SF 783

1st Engrossment - 93rd Legislature (2023 - 2024) Posted on 10/25/2023 10:29am

A bill for an act
relating to taxation; making various policy and technical changes to individual
income and corporate franchise taxes, fire and police state aids, and other
miscellaneous taxes and tax provisions; amending Minnesota Statutes 2022, sections
6.495, subdivision 3; 270C.19, subdivisions 1, 2; 289A.08, subdivisions 7, 7a;
289A.382, subdivision 2; 289A.50, by adding a subdivision; 290.01, subdivision
19; 290.06, subdivision 22; 290.0671, subdivisions 1, 7; 290.0685, subdivision 1;
290.92, subdivision 20; 290.9705, subdivision 1; 290A.03, subdivision 13; 295.50,
subdivision 4; 296A.083, subdivision 3; 297A.61, subdivision 29; 477B.01,
subdivisions 5, 10, 11, by adding subdivisions; 477B.02, subdivisions 2, 3, 5, 8,
9, 10, by adding a subdivision; 477B.03, subdivisions 2, 3, 4, 5, 7; 477B.04,
subdivision 1, by adding a subdivision; 477C.02, subdivision 4; 477C.03,
subdivisions 2, 5; 477C.04, by adding a subdivision; repealing Minnesota Statutes
2022, sections 477B.02, subdivision 4; 477B.03, subdivision 6.

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

ARTICLE 1

INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES

Section 1.

Minnesota Statutes 2022, section 289A.08, subdivision 7, is amended to read:

Subd. 7.

Composite income tax returns for nonresident partners, shareholders, and
beneficiaries.

(a) The commissioner may allow a partnership with nonresident partners to
file a composite return and to pay the tax on behalf of nonresident partners who have no
other Minnesota source income. This composite return must include the names, addresses,
Social Security numbers, income allocation, and tax liability for the nonresident partners
electing to be covered by the composite return.

(b) The computation of a partner's tax liability must be determined by multiplying the
income allocated to that partner by the highest rate used to determine the tax liability for
individuals under section 290.06, subdivision 2c. Nonbusiness deductions, standard
deductions, or personal exemptions are not allowed.

(c) The partnership must submit a request to use this composite return filing method for
nonresident partners. The requesting partnership must file a composite return in the form
prescribed by the commissioner of revenue. The filing of a composite return is considered
a request to use the composite return filing method.

(d) The electing partner must not have any Minnesota source income other than the
income from the partnership, other electing partnerships, and other qualifying entities
electing to file and pay the pass-through entity tax under subdivision 7a. If it is determined
that the electing partner has other Minnesota source income, the inclusion of the income
and tax liability for that partner under this provision will not constitute a return to satisfy
the requirements of subdivision 1. The tax paid for the individual as part of the composite
return is allowed as a payment of the tax by the individual on the date on which the composite
return payment was made. If the electing nonresident partner has no other Minnesota source
income, filing of the composite return is a return for purposes of subdivision 1.

(e) This subdivision does not negate the requirement that an individual pay estimated
tax if the individual's liability would exceed the requirements set forth in section 289A.25.
The individual's liability to pay estimated tax is, however, satisfied when the partnership
pays composite estimated tax in the manner prescribed in section 289A.25.

(f) If an electing partner's share of the partnership's gross income from Minnesota sources
is less than the filing requirements for a nonresident under this subdivision, the tax liability
is zero. However, a statement showing the partner's share of gross income must be included
as part of the composite return.

(g) The election provided in this subdivision is only available to a partner who has no
other Minnesota source income and who is either (1) a full-year nonresident individual or
(2) a trust or estate that does not claim a deduction under either section 651 or 661 of the
Internal Revenue Code.

(h) A corporation defined in section 290.9725 and its nonresident shareholders may
make an election under this paragraph. The provisions covering the partnership apply to
the corporation and the provisions applying to the partner apply to the shareholder.

(i) Estates and trusts distributing current income only and the nonresident individual
beneficiaries of the estates or trusts may make an election under this paragraph. The
provisions covering the partnership apply to the estate or trust. The provisions applying to
the partner apply to the beneficiary.

(j) For the purposes of this subdivision, "income" deleted text begin means the partner's share of federal
adjusted gross income from the partnership modified by the additions provided in section
290.0131, subdivisions 8 to 10, 16, and 17, and the subtractions provided in: (1) section
290.0132, subdivisions 9, 27, and 28, to the extent the amount is assignable or allocable to
Minnesota under section 290.17; and (2) section 290.0132, subdivision 14. The subtraction
allowed under section 290.0132, subdivision 9, is only allowed on the composite tax
computation to the extent the electing partner would have been allowed the subtraction. deleted text end new text begin has
the meaning given in section 290.01, subdivision 19, paragraph (h).
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, 2022.
new text end

Sec. 2.

Minnesota Statutes 2022, section 289A.08, subdivision 7a, is amended to read:

Subd. 7a.

Pass-through entity tax.

(a) For the purposes of this subdivision, the following
terms have the meanings given:

(1) "income" has the meaning given in deleted text begin subdivision 7, paragraph (j), modified by the
addition provided in section 290.0131, subdivision 5, and the subtraction provided in section
290.0132, subdivision 3, except that the provisions that apply to a partnership apply to a
qualifying entity and the provisions that apply to a partner apply to a qualifying owner. The
income of both a resident and nonresident qualifying owner is allocated and assigned to
this state as provided for nonresident partners and shareholders under sections 290.17,
290.191, and 290.20; deleted text end new text begin section 290.01, subdivision 19, paragraph (i);
new text end

(2) "qualifying entity" means a partnership, limited liability company new text begin taxed as a
partnership or S corporation new text end , or S corporation including a qualified subchapter S subsidiary
organized under section 1361(b)(3)(B) of the Internal Revenue Code. Qualifying entity does
not include a partnership, limited liability company, or corporation that has a partnership,
limited liability company other than a disregarded entity, or corporation as a partner, member,
or shareholder; and

(3) "qualifying owner" means:

(i) a resident or nonresident individual or estate that is a partner, member, or shareholder
of a qualifying entity; or

(ii) a resident or nonresident trust that is a shareholder of a qualifying entity that is an
S corporation.

(b) For taxable years beginning after December 31, 2020, in which the taxes of a
qualifying owner are limited under section 164(b)(6)(B) of the Internal Revenue Code, a
qualifying entity may elect to file a return and pay the pass-through entity tax imposed under
paragraph (c). The election:

(1) must be made on or before the due date or extended due date of the qualifying entity's
pass-through entity tax return;

(2) may only be made by qualifying owners who collectively hold more than a 50 percent
ownership interest in the qualifying entity;

(3) is binding on all qualifying owners who have an ownership interest in the qualifying
entity; and

(4) once made is irrevocable for the taxable year.

(c) Subject to the election in paragraph (b), a pass-through entity tax is imposed on a
qualifying entity in an amount equal to the sum of the tax liability of each qualifying owner.

(d) The amount of a qualifying owner's tax liability under paragraph (c) is the amount
of the qualifying owner's income multiplied by the highest tax rate for individuals under
section 290.06, subdivision 2c. When making this determination:

(1) nonbusiness deductions, standard deductions, or personal exemptions are not allowed;
and

(2) a credit or deduction is allowed only to the extent allowed to the qualifying owner.

(e) The amount of each credit and deduction used to determine a qualifying owner's tax
liability under paragraph (d) must also be used to determine that qualifying owner's income
tax liability under chapter 290.

(f) This subdivision does not negate the requirement that a qualifying owner pay estimated
tax if the qualifying owner's tax liability would exceed the requirements set forth in section
289A.25. The qualifying owner's liability to pay estimated tax on the qualifying owner's
tax liability as determined under paragraph (d) is, however, satisfied when the qualifying
entity pays estimated tax in the manner prescribed in section 289A.25 for composite estimated
tax.

(g) A qualifying owner's adjusted basis in the interest in the qualifying entity, and the
treatment of distributions, is determined as if the election to pay the pass-through entity tax
under paragraph (b) is not made.

(h) To the extent not inconsistent with this subdivision, for purposes of this chapter, a
pass-through entity tax return must be treated as a composite return and a qualifying entity
filing a pass-through entity tax return must be treated as a partnership filing a composite
return.

(i) The provisions of subdivision 17 apply to the election to pay the pass-through entity
tax under this subdivision.

