 65 before the close of the taxable year.
new text end

new text begin (d) For purposes of paragraph (c), an individual is blind only if the taxpayer's central
visual acuity does not exceed 20/200 in the better eye with correcting lenses, or if the
taxpayer's visual acuity is greater than 20/200 but is accompanied by a limitation in the
fields of vision such that the widest diameter of the visual field subtends an angle no greater
than 20 degrees.
new text end

new text begin (e) The standard deduction under this section for an individual that is a dependent under
section 151 of the Internal Revenue Code for a taxable year beginning in the calendar year
in which the individual's tax year begins, must not exceed the greater of:
new text end

new text begin (1) $1,100; or
new text end

new text begin (2) the sum of $350 plus the amount of earned income of the individual, but in no case
may the individual's standard deduction exceed $6,650.
new text end

new text begin (f) A taxpayer who is not eligible for the standard deduction under section 63(b)(6) of
the Internal Revenue Code, is not eligible for a standard deduction under this section.
new text end

new text begin Subd. 3. new text end

new text begin Itemized deductions. new text end

new text begin In lieu of the standard deduction in subdivision 2, a
taxpayer may elect under section 290.0803 to take state itemized deductions as allowed
under section 290.0139.
new text end

new text begin Subd. 4. new text end

new text begin Cost-of-living adjustment. new text end

new text begin For taxable years beginning after December 31,
2018, the commissioner shall annually adjust the amounts in subdivisions 1 and 2 by the
percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue
Code as amended through December 16, 2016, except that in section 1(f)(3)(B), the word
"2017" shall be substituted for the word "1992." The exemption amount as adjusted for
inflation must be rounded to the nearest $50. If a dollar amount as adjusted for inflation is
not a multiple of $50, the dollar amount must be rounded to the next lowest multiple of $50.
The determination of the commissioner under this subdivision is not a rule under the
Administrative Procedure Act, including section 14.386.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 32.

new text begin [290.0139] INDIVIDUAL ITEMIZED DEDUCTIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Allowance of deductions. new text end

new text begin If a taxpayer elects under section 290.0803,
the taxpayer may subtract from federal adjusted gross income the deductions in this section
to the extent not already deducted in computing federal adjusted gross income. The
deductions in this section are in lieu of the standard deduction under section 290.0138,
subdivision 2.
new text end

new text begin Subd. 2. new text end

new text begin Medical expenses. new text end

new text begin A deduction is allowed for medical expenses as provided
in section 213 of the Internal Revenue Code.
new text end

new text begin Subd. 3. new text end

new text begin Taxes. new text end

new text begin A deduction is allowed for the amount paid or accrued during the taxable
year for real or personal property taxes imposed by a state or a political subdivision of a
state.
new text end

new text begin Subd. 4. new text end

new text begin Interest. new text end

new text begin To the extent not already deducted from federal adjusted gross income,
a deduction is allowed for interest paid or accrued, as provided in section 163 of the Internal
Revenue Code, disregarding the limitation on interest deductions in paragraphs (h)(3)(F)(i)(I),
(III), and (IV).
new text end

new text begin Subd. 5. new text end

new text begin Charitable contributions. new text end

new text begin A deduction is allowed for charitable contributions
as provided in section 170 of the Internal Revenue Code.
new text end

new text begin Subd. 6. new text end

new text begin Losses. new text end

new text begin A deduction is allowed for losses, as provided for in sections 165(d)
and 165(h) of the Internal Revenue Code, disregarding the limitation on personal casualty
losses in paragraph (h)(5).
new text end

new text begin Subd. 7. new text end

new text begin Other miscellaneous expenses subject to a minimum. new text end

new text begin A deduction is allowed
for miscellaneous expenses as provided for in section 67 of the Internal Revenue Code,
disregarding paragraph (g). The expenses shall only be allowed to the extent that the
aggregate amount of miscellaneous deductions exceeds two percent of federal adjusted
gross income.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 33.

Minnesota Statutes 2018, section 290.032, subdivision 2, is amended to read:

Subd. 2.

Computation.

The amount of tax imposed by subdivision 1 shall be computed
in the same way as the tax imposed under section 402(d) of the Internal Revenue Code of
1986, as amended through December 31, 1995, except that the initial separate tax shall be
an amount equal to five times the tax which would be imposed by section 290.06, subdivision
2c, if the recipient was an unmarried individual, and the taxable net income was an amount
equal to one-fifth of the excess of

(i) the total taxable amount of the lump-sum distribution for the year, over

(ii) the minimum distribution allowance, and except that references in section 402(d) of
the Internal Revenue Code of 1986, as amended through December 31, 1995, to paragraph
(1)(A) thereof shall instead be references to subdivision 1, and the excess, if any, of the
subtraction base amount over deleted text begin federaldeleted text end taxablenew text begin netnew text end income for a qualified individual as provided
under section 290.0802, subdivision 2.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 34.

Minnesota Statutes 2018, section 290.05, subdivision 3, is amended to read:

Subd. 3.

Taxes imposed on exempt entities.

(a) An organization exempt from taxation
under subdivision 2 shall, nevertheless, be subject to tax under this chapter to the extent
provided in the following provisions of the Internal Revenue Code:

(1) section 527 (dealing with political organizations);

(2) section 528 (dealing with certain homeowners associations);

(3) sections 511 to 515 (dealing with unrelated business income);

(4) section 521 (dealing with farmers' cooperatives); and

(5) section 6033(e)(2) (dealing with lobbying expense); but notwithstanding this
subdivision, shall be considered an organization exempt from income tax for the purposes
of any law which refers to organizations exempt from income taxes.

(b) The tax shall be imposed on the taxable income of political organizations or
homeowner associations or the unrelated business taxable income, as defined in section 512
of the Internal Revenue Code, of organizations defined in section 511 of the Internal Revenue
Code, provided that the tax is not imposed on:

(1) advertising revenues from a newspaper published by an organization described in
section 501(c)(4) of the Internal Revenue Code;deleted text begin or
deleted text end

(2) revenues from lawful gambling authorized under chapter 349 that are expended for
purposes that qualify for the deduction for charitable contributions under section 170 of the
Internal Revenue Code, disregarding the limitation under section 170(b)(2), but only to the
extent the contributions are not deductible in computing federal taxable incomedeleted text begin .deleted text end new text begin ; or
new text end

new text begin (3) any increase in unrelated business taxable income from disallowed fringe benefit as
provided in section 512(a)(7) of the Internal Revenue Code.
new text end

The tax shall be at the corporate rates. The tax shall only be imposed on income and
deductions assignable to this state under sections 290.17 to 290.20. To the extent deducted
in computing federal taxable income, the deductions contained in section 290.21 shall not
be allowed in computing Minnesota taxable net income.

(c) The tax shall be imposed on organizations subject to federal tax under section
6033(e)(2) of the Internal Revenue Code, in an amount equal to the corporate tax rate
multiplied by the amount of lobbying expenses taxed under section 6033(e)(2) which are
attributable to lobbying the Minnesota state government.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 35.

Minnesota Statutes 2018, section 290.06, subdivision 2c, is amended to read:

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income taxes
imposed by this chapter upon married individuals filing joint returns and surviving spouses
as defined in section 2(a) of the Internal Revenue Code must be computed by applying to
their taxable net income the following schedule of rates:

(1) On the first $35,480, 5.35 percent;

(2) On all over $35,480, but not over $140,960, 7.05 percent;

(3) On all over $140,960, but not over $250,000, 7.85 percent;

(4) On all over $250,000, 9.85 percent.

Married individuals filing separate returns, estates, and trusts must compute their income
tax by applying the above rates to their taxable income, except that the income brackets
will be one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $24,270, 5.35 percent;

(2) On all over $24,270, but not over $79,730, 7.05 percent;

(3) On all over $79,730, but not over $150,000, 7.85 percent;

(4) On all over $150,000, 9.85 percent.

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying as
a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $29,880, 5.35 percent;

(2) On all over $29,880, but not over $120,070, 7.05 percent;

(3) On all over $120,070, but not over $200,000, 7.85 percent;

(4) On all over $200,000, 9.85 percent.

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the tax
of any individual taxpayer whose taxable net income for the taxable year is less than an
amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not more
than $100. The amount of tax for each bracket shall be computed at the rates set forth in
this subdivision, provided that the commissioner may disregard a fractional part of a dollar
unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute the
individual's Minnesota income tax as provided in this subdivision. After the application of
the nonrefundable credits provided in this chapter, the tax liability must then be multiplied
by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross income as
defined in section 62 of the Internal Revenue Code and increased by the additions required
under section 290.0131, subdivisions 2 deleted text begin anddeleted text end new text begin ,new text end 6new text begin , 8new text end to deleted text begin 11deleted text end new text begin 10, 16, and 17new text end , and reduced by the
Minnesota assignable portion of the subtraction for United States government interest under
section 290.0132, subdivision 2, and the subtractions under section 290.0132, subdivisions
9, 10, 14, 15, 17, deleted text begin anddeleted text end 18, new text begin and 29, new text end after applying the allocation and assignability provisions
of section 290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in section
62 of the Internal Revenue Code, increased by the amounts specified in section 290.0131,
subdivisions 2 deleted text begin anddeleted text end new text begin ,new text end 6new text begin , 8new text end to deleted text begin 11deleted text end new text begin 10, 16, and 17new text end , and reduced by the amounts specified in section
290.0132, subdivisions 2, 9, 10, 14, 15, 17, deleted text begin anddeleted text end 18new text begin , and 29new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 36.

Minnesota Statutes 2018, section 290.06, subdivision 2d, is amended to read:

Subd. 2d.

Inflation adjustment of brackets.

(a) For taxable years beginning after
December 31, 2013, the minimum and maximum dollar amounts for each rate bracket for
which a tax is imposed in subdivision 2c shall be adjusted for inflation by the percentage
determined under paragraph (b). For the purpose of making the adjustment as provided in
this subdivision all of the rate brackets provided in subdivision 2c shall be the rate brackets
as they existed for taxable years beginning after December 31, 2012, and before January 1,
2014. The rate applicable to any rate bracket must not be changed. The dollar amounts
setting forth the tax shall be adjusted to reflect the changes in the rate brackets. The rate
brackets as adjusted must be rounded to the nearest $10 amount. If the rate bracket ends in
$5, it must be rounded up to the nearest $10 amount.

(b) The commissioner shall adjust the rate brackets and by the percentage determined
pursuant to the provisions of section 1(f) of the Internal Revenue Codenew text begin , as amended through
December 16, 2016new text end , except that in section 1(f)(3)(B) the word "2012" shall be substituted
for the word "1992." For 2014, the commissioner shall then determine the percent change
from the 12 months ending on August 31, 2012, to the 12 months ending on August 31,
2013, and in each subsequent year, from the 12 months ending on August 31, 2012, to the
12 months ending on August 31 of the year preceding the taxable year. The determination
of the commissioner pursuant to this subdivision shall not be considered a "rule" and shall
not be subject to the Administrative Procedure Act contained in chapter 14.

No later than December 15 of each year, the commissioner shall announce the specific
percentage that will be used to adjust the tax rate brackets.

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. 37.

Minnesota Statutes 2018, section 290.06, subdivision 2h, is amended to read:

Subd. 2h.

Section 529 plan recapture.

(a) For the purposes of this subdivision:

(1) the definitions under section 290.0684 apply;

(2) "account owner" means an individual who owns one or more qualified accounts;

(3) "credit ratio" means the ratio of (i) two times the total amount of credits that an
account owner claimed under section 290.0684 for contributions to the account owner's
qualified accounts to (ii) the total contributions in all taxable years to the account owner's
qualified accounts; deleted text begin and
deleted text end

new text begin (4) "qualified higher education expenses" has the meaning given in section 29(e)(3) of
the Internal Revenue Code except section 529(c)(7) does not apply; and
new text end

deleted text begin (4)deleted text end new text begin (5)new text end "subtraction ratio" means the ratio of (i) the total amount of subtractions that an
account owner claimed under section 290.0132, subdivision 23, for contributions to the
account owner's qualified accounts to (ii) the total contributions in all taxable years to the
account owner's qualified accounts.

(b) If a distribution from a qualified account is used for a purpose other than to pay for
qualified higher education expenses, the account owner must pay an additional tax equal
to:

(1) 50 percent of the product of the credit ratio and the amount of the distribution; plus

(2) ten percent of the product of the subtraction ratio and the amount of the distribution.

(c) The additional tax under this subdivision does not apply to any portion of a distribution
that is subject to the additional tax under section 529(c)(6) of the Internal Revenue Code.

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. 38.

Minnesota Statutes 2018, section 290.067, subdivision 2b, is amended to read:

Subd. 2b.

Inflation adjustment.

The commissioner shall adjust the dollar amount of
the income threshold at which the maximum credit begins to be reduced under subdivision
1 by the percentage determined pursuant to the provisions of section 1(f) of the Internal
Revenue Codenew text begin , as amended through December 16, 2016new text end , except that in section 1(f)(3)(B)
the word "2016" shall be substituted for the word "1992." For 2018, the commissioner shall
then determine the percent change from the 12 months ending on August 31, 2016, to the
12 months ending on August 31, 2017, and in each subsequent year, from the 12 months
ending on August 31, 2016, to the 12 months ending on August 31 of the year preceding
the taxable year. The determination of the commissioner pursuant to this subdivision must
not be considered a "rule" and is not subject to the Administrative Procedure Act contained
in chapter 14. The threshold amount as adjusted must be rounded to the nearest $10 amount.
If the amount ends in $5, the amount is rounded up to the nearest $10 amount.

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. 39.

Minnesota Statutes 2018, section 290.0671, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual who is a resident of Minnesota is
allowed a credit against the tax imposed by this chapter equal to a percentage of earned
income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the
Internal Revenue Code, except that a taxpayer with no qualifying children who has attained
the age of 21, but not attained age 65 before the close of the taxable year and is otherwise
eligible for a credit under section 32 of the Internal Revenue Code may also receive a credit.

(b) For individuals with no qualifying children, the credit equals 2.10 percent of the first
$6,180 of earned income. The credit is reduced by 2.01 percent of earned income or adjusted
gross income, whichever is greater, in excess of $8,130, but in no case is the credit less than
zero.

(c) For individuals with one qualifying child, the credit equals 9.35 percent of the first
$11,120 of earned income. The credit is reduced by 6.02 percent of earned income or adjusted
gross income, whichever is greater, in excess of $21,190, but in no case is the credit less
than zero.

(d) For individuals with two or more qualifying children, the credit equals 11 percent
of the first $18,240 of earned income. The credit is reduced by 10.82 percent of earned
income or adjusted gross income, whichever is greater, in excess of $25,130, but in no case
is the credit less than zero.

(e) For a part-year resident, the credit must be allocated based on the percentage calculated
under section 290.06, subdivision 2c, paragraph (e).

(f) For a person who was a resident for the entire tax year and has earned income not
subject to tax under this chapter, including income excluded under section 290.0132,
subdivision 10, the credit must be allocated based on the ratio of federal adjusted gross
income reduced by the earned income not subject to tax under this chapter over federal
adjusted gross income. For purposes of this paragraph, the following clauses are not
considered "earned income not subject to tax under this chapter":

(1) the subtractions for military pay under section 290.0132, subdivisions 11 and 12;

(2) the exclusion of combat pay under section 112 of the Internal Revenue Code; and

(3) income derived from an Indian reservation by an enrolled member of the reservation
while living on the reservation.

(g) For tax years beginning after December 31, 2013, the $8,130 in paragraph (b), the
$21,190 in paragraph (c), and the $25,130 in paragraph (d), after being adjusted for inflation
under subdivision 7, are each increased by $5,000 for married taxpayers filing joint returns.
For tax years beginning after December 31, 2013, the commissioner shall annually adjust
the $5,000 by the percentage determined pursuant to the provisions of section 1(f) of the
Internal Revenue Codenew text begin as amended through December 16, 2016new text end , except that in section
1(f)(3)(B), the word "2008" shall be substituted for the word "1992." For 2014, the
commissioner shall then determine the percent change from the 12 months ending on August
31, 2008, to the 12 months ending on August 31, 2013, and in each subsequent year, from
the 12 months ending on August 31, 2008, to the 12 months ending on August 31 of the
year preceding the taxable year. The earned income thresholds as adjusted for inflation must
be rounded to the nearest $10. If the amount ends in $5, the amount is rounded up to the
nearest $10. The determination of the commissioner under this subdivision is not a rule
under the Administrative Procedure Act.

(h) The commissioner shall construct tables showing the amount of the credit at various
income levels and make them available to taxpayers. The tables shall follow the schedule
contained in this subdivision, except that the commissioner may graduate the transition
between income brackets.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effectively retroactively for taxable years beginning
after December 31, 2017.
new text end

Sec. 40.

Minnesota Statutes 2018, section 290.0671, subdivision 7, is amended to read:

Subd. 7.

Inflation adjustment.

The earned income amounts used to calculate the credit
and the income thresholds at which the maximum credit begins to be reduced in subdivision
1 must be adjusted for inflation. The commissioner shall adjust by the percentage determined
pursuant to the provisions of section 1(f) of the Internal Revenue Codenew text begin as amended through
December 16, 2016new text end , except that in section 1(f)(3)(B) the word "2013" shall be substituted
for the word "1992." For 2015, the commissioner shall then determine the percent change
from the 12 months ending on August 31, 2013, to the 12 months ending on August 31,
2014, and in each subsequent year, from the 12 months ending on August 31, 2013, to the
12 months ending on August 31 of the year preceding the taxable year. The earned income
thresholds as adjusted for inflation must be rounded to the nearest $10 amount. If the amount
ends in $5, the amount is rounded up to the nearest $10 amount. The determination of the
commissioner under this subdivision is not a rule under the Administrative Procedure Act.

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. 41.

Minnesota Statutes 2018, section 290.0672, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

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

(b) "Long-term care insurance" means a policy that:

(1) qualifies for a deduction under section 213 of the Internal Revenue Code, disregarding
the adjusted gross income test; or meets the requirements given in section 62A.46; or provides
similar coverage issued under the laws of another jurisdiction; and

(2) has a lifetime long-term care benefit limit of not less than $100,000; and

(3) has been offered in compliance with the inflation protection requirements of section
62S.23.

(d) "Premiums deducted in determining deleted text begin federal taxabledeleted text end new text begin netnew text end income" means the lesser of
(1) long-term care insurance premiums that qualify as deductions under section 213 of the
Internal Revenue Code; and (2) the total amount deductible for medical care under deleted text begin section
213 of the Internal Revenue Codedeleted text end new text begin sections 290.01, subdivision 29a, and 290.0132,
subdivision 28new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 42.

Minnesota Statutes 2018, section 290.0672, subdivision 2, is amended to read:

Subd. 2.

Credit.

A taxpayer is allowed a credit against the tax imposed by this chapter
for long-term care insurance policy premiums paid during the tax year. The credit for each
policy equals 25 percent of premiums paid to the extent not deducted in determining deleted text begin federal
taxabledeleted text end new text begin netnew text end income. A taxpayer may claim a credit for only one policy for each qualified
beneficiary. A maximum of $100 applies to each qualified beneficiary. The maximum total
credit allowed per year is $200 for married couples filing joint returns and $100 for all other
filers. For a nonresident or part-year resident, the credit determined under this section must
be allocated based on the percentage calculated under 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, 2018.
new text end

Sec. 43.

Minnesota Statutes 2018, section 290.0681, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

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

(b) "Account" means the historic credit administration account in the special revenue
fund.

(d) "Project" means rehabilitation of a certified historic structure, as defined in section
47(c)(3)(A) of the Internal Revenue Code, that is located in Minnesota and is allowed a
federal credit.

(e) "Federal credit" means the credit allowed under section deleted text begin 47(a)(2)deleted text end new text begin 47(a)new text end of the Internal
Revenue Codenew text begin , except that the amount allowed is deemed to be allocated in the taxable year
that the project is placed in servicenew text end .

(f) "Placed in service" has the meaning used in section 47 of the Internal Revenue Code.

(g) "Qualified rehabilitation expenditures" has the meaning given in section 47 of the
Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for applications for allocation
certificates submitted after December 31, 2017.
new text end

Sec. 44.

Minnesota Statutes 2018, section 290.0681, subdivision 2, is amended to read:

Subd. 2.

Credit or grant allowed; certified historic structure.

(a) A credit is allowed
against the tax imposed under this chapter equal to not more than 100 percent of the credit
allowed under section deleted text begin 47(a)(2)deleted text end new text begin 47(a)new text end of the Internal Revenue Code for a project. new text begin The credit
is payable each taxable year in five equal yearly installments beginning with the year the
project is placed in service. new text end To qualify for the credit:

(1) the project must receive Part 3 certification and be placed in service during the taxable
year; and

(2) the taxpayer must be allowed the federal credit and be issued a credit certificate for
the taxable year as provided in subdivision 4.

(b) The commissioner of administration may pay a grant in lieu of the credit. The grant
equals 90 percent of the credit that would be allowed for the project.new text begin The grant is payable
each taxable year in five equal yearly installments beginning with the year the project is
placed in service.
new text end

(c) In lieu of the credit under paragraph (a), an insurance company may claim a credit
against the insurance premiums tax imposed under chapter 297I.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for applications for allocation
certificates submitted after December 31, 2017.
new text end

Sec. 45.

Minnesota Statutes 2018, section 290.0681, subdivision 3, is amended to read:

Subd. 3.

Applications; allocations.

(a) To qualify for a credit or grant under this section,
the developer of a project must apply to the office before the rehabilitation begins. The
application must contain the information and be in the form prescribed by the office. The
office may collect a fee for application of up to 0.5 percent of qualified rehabilitation
expenditures, up to $40,000, based on estimated qualified rehabilitation expenditures, to
offset costs associated with personnel and administrative expenses related to administering
the credit and preparing the economic impact report in subdivision 9. Application fees are
deposited in the account. The application must indicate if the application is for a credit or
a grant in lieu of the credit or a combination of the two and designate the taxpayer qualifying
for the credit or the recipient of the grant.

(b) Upon approving an application for credit, the office shall issue allocation certificates
that:

(1) verify eligibility for the credit or grant;

(2) state the amount of credit or grant anticipated with the project, with the credit amount
equal to 100 percent and the grant amount equal to 90 percent of the federal credit anticipated
in the application;

(3) state that the credit or grant allowed may increase or decrease if the federal credit
the project receives at the time it is placed in service is different than the amount anticipated
at the time the allocation certificate is issued; and

(4) state the fiscal year in which the credit or grant is allocated, and that the taxpayer or
grant recipient is entitled to receive new text begin one-fifth of the total amount of either new text end the credit or new text begin the
new text end grant at the time the project is placed in service, provided that date is within three calendar
years following the issuance of the allocation certificate.

