Minnesota Session Laws - 1983, Regular Session

  

                         Laws of Minnesota 1983 

                         CHAPTER 15--H.F.No. 201
           An act relating to taxation; making administrative and 
          technical changes to income tax and property tax 
          refund provisions; imposing a penalty; amending 
          Minnesota Statutes 1982, sections 13.46, subdivision 2;
          176.231, subdivision 9; 290.032, subdivision 2; 
          290.06, subdivisions 1, 2c, 2e, as amended, and 3d; 
          290.068, subdivision 3; 290.077, subdivisions 1 and 4; 
          290.081; 290.09, subdivisions 1, 6, and 29; 290.095, 
          subdivision 7; 290.12, subdivision 2; 290.17, 
          subdivision 2; 290.21, subdivision 4; 290.26, 
          subdivision 2; 290.39, subdivision 1; 290.49, 
          subdivision 8; 290.50, subdivisions 1 and 5; 290.53, 
          subdivision 3a and by adding a subdivision; 290.531; 
          290.92, subdivision 5a; 290A.03, subdivision 13; 
          290A.04, subdivision 3; 290A.111, subdivision 2; 
          290A.112, subdivision 2; and Laws 1981, Third Special 
          Session chapter 2, article IV, section 14; and 
          repealing Minnesota Statutes 1982, sections 136A.235; 
          290.01, subdivision 25; 290.07, subdivision 5a; 
          290.071, subdivisions 2, 3, 4, and 6; 290.26, 
          subdivision 2a; 290.34, subdivision 3; 290.48, 
          subdivision 6; 290A.04, subdivisions 2c and 2d. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1982, section 13.46, 
subdivision 2, is amended to read:  
    Subd. 2.  [GENERAL.] Unless the data is summary data or a 
statute specifically provides a different classification, data 
on individuals collected, maintained, used or disseminated by 
the welfare system is private data on individuals, and shall not 
be disclosed except:  
    (a) Pursuant to section 13.05;  
    (b) Pursuant to a valid court order;  
    (c) Pursuant to a statute specifically authorizing access 
to the private data;  
    (d) To an agent of the welfare system, including 
appropriate law enforcement personnel, who are acting in the 
investigation, prosecution, criminal or civil proceeding 
relating to the administration of a program;  
    (e) To personnel of the welfare system who require the data 
to determine eligibility, amount of assistance, and the need to 
provide services of additional programs to the individual;  
    (f) To administer federal funds or programs; or 
    (g) Between personnel of the welfare system working in the 
same program; or 
    (h) The amounts of cash public assistance and relief paid 
to welfare recipients in this state, including their names and 
social security numbers, upon request by the department of 
revenue to administer the property tax refund law, supplemental 
housing allowance, and the income tax.  
    Sec. 2.  Minnesota Statutes 1982, section 176.231, 
subdivision 9, is amended to read:  
    Subd. 9.  [USES WHICH MAY BE MADE OF REPORTS.] Reports 
filed with the commissioner of the department of labor and 
industry under this section may be used in hearings held under 
this chapter, and for the purpose of state investigations and 
for statistics.  These reports are available to the department 
of revenue for use in enforcing Minnesota income tax and 
property tax refund laws, and the information shall be protected 
as provided in section 290.61 or 290A.17.  
    The division may permit an attorney at law who represents 
an employer, insurer, or an employee or his dependent to examine 
its file in a compensation case if the attorney furnishes 
written authorization to do so from his client. 
     Sec. 3.  Minnesota Statutes 1982, section 290.032, 
subdivision 2, is amended to read:  
    Subd. 2.  The amount of tax imposed by subdivision 1 shall 
be computed in the same way as the tax imposed under section 
402(e) of the Internal Revenue Code of 1954, as amended through 
December 31, 1981, except that the initial separate tax shall be 
an amount equal to ten times the tax which would be imposed by 
section 290.03 if the recipient was an individual referred to in 
such section and the taxable net income, excluding the credits 
allowed in section 290.06, subdivision 3f, was an amount equal 
to one-tenth of the excess of 
    (i) the total taxable amount of the lump sum distribution 
for the year, over 
    (ii) the minimum distribution allowance, and except that 
references in section 402(e) of the Internal Revenue Code of 
1954, as amended through December 31, 1981, to paragraph (1)(A) 
thereof shall instead be references to subdivision 1 of this 
section. 
     The amount of any distribution from a qualified pension or 
profit sharing plan which is received as a lump sum distribution 
shall be reduced to the extent of any contribution not 
previously allowed as a deduction by reason of a change in 
federal law which was not adopted by Minnesota for a taxable 
year beginning in 1974 or thereafter.  
     Sec. 4.  Minnesota Statutes 1982, section 290.06, 
subdivision 1, is amended to read:  
    Subdivision 1.  [COMPUTATION, CORPORATIONS.] The privilege 
and income taxes imposed by this chapter upon corporations shall 
be computed by applying to their taxable net income in excess of 
the applicable deductions allowed under section 290.21 the 
following rates:  
    (1) On the first $25,000, for the first taxable year 
beginning after December 31, 1981 and before January 1, 1983 
nine percent and, for taxable years beginning after December 31, 
1982, six percent; provided that, in the case of a corporation 
having taxable net income allocated to this state pursuant to 
the provisions of section 290.19 or, 290.20, 290.35, or 290.36, 
the amount of income subject to this rate shall be that 
proportion of $25,000 which its income allocable to this state 
bears to its total taxable net income; and 
    (2) On the remainder, 12 percent. 
