SF 27

as introduced - 91st Legislature, 2020 1st Special Session (2019 - 2020) Posted on 06/16/2020 08:09am

A bill for an act
relating to taxation; tax relief for destroyed property; providing property tax
abatement and exemption; providing a sales tax exemption and jobs credit;
appropriating money; amending Minnesota Statutes 2018, sections 290.0132, by
adding a subdivision; 290.0134, by adding a subdivision; 290.0922, subdivision
2; 297A.71, by adding a subdivision; Minnesota Statutes 2019 Supplement, sections
290.06, subdivision 2c; 290.091, subdivision 2; 290.0921, subdivision 3; Laws
2020, chapter 83, article 1, section 74; proposing coding for new law in Minnesota
Statutes, chapters 273; 290.

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

Section 1.

new text begin [273.1236] 2020 TAX RELIEF FOR DESTROYED PROPERTY.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Homestead property" has the meaning provided in section 273.1231, subdivision
4.
new text end

new text begin (c) "Nonhomestead property" has the meaning provided in section 273.1231, subdivision
5.
new text end

new text begin (d) "Net tax" has the meaning provided in section 273.1231, subdivision 6.
new text end

new text begin Subd. 2. new text end

new text begin Authorization. new text end

new text begin Homestead property and nonhomestead property located in
Hennepin County or Ramsey County may be eligible for relief under this section if the
county assessor determines that 50 percent or more of the homestead or nonhomestead
property was destroyed by arson or vandalism by someone other than the owner between
May 25, 2020, and June 8, 2020.
new text end

new text begin Subd. 3. new text end

new text begin Application; determination and certification. new text end

new text begin (a) By July 31, 2020, a property
owner seeking relief under this section must submit a written application to the county
assessor and county board. The county assessor may require any documentation necessary
in making this determination.
new text end

new text begin (b) By August 14, 2020, the county assessor must determine and certify that 50 percent
or more of the property was destroyed by arson or vandalism by someone other than the
owner between May 25, 2020, and June 8, 2020. The county assessor must provide a copy
of the certification to the Department of Revenue.
new text end

new text begin Subd. 4. new text end

new text begin Reassessment; abatement; exemption. new text end

new text begin (a) Reassessments required. The
county assessor must reassess all property that the county certifies as having met the
requirement of subdivision 3, paragraph (b). As soon as practicable, the assessor must report
the reassessed value to the county auditor.
new text end

new text begin (b) Abatement. A property certified under subdivision 3, paragraph (b), shall receive
an abatement of net tax for taxes payable in 2020 only as provided in section 273.1233,
subdivision 2.
new text end

new text begin (c) Exemption. A property certified under subdivision 3, paragraph (b), shall be treated
as exempt property as defined under section 272.02 for taxes payable in 2021 and 2022
only.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

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

new text begin Subd. 30. new text end

new text begin Income derived from certain property. new text end

new text begin (a) Subject to the limits of paragraph
(b), the sum of the amounts calculated in this paragraph is a subtraction:
new text end

new text begin (1) the amount of net rents derived from real or tangible personal property located in or
on qualified property; provided, however, that if tangible personal property was used both
within and outside of the qualified property, the amount allowed under this clause must be
multiplied by a fraction, the numerator of which is the number of days the tangible personal
property was used in the qualified property in the taxable year, and the denominator of
which is the total days in the taxable year; and
new text end

new text begin (2) the amount of net income derived from the operation of a trade or business located
in or on qualified property; provided, however, that if the trade or business is carried on
within and without the qualified property, the amount allowed under this clause must be
multiplied by a fraction, the numerator of which is the amount of net income derived from
the trade or business located in or on qualified property, and the denominator of which is
the total net income derived from the operation of the trade or business in Minnesota in the
taxable year.
new text end

new text begin (b) The owner of qualified property must provide notice of determination under section
273.1236, subdivision 3, in writing to all tenants or lessees operating a trade or business in
the qualified property.
new text end

new text begin (c) A tenant or lessee must not claim the subtraction under this subdivision if the tenant
or lessee has not received the notice required under paragraph (b).
new text end

new text begin (d) For purposes of this subdivision, "qualified property" means real property that has
received a determination under section 273.1236, subdivision 3.
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, 2022.
new text end

Sec. 3.