(c) The office, in consultation with the commissioner, shall determine if the project is
eligible for a credit or a grant under this section and must notify the developer in writing
of its determination. Eligibility for the credit is subject to review and audit by the
commissioner.

(d) The federal credit recapture and repayment requirements under section 50 of the
Internal Revenue Code do not apply to the credit allowed under this section.

(e) Any decision of the office under paragraph (c) may be challenged as a contested case
under chapter 14. The contested case proceeding must be initiated within 45 days of the
date of written notification by the office.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for applications for allocation
certificates submitted after December 31, 2017.
new text end

Sec. 46.

Minnesota Statutes 2018, section 290.0681, subdivision 4, is amended to read:

Subd. 4.

Credit certificates; grants.

(a)(1) The developer of a project for which the
office has issued an allocation certificate must notify the office when the project is placed
in service. Upon verifying that the project has been placed in service, and was allowed a
federal credit, the office must issue a credit certificate to the taxpayer designated in the
application or must issue a grant to the recipient designated in the application. The credit
certificate must state the amount of the credit.

(2) The credit amount equals the federal credit allowed for the project.

(3) The grant amount equals 90 percent of the federal credit allowed for the project.

(b) The recipient of a credit certificate may assign the certificate to another taxpayernew text begin
before the first one-fifth payment is claimednew text end , which is then allowed the credit under this
section or section 297I.20, subdivision 3. An assignment is not valid unless the assignee
notifies the commissioner within 30 days of the date that the assignment is made. The
commissioner shall prescribe the forms necessary for notifying the commissioner of the
assignment of a credit certificate and for claiming a credit by assignment.

(c) Credits passed through to partners, members, shareholders, or owners pursuant to
subdivision 5 are not an assignment of a credit certificate under this subdivision.

(d) A grant agreement between the office and the recipient of a grant may allow the
grant to be issued to another individual or entity.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for applications for allocation
certificates submitted after December 31, 2017.
new text end

Sec. 47.

Minnesota Statutes 2018, section 290.0684, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

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

(b) "Contribution" means the amount contributed to one or more qualified accounts
except that the amount:

(1) is reduced by any withdrawals or distributions, other than transfers or rollovers to
another qualified account, from a qualified account during the taxable year; and

(2) excludes the amount of any transfers or rollovers from a qualified account made
during the taxable year.

(d) "Qualified account" means an account qualifying under section 529 of the Internal
Revenue Code.

deleted text begin (e) "Qualified higher education expenses" has the meaning given in section 529 of the
Internal Revenue Code.
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. 48.

Minnesota Statutes 2018, section 290.0684, subdivision 2, is amended to read:

Subd. 2.

Credit allowed.

(a) An individual who is a resident of Minnesota is allowed a
credit against the tax imposed by this chapter. The credit is not allowed to an individual
who is eligible to be claimed as a dependent, as defined in sections 151 and 152 of the
Internal Revenue Code. The credit may not exceed the liability for tax under this chapter.

(b) The amount of the credit allowed equals 50 percent of contributions for the taxable
year. The maximum credit is $500, subject to the phaseout in paragraphs (c) and (d). In no
case is the credit less than zero.

(d) For married couples filing a joint return, the maximum credit is phased out as follows:

(1) for married couples with adjusted gross income in excess of $75,000, but not more
than $100,000, the maximum credit is reduced by one percent of adjusted gross income in
excess of $75,000;

(2) for married couples with adjusted gross income in excess of $100,000, but not more
than $135,000, the maximum credit is $250; and

(3) for married couples with adjusted gross income in excess of $135,000, the maximum
credit is $250, reduced by one percent of adjusted gross income in excess of $135,000.

(e) The income thresholds in paragraphs (c) and (d) used to calculate the maximum
credit must be adjusted for inflation. The commissioner shall adjust the income thresholds
by the percentage determined under the provisions of section 1(f) of the Internal Revenue
Codenew text begin , as amended through December 16, 2016new text end , except that in section 1(f)(3)(B) the word
"2016" is substituted for the word "1992." For 2018, the commissioner shall then determine
the percent change from the 12 months ending on August 31, 2016, to the 12 months ending
on August 31, 2017, and in each subsequent year, from the 12 months ending on August
31, 2016, to the 12 months ending on August 31 of the year preceding the taxable year. The
income thresholds as adjusted for inflation must be rounded to the nearest $10 amount. If
the amount ends in $5, the amount is rounded up to the nearest $10 amount. The
determination of the commissioner under this subdivision is not subject to chapter 14,
including section 14.386.

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. 49.

Minnesota Statutes 2018, section 290.0802, subdivision 2, is amended to read:

Subd. 2.

Subtraction.

(a) A qualified individual is allowed a subtraction from federal
deleted text begin taxabledeleted text end new text begin adjusted grossnew text end income of the individual's subtraction base amount. The excess of
the subtraction base amount over the taxable net income computed without regard to the
subtraction for the elderly or disabled under section 290.0132, subdivision 5, may be used
to reduce the amount of a lump sum distribution subject to tax under section 290.032.

(b)(1) The initial subtraction base amount equals

(i) $12,000 for a married taxpayer filing a joint return if a spouse is a qualified individual,

(ii) $9,600 for a single taxpayer, and

(iii) $6,000 for a married taxpayer filing a separate federal return.

(2) The qualified individual's initial subtraction base amount, then, must be reduced by
the sum of nontaxable retirement and disability benefits and one-half of the amount of
adjusted gross income in excess of the following thresholds:

(i) $18,000 for a married taxpayer filing a joint return if both spouses are qualified
individuals,

(ii) $14,500 for a single taxpayer or for a married couple filing a joint return if only one
spouse is a qualified individual, and

(iii) $9,000 for a married taxpayer filing a separate federal return.

(3) In the case of a qualified individual who is under the age of 65, the maximum amount
of the subtraction base may not exceed the taxpayer's disability income.

(4) The resulting amount is the subtraction base amount.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 50.

new text begin [290.0803] STANDARD OR ITEMIZED DEDUCTION.
new text end

new text begin Subdivision 1. new text end

new text begin Election. new text end

new text begin An individual may elect to claim state itemized deductions in
lieu of a state standard deduction. However, in the case of a married individual filing a
separate return, if one spouse elects to claim state itemized deductions, the other spouse is
not allowed a state standard deduction.
new text end

new text begin Subd. 2. new text end

new text begin Subtraction. new text end

new text begin Based on the election under subdivision 1, individuals are allowed
to subtract from federal adjusted gross income:
new text end

new text begin (1) the state standard deduction under section 290.0138, subdivision 2; or
new text end

new text begin (2) the state itemized deduction under section 290.0139.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 51.

Minnesota Statutes 2018, section 290.091, subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given.

(a) "Alternative minimum taxable income" means the sum of the following for the taxable
year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum
taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal Revenue
Code, with respect to each property (as defined in section 614 of the Internal Revenue Code),
to the extent not included in federal alternative minimum taxable income, the excess of the
deduction for depletion allowable under section 611 of the Internal Revenue Code for the
taxable year over the adjusted basis of the property at the end of the taxable year (determined
without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the amount
of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue
Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the amount
of interest income as provided by section 290.0131, subdivision 2; deleted text begin and
deleted text end

(6) the amount of addition required by section 290.0131, subdivisions 9 deleted text begin to 11;deleted text end new text begin , 10, and
16; and
new text end

new text begin (7) the deduction allowed under section 199A of the Internal Revenue Code;
new text end

less the sum of the amounts determined under the following:

(i) interest income as defined in section 290.0132, subdivision 2;

(ii) an overpayment of state income tax as provided by section 290.0132, subdivision
3, to the extent included in federal alternative minimum taxable income;

(iii) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as defined
in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted
in computing federal adjusted gross income;

(iv) amounts subtracted from federal taxable income as provided by section 290.0132,
subdivisions 7, 9 to 15, 17, 21, 24, deleted text begin anddeleted text end 26new text begin to 29new text end ; deleted text begin and
deleted text end

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c)deleted text begin .deleted text end new text begin ; and
new text end

new text begin (vi) the amount allowable as a Minnesota itemized deduction under section 290.0139,
subdivision 7.
new text end

In the case of an estate or trust, alternative minimum taxable income must be computed
as provided in section 59(c) of the Internal Revenue Codenew text begin , except alternative minimum
taxable income must be increased by the addition in section 290.0131, subdivision 17new text end .

(b) "Investment interest" means investment interest as defined in section 163(d)(3) of
the Internal Revenue Code.

(d) "Regular tax" means the tax that would be imposed under this chapter (without regard
to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed
under this chapter.

(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
after subtracting the exemption amount determined under subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 52.

Minnesota Statutes 2018, section 290.091, subdivision 3, is amended to read:

Subd. 3.

Exemption amount.

(a) For purposes of computing the alternative minimum
tax, the exemption amount is, for taxable years beginning after December 31, 2005, $60,000
for married couples filing joint returns, $30,000 for married individuals filing separate
returns, estates, and trusts, and $45,000 for unmarried individuals.

(b) The exemption amount determined under this subdivision is subject to the phase out
under section deleted text begin 55(d)(3)deleted text end new text begin 55(d)(2)new text end of the Internal Revenue Code, except that alternative
minimum taxable income as determined under this section must be substituted in the
computation of the phase out.

(c) For taxable years beginning after December 31, 2006, the exemption amount under
paragraph (a) must be adjusted for inflation. The commissioner shall adjust the exemption
amount by the percentage determined pursuant to the provisions of section 1(f) of the Internal
Revenue Codenew text begin , as amended through December 16, 2016new text end , except that in section 1(f)(3)(B)
the word "2005" shall be substituted for the word "1992." For 2007, the commissioner shall
then determine the percent change from the 12 months ending on August 31, 2005, to the
12 months ending on August 31, 2006, and in each subsequent year, from the 12 months
ending on August 31, 2005, to the 12 months ending on August 31 of the year preceding
the taxable year. The exemption amount as adjusted must be rounded to the nearest $10. If
the amount ends in $5, it must be rounded up to the nearest $10 amount. The determination
of the commissioner under this subdivision is not a rule under the Administrative Procedure
Act.

new text begin EFFECTIVE DATE. new text end

new text begin (a) The amendment to paragraph (b) is effective the day following
final enactment.
new text end

new text begin (b) The amendment to paragraph (c) is effective retroactively for taxable years beginning
after December 31, 2017.
new text end

Sec. 53.

Minnesota Statutes 2018, section 290.0921, subdivision 1, is amended to read:

Subdivision 1.

Tax imposed.

In addition to the taxes computed under this chapter without
regard to this section,new text begin for taxable years beginning before January 1, 2018,new text end the franchise tax
imposed on corporations includes a tax equal to the excess, if any, for the taxable year of:

(1) 5.8 percent of Minnesota alternative minimum taxable income; over

(2) the tax imposed under section 290.06, subdivision 1, without regard to this section.

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. 54.

Minnesota Statutes 2018, section 290.0921, subdivision 8, is amended to read:

Subd. 8.

Carryover credit.

(a) A corporation is allowed a credit against qualified regular
tax for qualified alternative minimum tax previously paid. The credit is allowable only deleted text begin if
the corporation has no tax liability under this section for the taxable year anddeleted text end if the
corporation has an alternative minimum tax credit carryover from a previous year. The
credit allowable in a taxable year equals the lesser ofnew text begin :
new text end

(1) deleted text begin the excess ofdeleted text end the qualified regular tax for the taxable year deleted text begin over the amount computed
under subdivision 1, clause (1), for the taxable yeardeleted text end new text begin ;new text end or

(2) the carryover credit to the taxable year.

(b) For purposes of this subdivision, the following terms have the meanings given.

(1) "Qualified alternative minimum tax" equals the amount determined under subdivision
1 for deleted text begin thedeleted text end new text begin anew text end taxable yearnew text begin beginning before January 1, 2018new text end .

(2) "Qualified regular tax" means the tax imposed under section 290.06, subdivision 1.

(c) The qualified alternative minimum tax for a taxable year is an alternative minimum
tax credit carryover to each of the new text begin three new text end taxable years succeeding the taxable year. The entire
amount of the credit must be carried to the earliest taxable year to which the amount may
be carried. Any unused portion of the credit must be carried to the following taxable year.
No credit may be carried to a taxable year in which alternative minimum tax was paid.

(d) An acquiring corporation may carry over this credit from a transferor or distributor
corporation in a corporate acquisition. The provisions of section 381 of the Internal Revenue
Code apply in determining the amount of the carryover, if any.

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. 55.

Minnesota Statutes 2018, section 290.0922, subdivision 1, is amended to read:

Subdivision 1.

Imposition.

(a) In addition to the tax imposed by this chapter without
regard to this section, the franchise tax imposed on a corporation required to file under
section 289A.08, subdivision 3, other than a corporation treated as an "S" corporation under
section 290.9725 for the taxable year includes a tax equal to the following amounts:

If the sum of the corporation's Minnesota property, payrolls, and sales or receipts is:						the tax equals:
		less than		$	930,000	$	0
	$	930,000	to	$	1,869,999	$	190
	$	1,870,000	to	$	9,339,999	$	560
	$	9,340,000	to	$	18,679,999	$	1,870
	$	18,680,000	to	$	37,359,999	$	3,740
	$	37,360,000	or	more		$	9,340

(b) A tax is imposed for each taxable year on a corporation required to file a return under
section 289A.12, subdivision 3, that is treated as an "S" corporation under section 290.9725
and on a partnership required to file a return under section 289A.12, subdivision 3, other
than a partnership that derives over 80 percent of its income from farming. The tax imposed
under this paragraph is due on or before the due date of the return for the taxpayer due under
section 289A.18, subdivision 1. The commissioner shall prescribe the return to be used for
payment of this tax. The tax under this paragraph is equal to the following amounts:

If the sum of the S corporation's or partnership's Minnesota property, payrolls, and sales or receipts is:						the tax equals:
		less than		$	930,000	$	0
	$	930,000	to	$	1,869,999	$	190
	$	1,870,000	to	$	9,339,999	$	560
	$	9,340,000	to	$	18,679,999	$	1,870
	$	18,680,000	to	$	37,359,999	$	3,740
	$	37,360,000	or	more		$	9,340

(c) The commissioner shall adjust the dollar amounts of both the tax and the property,
payrolls, and sales or receipts thresholds in paragraphs (a) and (b) by the percentage
determined pursuant to the provisions of section 1(f) of the Internal Revenue Codenew text begin , as
amended through December 16, 2016new text end , except that in section 1(f)(3)(B) the word "2012"
must be substituted for the word "1992." For 2014, the commissioner shall determine the
percentage change from the 12 months ending on August 31, 2012, to the 12 months ending
on August 31, 2013, and in each subsequent year, from the 12 months ending on August
31, 2012, to the 12 months ending on August 31 of the year preceding the taxable year. The
determination of the commissioner pursuant to this subdivision is not a "rule" subject to the
Administrative Procedure Act contained in chapter 14. The tax amounts as adjusted must
be rounded to the nearest $10 amount and the threshold amounts must be adjusted to the
nearest $10,000 amount. For tax amounts that end in $5, the amount is rounded up to the
nearest $10 amount and for the threshold amounts that end in $5,000, the amount is rounded
up to the nearest $10,000.

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. 56.

Minnesota Statutes 2018, section 290.095, subdivision 2, is amended to read:

Subd. 2.

Defined and limited.

(a) The term "net operating loss" as used in this section
shall mean a net operating loss as defined in section 172(c) of the Internal Revenue Code,
with the modifications specified in subdivision 4. The deductions provided in section 290.21
cannot be used in the determination of a net operating loss.

(b) The term "net operating loss deduction" as used in this section means the aggregate
of the net operating loss carryovers to the taxable year, computed in accordance with
subdivision 3. The provisions of section 172(b) of the Internal Revenue Code relating to
the carryback of net operating losses, do not apply.

new text begin (c) The amount of net operating loss deduction under this section must not exceed 80
percent of taxable net income in a single taxable year.
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, 2017.
new text end

Sec. 57.

Minnesota Statutes 2018, section 290.17, subdivision 2, is amended to read:

Subd. 2.

Income not derived from conduct of a trade or business.

The income of a
taxpayer subject to the allocation rules that is not derived from the conduct of a trade or
business must be assigned in accordance with paragraphs (a) to (f):

(a)(1) Subject to paragraphs (a)(2) and (a)(3), income from wages as defined in section
3401(a) deleted text begin anddeleted text end new text begin ,new text end (f)new text begin , and (i)new text end of the Internal Revenue Code is assigned to this state if, and to the
extent that, the work of the employee is performed within it; all other income from such
sources is treated as income from sources without this state.

Severance pay shall be considered income from labor or personal or professional services.

(2) In the case of an individual who is a nonresident of Minnesota and who is an athlete
or entertainer, income from compensation for labor or personal services performed within
this state shall be determined in the following manner:

(i) the amount of income to be assigned to Minnesota for an individual who is a
nonresident salaried athletic team employee shall be determined by using a fraction in which
the denominator contains the total number of days in which the individual is under a duty
to perform for the employer, and the numerator is the total number of those days spent in
Minnesota. For purposes of this paragraph, off-season training activities, unless conducted
at the team's facilities as part of a team imposed program, are not included in the total number
of duty days. Bonuses earned as a result of play during the regular season or for participation
in championship, play-off, or all-star games must be allocated under the formula. Signing
bonuses are not subject to allocation under the formula if they are not conditional on playing
any games for the team, are payable separately from any other compensation, and are
nonrefundable; and

(ii) the amount of income to be assigned to Minnesota for an individual who is a
nonresident, and who is an athlete or entertainer not listed in item (i), for that person's athletic
or entertainment performance in Minnesota shall be determined by assigning to this state
all income from performances or athletic contests in this state.

(3) For purposes of this section, amounts received by a nonresident as "retirement income"
as defined in section (b)(1) of the State Income Taxation of Pension Income Act, Public
Law 104-95, are not considered income derived from carrying on a trade or business or
from wages or other compensation for work an employee performed in Minnesota, and are
not taxable under this chapter.

(b) Income or gains from tangible property located in this state that is not employed in
the business of the recipient of the income or gains must be assigned to this state.

(c) Income or gains from intangible personal property not employed in the business of
the recipient of the income or gains must be assigned to this state if the recipient of the
income or gains is a resident of this state or is a resident trust or estate.

Gain on the sale of a partnership interest is allocable to this state in the ratio of the
original cost of partnership tangible property in this state to the original cost of partnership
tangible property everywhere, determined at the time of the sale. If more than 50 percent
of the value of the partnership's assets consists of intangibles, gain or loss from the sale of
the partnership interest is allocated to this state in accordance with the sales factor of the
partnership for its first full tax period immediately preceding the tax period of the partnership
during which the partnership interest was sold.

Gain on the sale of an interest in a single member limited liability company that is
disregarded for federal income tax purposes is allocable to this state as if the single member
limited liability company did not exist and the assets of the limited liability company are
personally owned by the sole member.

Gain on the sale of goodwill or income from a covenant not to compete that is connected
with a business operating all or partially in Minnesota is allocated to this state to the extent
that the income from the business in the year preceding the year of sale was allocable to
Minnesota under subdivision 3.

When an employer pays an employee for a covenant not to compete, the income allocated
to this state is in the ratio of the employee's service in Minnesota in the calendar year
preceding leaving the employment of the employer over the total services performed by the
employee for the employer in that year.

(d) Income from winnings on a bet made by an individual while in Minnesota is assigned
to this state. In this paragraph, "bet" has the meaning given in section 609.75, subdivision
2, as limited by section 609.75, subdivision 3, clauses (1), (2), and (3).

(e) All items of gross income not covered in paragraphs (a) to (d) and not part of the
taxpayer's income from a trade or business shall be assigned to the taxpayer's domicile.

(f) For the purposes of this section, working as an employee shall not be considered to
be conducting a trade or business.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for wages paid after December 31, 2018.
new text end

Sec. 58.

Minnesota Statutes 2018, section 290.21, is amended by adding a subdivision to
read:

new text begin Subd. 9. new text end

new text begin Controlled foreign corporations. new text end

new text begin For the purposes of this chapter, the net
income of a domestic corporation that is included pursuant to sections 951, 951A, and 965
of the Internal Revenue Code is dividend income.
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, 2016.
new text end

Sec. 59.

Minnesota Statutes 2018, section 290.92, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(1) Wages. For purposes of this section, the term "wages"
means the same as that term is defined in section 3401(a) deleted text begin anddeleted text end new text begin ,new text end (f)new text begin , and (i)new text end of the Internal
Revenue Code.

(2) Payroll period. For purposes of this section the term "payroll period" means a period
for which a payment of wages is ordinarily made to the employee by the employee's
employer, and the term "miscellaneous payroll period" means a payroll period other than a
daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual, or annual payroll
period.

(3) Employee. For purposes of this section the term "employee" means any resident
individual performing services for an employer, either within or without, or both within and
without the state of Minnesota, and every nonresident individual performing services within
the state of Minnesota, the performance of which services constitute, establish, and determine
the relationship between the parties as that of employer and employee. As used in the
preceding sentence, the term "employee" includes an officer of a corporation, and an officer,
employee, or elected official of the United States, a state, or any political subdivision thereof,
or the District of Columbia, or any agency or instrumentality of any one or more of the
foregoing.

(4) Employer. For purposes of this section the term "employer" means any person,
including individuals, fiduciaries, estates, trusts, partnerships, limited liability companies,
and corporations transacting business in or deriving any income from sources within the
state of Minnesota for whom an individual performs or performed any service, of whatever
nature, as the employee of such person, except that if the person for whom the individual
performs or performed the services does not have control of the payment of the wages for
such services, the term "employer," except for purposes of paragraph (1), means the person
having control of the payment of such wages. As used in the preceding sentence, the term
"employer" includes any corporation, individual, estate, trust, or organization which is
exempt from taxation under section 290.05 and further includes, but is not limited to, officers
of corporations who have control, either individually or jointly with another or others, of
the payment of the wages.

(5) Number of withholding exemptions claimed. For purposes of this section, the term
"number of withholding exemptions claimed" means the number of withholding exemptions
claimed in a withholding exemption certificate in effect under subdivision 5, except that if
no such certificate is in effect, the number of withholding exemptions claimed shall be
considered to be zero.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 60.

new text begin [290.993] SPECIAL LIMITED ADJUSTMENT.
new text end

new text begin (a) For an individual income taxpayer subject to tax under section 290.06, subdivision
2c, or a partnership that elects to file a composite return under section 289A.08, subdivision
7, for taxable years beginning after December 31, 2017, and before January 1, 2019, the
following special rules apply:
new text end

new text begin (1) sections 63(c)(7) and 151(d)(5) of the Internal Revenue Code do not apply;
new text end

new text begin (2) an individual income taxpayer may: (i) take the standard deduction, or (ii) make an
election under section 63(e) of the Internal Revenue Code to itemize, for Minnesota individual
income tax purposes, regardless of the choice made on their federal return; and
new text end

new text begin (3) there is an adjustment to tax equal to the difference between the tax calculated under
this chapter using the Internal Revenue Code as amended through December 16, 2016, and
the tax calculated under this chapter using the Internal Revenue Code amended through
December 31, 2018, before the application of credits. The end result must be zero additional
tax due or refund.
new text end

new text begin (b) The adjustment in paragraph (a), clause (3), does not apply to any changes due to
sections 13101, 13201, 13202, 13203, 13204, 13205, 13207, 13303, 13313, 13502, 13503,
13801, 14102, 14103, 14201, 14202, 14211 through 14215, and 14501 of Public Law
115-97; and section 40411 of Public Law 115-123.
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, 2017, and before January 1, 2019.
new text end

Sec. 61.

