Engrossments
Introduction		Posted on 07/13/2020

A bill for an act
relating to taxation; modifying provisions for property taxes, local government
aids, individual and corporate franchise taxes, sales and use taxes, lawful gambling
taxes, and other miscellaneous taxes and tax provisions; modifying the referendum
equalization levy; providing for certain property tax classification; providing local
government aid penalty forgiveness; modifying and providing for certain additions
and subtractions for the individual income and corporate franchise taxes; making
the student loan credit refundable; modifying sales and use tax exemptions;
providing provisions related to partnership audits; modifying lawful gambling
taxes; modifying the workforce and affordable homeownership development
program; making other minor policy, technical, and conforming changes;
appropriating money; amending Minnesota Statutes 2018, sections 270C.445,
subdivision 6; 272.02, by adding a subdivision; 273.13, subdivision 25; 289A.31,
subdivision 1; 289A.37, subdivision 2; 289A.38, subdivisions 8, 9, 10; 289A.42;
289A.60, subdivision 24; 290.0131, subdivision 10; 290.0132, by adding a
subdivision; 290.0133, subdivision 12; 290.0682, subdivision 2; 297A.70,
subdivision 13; 297E.02, subdivision 6, as amended; 297E.021, subdivision 2;
297F.17, subdivision 6; 297G.16, subdivision 7; 349.15, subdivision 1; 349.151,
subdivision 4; 462A.38, as amended; 469.319, subdivision 4; Minnesota Statutes
2019 Supplement, sections 126C.17, subdivision 6; 273.13, subdivision 34;
289A.38, subdivision 7; 290.31, subdivision 1; 290.993; 297A.71, subdivision 52;
proposing coding for new law in Minnesota Statutes, chapter 289A.

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

ARTICLE 1

PROPERTY TAXES AND AIDS

Section 1.

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

Subd. 6.

Referendum equalization levy.

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

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2018, section 272.02, is amended by adding a subdivision to
read:

new text begin Subd. 104. new text end

new text begin Certain property owned by an Indian tribe. new text end

new text begin (a) Property is exempt that:
new text end

new text begin (1) is located in a county with a population greater than 28,000 but less than 29,000 as
of the 2010 federal census;
new text end

new text begin (2) was on January 2, 2016, and is for the current assessment owned by a federally
recognized Indian tribe or its instrumentality, that is located in Minnesota;
new text end

new text begin (3) was on January 2, 2016, erroneously treated as exempt under subdivision 7; and
new text end

new text begin (4) is used for the same purpose as the property was used on January 2, 2016.
new text end

new text begin (b) For assessment years 2019 and 2020, an exemption application under this subdivision
must be filed with the county assessor by August 1, 2020. Property taxes paid on property
exempt under this section for taxes payable in 2020 only shall be refunded by the county
by September 1, 2020.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from assessment year 2019.
new text end

Sec. 3.

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

Subd. 25.

Class 4.

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

(b) Class 4b includes:

(1) residential real estate containing less than four unitsnew text begin , including property rented as a
short-term rental property for more than 14 days in the preceding year,new text end that does not qualify
as class 4bb, other than seasonal residential recreational property;

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

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

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

new text begin For the purposes of this paragraph, "short-term rental property" means residential real
estate rented for periods of less than 30 consecutive days.
new text end

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

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

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

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

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

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

(d) Class 4c property includes:

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

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

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

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

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

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

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

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

For purposes of this clause:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(i) the land abuts a public airport; and

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

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

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

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

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

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

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

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

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

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

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

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

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

new text begin EFFECTIVE DATE. new text end

new text begin Notwithstanding Minnesota Statutes, section 273.01, this section
is effective beginning with assessments in 2020 and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2019 Supplement, section 273.13, subdivision 34, is amended
to read:

Subd. 34.

Homestead of veteran with a disability or family caregiver.

(a) All or a
portion of the market value of property owned by a veteran and serving as the veteran's
homestead under this section is excluded in determining the property's taxable market value
if the veteran has a service-connected disability of 70 percent or more as certified by the
United States Department of Veterans Affairs. To qualify for exclusion under this subdivision,
the veteran must have been honorably discharged from the United States armed forces, as
indicated by United States Government Form DD214 or other official military discharge
papers.

(b)(1) For a disability rating of 70 percent or more, $150,000 of market value is excluded,
except as provided in clause (2); and

(2) for a total (100 percent) and permanent disability, $300,000 of market value is
excluded.

(c) If a veteran with a disability qualifying for a valuation exclusion under paragraph
(b), clause (2), predeceases the veteran's spouse, and if upon the death of the veteran the
spouse holds the legal or beneficial title to the homestead and permanently resides there,
the exclusion shall carry over to the benefit of the veteran's spouse until such time as the
spouse remarries, or sells, transfers, or otherwise disposes of the propertynew text begin , except as otherwise
provided in paragraph (n)new text end . Qualification under this paragraph requires an application under
paragraph (h), and a spouse must notify the assessor if there is a change in the spouse's
marital status, ownership of the property, or use of the property as a permanent residence.

(d) If the spouse of a member of any branch or unit of the United States armed forces
who dies due to a service-connected cause while serving honorably in active service, as
indicated on United States Government Form DD1300 or DD2064, holds the legal or
beneficial title to a homestead and permanently resides there, the spouse is entitled to the
benefit described in paragraph (b), clause (2), until such time as the spouse remarries or
sells, transfers, or otherwise disposes of the propertynew text begin , except as otherwise provided in
paragraph (n)new text end .

(e) If a veteran meets the disability criteria of paragraph (a) but does not own property
classified as homestead in the state of Minnesota, then the homestead of the veteran's primary
family caregiver, if any, is eligible for the exclusion that the veteran would otherwise qualify
for under paragraph (b).

(f) In the case of an agricultural homestead, only the portion of the property consisting
of the house and garage and immediately surrounding one acre of land qualifies for the
valuation exclusion under this subdivision.

(g) A property qualifying for a valuation exclusion under this subdivision is not eligible
for the market value exclusion under subdivision 35, or classification under subdivision 22,
paragraph (b).

(h) To qualify for a valuation exclusion under this subdivision a property owner must
apply to the assessor by December 15 of the first assessment year for which the exclusion
is sought. For an application received after December 15, the exclusion shall become effective
for the following assessment year. Except as provided in paragraph (c), the owner of a
property that has been accepted for a valuation exclusion must notify the assessor if there
is a change in ownership of the property or in the use of the property as a homestead.

(i) A first-time application by a qualifying spouse for the market value exclusion under
paragraph (d) must be made any time within two years of the death of the service member.

(j) For purposes of this subdivision:

(1) "active service" has the meaning given in section 190.05;

(2) "own" means that the person's name is present as an owner on the property deed;

(3) "primary family caregiver" means a person who is approved by the secretary of the
United States Department of Veterans Affairs for assistance as the primary provider of
personal care services for an eligible veteran under the Program of Comprehensive Assistance
for Family Caregivers, codified as United States Code, title 38, section 1720G; and

(4) "veteran" has the meaning given the term in section 197.447.

(k) If a veteran dying after December 31, 2011, did not apply for or receive the exclusion
under paragraph (b), clause (2), before dying, the veteran's spouse is entitled to the benefit
under paragraph (b), clause (2), until the spouse remarries or sells, transfers, or otherwise
disposes of the propertynew text begin , except as otherwise provided in paragraph (n),new text end if:

(1) the spouse files a first-time application within two years of the death of the service
member or by June 1, 2019, whichever is later;

(2) upon the death of the veteran, the spouse holds the legal or beneficial title to the
homestead and permanently resides there;

(3) the veteran met the honorable discharge requirements of paragraph (a); and

(4) the United States Department of Veterans Affairs certifies that:

(i) the veteran met the total (100 percent) and permanent disability requirement under
paragraph (b), clause (2); or

(ii) the spouse has been awarded dependency and indemnity compensation.

(l) The purpose of this provision of law providing a level of homestead property tax
relief for veterans with a disability, their primary family caregivers, and their surviving
spouses is to help ease the burdens of war for those among our state's citizens who bear
those burdens most heavily.