(j) If a nonresident qualifying owner of a qualifying entity making the election to file
and pay the tax under this subdivision has no other Minnesota source income, filing of the
pass-through entity tax return is a return for purposes of subdivision 1, provided that the
nonresident qualifying owner must not have any Minnesota source income other than the
income from the qualifying entity, other electing qualifying entities, and other partnerships
electing to file a composite return under subdivision 7. If it is determined that the nonresident
qualifying owner has other Minnesota source income, the inclusion of the income and tax
liability for that owner under this provision will not constitute a return to satisfy the
requirements of subdivision 1. The tax paid for the qualifying owner as part of the
pass-through entity tax return is allowed as a payment of the tax by the qualifying owner
on the date on which the pass-through entity tax return payment was made.

new text begin (k) Once a credit is claimed by a qualifying owner under section 290.06, subdivision
40, the qualifying entity cannot receive a refund for tax paid under this subdivision for any
amounts claimed under that section by the qualifying owners. Once a credit is claimed under
section 290.06, subdivision 40, any refund must be claimed in conjunction with a return
filed by the qualifying owner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin (a) The amendment to paragraph (a), clause (1), is effective for
taxable years beginning after December 31, 2022.
new text end

new text begin (b) The amendment to paragraph (a), clause (2), and the amendment adding paragraph
(k), are effective retroactively for taxable years beginning after December 31, 2020.
new text end

Sec. 3.

Minnesota Statutes 2022, section 289A.382, subdivision 2, is amended to read:

Subd. 2.

Reporting and payment requirements for partnerships and tiered
partners.

(a) Except for when an audited partnership makes the election in subdivision 3,
and except for negative federal adjustments required under federal law taken into account
by the partnership in the partnership return for the adjustment or other year, all final federal
adjustments of an 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 adjustments 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 final federal
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; deleted text begin and
deleted text end

(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 deleted text begin . deleted text end new text begin ; and
new text end

new text begin (5) file an amended pass-through entity tax report for all direct partners who were
included in a pass-through entity tax return under section 289A.08, subdivision 7a, 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

(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 adjustments 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).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2020.
new text end

Sec. 4.

Minnesota Statutes 2022, section 289A.50, is amended by adding a subdivision to
read:

new text begin Subd. 3a. new text end

new text begin Nonresident withholding tax refunds. new text end

new text begin When there is an overpayment of
nonresident withholding tax by a partnership or S corporation, a refund allowable under
this section to the payor is limited to the amount of the overpayment that was not deducted
and withheld from the shares of the payor's partners or shareholders.
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. 5.

Minnesota Statutes 2022, section 290.01, subdivision 19, is amended to read:

Subd. 19.

Net income.

(a) For a trust or estate taxable under section 290.03, and a
corporation taxable under section 290.02, the term "net income" means the federal taxable
income, as defined in section 63 of the Internal Revenue Code of 1986, as amended through
the date named in this subdivision, incorporating the federal effective dates of changes to
the Internal Revenue Code and any elections made by the taxpayer in accordance with the
Internal Revenue Code in determining federal taxable income for federal income tax
purposes, and with the modifications provided in sections 290.0131 to 290.0136.

(b) For an individual, the term "net income" means federal adjusted gross income with
the modifications provided in sections 290.0131, 290.0132, and 290.0135 to 290.0137.

(c) In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:

(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;

(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal Revenue
Code must be applied by allowing a deduction for capital gain dividends and exempt-interest
dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal Revenue Code;
and

(3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.

(d) The net income of a real estate investment trust as defined and limited by section
856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
taxable income as defined in section 857(b)(2) of the Internal Revenue Code.

(e) The net income of a designated settlement fund as defined in section 468B(d) of the
Internal Revenue Code means the gross income as defined in section 468B(b) of the Internal
Revenue Code.

(f) The Internal Revenue Code of 1986, as amended through December 31, 2018, applies
for taxable years beginning after December 31, 1996, except the sections of federal law in
section 290.0111 shall also apply.

(g) Except as otherwise provided, references to the Internal Revenue Code in this
subdivision and sections 290.0131 to 290.0136 mean the code in effect for purposes of
determining net income for the applicable year.

new text begin (h) In the case of a partnership electing to file a composite return under section 289A.08,
subdivision 7, income means the partner's share of federal adjusted gross income from the
partnership modified by the additions provided in section 290.0131, subdivisions 8 to 10,
16, and 17, and the subtractions provided in: (1) section 290.0132, subdivisions 9, 27, and
28, to the extent the amount is assignable or allocable to Minnesota under section 290.17;
and (2) section 290.0132, subdivision 14. The subtraction allowed under section 290.0132,
subdivision 9, is only allowed on the composite tax computation to the extent the electing
partner would have been allowed the subtraction.
new text end

new text begin (i) In the case of a qualifying entity electing to pay the pass-through entity tax under
section 289A.08, subdivision 7a, income means the qualifying owner's share of federal
adjusted gross income from the qualifying entity modified by the additions provided in
section 290.0131, subdivisions 5, 8 to 10, 16, and 17, and the subtractions provided in: (1)
section 290.0132, subdivisions 3, 9, 27, and 28, to the extent the amount is assignable or
allocable to Minnesota under section 290.17; and (2) section 290.0132, subdivision 14. The
subtraction allowed under section 290.0132, subdivision 9, is only allowed on the
pass-through entity tax computation to the extent the qualifying owners would have been
allowed the subtraction. The income of both a resident and nonresident qualifying owner
is allocated and assigned to this state as provided for nonresident partners and shareholders
under sections 290.17, 290.191, and 290.20.
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, 2022.
new text end

Sec. 6.

Minnesota Statutes 2022, section 290.06, subdivision 22, is amended to read:

Subd. 22.

Credit for taxes paid to another state.

(a) A taxpayer who is liable for taxes
based on net income to another state, as provided in paragraphs (b) through (f), upon income
allocated or apportioned to Minnesota, is entitled to a credit for the tax paid to another state
if the tax is actually paid in the taxable year or a subsequent taxable year. A taxpayer who
is a resident of this state pursuant to section 290.01, subdivision 7, paragraph (b), and who
is subject to income tax as a resident in the state of the individual's domicile is not allowed
this credit unless the state of domicile does not allow a similar credit.

(b) For an individual, estate, or trust, the credit is determined by multiplying the tax
payable under this chapter by the ratio derived by dividing the income subject to tax in the
other state that is also subject to tax in Minnesota while a resident of Minnesota by the
taxpayer's federal adjusted gross income, as defined in section 62 of the Internal Revenue
Code, modified by the addition required by section 290.0131, subdivision 2, and the
subtraction allowed by section 290.0132, subdivision 2, to the extent the income is allocated
or assigned to Minnesota under sections 290.081 and 290.17.

(c) If the taxpayer is an athletic team that apportions all of its income under section
290.17, subdivision 5, the credit is determined by multiplying the tax payable under this
chapter by the ratio derived from dividing the total net income subject to tax in the other
state by the taxpayer's Minnesota taxable income.

(d)(1) The credit determined under paragraph (b) or (c) shall not exceed the amount of
tax so paid to the other state on the gross income earned within the other state subject to
tax under this chapter; and

(2) the allowance of the credit does not reduce the taxes paid under this chapter to an
amount less than what would be assessed if the gross income earned within the other state
were excluded from taxable net income.

(e) In the case of the tax assessed on a lump-sum distribution under section 290.032, the
credit allowed under paragraph (a) is the tax assessed by the other state on the lump-sum
distribution that is also subject to tax under section 290.032, and shall not exceed the tax
assessed under section 290.032. To the extent the total lump-sum distribution defined in
section 290.032, subdivision 1, includes lump-sum distributions received in prior years or
is all or in part an annuity contract, the reduction to the tax on the lump-sum distribution
allowed under section 290.032, subdivision 2, includes tax paid to another state that is
properly apportioned to that distribution.

(f) If a Minnesota resident reported an item of income to Minnesota and is assessed tax
in such other state on that same income after the Minnesota statute of limitations has expired,
the taxpayer shall receive a credit for that year under paragraph (a), notwithstanding any
statute of limitations to the contrary. The claim for the credit must be submitted within one
year from the date the taxes were paid to the other state. The taxpayer must submit sufficient
proof to show entitlement to a credit.

