Skip to main content Skip to office menu Skip to footer
Capital IconMinnesota Legislature

HF 1030

as introduced - 89th Legislature (2015 - 2016) Posted on 02/18/2015 11:20am

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 02/18/2015

Current Version - as introduced

Line numbers 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10
1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 1.22 1.23 1.24 1.25 1.26
2.1 2.2
2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19 2.20 2.21 2.22 2.23 2.24 2.25 2.26 2.27 2.28 2.29 2.30 2.31 2.32 2.33 2.34 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21
3.22 3.23
3.24 3.25 3.26 3.27 3.28 3.29 3.30 3.31 3.32 3.33 3.34 3.35 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25
4.26 4.27
4.28 4.29 4.30 4.31 4.32 4.33 4.34 4.35 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19 5.20 5.21 5.22
5.23 5.24
5.25 5.26 5.27 5.28 5.29 5.30 5.31 5.32 5.33 5.34 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 6.12 6.13 6.14 6.15 6.16 6.17 6.18 6.19 6.20 6.21 6.22 6.23 6.24
6.25 6.26
6.27 6.28 6.29 6.30 6.31 6.32
6.33 6.34
7.1 7.2 7.3 7.4 7.5 7.6 7.7
7.8 7.9
7.10 7.11 7.12 7.13 7.14 7.15 7.16 7.17 7.18 7.19 7.20 7.21 7.22 7.23 7.24 7.25 7.26 7.27 7.28 7.29 7.30 7.31 7.32
7.33 7.34
8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 8.14 8.15 8.16 8.17 8.18 8.19 8.20 8.21 8.22 8.23 8.24 8.25 8.26 8.27 8.28 8.29 8.30 8.31 8.32 8.33 8.34 8.35 8.36 9.1 9.2 9.3
9.4 9.5
9.6 9.7 9.8 9.9 9.10 9.11 9.12 9.13 9.14 9.15 9.16 9.17 9.18 9.19 9.20 9.21 9.22 9.23 9.24 9.25 9.26 9.27 9.28 9.29 9.30 9.31 9.32 9.33 9.34 9.35 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25 10.26 10.27 10.28 10.29 10.30 10.31 10.32 10.33 10.34 10.35 10.36 11.1 11.2 11.3 11.4 11.5 11.6 11.7
11.8 11.9
11.10 11.11 11.12 11.13 11.14 11.15 11.16 11.17 11.18 11.19 11.20 11.21 11.22 11.23 11.24 11.25 11.26 11.27 11.28 11.29 11.30 11.31 11.32 11.33 11.34 11.35 12.1
12.2 12.3
12.4 12.5 12.6 12.7 12.8 12.9 12.10 12.11 12.12 12.13 12.14 12.15 12.16 12.17 12.18
12.19 12.20
12.21 12.22 12.23 12.24 12.25 12.26 12.27 12.28 12.29 12.30 12.31
12.32 12.33
13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 13.9 13.10 13.11 13.12 13.13 13.14 13.15 13.16
13.17 13.18
13.19 13.20 13.21 13.22 13.23
13.24 13.25
13.26 13.27 13.28 13.29 13.30 13.31 13.32 13.33 14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8 14.9 14.10 14.11 14.12 14.13 14.14 14.15 14.16 14.17 14.18 14.19 14.20 14.21 14.22 14.23 14.24 14.25 14.26 14.27 14.28 14.29 14.30 14.31 14.32 14.33
14.34 14.35
15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9 15.10 15.11 15.12 15.13 15.14 15.15
15.16 15.17
15.18 15.19 15.20 15.21 15.22 15.23 15.24 15.25 15.26 15.27 15.28 15.29 15.30 15.31 15.32 15.33 15.34
16.1 16.2
16.3 16.4 16.5 16.6 16.7 16.8 16.9 16.10 16.11 16.12 16.13 16.14 16.15
16.16 16.17
16.18 16.19 16.20 16.21 16.22 16.23 16.24 16.25 16.26
16.27 16.28
16.29 16.30 16.31 16.32 17.1 17.2 17.3 17.4
17.5
17.6 17.7 17.8
17.9 17.10

A bill for an act
relating to taxation; abolishing withholding taxes on wages; providing for
payment of estimated taxes on wages; amending Minnesota Statutes 2014,
sections 289A.09, subdivisions 1, 2; 289A.20, subdivision 2; 289A.31,
subdivision 5; 289A.38, subdivision 14; 289A.50, subdivision 3; 289A.60,
subdivision 11; 290.92, subdivisions 1, 2a, 4a, 9, 12, 24, 25, 26, 27, 28, 29;
290.9201, subdivision 7; proposing coding for new law in Minnesota Statutes,
chapter 289A; repealing Minnesota Statutes 2014, sections 270B.06, subdivision
3; 289A.63, subdivision 5; 290.92, subdivisions 3, 5, 5a, 10, 16, 19, 30.

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

Section 1.

Minnesota Statutes 2014, section 289A.09, subdivision 1, is amended to read:


Subdivision 1.

Returns.

