Engrossments
Introduction		Posted on 08/24/2018

ARTICLE 1

PROPERTY TAX

Section 1.

Minnesota Statutes 2016, section 162.145, subdivision 3, is amended to read:

Subd. 3.

Administration.

(a) Subject to funds made available by law, the commissioner
shall allocate all funds as provided in subdivision 4 and shall notify, by June 1, certify to
the commissioner of revenue the amounts to be paid.

(b) Following notification certification from the commissioner of transportation, the
commissioner of revenue shall distribute the specified funds to cities in the same manner
as local government aid under chapter 477A. An appropriation to the commissioner of
transportation under this section is available to the commissioner of revenue for the purposes
specified in this paragraph.

(c) Notwithstanding other law to the contrary, in order to receive distributions under
this section, a city must conform to the standards in section 477A.017, subdivision 2. A city
that receives funds under this section must make and preserve records necessary to show
that the funds are spent in compliance with subdivision 4.

EFFECTIVE DATE.

This section is effective for aids payable in 2018 and thereafter.

Sec. 2.

Minnesota Statutes 2016, section 270.41, subdivision 3, is amended to read:

Subd. 3.

Assessor sanctions; refusal to license.

(a) Following a recommendation from
the commissioner of revenue, the board may (i) refuse to grant or renew, or may suspend
or revoke, a license of an applicant or licensee, or (ii) censure, warn, or fine any licensed
assessor, or any other person employed by an assessment jurisdiction or contracting with
an assessment jurisdiction for the purpose of valuing or classifying property for property
tax purposes, for any of the following causes or acts:

(1) failure to complete required training;

(2) inefficiency or neglect of duty;

(3) failure to comply with the Code of Conduct and Ethics for Licensed Minnesota
Assessors adopted by the board pursuant to Laws 2005, First Special Session chapter 3,
article 1, section 38;

(4) conviction of a crime involving moral turpitude;

(5) failure to faithfully and fully perform his or her duties through malfeasance,
misfeasance, or nonfeasance; or

(6) any other cause or act that in the board's opinion warrants a refusal to issue a license
or the imposition of a sanction provided under this subdivision.

(b) When appropriate for the level of infraction, a written warning must be given to
assessors who have no prior identified infractions. The warning must identify the infraction
and, as appropriate, detail future expectations of performance and behavior. Fines must not
exceed $1,000 for the first occurrence and must not exceed $3,000 for each occurrence
thereafter, and suspensions must not exceed one year for each occurrence, depending in
each case upon the severity of the infraction and the level of negligence or intent. The
commissioner of revenue shall give notice to an applicant or licensee of the commissioner's
recommendation that the board impose sanctions or refuse to grant or renew a license. An
action by the board to impose a sanction fine, to suspend or revoke a license, or to refuse
to grant or renew a license is subject to review in a contested case hearing under chapter
14. A licensee must submit a request for a hearing to the board within 30 days of the notice
date of the commissioner's recommendation for sanctions or for refusal to grant or renew
a license.

EFFECTIVE DATE.

This section is effective for sanctions or refusals to grant or renew
a license recommended by the commissioner of revenue after June 30, 2018.

Sec. 3.

Minnesota Statutes 2017 Supplement, section 272.115, subdivision 1, is amended
to read:

Subdivision 1.

Requirement.

Except as otherwise provided in subdivision 5, 6, or 7,
whenever any real estate is sold for a consideration in excess of $1,000 $3,000, whether by
warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor,
grantee or the legal agent of either shall file a certificate of value with the county auditor
in the county in which the property is located when the deed or other document is presented
for recording. Contract for deeds are subject to recording under section 507.235, subdivision
1. Value shall, in the case of any deed not a gift, be the amount of the full actual consideration
thereof, paid or to be paid, including the amount of any lien or liens assumed. The items
and value of personal property transferred with the real property must be listed and deducted
from the sale price. The certificate of value shall include the classification to which the
property belongs for the purpose of determining the fair market value of the property, and
shall include any proposed change in use of the property known to the person filing the
certificate that could change the classification of the property. The certificate shall include
financing terms and conditions of the sale which are necessary to determine the actual,
present value of the sale price for purposes of the sales ratio study. If the property is being
acquired as part of a like-kind exchange under section 1031 of the Internal Revenue Code
of 1986, as amended through December 31, 2006, that must be indicated on the certificate.
The commissioner of revenue shall promulgate administrative rules specifying the financing
terms and conditions which must be included on the certificate. The certificate of value
must include the Social Security number or the federal employer identification number of
the grantors and grantees. However, a married person who is not an owner of record and
who is signing a conveyance instrument along with the person's spouse solely to release
and convey their marital interest, if any, in the real property being conveyed is not a grantor
for the purpose of the preceding sentence. A statement in the deed that is substantially in
the following form is sufficient to allow the county auditor to accept a certificate for filing
without the Social Security number of the named spouse: "(Name) claims no ownership
interest in the real property being conveyed and is executing this instrument solely to release
and convey a marital interest, if any, in that real property." The identification numbers of
the grantors and grantees are private data on individuals or nonpublic data as defined in
section 13.02, subdivisions 9 and 12, but, notwithstanding that section, the private or
nonpublic data may be disclosed to the commissioner of revenue for purposes of tax
administration. The information required to be shown on the certificate of value is limited
to the information required as of the date of the acknowledgment on the deed or other
document to be recorded.