Minnesota Statutes 2018, section 290A.03, subdivision 12, is amended to read:

Subd. 12.

Gross rent.

(a) "Gross rent" means rental paid for the right of occupancy, at
arm's length, of a homestead, exclusive of charges for any medical services furnished by
the landlord as a part of the rental agreement, whether expressly set out in the rental
agreement or not.

(b) The gross rent of a resident of a nursing home or intermediate care facility is $350
per month. The gross rent of a resident of an adult foster care home is $550 per month.
Beginning for rent paid in 2002, the commissioner shall annually adjust for inflation the
gross rent amounts stated in this paragraph. The adjustment must be made in accordance
with section 1(f) of the Internal Revenue Codenew text begin , as amended through December 16, 2016new text end ,
except that for purposes of this paragraph the percentage increase shall be determined from
the year ending on June 30, 2001, to the year ending on June 30 of the year in which the
rent is paid. The commissioner shall round the gross rents to the nearest $10 amount. If the
amount ends in $5, the commissioner shall round it up to the next $10 amount. The
determination of the commissioner under this paragraph is not a rule under the Administrative
Procedure Act.

(c) If the landlord and tenant have not dealt with each other at arm's length and the
commissioner determines that the gross rent charged was excessive, the commissioner may
adjust the gross rent to a reasonable amount for purposes of this chapter.

(d) Any amount paid by a claimant residing in property assessed pursuant to section
273.124, subdivision 3, 4, 5, or 6 for occupancy in that property shall be excluded from
gross rent for purposes of this chapter. However, property taxes imputed to the homestead
of the claimant or the dwelling unit occupied by the claimant that qualifies for homestead
treatment pursuant to section 273.124, subdivision 3, 4, 5, or 6 shall be included within the
term "property taxes payable" as defined in subdivision 13, notwithstanding the fact that
ownership is not in the name of the claimant.

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. 62.

Minnesota Statutes 2018, 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 deleted text begin December 16, 2016deleted text end new text begin December 31, 2018new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment, except
the changes to household income adopted by the federal changes are effective retroactively
at the same time the changes became effective for federal purposes.
new text end

Sec. 63.

Minnesota Statutes 2018, section 290A.04, subdivision 4, is amended to read:

Subd. 4.

Inflation adjustment.

(a) Beginning for property tax refunds payable in calendar
year 2002, the commissioner shall annually adjust the dollar amounts of the income thresholds
and the maximum refunds under subdivisions 2 and 2a for inflation. The commissioner
shall make the inflation adjustments in accordance with section 1(f) of the Internal Revenue
Codenew text begin , as amended through December 16, 2016new text end , except that for purposes of this subdivision
the percentage increase shall be determined as provided in this subdivision.

(b) In adjusting the dollar amounts of the income thresholds and the maximum refunds
under subdivision 2 for inflation, the percentage increase shall be determined from the year
ending on June 30, 2013, to the year ending on June 30 of the year preceding that in which
the refund is payable.

(c) In adjusting the dollar amounts of the income thresholds and the maximum refunds
under subdivision 2a for inflation, the percentage increase shall be determined from the
year ending on June 30, 2013, to the year ending on June 30 of the year preceding that in
which the refund is payable.

(d) The commissioner shall use the appropriate percentage increase to annually adjust
the income thresholds and maximum refunds under subdivisions 2 and 2a for inflation
without regard to whether or not the income tax brackets are adjusted for inflation in that
year. The commissioner shall round the thresholds and the maximum amounts, as adjusted
to the nearest $10 amount. If the amount ends in $5, the commissioner shall round it up to
the next $10 amount.

(e) The commissioner shall annually announce the adjusted refund schedule at the same
time provided under section 290.06. The determination of the commissioner under this
subdivision is not a rule under the Administrative Procedure Act.

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. 64.

Minnesota Statutes 2018, 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 deleted text begin December 16, 2016deleted text end new text begin December 31, 2018new 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 deleted text begin includibledeleted text end new text begin includablenew text end 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

Sec. 65.

Minnesota Statutes 2018, section 297A.68, subdivision 25, is amended to read:

Subd. 25.

Sale of property used in a trade or business.

(a) The sale of tangible personal
property primarily used in a trade or business is exempt if the sale is not made in the normal
course of business of selling that kind of property and if one of the following conditions is
satisfied:

(1) the sale occurs in a transaction subject to or described in section 118, 331, 332, 336,
337, 338, 351, 355, 368, 721, 731, 1031, or 1033 of the Internal Revenue Codenew text begin , as amended
through December 16, 2016new text end ;

(2) the sale is between members of a controlled group as defined in section 1563(a) of
the Internal Revenue Code;

(3) the sale is a sale of farm machinery;

(4) the sale is a farm auction sale;

(5) the sale is a sale of substantially all of the assets of a trade or business; or

(6) the total amount of gross receipts from the sale of trade or business property made
during the calendar month of the sale and the preceding 11 calendar months does not exceed
$1,000.

The use, storage, distribution, or consumption of tangible personal property acquired as
a result of a sale exempt under this subdivision is also exempt.

(b) For purposes of this subdivision, the following terms have the meanings given.

(1) A "farm auction" is a public auction conducted by a licensed auctioneer if substantially
all of the property sold consists of property used in the trade or business of farming and
property not used primarily in a trade or business.

(2) "Trade or business" includes the assets of a separate division, branch, or identifiable
segment of a trade or business if, before the sale, the income and expenses attributable to
the separate division, branch, or identifiable segment could be separately ascertained from
the books of account or record (the lease or rental of an identifiable segment does not qualify
for the exemption).

(3) A "sale of substantially all of the assets of a trade or business" must occur as a single
transaction or a series of related transactions within the 12-month period beginning on the
date of the first sale of assets intended to qualify for the exemption provided in paragraph
(a), clause (5).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after December 31, 2017.
new text end

Sec. 66.

Minnesota Statutes 2018, section 297B.03, is amended to read:

297B.03 EXEMPTIONS.

There is specifically exempted from the provisions of this chapter and from computation
of the amount of tax imposed by it the following:

(1) purchase or use, including use under a lease purchase agreement or installment sales
contract made pursuant to section 465.71, of any motor vehicle by the United States and its
agencies and instrumentalities and by any person described in and subject to the conditions
provided in section 297A.67, subdivision 11;

(2) purchase or use of any motor vehicle by any person who was a resident of another
state or country at the time of the purchase and who subsequently becomes a resident of
Minnesota, provided the purchase occurred more than 60 days prior to the date such person
began residing in the state of Minnesota and the motor vehicle was registered in the person's
name in the other state or country;

(3) purchase or use of any motor vehicle by any person making a valid election to be
taxed under the provisions of section 297A.90;

(4) purchase or use of any motor vehicle previously registered in the state of Minnesota
when such transfer constitutes a transfer within the meaning of section 118, 331, 332, 336,
337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 1563(a) of the Internal Revenue Codenew text begin ,
as amended through December 16, 2016new text end ;

(5) purchase or use of any vehicle owned by a resident of another state and leased to a
Minnesota-based private or for-hire carrier for regular use in the transportation of persons
or property in interstate commerce provided the vehicle is titled in the state of the owner or
secured party, and that state does not impose a sales tax or sales tax on motor vehicles used
in interstate commerce;

(6) purchase or use of a motor vehicle by a private nonprofit or public educational
institution for use as an instructional aid in automotive training programs operated by the
institution. "Automotive training programs" includes motor vehicle body and mechanical
repair courses but does not include driver education programs;

(7) purchase of a motor vehicle by an ambulance service licensed under section 144E.10
when that vehicle is equipped and specifically intended for emergency response or for
providing ambulance service;

(8) purchase of a motor vehicle by or for a public library, as defined in section 134.001,
subdivision 2, as a bookmobile or library delivery vehicle;

(9) purchase of a ready-mixed concrete truck;

(10) purchase or use of a motor vehicle by a town for use exclusively for road
maintenance, including snowplows and dump trucks, but not including automobiles, vans,
or pickup trucks;

(11) purchase or use of a motor vehicle by a corporation, society, association, foundation,
or institution organized and operated exclusively for charitable, religious, or educational
purposes, except a public school, university, or library, but only if the vehicle is:

(i) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a
passenger automobile, as defined in section 168.002, if the automobile is designed and used
for carrying more than nine persons including the driver; and

(ii) intended to be used primarily to transport tangible personal property or individuals,
other than employees, to whom the organization provides service in performing its charitable,
religious, or educational purpose;

(12) purchase of a motor vehicle for use by a transit provider exclusively to provide
transit service is exempt if the transit provider is either (i) receiving financial assistance or
reimbursement under section 174.24 or 473.384, or (ii) operating under section 174.29,
473.388, or 473.405;

(13) purchase or use of a motor vehicle by a qualified business, as defined in section
469.310, located in a job opportunity building zone, if the motor vehicle is principally
garaged in the job opportunity building zone and is primarily used as part of or in direct
support of the person's operations carried on in the job opportunity building zone. The
exemption under this clause applies to sales, if the purchase was made and delivery received
during the duration of the job opportunity building zone. The exemption under this clause
also applies to any local sales and use tax;

(14) purchase of a leased vehicle by the lessee who was a participant in a lease-to-own
program from a charitable organization that is:

(i) described in section 501(c)(3) of the Internal Revenue Code; and

(ii) licensed as a motor vehicle lessor under section 168.27, subdivision 4; and

(15) purchase of a motor vehicle used exclusively as a mobile medical unit for the
provision of medical or dental services by a federally qualified health center, as defined
under title 19 of the Social Security Act, as amended by Section 4161 of the Omnibus Budget
Reconciliation Act of 1990.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after December 31, 2017.
new text end

Sec. 67.

Minnesota Statutes 2018, section 462D.06, subdivision 1, is amended to read:

Subdivision 1.

Subtraction.

(a) As provided in section 290.0132, subdivision 25, an
account holder is allowed a subtraction from deleted text begin thedeleted text end federal deleted text begin taxabledeleted text end new text begin adjusted grossnew text end income equal
to interest or dividends earned on the first-time home buyer savings account during the
taxable year.

(b) The subtraction under paragraph (a) is allowed each year for the taxable years
including and following the taxable year in which the account was established. No person
other than the account holder is allowed a subtraction under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 68.

Minnesota Statutes 2018, section 462D.06, subdivision 2, is amended to read:

Subd. 2.

Addition.

(a) As provided in section 290.0131, subdivision 14, an account
holder must add to federal deleted text begin taxabledeleted text end new text begin adjusted grossnew text end income the following amounts:

(1) the amount in excess of the total contributions for all taxable years that is withdrawn
and used for other than eligible costs, or for a transfer permitted under section 462D.04,
subdivision 2; and

(2) the amount remaining in the first-time home buyer savings account at the close of
the tenth taxable year that exceeds the total contributions to the account for all taxable years.

(b) For an account that received a transfer under section 462D.04, subdivision 2, the
ten-year period under paragraph (a), clause (2), ends at the close of the earliest taxable year
that applies to either account under that clause.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 69.

Minnesota Statutes 2018, section 469.316, subdivision 1, is amended to read:

Subdivision 1.

Application.

An individual, estate, or trust operating a trade or business
in a job opportunity building zone, and an individual, estate, or trust making a qualifying
investment in a qualified business operating in a job opportunity building zone qualifies for
the exemptions from taxes imposed under chapter 290, as provided in this section. The
exemptions provided under this section apply only to the extent that the income otherwise
would be taxable under chapter 290. Subtractions under this section from new text begin federal adjusted
gross income, new text end federal taxable income, alternative minimum taxable income, or any other
base subject to tax are limited to the amount that otherwise would be included in the tax
base absent the exemption under this section. This section applies only to taxable years
beginning during the duration of the job opportunity building zone.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 70. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2018, sections 290.0131, subdivisions 7 and 11; 290.0133,
subdivisions 13 and 14; and 290.10, subdivision 2, 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 for taxable years beginning after December
31, 2018.
new text end

ARTICLE 2

INDIVIDUAL INCOME TAX

Section 1.

Minnesota Statutes 2018, section 116J.8737, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

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

(b) "Qualified small business" means a business that has been certified by the
commissioner under subdivision 2.

(d) "Qualified fund" means a pooled angel investment network fund that has been certified
by the commissioner under subdivision 4.

(e) "Qualified investment" means a cash investment in a qualified small business of a
minimum of:

(1) $10,000 in a calendar year by a qualified investor; deleted text begin or
deleted text end

new text begin (2) $7,500 in a calendar year by a qualified investor in qualified greater Minnesota
businesses or minority- or women-owned businesses in Minnesota; or
new text end

deleted text begin (2)deleted text end new text begin (3)new text end $30,000 in a calendar year by a qualified fund.

A qualified investment must be made in exchange for common stock, a partnership or
membership interest, preferred stock, debt with mandatory conversion to equity, or an
equivalent ownership interest as determined by the commissioner.

(f) "Family" means a family member within the meaning of the Internal Revenue Code,
section 267(c)(4).

(g) "Pass-through entity" means a corporation that for the applicable taxable year is
treated as an S corporation or a general partnership, limited partnership, limited liability
partnership, trust, or limited liability company and which for the applicable taxable year is
not taxed as a corporation under chapter 290.

(h) "Intern" means a student of an accredited institution of higher education, or a former
student who has graduated in the past six months from an accredited institution of higher
education, who is employed by a qualified small business in a nonpermanent position for
a duration of nine months or less that provides training and experience in the primary
business activity of the business.

(i) "Liquidation event" means a conversion of qualified investment for cash, cash and
other consideration, or any other form of equity or debt interest.

(j) "Qualified greater Minnesota business" means a qualified small business that is also
certified by the commissioner as a qualified greater Minnesota business under subdivision
2, paragraph (h).

(k) "Minority group member" means a United States citizen who is Asian, Pacific
Islander, Black, Hispanic, or Native American.

(l) "Minority-owned business" means a business for which one or more minority group
members:

(1) own at least 50 percent of the business, or, in the case of a publicly owned business,
own at least 51 percent of the stock; and

(2) manage the business and control the daily business operations.

(m) "Women" means persons of the female gender.

(n) "Women-owned business" means a business for which one or more women:

(1) own at least 50 percent of the business, or, in the case of a publicly owned business,
own at least 51 percent of the stock; and

(2) manage the business and control the daily business operations.

(o) "Officer" means a person elected or appointed by the board of directors to manage
the daily operations of the qualified small business.

(p) "Principal" means a person having authority to act on behalf of the qualified small
business.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 2.

Minnesota Statutes 2018, section 116J.8737, subdivision 2, is amended to read:

Subd. 2.

Certification of qualified small businesses.

(a) Businesses may apply to the
commissioner for certification as a qualified small business or qualified greater Minnesota
small business for a calendar year. The application must be in the form and be made under
the procedures specified by the commissioner, accompanied by an application fee of $150.
Application fees are deposited in the small business investment tax credit administration
account in the special revenue fund. deleted text begin The application for certification for 2010 must be made
available on the department's website by August 1, 2010.deleted text end Applications for deleted text begin subsequent years'deleted text end
certification must be made available on the department's website by November 1 of the
preceding year.

(b) Within 30 days of receiving an application for certification under this subdivision,
the commissioner must either certify the business as satisfying the conditions required of a
qualified small business or qualified greater Minnesota small business, request additional
information from the business, or reject the application for certification. If the commissioner
requests additional information from the business, the commissioner must either certify the
business or reject the application within 30 days of receiving the additional information. If
the commissioner neither certifies the business nor rejects the application within 30 days
of receiving the original application or within 30 days of receiving the additional information
requested, whichever is later, then the application is deemed rejected, and the commissioner
must refund the $150 application fee. A business that applies for certification and is rejected
may reapply.

(1) the business has its headquarters in Minnesota;

(2) at least: (i) 51 percent of the business's employees are employed in Minnesota; (ii)
51 percent of the business's total payroll is paid or incurred in the state; and (iii) 51 percent
of the total value of all contractual agreements to which the business is a party in connection
with its primary business activity is for services performed under contract in Minnesota,
unless the business obtains a waiver under paragraph (i);

(3) the business is engaged in, or is committed to engage in, innovation in Minnesota in
one of the following as its primary business activity:

(i) using proprietary technology to add value to a product, process, or service in a qualified
high-technology field;

(ii) researching or developing a proprietary product, process, or service in a qualified
high-technology field;

(iii) researching or developing a proprietary product, process, or service in the fields of
agriculture, tourism, forestry, mining, manufacturing, or transportation; or

(iv) researching, developing, or producing a new proprietary technology for use in the
fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;

(4) other than the activities specifically listed in clause (3), the business is not engaged
in real estate development, insurance, banking, lending, lobbying, political consulting,
information technology consulting, wholesale or retail trade, leisure, hospitality,
transportation, construction, ethanol production from corn, or professional services provided
by attorneys, accountants, business consultants, physicians, or health care consultants;

(5) the business has fewer than 25 employees;

(6) the business must new text begin either:
new text end

new text begin (i) new text end pay its employees annual wages of at least 175 percent of the federal poverty guideline
for the year for a family of four and must pay its interns annual wages of at least 175 percent
of the federal minimum wage used for federally covered employers, except that this
requirement must be reduced proportionately for employees and interns who work less than
full-time, and does not apply to an executive, officer, or member of the board of the business,
or to any employee who owns, controls, or holds power to vote more than 20 percent of the
outstanding securities of the business;new text begin or
new text end

new text begin (ii) if the business is a qualified greater Minnesota business or minority- or women-owned
qualified small business, pay at least 51 percent of its employees annual wages of at least
175 percent of the federal poverty guideline for the year for a family of four and must pay
its interns annual wages of at least 175 percent of the federal minimum wage used for
federally covered employers, except that this requirement must be reduced proportionately
for employees and interns who work less than full-time, and does not apply to an executive,
officer, or member of the board of the business, or to any employee who owns, controls, or
holds power to vote more than 20 percent of the outstanding securities of the business;
new text end

(7) the business has (i) not been in operation for more than ten years, or (ii) not been in
operation for more than 20 years if the business is engaged in the research, development,
or production of medical devices or pharmaceuticals for which United States Food and Drug
Administration approval is required for use in the treatment or diagnosis of a disease or
condition;

(8) the business has not previously received private equity investments of more than
$4,000,000;

(9) the business is not an entity disqualified under section 80A.50, paragraph (b), clause
(3); and

(10) the business has not issued securities that are traded on a public exchange.

(d) In applying the limit under paragraph (c), clause (5), the employees in all members
of the unitary business, as defined in section 290.17, subdivision 4, must be included.

(e) In order for a qualified investment in a business to be eligible for tax credits:

(1) the business must have applied for and received certification for the calendar year
in which the investment was made prior to the date on which the qualified investment was
made;

(2) the business must not have issued securities that are traded on a public exchange;

(3) the business must not issue securities that are traded on a public exchange within
180 days after the date on which the qualified investment was made; and

(4) the business must not have a liquidation event within 180 days after the date on
which the qualified investment was made.

(f) The commissioner must maintain a list of qualified small businesses and qualified
greater Minnesota businesses certified under this subdivision for the calendar year and make
the list accessible to the public on the department's website.

(g) For purposes of this subdivision, the following terms have the meanings given:

(1) "qualified high-technology field" includes aerospace, agricultural processing,
renewable energy, energy efficiency and conservation, environmental engineering, food
technology, cellulosic ethanol, information technology, materials science technology,
nanotechnology, telecommunications, biotechnology, medical device products,
pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar fields;

(2) "proprietary technology" means the technical innovations that are unique and legally
owned or licensed by a business and includes, without limitation, those innovations that are
patented, patent pending, a subject of trade secrets, or copyrighted; and

(3) "greater Minnesota" means the area of Minnesota located outside of the metropolitan
area as defined in section 473.121, subdivision 2.

(h) To receive certification as a qualified greater Minnesota business, a business must
satisfy all of the requirements of paragraph (c) and must satisfy the following conditions:

(1) the business has its headquarters in greater Minnesota; and

(2) at least: (i) 51 percent of the business's employees are employed in greater Minnesota;
(ii) 51 percent of the business's total payroll is paid or incurred in greater Minnesota; and
(iii) 51 percent of the total value of all contractual agreements to which the business is a
party in connection with its primary business activity is for services performed under contract
in greater Minnesota, unless the business obtains a waiver under paragraph (i).

(i) The commissioner must exempt a business from the requirement under paragraph
(c), clause (2), item (iii), if the business certifies to the commissioner that the services
required under a contract in connection with the primary business activity cannot be
performed in Minnesota if the business otherwise qualifies as a qualified small business, or
in greater Minnesota if the business otherwise qualifies as a qualified greater Minnesota
business. The business must submit the certification required under this paragraph every
six months from the month the exemption was granted. The exemption allowed under this
paragraph must be submitted in a form and manner prescribed by the commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 3.

Minnesota Statutes 2018, section 116J.8737, subdivision 3, is amended to read:

Subd. 3.

Certification of qualified investors.

(a) Investors may apply to the
commissioner for certification as a qualified investor for a taxable year. The application
must be in the form and be made under the procedures specified by the commissioner,
accompanied by an application fee of $350. Application fees are deposited in the small
business investment tax credit administration account in the special revenue fund. deleted text begin The
application for certification for 2010 must be made available on the department's website
by August 1, 2010.deleted text end Applications for deleted text begin subsequent years'deleted text end certification must be made available
on the department's website by November 1 of the preceding year.

(b) Within 30 days of receiving an application for certification under this subdivision,
the commissioner must either certify the investor as satisfying the conditions required of a
qualified investor, request additional information from the investor, or reject the application
for certification. If the commissioner requests additional information from the investor, the
commissioner must either certify the investor or reject the application within 30 days of
receiving the additional information. If the commissioner neither certifies the investor nor
rejects the application within 30 days of receiving the original application or within 30 days
of receiving the additional information requested, whichever is later, then the application
is deemed rejected, and the commissioner must refund the $350 application fee. An investor
who applies for certification and is rejected may reapply.

(c) To receive certification, an investor must (1) be a natural person; and (2) certify to
the commissioner that the investor will only invest in a transaction that is exempt under
section 80A.46, clause (13) or (14), in a security exempt under section 80A.461, or in a
security registered under section 80A.50, paragraph (b).

