1.1 	A bill for an act
1.2 	relating to taxation; abolishing withholding taxes on wages; providing for 
1.3 	payment of estimated taxes on wages;amending Minnesota Statutes 2014, 
1.4 	sections 289A.09, subdivisions 1, 2; 289A.20, subdivision 2; 289A.31, 
1.5 	subdivision 5; 289A.38, subdivision 14; 289A.50, subdivision 3; 289A.60, 
1.6 	subdivision 11; 290.92, subdivisions 1, 2a, 4a, 9, 12, 24, 25, 26, 27, 28, 29; 
1.7 	290.9201, subdivision 7; proposing coding for new law in Minnesota Statutes, 
1.8 	chapter 289A; repealing Minnesota Statutes 2014, sections 270B.06, subdivision 
1.9 	3; 289A.63, subdivision 5; 290.92, subdivisions 3, 5, 5a, 10, 16, 19, 30.
1.10 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.11 	Section 1. Minnesota Statutes 2014, section 289A.09, subdivision 1, is amended to read:
1.12 		Subdivision 1.Returns. (a) An employer who is required to deduct and withhold tax 
1.13 	under section 290.92, subdivision 2a or 3, and A person required to deduct and withhold 
1.14 	tax under section 290.923, subdivision 2, must file a return with the commissioner for each 
1.15 	quarterly period unless otherwise prescribed by the commissioner.
1.16 	(b) A person or corporation required to make deposits under section 290.9201, 
1.17 	subdivision 8, must file an entertainer withholding tax return with the commissioner.
1.18 	(c) A person required to withhold an amount under section 290.9705, subdivision 1, 
1.19 	must file a return.
1.20 	(d) A partnership required to deduct and withhold tax under section 290.92, 
1.21 	subdivision 4b, must file a return.
1.22 	(e) An S corporation required to deduct and withhold tax under section 290.92, 
1.23 	subdivision 4c, must also file a return.
1.24 	(f) Returns must be filed in the form and manner, and contain the information 
1.25 	prescribed by the commissioner. Every return for taxes withheld must be signed by the 
1.26 	employer, entertainment entity, contract payor, partnership, or S corporation, or a designee.

2.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
2.2 	December 31, 2015.

2.3 	Sec. 2. Minnesota Statutes 2014, section 289A.09, subdivision 2, is amended to read:
2.4 		Subd. 2.Withholding statement. (a) A person required to deduct and withhold 
2.5 	from an employee a tax under section 290.92, subdivision 2a or 3, or290.923, subdivision 
2.6 	2, or who would have been required to deduct and withhold a tax under section 290.92, 
2.7 	subdivision 2a or 3, or persons required to withhold tax under section 290.923, subdivision 
2.8 	2, determined without regard to section 290.92, subdivision 19, if the employee or payee 
2.9 	had claimed no more than one withholding exemption, or who paid wages or made 
2.10 	payments not subject to withholding under section 290.92, subdivision 2a or 3, or290.923, 
2.11 	subdivision 2, to an employee or a person receiving royalty payments in excess of $600, 
2.12 	or who has entered into a voluntary withholding agreement with a payee under section 
2.13 	290.92, subdivision 20, must give every employee or person receiving royalty payments in 
2.14 	respect to the remuneration paid by the person to the employee or person receiving royalty 
2.15 	payments during the calendar year, on or before January 31 of the succeeding year, or, if 
2.16 	employment is terminated before the close of the calendar year, within 30 days after the 
2.17 	date of receipt of a written request from the employee if the 30-day period ends before 
2.18 	January 31, a written statement showing the following:
2.19 	(1) name of the person;
2.20 	(2) the name of the employee or payee and the employee's or payee's Social Security 
2.21 	account number;
2.22 	(3) the total amount of wages as that term is defined in section 290.92, subdivision 
2.23 	1, paragraph (1); the total amount of remuneration subject to withholding under section 
2.24 	290.92, subdivision 20; the amount of sick pay as required under section 6051(f) of the 
2.25 	Internal Revenue Code; and the amount of royalties subject to withholding under section 
2.26 	290.923, subdivision 2; and
2.27 	(4) the total amount deducted and withheld as tax under section 290.92, subdivision 
2.28 	2a or 3, or290.923, subdivision 2.
2.29 	(b) The statement required to be furnished by paragraph (a) with respect to any 
2.30 	remuneration must be furnished at those times, must contain the information required, and 
2.31 	must be in the form the commissioner prescribes.
2.32 	(c) The commissioner may prescribe rules providing for reasonable extensions of 
2.33 	time, not in excess of 30 days, to employers or payers required to give the statements to 
2.34 	their employees or payees under this subdivision.
3.1 	(d) A duplicate of any statement made under this subdivision and in accordance 
3.2 	with rules prescribed by the commissioner, along with a reconciliation in the form the 
3.3 	commissioner prescribes of the statements for the calendar year, including a reconciliation 
3.4 	of the quarterly returns required to be filed under subdivision 1, must be filed with the 
3.5 	commissioner on or before February 28 of the year after the payments were made.
3.6 	(e) If an employer cancels the employer's Minnesota withholding account number 
3.7 	required by section 290.92, subdivision 24, the information required by paragraph (d), 
3.8 	must be filed with the commissioner within 30 days of the end of the quarter in which 
3.9 	the employer cancels its account number.
3.10 	(f) The employer must submit the statements required to be sent to the commissioner 
3.11 	in the same manner required to satisfy the federal reporting requirements of section 
3.12 	6011(e) of the Internal Revenue Code and the regulations issued under it. An employer 
3.13 	must submit statements to the commissioner required by this section by electronic means 
3.14 	if the employer is required to send more than 25 statements to the commissioner, even 
3.15 	though the employer is not required to submit the returns federally by electronic means. 
3.16 	For statements issued for wages paid in 2011 and after, the threshold is ten. All statements 
3.17 	issued for withholding required under section 290.92 are aggregated for purposes of 
3.18 	determining whether the electronic submission threshold is met.
3.19 	(g) A "third-party bulk filer" as defined in section 290.92, subdivision 30, paragraph 
3.20 	(a), clause (2), must submit the returns required by this subdivision and subdivision 1, 
3.21 	paragraph (a), with the commissioner by electronic means.