(a) deleted text beginAn employer who is required to deduct and withhold tax
under section 290.92, subdivision 2a or 3, and
deleted text end A person required to deduct and withhold
tax under section 290.923, subdivision 2, must file a return with the commissioner for each
quarterly period unless otherwise prescribed by the commissioner.

(b) A person or corporation required to make deposits under section 290.9201,
subdivision 8
, must file an entertainer withholding tax return with the commissioner.

(c) A person required to withhold an amount under section 290.9705, subdivision 1,
must file a return.

(d) A partnership required to deduct and withhold tax under section 290.92,
subdivision 4b
, must file a return.

(e) An S corporation required to deduct and withhold tax under section 290.92,
subdivision 4c
, must also file a return.

(f) Returns must be filed in the form and manner, and contain the information
prescribed by the commissioner. Every return for taxes withheld must be signed by the
employer, entertainment entity, contract payor, partnership, or S corporation, or a designee.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 2.

Minnesota Statutes 2014, section 289A.09, subdivision 2, is amended to read:


Subd. 2.

Withholding statement.

(a) A person required to deduct and withhold
deleted text beginfrom an employeedeleted text end a tax under section deleted text begin290.92, subdivision 2a or 3, ordeleted text end 290.923, subdivision
2
, deleted text beginor who would have been required to deduct and withhold a tax under section 290.92,
subdivision 2a
or 3,
deleted text end or persons required to withhold tax under section 290.923, subdivision
2
, determined without regard to section 290.92, subdivision 19, if the deleted text beginemployee ordeleted text end payee
had claimed no more than one withholding exemption, or who deleted text beginpaid wages ordeleted text end made
payments not subject to withholding under section deleted text begin290.92, subdivision 2a or 3, ordeleted text end 290.923,
subdivision 2
, to deleted text beginan employee ordeleted text endnew text begin anew text end person receiving royalty payments in excess of $600,
or who has entered into a voluntary withholding agreement with a payee under section
290.92, subdivision 20, must give every deleted text beginemployee ordeleted text end person receiving royalty payments in
respect to the remuneration paid by the person to the deleted text beginemployee ordeleted text end person receiving royalty
payments during the calendar year, on or before January 31 of the succeeding year, deleted text beginor, if
employment is terminated before the close of the calendar year, within 30 days after the
date of receipt of a written request from the employee if the 30-day period ends before
January 31,
deleted text end a written statement showing the following:

(1) name of the person;

(2) the name of the deleted text beginemployee ordeleted text end payee and the deleted text beginemployee's ordeleted text end payee's Social Security
deleted text beginaccountdeleted text end number;

(3) deleted text beginthe total amount of wages as that term is defined in section 290.92, subdivision
1
, paragraph (1);
deleted text end the total amount of remuneration subject to withholding under section
290.92, subdivision 20; the amount of sick pay as required under section 6051(f) of the
Internal Revenue Code; and the amount of royalties subject to withholding under section
290.923, subdivision 2; and

(4) the total amount deducted and withheld as tax under section deleted text begin290.92, subdivision
2a
or 3, or
deleted text end 290.923, subdivision 2.

(b) The statement required to be furnished by paragraph (a) with respect to any
remuneration must be furnished at those times, must contain the information required, and
must be in the form the commissioner prescribes.

(c) The commissioner may prescribe rules providing for reasonable extensions of
time, not in excess of 30 days, to employers or payers required to give the statements to
their employees or payees under this subdivision.

(d) A duplicate of any statement made under this subdivision and in accordance
with rules prescribed by the commissioner, along with a reconciliation in the form the
commissioner prescribes of the statements for the calendar year, including a reconciliation
of the quarterly returns required to be filed under subdivision 1, must be filed with the
commissioner on or before February 28 of the year after the payments were made.

deleted text begin (e) If an employer cancels the employer's Minnesota withholding account number
required by section 290.92, subdivision 24, the information required by paragraph (d),
must be filed with the commissioner within 30 days of the end of the quarter in which
the employer cancels its account number.
deleted text end

deleted text begin (f) The employer must submit the statements required to be sent to the commissioner
in the same manner required to satisfy the federal reporting requirements of section
6011(e) of the Internal Revenue Code and the regulations issued under it. An employer
must submit statements to the commissioner required by this section by electronic means
if the employer is required to send more than 25 statements to the commissioner, even
though the employer is not required to submit the returns federally by electronic means.
For statements issued for wages paid in 2011 and after, the threshold is ten. All statements
issued for withholding required under section 290.92 are aggregated for purposes of
determining whether the electronic submission threshold is met.
deleted text end

deleted text begin (g) A "third-party bulk filer" as defined in section 290.92, subdivision 30, paragraph
(a), clause (2), must submit the returns required by this subdivision and subdivision 1,
paragraph (a), with the commissioner by electronic means.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 3.

Minnesota Statutes 2014, section 289A.20, subdivision 2, is amended to read:


Subd. 2.

deleted text beginWithholding from wages,deleted text end Entertainer withholding, withholding
from payments to out-of-state contractors, and withholding by partnerships, small
business corporations, trusts.