(d) In order for a qualified investment in a qualified small business to be eligible for tax
credits, a qualified investor who makes the investment must have applied for and received
certification for the calendar year prior to making the qualified investment, except in the
case of an investor who is not an accredited investor, within the meaning of Regulation D
of the Securities and Exchange Commission, Code of Federal Regulations, title 17, section
230.501, paragraph (a), application for certification may be made within 30 days after
making the qualified investment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 4.

Minnesota Statutes 2018, section 116J.8737, subdivision 4, is amended to read:

Subd. 4.

Certification of qualified funds.

(a) A pass-through entity may apply to the
commissioner for certification as a qualified fund for a calendar year. The application must
be in the form and be made under the procedures specified by the commissioner, accompanied
by an application fee of $1,000. Application fees are deposited in the small business
investment tax credit administration account in the special revenue fund. deleted text begin The application
for certification for 2010 of qualified funds must be made available on the department's
website by August 1, 2010.deleted text end Applications for deleted text begin subsequent years'deleted text end certification must be made
available by November 1 of the preceding year.

(b) Within 30 days of receiving an application for certification under this subdivision,
the commissioner must either certify the fund as satisfying the conditions required of a
qualified fund, request additional information from the fund, or reject the application for
certification. If the commissioner requests additional information from the fund, the
commissioner must either certify the fund or reject the application within 30 days of receiving
the additional information. If the commissioner neither certifies the fund nor rejects the
application within 30 days of receiving the original application or within 30 days of receiving
the additional information requested, whichever is later, then the application is deemed
rejected, and the commissioner must refund the $1,000 application fee. A fund that applies
for certification and is rejected may reapply.

(1) invest or intend to invest in qualified small businesses;

(2) be organized as a pass-through entity; and

(3) have at least three separate investors, of whom at least three whose investment is
made in the certified business and who seek a tax credit allocation satisfy the conditions in
subdivision 3, paragraph (c).

(d) Investments in the fund may consist of equity investments or notes that pay interest
or other fixed amounts, or any combination of both.

(e) In order for a qualified investment in a qualified small business to be eligible for tax
credits, a qualified fund that makes the investment must have applied for and received
certification for the calendar year prior to making the qualified investment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 5.

Minnesota Statutes 2018, section 116J.8737, subdivision 5, is amended to read:

Subd. 5.

Credit allowed.

(a)deleted text begin (1)deleted text end 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 deleted text begin $15,000,000deleted text end new text begin $10,000,000new text end in credits
to qualified investors or qualified funds for taxable years beginning after December 31,
deleted text begin 2013, and before January 1, 2017, and must not allocate more than $10,000,000 in credits
to qualified investors or qualified funds for taxable years beginning after December 31,
2016, and before January 1, 2018; and (2) for taxable years beginning after December 31,
2014, and before January 1,deleted text end 2018,new text begin and before January 1, 2021. For each taxable year,new text end 50
percent must be allocated to credits for qualifying investments in qualified greater Minnesota
businesses and minority- or women-owned qualified small businesses in Minnesota. Any
portion of a taxable year's credits that is reserved for qualifying investments in greater
Minnesota businesses and minority- or women-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 2010 must be made available on the department's
website by September 1, 2010, and the department must begin accepting applications by
September 1, 2010. 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 6.

Minnesota Statutes 2018, section 116J.8737, subdivision 6, is amended to read:

Subd. 6.

Annual reports.

(a) By February 1 of each year each qualified small business
that received an investment that qualified for a credit, and each qualified investor and
qualified fund that made an investment that qualified for a credit, must submit an annual
report to the commissioner and pay a filing fee of $100 as required under this subdivision.
Each qualified investor and qualified fund must submit reports for three years following
each year in which it made an investment that qualified for a credit, and each qualified small
business must submit reports for five years following the year in which it received an
investment qualifying for a credit. Reports must be made in the form required by the
commissioner. All filing fees collected are deposited in the small business investment tax
credit administration account in the special revenue fund.

(b) A report from a qualified small business must certify that the business satisfies the
following requirements:

(1) the business has its headquarters in Minnesota;

(2) at least 51 percent of the business's employees are employed in Minnesota, and 51
percent of the business's total payroll is paid or incurred in the state;

(3) that the business is engaged in, or is committed to engage in, innovation in Minnesota
as defined under subdivision 2; and

(4) that the business meets the payroll requirements in subdivision 2, paragraph (c),
clause (6).

(c) Reports from qualified investors must certify that the investor remains invested in
the qualified small business as required by subdivision 5, paragraph (g).

(d) Reports from qualified funds must certify that the fund remains invested in the
qualified small business as required by subdivision 5, paragraph (g).

(e) A qualified small business that ceases all operations and becomes insolvent must file
a final annual report in the form required by the commissioner documenting its insolvency.
In following years the business is exempt from the annual reporting requirement, the report
filing fee, and the fine for failure to file a report.

(f) A qualified small business, qualified investor, or qualified fund that fails to file an
annual reportnew text begin by February 1new text end as required under this subdivision is subject to a deleted text begin $500deleted text end new text begin $100new text end
fine.

new text begin (g) A qualified investor or qualified fund that fails to file an annual report by April 1
may, at the commissioner's discretion, have any credit allocated and certified to the investor
or fund revoked and such credit must be repaid by the investor.
new text end

new text begin (h) A qualified business that fails to file an annual report by April 1 may, at the
commissioner's discretion, be subject to the credit repayment provisions in subdivision 7,
paragraph (b).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 7.

Minnesota Statutes 2018, section 116J.8737, subdivision 12, is amended to read:

Subd. 12.

Sunset.

This section expires for taxable years beginning after December 31,
deleted text begin 2017deleted text end new text begin 2020new text end , except that reporting requirements under subdivision 6 and revocation of credits
under subdivision 7 remain in effect through deleted text begin 2019deleted text end new text begin 2022new text end for qualified investors and qualified
funds, and through deleted text begin 2021deleted text end new text begin 2024new text end for qualified small businesses, reporting requirements under
subdivision 9 remain in effect through deleted text begin 2022deleted text end new text begin 2020new text end , and the appropriation in subdivision 11
remains in effect through deleted text begin 2021deleted text end new text begin 2024new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 8.

Minnesota Statutes 2018, section 290.0132, subdivision 26, is amended to read:

Subd. 26.

Social Security benefits.

(a) A portion ofnew text begin taxablenew text end Social Security benefits is
allowed as a subtraction. The subtraction equals the lesser ofnew text begin taxablenew text end Social Security benefits
or a maximum subtraction subject to the limits under paragraphs (b), (c), and (d).

(b) For married taxpayers filing a joint return and surviving spouses, the maximum
subtraction equals deleted text begin $4,500deleted text end new text begin $6,000new text end . The maximum subtraction is reduced by 20 percent of
provisional income over deleted text begin $77,000deleted text end new text begin $74,000new text end . In no case is the subtraction less than zero.

(c) For single or head-of-household taxpayers, the maximum subtraction equals deleted text begin $3,500deleted text end new text begin
$4,500new text end . The maximum subtraction is reduced by 20 percent of provisional income over
deleted text begin $60,200deleted text end new text begin $58,700new text end . In no case is the subtraction less than zero.

(d) For married taxpayers filing separate returns, the maximum subtraction equals deleted text begin $2,250deleted text end new text begin
$3,000new text end . The maximum subtraction is reduced by 20 percent of provisional income over
deleted text begin $38,500deleted text end new text begin $37,000new text end . In no case is the subtraction less than zero.

(e) For purposes of this subdivision, "provisional income" means modified adjusted
gross income as defined in section 86(b)(2) of the Internal Revenue Code, plus one-half of
thenew text begin taxablenew text end Social Security benefits received during the taxable year, and "Social Security
benefits" has the meaning given in section 86(d)(1) of the Internal Revenue Code.

(f) The commissioner shall adjust the maximum subtraction and threshold amounts in
paragraphs (b) to (d) by the percentage determined pursuant to the provisions of section
1(f) of the Internal Revenue Code,new text begin as amended through December 16, 2016,new text end except that in
section 1(f)(3)(B) of the Internal Revenue Code the word "deleted text begin 2016deleted text end new text begin 2018new text end " shall be substituted
for the word "1992." For deleted text begin 2018deleted text end new text begin 2020new text end , the commissioner shall then determine the percentage
change from the 12 months ending on August 31, deleted text begin 2016deleted text end new text begin 2018new text end , to the 12 months ending on
August 31, deleted text begin 2017deleted text end new text begin 2019new text end , and in each subsequent year, from the 12 months ending on August
31, deleted text begin 2016deleted text end new text begin 2018new text end , to the 12 months ending on August 31 of the year preceding the taxable
year. The determination of the commissioner pursuant to this subdivision must not be
considered a rule and is not subject to the Administrative Procedure Act contained in chapter
14, including section 14.386. The maximum subtraction and threshold amounts as adjusted
must be rounded to the nearest $10 amount. If the amount ends in $5, the amount is rounded
up to the nearest $10 amount.

new text begin EFFECTIVE DATE. new text end

new text begin (a) The amendments to paragraphs (b), (c), (d), and (f), except
for the amendment adding the words "as amended through December 31, 2016," are effective
for taxable years beginning after December 31, 2018.
new text end

new text begin (b) The amendments to paragraphs (a) and (e), and the amendment to paragraph (f)
adding the words "as amended through December 31, 2016," are effective retroactively for
taxable years beginning after December 31, 2017.
new text end

Sec. 9.

Minnesota Statutes 2018, section 290.0671, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

new text begin (1)new text end a taxpayer with no qualifying children who has attained the age of 21, but not attained
age 65 before the close of the taxable year and is otherwise eligible for a credit under section
32 of the Internal Revenue Code may also receive a creditdeleted text begin .deleted text end new text begin ; and
new text end

new text begin (2) a taxpayer who is otherwise eligible for a credit under section 32 of the Internal
Revenue Code remains eligible for the credit even if the taxpayer's earned income or adjusted
gross income exceeds the income limitation under section 32 of the Internal Revenue Code.
new text end

(b) For individuals with no qualifying children, the credit equals 2.10 percent of the first
deleted text begin $6,180deleted text end new text begin $6,640new text end of earned income. The credit is reduced by 2.01 percent of earned income
or adjusted gross income, whichever is greater, in excess of deleted text begin $8,130deleted text end new text begin $8,730new text end , but in no case
is the credit less than zero.

(c) For individuals with one qualifying child, the credit equals 9.35 percent of the first
deleted text begin $11,120deleted text end new text begin $11,950new text end of earned income. The credit is reduced by 6.02 percent of earned income
or adjusted gross income, whichever is greater, in excess of deleted text begin $21,190deleted text end new text begin $22,770new text end , but in no case
is the credit less than zero.

(d) For individuals with two deleted text begin or moredeleted text end qualifying children, the credit equals 11 percent
of the first deleted text begin $18,240deleted text end new text begin $14,600new text end of earned income. The credit is reduced by 10.82 percent of
earned income or adjusted gross income, whichever is greater, in excess of deleted text begin $25,130deleted text end new text begin $27,000new text end ,
but in no case is the credit less than zero.

new text begin (e) For individuals with three or more qualifying children, the credit equals 12.38 percent
of the first $19,600 of earned income. The credit is reduced by 10.82 percent of earned
income or adjusted gross income, whichever is greater, in excess of $27,000, but in no case
is the credit less than zero.
new text end

new text begin (f) For taxpayers eligible for a credit under this section, an additional credit is allowed
as follows:
new text end

new text begin (1) $200 for a married filing joint return or a surviving spouse; and
new text end

new text begin (2) $100 for all other taxpayers.
new text end

deleted text begin (e)deleted text end new text begin (g)new text end For a part-year resident, the credit must be allocated based on the percentage
calculated under section 290.06, subdivision 2c, paragraph (e).

deleted text begin (f)deleted text end new text begin (h)new text end For a person who was a resident for the entire tax year and has earned income
not subject to tax under this chapter, including income excluded under section 290.0132,
subdivision 10, the credit must be allocated based on the ratio of federal adjusted gross
income reduced by the earned income not subject to tax under this chapter over federal
adjusted gross income. For purposes of this paragraph, the following clauses are not
considered "earned income not subject to tax under this chapter":

(1) the subtractions for military pay under section 290.0132, subdivisions 11 and 12;

(2) the exclusion of combat pay under section 112 of the Internal Revenue Code; and

(3) income derived from an Indian reservation by an enrolled member of the reservation
while living on the reservation.

deleted text begin (g)deleted text end new text begin (i)new text end For tax years beginning after December 31, deleted text begin 2013deleted text end new text begin 2018new text end , the deleted text begin $8,130deleted text end new text begin $8,730new text end in
paragraph (b), the deleted text begin $21,190deleted text end new text begin $22,700new text end in paragraph (c), deleted text begin anddeleted text end the deleted text begin $25,130deleted text end new text begin $27,000new text end in paragraph
(d),new text begin and the $27,000 in paragraph (e),new text end after being adjusted for inflation under subdivision
7, are each increased by deleted text begin $5,000deleted text end new text begin $5,840new text end for married taxpayers filing joint returns. deleted text begin For tax
years beginning after December 31, 2013, the commissioner shall annually adjust the $5,000
by the percentage determined pursuant to the provisions of section 1(f) of the Internal
Revenue Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted for
the word "1992." For 2014, the commissioner shall then determine the percent change from
the 12 months ending on August 31, 2008, to the 12 months ending on August 31, 2013,
and in each subsequent year, from the 12 months ending on August 31, 2008, to the 12
months ending on August 31 of the year preceding the taxable year. The earned income
thresholds as adjusted for inflation must be rounded to the nearest $10. If the amount ends
in $5, the amount is rounded up to the nearest $10. The determination of the commissioner
under this subdivision is not a rule under the Administrative Procedure Act.
deleted text end

deleted text begin (h)deleted text end new text begin (j)new text end The commissioner shall construct tables showing the amount of the credit at
various income levels and make them available to taxpayers. The tables shall follow the
schedule contained in this subdivision, except that the commissioner may graduate the
transition between income brackets.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 10.

Minnesota Statutes 2018, section 290.0671, subdivision 7, is amended to read:

Subd. 7.

Inflation adjustment.

The earned income amounts used to calculate the credit
and the income thresholds at which the maximum credit begins to be reduced in subdivision
1new text begin , and the additional threshold amount for married taxpayers filing joint returns,new text end must be
adjusted for inflation. The commissioner shall adjust by the percentage determined pursuant
to the provisions of section 1(f) of the Internal Revenue Code,new text begin as amended through December
16, 2016,new text end except that in section 1(f)(3)(B) the word deleted text begin "2013"deleted text end new text begin "2018"new text end shall be substituted for
the word "1992." For deleted text begin 2015deleted text end new text begin 2020new text end , the commissioner shall then determine the percent change
from the 12 months ending on August 31, deleted text begin 2013deleted text end new text begin 2018new text end , to the 12 months ending on August
31, deleted text begin 2014deleted text end new text begin 2019new text end , and in each subsequent year, from the 12 months ending on August 31, deleted text begin 2013deleted text end new text begin
2018new text end , to the 12 months ending on August 31 of the year preceding the taxable year. The
earned income thresholds as adjusted for inflation must be rounded to the nearest $10
amount. If the amount ends in $5, the amount is rounded up to the nearest $10 amount. The
determination of the commissioner under this subdivision is not a rule under the
Administrative Procedure Act.

new text begin EFFECTIVE DATE. new text end

new text begin The amendment adding the words "as amended through December
16, 2016," is effective retroactively for taxable years beginning after December 31, 2017.
The remaining amendments are effective for taxable years beginning after December 31,
2018.
new text end

Sec. 11.

Minnesota Statutes 2018, section 290.0684, subdivision 2, is amended to read:

Subd. 2.

Credit allowed.

(d) For married couples filing a joint return, the maximum credit is phased out as follows:

(1) for married couples with adjusted gross income in excess of $75,000, but not more
than deleted text begin $100,000deleted text end new text begin $135,000new text end , the maximum credit is reduced by one percent of adjusted gross
income in excess of $75,000new text begin until the maximum credit amount equals $250new text end ;new text begin and
new text end

deleted text begin (2) for married couples with adjusted gross income in excess of $100,000, but not more
than $135,000, the maximum credit is $250; and
deleted text end

deleted text begin (3)deleted text end new text begin (2)new text end for married couples with adjusted gross income in excess of $135,000, the
maximum credit is $250, reduced by one percent of adjusted gross income in excess of
$135,000.

(e) The income thresholds in paragraphs (c) and (d) used to calculate the maximum
credit must be adjusted for inflation. The commissioner shall adjust the income thresholds
by the percentage determined under the provisions of section 1(f) of the Internal Revenue
Code, except that in section 1(f)(3)(B) the word "2016" is substituted for the word "1992."
For 2018, the commissioner shall then determine the percent change from the 12 months
ending on August 31, 2016, to the 12 months ending on August 31, 2017, and in each
subsequent year, from the 12 months ending on August 31, 2016, to the 12 months ending
on August 31 of the year preceding the taxable year. The income thresholds as adjusted for
inflation must be rounded to the nearest $10 amount. If the amount ends in $5, the amount
is rounded up to the nearest $10 amount. The determination of the commissioner under this
subdivision is not subject to chapter 14, including section 14.386.

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. 12. new text begin APPLICATION OF SMALL BUSINESS INVESTMENT TAX CREDIT
FOR TAXABLE YEAR 2019.
new text end

new text begin Applications for (1) certification as a qualified small business, qualified investor, or
qualified fund under Minnesota Statutes, section 116J.8737, subdivisions 2, 3, and 4, and
(2) the credit under Minnesota Statutes, section 116J.8737, subdivision 5, for taxable year
2019 must be made available on the Department of Employment and Economic
Development's website by September 1, 2019. The provisions of Minnesota Statutes, section
116J.8737, generally apply to the taxable year 2019 extension of the credit in sections 1 to
7.
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 TAX

Section 1.

Minnesota Statutes 2018, section 289A.11, is amended by adding a subdivision
to read:

new text begin Subd. 4. new text end

new text begin Marketplace provider information report. new text end

new text begin (a) A marketplace provider required
to collect and remit sales and use taxes under section 297A.66 shall file an information
report for each calendar quarter containing the information regarding the sales it facilitates
for each retailer as required by this section. The report is due on the 30th day following the
last day of the most recently completed calendar quarter. The commissioner shall prescribe
the content, format, and manner of the information report pursuant to section 270C.03. The
report must include each retailer's:
new text end

new text begin (1) name, address, and federal employer identification number (FEIN);
new text end

new text begin (2) total gross receipts for the period;
new text end

new text begin (3) total taxable sales for the period;
new text end

new text begin (4) total state sales tax collected and remitted for the period; and
new text end

new text begin (5) itemized total of each local sales tax collected and remitted for the period.
new text end

new text begin (b) No payment of tax is required to be remitted with the quarterly information report.
A marketplace provider that fails to file this information report is subject to the penalty
imposed under section 289A.60, subdivision 29.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2019.
new text end

Sec. 2.

Minnesota Statutes 2018, section 289A.60, subdivision 29, is amended to read:

Subd. 29.

Penalty for failure to new text begin file new text end report deleted text begin liquor salesdeleted text end .

In the case of a failure to file
an informational report required by sectionnew text begin 289A.11, subdivision 4, ornew text end 297A.8155new text begin ,new text end with the
commissioner on or before the deleted text begin datedeleted text end new text begin dates new text end prescribed, the person failing to file the report
shall pay a penalty of $500 for each failure. If a failure to file a report is intentional, the
penalty shall be $1,000 for each failure.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for reports first due for sales and purchases
made after June 30, 2019.
new text end

Sec. 3.

Minnesota Statutes 2018, section 297A.66, is amended to read:

297A.66 JURISDICTION TO REQUIRE COLLECTION AND REMITTANCE
OF TAX deleted text begin BY RETAILERdeleted text end .

Subdivision 1.

Definitions.

(a) To the extent allowed by the United States Constitution
and the laws of the United States, new text begin the terms new text end "retailer maintaining a place of business in this
state," new text begin and "marketplace provider maintaining a place of business in this state,"new text end or deleted text begin adeleted text end similar
deleted text begin term, meansdeleted text end new text begin terms mean new text end a retailernew text begin or marketplace providernew text end :

(1) having or maintaining within this state, directly or by a subsidiary or an affiliate, an
office, place of distribution, sales, storage, or sample room or place, warehouse, or other
place of business, including the employment of a resident of this state who works from a
home office in this state; or

(2) having a representative, including, but not limited to, an affiliate, agent, salesperson,
canvasser, deleted text begin marketplace provider,deleted text end solicitor, or other third party operating in this state under
the authority of the retailernew text begin or marketplace provider,new text end or its subsidiary, for any purpose,
including the repairing, selling, delivering, installing, facilitating sales, processing sales, or
soliciting of orders for the retailer's new text begin or a retailer's new text end goods or services, or the leasing of tangible
personal property located in this state, whether the place of business or agent, representative,
affiliate, salesperson, canvasser, or solicitor is located in the state permanently or temporarily,
or whether or not the retailernew text begin or marketplace providernew text end , subsidiary, or affiliate is authorized
to do business in this state. deleted text begin A retailer is represented by a marketplace provider in this state
if the retailer makes sales in this state facilitated by a marketplace provider that maintains
a place of business in this state.
deleted text end

deleted text begin (b) "Destination of a sale" means the location to which the retailer makes delivery of
the property sold, or causes the property to be delivered, to the purchaser of the property,
or to the agent or designee of the purchaser. The delivery may be made by any means,
including the United States Postal Service or a for-hire carrier.
deleted text end

deleted text begin (c) deleted text end new text begin (b) To the extent allowed by the United States Constitution and the laws of the United
States, the terms "retailer not maintaining a place of business in this state," and "marketplace
provider not maintaining a place of business in this state," or similar terms mean a retailer
or marketplace provider making or facilitating retail sales from outside this state to a
destination within this state and not maintaining a place of business in this state as provided
in paragraph (a) that engages in the regular or systematic soliciting of sales from potential
customers in this state by:
new text end

new text begin (1) distribution, by mail or otherwise, of catalogs, periodicals, advertising flyers, or other
written solicitations of business to customers in this state;
new text end

new text begin (2) advertisements on billboards or other outdoor advertising in this state;
new text end

new text begin (3) advertisements in newspapers published in this state;
new text end

new text begin (4) advertisements in trade journals or other periodicals the circulation of which is
primarily within this state;
new text end

new text begin (5) advertisements in a Minnesota edition of a national or regional publication or a
limited regional edition in which this state is included as part of a broader regional or national
publication that are not placed in other geographically defined editions of the same issue
of the same publication;
new text end

new text begin (6) advertisements in regional or national publications in an edition that is not by its
contents geographically targeted to Minnesota but is sold over the counter in Minnesota or
by subscription to Minnesota residents;
new text end

new text begin (7) advertisements broadcast on a radio or television station located in Minnesota; or
new text end

new text begin (8) any other solicitation by telephone, computer database, cable, optic, microwave, or
any other communication system, including but not limited to a website accessible from
within Minnesota.
new text end

new text begin The location of independent vendors that provide products or services to a retailer or
marketplace provider in connection with a retailer or marketplace provider's solicitation of
customers within this state, including such products and services as creation of copy, printing,
distribution, and recording is not considered in determining whether the retailer or
marketplace provider is required to collect tax. Paragraph (b) must be construed without
regard to the state from which distribution of the materials originated or in which they were
prepared.
new text end

new text begin (c) "Regular or systematic soliciting of sales from potential customers in this state"
means the retailer not maintaining a place of business in this state or marketplace provider
not maintaining a place of business in this state is engaged in any of the solicitations listed
in paragraph (b), and:
new text end

new text begin (1) makes or facilitates 100 or more retail sales from outside this state to destinations in
this state during the prior 12-month period; or
new text end

new text begin (2) makes or facilitates retail sales totaling more than $100,000 from outside this state
to destinations in this state during the prior 12-month period.
new text end

new text begin (d) new text end "Marketplace provider" means any person who facilitates a retail sale by a retailer
by:

(1) listing or advertising for sale by the retailer in any forum, tangible personal property,
services, or digital goods that are subject to tax under this chapter; and

(2) either directly or indirectly through agreements or arrangements with third parties
collecting payment from the customer and transmitting that payment to the retailer regardless
of whether the marketplace provider receives compensation or other consideration in
exchange for its services.

deleted text begin (d) "Total taxable retail sales" means the gross receipts from the sale of all tangible
goods, services, and digital goods subject to sales and use tax under this chapter.
deleted text end

new text begin (e) "Destination of a sale" means the location to which the retailer makes delivery of
the property sold, or causes the property to be delivered, to the purchaser of the property,
or to the agent or designee of the purchaser. The delivery may be made by any means,
including the United States Postal Service or a for-hire carrier.
new text end

Subd. 2.

deleted text begin Retailer maintaining place of business in this statedeleted text end new text begin Collection and remittance
requirements for retailers and marketplace providersnew text end .