3.22 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
3.23 	December 31, 2015.

3.24 	Sec. 3. Minnesota Statutes 2014, section 289A.20, subdivision 2, is amended to read:
3.25 		Subd. 2.Withholding from wages, Entertainer withholding, withholding 
3.26 	from payments to out-of-state contractors, and withholding by partnerships, small 
3.27 	business corporations, trusts. (a) A tax required to be deducted and withheld during the 
3.28 	quarterly period must be paid on or before the last day of the month following the close of 
3.29 	the quarterly period, unless an earlier time for payment is provided. A tax required to be 
3.30 	deducted and withheld from compensation of an entertainer and from a payment to an 
3.31 	out-of-state contractor must be paid on or before the date the return for such tax must be 
3.32 	filed under section 289A.18, subdivision 2. Taxes required to be deducted and withheld 
3.33 	by partnerships, S corporations, and trusts must be paid on a quarterly basis as estimated 
3.34 	taxes under section 289A.25 for partnerships and trusts and under section 289A.26 for S 
3.35 	corporations.
4.1 	(b) An employer A person who, during the previous quarter, withheld more than 
4.2 	$1,500 of tax under section 290.92, subdivision 2a or 3, or290.923, subdivision 2, 
4.3 	must deposit tax withheld under those sections with the commissioner within the time 
4.4 	allowed to deposit the employer's federal withheld employment taxes under Code of 
4.5 	Federal Regulations, title 26, section 31.6302-1, as amended through December 31, 2001, 
4.6 	without regard to the safe harbor or de minimis rules in paragraph (f) or the one-day rule 
4.7 	in paragraph (c)(3). Taxpayers must submit a copy of their federal notice of deposit status 
4.8 	to the commissioner upon request by the commissioner.
4.9 	(c) The commissioner may prescribe by rule other return periods or deposit 
4.10 	requirements. In prescribing the reporting period, the commissioner may classify payors 
4.11 	according to the amount of their tax liability and may adopt an appropriate reporting 
4.12 	period for the class that the commissioner judges to be consistent with efficient tax 
4.13 	collection. In no event will the duration of the reporting period be more than one year.
4.14 	(d) If less than the correct amount of tax is paid to the commissioner, proper 
4.15 	adjustments with respect to both the tax and the amount to be deducted must be made, 
4.16 	without interest, in the manner and at the times the commissioner prescribes. If the 
4.17 	underpayment cannot be adjusted, the amount of the underpayment will be assessed and 
4.18 	collected in the manner and at the times the commissioner prescribes.
4.19 	(e) If the aggregate amount of the tax withheld is $10,000 or more in a fiscal year 
4.20 	ending June 30, the employer must remit each required deposit for wages paid in all 
4.21 	subsequent calendar years by electronic means.
4.22 	(f) A third-party bulk filer as defined in section 290.92, subdivision 30, paragraph 
4.23 	(a), clause (2), who remits withholding deposits must remit all deposits by electronic 
4.24 	means as provided in paragraph (e), regardless of the aggregate amount of tax withheld 
4.25 	during a fiscal year for all of the employers.

4.26 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
4.27 	December 31, 2015.