EFFECTIVE DATE.

This section is effective for certificates of value filed after
December 31, 2018.

Sec. 4.

Minnesota Statutes 2016, section 287.21, subdivision 1, is amended to read:

Subdivision 1.

Determination of tax.

(a) A tax is imposed on each deed or instrument
by which any real property in this state is granted, assigned, transferred, or otherwise
conveyed. The tax applies against the net consideration. For purposes of the tax, the
conversion of a corporation to a limited liability company, a limited liability company to a
corporation, a partnership to a limited partnership, a limited partnership to another limited
partnership or other entity, or a similar conversion of one entity to another does not grant,
assign, transfer, or convey real property.

(b) The tax is determined in the following manner: (1) when transfers are made by
instruments pursuant to (i) consolidations or mergers, or (ii) designated transfers, the tax is
$1.65; (2) when there is no consideration or when the consideration, exclusive of the value
of any lien or encumbrance remaining thereon at the time of sale, is $500 $3,000 or less,
the tax is $1.65; or (3) when the consideration, exclusive of the value of any lien or
encumbrance remaining at the time of sale, exceeds $500 $3,000, the tax is .0033 of the net
consideration.

(c) If, within six months from the date of a designated transfer, an ownership interest in
the grantee entity is transferred by an initial owner to any person or entity with the result
that the designated transfer would not have been a designated transfer if made to the grantee
entity with its subsequent ownership, then a tax is imposed at .0033 of the net consideration
for the designated transfer. If the subsequent transfer of ownership interests was reasonably
expected at the time of the designated transfer, the applicable penalty under section 287.31,
subdivision 1, must be paid. The deed tax imposed under this paragraph is due within 30
days of the subsequent transfer that caused the tax to be imposed under this paragraph.
Involuntary transfers of ownership shall not be considered transfers of ownership under this
paragraph. The commissioner may adopt rules defining the types of transfers to be considered
involuntary.

(d) The tax is due at the time a taxable deed or instrument is presented for recording,
except as provided in paragraph (c). The commissioner may require the tax to be documented
in a manner prescribed by the commissioner, and may require that the documentation be
attached to and recorded as part of the deed or instrument. The county recorder or registrar
of titles shall accept the attachment for recording as part of the deed or instrument and may
not require, as a condition of recording a deed or instrument, evidence that a transfer is a
designated transfer in addition to that required by the commissioner. Such an attachment
shall not, however, provide actual or constructive notice of the information contained therein
for purposes of determining any interest in the real property. The commissioner shall
prescribe the manner in which the tax due under paragraph (c) is to be paid and may require
grantees of designated transfers to file with the commissioner subsequent statements verifying
that the tax provided under paragraph (c) does not apply.

EFFECTIVE DATE.

This section is effective for deeds recorded after December 31,
2018.

ARTICLE 3

PARTNERSHIP TAX

Section 1.

Minnesota Statutes 2017 Supplement, 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 section sections 289A.38 to 289A.384.

(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.

EFFECTIVE DATE.

This section is effective for tax 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.

Sec. 2.

Minnesota Statutes 2017 Supplement, 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.35, paragraph (b), 289A.383, subdivision
3, and 290.0922 on partnerships are the joint and several liability of the partnership and the
general partners.

EFFECTIVE DATE.

Sec. 3.