(g) For the purposes of this subdivision, a resident shareholder of a corporation treated
as an "S" corporation under section 290.9725, must be considered to have paid a tax imposed
on the shareholder in an amount equal to the shareholder's pro rata share of any net income
tax paid by the S corporation to another state. For the purposes of the preceding sentence,
the term "net income tax" means any tax imposed on or measured by a corporation's net
income.

(h) For the purposes of this subdivision, a resident partner of an entity taxed as a
partnership under the Internal Revenue Code must be considered to have paid a tax imposed
on the partner in an amount equal to the partner's pro rata share of any net income tax paid
by the partnership to another state. For purposes of the preceding sentence, the term "net
income" tax means any tax imposed on or measured by a partnership's net income. For
purposes of this paragraph, "partnership" includes a limited liability company and "partner"
includes a member of a limited liability company.

(i) For the purposes of this subdivision, "another state":

(1) includes:

(i) the District of Columbia; and

(ii) a province or territory of Canada; but

(2) excludes Puerto Rico and the several territories organized by Congress.

(j) The limitations on the credit in paragraphs (b), (c), and (d), are imposed on a state
by state basis.

(k) For a tax imposed by a province or territory of Canada, the tax for purposes of this
subdivision is the excess of the tax over the amount of the foreign tax credit allowed under
section 27 of the Internal Revenue Code. In determining the amount of the foreign tax credit
allowed, the net income taxes imposed by Canada on the income are deducted first. Any
remaining amount of the allowable foreign tax credit reduces the provincial or territorial
tax that qualifies for the credit under this subdivision.

(l)(1) The credit allowed to a qualifying individual under this section for tax paid to a
qualifying state equals the credit calculated under paragraphs (b) and (d), plus the amount
calculated by multiplying:

(i) the difference between the preliminary credit and the credit calculated under paragraphs
(b) and (d), by

(ii) the ratio derived by dividing the income subject to tax in the qualifying state that
consists of compensation for performance of personal or professional services by the total
amount of income subject to tax in the qualifying state.

(2) If the amount of the credit that a qualifying individual is eligible to receive under
clause (1) for tax paid to a qualifying state exceeds the tax due under this chapter before
the application of the credit calculated under clause (1), the commissioner shall refund the
excess to the qualifying individual. An amount sufficient to pay the refunds required by this
subdivision is appropriated to the commissioner from the general fund.

(3) For purposes of this paragraph, "preliminary credit" means the credit that a qualifying
individual is eligible to receive under paragraphs (b) and (d) for tax paid to a qualifying
state without regard to the limitation in paragraph (d), clause (2); "qualifying individual"
means a Minnesota resident under section 290.01, subdivision 7, paragraph (a), who received
compensation during the taxable year for the performance of personal or professional services
within a qualifying state; and "qualifying state" means a state with which an agreement
under section 290.081 is not in effect for the taxable year but was in effect for a taxable
year beginning before January 1, 2010.

new text begin (m) For purposes of this subdivision, a resident sole member of a disregarded limited
liability company must be considered to have paid a tax imposed on the sole member in an
amount equal to the net income tax paid by the disregarded limited liability company to
another state. For the purposes of this paragraph, the term "disregarded limited liability
company" means a limited liability company that is disregarded as an entity separate from
its owner as defined in Code of Federal Regulations, title 26, section 301.7701, and "net
income tax" means any tax imposed on or measured by a disregarded limited liability
company's net income.
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, 2022.
new text end

Sec. 7.

Minnesota Statutes 2022, section 290.0671, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual who is a resident of Minnesota is
allowed a credit against the tax imposed by this chapter equal to a percentage of earned
income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the
Internal Revenue Code, except that:

(1) a taxpayer with no qualifying children who has attained the age of 19, but not attained
age 65 before the close of the taxable year and is otherwise eligible for a credit under section
32 of the Internal Revenue Code may also receive a credit; and

(2) a taxpayer who is otherwise eligible for a credit under section 32 of the Internal
Revenue Code remains eligible for the credit even if the taxpayer's earned income or adjusted
gross income exceeds the income limitation under section 32 of the Internal Revenue Code.

(b) For individuals with no qualifying children, the credit equals 3.9 percent of the first
$7,150 of earned income. The new text begin maximum new text end credit new text begin allowed new text end is reduced by 2.0 percent of earned
income or adjusted gross income, whichever is greater, in excess of the phaseout threshold deleted text begin ,
but deleted text end new text begin . new text end In no case is the credit less than zero.

(c) For individuals with one qualifying child, the credit equals 9.35 percent of the first
$11,950 of earned income. The new text begin maximum new text end credit new text begin allowed new text end is reduced by 6.0 percent of earned
income or adjusted gross income, whichever is greater, in excess of the phaseout threshold deleted text begin ,
but deleted text end new text begin . new text end In no case is the credit less than zero.

(d) For individuals with two qualifying children, the credit equals 11 percent of the first
$19,600 of earned income. The new text begin maximum new text end credit new text begin allowed new text end is reduced by 10.5 percent of
earned income or adjusted gross income, whichever is greater, in excess of the phaseout
threshold deleted text begin , but deleted text end new text begin . new text end In no case is the credit less than zero.

(e) For individuals with three or more qualifying children, the credit equals 12.5 percent
of the first $20,000 of earned income. The new text begin maximum new text end credit new text begin allowed new text end is reduced by 10.5
percent of earned income or adjusted gross income, whichever is greater, in excess of the
phaseout threshold deleted text begin , but deleted text end new text begin . new text end In no case is the credit less than zero.

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

(g) For a person who was a resident for the entire tax year and has earned income not
subject to tax under this chapter deleted text begin , including income excluded under section 290.0132,
subdivision 10, deleted text end the credit must be allocated based on the ratio of federal adjusted gross
income reduced by the earned income not subject to tax under this chapter over federal
adjusted gross income. For purposes of this paragraph, the following clauses are not
considered "earned income not subject to tax under this chapter":

(1) the subtractions for military pay under section 290.0132, subdivisions 11 and 12;

(2) the exclusion of combat pay under section 112 of the Internal Revenue Code; and

(3) income derived from an Indian reservation by an enrolled member of the reservation
while living on the reservation.

(h) For the purposes of this section, the phaseout threshold equals:

(1) $14,570 for married taxpayers filing joint returns with no qualifying children;

(2) $8,730 for all other taxpayers with no qualifying children;

(3) $28,610 for married taxpayers filing joint returns with one qualifying child;

(4) $22,770 for all other taxpayers with one qualifying child;

(5) $32,840 for married taxpayers filing joint returns with two qualifying children;

(6) $27,000 for all other taxpayers with two qualifying children;

(7) $33,140 for married taxpayers filing joint returns with three or more qualifying
children; and

(8) $27,300 for all other taxpayers with three or more qualifying children.

(i) The commissioner shall construct tables showing the amount of the credit at various
income levels and make them available to taxpayers. The tables shall follow the schedule
contained in this subdivision, except that the commissioner may graduate the transition
between income brackets.

new text begin EFFECTIVE DATE. new text end

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

Sec. 8.

Minnesota Statutes 2022, section 290.0671, subdivision 7, is amended to read:

Subd. 7.

Inflation adjustment.

The commissioner shall annually adjust the earned
income amounts used to calculate the new text begin maximum new text end credit and the phase-out thresholds in
subdivision 1 as provided in section 270C.22. The statutory year is taxable year 2019.

new text begin EFFECTIVE DATE. new text end

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

Sec. 9.

Minnesota Statutes 2022, section 290.0685, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual new text begin who is a resident of Minnesota new text end is
allowed a credit against the tax imposed by this chapter equal to $2,000 for each birth new text begin :
new text end

new text begin (1) new text end for which a certificate of birth resulting in stillbirth has been issued under section
144.2151 deleted text begin . deleted text end new text begin ; or
new text end

new text begin (2) outside of Minnesota for which there is a certificate similar to the certificate under
section 144.2151 that documents that the stillbirth occurred under the applicable local laws.
new text end

new text begin (b) new text end The credit under this section is allowed only in the taxable year in which the stillbirth
occurred and if the child would have been a dependent of the taxpayer as defined in section
152 of the Internal Revenue Code.

deleted text begin (b) deleted text end new text begin (c) new text end For a deleted text begin nonresident or deleted text end part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 10.

Minnesota Statutes 2022, section 290.92, subdivision 20, is amended to read:

Subd. 20.

Miscellaneous withholding arrangements.