(m) By July 1, the county veterans service officer must certify the disability rating and
permanent address of each veteran receiving the benefit under paragraph (b) to the assessor.

new text begin (n) A spouse who received the benefit in paragraph (c), (d), or (k) but no longer holds
the legal or beneficial title to the property may continue to receive the exclusion for a
property other than the property for which the exclusion was initially granted until the spouse
remarries or sells, transfers, or otherwise disposes of the property, provided that:
new text end

new text begin (1) the spouse applies under paragraph (h) for the continuation of the exclusion allowed
under this paragraph;
new text end

new text begin (2) the spouse holds the legal or beneficial title to the property for which the continuation
of the exclusion is sought under this paragraph, and permanently resides there;
new text end

new text begin (3) the estimated market value of the property for which the exclusion is sought under
this paragraph is less than or equal to the estimated market value of the property that first
received the exclusion, based on the value of each property on the date of the sale of the
property that first received the exclusion; and
new text end

new text begin (4) the spouse has not previously received the benefit under this paragraph for a property
other than the property for which the exclusion is sought.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 5. new text begin 2019 AID PENALTY FORGIVENESS; ADDITIONAL FILING REQUIRED
IN 2020.
new text end

new text begin (a) Notwithstanding Minnesota Statutes, section 477A.017, subdivision 3, the
commissioner of revenue shall make a payment of $9,280 to the city of Sargeant by August
31, 2020, to compensate the city for its 2019 aid payment under Minnesota Statutes, section
477A.013, that was withheld under Minnesota Statutes, section 477A.017, subdivision 3.
new text end

new text begin (b) The second half of the calendar year 2020 aid payment to the city under Minnesota
Statutes, section 477A.013, will be withheld until the state auditor certifies to the
commissioner of revenue that the city has complied with all reporting requirements under
Minnesota Statutes, section 477A.017, subdivision 3, for calendar years 2018 and 2019.
The commissioner of revenue must make the second payment for calendar year 2020 within
one month of receiving this certification from the state auditor. If the city has not complied
with all reporting requirements under Minnesota Statutes, section 477A.017, subdivision
3, for calendar years 2018 and 2019 by December 1, 2020, the city will receive no second
half aid payment under Minnesota Statutes, section 477A.013, for calendar year 2020.
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. 6. new text begin 2019 AID PENALTY FORGIVENESS.
new text end

new text begin Notwithstanding Minnesota Statutes, section 477A.017, subdivision 3, the city of
Roosevelt shall receive its aid payment for calendar year 2019 under Minnesota Statutes,
section 477A.013, that was withheld under Minnesota Statutes, section 477A.017, subdivision
3, provided that the state auditor certifies to the commissioner of revenue that the state
auditor received the annual financial reporting form for 2018 from the city as well as all
forms, including the financial statement and annual financial reporting form for calendar
year 2019 by August 1, 2020. The commissioner of revenue shall make a payment of $25,410
by August 30, 2020.
new text end

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 2

INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES

Section 1.

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

Subd. 10.

Section 179 expensing.

new text begin (a) For property placed in service in taxable years
beginning before January 1, 2020, except for qualifying depreciable property, 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 (b) For purposes of this subdivision, "qualifying depreciable property" means:
new text end

new text begin (1) property for which a depreciation deduction is allowed under section 167 of the
Internal Revenue Code; and
new text end

new text begin (2) property received as part of an exchange that qualifies for gain or loss recognition
deferral under section 1031 of the Internal Revenue Code of 1986, as amended through
December 16, 2016, but that does not qualify for gain or loss recognition deferral under
section 1031 of the Internal Revenue Code of 1986, as amended through December 31,
2018.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property placed in service in taxable
years beginning after December 31, 2019, except that for taxpayers with qualifying
depreciable property, this section is effective retroactively and applies to the same tax periods
to which section 13303 of Public Law 115-97 relates.
new text end

Sec. 2.

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

new text begin Subd. 30. new text end

new text begin Volunteer driver reimbursement. new text end

new text begin (a) The amount of mileage reimbursement
paid by a charitable organization for work as a volunteer driver is a subtraction. The
subtraction is limited to amounts paid per mile by the organization that:
new text end

new text begin (1) exceed the mileage rate for use of an automobile in rendering gratuitous services to
a charitable organization under section 170(i) of the Internal Revenue Code; and
new text end

new text begin (2) do not exceed the standard mileage rate for businesses established under Code of
Federal Regulations, title 26, section 1.274-5(j)(2).
new text end

new text begin (b) For the purposes of this section, "charitable organization" means an organization
eligible for a charitable contribution under section 170(c) of the Internal Revenue Code.
new text end

new text begin (c) This section expires for taxable years beginning after December 31, 2029.
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, 2019, and before January 1, 2030.
new text end

Sec. 3.

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

Subd. 12.

Section 179 expensing.

new text begin (b) For purposes of this subdivision, "qualifying depreciable property" means:
new text end

new text begin (1) property for which a depreciation deduction is allowed under section 167 of the
Internal Revenue Code; and
new text end

new text begin EFFECTIVE DATE. new text end

Sec. 4.

Minnesota Statutes 2018, section 290.0682, subdivision 2, is amended to read:

Subd. 2.

Credit allowednew text begin ; refundable; appropriationnew text end .

(a) An eligible individual is
allowed a credit against the tax due under this chapter.

(b) The credit for an eligible individual equals the least of:

(1) eligible loan payments minus ten percent of an amount equal to adjusted gross income
in excess of $10,000, but in no case less than zero;

(2) the earned income for the taxable year of the eligible individual, if any;

(3) the sum of:

(i) the interest portion of eligible loan payments made during the taxable year; and

(ii) ten percent of the original loan amount of all qualified education loans of the eligible
individual; or

(4) $500.

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

(d) In the case of a married couple, each spouse is eligible for the credit in this section.

new text begin (e) If the amount of credit which a claimant is eligible to receive under this section
exceeds the claimant's tax liability under this chapter, the commissioner shall refund the
excess to the claimant.
new text end

new text begin (f) An amount sufficient to pay the refunds required by this section is appropriated to
the commissioner from the general fund.
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, 2020.
new text end

Sec. 5.

Minnesota Statutes 2019 Supplement, section 290.993, is amended to read:

290.993 SPECIAL LIMITED ADJUSTMENT.

(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:

(1) 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

(2) 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.

(b) The adjustment in paragraph (a), clause (2), does not apply to any changes due to
sections 11012, new text begin 11031, new text end 13101, 13201, 13202, 13203, 13204, 13205, 13207, 13301, 13302,
13303, 13313, 13502, 13503, 13801, 14101, 14102, 14211 through 14215, and 14501 of
Public Law 115-97; and section 40411 of Public Law 115-123.

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. 6. new text begin SECTION 179 EXPENSING; SUBTRACTIONS.
new text end

new text begin No taxpayer with qualifying depreciable property is allowed a subtraction in computing
the taxpayer's net income for that qualifying depreciable property placed in service in taxable
years beginning after December 31, 2017, due to the retroactive exception for qualifying
depreciable property from the additions required under Minnesota Statutes, sections 290.0131,
subdivision 10, and 290.0133, subdivision 12. A taxpayer who claimed a subtraction under
Minnesota Statutes, section 290.0132, subdivision 14, or 290.0134, subdivision 14, for that
qualifying depreciable property must recompute the taxpayer's tax in the year in which the
qualifying depreciable property was placed in service and in each year a subtraction was
claimed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively and applies to the same tax
periods to which section 13303 of Public Law 115-97 relates.
new text end

ARTICLE 3

SALES AND USE TAXES

Section 1.

Minnesota Statutes 2018, section 297A.70, subdivision 13, is amended to read:

Subd. 13.

Fund-raising sales by or for nonprofit groups.

(a) The following sales by
the specified organizations for fund-raising purposes are exempt, subject to the limitations
listed in paragraph (b):

(1) all sales made by a nonprofit organization that exists solely for the purpose of
providing educational or social activities for young people primarily age 18 and under;

(2) all sales made by an organization that is a senior citizen group or association of
groups if (i) in general it limits membership to persons age 55 or older; (ii) it is organized
and operated exclusively for pleasure, recreation, and other nonprofit purposes; and (iii) no
part of its net earnings inures to the benefit of any private shareholders;

(3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if the
beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization under
section 501(c)(3) of the Internal Revenue Code; and

(4) sales of candy sold for fund-raising purposes by a nonprofit organization that provides
educational and social activities primarily for young people age 18 and under.

(b) The exemptions listed in paragraph (a) are limited in the following manner:

(1) the exemption under paragraph (a), clauses (1) and (2), applies only to the first
$20,000 of the gross annual receipts of the organization from fund-raising; deleted text begin and
deleted text end

(2) the exemption under paragraph (a), clause (1), does not apply if the sales are derived
from admission charges or from activities for which the money must be deposited with the
school district treasurer under section 123B.49, subdivision 2deleted text begin , ordeleted text end new text begin ; and
new text end

new text begin (3) the exemption under paragraph (a), clause (1), does not apply if the sales are derived
from admission charges or from activities for which the money mustnew text end be recorded in the
same manner as other revenues or expenditures of the school district under section 123B.49,
subdivision 4deleted text begin .deleted text end new text begin , unless the following conditions are both met:
new text end

new text begin (i) the sales are made for fund-raising purposes of a club, association, or other
organization of elementary or secondary school students organized for the purpose of
carrying on sports activities, educational activities, or other extracurricular activities; and
new text end

new text begin (ii) the school district reserves revenue raised for extracurricular activities, as provided
in section 123B.49, subdivision 4, paragraph (e), and spends the revenue raised by a particular
extracurricular activity only for that extracurricular activity.
new text end

(c) Sales of tangible personal property and services are exempt if the entire proceeds,
less the necessary expenses for obtaining the property or services, will be contributed to a
registered combined charitable organization described in section 43A.50, to be used
exclusively for charitable, religious, or educational purposes, and the registered combined
charitable organization has given its written permission for the sale. Sales that occur over
a period of more than 24 days per year are not exempt under this paragraph.