(a) A tax required to be deducted and withheld during the
quarterly period must be paid on or before the last day of the month following the close of
the quarterly period, unless an earlier time for payment is provided. A tax required to be
deducted and withheld from compensation of an entertainer and from a payment to an
out-of-state contractor must be paid on or before the date the return for such tax must be
filed under section 289A.18, subdivision 2. Taxes required to be deducted and withheld
by partnerships, S corporations, and trusts must be paid on a quarterly basis as estimated
taxes under section 289A.25 for partnerships and trusts and under section 289A.26 for S
corporations.

(b) deleted text beginAn employerdeleted text endnew text begin A personnew text end who, during the previous quarter, withheld more than
$1,500 of tax under section deleted text begin290.92, subdivision 2a or 3, ordeleted text end 290.923, subdivision 2,
must deposit tax withheld under those sections with the commissioner within the time
allowed to deposit the employer's federal withheld employment taxes under Code of
Federal Regulations, title 26, section 31.6302-1, as amended through December 31, 2001,
without regard to the safe harbor or de minimis rules in paragraph (f) or the one-day rule
in paragraph (c)(3). Taxpayers must submit a copy of their federal notice of deposit status
to the commissioner upon request by the commissioner.

(c) The commissioner may prescribe by rule other return periods or deposit
requirements. In prescribing the reporting period, the commissioner may classify payors
according to the amount of their tax liability and may adopt an appropriate reporting
period for the class that the commissioner judges to be consistent with efficient tax
collection. In no event will the duration of the reporting period be more than one year.

(d) If less than the correct amount of tax is paid to the commissioner, proper
adjustments with respect to both the tax and the amount to be deducted must be made,
without interest, in the manner and at the times the commissioner prescribes. If the
underpayment cannot be adjusted, the amount of the underpayment will be assessed and
collected in the manner and at the times the commissioner prescribes.

deleted text begin (e) If the aggregate amount of the tax withheld is $10,000 or more in a fiscal year
ending June 30, the employer must remit each required deposit for wages paid in all
subsequent calendar years by electronic means.
deleted text end

deleted text begin (f) A third-party bulk filer as defined in section 290.92, subdivision 30, paragraph
(a), clause (2), who remits withholding deposits must remit all deposits by electronic
means as provided in paragraph (e), regardless of the aggregate amount of tax withheld
during a fiscal year for all of the employers.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 4.

new text begin [289A.251] ESTIMATED TAX ON WAGES.
new text end

new text begin Subdivision 1. new text end

new text begin Estimated tax. new text end

new text begin An employee receiving wages, as those terms are
defined in section 290.92, shall make payments of estimated tax. The term "estimated
tax" means the amount the employee estimates is the sum of the taxes imposed by chapter
290 for the taxable year.
new text end

new text begin Subd. 2. new text end

new text begin Required installments. new text end

new text begin There are 12 monthly required installments for a
taxable year. Each installment is due on the 15th day of the month following the end of the
month for which the installment is required.
new text end

new text begin Subd. 3. new text end

new text begin Amount of installment. new text end

new text begin (a) The amount of the installment required to be
paid shall be determined by estimated tax tables prescribed by the commissioner under
section 290.92, subdivision 2a.
new text end

new text begin (b) Notwithstanding paragraph (a), no payments of estimated tax are required if the
estimated tax, as defined in this section, less the credits allowed against the tax, is less
than .......
new text end

new text begin Subd. 4. new text end

new text begin Addition to tax for underpayment. new text end

new text begin In the case of any underpayment of
estimated tax by an employee, except as provided in subdivision 5, there is added to and
becomes part of the taxes imposed by chapter 290 for the taxable year for the period of
the underpayment, an amount determined under section 270C.40 on the amount of the
underpayment.
new text end

new text begin Subd. 5. new text end

new text begin Period of underpayment. new text end

new text begin (a) The period of the underpayment runs from
the date the installment was required to be paid to the earlier of the following dates:
new text end

new text begin (1) the 15th day of the fourth month following the close of the taxable year; or
new text end

new text begin (2) with respect to any part of the underpayment, the date on which that part is
paid. For purposes of this clause, a payment of estimated tax on an installment date is
considered a payment of any unpaid required installments in the order in which the
installments are required to be paid.
new text end

new text begin (b) If, on or before January 31 of the following taxable year, the taxpayer files a
return for the taxable year and pays in full the amount computed on the return as payable,
then no addition to tax is imposed under subdivision 4 with respect to any underpayment
of the last required installment for the taxable year.
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, 2015.
new text end

Sec. 5.

Minnesota Statutes 2014, section 289A.31, subdivision 5, is amended to read:


Subd. 5.

deleted text beginWithholding tax,deleted text end Withholding from payments to out-of-state
contractors, and withholding by partnerships and small business corporations.

(a) Except as provided in paragraph (b), deleted text beginan employer ordeleted text endnew text begin anew text end person withholding tax
under section 290.92 or 290.923, subdivision 2, who fails to pay to or deposit with the
commissioner a sum or sums required by those sections to be deducted, withheld, and
paid, is personally and individually liable to the state for the sum or sums, and added
penalties and interest, and is not liable to another person for that payment or payments.
The sum or sums deducted and withheld under section 290.92deleted text begin, subdivision 2adeleted text enddeleted text begin or 3,deleted text end or
290.923, subdivision 2, must be held as a special fund in trust for the state of Minnesota.