Minnesota Statutes 2018, section 290.0134, is amended by adding a subdivision
to read:

new text begin Subd. 20. new text end

new text begin Income derived from certain property. new text end

new text begin (a) The amount of income attributable
to the operations of a qualified business is a subtraction; provided, however, that if the trade
or business is carried on within and without the qualified property, the amount allowed
under this clause must be multiplied by a fraction, the numerator of which is the amount of
net income derived from the trade or business located in or on qualified property in the
taxable year, and the denominator of which is the total net income derived from the operation
of the trade or business in Minnesota in the taxable year.
new text end

new text begin (b) The owner of qualified property must provide notice of determination under section
273.1236, subdivision 3, in writing to all tenants or lessees operating a trade or business in
the qualified property.
new text end

new text begin (c) A tenant or lessee must not claim the subtraction under this subdivision if the tenant
or lessee has not received the notice required under paragraph (b).
new text end

new text begin (d) For purposes of this subdivision:
new text end

new text begin (1) "qualified property" has the meaning given in section 290.0132, subdivision 30,
paragraph (d); and
new text end

new text begin (2) "qualified business" means a C corporation whose business operates in or on qualified
property.
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, 2022.
new text end

Sec. 4.

Minnesota Statutes 2019 Supplement, section 290.06, subdivision 2c, is amended
to read:

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

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

(1) On the first $38,770, 5.35 percent;

(2) On all over $38,770, but not over $154,020, 6.8 percent;

(3) On all over $154,020, but not over $269,010, 7.85 percent;

(4) On all over $269,010, 9.85 percent.

Married individuals filing separate returns, estates, and trusts must compute their income
tax by applying the above rates to their taxable income, except that the income brackets
will be one-half of the above amounts after the adjustment required in subdivision 2d.

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

(1) On the first $26,520, 5.35 percent;

(2) On all over $26,520, but not over $87,110, 6.8 percent;

(3) On all over $87,110, but not over $161,720, 7.85 percent;

(4) On all over $161,720, 9.85 percent.

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

(1) On the first $32,650, 5.35 percent;

(2) On all over $32,650, but not over $131,190, 6.8 percent;

(3) On all over $131,190, but not over $214,980, 7.85 percent;

(4) On all over $214,980, 9.85 percent.

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

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

(1) the numerator is the individual's Minnesota source federal adjusted gross income as
defined in section 62 of the Internal Revenue Code and increased by:

(i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, and
17, and 290.0137, paragraph (a); and reduced by

(ii) the Minnesota assignable portion of the subtraction for United States government
interest under section 290.0132, subdivision 2, the subtractions under sections 290.0132,
subdivisions 9, 10, 14, 15, 17, 18, deleted text begin and deleted text end 27 new text begin , and 30 new text end , and 290.0137, paragraph (c), after applying
the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in section
62 of the Internal Revenue Code, increased by:

(i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, and
17, and 290.0137, paragraph (a); and reduced by

(ii) the subtractions under sections 290.0132, subdivisions 2, 9, 10, 14, 15, 17, 18, deleted text begin and deleted text end
27 new text begin , and 30 new text end , and 290.0137, paragraph (c).

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, 2025.
new text end

Sec. 5.

new text begin [290.0693] JOB CREDIT FOR BUSINESSES AFFECTED BY CERTAIN
DESTROYED PROPERTY.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Qualified property" has the meaning provided in section 290.0132, subdivision 30,
paragraph (d).
new text end

new text begin (c) "Qualified business" means a business located in or on qualified property.
new text end

new text begin (d) "Minnesota payroll" means:
new text end

new text begin (1) the wages or salaries attributable to Minnesota under section 290.191, subdivision
12, for the qualified business; or
new text end

