SF 2856

as introduced - 91st Legislature (2019 - 2020) Posted on 05/01/2019 08:31am

A bill for an act
relating to taxation; individual income; modifying the calculation of tax for
nonresidents; amending Minnesota Statutes 2018, section 290.06, subdivision 2c,
by adding subdivisions.

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

Section 1.

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

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(e) An individual who is not a Minnesota resident for the entire year new text begin , and who does not
meet the criteria under subdivision 2i for alternative calculation of nonresident income tax, new text end
must compute the individual's Minnesota income tax as provided in this subdivision. After
the application of the nonrefundable credits provided in this chapter, the tax liability must
then be multiplied by a fraction in which:

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2018, section 290.06, is amended by adding a subdivision to
read:

new text begin Subd. 2i. new text end

new text begin Alternative calculation of tax for nonresidents. new text end

new text begin (a) An individual who is not
a Minnesota resident for the entire year may compute the individual's Minnesota income
tax under this subdivision if the individual meets the requirements of paragraph (b).
new text end

new text begin (b) The taxpayer must elect to become a Minnesota resident for at least ..... taxable years
immediately following the taxable year in which the taxpayer is not a Minnesota resident.
The election must be made in a form prescribed by the commissioner and must include an
agreement by the taxpayer to pay the recapture tax under subdivision 2j if applicable.
new text end

new text begin (c) For nonresident taxpayers meeting the requirements of paragraph (b), the tax equals
the product of taxable net income multiplied by the fraction under clauses (1) and (2),
reduced by nonrefundable credits as provided in this chapter and multiplied by the rates as
provided in subdivision 2c:
new text end

new text begin (1) the numerator is the individual's Minnesota source federal adjusted gross income as
defined in section 62 of the Internal Revenue Code, and increased by the additions required
under section 290.0131, subdivisions 2, 6, 7, 8, 9, 10, and 11, and reduced by the Minnesota
assignable portion of the subtraction for United States government interest under section
290.0132, subdivision 2, and the subtractions under section 290.0132, subdivisions 9, 10,
14, 15, 17, and 18, after applying the allocation and assignability provisions of section
290.081, paragraph (a), or 290.17; and
new text end

new text begin (2) the denominator is the individual's federal adjusted gross income as defined in section
62 of the Internal Revenue Code, increased by the amounts specified in section 290.0131,
subdivisions 2, 6, 7, 8, 9, 10, and 11, and reduced by the amounts specified in section
290.0132, subdivisions 2, 9, 10, 14, 15, 17, and 18.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2018, section 290.06, is amended by adding a subdivision to
read:

new text begin Subd. 2j. new text end

new text begin Recapture tax. new text end

new text begin (a) If an individual who used the alternative calculation of tax
for nonresidents in a tax year under subdivision 2i and does not retain Minnesota residency
for at least ..... of the immediately following taxable years after the taxable year in which
the alternative calculation was applied, a recapture tax is imposed.
new text end

new text begin (b) The recapture tax equals the difference between the tax imposed under subdivision
2i and the tax imposed under subdivision 2c, multiplied by ... percent.
new text end

new text begin (c) The recapture tax under this subdivision is due on the day required under section
289A.20, subdivision 1, for the taxable year immediately following the taxable year to
which the recapture tax applies.
new text end

new text begin EFFECTIVE DATE. new text end

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