(b) If the employer or person withholding tax under section 290.92 or 290.923,
subdivision 2
, fails to deduct and withhold the tax in violation of those sections, and
later the taxes against which the tax may be credited are paid, the tax required to be
deducted and withheld will not be collected from the employer. This does not, however,
relieve the employer from liability for any penalties and interest otherwise applicable for
failure to deduct and withhold. deleted text beginThis paragraph does not apply to an employer subject to
paragraph (g).
deleted text end

(c) Liability for payment of withholding taxes includes a responsible person or entity
described in the personal liability provisions of section 270C.56.

(d) deleted text beginLiability for payment of withholding taxes includes a third-party lender or surety
described in section 270C.59.
deleted text end

deleted text begin (e)deleted text end A partnership or S corporation required to withhold and remit tax under section
290.92, subdivisions 4b and 4c, is liable for payment of the tax to the commissioner, and a
person having control of or responsibility for the withholding of the tax or the filing of
returns due in connection with the tax is personally liable for the tax due.

deleted text begin (f)deleted text endnew text begin (e)new text end A payor of sums required to be withheld under section 290.9705, subdivision
1
, is liable to the state for the amount required to be deducted, and is not liable to an
out-of-state contractor for the amount of the payment.

deleted text begin (g) If an employer fails to withhold tax from the wages of an employee when
required to do so under section 290.92, subdivision 2a, by reason of treating such
employee as not being an employee, then the liability for tax is equal to three percent of
the wages paid to the employee. The liability for tax of an employee is not affected by
the assessment or collection of tax under this paragraph. The employer is not entitled to
recover from the employee any tax determined under this paragraph.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 6.

Minnesota Statutes 2014, section 289A.38, subdivision 14, is amended to read:


Subd. 14.

Failure to timely file withholding reconciliation.

If deleted text beginan employerdeleted text endnew text begin a
person
new text end fails to timely file the reconciliation required by section 289A.09, subdivision
2
, paragraph (d), withholding taxes may be assessed within the period prescribed in
subdivision 1, or within one year from the date the reconciliation is filed with the
commissioner, whichever is later.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 7.

Minnesota Statutes 2014, section 289A.50, subdivision 3, is amended to read:


Subd. 3.

Withholding tax and entertainer withholding tax refunds.

When
there is an overpayment of withholding tax by deleted text beginan employer ordeleted text end a person making royalty
payments, or an overpayment of entertainer withholding tax by the payor, a refund
allowable under this section is limited to the amount of the overpayment that was not
deducted and withheld deleted text beginfrom employee wages ordeleted text end from the royalty payments, or from the
compensation of an entertainer.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 8.

Minnesota Statutes 2014, section 289A.60, subdivision 11, is amended to read:


Subd. 11.

Penalties relating to information reports, withholding.

deleted text begin(a)deleted text end When a
person required under section 289A.09, subdivision 2, to give a statement to deleted text beginan employee
or
deleted text endnew text begin anew text end payee and a duplicate statement to the commissioner, or to give a reconciliation of the
statements and quarterly returns to the commissioner, gives a false or fraudulent statement
to deleted text beginan employee ordeleted text endnew text begin anew text end payee or a false or fraudulent duplicate statement or reconciliation of
statements and quarterly returns to the commissioner, or fails to give a statement or the
reconciliation in the manner, when due, and showing the information required by section
289A.09, subdivision 2, or rules prescribed by the commissioner under that section, that
person is liable for a penalty of $50 for an act or failure to act. The total amount imposed
on the delinquent person for failures during a calendar year must not exceed $25,000.

deleted text begin (b) In addition to any other penalty provided by law, an employee who gives a
withholding exemption certificate or a residency affidavit to an employer that decreases
the amount withheld under section 290.92 and as of the time the certificate or affidavit was
given to the employer there was no reasonable basis for the statements in the certificate or
affidavit is liable to the commissioner of revenue for a penalty of $500 for each instance.
deleted text end

deleted text begin (c) In addition to any other penalty provided by law, an employer who fails to submit
a copy of a withholding exemption certificate or a residency affidavit required by section
290.92, subdivision 5a, paragraph (a), clause (1) or (2), or (b) is liable to the commissioner
of revenue for a penalty of $50 for each instance.
deleted text end

deleted text begin (d) An employer or payor who fails to file an application for a withholding account
number, as required by section 290.92, subdivision 24, is liable to the commissioner for
a penalty of $100.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 9.

Minnesota Statutes 2014, section 290.92, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

(1) Wages. For purposes of this section, the term
"wages" means the same as that term is defined in section 3401(a) and (f) of the Internal
Revenue Code.

(2) Payroll period. For purposes of this section the term "payroll period" means a
period for which a payment of wages is ordinarily made to the employee by the employee's
employer, and the term "miscellaneous payroll period" means a payroll period other
than a daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual, or annual
payroll period.