4.28 	Sec. 4. [289A.251] ESTIMATED TAX ON WAGES.
4.29 		Subdivision 1.Estimated tax. An employee receiving wages, as those terms are 
4.30 	defined in section 290.92, shall make payments of estimated tax. The term "estimated 
4.31 	tax" means the amount the employee estimates is the sum of the taxes imposed by chapter 
4.32 	290 for the taxable year.
4.33 		Subd. 2.Required installments. There are 12 monthly required installments for a 
4.34 	taxable year. Each installment is due on the 15th day of the month following the end of the 
4.35 	month for which the installment is required. 
5.1 		Subd. 3.Amount of installment. (a) The amount of the installment required to be 
5.2 	paid shall be determined by estimated tax tables prescribed by the commissioner under 
5.3 	section 290.92, subdivision 2a.
5.4 	(b) Notwithstanding paragraph (a), no payments of estimated tax are required if the 
5.5 	estimated tax, as defined in this section, less the credits allowed against the tax, is less 
5.6 	than .......
5.7 		Subd. 4.Addition to tax for underpayment. In the case of any underpayment of 
5.8 	estimated tax by an employee, except as provided in subdivision 5, there is added to and 
5.9 	becomes part of the taxes imposed by chapter 290 for the taxable year for the period of 
5.10 	the underpayment, an amount determined under section 270C.40 on the amount of the 
5.11 	underpayment.
5.12 		Subd. 5.Period of underpayment. (a) The period of the underpayment runs from 
5.13 	the date the installment was required to be paid to the earlier of the following dates:
5.14 	(1) the 15th day of the fourth month following the close of the taxable year; or
5.15 	(2) with respect to any part of the underpayment, the date on which that part is 
5.16 	paid. For purposes of this clause, a payment of estimated tax on an installment date is 
5.17 	considered a payment of any unpaid required installments in the order in which the 
5.18 	installments are required to be paid.
5.19 	(b) If, on or before January 31 of the following taxable year, the taxpayer files a 
5.20 	return for the taxable year and pays in full the amount computed on the return as payable, 
5.21 	then no addition to tax is imposed under subdivision 4 with respect to any underpayment 
5.22 	of the last required installment for the taxable year.

5.23 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
5.24 	December 31, 2015.

5.25 	Sec. 5. Minnesota Statutes 2014, section 289A.31, subdivision 5, is amended to read:
5.26 		Subd. 5.Withholding tax, Withholding from payments to out-of-state 
5.27 	contractors, and withholding by partnerships and small business corporations.
 5.28 	(a) Except as provided in paragraph (b), an employer or a person withholding tax 
5.29 	under section 290.92 or 290.923, subdivision 2, who fails to pay to or deposit with the 
5.30 	commissioner a sum or sums required by those sections to be deducted, withheld, and 
5.31 	paid, is personally and individually liable to the state for the sum or sums, and added 
5.32 	penalties and interest, and is not liable to another person for that payment or payments. 
5.33 	The sum or sums deducted and withheld under section 290.92, subdivision 2a or 3, or 
5.34 	290.923, subdivision 2, must be held as a special fund in trust for the state of Minnesota.
6.1 	(b) If the employer or person withholding tax under section 290.92 or 290.923, 
6.2 	subdivision 2, fails to deduct and withhold the tax in violation of those sections, and 
6.3 	later the taxes against which the tax may be credited are paid, the tax required to be 
6.4 	deducted and withheld will not be collected from the employer. This does not, however, 
6.5 	relieve the employer from liability for any penalties and interest otherwise applicable for 
6.6 	failure to deduct and withhold. This paragraph does not apply to an employer subject to 
6.7 	paragraph (g).
6.8 	(c) Liability for payment of withholding taxes includes a responsible person or entity 
6.9 	described in the personal liability provisions of section 270C.56.
6.10 	(d) Liability for payment of withholding taxes includes a third-party lender or surety 
6.11 	described in section 270C.59.
6.12 	(e) A partnership or S corporation required to withhold and remit tax under section 
6.13 	290.92, subdivisions 4b and 4c, is liable for payment of the tax to the commissioner, and a 
6.14 	person having control of or responsibility for the withholding of the tax or the filing of 
6.15 	returns due in connection with the tax is personally liable for the tax due.
6.16 	(f) (e) A payor of sums required to be withheld under section 290.9705, subdivision 
6.17 	1, is liable to the state for the amount required to be deducted, and is not liable to an 
6.18 	out-of-state contractor for the amount of the payment.
6.19 	(g) If an employer fails to withhold tax from the wages of an employee when 
6.20 	required to do so under section 290.92, subdivision 2a, by reason of treating such 
6.21 	employee as not being an employee, then the liability for tax is equal to three percent of 
6.22 	the wages paid to the employee. The liability for tax of an employee is not affected by 
6.23 	the assessment or collection of tax under this paragraph. The employer is not entitled to 
6.24 	recover from the employee any tax determined under this paragraph.

6.25 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
6.26 	December 31, 2015.

6.27 	Sec. 6. Minnesota Statutes 2014, section 289A.38, subdivision 14, is amended to read:
6.28 		Subd. 14.Failure to timely file withholding reconciliation. If an employer a 
6.29 	person fails to timely file the reconciliation required by section 289A.09, subdivision 
6.30 	2, paragraph (d), withholding taxes may be assessed within the period prescribed in 
6.31 	subdivision 1, or within one year from the date the reconciliation is filed with the 
6.32 	commissioner, whichever is later.

6.33 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
6.34 	December 31, 2015.

7.1 	Sec. 7. Minnesota Statutes 2014, section 289A.50, subdivision 3, is amended to read:
7.2 		Subd. 3.Withholding tax and entertainer withholding tax refunds. When 
7.3 	there is an overpayment of withholding tax by an employer or a person making royalty 
7.4 	payments, or an overpayment of entertainer withholding tax by the payor, a refund 
7.5 	allowable under this section is limited to the amount of the overpayment that was not 
7.6 	deducted and withheld from employee wages or from the royalty payments, or from the 
7.7 	compensation of an entertainer.

