SF 54

as introduced - 91st Legislature, 2020 1st Special Session (2019 - 2020) Posted on 06/13/2020 02:22pm

A bill for an act
relating to taxes; property and local; providing grants to counties from the tax on
deeds for funding certain purposes; appropriating money; amending Minnesota
Statutes 2019 Supplement, section 287.21, subdivision 1; proposing coding for
new law in Minnesota Statutes, chapter 287.

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

Section 1.

Minnesota Statutes 2019 Supplement, 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 $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 $3,000, the tax is deleted text begin .0033 deleted text end new text begin .0011 new text end 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 deleted text begin .0033 deleted text end new text begin .0011 new text end of the net
consideration for the designated transfer. If the subsequent transfer of ownership interests
was reasonably expected at the time of the designated transfer, the applicable penalty under
section 287.31, subdivision 1, must be paid. The deed tax imposed under this paragraph is
due within 30 days of the subsequent transfer that caused the tax to be imposed under this
paragraph. Involuntary transfers of ownership shall not be considered transfers of ownership
under this paragraph. The commissioner may adopt rules defining the types of transfers to
be considered involuntary.

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for deeds recorded on or after July 1,
2020.
new text end

Sec. 2.

new text begin [287.291] GRANTS TO COUNTIES.
new text end

new text begin Subdivision 1. new text end

new text begin Grants; use of funds. new text end

new text begin (a) Beginning in fiscal year 2022, the commissioner
of revenue must provide grants to all counties from the revenue derived from the tax imposed
under section 287.21, subdivision 1. These revenues must be used exclusively for the
purposes allowed by paragraph (b).
new text end

new text begin (b) Counties must use grants for qualified expenditures within the county. For the purpose
of this section, "qualified expenditures" means expenditures to subsidize housing initiatives
that meet the needs of the community, as stated in the county's adopted housing plan.
Qualified expenditures may be in the form of a grant or a gap-financing loan to local
development authorities within the county.
new text end

new text begin (c) Counties must adopt a budget or plan that details the use of funds for projects allowed
by paragraph (b). The maximum amount of grant funds a county may accumulate in its
reserve is $5,000,000. A county is ineligible to receive a grant under this section if it has
accumulated more than $5,000,000 of grant funds and has not yet scheduled an obligation
of all or a portion of those funds to future projects for which there is an adopted budget or
plan. The commissioner must spread in equal amounts to all other eligible counties the
amount of grant an ineligible county was supposed to receive. An ineligible county may
become eligible to receive a grant in the following fiscal year if the county's grant fund
reserve drops below the $5,000,000 maximum or if the county adopts a budget or plan to
use all or a portion of the funds for future projects. Counties have five years from the date
of the budget or plan's adoption to spend the obligated funds before those funds count toward
the $5,000,000 maximum.
new text end

new text begin (d) The grant funds provided by this section must supplement traditional sources of
funding for these purposes and may not be used as a substitute.
new text end

new text begin Subd. 2. new text end

new text begin Calculation of grant funds. new text end

new text begin (a) The revenue derived from the tax imposed
under section 287.21, subdivision 1, is divided equally among counties in this state so that
the entire appropriation is spent.
new text end

new text begin (b) By August 1 of each year, the commissioner must calculate the amount of tax collected
under section 287.21, subdivision 1, in the previous fiscal year and certify to each county
the amount of grant funds the county is to receive.
new text end

new text begin (c) The commissioner must pay the funds on the second payment date provided by
section 477A.015, paragraph (a).
new text end

new text begin Subd. 3. new text end

new text begin Appropriation. new text end

new text begin An amount equal to the revenue raised by the tax imposed
under section 287.21, subdivision 1, in the previous fiscal year is annually appropriated to
the commissioner of revenue to issue the grants authorized by this section.
new text end

new text begin EFFECTIVE DATE. new text end

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