(3) Employee. For purposes of this section the term "employee" means any resident
individual performing services for an employer, either within or without, or both within
and without the state of Minnesota, and every nonresident individual performing services
within the state of Minnesota, the performance of which services constitute, establish, and
determine the relationship between the parties as that of employer and employee. As
used in the preceding sentence, the term "employee" includes an officer of a corporation,
and an officer, employee, or elected official of the United States, a state, or any political
subdivision thereof, or the District of Columbia, or any agency or instrumentality of
any one or more of the foregoing.

(4) Employer. For purposes of this section the term "employer" means any person,
including individuals, fiduciaries, estates, trusts, partnerships, limited liability companies,
and corporations transacting business in or deriving any income from sources within
the state of Minnesota for whom an individual performs or performed any service, of
whatever nature, as the employee of such person, except that if the person for whom the
individual performs or performed the services does not have control of the payment of
the wages for such services, the term "employer," except for purposes of paragraph (1),
means the person having control of the payment of such wages. As used in the preceding
sentence, the term "employer" includes any corporation, individual, estate, trust, or
organization which is exempt from taxation under section 290.05 and further includes, but
is not limited to, officers of corporations who have control, either individually or jointly
with another or others, of the payment of the wages.

(5) Number of deleted text beginwithholdingdeleted text endnew text begin estimated taxnew text end exemptions claimed. For purposes of
this section, the term "number of deleted text beginwithholdingdeleted text endnew text begin estimated taxnew text end exemptions claimed" means
the number of deleted text beginwithholdingdeleted text endnew text begin estimated taxnew text end exemptions claimed deleted text beginin a withholding exemption
certificate in effect under subdivision 5, except that if no such certificate is in effect, the
number of withholding exemptions claimed shall be considered to be zero.
deleted text endnew text begin for purposes
of filing estimated taxes on wages under section 289A.251. The employee may claim a
number of estimated tax exemptions not to exceed the number of withholding exemptions
that the employee claims and that are allowable pursuant to section 3402(f)(1), (m), and
(n) of the Internal Revenue Code for federal withholding purposes.
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, 2015.
new text end

Sec. 10.

Minnesota Statutes 2014, section 290.92, subdivision 2a, is amended to read:


Subd. 2a.

deleted text beginCollection at sourcedeleted text endnew text begin Estimated tax tablesnew text end.

deleted text begin (1) Deductions. Every
employer making payment of wages shall deduct and withhold upon such wages a tax as
provided in this section.
deleted text end

deleted text begin (2) Withholding on payroll period. The employer shall withhold the tax on the
basis of each payroll period or as otherwise provided in this section.
deleted text end

deleted text begin (3) Withholding tables. Unless the amount of tax to be withheld is determined as
provided in subdivision 3,
deleted text end The amount of deleted text begintax to be withheld for each individualdeleted text endnew text begin estimated
taxes on wages payable under section 289A.251
new text end shall be based uponnew text begin estimated taxnew text end tables
to be prepared and distributed by the commissioner. The tables deleted text beginshall be computed for the
several permissible withholding periods and
deleted text end shall take account of exemptions allowed
under this section; and the amounts computed deleted text beginfor withholdingdeleted text end shall be such that the
amount deleted text beginwithhelddeleted text end for any individual during the individual's taxable year shall approximate
in the aggregate as closely as possible the tax which is levied and imposed under this
chapter for that taxable year, upon the individual's salary, wages, or compensation for
personal services of any kind for the employer.

deleted text begin (4) Miscellaneous payroll period. If wages are paid with respect to a period which
is not a payroll period, the amount to be deducted and withheld shall be that applicable
in the case of a miscellaneous payroll period containing a number of days, including
Sundays and holidays, equal to the number of days in the period with respect to which
such wages are paid.
deleted text end

deleted text begin (5) Miscellaneous payroll period. (a) In any case in which wages are paid by
an employer without regard to any payroll period or other period, the amount to be
deducted and withheld shall be that applicable in the case of a miscellaneous payroll
period containing a number of days equal to the number of days, including Sundays and
holidays, which have elapsed since the date of the last payment of such wages by such
employer during the calendar year, or the date of commencement of employment with
such employer during such year, or January 1 of such year, whichever is the later.
deleted text end

deleted text begin (b) In any case in which the period, or the time described in clause (a), in respect
of any wages is less than one week, the commissioner, under rules prescribed by the
commissioner, may authorize an employer to determine the amount to be deducted and
withheld under the tables applicable in the case of a weekly payroll period, in which
case the aggregate of the wages paid to the employee during the calendar week shall
be considered the weekly wages.
deleted text end

deleted text begin (6) Wages computed to nearest dollar. If the wages exceed the highest bracket, in
determining the amount to be deducted and withheld under this subdivision, the wages
may, at the election of the employer, be computed to the nearest dollar.
deleted text end

deleted text begin (7) Rules on withholding. The commissioner may, by rule, authorize employers:
deleted text end

deleted text begin (a) to estimate the wages which will be paid to any employee in any quarter of
the calendar year;
deleted text end