7.8 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
7.9 	December 31, 2015.

7.10 	Sec. 8. Minnesota Statutes 2014, section 289A.60, subdivision 11, is amended to read:
7.11 		Subd. 11.Penalties relating to information reports, withholding. (a) When a 
7.12 	person required under section 289A.09, subdivision 2, to give a statement to an employee 
7.13 	or a payee and a duplicate statement to the commissioner, or to give a reconciliation of the 
7.14 	statements and quarterly returns to the commissioner, gives a false or fraudulent statement 
7.15 	to an employee or a payee or a false or fraudulent duplicate statement or reconciliation of 
7.16 	statements and quarterly returns to the commissioner, or fails to give a statement or the 
7.17 	reconciliation in the manner, when due, and showing the information required by section 
7.18 	289A.09, subdivision 2, or rules prescribed by the commissioner under that section, that 
7.19 	person is liable for a penalty of $50 for an act or failure to act. The total amount imposed 
7.20 	on the delinquent person for failures during a calendar year must not exceed $25,000.
7.21 	(b) In addition to any other penalty provided by law, an employee who gives a 
7.22 	withholding exemption certificate or a residency affidavit to an employer that decreases 
7.23 	the amount withheld under section 290.92 and as of the time the certificate or affidavit was 
7.24 	given to the employer there was no reasonable basis for the statements in the certificate or 
7.25 	affidavit is liable to the commissioner of revenue for a penalty of $500 for each instance.
7.26 	(c) In addition to any other penalty provided by law, an employer who fails to submit 
7.27 	a copy of a withholding exemption certificate or a residency affidavit required by section 
7.28 	290.92, subdivision 5a, paragraph (a), clause (1) or (2), or (b) is liable to the commissioner 
7.29 	of revenue for a penalty of $50 for each instance.
7.30 	(d) An employer or payor who fails to file an application for a withholding account 
7.31 	number, as required by section 290.92, subdivision 24, is liable to the commissioner for 
7.32 	a penalty of $100.

7.33 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
7.34 	December 31, 2015.

8.1 	Sec. 9. Minnesota Statutes 2014, section 290.92, subdivision 1, is amended to read:
8.2 		Subdivision 1.Definitions. (1) Wages. For purposes of this section, the term 
8.3 	"wages" means the same as that term is defined in section 3401(a) and (f) of the Internal 
8.4 	Revenue Code.
8.5 	(2) Payroll period. For purposes of this section the term "payroll period" means a 
8.6 	period for which a payment of wages is ordinarily made to the employee by the employee's 
8.7 	employer, and the term "miscellaneous payroll period" means a payroll period other 
8.8 	than a daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual, or annual 
8.9 	payroll period.
8.10 	(3) Employee. For purposes of this section the term "employee" means any resident 
8.11 	individual performing services for an employer, either within or without, or both within 
8.12 	and without the state of Minnesota, and every nonresident individual performing services 
8.13 	within the state of Minnesota, the performance of which services constitute, establish, and 
8.14 	determine the relationship between the parties as that of employer and employee. As 
8.15 	used in the preceding sentence, the term "employee" includes an officer of a corporation, 
8.16 	and an officer, employee, or elected official of the United States, a state, or any political 
8.17 	subdivision thereof, or the District of Columbia, or any agency or instrumentality of 
8.18 	any one or more of the foregoing.
8.19 	(4) Employer. For purposes of this section the term "employer" means any person, 
8.20 	including individuals, fiduciaries, estates, trusts, partnerships, limited liability companies, 
8.21 	and corporations transacting business in or deriving any income from sources within 
8.22 	the state of Minnesota for whom an individual performs or performed any service, of 
8.23 	whatever nature, as the employee of such person, except that if the person for whom the 
8.24 	individual performs or performed the services does not have control of the payment of 
8.25 	the wages for such services, the term "employer," except for purposes of paragraph (1), 
8.26 	means the person having control of the payment of such wages. As used in the preceding 
8.27 	sentence, the term "employer" includes any corporation, individual, estate, trust, or 
8.28 	organization which is exempt from taxation under section 290.05 and further includes, but 
8.29 	is not limited to, officers of corporations who have control, either individually or jointly 
8.30 	with another or others, of the payment of the wages.
8.31 	(5) Number of withholding estimated tax exemptions claimed. For purposes of 
8.32 	this section, the term "number of withholding estimated tax exemptions claimed" means 
8.33 	the number of withholding estimated tax exemptions claimed in a withholding exemption 
8.34 	certificate in effect under subdivision 5, except that if no such certificate is in effect, the 
8.35 	number of withholding exemptions claimed shall be considered to be zero. for purposes 
8.36 	of filing estimated taxes on wages under section 289A.251. The employee may claim a 
9.1 	number of estimated tax exemptions not to exceed the number of withholding exemptions 
9.2 	that the employee claims and that are allowable pursuant to section 3402(f)(1), (m), and 
9.3 	(n) of the Internal Revenue Code for federal withholding purposes.

9.4 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
9.5 	December 31, 2015.