(d) For purposes of this subdivision, a club, association, or other organization of
elementary or secondary school students organized for the purpose of carrying on sports,
educational, or other extracurricular activities is a separate organization from the school
district or school for purposes of applying the $20,000 limit.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after the
date of final enactment.
new text end

Sec. 2.

Minnesota Statutes 2019 Supplement, section 297A.71, subdivision 52, is amended
to read:

Subd. 52.

Construction; certain local government facilities.

(a) Materials and supplies
used in and equipment incorporated into the construction, reconstruction, upgrade, expansion,
or remodeling of the following local government owned facilities are exempt:

(1) a new fire station, which includes firefighting, emergency management, public safety
training, and other public safety facilities in the city of Monticello if materials, supplies,
and equipment are purchased after January 31, 2019, and before January 1, 2022;

(2) a new fire station, which includes firefighting and public safety training facilities
and public safety facilities, in the city of Inver Grove Heights if materials, supplies, and
equipment are purchased after June 30, 2018, and before January 1, 2021;

(3) a fire station and police station, including access roads, lighting, sidewalks, and
utility components, on or adjacent to the property on which the fire station or police station
are located that are necessary for safe access to and use of those buildings, in the city of
Minnetonka if materials, supplies, and equipment are purchased after May 23, 2019, and
before January 1, deleted text begin 2021deleted text end new text begin 2022new text end ;

(4) the school building in Independent School District No. 414, Minneota, if materials,
supplies, and equipment are purchased after January 1, 2018, and before January 1, 2021;

(5) a fire station in the city of Mendota Heights, if materials, supplies, and equipment
are purchased after December 31, 2018, and before January 1, 2021; deleted text begin and
deleted text end

(6) a Dakota County law enforcement collaboration center, also known as the Safety
and Mental Health Alternative Response Training (SMART) Center, if materials, supplies,
and equipment are purchased after June 30, 2019, and before July 1, 2021deleted text begin .deleted text end new text begin ;
new text end

new text begin (7) a new fire station and emergency management operations center, including on-site
infrastructure improvements of parking lot, road access, lighting, sidewalks, and utility
components in the city of Maplewood if materials, supplies, and equipment are purchased
after September 30, 2020, and before April 1, 2023;
new text end

new text begin (8) a new police station, which includes police administration, meeting, training, and
short-term detention facilities in the city of Crystal, if materials, supplies, and equipment
are purchased after December 31, 2020, and before January 1, 2024;
new text end

new text begin (9) a new fire station, which includes firefighting, emergency management, public safety
training, and other public safety facilities in the city of Buffalo, if materials, supplies, and
equipment are purchased after April 30, 2020, and before November 1, 2021;
new text end

new text begin (10) a new fire station in the city of Grand Rapids, if materials, supplies, and equipment
are purchased after July 31, 2020, and before August 1, 2022;
new text end

new text begin (11) a new fire station constructed on the site of a previous fire station in the city of
Bloomington, if materials, supplies, and equipment are purchased after December 31, 2020,
and before January 1, 2023;
new text end

new text begin (12) a fire station in the city of St. Peter if materials, supplies, and equipment are
purchased after June 30, 2020, and before March 1, 2022;
new text end

new text begin (13) demolition and replacement of the existing Fire Station No. 2 on its existing site
and renovation and expansion of Fire Station No. 3, both in the city of Plymouth, if materials,
supplies, and equipment are purchased after January 1, 2021, and before March 31, 2023;
and
new text end

new text begin (14) the following facilities in the city of Virginia:
new text end

new text begin (i) a regional public safety center and training facility for fire and police departments,
emergency medical services, regional emergency services training, and other regional
community needs, if materials, supplies, and equipment are purchased after May 1, 2021,
and before May 1, 2023; and
new text end

new text begin (ii) the Miner's Memorial recreation complex and convention center, if materials, supplies,
and equipment are purchased after May 1, 2020, and before May 1, 2022.
new text end

(b) The tax 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 begin EFFECTIVE DATE. new text end

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

Sec. 3. new text begin STATE HIGH SCHOOL LEAGUE; FUNDING FLEXIBILITY.
new text end

new text begin Notwithstanding Minnesota Statutes, section 128C.24, the Minnesota State High School
League may reduce the transfer of sales tax savings to a nonprofit charitable foundation
created for the purpose of promoting high school extracurricular activities by up to $500,000
in total over the 2019-2020 and 2020-2021 school years. Any sales tax savings amounts
not transferred must be used for operations of the Minnesota State High School League.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies retroactively to sales tax savings in the 2019-2020 and 2020-2021 school years.
new text end

ARTICLE 4

PARTNERSHIP AUDITS

Section 1.

Minnesota Statutes 2018, section 270C.445, subdivision 6, is amended to read:

Subd. 6.

Enforcement; administrative order; penalties; cease and desist.

(a) The
commissioner may impose an administrative penalty of not more than $1,000 per violation
of subdivision 3 or 5, or section 270C.4451, provided that a penalty may not be imposed
for any conduct for which a tax preparer penalty is imposed under section 289A.60,
subdivision 13. The commissioner may terminate a tax preparer's authority to transmit
returns electronically to the state, if the commissioner determines the tax preparer engaged
in a pattern and practice of violating this section. Imposition of a penalty under this paragraph
is subject to the contested case procedure under chapter 14. The commissioner shall collect
the penalty in the same manner as the income tax. There is no right to make a claim for
refund under section 289A.50 of the penalty imposed under this paragraph. Penalties imposed
under this paragraph are public data.

(b) In addition to the penalty under paragraph (a), if the commissioner determines that
a tax preparer has violated subdivision 3 or 5, or section 270C.4451, the commissioner may
issue an administrative order to the tax preparer requiring the tax preparer to cease and
desist from committing the violation. The administrative order may include an administrative
penalty provided in paragraph (a).

(c) If the commissioner issues an administrative order under paragraph (b), the
commissioner must send the order to the tax preparer addressed to the last known address
of the tax preparer.

(d) A cease and desist order under paragraph (b) must:

(1) describe the act, conduct, or practice committed and include a reference to the law
that the act, conduct, or practice violates; and

(2) provide notice that the tax preparer may request a hearing as provided in this
subdivision.

(e) Within 30 days after the commissioner issues an administrative order under paragraph
(b), the tax preparer may request a hearing to review the commissioner's action. The request
for hearing must be made in writing and must be served on the commissioner at the address
specified in the order. The hearing request must specifically state the reasons for seeking
review of the order. The date on which a request for hearing is served by mail is the postmark
date on the envelope in which the request for hearing is mailed.

(f) If a tax preparer does not timely request a hearing regarding an administrative order
issued under paragraph (b), the order becomes a final order of the commissioner and is not
subject to review by any court or agency.

(g) If a tax preparer timely requests a hearing regarding an administrative order issued
under paragraph (b), the hearing must be commenced within ten days after the commissioner
receives the request for a hearing.

(h) A hearing timely requested under paragraph (e) is subject to the contested case
procedure under chapter 14, as modified by this subdivision. The administrative law judge
must issue a report containing findings of fact, conclusions of law, and a recommended
order within ten days after the completion of the hearing, the receipt of late-filed exhibits,
or the submission of written arguments, whichever is later.

(i) Within five days of the date of the administrative law judge's report issued under
paragraph (h), any party aggrieved by the administrative law judge's report may submit
written exceptions and arguments to the commissioner. Within 15 days after receiving the
administrative law judge's report, the commissioner must issue an order vacating, modifying,
or making final the administrative order.

(j) The commissioner and the tax preparer requesting a hearing may by agreement
lengthen any time periods prescribed in paragraphs (g) to (i).

(k) An administrative order issued under paragraph (b) is in effect until it is modified
or vacated by the commissioner or an appellate court. The administrative hearing provided
by paragraphs (e) to (i) and any appellate judicial review as provided in chapter 14 constitute
the exclusive remedy for a tax preparer aggrieved by the order.