(a) Except as provided in paragraph
deleted text begin (b)deleted text end new text begin (d)new text end , a retailer maintaining a place of business in this state new text begin and a retailer not maintaining
a place of business in this state new text end who makes retail sales in Minnesota or to a destination in
Minnesota shall collect sales and use taxes and remit them to the commissioner under section
297A.77new text begin for all retail sales other than those facilitated by a marketplace provider maintaining
a place of business in this state or a marketplace provider not maintaining a place of business
in this state that is required to collect and remit sales and use taxes under paragraph (b)new text end .

(b) deleted text begin A retailer with total taxable retail sales to customers in this state of less than $10,000
in the 12-month period ending on the last day of the most recently completed calendar
quarter is not required to collect and remit sales tax if it is determined to be a retailer
maintaining a place of business in the state solely because it made sales through one or more
marketplace providers. The provisions of this paragraph do not apply to a retailer that is or
was registered to collect sales and use tax in this state.deleted text end new text begin Except as provided in paragraph (d),
a marketplace provider maintaining a place of business in this state and a marketplace
provider not maintaining a place of business in this state who facilitates retail sales in
Minnesota or to a destination in Minnesota shall collect sales and use taxes and remit them
to the commissioner under section 297A.77 unless:
new text end

new text begin (1) the retailer provides a copy of the retailer's registration to collect sales and use taxes
in this state to the marketplace provider before the marketplace provider facilitates a sale
on behalf of the retailer; or
new text end

new text begin (2) upon inquiry by the marketplace provider or its agent, the commissioner discloses
that the retailer is registered to collect sales and use taxes in this state.
new text end

new text begin (c) Nothing in paragraph (b) shall be construed to interfere with the ability of a
marketplace provider and a retailer to enter into an agreement regarding fulfillment of the
requirements of this chapter.
new text end

new text begin (d) A retailer not maintaining a place of business in this state and a marketplace provider
not maintaining a place of business in this state shall:
new text end

new text begin (1) begin collecting and remitting sales and use taxes to the commissioner on the first
day of a calendar month occurring no later than 60 days after the retailer or marketplace
provider engages in regular or systematic soliciting of sales from potential customers in this
state; and
new text end

new text begin (2) continue to collect and remit sales and use taxes to the commissioner until at least
the last day of the 12th calendar month following the calendar month in which the retailer
or marketplace provider began collecting and remitting sales and use taxes under clause
(1).
new text end

new text begin (e) A retailer not maintaining a place of business in this state and a marketplace provider
not maintaining a place of business in this state may cease collecting and remitting sales
and use taxes to the commissioner after the period in paragraph (d), clause (2), if the retailer
or marketplace provider no longer engages in regular or systematic soliciting of sales from
potential customers in this state.
new text end

new text begin (f) A retailer or marketplace provider may cease collecting and remitting sales and use
taxes under paragraph (e) only after notifying the commissioner that the retailer or
marketplace provider is no longer engaged in the regular or systematic soliciting of sales
from potential customers in this state. The commissioner shall prescribe the content, format,
and manner of the notification pursuant to section 270C.30. If a retailer or marketplace
provider subsequently engages in regular or systematic soliciting of sales from potential
customers in this state, the retailer shall again comply with the requirements of paragraph
(d).
new text end

Subd. 3.

deleted text begin Retailer not maintaining place of business in this statedeleted text end new text begin Marketplace provider
liabilitynew text end .

deleted text begin (a) To the extent allowed by the United States Constitution and in accordance with
the terms and conditions of federal remote seller law, a retailer making retail sales from
outside this state to a destination within this state and not maintaining a place of business
in this state shall collect sales and use taxes and remit them to the commissioner under
section 297A.77.
deleted text end

deleted text begin (b) To the extent allowed by the United States Constitution and the laws of the United
States, a retailer making retail sales from outside this state to a destination within this state
and not maintaining a place of business in this state shall collect sales and use taxes and
remit them to the commissioner under section 297A.77, if the retailer engages in the regular
or systematic soliciting of sales from potential customers in this state by:
deleted text end

deleted text begin (1) distribution, by mail or otherwise, of catalogs, periodicals, advertising flyers, or other
written solicitations of business to customers in this state;
deleted text end

deleted text begin (2) display of advertisements on billboards or other outdoor advertising in this state;
deleted text end

deleted text begin (3) advertisements in newspapers published in this state;
deleted text end

deleted text begin (4) advertisements in trade journals or other periodicals the circulation of which is
primarily within this state;
deleted text end

deleted text begin (5) advertisements in a Minnesota edition of a national or regional publication or a
limited regional edition in which this state is included as part of a broader regional or national
publication which are not placed in other geographically defined editions of the same issue
of the same publication;
deleted text end

deleted text begin (6) advertisements in regional or national publications in an edition which is not by its
contents geographically targeted to Minnesota but which is sold over the counter in Minnesota
or by subscription to Minnesota residents;
deleted text end

deleted text begin (7) advertisements broadcast on a radio or television station located in Minnesota; or
deleted text end

deleted text begin (8) any other solicitation by telegraphy, telephone, computer database, cable, optic,
microwave, or other communication system.
deleted text end

deleted text begin This paragraph must be construed without regard to the state from which distribution
of the materials originated or in which they were prepared.
deleted text end

deleted text begin (c) The location within or without this state of independent vendors that provide products
or services to the retailer in connection with its solicitation of customers within this state,
including such products and services as creation of copy, printing, distribution, and recording,
is not considered in determining whether the retailer is required to collect tax.
deleted text end

deleted text begin (d) A retailer not maintaining a place of business in this state is presumed, subject to
rebuttal, to be engaged in regular solicitation within this state if it engages in any of the
activities in paragraph (b) and:
deleted text end

deleted text begin (1) makes 100 or more retail sales from outside this state to destinations in this state
during a period of 12 consecutive months; or
deleted text end

deleted text begin (2) makes ten or more retail sales totaling more than $100,000 from outside this state
to destinations in this state during a period of 12 consecutive months.
deleted text end

new text begin (a) A marketplace provider is subject to audit on the retail sales it facilitates if it is
required to collect sales and use taxes and remit them to the commissioner under subdivision
2, paragraphs (b) and (c).
new text end

new text begin (b) A marketplace provider is not liable for failing to file, collect, and remit sales and
use taxes to the commissioner if the marketplace provider demonstrates that the error was
due to incorrect or insufficient information given to the marketplace provider by the retailer.
This paragraph does not apply if the marketplace provider and the marketplace retailer are
related as defined in subdivision 4, paragraph (b).
new text end

Subd. 4.

Affiliated entities.

(a) An entity is an "affiliate" of the retailer for purposes of
subdivision 1, paragraph (a), if the entity:

(1) uses its facilities or employees in this state to advertise, promote, or facilitate the
establishment or maintenance of a market for sales of items by the retailer to purchasers in
this state or for the provision of services to the retailer's purchasers in this state, such as
accepting returns of purchases for the retailer, providing assistance in resolving customer
complaints of the retailer, or providing other services;

(2) has the same or a similar business name to the retailer and sells, from a location or
locations in this state, tangible personal property, digital goods, or services, taxable under
this chapter, that are similar to that sold by the retailer;

(3) maintains an office, distribution facility, salesroom, warehouse, storage place, or
other similar place of business in this state to facilitate the delivery of tangible personal
property, digital goods, or services sold by the retailer to its customers in this state;

(4) maintains a place of business in this state and uses trademarks, service marks, or
trade names in this state that are the same or substantially similar to those used by the retailer,
and that use is done with the express or implied consent of the holder of the marks or names;

(5) delivers, installs, or assembles tangible personal property in this state, or performs
maintenance or repair services on tangible personal property in this state, for tangible
personal property sold by the retailer;

(6) facilitates the delivery of tangible personal property to customers of the retailer by
allowing the customers to pick up tangible personal property sold by the retailer at a place
of business the entity maintains in this state; or

(7) shares management, business systems, business practices, or employees with the
retailer, or engages in intercompany transactions with the retailer related to the activities
that establish or maintain the market in this state of the retailer.

(b) Two entities are related parties under this section if one of the entities meets at least
one of the following tests with respect to the other entity:

(1) one or both entities is a corporation, and one entity and any party related to that entity
in a manner that would require an attribution of stock from the corporation to the party or
from the party to the corporation under the attribution rules of section 318 of the Internal
Revenue Code owns directly, indirectly, beneficially, or constructively at least 50 percent
of the value of the corporation's outstanding stock;

(2) one or both entities is a partnership, estate, or trust and any partner or beneficiary,
and the partnership, estate, or trust and its partners or beneficiaries own directly, indirectly,
beneficially, or constructively, in the aggregate, at least 50 percent of the profits, capital,
stock, or value of the other entity or both entities;

(3) an individual stockholder and the members of the stockholder's family (as defined
in section 318 of the Internal Revenue Code) owns directly, indirectly, beneficially, or
constructively, in the aggregate, at least 50 percent of the value of both entities' outstanding
stock;

(4) the entities are related within the meaning of subsections (b) and (c) of section 267
or 707(b)(1) of the Internal Revenue Code; or

(5) the entities have one or more ownership relationships and the relationships were
designed with a principal purpose of avoiding the application of this section.

(c) An entity is an affiliate under the provisions of this subdivision if the requirements
of paragraphs (a) and (b) are met during any part of the 12-month period ending on the first
day of the month before the month in which the sale was made.

Subd. 4a.

Solicitor.

(a) "Solicitor," for purposes of subdivision 1, paragraph (a), means
a person, whether an independent contractor or other representative, who directly or indirectly
solicits business for the retailer.

(b) A retailer is presumed to have a solicitor in this state if it enters into an agreement
with a resident under which the resident, for a commission or other substantially similar
consideration, directly or indirectly refers potential customers, whether by a link on an
Internet website, or otherwise, to the seller. This paragraph only applies if the total gross
receipts are at least $10,000 in the 12-month period ending on the last day of the most recent
calendar quarter before the calendar quarter in which the sale is made. For purposes of this
paragraph, gross receipts means receipts from sales to customers located in the state who
were referred to the retailer by all residents with this type of agreement with the retailer.

(c) The presumption under paragraph (b) may be rebutted by proof that the resident with
whom the seller has an agreement did not engage in any solicitation in the state on behalf
of the retailer that would satisfy the nexus requirement of the United States Constitution
during the 12-month period in question. Nothing in this section shall be construed to narrow
the scope of the terms affiliate, agent, salesperson, canvasser, or other representative for
purposes of subdivision 1, paragraph (a).

(d) For purposes of this subdivision, "resident" includes an individual who is a resident
of this state, as defined in section 290.01, or a business that owns tangible personal property
located in this state or has one or more employees providing services for the business in
this state.

(e) This subdivision does not apply to chapter 290 and does not expand or contract the
jurisdiction to tax a trade or business under chapter 290.

deleted text begin Subd. 4b. deleted text end

deleted text begin Collection and remittance requirements for marketplace providers and
marketplace retailers. deleted text end

deleted text begin (a) A marketplace provider shall collect sales and use taxes and
remit them to the commissioner under section 297A.77 for all facilitated sales for a retailer,
and is subject to audit on the retail sales it facilitates unless either:
deleted text end

deleted text begin (1) the retailer provides a copy of the retailer's registration to collect sales and use tax
in this state to the marketplace provider before the marketplace provider facilitates a sale;
or
deleted text end

deleted text begin (2) upon inquiry by the marketplace provider or its agent, the commissioner discloses
that the retailer is registered to collect sales and use taxes in this state.
deleted text end

deleted text begin (b) Nothing in this subdivision shall be construed to interfere with the ability of a
marketplace provider and a retailer to enter into an agreement regarding fulfillment of the
requirements of this chapter.
deleted text end

deleted text begin (c) A marketplace provider is not liable under this subdivision for failure to file and
collect and remit sales and use taxes if the marketplace provider demonstrates that the error
was due to incorrect or insufficient information given to the marketplace provider by the
retailer. This paragraph does not apply if the marketplace provider and the marketplace
retailer are related as defined in subdivision 4, paragraph (b).
deleted text end

Subd. 5.

Withdrawal from streamlined sales and use tax agreement.

If the state has
withdrawn its membership or been expelled from the streamlined sales and use tax agreement,
it shall not use a seller's registration with the central registration system and the collection
of sales and use taxes in the state as a factor in determining whether the seller has nexus
with that state for any tax at any time.

Subd. 6.

Lodging services.

An accommodations intermediary shall collect sales tax and
remit it to the commissioner under section 297A.77 for services provided in connection
with or for lodging located in this state.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
September 30, 2019.
new text end

Sec. 4.

Minnesota Statutes 2018, section 297A.68, subdivision 42, is amended to read:

Subd. 42.

Qualified data centers.

(a) new text begin Purchases of enterprise information technology
equipment and computer software are exempt from tax as follows:
new text end

new text begin (1) new text end purchases of enterprise information technology equipment deleted text begin and computer softwaredeleted text end new text begin ,
and replacements or upgrades to the equipment,new text end for use in a qualified data centerdeleted text begin ,deleted text end or a
qualified refurbished data center, are exemptdeleted text begin ,deleted text end new text begin ;
new text end

new text begin (2) purchases of prewritten computer software, and replacements or upgrades to the
software, for use by or in a qualified data center or a qualified refurbished data center are
exempt as follows:
new text end

new text begin (i) for purchases prior to July 1, 2019, software that is loaded at the data center and either
operates, maintains, or monitors the enterprise information technology equipment exempt
under clause (1), or manages, manipulates, analyzes, collects, stores, processes, distributes,
or allows access to large amounts of data, or any other similar functions related to the data,
at the qualified data center or qualified refurbished data center, is exempt. This exemption
does not apply to software that is distributed to users outside of the facility;
new text end

new text begin (ii) for purchases after June 30, 2019, all software that is loaded at the data center is
exempt, including software that is distributed to users outside of the facility, but the refund
provided in paragraph (c) is limited to 50 percent of the tax paid on the software; and
new text end

new text begin (iii) purchases of software exempt under this clause include licenses to use the software
and maintenance agreements for the software,new text end except that computer software maintenance
agreements are exempt for purchases made after June 30, 2013deleted text begin . deleted text end new text begin ; and
new text end

new text begin (3) new text end the tax on purchases exempt under this paragraph must be imposed and collected as
if the rate under section 297A.62, subdivision 1, applied, and then refunded after June 30,
2013, in the manner provided new text begin under clause (2), item (ii), and new text end in section 297A.75. deleted text begin This
exemption includes enterprise information technology equipment and computer software
purchased to replace or upgrade enterprise information technology equipment and computer
software in a qualified data center, or a qualified refurbished data center.
deleted text end

(b) Electricity used or consumed in the operation of a qualified data center or qualified
refurbished data center is exempt.

(1) that is comprised of one or more buildings that consist in the aggregate of at least
25,000 square feet, and that are located on a single parcel or on contiguous parcels, where
the total cost of construction or refurbishment, investment in enterprise information
technology equipment, and computer software is at least $30,000,000 within a 48-month
period. The 48-month period begins no sooner than July 1, 2012, except that costs for
computer software maintenance agreements purchased before July 1, 2013, are not included
in determining if the $30,000,000 threshold has been met;

(2) that is constructed or substantially refurbished after June 30, 2012, where
"substantially refurbished" means that at least 25,000 square feet have been rebuilt or
modified, including:

(i) installation of enterprise information technology equipment; environmental control,
computer software, and energy efficiency improvements; and

(ii) building improvements; and

(3) that is used to house enterprise information technology equipment, where the facility
has the following characteristics:

(i) uninterruptible power supplies, generator backup power, or both;

(ii) sophisticated fire suppression and prevention systems; and

(iii) enhanced security. A facility will be considered to have enhanced security if it has
restricted access to the facility to selected personnel; permanent security guards; video
camera surveillance; an electronic system requiring pass codes, keycards, or biometric scans,
such as hand scans and retinal or fingerprint recognition; or similar security features.

In determining whether the facility has the required square footage, the square footage
of the following spaces shall be included if the spaces support the operation of enterprise
information technology equipment: office space, meeting space, and mechanical and other
support facilities. For purposes of new text begin meeting investment and square footage criteria in new text end this
deleted text begin subdivisiondeleted text end new text begin paragraphnew text end , "computer software" deleted text begin includes, but is not limited to, software utilized
or loaded at a qualified data center or qualified refurbished data center, including
maintenance, licensing,deleted text end new text begin means both software that is exempt under paragraph (a), clause (2),new text end
and software customization.

(d) For purposes of this subdivision, a "qualified refurbished data center" means an
existing facility that qualifies as a data center under paragraph (c), clauses (2) and (3), but
that is comprised of one or more buildings that consist in the aggregate of at least 25,000
square feet, and that are located on a single parcel or contiguous parcels, where the total
cost of construction or refurbishment, investment in enterprise information technology
equipment, and computer software is at least $50,000,000 within a 24-month period.

(e) For purposes of this subdivision, "enterprise information technology equipment"
means computers and equipment supporting computing, networking, or data storage,
including servers and routers. It includes, but is not limited to: cooling systems, cooling
towers, and other temperature control infrastructure; power infrastructure for transformation,
distribution, or management of electricity used for the maintenance and operation of a
qualified data center or qualified refurbished data center, including but not limited to exterior
dedicated business-owned substations, backup power generation systems, battery systems,
and related infrastructure; and racking systems, cabling, and trays, which are necessary for
the maintenance and operation of the qualified data center or qualified refurbished data
center.

(f) A qualified data center or qualified refurbished data center may claimnew text begin the following:
new text end

new text begin (1)new text end the exemptions deleted text begin in this subdivisiondeleted text end new text begin provided under paragraphs (a), clause (1), and
(b),new text end for purchases made either within 20 years of the date of its first purchase qualifying for
the deleted text begin exemptiondeleted text end new text begin exemptionsnew text end under paragraph (a), or by June 30, 2042, whichever is earlierdeleted text begin .deleted text end new text begin ;
new text end

new text begin (2) where the first purchase qualifying for the exemptions under paragraph (a) was made
between July 1, 2012, and June 30, 2014, the exemption provided under paragraph (a),
clause (2), item (i), for those purchases of software made within a period starting on the
date of the first purchase qualifying for the exemption under paragraph (a) and ending with
the last purchase made prior to July 1, 2019;
new text end

new text begin (3) where the first purchase qualifying for the exemptions under paragraph (a) was made
after June 30, 2019, the exemption provided under paragraph (a), clause (2), item (ii), for
purchases of software made within five years of the date of its first purchase qualifying for
the exemption under paragraph (a), or by June 30, 2042, whichever is earlier;
new text end

new text begin (4) where the first purchase qualifying for the exemptions under paragraph (a) was made
between July 1, 2014, and June 30, 2019, the exemption provided under paragraph (a),
clause (2), item (i), for purchases of software made prior to July 1, 2019, and the exemption
provided under paragraph (a), clause (2), item (ii), for purchases of software made after
June 30, 2019, for purchases made within five years of the first purchase qualifying for the
exemptions under paragraph (a); and
new text end

new text begin (5) notwithstanding clauses (2) to (4), and paragraph (a), clause (2), a qualified data
center or qualified refurbished data center may claim the exemption for purchases of software
under paragraph (a), clause (2), during only one exemption period, as described in either
clause (2), (3), or (4), per data center location. If the commissioner of employment and
economic development subsequently certifies the data center as newly meeting the
requirements under paragraph (c) or (d) at the same data center location, a data center that
previously qualified for the exemption on purchases of software under paragraph (a), clause
(2), as either a qualified data center or a qualified refurbished data center for the relevant
period described in clause (2), (3), or (4), is not eligible for the exemption on purchases of
software under the subsequent certification.
new text end

(g) The purpose of this exemption is to create jobs in the construction and data center
industries.

(h) This subdivision is effective for sales and purchases made before July 1, 2042new text begin , as
limited by paragraph (f)new text end .