9.6 	Sec. 10. Minnesota Statutes 2014, section 290.92, subdivision 2a, is amended to read:
9.7 		Subd. 2a.Collection at source Estimated tax tables. (1) Deductions. Every 
9.8 	employer making payment of wages shall deduct and withhold upon such wages a tax as 
9.9 	provided in this section.
9.10 	(2) Withholding on payroll period. The employer shall withhold the tax on the 
9.11 	basis of each payroll period or as otherwise provided in this section.
9.12 	(3) Withholding tables. Unless the amount of tax to be withheld is determined as 
9.13 	provided in subdivision 3, The amount of tax to be withheld for each individual estimated 
9.14 	taxes on wages payable under section 289A.251 shall be based upon estimated tax tables 
9.15 	to be prepared and distributed by the commissioner. The tables shall be computed for the 
9.16 	several permissible withholding periods and shall take account of exemptions allowed 
9.17 	under this section; and the amounts computed for withholding shall be such that the 
9.18 	amount withheld for any individual during the individual's taxable year shall approximate 
9.19 	in the aggregate as closely as possible the tax which is levied and imposed under this 
9.20 	chapter for that taxable year, upon the individual's salary, wages, or compensation for 
9.21 	personal services of any kind for the employer.
9.22 	(4) Miscellaneous payroll period. If wages are paid with respect to a period which 
9.23 	is not a payroll period, the amount to be deducted and withheld shall be that applicable 
9.24 	in the case of a miscellaneous payroll period containing a number of days, including 
9.25 	Sundays and holidays, equal to the number of days in the period with respect to which 
9.26 	such wages are paid.
9.27 	(5) Miscellaneous payroll period. (a) In any case in which wages are paid by 
9.28 	an employer without regard to any payroll period or other period, the amount to be 
9.29 	deducted and withheld shall be that applicable in the case of a miscellaneous payroll 
9.30 	period containing a number of days equal to the number of days, including Sundays and 
9.31 	holidays, which have elapsed since the date of the last payment of such wages by such 
9.32 	employer during the calendar year, or the date of commencement of employment with 
9.33 	such employer during such year, or January 1 of such year, whichever is the later.
9.34 	(b) In any case in which the period, or the time described in clause (a), in respect 
9.35 	of any wages is less than one week, the commissioner, under rules prescribed by the 
10.1 	commissioner, may authorize an employer to determine the amount to be deducted and 
10.2 	withheld under the tables applicable in the case of a weekly payroll period, in which 
10.3 	case the aggregate of the wages paid to the employee during the calendar week shall 
10.4 	be considered the weekly wages.
10.5 	(6) Wages computed to nearest dollar. If the wages exceed the highest bracket, in 
10.6 	determining the amount to be deducted and withheld under this subdivision, the wages 
10.7 	may, at the election of the employer, be computed to the nearest dollar.
10.8 	(7) Rules on withholding. The commissioner may, by rule, authorize employers:
10.9 	(a) to estimate the wages which will be paid to any employee in any quarter of 
10.10 	the calendar year;
10.11 	(b) to determine the amount to be deducted and withheld upon each payment of 
10.12 	wages to such employee during such quarter as if the appropriate average of the wages so 
10.13 	estimated constituted the actual wages paid; and
10.14 	(c) to deduct and withhold upon any payment of wages to such employee during 
10.15 	such quarter such amount as may be necessary to adjust the amount actually deducted and 
10.16 	withheld upon wages of such employee during such quarter to the amount required to be 
10.17 	deducted and withheld during such quarter without regard to this paragraph (7).
10.18 	(8) Additional withholding. The commissioner is authorized to provide by rule for 
10.19 	increases or decreases in the amount of withholding otherwise required under this section 
10.20 	in cases where the employee requests the changes. Such additional withholding shall for 
10.21 	all purposes be considered tax required to be deducted and withheld under this section.
10.22 	(9) Tips. In the case of tips which constitute wages, this subdivision shall be 
10.23 	applicable only to such tips as are included in a written statement furnished to the 
10.24 	employer pursuant to section 6053 of the Internal Revenue Code and only to the extent 
10.25 	that the tax can be deducted and withheld by the employer, at or after the time such 
10.26 	statement is so furnished and before the close of the calendar year in which such statement 
10.27 	is furnished, from such wages of the employee (excluding tips, but including funds turned 
10.28 	over by the employee to the employer for the purpose of such deduction and withholding) 
10.29 	as are under the control of the employer; and an employer who is furnished by an 
10.30 	employee a written statement of tips (received in a calendar month) pursuant to section 
10.31 	6053 of the Internal Revenue Code to which subdivision 1 is applicable may deduct and 
10.32 	withhold the tax with respect to such tips from any wages of the employee (excluding tips) 
10.33 	under the employer's control, even though at the time such statement is furnished the 
10.34 	total amount of the tips included in statements furnished to the employer as having been 
10.35 	received by the employee in such calendar month in the course of employment by such 
10.36 	employer is less than $20. Such tax shall not at any time be deducted and withheld in an 
11.1 	amount which exceeds the aggregate of such wages and funds as are under the control 
11.2 	of the employer minus any tax required by other provisions of state or federal law to 
11.3 	be collected from such wages and funds.
11.4 	(10) Vehicle fringe benefits. An employer shall not deduct and withhold any tax 
11.5 	under this section with respect to any vehicle fringe benefit provided to an employee if the 
11.6 	employer has so elected for federal purposes and the requirement of and the definition 
11.7 	contained in section 3402(s) of the Internal Revenue Code are complied with.