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

new text begin (1) "periodic payment" means a payment as defined under section 3405(e)(2) of the
Internal Revenue Code;
new text end

new text begin (2) "nonperiodic distribution" means a distribution as defined under section 3405(e)(3)
of the Internal Revenue Code; and
new text end

new text begin (3) "sick pay" means any amount which:
new text end

new text begin (i) is paid to an employee pursuant to a plan to which the employer is a party; and
new text end

new text begin (ii) constitutes remuneration or a payment in lieu of remuneration for any period during
which the employee is temporarily absent from work on account of sickness or personal
injuries.
new text end

deleted text begin (a) deleted text end new text begin (b) new text end For purposes of this section, any new text begin periodic new text end payment or new text begin nonperiodic new text end distribution to
an individual deleted text begin as defined under section 3405(e)(2) or (3) of the Internal Revenue Code deleted text end shall
be treated as if it were a payment of wages by an employer to an employee for a payroll
period new text begin , and it is subject to withholding at a rate of 6.25 percent or any rate specified by the
recipient new text end . Any payment to an individual of sick pay which does not constitute wages,
determined without regard to this subdivision, shall be treated as if it were a payment of
wages by an employer to an employee for a payroll period, if, at the time the payment is
made a request that such sick pay be subject to withholding under this section is in effect.
deleted text begin Sick pay means any amount which:
deleted text end

deleted text begin (1) is paid to an employee pursuant to a plan to which the employer is a party, and
deleted text end

deleted text begin (2) constitutes remuneration or a payment in lieu of remuneration for any period during
which the employee is temporarily absent from work on account of sickness or personal
injuries.
deleted text end

deleted text begin (b) deleted text end new text begin (c) new text end A request for withholding, the amount withheld, and sick pay paid pursuant to
certain collective bargaining agreements shall conform with the provisions of section
3402(o)(3), (4), and (5) of the Internal Revenue Code.

deleted text begin (c) deleted text end new text begin (d) new text end The commissioner is authorized by rules to provide for withholding:

(1) from remuneration for services performed by an employee for the employer which,
without regard to this subdivision, does not constitute wages, and

(2) from any other type of payment with respect to which the commissioner finds that
withholding would be appropriate under the provisions of this section, if the employer and
the employee, or in the case of any other type of payment the person making and the person
receiving the payment, agree to such withholding. Such agreement shall be made in such
form and manner as the commissioner may by rules provide. For purposes of this section
remuneration or other payments with respect to which such agreement is made shall be
treated as if they were wages paid by an employer to an employee to the extent that such
remuneration is paid or other payments are made during the period for which the agreement
is in effect.

deleted text begin (d) deleted text end new text begin (e) new text end An individual receiving a new text begin periodic new text end payment or new text begin nonperiodic new text end distribution under
paragraph deleted text begin (a) deleted text end new text begin (b) new text end may elect to have paragraph deleted text begin (a) deleted text end new text begin (b) new text end not apply to the payment or distribution
deleted text begin as follows. deleted text end new text begin , and an election remains in effect until revoked by such individual.
new text end

deleted text begin (1) For payments defined under section 3405(e)(2) of the Internal Revenue Code, an
election remains in effect until revoked by such individual.
deleted text end

deleted text begin (2) For distributions defined under section 3405(e)(3) of the Internal Revenue Code, the
election is on a distribution-by-distribution basis.
deleted text end

new text begin EFFECTIVE DATE; APPLICATION. new text end

new text begin (a) This section is effective for periodic
payments and nonperiodic distributions made on or after the day following final enactment.
new text end

new text begin (b) For periodic payments and nonperiodic distributions made on or after the day
following final enactment but before January 1, 2024, the commissioner of revenue must
not assess penalties relating to this amendment against a payor who complies with Minnesota
Statutes 2021 Supplement, section 290.92, subdivision 20.
new text end

Sec. 11.

Minnesota Statutes 2022, section 290.9705, subdivision 1, is amended to read:

Subdivision 1.

Withholding of payments to out-of-state contractors.

(a) In this section,
"person" means a person, corporation, or cooperative, the state of Minnesota and its political
subdivisions, and a city, county, and school district in Minnesota.

(b) A person who in the regular course of business is hiring, contracting, or having a
contract with a nonresident person or deleted text begin foreign corporation deleted text end new text begin a corporation or cooperative
created or organized outside Minnesota, new text end to perform construction work in Minnesota, shall
deduct and withhold eight percent of payments made to the contractor if the value of the
contract exceeds $50,000.

new text begin EFFECTIVE DATE. new text end

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

Sec. 12.

Minnesota Statutes 2022, section 290A.03, subdivision 13, is amended to read:

Subd. 13.

Property taxes payable.

"Property taxes payable" means the property tax
exclusive of special assessments, penalties, and interest payable on a claimant's homestead
after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2,
and any other state paid property tax credits in any calendar year, and after any refund
claimed and allowable under section 290A.04, subdivision 2h, that is first payable in the
year that the property tax is payable. In the case of a claimant who makes ground lease
payments, "property taxes payable" includes the amount of the payments directly attributable
to the property taxes assessed against the parcel on which the house is located. Regardless
of the limitations in section 280A(c)(5) of the Internal Revenue Code, "property taxes
payable" must be apportioned or reduced for the use of a portion of the claimant's homestead
for a business purpose if the claimant deducts any business depreciation expenses for the
use of a portion of the homestead or deducts expenses under section 280A of the Internal
Revenue Code for a business operated in the claimant's homestead. For homesteads which
are manufactured homes as defined in section 273.125, subdivision 8, including manufactured
homes located in a manufactured home community owned by a cooperative organized under
chapter 308A or 308B, and park trailers taxed as manufactured homes under section 168.012,
subdivision 9, "property taxes payable" shall also include 17 percent of the gross rent paid
in the preceding year for the site on which the homestead is located. When a homestead is
owned by two or more persons as joint tenants or tenants in common, such tenants shall
determine between them which tenant may claim the property taxes payable on the
homestead. If they are unable to agree, the matter shall be referred to the commissioner of
revenue whose decision shall be final. Property taxes are considered payable in the year
prescribed by law for payment of the taxes.

In the case of a claim relating to "property taxes payable," the claimant must have owned
and occupied the homestead on January 2 of the year in which the tax is payable and (i) the
property must have been classified as homestead property pursuant to section 273.124, on
or before December deleted text begin 15 deleted text end new text begin 31 new text end of the assessment year to which the "property taxes payable"
relate; or (ii) the claimant must provide documentation from the local assessor that application
for homestead classification has been made on or before December deleted text begin 15 deleted text end new text begin 31 new text end of the year in
which the "property taxes payable" were payable and that the assessor has approved the
application.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for refund claims based on
property taxes payable in 2022 and thereafter.
new text end

ARTICLE 2

FIRE AND POLICE STATE AIDS

Section 1.

Minnesota Statutes 2022, section 6.495, subdivision 3, is amended to read:

Subd. 3.

deleted text begin Report deleted text end new text begin Reports new text end to commissioner of revenue.

new text begin (a) On or before September 15,
November 1, March 1, and June 1, new text end the state auditor deleted text begin shall deleted text end new text begin must new text end file with the commissioner
of revenue a financial compliance report certifying for each relief association:

(1) the completion of the annual financial report required under section 424A.014 and
the auditing or certification of those financial reports under subdivision 1; and

(2) the receipt of any actuarial valuations required under section 424A.093 or Laws
2013, chapter 111, article 5, sections 31 to 42.

new text begin (b) The commissioner of revenue shall prescribe the content, format, and manner of the
financial compliance reports required by paragraph (a), pursuant to section 270C.30.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2022, section 477B.01, is amended by adding a subdivision to
read:

new text begin Subd. 1a. new text end

new text begin Apportionment agreement. new text end

new text begin "Apportionment agreement" means an agreement
between two or more fire departments that provide contracted fire protection service to the
same municipality and establishes the percentage of the population and the percentage of
the estimated market value within the municipality serviced by each fire department.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2022, section 477B.01, subdivision 5, is amended to read:

Subd. 5.