(i) The commissioner of employment and economic development must certify to the
commissioner of revenue, in a format approved by the commissioner of revenue, when a
qualified data center has met the requirements under paragraph (c) or a qualified refurbished
data center has met the requirements under paragraph (d). The certification must provide
the following information regarding each qualified data center or qualified refurbished data
center:

(1) the total square footage amount;

(2) the total amount of construction or refurbishment costs and the total amount of
qualifying investments in enterprise information technology equipment and computer
software; and

(3) the beginning and ending of the applicable period under either paragraph (c) or (d)
in which the qualifying expenditures and purchases under clause (2) were made, but in no
case shall the period begin before July 1, 2012;

(j) Any refund for sales tax paid on qualifying purchases under this subdivision must
not be issued unless the commissioner of revenue has received the certification required
under paragraph (i) either from the commissioner of employment and economic development
or the qualified data center or qualified refurbished data center claiming the refund; and

(k) The commissioner of employment and economic development must annually notify
the commissioner of revenue of the qualified data centers that are projected to meet the
requirements under paragraph (c) and the qualified refurbished data centers that are projected
to meet the requirements under paragraph (d) in each of the next four years. The notification
must provide the information required under paragraph (i), clauses (1) to (3), for each
qualified data center or qualified refurbished data center.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2019; except that paragraph (a), clause (2), item (i), and those portions of paragraph (f)
relating to the exemption provided under paragraph (a), clause (2), item (i), are effective
retroactively to the first purchase qualifying for the exemptions under paragraph (a) made
after June 30, 2012, for sales and purchases of software made prior to July 1, 2019.
new text end

Sec. 5.

Minnesota Statutes 2018, section 297A.71, is amended by adding a subdivision to
read:

new text begin Subd. 51. new text end

new text begin Construction materials purchased by contractors; exemption for certain
entities. new text end

new text begin (a) Building, construction, or reconstruction materials, supplies, and equipment
purchased by a contractor, subcontractor, or builder and used or consumed in or incorporated
into buildings or facilities used principally by the following entities are exempt:
new text end

new text begin (1) school districts, as defined under section 297A.70, subdivision 2, paragraph (c);
new text end

new text begin (2) local governments, as defined under section 297A.70, subdivision 2, paragraph (d);
new text end

new text begin (3) hospitals and nursing homes owned and operated by political subdivisions of the
state, as described under section 297A.70, subdivision 2, paragraph (a), clause (3);
new text end

new text begin (4) county law libraries under chapter 134A and public libraries, regional public library
systems, and multicounty, multitype library systems, as defined in section 134.001;
new text end

new text begin (5) nonprofit groups, as defined under section 297A.70, subdivision 4;
new text end

new text begin (6) hospitals, outpatient surgical centers, and critical access dental providers, as defined
under section 297A.70, subdivision 7; and
new text end

new text begin (7) nursing homes and boarding care homes, as defined under section 297A.70,
subdivision 18.
new text end

new text begin (b) Materials and supplies used or consumed in, and equipment incorporated into, the
construction, reconstruction, repair, maintenance, or improvement of public infrastructure
of any kind including but not limited to roads, bridges, culverts, drinking water facilities,
and wastewater facilities, purchased by a contractor, subcontractor, or builder as part of a
contract with the following entities are exempt:
new text end

new text begin (1) school districts, as defined under section 297A.70, subdivision 2, paragraph (c); or
new text end

new text begin (2) local governments, as defined under section 297A.70, subdivision 2, paragraph (d).
new text end

new text begin (c) The tax on purchases exempt under this subdivision must be imposed and collected
as if the rate under section 297A.62, subdivision 1, applied, and then refunded in the manner
provided in section 297A.75.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2019.
new text end

Sec. 6.

Minnesota Statutes 2018, section 297A.75, subdivision 1, is amended to read:

Subdivision 1.

Tax collected.

The tax on the gross receipts from the sale of the following
exempt items must be imposed and collected as if the sale were taxable and the rate under
section 297A.62, subdivision 1, applied. The exempt items include:

(1) building materials for an agricultural processing facility exempt under section
297A.71, subdivision 13;

(2) building materials for mineral production facilities exempt under section 297A.71,
subdivision 14;

(3) building materials for correctional facilities under section 297A.71, subdivision 3;

(4) building materials used in a residence for disabled veterans exempt under section
297A.71, subdivision 11;

(5) elevators and building materials exempt under section 297A.71, subdivision 12;

(6) materials and supplies for qualified low-income housing under section 297A.71,
subdivision 23;

(7) materials, supplies, and equipment for municipal electric utility facilities under
section 297A.71, subdivision 35;

(8) equipment and materials used for the generation, transmission, and distribution of
electrical energy and an aerial camera package exempt under section 297A.68, subdivision
37;

(9) commuter rail vehicle and repair parts under section 297A.70, subdivision 3, paragraph
(a), clause (10);

(10) materials, supplies, and equipment for construction or improvement of projects and
facilities under section 297A.71, subdivision 40;

(11) materials, supplies, and equipment for construction, improvement, or expansion
of:

(i) an aerospace defense manufacturing facility exempt under Minnesota Statutes 2014,
section 297A.71, subdivision 42;

(ii) a biopharmaceutical manufacturing facility exempt under section 297A.71, subdivision
45;

(iii) a research and development facility exempt under Minnesota Statutes 2014, section
297A.71, subdivision 46; and

(iv) an industrial measurement manufacturing and controls facility exempt under
Minnesota Statutes 2014, section 297A.71, subdivision 47;

(12) enterprise information technology equipment and computer software for use in a
qualified data center exempt under section 297A.68, subdivision 42;

(13) materials, supplies, and equipment for qualifying capital projects under section
297A.71, subdivision 44, paragraph (a), clause (1), and paragraph (b);

(14) items purchased for use in providing critical access dental services exempt under
section 297A.70, subdivision 7, paragraph (c);

(15) items and services purchased under a business subsidy agreement for use or
consumption primarily in greater Minnesota exempt under section 297A.68, subdivision
44;

(16) building materials, equipment, and supplies for constructing or replacing real
property exempt under section 297A.71, subdivision 49; deleted text begin and
deleted text end

(17) building materials, equipment, and supplies for constructing or replacing real
property exempt under section 297A.71, subdivision 50, paragraph (b)deleted text begin .deleted text end new text begin ; and
new text end

new text begin (18) building construction or reconstruction materials, supplies, and equipment exempt
under section 297A.71, subdivision 51.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2019.
new text end

Sec. 7.

Minnesota Statutes 2018, section 297A.75, subdivision 2, is amended to read:

Subd. 2.

Refund; eligible persons.

Upon application on forms prescribed by the
commissioner, a refund equal to the tax paid on the gross receipts of the exempt itemsnew text begin ,
except as otherwise provided in this chapter,new text end must be paid to the applicant. Only the following
persons may apply for the refund:

(1) for subdivision 1, clauses (1), (2), and (14), the applicant must be the purchaser;

(2) for subdivision 1, clause (3), the applicant must be the governmental subdivision;

(3) for subdivision 1, clause (4), the applicant must be the recipient of the benefits
provided in United States Code, title 38, chapter 21;

(4) for subdivision 1, clause (5), the applicant must be the owner of the homestead
property;

(5) for subdivision 1, clause (6), the owner of the qualified low-income housing project;

(6) for subdivision 1, clause (7), the applicant must be a municipal electric utility or a
joint venture of municipal electric utilities;

(7) for subdivision 1, clauses (8), (11), (12), and (15), the owner of the qualifying
business;

(8) for subdivision 1, clauses (9), (10), and (13), the applicant must be the governmental
entity that owns or contracts for the project or facility;

(9) for subdivision 1, clause (16), the applicant must be the owner or developer of the
building or project; deleted text begin and
deleted text end

(10) for subdivision 1, clause (17), the applicant must be the owner or developer of the
building or projectdeleted text begin .deleted text end new text begin ; and
new text end

new text begin (11) for subdivision 1, clause (18), the applicant must be the entity:
new text end

new text begin (i) listed in section 297A.71, subdivision 51, paragraph (a), that principally uses the
building or facility; or
new text end

new text begin (ii) listed in section 297A.71, subdivision 51, paragraph (b), that contracts with a
contractor, subcontractor, or builder for the public infrastructure project.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2019.
new text end

Sec. 8.

Minnesota Statutes 2018, section 297A.75, subdivision 3, is amended to read:

Subd. 3.

Application.

(a) The application must include sufficient information to permit
the commissioner to verify the tax paid. If the tax was paid by a contractor, subcontractor,
or builder, under subdivision 1, clauses (3) to (13) or (15) to deleted text begin (17)deleted text end new text begin (18)new text end , the contractor,
subcontractor, or builder must furnish to the refund applicant a statement including the cost
of the exempt items and the taxes paid on the items unless otherwise specifically provided
by this subdivision. The provisions of sections 289A.40 and 289A.50 apply to refunds under
this section.

(b) An applicant may not file more than two applications per calendar year for refunds
for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2019.
new text end

Sec. 9.

Minnesota Statutes 2018, section 297A.83, subdivision 1, is amended to read:

Subdivision 1.

Persons applying.

(a) A deleted text begin retailerdeleted text end new text begin person new text end required to collect and remit
sales taxes under section 297A.66 shall file with the commissioner an application for a
permit.

(b) A retailer making retail sales from outside this state to a destination within this state
who is not required to obtain a permit under paragraph (a) may nevertheless voluntarily file
an application for a permit.

(c) The commissioner may require any person or class of persons obligated to file a use
tax return under section 289A.11, subdivision 3, to file an application for a permit.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2019.
new text end

ARTICLE 4

PROPERTY TAXES

Section 1.

Minnesota Statutes 2018, section 272.115, subdivision 1, is amended to read:

Subdivision 1.

Requirement.

Except as otherwise provided in subdivision 5, 6, or 7,
whenever any real estate is sold for a consideration in excess of deleted text begin $1,000deleted text end new text begin $3,000new text end , whether by
warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor,
grantee or the legal agent of either shall file a certificate of value with the county auditor
in the county in which the property is located when the deed or other document is presented
for recording. Contract for deeds are subject to recording under section 507.235, subdivision
1. Value shall, in the case of any deed not a gift, be the amount of the full actual consideration
thereof, paid or to be paid, including the amount of any lien or liens assumed. The items
and value of personal property transferred with the real property must be listed and deducted
from the sale price. The certificate of value shall include the classification to which the
property belongs for the purpose of determining the fair market value of the property, and
shall include any proposed change in use of the property known to the person filing the
certificate that could change the classification of the property. The certificate shall include
financing terms and conditions of the sale which are necessary to determine the actual,
present value of the sale price for purposes of the sales ratio study. If the property is being
acquired as part of a like-kind exchange under section 1031 of the Internal Revenue Code
of 1986, as amended through December 31, 2006, that must be indicated on the certificate.
The commissioner of revenue shall promulgate administrative rules specifying the financing
terms and conditions which must be included on the certificate. The certificate of value
must include the Social Security number or the federal employer identification number of
the grantors and grantees. However, a married person who is not an owner of record and
who is signing a conveyance instrument along with the person's spouse solely to release
and convey their marital interest, if any, in the real property being conveyed is not a grantor
for the purpose of the preceding sentence. A statement in the deed that is substantially in
the following form is sufficient to allow the county auditor to accept a certificate for filing
without the Social Security number of the named spouse: "(Name) claims no ownership
interest in the real property being conveyed and is executing this instrument solely to release
and convey a marital interest, if any, in that real property." The identification numbers of
the grantors and grantees are private data on individuals or nonpublic data as defined in
section 13.02, subdivisions 9 and 12, but, notwithstanding that section, the private or
nonpublic data may be disclosed to the commissioner of revenue for purposes of tax
administration. The information required to be shown on the certificate of value is limited
to the information required as of the date of the acknowledgment on the deed or other
document to be recorded.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for certificates of value filed after
December 31, 2019.
new text end

Sec. 2.

Minnesota Statutes 2018, section 273.124, subdivision 13, is amended to read:

Subd. 13.

Homestead application.

(a) A person who meets the homestead requirements
under subdivision 1 must file a homestead application with the county assessor to initially
obtain homestead classification.

(b) The commissioner shall prescribe the content, format, and manner of the homestead
application required to be filed under this chapter pursuant to section 270C.30. The
application must clearly inform the taxpayer that this application must be signed by all
owners who occupy the property or by the qualifying relative and returned to the county
assessor in order for the property to receive homestead treatment.

(c) Every property owner applying for homestead classification must furnish to the
county assessor the Social Security number new text begin or individual tax identification number new text end of each
occupant who is listed as an owner of the property on the deed of record, the name and
address of each owner who does not occupy the property, and the name and Social Security
number new text begin or individual tax identification number new text end of each owner's spouse. The application
must be signed by each owner who occupies the property and by each owner's spouse who
occupies the property, or, in the case of property that qualifies as a homestead under
subdivision 1, paragraph (c), by the qualifying relative.

If a property owner occupies a homestead, the property owner's spouse may not claim
another property as a homestead unless the property owner and the property owner's spouse
file with the assessor an affidavit or other proof required by the assessor stating that the
property qualifies as a homestead under subdivision 1, paragraph (e).

Owners or spouses occupying residences owned by their spouses and previously occupied
with the other spouse, either of whom fail to include the other spouse's name and Social
Security number new text begin or individual tax identification number new text end on the homestead application or
provide the affidavits or other proof requested, will be deemed to have elected to receive
only partial homestead treatment of their residence. The remainder of the residence will be
classified as nonhomestead residential. When an owner or spouse's name and Social Security
number new text begin or individual tax identification number new text end appear on homestead applications for two
separate residences and only one application is signed, the owner or spouse will be deemed
to have elected to homestead the residence for which the application was signed.

(d) If residential real estate is occupied and used for purposes of a homestead by a relative
of the owner and qualifies for a homestead under subdivision 1, paragraph (c), in order for
the property to receive homestead status, a homestead application must be filed with the
assessor. The Social Security number new text begin or individual tax identification number new text end of each relative
occupying the property and the name and Social Security number new text begin or individual tax
identification number new text end of the spouse of a relative occupying the property shall be required
on the homestead application filed under this subdivision. If a different relative of the owner
subsequently occupies the property, the owner of the property must notify the assessor
within 30 days of the change in occupancy. The Social Security number new text begin or individual tax
identification number new text end of a relative occupying the property or the spouse of a relative
occupying the property is private data on individuals as defined by section 13.02, subdivision
12, but may be disclosed to the commissioner of revenue, or, for the purposes of proceeding
under the Revenue Recapture Act to recover personal property taxes owing, to the county
treasurer.

(e) The homestead application shall also notify the property owners that if the property
is granted homestead status for any assessment year, that same property shall remain
classified as homestead until the property is sold or transferred to another person, or the
owners, the spouse of the owner, or the relatives no longer use the property as their
homestead. Upon the sale or transfer of the homestead property, a certificate of value must
be timely filed with the county auditor as provided under section 272.115. Failure to notify
the assessor within 30 days that the property has been sold, transferred, or that the owner,
the spouse of the owner, or the relative is no longer occupying the property as a homestead,
shall result in the penalty provided under this subdivision and the property will lose its
current homestead status.

(f) If a homestead application has not been filed with the county by December 15, the
assessor shall classify the property as nonhomestead for the current assessment year for
taxes payable in the following year, provided that the owner may be entitled to receive the
homestead classification by proper application under section 375.192.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for homestead filed in
2019 and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2018, section 273.124, subdivision 13c, is amended to read:

Subd. 13c.

Property lists.

In addition to lists of homestead properties, the commissioner
may ask the counties to furnish lists of all properties and the record owners. The Social
Security numbersnew text begin , individual tax identification numbers,new text end and federal identification numbers
that are maintained by a county or city assessor for property tax administration purposes,
and that may appear on the lists retain their classification as private or nonpublic data; but
may be viewed, accessed, and used by the county auditor or treasurer of the same county
for the limited purpose of assisting the commissioner in the preparation of microdata samples
under section 270C.12. The commissioner shall use the information provided on the lists
as appropriate under the law, including for the detection of improper claims by owners, or
relatives of owners, under chapter 290A.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for homestead data provided to the
commissioner of revenue in 2020 and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2018, section 273.124, subdivision 13d, is amended to read:

Subd. 13d.

Homestead data.

On or before April 30 each year beginning in 2007, each
county must provide the commissioner with the following data for each parcel of homestead
property by electronic means as defined in section 289A.02, subdivision 8:

(1) the property identification number assigned to the parcel for purposes of taxes payable
in the current year;

(2) the name and Social Security number new text begin or individual tax identification number new text end of each
occupant of homestead property who is the property owner or qualifying relative of a property
owner, and the spouse of the property owner who occupies homestead property or spouse
of a qualifying relative of a property owner who occupies homestead property;

(3) the classification of the property under section 273.13 for taxes payable in the current
year and in the prior year;

(4) an indication of whether the property was classified as a homestead for taxes payable
in the current year because of occupancy by a relative of the owner or by a spouse of a
relative;

(5) the property taxes payable as defined in section 290A.03, subdivision 13, for the
current year and the prior year;

(6) the market value of improvements to the property first assessed for tax purposes for
taxes payable in the current year;

(7) the assessor's estimated market value assigned to the property for taxes payable in
the current year and the prior year;

(8) the taxable market value assigned to the property for taxes payable in the current
year and the prior year;

(9) whether there are delinquent property taxes owing on the homestead;

(10) the unique taxing district in which the property is located; and

(11) such other information as the commissioner decides is necessary.

The commissioner shall use the information provided on the lists as appropriate under
the law, including for the detection of improper claims by owners, or relatives of owners,
under chapter 290A.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for homestead data provided to the
commissioner of revenue in 2020 and thereafter.
new text end

Sec. 5.

Minnesota Statutes 2018, section 273.124, subdivision 14, is amended to read:

Subd. 14.

Agricultural homesteads; special provisions.

(a) Real estate of less than ten
acres that is the homestead of its owner must be classified as class 2a under section 273.13,
subdivision 23, paragraph (a), if:

(1) the parcel on which the house is located is contiguous on at least two sides to (i)
agricultural land, (ii) land owned or administered by the United States Fish and Wildlife
Service, or (iii) land administered by the Department of Natural Resources on which in lieu
taxes are paid under sections 477A.11 to 477A.14;

(2) its owner also owns a noncontiguous parcel of agricultural land that is at least 20
acres;

(3) the noncontiguous land is located not farther than four townships or cities, or a
combination of townships or cities from the homestead; and

(4) the agricultural use value of the noncontiguous land and farm buildings is equal to
at least 50 percent of the market value of the house, garage, and one acre of land.

Homesteads initially classified as class 2a under the provisions of this paragraph shall
remain classified as class 2a, irrespective of subsequent changes in the use of adjoining
properties, as long as the homestead remains under the same ownership, the owner owns a
noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use
value qualifies under clause (4). Homestead classification under this paragraph is limited
to property that qualified under this paragraph for the 1998 assessment.

(b)(i) Agricultural property shall be classified as the owner's homestead, to the same
extent as other agricultural homestead property, if all of the following criteria are met:

(1) the agricultural property consists of at least 40 acres including undivided government
lots and correctional 40's;

(2) the owner, the owner's spouse, or a grandchild, child, sibling, or parent of the owner
or of the owner's spouse, is actively farming the agricultural property, either on the person's
own behalf as an individual or on behalf of a partnership operating a family farm, family
farm corporation, joint family farm venture, or limited liability company of which the person
is a partner, shareholder, or member;

(3) both the owner of the agricultural property and the person who is actively farming
the agricultural property under clause (2), are Minnesota residents;

(4) neither the owner nor the spouse of the owner claims another agricultural homestead
in Minnesota; and

(5) neither the owner nor the person actively farming the agricultural property lives
farther than four townships or cities, or a combination of four townships or cities, from the
agricultural property, except that if the owner or the owner's spouse is required to live in
employer-provided housing, the owner or owner's spouse, whichever is actively farming
the agricultural property, may live more than four townships or cities, or combination of
four townships or cities from the agricultural property.

The relationship under this paragraph may be either by blood or marriage.

(ii) Agricultural property held by a trustee under a trust is eligible for agricultural
homestead classification under this paragraph if the qualifications in clause (i) are met,
except that "owner" means the grantor of the trust.

(iii) Property containing the residence of an owner who owns qualified property under
clause (i) shall be classified as part of the owner's agricultural homestead, if that property
is also used for noncommercial storage or drying of agricultural crops.

(iv) As used in this paragraph, "agricultural property" means class 2a property and any
class 2b property that is contiguous to and under the same ownership as the class 2a property.

(c) Noncontiguous land shall be included as part of a homestead under section 273.13,
subdivision 23, paragraph (a), only if the homestead is classified as class 2a and the detached
land is located in the same township or city, or not farther than four townships or cities or
combination thereof from the homestead. Any taxpayer of these noncontiguous lands must
notify the county assessor that the noncontiguous land is part of the taxpayer's homestead,
and, if the homestead is located in another county, the taxpayer must also notify the assessor
of the other county.

(d) Agricultural land used for purposes of a homestead and actively farmed by a person
holding a vested remainder interest in it must be classified as a homestead under section
273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a, any other
dwellings on the land used for purposes of a homestead by persons holding vested remainder
interests who are actively engaged in farming the property, and up to one acre of the land
surrounding each homestead and reasonably necessary for the use of the dwelling as a home,
must also be assessed class 2a.

(e) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain classified as
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of the April 1997 floods;

(2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman, or
Wilkin;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 1997 assessment year and continue to be used for
agricultural purposes;

(4) the dwelling occupied by the owner is located in Minnesota and is within 30 miles
of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the 1997 floods,
and the owner furnishes the assessor any information deemed necessary by the assessor in
verifying the change in dwelling. Further notifications to the assessor are not required if the
property continues to meet all the requirements in this paragraph and any dwellings on the
agricultural land remain uninhabited.

(f) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain classified
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of damage caused by a March 29, 1998, tornado;

(2) the property is located in the county of Blue Earth, Brown, Cottonwood, LeSueur,
Nicollet, Nobles, or Rice;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 1998 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles of
one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to a March 29,
1998, tornado, and the owner furnishes the assessor any information deemed necessary by
the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the
owner must notify the assessor by December 1, 1998. Further notifications to the assessor
are not required if the property continues to meet all the requirements in this paragraph and
any dwellings on the agricultural land remain uninhabited.

(g) Agricultural property of a family farm corporation, joint family farm venture, family
farm limited liability company, or partnership operating a family farm as described under
subdivision 8 shall be classified homestead, to the same extent as other agricultural homestead
property, if all of the following criteria are met:

(1) the property consists of at least 40 acres including undivided government lots and
correctional 40's;

(2) a shareholder, member, or partner of that entity is actively farming the agricultural
property;

(3) that shareholder, member, or partner who is actively farming the agricultural property
is a Minnesota resident;

(4) neither that shareholder, member, or partner, nor the spouse of that shareholder,
member, or partner claims another agricultural homestead in Minnesota; and

(5) that shareholder, member, or partner does not live farther than four townships or
cities, or a combination of four townships or cities, from the agricultural property.

Homestead treatment applies under this paragraph for property leased to a family farm
corporation, joint farm venture, limited liability company, or partnership operating a family
farm if legal title to the property is in the name of an individual who is a member, shareholder,
or partner in the entity.