deleted text begin (b) to determine the amount to be deducted and withheld upon each payment of
wages to such employee during such quarter as if the appropriate average of the wages so
estimated constituted the actual wages paid; and
deleted text end

deleted text begin (c) to deduct and withhold upon any payment of wages to such employee during
such quarter such amount as may be necessary to adjust the amount actually deducted and
withheld upon wages of such employee during such quarter to the amount required to be
deducted and withheld during such quarter without regard to this paragraph (7).
deleted text end

deleted text begin (8) Additional withholding. The commissioner is authorized to provide by rule for
increases or decreases in the amount of withholding otherwise required under this section
in cases where the employee requests the changes. Such additional withholding shall for
all purposes be considered tax required to be deducted and withheld under this section.
deleted text end

deleted text begin (9) Tips. In the case of tips which constitute wages, this subdivision shall be
applicable only to such tips as are included in a written statement furnished to the
employer pursuant to section 6053 of the Internal Revenue Code and only to the extent
that the tax can be deducted and withheld by the employer, at or after the time such
statement is so furnished and before the close of the calendar year in which such statement
is furnished, from such wages of the employee (excluding tips, but including funds turned
over by the employee to the employer for the purpose of such deduction and withholding)
as are under the control of the employer; and an employer who is furnished by an
employee a written statement of tips (received in a calendar month) pursuant to section
6053 of the Internal Revenue Code to which subdivision 1 is applicable may deduct and
withhold the tax with respect to such tips from any wages of the employee (excluding tips)
under the employer's control, even though at the time such statement is furnished the
total amount of the tips included in statements furnished to the employer as having been
received by the employee in such calendar month in the course of employment by such
employer is less than $20. Such tax shall not at any time be deducted and withheld in an
amount which exceeds the aggregate of such wages and funds as are under the control
of the employer minus any tax required by other provisions of state or federal law to
be collected from such wages and funds.
deleted text end

deleted text begin (10) Vehicle fringe benefits. An employer shall not deduct and withhold any tax
under this section with respect to any vehicle fringe benefit provided to an employee if the
employer has so elected for federal purposes and the requirement of and the definition
contained in section 3402(s) of the Internal Revenue Code are complied with.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 11.

Minnesota Statutes 2014, section 290.92, subdivision 4a, is amended to read:


Subd. 4a.

deleted text beginTax withheld from nonresidentsdeleted text endnew text begin Wages paid to nonresident
employees
new text end.

deleted text begin(1) "Wages" paid to nonresident employees.deleted text end For the purposes of this
sectiondeleted text begin:deleted text endnew text begin,new text end the term "wages" means all remuneration taxable under this chapter including all
remuneration paid to a nonresident employee for services performed in this state.

deleted text begin (2) "Employer," "wages" and "employee" concerning nonresidents.deleted text end
Notwithstanding any other provision of this section, under rules to be prescribed by the
commissioner of revenue, for purposes of this section deleted text beginany person having control, receipt,
custody, disposal or payment of compensation taxable under this chapter and earned by a
nonresident for personal services, shall be deemed an employer
deleted text end, any compensation taxable
under this chapter and earned by a nonresident for personal services shall be deemed
wages, and a nonresident entitled to compensation taxable under this chapter and earned
by the nonresident for personal services shall be deemed an employee.

When compensation for personal services is paid to a corporation in which all or
substantially all of the shareholders are individual entertainers, performers or athletes who
gave an entertainment or athletic performance in this state for which the compensation was
paid, the compensation shall be deemed wages of the individual entertainers, performers
or athletes and shall be subject to the provisions of this section. Advance payments of
compensation for personal services to be performed in Minnesota shall be deemed wages
and subject to the provisions of this section.

deleted text begin (3) Nonresidents, employer's duty. The employer of any employee domiciled
in a state with which Minnesota has reciprocity under section 290.081 is not required
to withhold under this chapter from the wages earned by such employee in this state if
the employee annually submits to the employer an affidavit of residency in the form
prescribed by the commissioner. The affidavit must be submitted by the later of
deleted text end

deleted text begin (i) 30 days after the employment date or
deleted text end

deleted text begin (ii) August 31 for calendar year 1987 and February 28 for subsequent calendar years.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 12.

Minnesota Statutes 2014, section 290.92, subdivision 9, is amended to read:


Subd. 9.

Determination of tax due.

The commissioner may grant permission to
deleted text beginemployers, ordeleted text end persons withholding tax under section 290.923, subdivision 2, who do not
desire to use the withholding tax tables provided in accordance with deleted text beginparagraph (3) of
subdivision 2a, or
deleted text end section 290.923, subdivision 2, to determine the amount of tax to be
withheld by use of a method of withholding other than withholding tax tables, provided
such method will withhold from each deleted text beginemployee ordeleted text end person receiving royalty payments
substantially the same amount of tax as would be withheld by use of the withholding tax
tables. deleted text beginEmployers, ordeleted text end Persons withholding tax under section 290.923, subdivision 2,
who desire to determine the amount of tax to be withheld by a method other than by
use of the withholding tax tables shall obtain permission from the commissioner before
the beginning of a deleted text beginpayrolldeleted text end period for which the deleted text beginemployer, ordeleted text end person withholding tax
under section 290.923, subdivision 2, desires to withhold the tax by such other method.
Applications to use such other method must be accompanied by evidence establishing the
need for the use of such method.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 13.