Fire department.

new text begin (a) new text end "Fire department" deleted text begin includes deleted text end new text begin means:
new text end

new text begin (1) new text end a municipal fire department deleted text begin and deleted text end new text begin ;
new text end

new text begin (2) new text end an independent nonprofit firefighting corporation deleted text begin . deleted text end new text begin ;
new text end

new text begin (3) a fire department established as or operated by a joint powers entity; or
new text end

new text begin (4) a fire protection special taxing district established under chapter 144F or special law.
new text end

new text begin (b) This subdivision only applies to this chapter.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2022, section 477B.01, is amended by adding a subdivision to
read:

new text begin Subd. 7a. new text end

new text begin Joint powers entity. new text end

new text begin "Joint powers entity" means a joint powers entity created
under section 471.59.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 5.

Minnesota Statutes 2022, section 477B.01, subdivision 10, is amended to read:

Subd. 10.

Municipality.

(a) "Municipality" means:

(1) a home rule charter or statutory city;

(2) an organized town;

(3) deleted text begin a park district subject to chapter 398 deleted text end new text begin a joint powers entity new text end ;

(4) deleted text begin the University of Minnesota deleted text end new text begin a fire protection special taxing district new text end ; deleted text begin and deleted text end new text begin or
new text end

(5) an American Indian tribal government entity located within a federally recognized
American Indian reservation.

(b) This subdivision only applies to new text begin this new text end chapter deleted text begin 477B deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 6.

Minnesota Statutes 2022, section 477B.01, subdivision 11, is amended to read:

Subd. 11.

Secretary.

new text begin (a) new text end "Secretary" means new text begin :
new text end

new text begin (1) new text end the secretary of an independent nonprofit firefighting corporation that has a subsidiary
incorporated firefighters' relief association or whose firefighters participate in the statewide
volunteer firefighter plan deleted text begin . deleted text end new text begin ; or
new text end

new text begin (2) the secretary of a joint powers entity or fire protection special taxing district or, if
there is no such person, the person primarily responsible for managing the finances of a
joint powers entity or fire protection special taxing district.
new text end

new text begin (b) This subdivision only applies to this chapter.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 7.

Minnesota Statutes 2022, section 477B.02, subdivision 2, is amended to read:

Subd. 2.

Establishment of fire department.

(a) An independent nonprofit firefighting
corporation must be created under the nonprofit corporation act of this state operating for
the exclusive purpose of firefighting, or the governing body of a municipality must officially
establish a fire department.

(b) The fire department must have provided firefighting services for at least one calendar
year new text begin , and must have a current fire department identification number issued by the state fire
marshal new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2022, section 477B.02, subdivision 3, is amended to read:

Subd. 3.

deleted text begin Personnel and deleted text end Benefits requirements.

deleted text begin (a) A fire department must have a
minimum of ten paid or volunteer firefighters, including a fire chief and assistant fire chief.
deleted text end

deleted text begin (b) The fire department must have regular scheduled meetings and frequent drills that
include instructions in firefighting tactics and in the use, care, and operation of all fire
apparatus and equipment.
deleted text end

deleted text begin (c) deleted text end new text begin (a) new text end The fire department must have a separate subsidiary incorporated firefighters'
relief association that provides retirement benefits or must participate in the statewide
volunteer firefighter plan; or if the municipality solely employs full-time firefighters as
defined in section 299N.03, subdivision 5, retirement coverage must be provided by the
public employees police and fire retirement plan. new text begin For purposes of retirement benefits, a fire
department may be associated with only one volunteer firefighters' relief association or one
account in the voluntary statewide volunteer firefighter retirement plan at one time.
new text end

deleted text begin (d) deleted text end new text begin (b) new text end Notwithstanding paragraph deleted text begin (c) deleted text end new text begin (a) new text end , a municipality without a relief association as
described under section 424A.08, paragraph (a), may still qualify to receive fire state aid if
all other requirements of this section are met.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2022, section 477B.02, is amended by adding a subdivision to
read:

new text begin Subd. 4a. new text end

new text begin Public safety answering point requirement. new text end

new text begin The fire department must be
dispatched by a public safety answering point as defined in section 403.02, subdivision 19.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 10.

Minnesota Statutes 2022, section 477B.02, subdivision 5, is amended to read:

Subd. 5.

Fire service contract or agreement; apportionment agreement filing
deleted text begin requirement deleted text end new text begin requirements new text end .

(a) Every municipality or independent nonprofit firefighting
corporation must file deleted text begin a copy of any duly executed and valid fire service contract or agreement deleted text end
with the commissioner new text begin (1) a copy of any duly executed and valid fire service contracts, (2)
written notification of any fire service contract terminations, and (3) written notification of
any dissolution of a fire department, within 60 days of contract execution or termination,
or department dissolution new text end .

(b) If more than one fire department provides service to a municipality, the fire
departments furnishing service must deleted text begin enter into an agreement apportioning among themselves
the percentage of the population and the percentage of the estimated market value of each
shared service fire department service area. The agreement must be in writing and must be
filed deleted text end new text begin file an apportionment agreement new text end with the commissioner.

new text begin (c) When a municipality is a joint powers entity, it must file its joint powers agreement
with the commissioner. If the joint powers agreement does not include sufficient information
defining the fire department service area of the joint powers entity for the purposes of
calculating fire state aid, the secretary must file a written statement with the commissioner
defining the fire department service area.
new text end

new text begin (d) When a municipality is a fire protection special taxing district, it must file its
resolution establishing the fire protection special taxing district, and any agreements required
for the establishment of the fire protection special taxing district, with the commissioner.
If the resolution or agreement does not include sufficient information defining the fire
department service area of the fire protection special taxing district, the secretary must file
a written statement with the commissioner defining the fire department service area.
new text end

new text begin (e) The commissioner shall prescribe the content, format, and manner of the notifications,
apportionment agreements, and written statements under paragraphs (a) to (d), pursuant to
section 270C.30, except that copies of fire service contracts, joint powers agreements, and
resolutions establishing fire protection special taxing districts shall be filed in their existing
form.
new text end

new text begin (f) A document filed with the commissioner under this subdivision must be refiled any
time it is updated within 60 days of the update. An apportionment agreement must be refiled
only when a change in the averaged sum of the percentage of population and percentage of
estimated market value serviced by a fire department subject to the apportionment agreement
is at least one percent. The percentage amount must be rounded to the nearest whole
percentage.
new text end

new text begin (g) Upon the request of the commissioner, the county auditor must provide information
that the commissioner requires to accurately apportion the estimated market value of a fire
department service area for a fire department providing service to an unorganized territory
located in the county.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 11.

Minnesota Statutes 2022, section 477B.02, subdivision 8, is amended to read:

Subd. 8.

PERA certification to commissioner.

On or before February 1 each year, deleted text begin if
retirement coverage for a fire department is provided by the statewide volunteer firefighter
plan, deleted text end the executive director of the Public Employees Retirement Association must certify
deleted text begin the existence of retirement coverage. deleted text end new text begin to the commissioner the fire departments that transferred
retirement coverage to, or terminated participation in, the voluntary statewide volunteer
firefighter retirement plan since the previous certification under this paragraph. This
certification must include the number of active volunteer firefighters under section 477B.03,
subdivision 5, paragraph (e).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 12.

Minnesota Statutes 2022, section 477B.02, subdivision 9, is amended to read:

Subd. 9.

Fire department certification to commissioner.

On or before March 15 of
each year, the municipal clerk or the secretary deleted text begin , and the fire chief, deleted text end must deleted text begin jointly deleted text end certify to the
commissioner deleted text begin that the fire department exists and meets the qualification requirements of
this section deleted text end new text begin the fire department service area as of December 31 of the previous year, and
that the fire department meets the qualification requirements of this section. The municipal
clerk or the secretary must provide the commissioner with documentation that the
commissioner deems necessary for determining eligibility for fire state aid or for calculating
and apportioning fire state aid under section 477B.03 new text end . The certification must be on a form
prescribed by the commissioner and must include all other information that the commissioner
requires. new text begin The municipal clerk or the secretary must send a copy of the certification filed
under this subdivision to the fire chief within five business days of the date the certification
was filed with the commissioner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 13.

Minnesota Statutes 2022, section 477B.02, subdivision 10, is amended to read:

Subd. 10.

Penalty for failure to file new text begin or correct new text end certification.