new text begin (2) for a qualified business that paid wages or salaries attributable to Minnesota under
section 290.191, subdivision 12, to more than 20 individuals, the average of all wages or
salaries attributable to Minnesota under section 290.191, subdivision 12, for the qualified
business, multiplied by 20.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin A qualified business is allowed a credit against the tax imposed
by this chapter.
new text end

new text begin Subd. 3. new text end

new text begin Calculation of credit. new text end

new text begin (a) For the taxable year beginning after December 31,
2019, and before January 1, 2021, the credit equals the difference between the Minnesota
payroll attributable to the qualified business for taxable years beginning after December
31, 2018, and before January 1, 2020, and the Minnesota payroll attributable to the qualified
business for the period beginning January 1, 2020, to May 25, 2020. In no case shall the
credit be less than zero.
new text end

new text begin (b) For the taxable year beginning after December 31, 2020, and before January 1, 2022,
the credit equals the lesser of the Minnesota payroll attributable to the qualified business
in the taxable year, and the Minnesota payroll attributable to the qualified business in the
taxable year beginning after December 31, 2018, and before January 1, 2020. In no case
shall the credit be less than zero.
new text end

new text begin (c) If the trade or operations of a qualified business are carried on within and without
qualified property, the credit amount allowed under paragraphs (a) and (b) must be multiplied
by a fraction, the numerator of which is the Minnesota payroll attributable to the qualified
property in this taxable year, and the denominator of which is the total Minnesota payroll
in the taxable year.
new text end

new text begin Subd. 4. new text end

new text begin Credit refundable. new text end

new text begin If the amount of the credit exceeds the liability of a qualified
business for tax under this chapter, the commissioner of revenue shall refund the excess to
the qualified business.
new text end

new text begin Subd. 5. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the refunds authorized by this
section is appropriated to the commissioner of revenue from the general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment for
taxable years beginning after December 31, 2019, and before January 1, 2022.
new text end

Sec. 6.

Minnesota Statutes 2019 Supplement, section 290.091, subdivision 2, is amended
to read:

Subd. 2.

Definitions.

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

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

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

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

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

(ii) the medical expense deduction;

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

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

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

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

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

(6) the amount of addition required by section 290.0131, subdivisions 9, 10, and 16;

(7) the deduction allowed under section 199A of the Internal Revenue Code, to the extent
not included in the addition required under clause (6); and

(8) to the extent not included in federal alternative minimum taxable income, the amount
of foreign-derived intangible income deducted under section 250 of the Internal Revenue
Code;

less the sum of the amounts determined under the following:

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

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

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

(iv) amounts subtracted from federal taxable or adjusted gross income as provided by
section 290.0132, subdivisions 7, 9 to 15, 17, 21, 24, and 26 to deleted text begin 29 deleted text end new text begin 30 new text end ;

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c); and

(vi) the amount allowable as a Minnesota itemized deduction under section 290.0122,
subdivision 7.

In the case of an estate or trust, alternative minimum taxable income must be computed
as provided in section 59(c) of the Internal Revenue Code, except alternative minimum
taxable income must be increased by the addition in section 290.0131, subdivision 16.

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

(c) "Net minimum tax" means the minimum tax imposed by this section.

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

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2019, and before January 1, 2025.
new text end

Sec. 7.

Minnesota Statutes 2019 Supplement, section 290.0921, subdivision 3, is amended
to read:

Subd. 3.

Alternative minimum taxable income.

"Alternative minimum taxable income"
is Minnesota net income as defined in section 290.01, subdivision 19, and includes the
adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e), (f), and (h) of
the Internal Revenue Code. If a corporation files a separate company Minnesota tax return,
the minimum tax must be computed on a separate company basis. If a corporation is part
of a tax group filing a unitary return, the minimum tax must be computed on a unitary basis.
The following adjustments must be made.

(1) The portion of the depreciation deduction allowed for federal income tax purposes
under section 168(k) of the Internal Revenue Code that is required as an addition under
section 290.0133, subdivision 11, is disallowed in determining alternative minimum taxable
income.

(2) The subtraction for depreciation allowed under section 290.0134, subdivision 13, is
allowed as a depreciation deduction in determining alternative minimum taxable income.