11.8 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
11.9 	December 31, 2015.

11.10 	Sec. 11. Minnesota Statutes 2014, section 290.92, subdivision 4a, is amended to read:
11.11 		Subd. 4a.Tax withheld from nonresidents Wages paid to nonresident 
11.12 	employees. (1) "Wages" paid to nonresident employees. For the purposes of this 
11.13 	section:, the term "wages" means all remuneration taxable under this chapter including all 
11.14 	remuneration paid to a nonresident employee for services performed in this state.
11.15 	(2) "Employer," "wages" and "employee" concerning nonresidents.
11.16 	Notwithstanding any other provision of this section, under rules to be prescribed by the 
11.17 	commissioner of revenue, for purposes of this section any person having control, receipt, 
11.18 	custody, disposal or payment of compensation taxable under this chapter and earned by a 
11.19 	nonresident for personal services, shall be deemed an employer, any compensation taxable 
11.20 	under this chapter and earned by a nonresident for personal services shall be deemed 
11.21 	wages, and a nonresident entitled to compensation taxable under this chapter and earned 
11.22 	by the nonresident for personal services shall be deemed an employee.
11.23 	When compensation for personal services is paid to a corporation in which all or 
11.24 	substantially all of the shareholders are individual entertainers, performers or athletes who 
11.25 	gave an entertainment or athletic performance in this state for which the compensation was 
11.26 	paid, the compensation shall be deemed wages of the individual entertainers, performers 
11.27 	or athletes and shall be subject to the provisions of this section. Advance payments of 
11.28 	compensation for personal services to be performed in Minnesota shall be deemed wages 
11.29 	and subject to the provisions of this section.
11.30 	(3) Nonresidents, employer's duty. The employer of any employee domiciled 
11.31 	in a state with which Minnesota has reciprocity under section 290.081 is not required 
11.32 	to withhold under this chapter from the wages earned by such employee in this state if 
11.33 	the employee annually submits to the employer an affidavit of residency in the form 
11.34 	prescribed by the commissioner. The affidavit must be submitted by the later of
11.35 	(i) 30 days after the employment date or
12.1 	(ii) August 31 for calendar year 1987 and February 28 for subsequent calendar years.

12.2 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
12.3 	December 31, 2015.

12.4 	Sec. 12. Minnesota Statutes 2014, section 290.92, subdivision 9, is amended to read:
12.5 		Subd. 9.Determination of tax due. The commissioner may grant permission to 
12.6 	employers, or persons withholding tax under section 290.923, subdivision 2, who do not 
12.7 	desire to use the withholding tax tables provided in accordance with paragraph (3) of 
12.8 	subdivision 2a, or section 290.923, subdivision 2, to determine the amount of tax to be 
12.9 	withheld by use of a method of withholding other than withholding tax tables, provided 
12.10 	such method will withhold from each employee or person receiving royalty payments 
12.11 	substantially the same amount of tax as would be withheld by use of the withholding tax 
12.12 	tables. Employers, or Persons withholding tax under section 290.923, subdivision 2, 
12.13 	who desire to determine the amount of tax to be withheld by a method other than by 
12.14 	use of the withholding tax tables shall obtain permission from the commissioner before 
12.15 	the beginning of a payroll period for which the employer, or person withholding tax 
12.16 	under section 290.923, subdivision 2, desires to withhold the tax by such other method. 
12.17 	Applications to use such other method must be accompanied by evidence establishing the 
12.18 	need for the use of such method.

12.19 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
12.20 	December 31, 2015.

12.21 	Sec. 13. Minnesota Statutes 2014, section 290.92, subdivision 12, is amended to read:
12.22 		Subd. 12.Withheld amount, credit against tax. (a) The amount deducted and 
12.23 	withheld as tax under subdivision 2a or 3 during a calendar year upon wages shall be 
12.24 	allowed as a credit to the recipient of the income against the taxes imposed by this chapter, 
12.25 	for a taxable year beginning in such calendar year. If more than one taxable year begins in 
12.26 	such calendar year, such amount shall be allowed as a credit against the taxes for the last 
12.27 	taxable year so beginning.
12.28 	(b) The amount deducted and withheld under subdivisions 4b and 4c and under 
12.29 	section 290.923, subdivision 2, for partnership, S corporation, or royalty income must be 
12.30 	allowed as a credit to the recipient of the income against the taxes imposed by this chapter 
12.31 	for the tax year the income is subject to tax under this chapter.

12.32 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
12.33 	December 31, 2015.