(a) If the certification
under subdivision 9 is not filed with the commissioner on or before March deleted text begin 15 deleted text end new text begin 1 new text end , the
commissioner must notify the municipal clerk or the secretary that a penalty deleted text begin equal to a
portion or all of the current year aid will apply if the certification is not received within ten
days of the postmark date of the notification deleted text end new text begin will be deducted from fire state aid certified
for the current year if the certification is not filed on or before March 15 new text end .

new text begin (b) If the commissioner rejects the certification by the municipal clerk or secretary under
subdivision 9 for inaccurate or incomplete information, the municipal clerk or the secretary
must file a corrective certification after taking corrective action as identified by the
commissioner in the notice of rejection. The corrective certification must be filed within
30 days of the date on the notice of rejection or by March 15, whichever date is later.
new text end

deleted text begin (b) deleted text end new text begin (c) A penalty applies to (1) a certification under subdivision 9 filed after March 15,
and (2) a corrective certification under paragraph (b) filed after March 15 that is also filed
more than 30 days after the date on the notice of rejection. new text end The penalty deleted text begin for failure to file
the certification under subdivision 9 deleted text end is equal to the amount of fire state aid determined for
the municipality or the independent nonprofit firefighting corporation for the current year,
multiplied by deleted text begin five deleted text end new text begin ten new text end percent for each week or fraction of a week that the certification new text begin or
corrective certification new text end is deleted text begin late deleted text end new text begin filed after March 15 or more than 30 days after the date on
the notice of rejection new text end . deleted text begin The penalty must be computed beginning ten days after the postmark
date of the commissioner's notification. deleted text end Aid amounts forfeited as a result of the penalty
revert to the state general fund. Failure to receive the certification form is not a defense for
a failure to file.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 14.

Minnesota Statutes 2022, section 477B.03, subdivision 2, is amended to read:

Subd. 2.

Apportionment of fire state aid.

(a) The amount of fire state aid available for
apportionment, before the addition of the minimum fire state aid allocation amount under
subdivision 5, is equal to 107 percent of the amount of premium taxes paid to the state upon
the fire, lightning, sprinkler leakage, and extended coverage premiums reported to the
commissioner by companies or insurance companies on the Minnesota Fire Premium Report new text begin ,
except that credits claimed under section 297I.20, subdivisions 3, 4, and 5, do not affect the
calculation of the amount of fire state aid available for apportionment new text end . This amount must
be reduced by the amount required to pay the state auditor's costs and expenses of the audits
or exams of the firefighters' relief associations.

(b) The total amount available for apportionment must not be less than two percent of
the premiums less return premiums reported to the commissioner by companies or insurance
companies on the Minnesota Fire Premium Report after subtracting the following amounts:

(1) the amount required to pay the state auditor's costs and expenses of the audits or
exams of the firefighters' relief associations; and

(2) one percent of the premiums reported by township mutual insurance companies and
mutual property and casualty companies with total assets of $5,000,000 or less.

(c) The commissioner must apportion the fire state aid to each municipality or independent
nonprofit firefighting corporation qualified under section 477B.02 relative to the premiums
reported on the Minnesota Fire Premium Reports filed under this chapter.

(d) The commissioner must calculate the percentage of increase or decrease reflected in
the apportionment over or under the previous year's available state aid using the same
premiums as a basis for comparison.

new text begin EFFECTIVE DATE. new text end

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

Sec. 15.

Minnesota Statutes 2022, section 477B.03, subdivision 3, is amended to read:

Subd. 3.

Population and estimated market value.

(a) deleted text begin Official statewide federal census
figures deleted text end new text begin The most recent population estimates made by the state demographer pursuant to
section 4A.02, paragraph (d), new text end must be used in calculations requiring the use of population
figures under this chapter. deleted text begin Increases or decreases in population disclosed by reason of any
special census must not be taken into consideration.
deleted text end

(b) The deleted text begin latest available deleted text end estimated market value property figures new text begin for the assessment year
immediately preceding the year the aid is distributed new text end must be used in calculations requiring
the use of estimated market value property figures under this chapter.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 16.

Minnesota Statutes 2022, section 477B.03, subdivision 4, is amended to read:

Subd. 4.

Initial fire state aid allocation amount.

(a) The initial fire state aid allocation
amount is the amount available for apportionment as fire state aid under subdivision 2,
without the inclusion of any additional funding amount to support a minimum fire state aid
amount under section 423A.02, subdivision 3. The initial fire state aid allocation amount
is allocated one-half in proportion to the population for each fire department service area
and one-half in proportion to the estimated market value of each fire department service
area, including (1) the estimated market value of tax-exempt property, and (2) the estimated
market value of natural resources lands receiving in lieu payments under sections 477A.11
to 477A.14 and 477A.17. The estimated market value of minerals is excluded.

(b) In the case of a municipality or independent nonprofit firefighting corporation
furnishing fire protection to other municipalities as evidenced by valid fire service contracts new text begin ,
joint powers agreements, resolutions, and other supporting documents new text end filed with the
commissioner under section 477B.02, subdivision 5, the distribution must be adjusted
proportionately to take into consideration the crossover fire protection service. Necessary
adjustments must be made to subsequent apportionments.

(c) In the case of municipalities or independent nonprofit firefighting corporations
qualifying for aid, the commissioner must calculate the state aid for the municipality or
independent nonprofit firefighting corporation on the basis of the population and the estimated
market value of the area furnished fire protection service by the fire department as evidenced
by new text begin valid new text end fire service deleted text begin agreements deleted text end new text begin contracts, joint powers agreements, resolutions, and other
supporting documents new text end filed with the commissioner under section 477B.02, subdivision 5.

(d) In the case of more than one fire department furnishing contracted fire service to a
municipality, the population and estimated market value in the apportionment agreement
filed with the commissioner under section 477B.02, subdivision 5, must be used in calculating
the state aid.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 17.

Minnesota Statutes 2022, section 477B.03, subdivision 5, is amended to read:

Subd. 5.

Minimum fire state aid allocation amount.

(a) The minimum fire state aid
allocation amount is the amount derived from any additional funding amount to support a
minimum fire state aid amount under section 423A.02, subdivision 3. The minimum fire
state aid allocation amount is allocated to municipalities or independent nonprofit firefighting
corporations with volunteer firefighters' relief associations or covered by the statewide
volunteer firefighter plan. The amount is based on the number of active volunteer firefighters
who are (1) members of the relief association as reported to the Office of the State Auditor
in a specific annual financial reporting year as specified in paragraphs (b) to (d), or (2)
covered by the statewide volunteer firefighter plan as specified in paragraph (e).

(b) For relief associations established in calendar year 1993 or a prior year, the number
of active volunteer firefighters equals the number of active volunteer firefighters who were
members of the relief association as reported in the annual financial reporting for calendar
year 1993, but not to exceed 30 active volunteer firefighters.

(c) For relief associations established in calendar year 1994 through calendar year 1999,
the number of active volunteer firefighters equals the number of active volunteer firefighters
who were members of the relief association as reported in the annual financial reporting for
calendar year 1998 to the Office of the State Auditor, but not to exceed 30 active volunteer
firefighters.

(d) For relief associations established after calendar year 1999, the number of active
volunteer firefighters equals the number of active volunteer firefighters who are members
of the relief association as reported in the first annual financial reporting submitted to the
Office of the State Auditor, but not to exceed 20 active volunteer firefighters.

(e) deleted text begin If a relief association is terminated as a result of deleted text end new text begin For a municipality or independent
nonprofit firefighting corporation that is new text end providing retirement coverage for volunteer
firefighters by the statewide volunteer firefighter plan under chapter 353G, the number of
active volunteer firefighters equals the number of active volunteer firefighters of the
municipality or independent nonprofit firefighting corporation covered by the statewide
plan as certified by the executive director of the Public Employees Retirement Association
to the commissioner and the state auditor new text begin within 30 days of the date the municipality or
independent nonprofit firefighting corporation begins coverage in the plan new text end , but not to exceed
30 active firefighters.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 18.

Minnesota Statutes 2022, section 477B.03, subdivision 7, is amended to read:

Subd. 7.

Appeal.

A municipality, an independent nonprofit firefighting corporation, a
fire relief association, or the statewide volunteer firefighter plan may object to the amount
of fire state aid apportioned to it by filing a written request with the commissioner to review
and adjust the apportionment of funds within the state. new text begin The objection of a municipality, an
independent nonprofit firefighting corporation, a fire relief association, or the voluntary
statewide volunteer firefighter retirement plan must be filed with the commissioner within
60 days of the date the amount of apportioned fire state aid is paid. new text end The decision of the
commissioner is subject to appeal, review, and adjustment by the district court in the county
in which the applicable municipality or independent nonprofit firefighting corporation is
located or by the Ramsey County District Court with respect to the statewide volunteer
firefighter plan.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 19.