     Sec. 5.  Minnesota Statutes 1982, section 290.06, 
subdivision 2c, is amended to read:  
    Subd. 2c.  [SCHEDULE OF RATES FOR INDIVIDUALS, ESTATES AND 
TRUSTS.] (a) The income taxes imposed by this chapter upon 
individuals, estates and trusts, other than those taxable as 
corporations, shall be computed by applying to their taxable net 
income the following schedule of rates: 
    (1) On the first $500, one and six-tenths percent; 
    (2) On the second $500, two and two-tenths percent; 
    (3) On the next $1,000, three and five-tenths percent; 
    (4) On the next $1,000, five and eight-tenths percent; 
    (5) On the next $1,000, seven and three-tenths percent; 
    (6) On the next $1,000, eight and eight-tenths percent; 
    (7) On the next $2,000, ten and two-tenths percent; 
    (8) On the next $2,000, eleven and five-tenths percent; 
    (9) On the next $3,500, twelve and eight-tenths percent; 
    (10) On all over $12,500, and not over $20,000, fourteen 
percent; 
    (11) On all over $20,000 and not over $27,500, fifteen 
percent; 
    (12) On all over $27,500, sixteen percent. 
    (b) In lieu of a tax computed according to the rates set 
forth in clause (a) of this subdivision, the tax of any 
individual taxpayer whose taxable net income for the taxable 
year is less than $20,000 $40,000 shall be computed in 
accordance with tables prepared and issued by the commissioner 
of revenue based on income brackets of not more than $100.  The 
amount of tax for each bracket shall be computed at the rates 
set forth in this subdivision, provided that the commissioner 
may disregard a fractional part of a dollar unless it amounts to 
50 cents or more, in which case it may be increased to $1. 
    Sec. 6.  Minnesota Statutes 1982, section 290.06, 
subdivision 2e, as amended by Laws 1982, Third Special Session 
chapter 1, article 5, section 3, is amended to read:  
    Subd. 2e.  [ADDITIONAL INCOME TAX.] In addition to the tax 
computed pursuant to subdivisions 2c and 2d or subdivision 3d, 
there is hereby imposed an additional income tax on individuals, 
estates, and trusts, other than those taxable as corporations.  
The additional tax shall be computed by applying the following 
rates to the tax computed pursuant to subdivision 3d or, in the 
case of an individual who does not qualify for the low income 
alternative tax and estates and trusts, the tax computed 
pursuant to subdivisions 2c and 2d and sections 290.032 and 
290.091 less the credits allowed by sections 290.06, 
subdivisions 3e, 3f, 9, 9a, 11 and 14; and 290.081 any 
nonrefundable credits allowed by this chapter.  
    (1) For taxable years beginning after December 31, 1981, 
but before January 1, 1983, seven percent;  
    (2) For taxable years beginning after December 31, 1982, 
but before January 1, 1984, 5 percent.  
    On October 1, 1983 the commissioner of finance shall 
determine the amount of the state's unrestricted general fund 
balance at the close of the 1982-1983 biennium.  If this amount 
is more than $150,000,000, the commissioner shall reduce the 
rate of the surtax in effect for taxable years beginning after 
December 31, 1982 and before January 1, 1984, so that the amount 
of revenue raised by the surtax results in a fund balance of no 
more than $150,000,000, provided that the rate so determined 
shall be rounded upward to the next one-tenth of one percent and 
no adjustment shall be required if the change in the rate of the 
surtax would be less than one-tenth of one percent.  
    Sec. 7.  Minnesota Statutes 1982, section 290.06, 
subdivision 3d, is amended to read:  
    Subd. 3d.  [LOW INCOME ALTERNATIVE TAX.] A claimant as 
defined in section 290.012 may pay a tax computed under this 
subdivision in lieu of the tax computed under sections 290.06, 
subdivisions 2c, 3e, 3f, 9, 9a, 11, 14 and 290.081 subdivision 
2c as reduced by any nonrefundable credits provided in this 
chapter without the provisions of section 290.012 and this 
subdivision: 
    (1) For taxable years beginning after December 31, 1979, 
The alternative tax shall be zero for the following claimants: 
    (a) An unmarried claimant with an income of $5,800 or less; 
    (b) A claimant with one dependent, with an income of $7,400 
or less; 
    (c) A claimant with two dependents, with an income of 
$8,800 or less; 
    (d) A claimant with three dependents, with an income of 
$10,000 or less; 
    (e) A claimant with four dependents, with an income of 
$10,500 or less; and 
    (f) A claimant with five or more dependents, with an income 
of $11,000 or less. 