(l) The commissioner may impose an administrative penalty, in addition to the penalty
under paragraph (a), up to $5,000 per violation of a cease and desist order issued under
paragraph (b). Imposition of a penalty under this paragraph is subject to the contested case
procedure under chapter 14. Within 30 days after the commissioner imposes a penalty under
this paragraph, the tax preparer assessed the penalty may request a hearing to review the
penalty order. The request for hearing must be made in writing and must be served on the
commissioner at the address specified in the order. The hearing request must specifically
state the reasons for seeking review of the order. The cease and desist order issued under
paragraph (b) is not subject to review in a proceeding to challenge the penalty order under
this paragraph. The date on which a request for hearing is served by mail is the postmark
date on the envelope in which the request for hearing is mailed. If the tax preparer does not
timely request a hearing, the penalty order becomes a final order of the commissioner and
is not subject to review by any court or agency. A penalty imposed by the commissioner
under this paragraph may be collected and enforced by the commissioner as an income tax
liability. There is no right to make a claim for refund under section 289A.50 of the penalty
imposed under this paragraph. A penalty imposed under this paragraph is public data.

(m) If a tax preparer violates a cease and desist order issued under paragraph (b), the
commissioner may terminate the tax preparer's authority to transmit returns electronically
to the state. Termination under this paragraph is public data.

(n) A cease and desist order issued under paragraph (b) is public data when it is a final
order.

(o) Notwithstanding any other law, the commissioner may impose a penalty or take other
action under this subdivision against a tax preparer, with respect to a return, within the
period to assess tax on that return as provided by deleted text begin sectiondeleted text end new text begin sectionsnew text end 289A.38new text begin to 289A.382new text end .

(p) Notwithstanding any other law, the imposition of a penalty or any other action against
a tax preparer under this subdivision, other than with respect to a return, must be taken by
the commissioner within five years of the violation of statute.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2017, except that for partnerships that make an election under Code of
Federal Regulations, title 26, section 301.9100-22T, this section is effective retroactively
and applies to the same tax periods to which the election relates.
new text end

Sec. 2.

Minnesota Statutes 2018, section 289A.31, subdivision 1, is amended to read:

Subdivision 1.

Individual income, fiduciary income, mining company, corporate
franchise, and entertainment taxes.

(a) Individual income, fiduciary income, mining
company, and corporate franchise taxes, and interest and penalties, must be paid by the
taxpayer upon whom the tax is imposed, except in the following cases:

(1) the tax due from a decedent for that part of the taxable year in which the decedent
died during which the decedent was alive and the taxes, interest, and penalty due for the
prior years must be paid by the decedent's personal representative, if any. If there is no
personal representative, the taxes, interest, and penalty must be paid by the transferees, as
defined in section 270C.58, subdivision 3, to the extent they receive property from the
decedent;

(2) the tax due from an infant or other incompetent person must be paid by the person's
guardian or other person authorized or permitted by law to act for the person;

(3) the tax due from the estate of a decedent must be paid by the estate's personal
representative;

(4) the tax due from a trust, including those within the definition of a corporation, as
defined in section 290.01, subdivision 4, must be paid by a trustee; and

(5) the tax due from a taxpayer whose business or property is in charge of a receiver,
trustee in bankruptcy, assignee, or other conservator, must be paid by the person in charge
of the business or property so far as the tax is due to the income from the business or property.

(b) Entertainment taxes are the joint and several liability of the entertainer and the
entertainment entity. The payor is liable to the state for the payment of the tax required to
be deducted and withheld under section 290.9201, subdivision 7, and is not liable to the
entertainer for the amount of the payment.

(c) The taxes imposed under sections 289A.35new text begin , paragraph (b), 289A.382, subdivision
3,new text end and 290.0922 on partnerships are the joint and several liability of the partnership and the
general partners.

new text begin EFFECTIVE DATE. new text end

Sec. 3.

Minnesota Statutes 2018, section 289A.37, subdivision 2, is amended to read:

Subd. 2.

Erroneous refunds.

(a) Except as provided in paragraph (b), an erroneous
refund occurs when the commissioner issues a payment to a person that exceeds the amount
the person is entitled to receive under law. An erroneous refund is considered an
underpayment of tax on the date issued.

(b) To the extent that the amount paid does not exceed the amount claimed by the
taxpayer, an erroneous refund does not include the following:

(1) any amount of a refund or credit paid pursuant to a claim for refund filed by a
taxpayer, including but not limited to refunds of claims made under section 290.06,
subdivision 23; 290.067; 290.0671; 290.0672; 290.0674; 290.0675; 290.0677; 290.068;
290.0681; or 290.0692; or chapter 290A; or

(2) any amount paid pursuant to a claim for refund of an overpayment of tax filed by a
taxpayer.

(c) The commissioner may make an assessment to recover an erroneous refund at any
time within two years from the issuance of the erroneous refund. If all or part of the erroneous
refund was induced by fraud or misrepresentation of a material fact, the assessment may
be made at any time.

(d) Assessments of amounts that are not erroneous refunds under paragraph (b) must be
conducted under deleted text begin sectiondeleted text end new text begin sectionsnew text end 289A.38new text begin to 289A.382new text end .

new text begin EFFECTIVE DATE. new text end

Sec. 4.

Minnesota Statutes 2019 Supplement, section 289A.38, subdivision 7, is amended
to read:

Subd. 7.

Federal tax changes.

(a) If the amount of income, items of tax preference,
deductions, or credits for any year of a taxpayer, or the wages paid by a taxpayer for any
period, as reported to the Internal Revenue Service is changed or corrected by the
commissioner of Internal Revenue or other officer of the United States or other competent
authority, or where a renegotiation of a contract or subcontract with the United States results
in a change in income, items of tax preference, deductions, credits, or withholding tax, or,
in the case of estate tax, where there are adjustments to the taxable estate, the taxpayer shall
report the deleted text begin change or correction or renegotiation resultsdeleted text end new text begin federal adjustmentsnew text end in writing to the
commissioner. The new text begin federal adjustments new text end report must be submitted within 180 days after the
final determination new text begin date new text end and must be in the form of either an amended Minnesota estate,
withholding tax, corporate franchise tax, or income tax return conceding the accuracy of
the federal deleted text begin determinationdeleted text end new text begin adjustmentnew text end or a letter detailing how the federal deleted text begin determinationdeleted text end new text begin
adjustmentnew text end is incorrect or does not change the Minnesota tax. An amended Minnesota
income tax return must be accompanied by an amended property tax refund return, if
necessary. A taxpayer filing an amended federal tax return must also file a copy of the
amended return with the commissioner of revenue within 180 days after filing the amended
return.

(b) deleted text begin For the purposes of paragraph (a), a change or correction includes any case where a
taxpayer reaches a closing agreement or compromise with the Internal Revenue Service
under section 7121 or 7122 of the Internal Revenue Code.deleted text end new text begin In the case of a final federal
adjustment arising from a partnership-level audit or an administrative adjustment request
filed by a partnership under section 6227 of the Internal Revenue Code, a taxpayer must
report adjustments as provided for under section 289A.382 and not this section.
new text end

new text begin EFFECTIVE DATE. new text end

Sec. 5.

Minnesota Statutes 2018, section 289A.38, subdivision 8, is amended to read:

Subd. 8.

Failure to report change or correction of federal return.

If a taxpayer fails
to make anew text begin federal adjustmentsnew text end report as required by subdivision 7new text begin or section 289A.382new text end , the
commissioner may recompute the tax, including a refund, based on information available
to the commissioner. The tax may be recomputed within six years after thenew text begin federal
adjustmentsnew text end report should have been filed, notwithstanding any period of limitations to the
contrary.

new text begin EFFECTIVE DATE. new text end

Sec. 6.

Minnesota Statutes 2018, section 289A.38, subdivision 9, is amended to read:

Subd. 9.

Report made of change or correction of federal return.

If a taxpayer is
required to make anew text begin federal adjustmentsnew text end report under subdivision 7new text begin or section 289A.382new text end , and
does report the change or files a copy of the amended return, the commissioner may
recompute and reassess the tax due, including a refund (1) within one year after thenew text begin federal
adjustmentsnew text end report or amended return is filed with the commissioner, notwithstanding any
period of limitations to the contrary, or (2) within any other applicable period stated in this
section, whichever period is longer. The period provided for the carryback of any amount
of loss or credit is also extended as provided in this subdivision, notwithstanding any law
to the contrary. If the commissioner has completed a field audit of the taxpayer, and, but
for this subdivision, the commissioner's time period to adjust the tax has expired, the
additional tax due or refund is limited to only those changes that are required to be made
to the return which relate to the changes made on the federal return. This subdivision does
not apply to sales and use tax.