(h) To be eligible for the special agricultural homestead under this subdivision, an initial
full application must be submitted to the county assessor where the property is located.
Owners and the persons who are actively farming the property shall be required to complete
only a one-page abbreviated version of the application in each subsequent year provided
that none of the following items have changed since the initial application:

(1) the day-to-day operation, administration, and financial risks remain the same;

(2) the owners and the persons actively farming the property continue to live within the
four townships or city criteria and are Minnesota residents;

(3) the same operator of the agricultural property is listed with the Farm Service Agency;

(4) a Schedule F or equivalent income tax form was filed for the most recent year;

(5) the property's acreage is unchanged; and

(6) none of the property's acres have been enrolled in a federal or state farm program
since the initial application.

The owners and any persons who are actively farming the property must include the
appropriate Social Security numbersnew text begin or individual tax identification numbersnew text end , and sign and
date the application. If any of the specified information has changed since the full application
was filed, the owner must notify the assessor, and must complete a new application to
determine if the property continues to qualify for the special agricultural homestead. The
commissioner of revenue shall prepare a standard reapplication form for use by the assessors.

(i) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 2007 assessment shall remain classified
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of damage caused by the August 2007 floods;

(2) the property is located in the county of Dodge, Fillmore, Houston, Olmsted, Steele,
Wabasha, or Winona;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 2007 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles of
one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the August 2007
floods, and the owner furnishes the assessor any information deemed necessary by the
assessor in verifying the change in homestead dwelling. For taxes payable in 2009, the
owner must notify the assessor by December 1, 2008. Further notifications to the assessor
are not required if the property continues to meet all the requirements in this paragraph and
any dwellings on the agricultural land remain uninhabited.

(j) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 2008 assessment shall remain classified as
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of the March 2009 floods;

(2) the property is located in the county of Marshall;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 2008 assessment year and continue to be used for
agricultural purposes;

(4) the dwelling occupied by the owner is located in Minnesota and is within 50 miles
of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the 2009 floods,
and the owner furnishes the assessor any information deemed necessary by the assessor in
verifying the change in dwelling. Further notifications to the assessor are not required if the
property continues to meet all the requirements in this paragraph and any dwellings on the
agricultural land remain uninhabited.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for homestead filed in
2019 and thereafter.
new text end

Sec. 6.

Minnesota Statutes 2018, section 273.1245, subdivision 1, is amended to read:

Subdivision 1.

Private or nonpublic data.

The following data are private or nonpublic
data as defined in section 13.02, subdivisions 9 and 12, when they are submitted to a county
or local assessor under section 273.124, 273.13, or another section, to support a claim for
the property tax homestead classification under section 273.13, or other property tax
classification or benefit:

(1) Social Security numbers;

new text begin (2) individual tax identification numbers;
new text end

deleted text begin (2)deleted text end new text begin (3)new text end copies of state or federal income tax returns; and

deleted text begin (3)deleted text end new text begin (4)new text end state or federal income tax return information, including the federal income tax
schedule F.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for homestead filed in
2019 and thereafter.
new text end

Sec. 7.

Minnesota Statutes 2018, section 273.13, subdivision 35, is amended to read:

Subd. 35.

Homestead market value exclusion.

(a) Prior to determining a property's
net tax capacity under this section, property classified as class 1a or 1b under subdivision
22, and the portion of property classified as class 2a under subdivision 23 consisting of the
house, garage, and surrounding one acre of land, shall be eligible for a market value exclusion
as determined under paragraph (b).

(b) For a homestead valued at $76,000 or less, the exclusion is 40 percent of market
value. For a homestead valued between $76,000 and $413,800, the exclusion is $30,400
minus nine percent of the valuation over $76,000. For a homestead valued at $413,800 or
more, there is no valuation exclusion. The valuation exclusion shall be rounded to the nearest
whole dollar, and may not be less than zero.

(c) Any valuation exclusions or adjustments under section 273.11 shall be applied prior
to determining the amount of the valuation exclusion under this subdivision.

(d) In the case of a property that is classified as part homestead and part nonhomestead,
(i) the exclusion shall apply only to the homestead portion of the property, but (ii) if a portion
of a property is classified as nonhomestead solely because not all the owners occupy the
property, not all the owners have qualifying relatives occupying the property, or solely
because not all the spouses of owners occupy the property, the exclusion amount shall be
initially computed as if that nonhomestead portion were also in the homestead class and
then prorated to the owner-occupant's percentage of deleted text begin ownershipdeleted text end new text begin homesteadnew text end . For the purpose
of this section, when an owner-occupant's spouse does not occupy the property, the
percentage of deleted text begin ownershipdeleted text end new text begin homesteadnew text end for the owner-occupant spouse is one-half of the couple's
ownership percentage.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2020 and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2018, section 273.1315, subdivision 2, is amended to read:

Subd. 2.

Class 1b homestead declaration 2009 and thereafter.

(a) Any property owner
seeking classification and assessment of the owner's homestead as class 1b property pursuant
to section 273.13, subdivision 22, paragraph (b), after October 1, 2008, shall file with the
county assessor a class 1b homestead declaration, on a form prescribed by the commissioner
of revenue. The declaration must contain the following information:

(1) the information necessary to verify that, on or before June 30 of the filing year, the
property owner or the owner's spouse satisfies the requirements of section 273.13, subdivision
22, paragraph (b), for class 1b classification; and

(2) any additional information prescribed by the commissioner.

(b) The declaration must be filed on or before October 1 to be effective for property
taxes payable during the succeeding calendar year. The Social Security numbersnew text begin , individual
tax identification numbers,new text end and income and medical information received from the property
owner pursuant to this subdivision are private data on individuals as defined in section
13.02. If approved by the assessor, the declaration remains in effect until the property no
longer qualifies under section 273.13, subdivision 22, paragraph (b). Failure to notify the
assessor within 30 days that the property no longer qualifies under that paragraph because
of a sale, change in occupancy, or change in the status or condition of an occupant shall
result in the penalty provided in section 273.124, subdivision 13b, computed on the basis
of the class 1b benefits for the property, and the property shall lose its current class 1b
classification.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for homestead filed in
2019 and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2018, section 273.1384, subdivision 2, is amended to read:

Subd. 2.

Agricultural homestead market value credit.

Property classified as agricultural
homestead under section 273.13, subdivision 23, paragraph (a), is eligible for an agricultural
credit. The credit is computed using the property's agricultural credit market value, defined
for this purpose as the property's market value excluding the market value of the house,
garage, and immediately surrounding one acre of land. The credit is equal to 0.3 percent of
the first $115,000 of the property's agricultural credit market value plus 0.1 percent of the
property's agricultural credit market value in excess of $115,000, subject to a maximum
credit of $490new text begin for a full agricultural homesteadnew text end . In the case of property that is classified as
part homestead and part nonhomestead solely because not all the owners occupy or farm
the property, not all the owners have qualifying relatives occupying or farming the property,
or solely because not all the spouses of owners occupy the property, the credit is computed
on the amount of agricultural credit market value corresponding to the percentage of
homesteaddeleted text begin . the percentage of homestead is equal to 100 divided by the number of owners
of the property, or, in the case of a trust, the number of grantors of the trust that owns the
property.deleted text end new text begin , and the maximum credit equals $490 multiplied by the percentage of homestead.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2020 and thereafter.
new text end

Sec. 10.

new text begin [273.1388] RIPARIAN BUFFER CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Alternative riparian water quality practice" or "alternative practice" means a water
quality practice or combination of structural, vegetative, and management practices, based
on the Natural Resources Conservation Service Field Office Technical Guide, common
alternative practices adopted and published by the board, other practices approved by the
board, or practices based on local conditions approved by the local soil and water
conservation district that are consistent with the Field Office Technical Guide, that provide
water quality protection comparable to the buffer protection for the water body that the
property abuts. Included in these practices are retention ponds and alternative measures that
prevent overland flow to the water resource.
new text end

new text begin (c) "Board" means the Board of Water and Soil Resources.
new text end

new text begin (d) "Riparian buffer" or "buffer" means a buffer required under section 103F.48,
subdivision 3.
new text end

new text begin Subd. 2. new text end

new text begin Eligibility requirements. new text end

new text begin Land may be eligible for the riparian buffer credit
if all of the following conditions are met, as determined by the county auditor:
new text end

new text begin (1) the land is classified as 2a under section 273.13, subdivision 23;
new text end

new text begin (2) a buffer or alternative riparian water quality practice is required to be maintained on
the property according to section 103F.48;
new text end

new text begin (3) there are no delinquent property taxes on the land;
new text end

new text begin (4) the land has not been compensated for damages under chapter 103E for purposes of
installing a buffer; and
new text end

new text begin (5) the soil and water conservation district has not found the landowner noncompliant
with the requirements of section 103F.48.
new text end

new text begin Subd. 3. new text end

new text begin Application. new text end

new text begin In order to initially qualify for a credit under this section, an owner
of agricultural land must file an application with the county auditor on or before December
31, 2019, on a form prescribed by the commissioner of revenue. The application must
specifically identify the land meeting the requirements of this section. Once an application
has been made for land to receive a credit under this section, no further applications for the
land to receive the credit are required, provided that the owner must notify the auditor if
there has been any change in the status of the land relative to the eligibility requirements
under subdivision 2 or if there is a change to the ownership of the land.
new text end

new text begin Subd. 4. new text end

new text begin Coordination with administrative entities. new text end

new text begin (a) By February 1, 2020, the
county auditor must notify the local soil and water conservation district of the parcels within
the district's jurisdiction for which an application for the credit under this section has been
received. By March 1, 2020, the soil and water conservation district must verify compliance
with section 103F.48 on the parcels which the credit is being claimed and certify the
information to the county auditor.
new text end

new text begin (b) By March 1, 2020, and March 1 of each year thereafter, the soil and water
conservation district must notify the county auditor of any noncompliant parcels under
section 103F.48, subdivision 7.
new text end

new text begin Subd. 5. new text end

new text begin Amount of credit. new text end

new text begin Land meeting the requirements of this section is eligible
for a credit at the rate of $50 per acre.
new text end

new text begin Subd. 6. new text end

new text begin Credit reimbursements. new text end

new text begin The county auditor shall determine the tax reductions
allowed under this section within the county for each taxes payable year and shall certify
that amount to the commissioner of revenue as a part of the abstracts of tax lists submitted
by the county auditors under section 275.29. Any prior year adjustments shall also be
certified on the abstracts of tax lists. The commissioner of revenue shall review the
certifications for accuracy, and may make such changes as are deemed necessary or return
the certification to the county auditor for correction. The credit under this section must be
used to proportionately reduce the net tax capacity-based property tax payable to each local
taxing jurisdiction as provided in section 273.1393.
new text end

new text begin Subd. 7. new text end

new text begin Payment. new text end

new text begin (a) The commissioner of revenue shall reimburse each local taxing
jurisdiction, other than school districts, for the tax reductions granted under this section, in
two equal installments on October 31 and December 26 of the taxes payable year for which
the reductions are granted, including in each payment the prior year adjustments certified
on the abstracts for that taxes payable year. The reimbursements related to tax increments
shall be issued in one installment each year on December 26.
new text end

new text begin (b) The commissioner of revenue shall certify the total of the tax reductions granted
under this section for each taxes payable year within each school district to the commissioner
of education, and the commissioner of education shall pay the reimbursement amounts to
each school district as provided in section 273.1392.
new text end

new text begin Subd. 8. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to make the payments required by this
section to taxing jurisdictions other than school districts is annually appropriated from the
general fund to the commissioner of revenue. An amount sufficient to make the payments
required by this section for school districts is annually appropriated from the general fund
to the commissioner of education.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 11.

Minnesota Statutes 2018, section 273.1392, is amended to read:

273.1392 PAYMENT; SCHOOL DISTRICTS.

The amounts of bovine tuberculosis credit reimbursements under section 273.113;
conservation tax credits under section 273.119; disaster or emergency reimbursement under
sections 273.1231 to 273.1235; agricultural credits under sections 273.1384 deleted text begin anddeleted text end new text begin ,new text end 273.1387new text begin ,
and 273.1388new text end ; aids and credits under section 273.1398; enterprise zone property credit
payments under section 469.171; and metropolitan agricultural preserve reduction under
section 473H.10 for school districts, shall be certified to the Department of Education by
the Department of Revenue. The amounts so certified shall be paid according to section
127A.45, subdivisions 9, 10, and 13.

new text begin EFFECTIVE DATE. new text end

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

Sec. 12.

Minnesota Statutes 2018, section 273.1393, is amended to read:

273.1393 COMPUTATION OF NET PROPERTY TAXES.

Notwithstanding any other provisions to the contrary, "net" property taxes are determined
by subtracting the credits in the order listed from the gross tax:

(1) disaster credit as provided in sections 273.1231 to 273.1235;

(2) powerline credit as provided in section 273.42;

(3) agricultural preserves credit as provided in section 473H.10;

(4) enterprise zone credit as provided in section 469.171;

(5) disparity reduction credit;

(6) conservation tax credit as provided in section 273.119;

(7) the school bond credit as provided in section 273.1387;

(8)new text begin riparian buffer credit under section 273.1388;
new text end

new text begin (9)new text end agricultural credit as provided in section 273.1384;

deleted text begin (9)deleted text end new text begin (10)new text end taconite homestead credit as provided in section 273.135;

deleted text begin (10)deleted text end new text begin (11)new text end supplemental homestead credit as provided in section 273.1391; and

deleted text begin (11)deleted text end new text begin (12)new text end the bovine tuberculosis zone credit, as provided in section 273.113.

The combination of all property tax credits must not exceed the gross tax amount.

new text begin EFFECTIVE DATE. new text end

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

Sec. 13.

Minnesota Statutes 2018, section 275.065, subdivision 3, is amended to read:

Subd. 3.

Notice of proposed property taxes.

(a) The county auditor shall prepare and
the county treasurer shall deliver after November 10 and on or before November 24 each
year, by first class mail to each taxpayer at the address listed on the county's current year's
assessment roll, a notice of proposed property taxes. Upon written request by the taxpayer,
the treasurer may send the notice in electronic form or by electronic mail instead of on paper
or by ordinary mail.

(b) The commissioner of revenue shall prescribe the form of the notice.

(c) The notice must inform taxpayers that it contains the amount of property taxes each
taxing authority proposes to collect for taxes payable the following year. In the case of a
town, or in the case of the state general tax, the final tax amount will be its proposed tax.
The notice must clearly state for each city that has a population over 500, county, school
district, regional library authority established under section 134.201, and metropolitan taxing
districts as defined in paragraph (i), the time and place of a meeting for each taxing authority
in which the budget and levy will be discussed and public input allowed, prior to the final
budget and levy determination. The taxing authorities must provide the county auditor with
the information to be included in the notice on or before the time it certifies its proposed
levy under subdivision 1. The public must be allowed to speak at that meeting, which must
occur after November 24 and must not be held before 6:00 p.m. It must provide a telephone
number for the taxing authority that taxpayers may call if they have questions related to the
notice and an address where comments will be received by mail, except that no notice
required under this section shall be interpreted as requiring the printing of a personal
telephone number or address as the contact information for a taxing authority. If a taxing
authority does not maintain public offices where telephone calls can be received by the
authority, the authority may inform the county of the lack of a public telephone number and
the county shall not list a telephone number for that taxing authority.

(d) The notice must state for each parcel:

(1) the market value of the property as determined under section 273.11, and used for
computing property taxes payable in the following year and for taxes payable in the current
year as each appears in the records of the county assessor on November 1 of the current
year; and, in the case of residential property, whether the property is classified as homestead
or nonhomestead. The notice must clearly inform taxpayers of the years to which the market
values apply and that the values are final values;

(2) the items listed below, shown separately by county, city or town, and state general
tax, agricultural homestead credit under section 273.1384, school building bond agricultural
credit under section 273.1387new text begin , riparian buffer credit under section 273.1388new text end , voter approved
school levy, other local school levy, and the sum of the special taxing districts, and as a
total of all taxing authorities:

(i) the actual tax for taxes payable in the current year; and

(ii) the proposed tax amount.

If the county levy under clause (2) includes an amount for a lake improvement district
as defined under sections 103B.501 to 103B.581, the amount attributable for that purpose
must be separately stated from the remaining county levy amount.

In the case of a town or the state general tax, the final tax shall also be its proposed tax
unless the town changes its levy at a special town meeting under section 365.52. If a school
district has certified under section 126C.17, subdivision 9, that a referendum will be held
in the school district at the November general election, the county auditor must note next
to the school district's proposed amount that a referendum is pending and that, if approved
by the voters, the tax amount may be higher than shown on the notice. In the case of the
city of Minneapolis, the levy for Minneapolis Park and Recreation shall be listed separately
from the remaining amount of the city's levy. In the case of the city of St. Paul, the levy for
the St. Paul Library Agency must be listed separately from the remaining amount of the
city's levy. In the case of Ramsey County, any amount levied under section 134.07 may be
listed separately from the remaining amount of the county's levy. In the case of a parcel
where tax increment or the fiscal disparities areawide tax under chapter 276A or 473F
applies, the proposed tax levy on the captured value or the proposed tax levy on the tax
capacity subject to the areawide tax must each be stated separately and not included in the
sum of the special taxing districts; and

(3) the increase or decrease between the total taxes payable in the current year and the
total proposed taxes, expressed as a percentage.

For purposes of this section, the amount of the tax on homesteads qualifying under the
senior citizens' property tax deferral program under chapter 290B is the total amount of
property tax before subtraction of the deferred property tax amount.

(e) The notice must clearly state that the proposed or final taxes do not include the
following:

(1) special assessments;

(2) levies approved by the voters after the date the proposed taxes are certified, including
bond referenda and school district levy referenda;

(3) a levy limit increase approved by the voters by the first Tuesday after the first Monday
in November of the levy year as provided under section 275.73;

(4) amounts necessary to pay cleanup or other costs due to a natural disaster occurring
after the date the proposed taxes are certified;

(5) amounts necessary to pay tort judgments against the taxing authority that become
final after the date the proposed taxes are certified; and

(6) the contamination tax imposed on properties which received market value reductions
for contamination.

(f) Except as provided in subdivision 7, failure of the county auditor to prepare or the
county treasurer to deliver the notice as required in this section does not invalidate the
proposed or final tax levy or the taxes payable pursuant to the tax levy.

(g) If the notice the taxpayer receives under this section lists the property as
nonhomestead, and satisfactory documentation is provided to the county assessor by the
applicable deadline, and the property qualifies for the homestead classification in that
assessment year, the assessor shall reclassify the property to homestead for taxes payable
in the following year.

(h) In the case of class 4 residential property used as a residence for lease or rental
periods of 30 days or more, the taxpayer must either:

(1) mail or deliver a copy of the notice of proposed property taxes to each tenant, renter,
or lessee; or

(2) post a copy of the notice in a conspicuous place on the premises of the property.

The notice must be mailed or posted by the taxpayer by November 27 or within three
days of receipt of the notice, whichever is later. A taxpayer may notify the county treasurer
of the address of the taxpayer, agent, caretaker, or manager of the premises to which the
notice must be mailed in order to fulfill the requirements of this paragraph.

(i) For purposes of this subdivision and subdivision 6, "metropolitan special taxing
districts" means the following taxing districts in the seven-county metropolitan area that
levy a property tax for any of the specified purposes listed below:

(1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325, 473.446,
473.521, 473.547, or 473.834;

(2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672; and

(3) Metropolitan Mosquito Control Commission under section 473.711.

For purposes of this section, any levies made by the regional rail authorities in the county
of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A
shall be included with the appropriate county's levy.

(j) The governing body of a county, city, or school district may, with the consent of the
county board, include supplemental information with the statement of proposed property
taxes about the impact of state aid increases or decreases on property tax increases or
decreases and on the level of services provided in the affected jurisdiction. This supplemental
information may include information for the following year, the current year, and for as
many consecutive preceding years as deemed appropriate by the governing body of the
county, city, or school district. It may include only information regarding:

(1) the impact of inflation as measured by the implicit price deflator for state and local
government purchases;

(2) population growth and decline;

(3) state or federal government action; and

(4) other financial factors that affect the level of property taxation and local services
that the governing body of the county, city, or school district may deem appropriate to
include.

The information may be presented using tables, written narrative, and graphic
representations and may contain instruction toward further sources of information or
opportunity for comment.

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. 14.

Minnesota Statutes 2018, section 276.04, subdivision 2, is amended to read:

Subd. 2.

Contents of tax statements.

(a) The treasurer shall provide for the printing of
the tax statements. The commissioner of revenue shall prescribe the form of the property
tax statement and its contents. The tax statement must not state or imply that property tax
credits are paid by the state of Minnesota. The statement must contain a tabulated statement
of the dollar amount due to each taxing authority and the amount of the state tax from the
parcel of real property for which a particular tax statement is prepared. The dollar amounts
attributable to the county, the state tax, the voter approved school tax, the other local school
tax, the township or municipality, and the total of the metropolitan special taxing districts
as defined in section 275.065, subdivision 3, paragraph (i), must be separately stated. The
amounts due all other special taxing districts, if any, may be aggregated except that any
levies made by the regional rail authorities in the county of Anoka, Carver, Dakota, Hennepin,
Ramsey, Scott, or Washington under chapter 398A shall be listed on a separate line directly
under the appropriate county's levy. If the county levy under this paragraph includes an
amount for a lake improvement district as defined under sections 103B.501 to 103B.581,
the amount attributable for that purpose must be separately stated from the remaining county
levy amount. In the case of Ramsey County, if the county levy under this paragraph includes
an amount for public library service under section 134.07, the amount attributable for that
purpose may be separated from the remaining county levy amount. The amount of the tax
on homesteads qualifying under the senior citizens' property tax deferral program under
chapter 290B is the total amount of property tax before subtraction of the deferred property
tax amount. The amount of the tax on contamination value imposed under sections 270.91
to 270.98, if any, must also be separately stated. The dollar amounts, including the dollar
amount of any special assessments, may be rounded to the nearest even whole dollar. For
purposes of this section whole odd-numbered dollars may be adjusted to the next higher
even-numbered dollar. The amount of market value excluded under section 273.11,
subdivision 16, if any, must also be listed on the tax statement.

(b) The property tax statements for manufactured homes and sectional structures taxed
as personal property shall contain the same information that is required on the tax statements
for real property.

(c) Real and personal property tax statements must contain the following information
in the order given in this paragraph. The information must contain the current year tax
information in the right column with the corresponding information for the previous year
in a column on the left:

(1) the property's estimated market value under section 273.11, subdivision 1;

(2) the property's homestead market value exclusion under section 273.13, subdivision
35;

(3) the property's taxable market value under section 272.03, subdivision 15;

(4) the property's gross tax, before credits;

(5) for agricultural properties, the credits under sections 273.1384 deleted text begin anddeleted text end new text begin ,new text end 273.1387new text begin , and
273.1388new text end ;

(6) any credits received under sections 273.119; 273.1234 or 273.1235; 273.135;
273.1391; 273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit
received under section 273.135 must be separately stated and identified as "taconite tax
relief"; and

(7) the net tax payable in the manner required in paragraph (a).