13.1 	Sec. 14. Minnesota Statutes 2014, section 290.92, subdivision 24, is amended to read:
13.2 		Subd. 24.Application for account number. An employer, or A person withholding 
13.3 	tax under section 290.923, desiring to engage in business in Minnesota shall file with the 
13.4 	commissioner an application for a withholding account number on or before the date the 
13.5 	employer person is required to withhold Minnesota taxes under this section 290.923. 
13.6 	An application for an account number must be made upon a form prescribed by the 
13.7 	commissioner. It must give the name of the employer or payor, the location of the place or 
13.8 	places of business, the names, addresses and Social Security numbers of the owners or 
13.9 	partners, or if the employer or payor is a corporation of the officers, or if the employer or 
13.10 	payor is a trust of the trustees, and other information the commissioner may require. The 
13.11 	application must be filed by the owner if the employer or payor is a natural person; by a 
13.12 	member or partner if the employer or payor is an association or partnership; by a trustee 
13.13 	if the employer or payor be a trust, or by a person authorized to sign the application 
13.14 	if the employer or payor is a corporation.
13.15 	No fee shall be charged for the application.
13.16 	The account number is not assignable.

13.17 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
13.18 	December 31, 2015.

13.19 	Sec. 15. Minnesota Statutes 2014, section 290.92, subdivision 25, is amended to read:
13.20 		Subd. 25.Delegation of duty of employer or payor. The delegation to an agent, 
13.21 	fiduciary, or employee of an employer, or a person withholding tax under section 290.923, 
13.22 	of any duty prescribed for the employer or payor by this section shall not relieve the 
13.23 	employer or payor of full compliance with such duty.

13.24 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
13.25 	December 31, 2015.

13.26 	Sec. 16. Minnesota Statutes 2014, section 290.92, subdivision 26, is amended to read:
13.27 		Subd. 26.Extension of withholding to certain payments where identifying 
13.28 	number not furnished or inaccurate. (a) If, in the case of any reportable payment, 
13.29 	(1) the payee fails to furnish the payee's Social Security account number to the payor, 
13.30 	(2) the payee is subject to federal backup withholding on the reportable payment under 
13.31 	section 3406 of the Internal Revenue Code, or (3) the commissioner notifies the payor that 
13.32 	the Social Security account number furnished by the payee is incorrect, then the payor 
13.33 	shall deduct and withhold from the payment a tax equal to the amount of the payment 
14.1 	multiplied by the highest rate used in determining the income tax liability of an individual 
14.2 	under section 290.06, subdivision 2c.
14.3 	(b)(1) In the case of any failure described in paragraph (a), clause (1), paragraph (a) 
14.4 	shall apply to any reportable payment made by the payor during the period during which 
14.5 	the Social Security account number has not been furnished.
14.6 	(2) In any case where there is a notification described in paragraph (a), clause (3), 
14.7 	paragraph (a) shall apply to any reportable payment made by the payor (i) after the close 
14.8 	of the 30th day after the day on which the payor received the notification, and (ii) before 
14.9 	the payee furnishes another Social Security account number.
14.10 	(3)(i) Unless the payor elects not to have this clause apply with respect to the payee, 
14.11 	paragraph (a), clause (1), shall also apply to any reportable payment made after the close 
14.12 	of the period described in clause (1) or (2), as the case may be, and before the 30th day 
14.13 	after the close of the period.
14.14 	(ii) If the payor elects the application of this clause with respect to the payee, 
14.15 	paragraph (a) shall also apply to any reportable payment made during the 30-day period 
14.16 	described in clause (2).
14.17 	(iii) The payor may elect a period shorter than the grace period set forth in item (i) or 
14.18 	(ii), as the case may be.
14.19 	(c) The provisions of section 3406 of the Internal Revenue Code shall apply and 
14.20 	shall govern when withholding shall be required and the definition of terms. The term 
14.21 	"reportable payment" shall include only those payments for personal services. No tax 
14.22 	shall be deducted or withheld under this subdivision with respect to any amount for 
14.23 	which withholding is otherwise required under this section. For purposes of this section, 
14.24 	payments which are subject to withholding under this subdivision shall be treated as if 
14.25 	they were wages paid by an employer to an employee and amounts deducted and withheld 
14.26 	under this subdivision shall be treated as if deducted and withheld under subdivision 2a.
14.27 	(d) Whenever the commissioner notifies a payor under this subdivision that the 
14.28 	Social Security account number furnished by any payee is incorrect, the commissioner 
14.29 	shall at the same time furnish a copy of the notice to the payor, and the payor shall promptly 
14.30 	furnish the copy to the payee. If the commissioner notifies a payor under this subdivision 
14.31 	that the Social Security account number furnished by any payee is incorrect and the payee 
14.32 	subsequently furnishes another Social Security account number to the payor, the payor shall 
14.33 	promptly notify the commissioner of the other Social Security account number furnished.

14.34 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
14.35 	December 31, 2015.