Minnesota Statutes 2017 Supplement, 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 section sections 289A.38 to 289A.384.

EFFECTIVE DATE.

Sec. 4.

Minnesota Statutes 2016, 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 9 sections 289A.381 to 289A.384 regarding additional extensions
apply.

EFFECTIVE DATE.

Sec. 5.

[289A.381] DEFINITIONS; PARTNERSHIPS; FEDERAL ADJUSTMENTS.

Subdivision 1.

Definitions relating to federal adjustments.

Unless otherwise specified,
the definitions in this section apply for the purposes of sections 289A.381 to 289A.385.

Subd. 2.

Administrative adjustment request.

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

Subd. 3.

Audited partnership.

"Audited partnership" means a partnership subject to a
federal adjustment resulting from a partnership-level audit.

Subd. 4.

Corporate partner.

"Corporate partner" means a partner that is subject to tax
under section 290.02.

Subd. 5.

Direct partner.

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

Subd. 6.

Exempt partner.

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

Subd. 7.

Federal adjustment.

"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 the filing of an amended federal return, federal refund claim, or an administrative
adjustment request by the taxpayer.

Subd. 8.

Federal adjustments report.

"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.

Subd. 9.

Federal partnership representative.

"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.

Subd. 10.

Final determination date.

(a) "Final determination date" means:

(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;

(2) 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 day
which the amended return, refund claim, or administrative adjustment request was filed; or

(3) for agreements required to be signed by the Internal Revenue Service and the taxpayer,
the date on which the last party signed the agreement.

Subd. 11.

Final federal adjustment.

"Final federal adjustment" means a federal
adjustment for which the final determination date for that federal adjustment has passed.

Subd. 12.

Indirect partner.

"Indirect partner" means either:

(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

(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.

Subd. 13.

Partner.

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

Subd. 14.

Partnership.

The term "partnership" has the meaning provided under section
7701(a)(2) of the Internal Revenue Code.

Subd. 15.

Partnership-level audit.

"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 including
reallocation adjustments and adjustments to partnership-related items.

Subd. 16.

Pass-through entity.

"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.

Subd. 17.

Reallocation adjustment.

"Reallocation adjustment" means a federal
adjustment, or final federal adjustment, that changes the shares of items of partnership
income, gain, loss, expense, or credit allocated to partners. The term positive reallocation
adjustment means reallocation adjustments that would increase state taxable income for
partners, and the term negative reallocation adjustment means reallocation adjustments that
would decrease state taxable income for partners.

Subd. 18.

Resident partner.

"Resident partner" means an individual partner or individual
indirect partner who is a resident of Minnesota under section 290.01, subdivision 7.

Subd. 19.

Reviewed year.

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

Subd. 20.

Tiered partner.

"Tiered partner" means any partner that is a partnership or
pass-through entity.

Subd. 21.

Unrelated business taxable income.

"Unrelated business taxable income"
has the same meaning as defined in section 512 of the Internal Revenue Code.

EFFECTIVE DATE.

Sec. 6.

[289A.382] REPORTING FEDERAL ADJUSTMENTS; GENERAL RULE.

(a) Within 180 days of a final determination date, a taxpayer must file a federal adjustment
report with the commissioner reporting all final federal adjustments by the Internal Revenue
Service or other competent authority.

(b) Within 180 days of a final determination date, a taxpayer must file a federal adjustment
report with the commissioner reporting any federal adjustments reported by the taxpayer
to the Internal Revenue Service, including but not limited to:

(1) federal refund claims;

(2) a change reported on a timely filed amended federal income tax return; and

(3) a change reported on an amended return filed pursuant to section 6225 of the Internal
Revenue Code.

(c) 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.383,
and not this section.

EFFECTIVE DATE.

Sec. 7.

[289A.383] REPORTING AND PAYMENT REQUIREMENTS.

Subdivision 1.

State partnership representative.

(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 partners and indirect partners shall
be bound by those actions.

(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.

Subd. 2.

Reporting and payment requirements for partnerships and tiered partners.

(a) Unless an audited partnership makes the election in subdivision 3, 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).

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

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

(2) notify each of its direct partners of their distributive share of the adjustments;

(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

(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.

(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:

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

(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).

Subd. 3.

Election; partnership or tiered partners pay; commissioner's powers.