(d) If the county uses envelopes for mailing property tax statements and if the county
agrees, a taxing district may include a notice with the property tax statement notifying
taxpayers when the taxing district will begin its budget deliberations for the current year,
and encouraging taxpayers to attend the hearings. If the county allows notices to be included
in the envelope containing the property tax statement, and if more than one taxing district
relative to a given property decides to include a notice with the tax statement, the county
treasurer or auditor must coordinate the process and may combine the information on a
single announcement.

new text begin EFFECTIVE DATE. new text end

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

Sec. 15.

Minnesota Statutes 2018, section 287.21, subdivision 1, is amended to read:

Subdivision 1.

Determination of tax.

(a) A tax is imposed on each deed or instrument
by which any real property in this state is granted, assigned, transferred, or otherwise
conveyed. The tax applies against the net consideration. For purposes of the tax, the
conversion of a corporation to a limited liability company, a limited liability company to a
corporation, a partnership to a limited partnership, a limited partnership to another limited
partnership or other entity, or a similar conversion of one entity to another does not grant,
assign, transfer, or convey real property.

(b) The tax is determined in the following manner: (1) when transfers are made by
instruments pursuant to (i) consolidations or mergers, or (ii) designated transfers, the tax is
$1.65; (2) when there is no consideration or when the consideration, exclusive of the value
of any lien or encumbrance remaining thereon at the time of sale, is deleted text begin $500deleted text end new text begin $3,000new text end or less,
the tax is $1.65; or (3) when the consideration, exclusive of the value of any lien or
encumbrance remaining at the time of sale, exceeds deleted text begin $500deleted text end new text begin $3,000new text end , the tax is .0033 of the net
consideration.

(c) If, within six months from the date of a designated transfer, an ownership interest in
the grantee entity is transferred by an initial owner to any person or entity with the result
that the designated transfer would not have been a designated transfer if made to the grantee
entity with its subsequent ownership, then a tax is imposed at .0033 of the net consideration
for the designated transfer. If the subsequent transfer of ownership interests was reasonably
expected at the time of the designated transfer, the applicable penalty under section 287.31,
subdivision 1, must be paid. The deed tax imposed under this paragraph is due within 30
days of the subsequent transfer that caused the tax to be imposed under this paragraph.
Involuntary transfers of ownership shall not be considered transfers of ownership under this
paragraph. The commissioner may adopt rules defining the types of transfers to be considered
involuntary.

(d) The tax is due at the time a taxable deed or instrument is presented for recording,
except as provided in paragraph (c). The commissioner may require the tax to be documented
in a manner prescribed by the commissioner, and may require that the documentation be
attached to and recorded as part of the deed or instrument. The county recorder or registrar
of titles shall accept the attachment for recording as part of the deed or instrument and may
not require, as a condition of recording a deed or instrument, evidence that a transfer is a
designated transfer in addition to that required by the commissioner. Such an attachment
shall not, however, provide actual or constructive notice of the information contained therein
for purposes of determining any interest in the real property. The commissioner shall
prescribe the manner in which the tax due under paragraph (c) is to be paid and may require
grantees of designated transfers to file with the commissioner subsequent statements verifying
that the tax provided under paragraph (c) does not apply.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for deeds recorded after December 31,
2019.
new text end

Sec. 16.

Minnesota Statutes 2018, section 290B.03, subdivision 1, is amended to read:

Subdivision 1.

Program qualifications.

The qualifications for the senior citizens'
property tax deferral program are as follows:

(1) the property must be owned and occupied as a homestead by a person 65 years of
age or older. In the case of a married couple, at least one of the spouses must be at least 65
years old at the time the first property tax deferral is granted, regardless of whether the
property is titled in the name of one spouse or both spouses, or titled in another way that
permits the property to have homestead status, and the other spouse must be at least 62 years
of age;

(2) the total household income of the qualifying homeowners, as defined in section
290A.03, subdivision 5, for the calendar year preceding the year of the initial application
may not exceed $60,000;

(3) the homestead must have been owned and occupied as the homestead of at least one
of the qualifying homeowners for at least deleted text begin 15deleted text end new text begin fivenew text end years prior to the year the initial application
is filed;

(4) there are no state or federal tax liens or judgment liens on the homesteaded property;

(5) there are no mortgages or other liens on the property that secure future advances,
except for those subject to credit limits that result in compliance with clause (6); and

(6) the total unpaid balances of debts secured by mortgages and other liens on the
property, including unpaid and delinquent special assessments and interest and any delinquent
property taxes, penalties, and interest, but not including property taxes payable during the
year or debts secured by a residential PACE lien, as defined in section 216C.435, subdivision
10d, does not exceed 75 percent of the assessor's estimated market value for the year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for deferral of taxes
payable in 2020 and thereafter.
new text end

Sec. 17.

Minnesota Statutes 2018, section 290B.04, subdivision 1, is amended to read:

Subdivision 1.

Initial application.

(a) A taxpayer meeting the program qualifications
under section 290B.03 may apply to the commissioner of revenue for the deferral of taxes.
Applications are due on or before deleted text begin Julydeleted text end new text begin Novembernew text end 1 for deferral of any of the following
year's property taxes. A taxpayer may apply in the year in which the taxpayer becomes 65
years old, provided that no deferral of property taxes will be made until the calendar year
after the taxpayer becomes 65 years old. The application, which shall be prescribed by the
commissioner of revenue, shall include the following items and any other information which
the commissioner deems necessary:

(1) the name, address, and Social Security number of the owner or owners;

(2) a copy of the property tax statement for the current payable year for the homesteaded
property;

(3) the initial year of ownership and occupancy as a homestead;

(4) the owner's household income for the previous calendar year; and

(5) information on any mortgage loans or other amounts secured by mortgages or other
liens against the property, for which purpose the commissioner may require the applicant
to provide a copy of the mortgage note, the mortgage, or a statement of the balance owing
on the mortgage loan provided by the mortgage holder. The commissioner may require the
appropriate documents in connection with obtaining and confirming information on unpaid
amounts secured by other liens.

The application must state that program participation is voluntary. The application must
also state that the deferred amount depends directly on the applicant's household income,
and that program participation includes authorization for the annual deferred amount, the
cumulative deferral and interest that appear on each year's notice prepared by the county
under subdivision 6, is public data.

The application must state that program participants may claim the property tax refund
based on the full amount of property taxes eligible for the refund, including any deferred
amounts. The application must also state that property tax refunds will be used to offset any
deferral and interest under this program, and that any other amounts subject to revenue
recapture under section 270A.03, subdivision 7, will also be used to offset any deferral and
interest under this program.

(b) As part of the initial application process, the commissioner may require the applicant
to obtain at the applicant's own cost and submit:

(1) if the property is registered property under chapter 508 or 508A, a copy of the original
certificate of title in the possession of the county registrar of titles (sometimes referred to
as "condition of register"); or

(2) if the property is abstract property, a report prepared by a licensed abstracter showing
the last deed and any unsatisfied mortgages, liens, judgments, and state and federal tax lien
notices which were recorded on or after the date of that last deed with respect to the property
or to the applicant.

The certificate or report under clauses (1) and (2) need not include references to any
documents filed or recorded more than 40 years prior to the date of the certification or report.
The certification or report must be as of a date not more than 30 days prior to submission
of the application.

The commissioner may also require the county recorder or county registrar of the county
where the property is located to provide copies of recorded documents related to the applicant
or the property, for which the recorder or registrar shall not charge a fee. The commissioner
may use any information available to determine or verify eligibility under this section. The
household income from the application is private data on individuals as defined in section
13.02, subdivision 12.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for deferral of taxes
payable in 2020 and thereafter.
new text end

Sec. 18. new text begin ADMINISTRATIVE APPROPRIATION.
new text end

new text begin $2,045,000 in fiscal year 2020 is appropriated from the general fund to the Board of
Water and Soil Resources for payments to soil and water conservation districts and for
agreements with coordinating administrative entities. This appropriation is for the purposes
of implementing the riparian buffer credit under Minnesota Statutes, section 273.1388.
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 5

LOCAL GOVERNMENT AIDS

Section 1.

Minnesota Statutes 2018, section 477A.03, subdivision 2a, is amended to read:

Subd. 2a.

Cities.

deleted text begin For aids payable in 2016 and 2017, the total aid paid under section
477A.013, subdivision 9, is $519,398,012.deleted text end For aids payable in deleted text begin 2018 and thereafterdeleted text end new text begin 2019new text end ,
the total aid paid under section 477A.013, subdivision 9, is $534,398,012.new text begin For aids payable
in 2020 and thereafter, the total aid paid under section 477A.013, subdivision 9, is
$564,990,952.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2020 and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2018, section 477A.03, subdivision 2b, is amended to read:

Subd. 2b.

Counties.

(a) For aids payable in deleted text begin 2018 through 2024deleted text end new text begin 2019new text end , the total aid payable
under section 477A.0124, subdivision 3, is $103,795,000, of which $3,000,000 shall be
allocated as required under Laws 2014, chapter 150, article 4, section 6.new text begin For aids payable
in 2020 through 2024, the total aid payable under section 477A.0124, subdivision 3, is
$118,972,778, of which $3,000,000 shall be allocated as required under Laws 2014, chapter
150, article 4, section 6.new text end For aids payable in 2025 and thereafter, the total aid payable under
section 477A.0124, subdivision 3, is deleted text begin $100,795,000deleted text end new text begin $115,972,778new text end . Each calendar year,
$500,000 of this appropriation shall be retained by the commissioner of revenue to make
reimbursements to the commissioner of management and budget for payments made under
section 611.27. The reimbursements shall be to defray the additional costs associated with
court-ordered counsel under section 611.27. Any retained amounts not used for
reimbursement in a year shall be included in the next distribution of county need aid that
is certified to the county auditors for the purpose of property tax reduction for the next taxes
payable year.

(b) For aids payable in deleted text begin 2018 and thereafterdeleted text end new text begin 2019new text end , the total aid under section 477A.0124,
subdivision 4, is $130,873,444.new text begin For aids payable in 2020 and thereafter, the total aid under
section 477A.0124, subdivision 4, is $146,051,222.new text end The commissioner of revenue shall
transfer to the commissioner of management and budget $207,000 annually for the cost of
preparation of local impact notes as required by section 3.987, and other local government
activities. The commissioner of revenue shall transfer to the commissioner of education
$7,000 annually for the cost of preparation of local impact notes for school districts as
required by section 3.987. The commissioner of revenue shall deduct the amounts transferred
under this paragraph from the appropriation under this paragraph. The amounts transferred
are appropriated to the commissioner of management and budget and the commissioner of
education respectively.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2020 and thereafter.
new text end

ARTICLE 6

REVENUE STABILITY

Section 1.

Minnesota Statutes 2018, section 275.025, subdivision 1, is amended to read:

Subdivision 1.

Levy amount.

The state general levy is levied against
commercial-industrial property and seasonal residential recreational property, as defined
in this section. The state general levynew text begin base amountnew text end for commercial-industrial property is
$784,590,000 for taxes payable in deleted text begin 2018 and thereafterdeleted text end new text begin 2019new text end . The state general levynew text begin base
amountnew text end for seasonal-recreational property is $44,190,000 for taxes payable in deleted text begin 2018 and
thereafterdeleted text end new text begin 2019new text end .new text begin For taxes payable in subsequent years, the levy base amount for
commercial-industrial property and seasonal-recreational property is increased each year
by multiplying the levy base amount for the prior year by the sum of one plus the rate of
increase, if any, in the implicit price deflator for government consumption expenditures and
gross investment for state and local governments prepared by the Bureau of Economic
Analysts of the United States Department of Commerce for the 12-month period ending
March 31 of the year prior to the year the taxes are payable.new text end The tax under this section is
not treated as a local tax rate under section 469.177 and is not the levy of a governmental
unit under chapters 276A and 473F.

The commissioner shall increase or decrease the preliminary or final rate for a year as
necessary to account for errors and tax base changes that affected a preliminary or final rate
for either of the two preceding years. Adjustments are allowed to the extent that the necessary
information is available to the commissioner at the time the rates for a year must be certified,
and for the following reasons:

(1) an erroneous report of taxable value by a local official;

(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for commercial-industrial or seasonal
residential recreational property reported on the abstracts of tax lists submitted under section
275.29 that was not reported on the abstracts of assessment submitted under section 270C.89
for the same year.

The commissioner may, but need not, make adjustments if the total difference in the tax
levied for the year would be less than $100,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2020 and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2018, section 289A.10, subdivision 1, is amended to read:

Subdivision 1.

Return required.

new text begin (a) new text end In the case of a decedent who has an interest in
property with a situs in Minnesota, the personal representative must submit a Minnesota
estate tax return to the commissioner, on a form prescribed by the commissioner, if:

(1) a federal estate tax return is required to be filed; or

(2) the sum of the federal gross estate and federal adjusted taxable gifts, as defined in
section 2001(b) of the Internal Revenue Code, made within three years of the date of the
decedent's death exceeds deleted text begin $1,200,000 for estates of decedents dying in 2014; $1,400,000 for
estates of decedents dying in 2015; $1,600,000 for estates of decedents dying in 2016;
$2,100,000 for estates of decedents dying in 2017;deleted text end $2,400,000 for estates of decedents dying
in 2018deleted text begin ; $2,700,000deleted text end new text begin and $2,800,000 new text end for estates of decedents dying in 2019deleted text begin ; and $3,000,000
for estates of decedents dying in 2020deleted text end and thereafter.

new text begin (b) new text end The return must contain a computation of the Minnesota estate tax due. The return
must be signed by the personal representative.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying in 2019 and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2018, section 291.016, subdivision 3, is amended to read:

Subd. 3.

Subtraction.

(a) deleted text begin For estates of decedents dying after December 31, 2016,deleted text end A
subtraction is allowed in computing the Minnesota taxable estate, equal to the sum of:

(1) the exclusion amount for the year of death under paragraph (b); and

(2) the lesser of:

(i) the value of qualified small business property under section 291.03, subdivision 9,
and the value of qualified farm property under section 291.03, subdivision 10; or

(ii) $5,000,000 minus the exclusion amount for the year of death under paragraph (b).

(b) The following exclusion amounts apply for the year of death:

deleted text begin (1) $2,100,000 for decedents dying in 2017;
deleted text end

deleted text begin (2)deleted text end new text begin (1)new text end $2,400,000 for new text begin estates of new text end decedents dying in 2018;new text begin and
new text end

deleted text begin (3) $2,700,000 for decedents dying in 2019; and
deleted text end

deleted text begin (4) $3,000,000 for decedents dying in 2020deleted text end new text begin (2) $2,800,000 for estates of decedents dying
in 2019new text end and thereafter.

deleted text begin (c)deleted text end new text begin (b)new text end The subtraction under this subdivision must not reduce the Minnesota taxable
estate to less than zero.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying in 2019 and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2018, section 297F.01, subdivision 13a, is amended to read:

Subd. 13a.

Premium cigar.

"Premium cigar" means any cigar that is hand-constructednew text begin
and hand-rollednew text end , has a wrapper that is made entirely from whole tobacco leaf, has a filler
and binder that is made entirely of tobacco, except for adhesives or other materials used to
maintain size, texture, or flavor, and has a wholesale price of no less than $2.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2018, section 297F.05, is amended by adding a subdivision to
read:

new text begin Subd. 1b. new text end

new text begin Annual indexing. new text end

new text begin (a) Each year the commissioner shall adjust the tax rates
under subdivision 1, including any adjustment made in prior years under this subdivision,
by multiplying the mill rates for the current calendar year by an adjustment factor and
rounding the result to the nearest mill. The adjustment factor equals the in-lieu sales tax
rate that applies to the following calendar year divided by the in-lieu sales tax rate for the
current calendar year. For purposes of this subdivision, "in-lieu sales tax rate" means the
tax rate established under section 297F.25, subdivision 1. For purposes of the calculations
under this subdivision to be made in any year in which an increase in the federal or state
excise tax on cigarettes is implemented, the commissioner shall exclude from the calculated
average price for the current year an amount equal to any increase in the state or federal
excise tax rate.
new text end

new text begin (b) The commissioner shall publish the resulting rate by November 1 and the rate applies
to sales made on or after January 1 of the following year.
new text end

new text begin (c) The determination of the commissioner under this subdivision is not a rule and is
not subject to the Administrative Procedure Act in chapter 14, including section 14.386.
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 beginning with rates calculated for calendar year 2020.
new text end

Sec. 6.

Minnesota Statutes 2018, section 297F.05, subdivision 3a, is amended to read:

Subd. 3a.

Rates; premium cigars.

(a) A tax is imposed upon all premium cigars in this
state and upon any person engaged in business as a tobacco product distributor, at the lesser
of:

(1) the rate of 95 percent of the wholesale sales price of the premium cigars; or

(2) deleted text begin $0.50deleted text end new text begin $3.50new text end per premium cigar.

(b) The tax imposed under paragraph (a) is imposed at the time the tobacco products
distributor:

(1) brings, or causes to be brought, into this state from outside the state premium cigars
for sale;

(2) makes, manufactures, or fabricates premium cigars in this state for sale in this state;
or

(3) ships or transports premium cigars to retailers in this state, to be sold by those retailers.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for cigars brought into the state or
manufactured in the state after June 30, 2019.
new text end

Sec. 7.

Minnesota Statutes 2018, section 297F.05, subdivision 4a, is amended to read:

Subd. 4a.

Use tax; premium cigars.

A tax is imposed upon the use or storage by
consumers of all premium cigars in this state, and upon such consumers, at the lesser of:

(1) the rate of 95 percent of the cost to the consumer of the premium cigars; or

(2) deleted text begin $0.50deleted text end new text begin $3.50new text end per premium cigar.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for cigars for which the consumer has
acquired title to, or possession of, after June 30, 2019.
new text end

Sec. 8. new text begin ADMINISTRATIVE APPROPRIATION.
new text end

new text begin $4,217,000 in fiscal year 2020 and $2,853,000 in fiscal year 2021 are appropriated from
the general fund to the commissioner of revenue for administering this act. The funding
base for this appropriation in fiscal year 2022 and each fiscal year thereafter is $1,450,000.
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: 19-2918

290.0131 INDIVIDUALS; ADDITIONS TO FEDERAL TAXABLE INCOME.

Subd. 7.

Fines, fees, and penalties.

The amount of expenses disallowed under section 290.10, subdivision 2, is an addition.

Subd. 11.

Income attributable to domestic production activities.

The amount of the deduction allowable under section 199 of the Internal Revenue Code is an addition.

290.0133 CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE INCOME.

Subd. 13.

Income attributable to domestic production activities.

The amount of the deduction allowable under section 199 of the Internal Revenue Code is an addition.

Subd. 14.

Fines, fees, and penalties.

The amount of expenses disallowed under section 290.10, subdivision 2, is an addition.

290.10 NONDEDUCTIBLE ITEMS.

Subd. 2.

Fines, fees, and penalties.

(a) Except as provided in this subdivision, no deduction from taxable income for a trade or business expense under section 162(a) of the Internal Revenue Code shall be allowed for any amount paid or incurred, whether by suit, agreement, or otherwise, to, or at the direction of, a government or entity described in paragraph (d) in relation to the violation of any law or the investigation or inquiry by such government or entity into the potential violation of any law.

(b) Exception for amounts constituting restitution or paid to come into compliance with the law. Paragraph (a) does not apply to any amount which:

(1) the taxpayer establishes:

(i) constitutes restitution, including remediation of property for damage or harm caused by or which may be caused by the violation of any law or the potential violation of any law; or

(ii) is paid to come into compliance with any law which was violated or involved in the investigation or inquiry; and

(2) is identified as restitution or as an amount paid to come into compliance with the law, as the case may be, in the court order or settlement agreement.

This paragraph does not apply to any amount paid or incurred as reimbursement to the government or entity for the costs of any investigation or litigation.

(c) Paragraph (a) does not apply to any amount paid or incurred by order of a court in a suit in which no government or entity described in paragraph (d) is a party.

(d) An entity is described in this paragraph if it is:

(1) a nongovernmental entity which exercises self-regulatory powers, including imposing sanctions, in connection with a qualified board or exchange, as defined in section 1256(g)(7) of the Internal Revenue Code; or

(2) to the extent provided in federal regulations, a nongovernmental entity which exercises self-regulatory powers, including imposing sanctions, as part of performing an essential governmental function.

(e) Paragraph (a) does not apply to any amount paid or incurred as taxes due.

SF 2411

Bill Text Versions

Current Version - as introduced

ARTICLE 1

FEDERAL RESPONSE

Section 1.

Subd. 5.

Debt; debtor.

new text begin EFFECTIVE DATE. new text end

Sec. 2.

Subd. 7.

Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

Sec. 3.

Subdivision 1.

Generally; individuals.

new text begin EFFECTIVE DATE. new text end

Sec. 4.

Subd. 7.

Composite income tax returns for nonresident partners, shareholders, and beneficiaries.

new text begin EFFECTIVE DATE. new text end

Sec. 5.

Subd. 14.

Reporting exempt interest and exempt-interest dividends.

new text begin EFFECTIVE DATE. new text end

Sec. 6.

new text begin Subd. 1a. new text end

new text begin Tax on deferred foreign income; election to pay in installments. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 7.

289A.35 ASSESSMENTS ON RETURNS.

new text begin EFFECTIVE DATE. new text end

Sec. 8.

new text begin Subd. 3c. new text end

new text begin Determination of marital status. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 9.

new text begin Subd. 14a. new text end

new text begin Surviving spouse. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 10.

Subd. 19.

Net income.

new text begin EFFECTIVE DATE. new text end

Sec. 11.

new text begin Subd. 19i. new text end

new text begin Deferred foreign income. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 12.

new text begin Subd. 21a. new text end

new text begin Adjusted gross income; federal adjusted gross income. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 13.

Subd. 29a.

State itemized deduction.

new text begin EFFECTIVE DATE. new text end

Sec. 14.

Subd. 31.

Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

Sec. 15.

Subdivision 1.

Definition; scope.

new text begin EFFECTIVE DATE. new text end

Sec. 16.

Subd. 3.

Income, sales and use, motor vehicle sales, or excise taxes paid.

new text begin EFFECTIVE DATE. new text end

Sec. 17.

Subd. 10.

Section 179 expensing.

new text begin EFFECTIVE DATE. new text end

Sec. 18.

Subd. 12.

Disallowed itemized deductions.

new text begin EFFECTIVE DATE. new text end

Sec. 19.

Subd. 13.

Disallowed personal exemption amount.

new text begin EFFECTIVE DATE. new text end

Composite income tax returns for nonresident partners, shareholders, and
beneficiaries.

new text begin [290.0138] PERSONAL AND DEPENDENT EXEMPTIONS; STANDARD
DEDUCTION.
new text end

new text begin [290.0139] INDIVIDUAL ITEMIZED DEDUCTIONS.
new text end