For purposes of this subdivision and section 289A.42, subdivision 2, a "field audit" is
the physical presence of examiners in the taxpayer's or taxpayer's representative's office
conducting an examination of the taxpayer with the intention of issuing an assessment or
notice of change in tax or which results in the issuing of an assessment or notice of change
in tax. The examination may include inspecting a taxpayer's place of business, tangible
personal property, equipment, computer systems and facilities, pertinent books, records,
papers, vouchers, computer printouts, accounts, and documents.

new text begin A taxpayer may make estimated payments to the commissioner of the tax expected to
result from a pending audit by the Internal Revenue Service. The taxpayer may make
estimated payments prior to the due date of the federal adjustments report without the
taxpayer having to file the report with the commissioner. The commissioner must credit the
estimated tax payments against any tax liability of the taxpayer ultimately found to be due
to the commissioner. The estimated payments limit the accrual of further statutory interest
on that amount. If the estimated tax payments exceed the final tax liability and statutory
interest ultimately determined to be due, the taxpayer is entitled to a refund or credit for the
excess, provided the taxpayer files a federal adjustments report or claim for refund or credit
of tax, no later than one year following the final determination date.
new text end

new text begin EFFECTIVE DATE. new text end

Sec. 7.

Minnesota Statutes 2018, section 289A.38, subdivision 10, is amended to read:

Subd. 10.

Incorrect determination of federal adjusted gross income.

Notwithstanding
any other provision of this chapter, if a taxpayer whose net income is determined under
section 290.01, subdivision 19, omits from income an amount that will under the Internal
Revenue Code extend the statute of limitations for the assessment of federal income taxes,
or otherwise incorrectly determines the taxpayer's federal adjusted gross income resulting
in adjustments by the Internal Revenue Service, then the period of assessment and
determination of tax will be that under the Internal Revenue Code. When a change is made
to federal income during the extended time provided under this subdivision, the provisions
under subdivisions 7 to 9new text begin and section 289A.382new text end regarding additional extensions apply.

new text begin EFFECTIVE DATE. new text end

Sec. 8.

new text begin [289A.381] DEFINITIONS; PARTNERSHIPS; FEDERAL ADJUSTMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions relating to federal adjustments. new text end

new text begin Unless otherwise specified,
the definitions in this section apply for the purposes of sections 289A.38, subdivisions 7 to
9, 289A.381, and 289A.382.
new text end

new text begin Subd. 2. new text end

new text begin Administrative adjustment request. new text end

new text begin "Administrative adjustment request"
means an administrative adjustment request filed by a partnership under section 6227 of
the Internal Revenue Code.
new text end

new text begin Subd. 3. new text end

new text begin Audited partnership. new text end

new text begin "Audited partnership" means a partnership subject to a
federal adjustment resulting from a partnership-level audit.
new text end

new text begin Subd. 4. new text end

new text begin Corporate partner. new text end

new text begin "Corporate partner" means a partner that is subject to tax
under section 290.02.
new text end

new text begin Subd. 5. new text end

new text begin Direct partner. new text end

new text begin "Direct partner" means a partner that holds an immediate legal
ownership interest in a partnership or pass-through entity.
new text end

new text begin Subd. 6. new text end

new text begin Exempt partner. new text end

new text begin "Exempt partner" means a partner that is exempt from taxes
on its net income under section 290.05, subdivision 1.
new text end

new text begin Subd. 7. new text end

new text begin Federal adjustment. new text end

new text begin "Federal adjustment" means any change in an amount
calculated under the Internal Revenue Code, whether to income, gross estate, a credit, an
item of preference, or any other item that is used by a taxpayer to compute a tax administered
under this chapter for the reviewed year whether that change results from action by the
Internal Revenue Service or other competent authority, including a partnership-level audit,
or from the filing of an amended federal return, federal refund claim, or an administrative
adjustment request by the taxpayer.
new text end

new text begin Subd. 8. new text end

new text begin Federal adjustments report. new text end

new text begin "Federal adjustments report" includes a method
or form prescribed by the commissioner for use by a taxpayer to report federal adjustments,
including an amended Minnesota tax return or a uniform multistate report.
new text end

new text begin Subd. 9. new text end

new text begin Federal partnership representative. new text end

new text begin "Federal partnership representative"
means the person the partnership designates for the taxable year as the partnership's
representative, or the person the Internal Revenue Service has appointed to act as the
partnership representative, pursuant to section 6223(a) of the Internal Revenue Code.
new text end

new text begin Subd. 10. new text end

new text begin Final determination date. new text end

new text begin "Final determination date" means:
new text end

new text begin (1) for a federal adjustment arising from an audit by the Internal Revenue Service or
other competent authority, the first day on which no federal adjustment arising from that
audit remains to be finally determined, whether by agreement, or, if appealed or contested,
by a final decision with respect to which all rights of appeal have been waived or exhausted;
new text end

new text begin (2) for a federal adjustment arising from an audit or other action by the Internal Revenue
Service or other competent authority, if the taxpayer filed as a member of a combined report
under section 290.17, subdivision 4, the first day on which no related federal adjustments
arising from that audit remain to be finally determined as described in clause (1) for the
entire combined group;
new text end

new text begin (3) for a federal adjustment arising from the filing of an amended federal return, a federal
refund claim, or the filing by a partnership of an administrative adjustment request, the date
on which the amended return, refund claim, or administrative adjustment request was filed;
or
new text end

new text begin (4) for agreements required to be signed by the Internal Revenue Service and the taxpayer,
the date on which the last party signed the agreement.
new text end

new text begin Subd. 11. new text end

new text begin Final federal adjustment. new text end

new text begin "Final federal adjustment" means a federal
adjustment after the final determination date for that federal adjustment has passed.
new text end

new text begin Subd. 12. new text end

new text begin Indirect partner. new text end

new text begin "Indirect partner" means either:
new text end

new text begin (1) a partner in a partnership or pass-through entity that itself holds an immediate legal
ownership interest in another partnership or pass-through entity; or
new text end

new text begin (2) a partner in a partnership or pass-through entity that holds an indirect interest in
another partnership or pass-through entity through another indirect partner.
new text end

new text begin Subd. 13. new text end

new text begin Partner. new text end

new text begin "Partner" means a person that holds an interest directly or indirectly
in a partnership or other pass-through entity.
new text end

new text begin Subd. 14. new text end

new text begin Partnership. new text end

new text begin "Partnership" has the meaning provided under section 7701(a)(2)
of the Internal Revenue Code.
new text end

new text begin Subd. 15. new text end

new text begin Partnership-level audit. new text end

new text begin "Partnership-level audit" means an examination by
the Internal Revenue Service at the partnership level pursuant to subtitle F, chapter 63,
subchapter C, of the Internal Revenue Code, which results in federal adjustments and
adjustments to partnership-related items.
new text end

new text begin Subd. 16. new text end

new text begin Pass-through entity. new text end

new text begin "Pass-through entity" means an entity, other than a
partnership, that is not subject to the tax imposed under section 290.02. The term pass-through
entity includes but is not limited to S corporations, estates, and trusts other than grantor
trusts.
new text end

new text begin Subd. 17. new text end

new text begin Resident partner. new text end

new text begin "Resident partner" means an individual, trust, or estate
partner who is a resident of Minnesota under section 290.01, subdivision 7, 7a, or 7b, for
the relevant tax period.
new text end

new text begin Subd. 18. new text end

new text begin Reviewed year. new text end

new text begin "Reviewed year" means the taxable year of a partnership that
is subject to a partnership-level audit from which federal adjustments arise.
new text end

new text begin Subd. 19. new text end

new text begin Tiered partner. new text end

new text begin "Tiered partner" means any partner that is a partnership or
pass-through entity.
new text end

new text begin Subd. 20. new text end

new text begin Unrelated business taxable income. new text end

new text begin "Unrelated business taxable income"
has the meaning provided under section 512 of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

Sec. 9.

new text begin [289A.382] REPORTING AND PAYMENT REQUIREMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin State partnership representative. new text end

new text begin (a) With respect to an action required
or permitted to be taken by a partnership under this section, or in a proceeding under section
270C.35 or 271.06, the state partnership representative for the reviewed year shall have the
sole authority to act on behalf of the partnership, and its direct partners and indirect partners
shall be bound by those actions.
new text end

new text begin (b) The state partnership representative for the reviewed year is the partnership's federal
partnership representative unless the partnership, in a form and manner prescribed by the
commissioner, designates another person as its state partnership representative.
new text end

new text begin Subd. 2. new text end

new text begin Reporting and payment requirements for partnerships and tiered
partners. new text end

new text begin (a) Unless an audited partnership makes the election in subdivision 3, or for
adjustments required to be reported for federal purposes pursuant to section 6225(a)(2) of
the Internal Revenue Code, then, for all final federal adjustments the audited partnership
must comply with paragraph (b) and each direct partner of the audited partnership, other
than a tiered partner, must comply with paragraph (c).
new text end

new text begin (b) No later than 90 days after the final determination date, the audited partnership must:
new text end

new text begin (1) file a completed federal adjustments report, including all partner-level information
required under section 289A.12, subdivision 3, with the commissioner;
new text end

new text begin (2) notify each of its direct partners of their distributive share of the final federal
adjustments;
new text end

new text begin (3) file an amended composite report for all direct partners who were included in a
composite return under section 289A.08, subdivision 7, in the reviewed year, and pay the
additional amount that would have been due had the federal adjustments been reported
properly as required; and
new text end