(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:

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

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

(i) exclude from final federal adjustments and any positive reallocation adjustments the
distributive share of these adjustments made to an exempt partner that is not unrelated
business taxable income;

(ii) exclude from final federal adjustments and any positive reallocation adjustments the
distributive share of these adjustments made to a partner that has filed a federal adjustment
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 of the Internal Revenue Code;

(iii) allocate at the partner level using section 290.17, subdivision 1, all final federal
adjustments and positive reallocation adjustments attributable to resident partners, both
direct and indirect, for the reviewed year;

(iv) allocate and apportion at the partnership level using sections 290.17 to 290.20 all
remaining final federal adjustments and positive reallocation adjustments for the reviewed
year;

(v) determine the total distributive share of the allocated and apportioned final federal
adjustments and positive reallocation adjustments determined in items (iii) and (iv) that are
attributable to:

(A) resident partners;

(B) corporate partners and exempt partners; and

(vi) for the total distributive share of net final federal adjustments plus positive
reallocation adjustments attributed to corporate partners and exempt partners under item
(v), subitem (B), 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;

(vii) for the total distributive share of net final federal adjustments plus positive
reallocation adjustments attributable to resident partners, and all other partners under item
(v), subitems (A) and (C), 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; and

(viii) add the amount determined in item (vi) to the amount determined in item (vii),
and pay all applicable taxes, penalties, and interest to the commissioner.

(b) Unless the commissioner determines otherwise, the election under this subdivision
is not available for reporting an adjustment made pursuant to an administrative adjustment
request.

Subd. 4.

Tiered partners and indirect partners.

(a) Each tiered partner and each
indirect partner of an audited partnership that reported final federal adjustments pursuant
to subdivision 2, paragraph (b), clause (1), or this subdivision, must:

(1) within 90 days of the report comply with the filing, reporting, and payment
requirements of subdivision 2, paragraph (b); or

(2) make the election under subdivision 3 as though it were the audited partnership.

(b) Each direct partner in a partnership making a report under paragraph (a) must, within
180 days of the report, comply with the filing, reporting, and payment requirements of
subdivision 2, paragraph (c).

(c) Notwithstanding the interim time requirements in this subdivision and subdivisions
2 and 3, all reports and payments required to be made by the tiered and indirect partners
under this section are required to be made within 90 days after the time for the filing and
furnishing of statements to tiered partners and their partners as established by the Internal
Revenue Service under section 6226 of the Internal Revenue Code.

Subd. 5.

Effects of election by partnership or tiered partner and payment of amount
due.

(a) Unless the commissioner determines otherwise, the election under subdivision 3
is irrevocable.

(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 on the same final federal adjustments. The direct partners and
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.

(c) Nothing in this subdivision precludes resident 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.

Subd. 6.

Failure of partnership or tiered partner to report or pay.

Nothing in this
section prevents the commissioner from assessing partners or indirect partners for taxes
they owe in the event that, for any reason, a partnership or tiered partner fails to timely
make any report or payment required by this section.

EFFECTIVE DATE.

Sec. 8.

[289A.384] ASSESSMENT OF TAX, INTEREST, PENALTIES, AND
ADDITIONAL AMOUNTS.

Subdivision 1.

Assessment of additional tax, interest, and penalties.

The commissioner
may assess additional tax, interest, and penalties following a final federal adjustment:

(1) arising from an audit by the Internal Revenue Service, including a partnership-level
audit;

(2) reported by the taxpayer on an amended federal tax return; or

(3) as part of an administrative adjustment request on or before the dates provided in
this section.

Subd. 2.

Timely and untimely reported federal adjustments.

If a taxpayer files a
federal adjustment report, within or after the periods prescribed in section 289A.382 or
289A.383, the commissioner may assess any additional Minnesota amounts including
in-lieu-of amounts, taxes, interest, and penalties at the later of:

(1) the expiration of the period of limitations in section 289A.38; or

(2) the expiration of the one-year period following the date of the filing with the
commissioner of the federal adjustments report.

Subd. 3.

Unreported reported federal adjustments.

If the taxpayer fails to file a federal
adjustments report, the commissioner may assess additional amounts including in-lieu-of
amounts, taxes, penalties, and interest, at the later of:

(1) the expiration of the period of limitations in section 289A.38; or

(2) the expiration of the six-year period following the final determination date.

EFFECTIVE DATE.

Sec. 9.