Minnesota Statutes 2014, section 290.92, subdivision 12, is amended to read:


Subd. 12.

Withheld amount, credit against tax.

deleted text begin (a) The amount deducted and
withheld as tax under subdivision 2a or 3 during a calendar year upon wages shall be
allowed as a credit to the recipient of the income against the taxes imposed by this chapter,
for a taxable year beginning in such calendar year. If more than one taxable year begins in
such calendar year, such amount shall be allowed as a credit against the taxes for the last
taxable year so beginning.
deleted text end

deleted text begin (b)deleted text end The amount deducted and withheld under subdivisions 4b and 4c and under
section 290.923, subdivision 2, for partnership, S corporation, or royalty income must be
allowed as a credit to the recipient of the income against the taxes imposed by this chapter
for the tax year the income is subject to tax under this chapter.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 14.

Minnesota Statutes 2014, section 290.92, subdivision 24, is amended to read:


Subd. 24.

Application for account number.

deleted text beginAn employer, ordeleted text endnew text begin Anew text end person withholding
tax under section 290.923, desiring to engage in business in Minnesota shall file with the
commissioner an application for a withholding account number on or before the date the
deleted text beginemployerdeleted text endnew text begin personnew text end is required to withhold Minnesota taxes under deleted text beginthisdeleted text end sectionnew text begin 290.923new text end.
An application for an account number must be made upon a form prescribed by the
commissioner. It must give the name of the employer or payor, the location of the place or
places of business, the names, addresses and Social Security numbers of the owners or
partners, or if the employer or payor is a corporation of the officers, or if the employer or
payor is a trust of the trustees, and other information the commissioner may require. The
application must be filed by the owner if the employer or payor is a natural person; by a
member or partner if the employer or payor is an association or partnership; by a trustee
if the employer or payor be a trust, or by a person authorized to sign the application
if the employer or payor is a corporation.

No fee shall be charged for the application.

The account number is not assignable.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 15.

Minnesota Statutes 2014, section 290.92, subdivision 25, is amended to read:


Subd. 25.

Delegation of duty of deleted text beginemployer ordeleted text end payor.

The delegation to an agent,
fiduciary, or employee of deleted text beginan employer, ordeleted text endnew text begin anew text end person withholding tax under section 290.923,
of any duty prescribed for the deleted text beginemployer ordeleted text end payor by this section shall not relieve the
deleted text beginemployer ordeleted text end payor of full compliance with such duty.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 16.

Minnesota Statutes 2014, section 290.92, subdivision 26, is amended to read:


Subd. 26.

Extension of withholding to certain payments where identifying
number not furnished or inaccurate.

(a) If, in the case of any reportable payment,
(1) the payee fails to furnish the payee's Social Security account number to the payor,
(2) the payee is subject to federal backup withholding on the reportable payment under
section 3406 of the Internal Revenue Code, or (3) the commissioner notifies the payor that
the Social Security account number furnished by the payee is incorrect, then the payor
shall deduct and withhold from the payment a tax equal to the amount of the payment
multiplied by the highest rate used in determining the income tax liability of an individual
under section 290.06, subdivision 2c.

(b)(1) In the case of any failure described in paragraph (a), clause (1), paragraph (a)
shall apply to any reportable payment made by the payor during the period during which
the Social Security account number has not been furnished.

(2) In any case where there is a notification described in paragraph (a), clause (3),
paragraph (a) shall apply to any reportable payment made by the payor (i) after the close
of the 30th day after the day on which the payor received the notification, and (ii) before
the payee furnishes another Social Security account number.

(3)(i) Unless the payor elects not to have this clause apply with respect to the payee,
paragraph (a), clause (1), shall also apply to any reportable payment made after the close
of the period described in clause (1) or (2), as the case may be, and before the 30th day
after the close of the period.

(ii) If the payor elects the application of this clause with respect to the payee,
paragraph (a) shall also apply to any reportable payment made during the 30-day period
described in clause (2).

(iii) The payor may elect a period shorter than the grace period set forth in item (i) or
(ii), as the case may be.

(c) The provisions of section 3406 of the Internal Revenue Code shall apply and
shall govern when withholding shall be required and the definition of terms. The term
"reportable payment" shall include only those payments for personal services. deleted text beginNo tax
shall be deducted or withheld under this subdivision with respect to any amount for
which withholding is otherwise required under this section. For purposes of this section,
payments which are subject to withholding under this subdivision shall be treated as if
they were wages paid by an employer to an employee and amounts deducted and withheld
under this subdivision shall be treated as if deducted and withheld under subdivision 2a.
deleted text end

(d) Whenever the commissioner notifies a payor under this subdivision that the
Social Security account number furnished by any payee is incorrect, the commissioner
shall at the same time furnish a copy of the notice to the payor, and the payor shall promptly
furnish the copy to the payee. If the commissioner notifies a payor under this subdivision
that the Social Security account number furnished by any payee is incorrect and the payee
subsequently furnishes another Social Security account number to the payor, the payor shall
promptly notify the commissioner of the other Social Security account number furnished.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 17.