(3) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
of the Internal Revenue Code does not apply.

(4) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
Revenue Code does not apply.

(5) The tax preference for depletion under section 57(a)(1) of the Internal Revenue Code
does not apply.

(6) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
Revenue Code does not apply.

(7) The tax preference for charitable contributions of appreciated property under section
57(a)(6) of the Internal Revenue Code does not apply.

(8) For purposes of calculating the adjustment for adjusted current earnings in section
56(g) of the Internal Revenue Code, the term "alternative minimum taxable income" as it
is used in section 56(g) of the Internal Revenue Code, means alternative minimum taxable
income as defined in this subdivision, determined without regard to the adjustment for
adjusted current earnings in section 56(g) of the Internal Revenue Code.

(9) For purposes of determining the amount of adjusted current earnings under section
56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section 56(g)(4)
of the Internal Revenue Code with respect to (i) the amount of foreign dividend gross-up
subtracted as provided in section 290.0134, subdivision 2, or (ii) the amount of refunds of
income, excise, or franchise taxes subtracted as provided in section 290.0134, subdivision
8.

(10) Alternative minimum taxable income excludes the income from operating in a job
opportunity building zone as provided under section 469.317.

Items of tax preference must not be reduced below zero as a result of the modifications
in this subdivision.

(11) The subtraction for disallowed section 280E expenses under section 290.0134,
subdivision 19, is allowed as a deduction in determining alternative minimum taxable
income.

new text begin (12) Alternative minimum taxable income excludes the income of a qualified business,
as defined under section 290.0134, subdivision 20, paragraph (d), clause (2).
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, 2025.
new text end

Sec. 8.

Minnesota Statutes 2018, section 290.0922, subdivision 2, is amended to read:

Subd. 2.

Exemptions.

The following entities are exempt from the tax imposed by this
section:

(1) corporations exempt from tax under section 290.05;

(2) real estate investment trusts;

(3) regulated investment companies or a fund thereof;

(4) entities having a valid election in effect under section 860D(b) of the Internal Revenue
Code;

(5) township mutual insurance companies;

(6) cooperatives organized under chapter 308A or 308B that provide housing exclusively
to persons age 55 and over and are classified as homesteads under section 273.124,
subdivision 3; deleted text begin and
deleted text end

(7) a qualified business as defined under section 469.310, subdivision 11, if for the
taxable year all of its property is located in a job opportunity building zone designated under
section 469.314 and all of its payroll is a job opportunity building zone payroll under section
469.310 deleted text begin . deleted text end new text begin ; and
new text end

new text begin (8) a qualified business as defined under section 290.0134, subdivision 20, paragraph
(d), clause (2), if for the taxable year all of its real property is qualified property, as defined
under section 290.0134, subdivision 20, paragraph (d), clause (1), and all of its payroll is
Minnesota payroll, as defined under section 290.0693, subdivision 1, paragraph (d).
new text end

Entities not specifically exempted by this subdivision are subject to tax under this section,
notwithstanding section 290.05.

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, 2025.
new text end

Sec. 9.

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

new text begin Subd. 53. new text end

new text begin Construction materials; destroyed property. new text end

new text begin Building materials and supplies
used in, and equipment incorporated into, the construction or replacement of real property
that has received a determination under section 273.1236, subdivision 3, are exempt. 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. Applicants must
provide proof of the determination received under section 273.1236, subdivision 3.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made on or after May 25, 2020, and before January 1, 2022.
new text end

Sec. 10.

Laws 2020, chapter 83, article 1, section 74, is amended to read:

Sec. 74.

Minnesota Statutes 2019 Supplement, section 297A.75, subdivision 1, is amended
to read:

Subdivision 1.

Tax collected.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(16) building materials, equipment, and supplies for constructing or replacing real
property exempt under section 297A.71, subdivisions 49; 50, paragraph (b); deleted text begin and deleted text end 51 new text begin ; and
53 new text end ; and

(17) building materials, equipment, and supplies for qualifying capital projects under
section 297A.71, subdivision 52.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made on or after May 25, 2020, and before January 1, 2022.
new text end