[289A.385] CLAIMS FOR REFUND OR CREDITS OF STATE TAX
ARISING FROM FINAL FEDERAL ADJUSTMENTS MADE BY THE INTERNAL
REVENUE SERVICE.

Notwithstanding the general period of limitations on claims for refund in section 289A.40,
taxpayers subject to the reporting requirements of sections 289A.382 and 289A.383 may
file claims for refund related to federal adjustments made by the Internal Revenue Service
on or before the last day for the assessment of tax under section 289A.384.

EFFECTIVE DATE.

Sec. 10.

Minnesota Statutes 2016, 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.38 to 289A.384 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 section 289A.38, subdivisions 8 and 9 289A.384,
subdivisions 2 and 3;

(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 it in section 289A.38, subdivision 9.

EFFECTIVE DATE.

Sec. 11.

Minnesota Statutes 2016, 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 section 289A.38, subdivision 7 sections 289A.382 and 289A.383, 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.

EFFECTIVE DATE.

Sec. 12.

Minnesota Statutes 2017 Supplement, section 290.31, subdivision 1, is amended
to read:

Subdivision 1.

Partners, not partnership, subject to tax.

Except as provided under
section sections 289A.35, paragraph (b), and 289A.383, subdivision 3, 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.

EFFECTIVE DATE.

Sec. 13.

Minnesota Statutes 2016, 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 section 289A.38, subdivision
7 sections 289A.382 and 289A.383.

EFFECTIVE DATE.

Sec. 14.

Minnesota Statutes 2016, 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 section 289A.38, subdivision 7 sections 289A.38 to 289A.384.

EFFECTIVE DATE.

Sec. 15.

Minnesota Statutes 2016, 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 section 289A.38 sections
289A.38 to 289A.384, 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.

EFFECTIVE DATE.

Sec. 16. REPEALER.

Minnesota Statutes 2016, section 289A.38, subdivisions 7, 8, and 9, are repealed.

SF 3712

Bill Text Versions

Current Version - as introduced

ARTICLE 1

PROPERTY TAX

Section 1.

Subd. 3.

Administration.

EFFECTIVE DATE.

Sec. 2.

Subd. 3.

Assessor sanctions; refusal to license.

EFFECTIVE DATE.

Sec. 3.

Subdivision 1.

Requirement.

EFFECTIVE DATE.

Sec. 4.

Subdivision 1.

Determination of tax.

EFFECTIVE DATE.

ARTICLE 2

MISCELLANEOUS

Section 1.

Subd. 2.

Revocation or cancellation.

EFFECTIVE DATE.

Sec. 2.

297A.84 PERMITS ISSUED AND NOT ISSUED; CANCELLATION.

Subdivision 1.

Definitions.

Subd. 2.

Permits issued.

Subd. 3.

Permits not issued.

Subd. 4.

Nonconforming permits; cancellation; reissue.

EFFECTIVE DATE.

Sec. 3.

297A.85 CANCELLATION OF PERMITS.

EFFECTIVE DATE.

Sec. 4.

Subdivision 1.

Authorization.

EFFECTIVE DATE; APPLICATION.

Sec. 5.

Subd. 7.

Collection.

EFFECTIVE DATE.

ARTICLE 3

PARTNERSHIP TAX

Section 1.

Subd. 6.

Enforcement; administrative order; penalties; cease and desist.

EFFECTIVE DATE.

Sec. 2.

Subdivision 1.

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

EFFECTIVE DATE.

Sec. 3.

Subd. 2.

Erroneous refunds.

EFFECTIVE DATE.

Sec. 4.

Subd. 10.

Incorrect determination of federal adjusted gross income.

EFFECTIVE DATE.

Sec. 5.

[289A.381] DEFINITIONS; PARTNERSHIPS; FEDERAL ADJUSTMENTS.

Subdivision 1.

Definitions relating to federal adjustments.

Subd. 2.

Administrative adjustment request.

Subd. 3.

Audited partnership.

Subd. 4.

Corporate partner.

Subd. 5.

Direct partner.

Subd. 6.

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

Effects of election by partnership or tiered partner and payment of amount
due.

[289A.384] ASSESSMENT OF TAX, INTEREST, PENALTIES, AND
ADDITIONAL AMOUNTS.

[289A.385] CLAIMS FOR REFUND OR CREDITS OF STATE TAX
ARISING FROM FINAL FEDERAL ADJUSTMENTS MADE BY THE INTERNAL
REVENUE SERVICE.