Minnesota Statutes 2014, section 290.92, subdivision 27, is amended to read:


Subd. 27.

Pari-mutuel winnings.

Any holder of a class A, B, or D license issued
by the Minnesota Racing Commission shall deduct and withhold an amount equal to the
winnings multiplied by the highest rate used in determining the income tax liability of
an individual under section 290.06, subdivision 2c, as Minnesota withholding tax. For
purposes of this subdivision, the term "winnings which are subject to withholding" has
the meaning given in section 3402(q)(3) of the Internal Revenue Code. deleted text beginFor purposes of
the provisions of this section, a payment to any person of winnings which are subject to
withholding must be treated as if the payment was a wage paid by an employer to an
employee.
deleted text end Every individual who is to receive a payment of winnings which are subject to
withholding shall furnish the license holder with a statement, made under the penalties
of perjury, containing the name, address, and Social Security account number of the
person receiving the payment and of each person entitled to any portion of such payment.
The license holder is liable for the payment of the tax required to be withheld under this
subdivision and subdivision 28 but is not liable to any person for the amount of the payment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 18.

Minnesota Statutes 2014, section 290.92, subdivision 28, is amended to read:


Subd. 28.

Payments to horse racing license holders.

Effective with payments
made after April 1, 1988, any holder of a license issued by the Minnesota Racing
Commission who makes a payment for personal or professional services to a holder of a
class C license issued by the commission, except an amount paid as a purse, shall deduct
from the payment and withhold 6.25 percent of the amount as Minnesota withholding tax
when the amount paid to that individual by the same person during the calendar year
exceeds $600. deleted text beginFor purposes of the provisions of this section, a payment to any person
which is subject to withholding under this subdivision must be treated as if the payment
was a wage paid by an employer to an employee.
deleted text end Every individual who is to receive a
payment which is subject to withholding under this subdivision shall furnish the license
holder with a statement, made under the penalties of perjury, containing the name, address,
and Social Security account number of the person receiving the payment. No withholding
is required if the individual presents a signed certificate from the individual's employer
which states that the individual is an employee of that employer. A nonresident individual
who holds a class C license must be treated as an athlete for purposes of applying the
provisions of subdivision 4a and section 290.17, subdivision 2(1)(b)(ii).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 19.

Minnesota Statutes 2014, section 290.92, subdivision 29, is amended to read:


Subd. 29.

Lottery prizes.

7.25 percent of the payment of Minnesota state lottery
winnings which are subject to withholding must be withheld as Minnesota withholding tax.
For purposes of this subdivision, the term "winnings which are subject to withholding"
has the meaning given in section 3402(q)(3) of the Internal Revenue Code. deleted text beginFor purposes
of the provisions of this section, a payment to any person of winnings which are subject
to withholding must be treated as if the payment was a wage paid by an employer to an
employee.
deleted text end Every individual who is to receive a payment of winnings which are subject
to withholding shall furnish the State Lottery with a statement, made under the penalties
of perjury, containing the name, address, and Social Security account number of the
person receiving the payment. The Minnesota State Lottery is liable for the payment
of the tax required to be withheld under this subdivision but is not liable to any person
for the amount of the payment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 20.

Minnesota Statutes 2014, section 290.9201, subdivision 7, is amended to read:


Subd. 7.

Withholding on compensation of entertainers.

The tax on compensation
of an entertainer must be withheld at a rate of two percent of all compensation paid to
the entertainment entity by the person or corporation having legal control of the payment
of the compensation. The compensation subject to withholding under this section is not
subject to the withholding provisions of section 290.92, subdivision deleted text begin2adeleted text enddeleted text begin, 3, ordeleted text end 28, except
the provisions of sections 270C.02, subdivision 2, paragraph (b), 270C.60, 289A.09,
subdivisions 1, paragraph (f)
, and 2, 289A.60, and 289A.63 shall apply to withholding
under this section deleted text beginas if the withholding were upon wagesdeleted text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2015.
new text end

Sec. 21. new text beginCOMMISSIONER OF REVENUE; POWERS AND DUTIES.
new text end

new text begin (a) The commissioner of revenue shall prepare a bill for introduction during the
2016 legislative session making technical and conforming amendments to Minnesota
Statutes as required by this act.
new text end

new text begin (b) The commissioner of revenue may adopt rules and prescribe forms and tables to
implement the provisions of this act. The rules may be adopted under Minnesota Statutes,
section 14.386, except that paragraph (b) does not apply, or 14.389, as determined by
the commissioner.
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. 22. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2014, sections 270B.06, subdivision 3; 289A.63, subdivision 5;
and 290.92, subdivisions 3, 5, 5a, 10, 16, 19, and 30,
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 taxable years beginning after
December 31, 2015.
new text end