new text begin (4) file amended withholding reports for all direct partners who were or should have
been subject to nonresident withholding under section 290.92, subdivision 4b, in the reviewed
year, and pay the additional amount that would have been due had the federal adjustments
been reported properly as required.
new text end

new text begin (c) No later than 180 days after the final determination date, each direct partner, other
than a tiered partner, that is subject to a tax administered under this chapter, other than the
sales tax, must:
new text end

new text begin (1) file a federal adjustments report reporting their distributive share of the adjustments
reported to them under paragraph (b), clause (2); and
new text end

new text begin (2) pay any additional amount of tax due as if the final federal adjustment had been
properly reported, plus any penalty and interest due under this chapter, and less any credit
for related amounts paid or withheld and remitted on behalf of the direct partner under
paragraph (b), clauses (3) and (4).
new text end

new text begin Subd. 3. new text end

new text begin Election; partnership or tiered partners pay. new text end

new text begin (a) An audited partnership may
make an election under this subdivision to pay its assessment at the entity level. If an audited
partnership makes an election to pay its assessment at the entity level it must:
new text end

new text begin (1) no later than 90 days after the final determination date, file a completed federal
adjustments report, including the residency information for all individual, trust, and estate
direct partners, and information pertaining to all other direct partners as prescribed by the
commissioner, and notify the commissioner that it is making the election under this
subdivision; and
new text end

new text begin (2) no later than 180 days after the final determination date, pay an amount, determined
as follows, in lieu of taxes on partners:
new text end

new text begin (i) exclude from final federal adjustments the distributive share of these adjustments
made to a direct exempt partner that is not unrelated business taxable income;
new text end

new text begin (ii) exclude from final federal adjustments the distributive share of these adjustments
made to a direct partner that has filed a federal adjustments report and paid the applicable
tax, as required under subdivision 2, for the distributive share of adjustments reported on a
federal return under section 6225(c) of the Internal Revenue Code;
new text end

new text begin (iii) assign and apportion at the partnership level using sections 290.17 to 290.20 the
total distributive share of the remaining final federal adjustments for the reviewed year
attributed to direct corporate partners and direct exempt partners, multiply the total by the
highest tax rate in section 290.06, subdivision 1, for the reviewed year, and calculate interest
and penalties as applicable under this chapter;
new text end

new text begin (iv) allocate at the partnership level using section 290.17, subdivision 1, the total
distributive share of all final federal adjustments attributable to individual resident direct
partners for the reviewed year; multiply the total by the highest tax rate in section 290.06,
subdivision 2c, for the reviewed year; and calculate interest and penalties as applicable
under this chapter;
new text end

new text begin (v) assign and apportion at the partnership level using sections 290.17 to 290.20 the total
distributive share of the remaining final federal adjustments attributable to nonresident
individual direct partners and direct partners who are an estate or a trust for the reviewed
year; multiply the total by the highest tax rate in section 290.06, subdivision 2c, for the
reviewed year; and calculate interest and penalties as applicable under this chapter;
new text end

new text begin (vi) for the total distributive share of the remaining final federal adjustments reported
to tiered partners:
new text end

new text begin (A) determine the amount of the adjustments that would be assigned using section 290.17,
subdivision 2, paragraphs (a) to (d), excluding income or gains from intangible personal
property not employed in the business of the recipient of the income or gains if the recipient
of the income or gains is a resident of this state or is a resident trust or estate under section
290.17, subdivision 2, paragraph (c), or apportioned using sections 290.17, subdivision 3,
290.191, and 290.20, and then determine the portion of this amount that would be allocated
to this state;
new text end

new text begin (B) determine the amount of the adjustments which are of a type which are fully sourced
to the taxpayer's state of residency under section 290.17, subdivision 2, paragraph (e), and
income or gains from intangible personal property not employed in the business of the
recipient of the income or gains if the recipient of the income or gains is a resident of this
state or is a resident trust or estate under section 290.17, subdivision 2, paragraph (c);
new text end

new text begin (C) determine the portion of the amount determined in subitem (B) that can be established
to be properly allocable to nonresident indirect partners or other partners not subject to tax
on the adjustments; and
new text end

new text begin (D) multiply the total of the amounts determined in subitems (A) and (B) reduced by
the amount determined in subitem (C) by the highest tax rate in section 290.06, subdivision
2c, for the reviewed year, and calculate interest and penalties as applicable under this chapter;
and
new text end

new text begin (vii) add the amounts determined in items (iii) to (vi), and pay all applicable taxes,
penalties, and interest to the commissioner.
new text end

new text begin (b) An audited partnership may not make an election under this subdivision to report:
new text end

new text begin (1) a federal adjustment that results in unitary business income to a corporate partner
required to file as a member of a combined report under section 290.17, subdivision 4; or
new text end

new text begin (2) any final federal adjustments resulting from an administrative adjustment request.
new text end

new text begin (c) An audited partnership not otherwise subject to any reporting or payment obligation
to this state may not make an election under this subdivision.
new text end

new text begin Subd. 4. new text end

new text begin Tiered partners and indirect partners. new text end

new text begin The direct and indirect partners of an
audited partnership that are tiered partners, and all of the partners of those tiered partners
that are subject to tax under chapter 290 are subject to the reporting and payment
requirements contained in subdivision 2 and the tiered partners are entitled to make the
elections provided in subdivision 3. The tiered partners or their partners shall make required
reports and payments no later than 90 days after the time for filing and furnishing of
statements to tiered partners and their partners as established under section 6226 of the
Internal Revenue Code.
new text end

new text begin Subd. 5. new text end

new text begin Effects of election by partnership or tiered partner and payment of amount
due. new text end

new text begin (a) Unless the commissioner determines otherwise, an election under subdivision 3 is
irrevocable.
new text end

new text begin (b) If an audited partnership or tiered partner properly reports and pays an amount
determined in subdivision 3, the amount will be treated as paid in lieu of taxes owed by the
partnership's direct partners and indirect partners, to the extent applicable, on the same final
federal adjustments. The direct partners or indirect partners of the partnership who are not
resident partners may not take any deduction or credit for this amount or claim a refund of
the amount in this state.
new text end

new text begin (c) Nothing in this subdivision precludes resident direct partners from claiming a credit
against taxes paid under section 290.06 on any amounts paid by the audited partnership or
tiered partners on the resident partner's behalf to another state or local tax jurisdiction.
new text end

new text begin Subd. 6. new text end

new text begin Failure of partnership or tiered partner to report or pay. new text end

new text begin Nothing in this
section prevents the commissioner from assessing direct partners or indirect partners for
taxes they owe, using the best information available, in the event that, for any reason, a
partnership or tiered partner fails to timely make any report or payment required by this
section.
new text end

new text begin EFFECTIVE DATE. new text end

Sec. 10.

Minnesota Statutes 2018, section 289A.42, is amended to read:

289A.42 CONSENT TO EXTEND STATUTE.

Subdivision 1.

Extension agreement.

If before the expiration of time prescribed in
sections 289A.38new text begin to 289A.382new text end and 289A.40 for the assessment of tax or the filing of a claim
for refund, both the commissioner and the taxpayer have consented in writing to the
assessment or filing of a claim for refund after that time, the tax may be assessed or the
claim for refund filed at any time before the expiration of the agreed-upon period. The
period may be extended by later agreements in writing before the expiration of the period
previously agreed upon. The taxpayer and the commissioner may also agree to extend the
period for collection of the tax.

Subd. 2.

Federal extensions.

When a taxpayer consents to an extension of time for the
assessment of federal withholding or income taxes, the period in which the commissioner
may recompute the tax is also extended, notwithstanding any period of limitations to the
contrary, as follows:

(1) for the periods provided in deleted text begin sectiondeleted text end new text begin sectionsnew text end 289A.38, subdivisions 8 and 9new text begin , and
289A.382, subdivisions 2 and 3new text end ;

(2) for six months following the expiration of the extended federal period of limitations
when no change is made by the federal authority. If no change is made by the federal
authority, and, but for this subdivision, the commissioner's time period to adjust the tax has
expired, and if the commissioner has completed a field audit of the taxpayer, no additional
changes resulting in additional tax due or a refund may be made. For purposes of this
subdivision, "field audit" has the meaning given deleted text begin itdeleted text end in section 289A.38, subdivision 9.

new text begin EFFECTIVE DATE. new text end

Sec. 11.

Minnesota Statutes 2018, section 289A.60, subdivision 24, is amended to read:

Subd. 24.

Penalty for failure to notify of federal change.

If a person fails to report to
the commissioner a change or correction of the person's federal return in the manner and
time prescribed in deleted text begin sectiondeleted text end new text begin sections new text end 289A.38, subdivision 7new text begin , and 289A.382new text end , there must be
added to the tax an amount equal to ten percent of the amount of any underpayment of
Minnesota tax attributable to the federal change.

new text begin EFFECTIVE DATE. new text end

Sec. 12.