15.1 	Sec. 17. Minnesota Statutes 2014, section 290.92, subdivision 27, is amended to read:
15.2 		Subd. 27.Pari-mutuel winnings. Any holder of a class A, B, or D license issued 
15.3 	by the Minnesota Racing Commission shall deduct and withhold an amount equal to the 
15.4 	winnings multiplied by the highest rate used in determining the income tax liability of 
15.5 	an individual under section 290.06, subdivision 2c, as Minnesota withholding tax. For 
15.6 	purposes of this subdivision, the term "winnings which are subject to withholding" has 
15.7 	the meaning given in section 3402(q)(3) of the Internal Revenue Code. For purposes of 
15.8 	the provisions of this section, a payment to any person of winnings which are subject to 
15.9 	withholding must be treated as if the payment was a wage paid by an employer to an 
15.10 	employee. Every individual who is to receive a payment of winnings which are subject to 
15.11 	withholding shall furnish the license holder with a statement, made under the penalties 
15.12 	of perjury, containing the name, address, and Social Security account number of the 
15.13 	person receiving the payment and of each person entitled to any portion of such payment. 
15.14 	The license holder is liable for the payment of the tax required to be withheld under this 
15.15 	subdivision and subdivision 28 but is not liable to any person for the amount of the payment.

15.16 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
15.17 	December 31, 2015.

15.18 	Sec. 18. Minnesota Statutes 2014, section 290.92, subdivision 28, is amended to read:
15.19 		Subd. 28.Payments to horse racing license holders. Effective with payments 
15.20 	made after April 1, 1988, any holder of a license issued by the Minnesota Racing 
15.21 	Commission who makes a payment for personal or professional services to a holder of a 
15.22 	class C license issued by the commission, except an amount paid as a purse, shall deduct 
15.23 	from the payment and withhold 6.25 percent of the amount as Minnesota withholding tax 
15.24 	when the amount paid to that individual by the same person during the calendar year 
15.25 	exceeds $600. For purposes of the provisions of this section, a payment to any person 
15.26 	which is subject to withholding under this subdivision must be treated as if the payment 
15.27 	was a wage paid by an employer to an employee. Every individual who is to receive a 
15.28 	payment which is subject to withholding under this subdivision shall furnish the license 
15.29 	holder with a statement, made under the penalties of perjury, containing the name, address, 
15.30 	and Social Security account number of the person receiving the payment. No withholding 
15.31 	is required if the individual presents a signed certificate from the individual's employer 
15.32 	which states that the individual is an employee of that employer. A nonresident individual 
15.33 	who holds a class C license must be treated as an athlete for purposes of applying the 
15.34 	provisions of subdivision 4a and section 290.17, subdivision 2(1)(b)(ii).

16.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
16.2 	December 31, 2015.

16.3 	Sec. 19. Minnesota Statutes 2014, section 290.92, subdivision 29, is amended to read:
16.4 		Subd. 29.Lottery prizes. 7.25 percent of the payment of Minnesota state lottery 
16.5 	winnings which are subject to withholding must be withheld as Minnesota withholding tax. 
16.6 	For purposes of this subdivision, the term "winnings which are subject to withholding" 
16.7 	has the meaning given in section 3402(q)(3) of the Internal Revenue Code. For purposes 
16.8 	of the provisions of this section, a payment to any person of winnings which are subject 
16.9 	to withholding must be treated as if the payment was a wage paid by an employer to an 
16.10 	employee. Every individual who is to receive a payment of winnings which are subject 
16.11 	to withholding shall furnish the State Lottery with a statement, made under the penalties 
16.12 	of perjury, containing the name, address, and Social Security account number of the 
16.13 	person receiving the payment. The Minnesota State Lottery is liable for the payment 
16.14 	of the tax required to be withheld under this subdivision but is not liable to any person 
16.15 	for the amount of the payment.

16.16 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
16.17 	December 31, 2015.

16.18 	Sec. 20. Minnesota Statutes 2014, section 290.9201, subdivision 7, is amended to read:
16.19 		Subd. 7.Withholding on compensation of entertainers. The tax on compensation 
16.20 	of an entertainer must be withheld at a rate of two percent of all compensation paid to 
16.21 	the entertainment entity by the person or corporation having legal control of the payment 
16.22 	of the compensation. The compensation subject to withholding under this section is not 
16.23 	subject to the withholding provisions of section 290.92, subdivision 2a, 3, or 28, except 
16.24 	the provisions of sections 270C.02, subdivision 2, paragraph (b), 270C.60, 289A.09, 
16.25 	subdivisions 1, paragraph (f), and 2, 289A.60, and 289A.63 shall apply to withholding 
16.26 	under this section as if the withholding were upon wages.

16.27 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
16.28 	December 31, 2015.

16.29 	Sec. 21. COMMISSIONER OF REVENUE; POWERS AND DUTIES.
 16.30 	(a) The commissioner of revenue shall prepare a bill for introduction during the 
16.31 	2016 legislative session making technical and conforming amendments to Minnesota 
16.32 	Statutes as required by this act.
17.1 	(b) The commissioner of revenue may adopt rules and prescribe forms and tables to 
17.2 	implement the provisions of this act. The rules may be adopted under Minnesota Statutes, 
17.3 	section 14.386, except that paragraph (b) does not apply, or 14.389, as determined by 
17.4 	the commissioner. 

17.5 	EFFECTIVE DATE. This section is effective the day following final enactment.

17.6 	Sec. 22.  REPEALER.
 17.7 	Minnesota Statutes 2014, sections 270B.06, subdivision 3; 289A.63, subdivision 5; 
17.8 	and 290.92, subdivisions 3, 5, 5a, 10, 16, 19, and 30, are repealed.

17.9 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
17.10 	December 31, 2015.