Minnesota Statutes 2022, section 477B.04, subdivision 1, is amended to read:

Subdivision 1.

Payments.

(a) The commissioner must make payments to the Public
Employees Retirement Association for deposit in the statewide volunteer firefighter fund
on behalf of a municipality or independent nonprofit firefighting corporation that is a member
of the statewide volunteer firefighter plan under chapter 353G deleted text begin , or directly to a municipality
or county designated by an independent nonprofit firefighting corporation deleted text end . new text begin The commissioner
must directly pay all other municipalities qualifying for fire state aid, except as provided in
paragraph (d). new text end The payment is equal to the amount of fire state aid apportioned to the
applicable fire state aid recipient under section 477B.03.

(b) Fire state aid is payable on October 1 annually. The amount of state aid due and not
paid by October 1 accrues interest payable to the recipient at the rate of one percent for each
month or part of a month that the amount remains unpaid after October 1.

(c) new text begin If the commissioner of revenue does not receive a financial compliance report
described in section 6.495, subdivision 3, for a relief association, the amount of fire state
aid apportioned to a municipality or independent nonprofit firefighting corporation under
section 477B.03 for that relief association must be withheld from payment to the Public
Employees Retirement Association or the municipality. The commissioner of revenue must
issue a withheld payment within ten business days of receipt of a financial compliance report
under section 6.495, subdivision 3. new text end The interest under paragraph (b) does not apply deleted text begin when deleted text end new text begin
to a new text end payment deleted text begin has not been made by October 1 due to noncompliance with sections 424A.014
and 477B.02, subdivision 7 deleted text end new text begin withheld under this paragraph new text end .

new text begin (d) The commissioner must make payments directly to the largest municipality in
population located within any area included in a joint powers entity that does not have a
designated agency under section 471.59, subdivision 3, or within the fire department service
area of an eligible independent nonprofit firefighting corporation. If there is no city or town
within the fire department service area of an eligible independent nonprofit firefighting
corporation, fire state aid must be paid to the county where the independent nonprofit
firefighting corporation is located.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 20.

Minnesota Statutes 2022, section 477B.04, is amended by adding a subdivision
to read:

new text begin Subd. 4. new text end

new text begin Aid amount corrections. new text end

new text begin (a) An adjustment needed to correct a fire state aid
overpayment or underpayment due to a clerical error must be made to subsequent fire state
aid payments as provided in paragraphs (b) and (c). The authority to correct an aid payment
under this subdivision is limited to three years after the payment was issued.
new text end

new text begin (b) If an overpayment equals more than ten percent of the most recently paid aid amount,
the commissioner must reduce the aid a municipality or independent nonprofit firefighting
corporation is to receive by the amount overpaid over a period of no more than three years.
If an overpayment equals or is less than ten percent of the most recently paid aid amount,
the commissioner must reduce the next aid payment occurring in 30 days or more by the
amount overpaid.
new text end

new text begin (c) In the event of an underpayment, the commissioner must distribute the amount of
underpaid funds to the municipality or independent nonprofit firefighting corporation over
a period of no more than three years. An additional distribution to a municipality or
independent nonprofit firefighting corporation must be paid from the general fund and must
not diminish the payments made to other municipalities or independent nonprofit firefighting
corporations under this chapter.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 21.

Minnesota Statutes 2022, section 477C.02, subdivision 4, is amended to read:

Subd. 4.

Penalty for failure to file new text begin or correct new text end certification.

(a) If a certification under
subdivision 1 or 2 is not filed with the commissioner on or before March deleted text begin 15 deleted text end new text begin 1 new text end , the
commissioner must notify the municipal clerk, municipal clerk-treasurer, or county auditor
that a penalty deleted text begin equal to a portion or all of its current year aid will apply if the certification
is not received within ten days deleted text end new text begin will be deducted from police state aid certified for the current
year if the certification is not filed on or before March 15 new text end .

new text begin (b) If the commissioner rejects the certification under subdivision 1 or 2 for inaccurate
or incomplete information, the municipal clerk, municipal clerk-treasurer, or county auditor
must file a corrective certification after taking corrective action as identified by the
commissioner in the notice of rejection. The corrective certification must be filed within
30 days of the date on the notice of rejection, or by March 15, whichever date is later.
new text end

deleted text begin (b) deleted text end new text begin (c) A penalty applies to (1) a certification under subdivisions 1 and 2 filed after
March 15, and (2) a corrective certification under paragraph (b) filed after March 15 that
is also filed more than 30 days after the date on the notice of rejection. new text end The penalty deleted text begin for
failure to file the certification under subdivision 1 or 2 deleted text end is equal to the amount of police state
aid determined for the municipality for the current year, multiplied by deleted text begin five deleted text end new text begin ten new text end percent for
each week or fraction of a week that the certification new text begin or corrective certification new text end is deleted text begin late deleted text end new text begin filed
after March 15 or more than 30 days after the date on the notice of rejection new text end . deleted text begin The penalty
must be computed beginning ten days after the postmark date of the commissioner's
notification as required under this subdivision. deleted text end All aid amounts forfeited as a result of the
penalty revert to the state general fund. Failure to receive the certification form may not be
used as a defense for a failure to file.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 22.

Minnesota Statutes 2022, section 477C.03, subdivision 2, is amended to read:

Subd. 2.

Apportionment of police state aid.

(a) The total amount available for
apportionment as police state aid is equal to 104 percent of the amount of premium taxes
paid to the state on the premiums reported to the commissioner by companies or insurance
companies on the Minnesota Aid to Police Premium Report new text begin , except that credits claimed
under section 297I.20, subdivisions 3, 4, and 5, do not affect the calculation of the total
amount of police state aid available for apportionment new text end . The total amount for apportionment
for the police state aid program must not be less than two percent of the amount of premiums
reported to the commissioner by companies or insurance companies on the Minnesota Aid
to Police Premium Report.

(b) The commissioner must calculate the percentage of increase or decrease reflected in
the apportionment over or under the previous year's available state aid using the same
premiums as a basis for comparison.

(c) In addition to the amount for apportionment of police state aid under paragraph (a),
each year $100,000 must be apportioned for police state aid. An amount sufficient to pay
this increase is annually appropriated from the general fund.

(d) The commissioner must apportion police state aid to all municipalities in proportion
to the relationship that the total number of peace officers employed by that municipality for
the prior calendar year and the proportional or fractional number who were employed less
than a calendar year as credited under section 477C.02, subdivision 1, paragraph (c), bears
to the total number of peace officers employed by all municipalities subject to any reduction
under subdivision 3.

deleted text begin (e) Any necessary additional adjustments must be made to subsequent police state aid
apportionments.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin (a) The amendment to paragraph (a) is effective the day following
final enactment.
new text end

new text begin (b) The amendment striking paragraph (e) is effective for aids payable in calendar year
2024 and thereafter.
new text end

Sec. 23.

Minnesota Statutes 2022, section 477C.03, subdivision 5, is amended to read:

Subd. 5.

Appeal.

A municipality may object to the amount of police state aid apportioned
to it by filing a written request with the commissioner to review and adjust the apportionment
of funds to the municipality. new text begin The objection of a municipality must be filed with the
commissioner within 60 days of the date the amount of apportioned police state aid is paid. new text end
The decision of the commissioner is subject to appeal, review, and adjustment by the district
court in the county in which the applicable municipality is located or by the Ramsey County
District Court with respect to the Departments of Natural Resources or Public Safety.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 24.

Minnesota Statutes 2022, section 477C.04, is amended by adding a subdivision
to read:

new text begin Subd. 4. new text end

new text begin Aid amount corrections. new text end

new text begin (a) An adjustment needed to correct a police state
aid overpayment or underpayment due to a clerical error must be made to subsequent police
state aid payments as provided in paragraphs (b) and (c). The authority to correct an aid
payment under this subdivision is limited to three years after the payment was issued.
new text end

new text begin (b) If an overpayment equals more than ten percent of the most recently paid aid amount,
the commissioner must reduce the aid a municipality is to receive by the amount overpaid
over a period of no more than three years. If an overpayment equals or is less than ten
percent of the most recently paid aid amount, the commissioner must reduce the next aid
payment occurring in 30 days or more by the amount overpaid.
new text end

new text begin (c) In the event of an underpayment, the commissioner must distribute the amount of
underpaid funds to the municipality over a period of no more than three years. An additional
distribution to a municipality must be paid from the general fund and must not diminish the
payments made to other municipalities under this chapter.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

Sec. 25. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2022, sections 477B.02, subdivision 4; and 477B.03, subdivision 6, new text end new text begin
are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year 2024
and thereafter.
new text end

ARTICLE 3

MISCELLANEOUS

Section 1.