Minnesota Statutes 2018, section 290.31, subdivision 1, is amended to read:

Subdivision 1.

Partners, not partnership, subject to tax.

Except as provided under
deleted text begin sectiondeleted text end new text begin sectionsnew text end 289A.35, paragraph (b),new text begin and 289A.382, subdivision 3,new text end a partnership as such
shall not be subject to the income tax imposed by this chapter, but is subject to the tax
imposed under section 290.0922. Persons carrying on business as partners shall be liable
for income tax only in their separate or individual capacities.

new text begin EFFECTIVE DATE. new text end

Sec. 13.

Minnesota Statutes 2018, section 297F.17, subdivision 6, is amended to read:

Subd. 6.

Time limit for bad debt refund.

Claims for refund must be filed with the
commissioner during the one-year period beginning with the timely filing of the taxpayer's
federal income tax return containing the bad debt deduction that is being claimed. Claimants
under this subdivision are subject to the notice requirements of deleted text begin sectiondeleted text end new text begin sectionsnew text end 289A.38,
subdivision 7new text begin , and 289A.382new text end .

new text begin EFFECTIVE DATE. new text end

Sec. 14.

Minnesota Statutes 2018, section 297G.16, subdivision 7, is amended to read:

Subd. 7.

Time limit for a bad debt deduction.

Claims for refund must be filed with
the commissioner within one year of the filing of the taxpayer's income tax return containing
the bad debt deduction that is being claimed. Claimants under this subdivision are subject
to the notice requirements of deleted text begin section 289A.38, subdivision 7deleted text end new text begin sections 289A.38 to 289A.382new text end .

new text begin EFFECTIVE DATE. new text end

Sec. 15.

Minnesota Statutes 2018, section 469.319, subdivision 4, is amended to read:

Subd. 4.

Repayment procedures.

(a) For the repayment of taxes imposed under chapter
290 or 297A or local taxes collected pursuant to section 297A.99, a business must file an
amended return with the commissioner of revenue and pay any taxes required to be repaid
within 30 days after becoming subject to repayment under this section. The amount required
to be repaid is determined by calculating the tax for the period or periods for which repayment
is required without regard to the exemptions and credits allowed under section 469.315.

(b) For the repayment of taxes imposed under chapter 297B, a business must pay any
taxes required to be repaid to the motor vehicle registrar, as agent for the commissioner of
revenue, within 30 days after becoming subject to repayment under this section.

(c) For the repayment of property taxes, the county auditor shall prepare a tax statement
for the business, applying the applicable tax extension rates for each payable year and
provide a copy to the business and to the taxpayer of record. The business must pay the
taxes to the county treasurer within 30 days after receipt of the tax statement. The business
or the taxpayer of record may appeal the valuation and determination of the property tax to
the Tax Court within 30 days after receipt of the tax statement.

(d) The provisions of chapters 270C and 289A relating to the commissioner's authority
to audit, assess, and collect the tax and to hear appeals are applicable to the repayment
required under paragraphs (a) and (b). The commissioner may impose civil penalties as
provided in chapter 289A, and the additional tax and penalties are subject to interest at the
rate provided in section 270C.40. The additional tax shall bear interest from 30 days after
becoming subject to repayment under this section until the date the tax is paid. Any penalty
imposed pursuant to this section shall bear interest from the date provided in section 270C.40,
subdivision 3, to the date of payment of the penalty.

(e) If a property tax is not repaid under paragraph (c), the county treasurer shall add the
amount required to be repaid to the property taxes assessed against the property for payment
in the year following the year in which the auditor provided the statement under paragraph
(c).

(f) For determining the tax required to be repaid, a reduction of a state or local sales or
use tax is deemed to have been received on the date that the good or service was purchased
or first put to a taxable use. In the case of an income tax or franchise tax, including the credit
payable under section 469.318, a reduction of tax is deemed to have been received for the
two most recent tax years that have ended prior to the date that the business became subject
to repayment under this section. In the case of a property tax, a reduction of tax is deemed
to have been received for the taxes payable in the year that the business became subject to
repayment under this section and for the taxes payable in the prior year.

(g) The commissioner may assess the repayment of taxes under paragraph (d) any time
within two years after the business becomes subject to repayment under subdivision 1, or
within any period of limitations for the assessment of tax under deleted text begin sectiondeleted text end new text begin sections new text end 289A.38new text begin
to 289A.382new text end , whichever period is later. The county auditor may send the statement under
paragraph (c) any time within three years after the business becomes subject to repayment
under subdivision 1.

(h) A business is not entitled to any income tax or franchise tax benefits, including
refundable credits, for any part of the year in which the business becomes subject to
repayment under this section nor for any year thereafter. Property is not exempt from tax
under section 272.02, subdivision 64, for any taxes payable in the year following the year
in which the property became subject to repayment under this section nor for any year
thereafter. A business is not eligible for any sales tax benefits beginning with goods or
services purchased or first put to a taxable use on the day that the business becomes subject
to repayment under this section.

new text begin EFFECTIVE DATE. new text end

ARTICLE 5

MISCELLANEOUS

Section 1.

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

Subd. 6.

Combined net receipts tax.

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

	If the combined net receipts for the fiscal year are:		The tax is:
	Not over $87,500		deleted text begin ninedeleted text end new text begin eightnew text end percent
	Over $87,500, but not over $122,500		deleted text begin $7,875deleted text end new text begin $7,000new text end plus deleted text begin 18deleted text end new text begin 16new text end percent of the amount over $87,500, but not over $122,500
	Over $122,500, but not over $157,500		deleted text begin $14,175deleted text end new text begin $12,600new text end plus deleted text begin 27deleted text end new text begin 24new text end percent of the amount over $122,500, but not over $157,500
	Over $157,500		deleted text begin $23,625deleted text end new text begin $21,000new text end plus deleted text begin 36deleted text end new text begin 32new text end percent of the amount over $157,500

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

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

Subd. 2.

Determination of revenue increase.

By March 15 of each fiscal year, the
commissioner of management and budget, in consultation with the commissioner, shall
determine the estimated increase in revenues received from taxes imposed under this chapter
over deleted text begin the estimated revenues under the February 2012 state budget forecast for that fiscal
year. For fiscal years after fiscal year 2015, the commissioner of management and budget
shall use the February 2012 state budget forecast for fiscal year 2015 as thedeleted text end new text begin anew text end baselinenew text begin of:
$30,500,000 in fiscal years 2021 and thereafternew text end . All calculations under this subdivision must
be made net of estimated refunds of the taxes required to be paid.

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

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

Subdivision 1.

Expenditure restrictions, requirements, and civil penalties.

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

(b) For each 12-month period beginning July 1, a licensed organization will be evaluated
by the board to determine a rating based on the percentage of annual lawful purpose
expendituresnew text begin , excluding those defined in section 349.12, subdivision 25, paragraph (a),
clauses (8) and (18),new text end when compared to deleted text begin available gross profitsdeleted text end new text begin total allowable expensesnew text end for
the same period. The rating will be used to determine the organization's profitability percent
and is not a rating of the organization's lawful gambling operation. An organization will be
evaluated according to the following criteria:

(1) an organization deleted text begin that expends 50deleted text end new text begin with a ratio of annual lawful purpose expenditures,
excluding those defined in section 349.12, subdivision 25, paragraph (a), clauses (8) and
(18), to allowable expenses of 100 new text end percent or more deleted text begin of gross profits on lawful purposesdeleted text end will
receive a five-star rating;

(2) an organization deleted text begin that expends 40deleted text end new text begin with a ratio of annual lawful purpose expenditures,
excluding those defined in section 349.12, subdivision 25, paragraph (a), clauses (8) and
(18), to allowable expenses of 80 new text end percent or more but less than deleted text begin 50deleted text end new text begin 100new text end percent deleted text begin of gross
profits on lawful purposesdeleted text end will receive a four-star rating;

(3) an organization deleted text begin that expends 30deleted text end new text begin with a ratio of annual lawful purpose expenditures,
excluding those defined in section 349.12, subdivision 25, paragraph (a), clauses (8) and
(18), to allowable expenses of 60 new text end percent or more but less than deleted text begin 40deleted text end new text begin 80new text end percent deleted text begin of gross profits
on lawful purposesdeleted text end will receive a three-star rating;

(4) an organization deleted text begin that expends 20deleted text end new text begin with a ratio of annual lawful purpose expenditures,
excluding those defined in section 349.12, subdivision 25, paragraph (a), clauses (8) and
(18), to allowable expenses of 40 new text end percent or more but less than deleted text begin 30deleted text end new text begin 60new text end percent deleted text begin of gross profits
on lawful purposesdeleted text end will receive a two-star rating; deleted text begin and
deleted text end

(5) an organization deleted text begin that expends less thandeleted text end new text begin with a ratio of annual lawful purpose
expenditures, excluding those defined in section 349.12, subdivision 25, paragraph (a),
clauses (8) and (18), to allowable expenses of new text end 20 percent deleted text begin of gross profits on lawful purposesdeleted text end
new text begin or more but less than 40 percent new text end will receive a one-star ratingnew text begin ; and
new text end

new text begin (6) an organization with a ratio of annual lawful purpose expenditures, excluding those
defined in section 349.12, subdivision 25, paragraph (a), clauses (8) and (18), to allowable
expenses of less than 20 percent will receive a zero-star ratingnew text end .

(c) An organization that fails to expend a minimum of deleted text begin 30deleted text end new text begin 20new text end percent deleted text begin annually of gross
profitsdeleted text end new text begin of its annual total allowable expensesnew text end on lawful purposes, deleted text begin or 20 percent annually for
organizations that conduct lawful gambling in a location where the primary business is
bingodeleted text end new text begin excluding those defined in section 349.12, subdivision 25, paragraph (a), clauses (8)
and (18)new text end , is automatically on probation effective July 1 for a period of one year. The
organization must increase its rating to the required minimum or be subject to sanctions by
the board. If an organization fails to meet the minimum after a one-year probation, the board
may suspend the organization's license or impose a civil penalty as follows:

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

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

Subd. 4.

Powers and duties.

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

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

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

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

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

(5) to make rules authorized by this chapter;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2018, section 462A.38, as amended by Laws 2019 First Special
Session chapter 1, article 6, section 28, is amended to read:

462A.38 WORKFORCE AND AFFORDABLE HOMEOWNERSHIP
DEVELOPMENT PROGRAM.

Subdivision 1.

Establishment.

A workforce and affordable homeownership development
program is established to award homeownership development grants new text begin and loans new text end to cities,
tribal governments, nonprofit organizations, cooperatives created under chapter 308A or
308B, and community land trusts created for the purposes outlined in section 462A.31,
subdivision 1, for development of workforce and affordable homeownership projects. The
purpose of the program is to increase the supply of workforce and affordable, owner-occupied
multifamily or single-family housing throughout Minnesota.

Subd. 2.

Use of funds.

(a) Grant funds new text begin and loans new text end awarded under this program may be
used for:

(1) development costs;

(2) rehabilitation;

(3) land development; and

(4) residential housing, including storm shelters and related community facilities.

(b) A project funded through deleted text begin the grantdeleted text end new text begin thisnew text end program shall serve households that meet
the income limits as provided in section 462A.33, subdivision 5, unless a project is intended
for the purpose outlined in section 462A.02, subdivision 6.

Subd. 3.

Application.

The commissioner shall develop forms and procedures for soliciting
and reviewing applications for grants new text begin and loans new text end under this section. The commissioner shall
consult with interested stakeholders when developing the guidelines and procedures for the
program. In making grantsnew text begin and loansnew text end , the commissioner shall establish semiannual application
deadlines in which grants new text begin and loans new text end will be authorized from all or part of the available
appropriations.

Subd. 4.

Awarding grantsnew text begin and loansnew text end .

Among comparable proposals, preference must
be given to proposals that include contributions from nonstate resources for the greatest
portion of the total development cost.

Subd. 5.

Statewide program.

The agency shall attempt to make grants new text begin and loans new text end in
approximately equal amounts to applicants outside and within the metropolitan areanew text begin , as
defined under section 473.121, subdivision 2new text end .

Subd. 6.

Report.

Beginning January 15, deleted text begin 2018deleted text end new text begin 2021new text end , the commissioner must annually
submit a report to the chairs and ranking minority members of the senate and house of
representatives committees having jurisdiction over housing and workforce development
specifying the projects that received grants new text begin and loans new text end under this section and the specific
purposes for which the grant new text begin or loan new text end funds were used.

new text begin Subd. 7. new text end

new text begin Workforce and affordable homeownership development account. new text end

new text begin A
workforce and affordable homeownership development account is established in the housing
development fund. Money in the account, including interest, is appropriated to the
commissioner of the Housing Finance Agency for the purposes of this section. The amount
appropriated under this section must supplement traditional sources of funding for this
purpose and must not be used as a substitute or to pay debt service on bonds.
new text end

new text begin Subd. 8. new text end

new text begin Deposits; funding amount. new text end

new text begin (a) In fiscal years 2022 through 2031, an amount
equal to $4,000,000 of the state's portion of the proceeds derived from the mortgage registry
tax imposed under section 287.035 and the deed tax under section 287.21, is appropriated
from the general fund to the commissioner of the Housing Finance Agency to transfer to
the workforce and affordable homeownership development account in the housing
development fund. The appropriation must be made annually by September 15.
new text end

new text begin (b) All loan repayments received under this section are to be deposited into the workforce
and affordable homeownership development account in the housing development fund.
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. 6. new text begin ADMINISTRATIVE APPROPRIATION.
new text end

new text begin $642,000 in fiscal year 2021 is appropriated to the commissioner of revenue to administer
this act. The base for this appropriation is $571,000 in fiscal year 2022 and $0 in fiscal year
2023.
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

SF 26

Bill Text Versions

Current Version - as introduced

ARTICLE 1

PROPERTY TAXES AND AIDS

Section 1.

Subd. 6.

Referendum equalization levy.

new text begin EFFECTIVE DATE. new text end

Sec. 2.

new text begin Subd. 104. new text end

new text begin Certain property owned by an Indian tribe. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 3.

Subd. 25.

Class 4.

new text begin EFFECTIVE DATE. new text end

Sec. 4.

Subd. 34.

Homestead of veteran with a disability or family caregiver.

new text begin EFFECTIVE DATE. new text end

Sec. 5. new text begin 2019 AID PENALTY FORGIVENESS; ADDITIONAL FILING REQUIRED IN 2020.new text end

new text begin EFFECTIVE DATE. new text end

Sec. 6. new text begin 2019 AID PENALTY FORGIVENESS.new text end

new text begin EFFECTIVE DATE. new text end

ARTICLE 2

INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES

Section 1.

Subd. 10.

Section 179 expensing.

new text begin EFFECTIVE DATE. new text end

Sec. 2.

new text begin Subd. 30. new text end

new text begin Volunteer driver reimbursement. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 3.

Subd. 12.

Section 179 expensing.

new text begin EFFECTIVE DATE. new text end

Sec. 4.

Subd. 2.

Credit allowednew text begin ; refundable; appropriationnew text end .

new text begin EFFECTIVE DATE. new text end

Sec. 5.

290.993 SPECIAL LIMITED ADJUSTMENT.

new text begin EFFECTIVE DATE. new text end

Sec. 6. new text begin SECTION 179 EXPENSING; SUBTRACTIONS.new text end

new text begin EFFECTIVE DATE. new text end

ARTICLE 3

SALES AND USE TAXES

Section 1.

Subd. 13.

Fund-raising sales by or for nonprofit groups.

new text begin EFFECTIVE DATE. new text end

Sec. 2.

Subd. 52.

Construction; certain local government facilities.

new text begin EFFECTIVE DATE. new text end

Sec. 3. new text begin STATE HIGH SCHOOL LEAGUE; FUNDING FLEXIBILITY.new text end

new text begin EFFECTIVE DATE. new text end

ARTICLE 4

PARTNERSHIP AUDITS

Section 1.

Subd. 6.

Enforcement; administrative order; penalties; cease and desist.

new text begin EFFECTIVE DATE. new text end

Sec. 2.

Subdivision 1.

Individual income, fiduciary income, mining company, corporate franchise, and entertainment taxes.

new text begin EFFECTIVE DATE. new text end

Sec. 3.

Subd. 2.

Erroneous refunds.

new text begin EFFECTIVE DATE. new text end

Sec. 4.

Subd. 7.

Federal tax changes.

new text begin EFFECTIVE DATE. new text end

Sec. 5.

Subd. 8.

Sec. 5. new text begin 2019 AID PENALTY FORGIVENESS; ADDITIONAL FILING REQUIRED
IN 2020.
new text end

Sec. 6. new text begin 2019 AID PENALTY FORGIVENESS.
new text end

Sec. 6. new text begin SECTION 179 EXPENSING; SUBTRACTIONS.
new text end

Sec. 3. new text begin STATE HIGH SCHOOL LEAGUE; FUNDING FLEXIBILITY.
new text end

Individual income, fiduciary income, mining company, corporate
franchise, and entertainment taxes.

new text begin [289A.381] DEFINITIONS; PARTNERSHIPS; FEDERAL ADJUSTMENTS.
new text end

new text begin [289A.382] REPORTING AND PAYMENT REQUIREMENTS.
new text end

new text begin Reporting and payment requirements for partnerships and tiered
partners. new text end

new text begin Effects of election by partnership or tiered partner and payment of amount
due. new text end