Minnesota Statutes 2022, section 270C.19, subdivision 1, is amended to read:

Subdivision 1.

Taxes paid by Indians.

new text begin Notwithstanding any other law which limits the
refund of tax, new text end the commissioner is authorized to enter into a tax refund agreement with the
governing body of any federally recognized Indian deleted text begin reservation deleted text end new text begin Tribe new text end in Minnesota.

new text begin (b) new text end The agreement may provide for new text begin :
new text end

new text begin (1) new text end a mutually agreed-upon amount as a refund to the governing body of new text begin an estimate of new text end
any sales or excise tax paid by deleted text begin the total resident Indian population on or adjacent to a
reservation into the state treasury, deleted text end new text begin Tribal members on transactions occurring on the
reservation or on transactions that would occur on the reservation if there was no agreement; new text end
or

new text begin (2) new text end for an amount which measures the economic value of an agreement by the Tribal
government to pay the equivalent of the state sales tax on items included in the sales tax
base but exempt on the reservation deleted text begin , notwithstanding any other law which limits the
refundment of taxes deleted text end . deleted text begin The total resident Indian population on or adjacent to a reservation
shall be defined according to the United States Department of the Interior, Bureau of Indian
Affairs, as determined and stated in its Report on Service Population and Labor Force.
deleted text end

new text begin (c) For purposes of this section, "Tribal members" means the number of enrolled members
of the Tribe who live on or adjacent to the reservation as defined in the agreement.
new text end

new text begin (d) In arriving at the refund amount, the commissioner must consider Tribal enrollment
records, estimates contained in the tax incidence report under section 270C.13, and any
other information available to the commissioner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for agreements entered into
or amended after December 31, 2022.
new text end

Sec. 2.

Minnesota Statutes 2022, section 270C.19, subdivision 2, is amended to read:

Subd. 2.

Sales, use, and excise taxes.

(a) The commissioner is authorized to enter into
a tax agreement with the governing body of any federally recognized Indian deleted text begin reservation deleted text end new text begin
Tribe new text end in Minnesota, that provides for the state and the Tribal government to share sales,
use, and excise tax revenues generated from on-reservation activities of deleted text begin non-Indians deleted text end new text begin
non-Tribal members new text end and off-reservation activities of new text begin Tribal new text end members deleted text begin of the reservation deleted text end .
Every agreement entered into pursuant to this subdivision must require the commissioner
to collect all state and Tribal taxes covered by the agreement.

(b) The commissioner is authorized to collect any Tribal taxes imposed pursuant to any
agreement entered into pursuant to this subdivision and to make payments authorized by
the agreement to the Tribal government from the funds collected.

(c) The commissioner shall pay to the Tribal government its share of the taxes collected
pursuant to the agreement, as indicated in the agreement, and grant the taxpayer a credit for
the taxpayer's share of the amount paid to the Tribal government against the taxpayer's
Minnesota tax.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for agreements entered into
or amended after December 31, 2022.
new text end

Sec. 3.

Minnesota Statutes 2022, section 295.50, subdivision 4, is amended to read:

Subd. 4.

Health care provider.

(a) "Health care provider" means:

(1) a person whose health care occupation is regulated or required to be regulated by
the state of Minnesota furnishing any or all of the following goods or services directly to a
patient or consumer: medical, surgical, optical, visual, dental, hearing, nursing services,
drugs, laboratory, diagnostic or therapeutic services;

(2) a person who provides goods and services not listed in clause (1) that qualify for
reimbursement under the medical assistance program provided under chapter 256B;

(3) a staff model health plan company;

(4) an ambulance service required to be licensed;

(5) a person who sells or repairs hearing aids and related equipment or prescription
eyewear; or

(6) a person providing patient services, who does not otherwise meet the definition of
health care provider and is not specifically excluded in clause (b), who employs or contracts
with a health care provider as defined in clauses (1) to (5) to perform, supervise, otherwise
oversee, or consult with regarding patient services.

(b) Health care provider does not include:

(1) hospitals; medical supplies distributors, except as specified under paragraph (a),
clause (5); nursing homes licensed under chapter 144A or licensed in any other jurisdiction;
wholesale drug distributors; pharmacies; surgical centers; bus and taxicab transportation,
or any other providers of transportation services other than ambulance services required to
be licensed; supervised living facilities for persons with developmental disabilities, licensed
under Minnesota Rules, parts 4665.0100 to 4665.9900; housing with services establishments
required to be registered under chapter 144D; board and lodging establishments providing
only custodial services that are licensed under chapter 157 and registered under section
157.17 to provide supportive services or health supervision services; adult foster homes as
defined in Minnesota Rules, part 9555.5105; day training and habilitation services for adults
with developmental disabilities as defined in section 252.41, subdivision 3; boarding care
homes, as defined in Minnesota Rules, part 4655.0100; and adult day care centers as defined
in Minnesota Rules, part 9555.9600;

(2) home health agencies as defined in Minnesota Rules, part 9505.0175, subpart 15; a
person providing personal care services and supervision of personal care services as defined
in Minnesota Rules, part 9505.0335; a person providing home care nursing services as
defined in Minnesota Rules, part 9505.0360; and home care providers required to be licensed
under chapter 144A for home care services provided under chapter 144A;

(3) a person who employs health care providers solely for the purpose of providing
patient services to its employees;

(4) an educational institution that employs health care providers solely for the purpose
of providing patient services to its students if the institution does not receive fee for service
payments or payments for extended coverage; and

(5) a person who receives all payments for patient services from health care providers,
surgical centers, or hospitals for goods and services that are taxable to the paying health
care providers, surgical centers, or hospitals, as provided under section 295.53, subdivision
1, paragraph (b), clause (3) or (4), or from a source of funds that is new text begin excluded or new text end exempt from
tax under deleted text begin this chapter deleted text end new text begin sections 295.50 to 295.59 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. 4.

Minnesota Statutes 2022, section 296A.083, subdivision 3, is amended to read:

Subd. 3.

Surcharge rate.

(a) By deleted text begin July 16, 2008, and each April 1 thereafter deleted text end new text begin May 1 each
year new text end , the commissioner of revenue shall calculate and publish a surcharge as provided in
deleted text begin paragraphs deleted text end new text begin paragraph new text end (b) deleted text begin and (c) deleted text end . The surcharge is imposed deleted text begin from August 1, 2008, through
June 30, 2009, and each new surcharge thereafter is imposed the following deleted text end new text begin beginning new text end July
1 new text begin of the year it is published new text end through June 30 new text begin of the following year new text end .

deleted text begin (b) For fiscal years 2009 through 2012, the commissioner shall set the surcharge as
specified in the following surcharge rate schedule.
deleted text end

deleted text begin Surcharge Rate Schedule deleted text end
	deleted text begin Fiscal Year deleted text end	deleted text begin Rate (in cents per gallon) deleted text end
	deleted text begin 2009 deleted text end	deleted text begin 0.5 deleted text end
	deleted text begin 2010 deleted text end	deleted text begin 2.1 deleted text end
	deleted text begin 2011 deleted text end	deleted text begin 2.5 deleted text end
	deleted text begin 2012 deleted text end	deleted text begin 3.0 deleted text end

deleted text begin (c) For fiscal year 2013 and thereafter, deleted text end new text begin (b) new text end The commissioner shall set the surcharge at
the lesser of (1) 3.5 cents, or (2) an amount calculated so that the total proceeds from the
surcharge deposited in the trunk highway fund from fiscal year 2009 to the upcoming fiscal
year equals the total amount of debt service from fiscal years 2009 to 2039, and the surcharge
is rounded to the nearest 0.1 cent.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2022, section 297A.61, subdivision 29, is amended to read:

Subd. 29.

State.

Unless specifically provided otherwise, "state" means any state of the
United States, deleted text begin the Commonwealth of Puerto Rico, and deleted text end the District of Columbia new text begin , and any
territory of the United States, including American Samoa, Guam, Northern Mariana Islands,
Puerto Rico, and the U.S. Virgin Islands new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2023.
new text end