    (2) In the case of a claimant with an income in excess of 
that set forth in the appropriate category of clause (1), he may 
pay a tax equal to 15 percent of that portion of his income that 
is in excess of the amount set forth in the appropriate category 
of clause (1), or his tax obligation as it would have been in 
the absence of section 290.012 and this subdivision, whichever 
is less. 
    (3) The total income for the entire calendar year of the 
claimant and his spouse, if any, including income not assignable 
to this state, shall be the figure employed for the purposes of 
this subdivision.  No individual dependent upon and receiving 
his chief support from any other individual may be a claimant 
under section 290.012 and this subdivision.  The commissioner of 
revenue shall prescribe the additional forms or alterations in 
existing forms as necessary to comply with the provisions of 
section 290.012 and this subdivision.  All claimants shall 
submit their returns on these forms. 
    The commissioner of revenue shall provide alternative tax 
tables. 
    Sec. 8.  Minnesota Statutes 1982, section 290.068, 
subdivision 3, is amended to read:  
    Subd. 3.  [LIMITATION; CARRYBACK AND CARRYOVER.] (a)(1) The 
credit for the taxable year shall not exceed the liability for 
tax.  "Liability for tax" for purposes of this section means the 
tax imposed under this chapter for the taxable year reduced by 
the sum of the nonrefundable credits allowed under section 
290.06, except the credit allowed under section 290.06, 
subdivision 13 this chapter.  
    (2) In the case of an individual who 
    (A) owns an interest in an unincorporated business, 
    (B) is a partner in a partnership, 
    (C) is a beneficiary of an estate or trust, or 
    (D) is a shareholder in a small business corporation, 
having a valid election in effect under section 1372 of the 
Internal Revenue Code, 
    the credit allowed for the taxable year shall not exceed 
the lesser of the amount determined under clause (1) for the 
taxable year or an amount (separately computed with respect to 
such person's interest in the trade or business or entity) equal 
to the amount of tax attributable to that portion of a person's 
taxable income which is allocable or apportionable to the 
person's interest in the trade or business or entity.  
    (b) If the amount of the credit determined under this 
section for any taxable year exceeds the limitation under clause 
(a), the excess shall be a research credit carryback to each of 
the three preceding taxable years and a research credit 
carryover to each of the 15 succeeding taxable years.  The 
entire amount of the excess unused credit for the taxable year 
shall be carried first to the earliest of the taxable years to 
which the credit may be carried and then to each successive year 
to which the credit may be carried.  The amount of the unused 
credit which may be added under this clause shall not exceed the 
taxpayer's liability for tax less the research credit for the 
taxable year.  
    For the purposes of sections 290.46 and 290.50, if the 
claim for refund relates to an overpayment attributable to a 
research and experimental expenditure credit carryback under 
this subdivision, in lieu of the period of limitation prescribed 
in sections 290.46 and 290.50, the period of limitation shall be 
that period which ends with the expiration of the 15th day of 
the 46th month, or the 45th month, in the case of a corporation, 
following the end of the taxable year in which the research and 
experimental expenditure credit arises which results in the 
carryback.  With respect to any portion of a credit carryback 
from a taxable year attributable to a loss carryback from a 
subsequent taxable year, the period of limitations shall be that 
period which ends with the expiration of the 15th day of the 
46th month, or, in the case of a corporation, the 45th month 
following the end of the subsequent taxable year.  In any case 
in which a taxpayer is entitled to a refund in a carryback year 
due to the carryback of a research and experimental expenditure 
credit, interest shall be computed only from the end of the 
taxable year in which the credit arises.  With respect to any 
portion of a credit carryback from a taxable year attributable 
to a loss carryback from a subsequent taxable year, interest 
shall be computed from the end of the subsequent taxable year.  
    Sec. 9.  Minnesota Statutes 1982, section 290.077, 
subdivision 1, is amended to read:  
    Subdivision 1.  [INCLUSION IN GROSS INCOME.] Income in 
respect of a decedent shall be included in gross income as 
provided in accordance with the method set forth in section 
691(a) of the Internal Revenue Code of 1954, as amended through 
December 31, 1981. 
    Sec. 10.  Minnesota Statutes 1982, section 290.077, 
subdivision 4, is amended to read:  
    Subd. 4.  [DEDUCTION FOR FEDERAL ESTATE TAX AND MINNESOTA 
INHERITANCE OR ESTATE TAX.] (1) [ALLOWANCE OF DEDUCTION; FEDERAL 
ESTATE TAX.] (A) [GENERAL RULE.] A person who includes an amount 
in gross income under this section, shall be allowed, for the 
same taxable year, as a deduction an amount which bears the same 
ratio to the estate tax attributable to the net value for estate 
tax purposes of all the items described in subdivision 1, as the 
value for estate tax purposes of the items of gross income or 
portions thereof in respect of which such person included the 
amount in gross income (or the amount included in gross income, 
whichever is lower) bears to the value for estate tax purposes 
of all the items described in subdivision 1.  
    (B) [ESTATES AND TRUSTS.] In the case of an estate or 
trust, the amount allowed as a deduction under subparagraph (A) 
of this subdivision shall be computed by excluding from the 
gross income of the estate or trust the portion (if any) of the 
items described in subdivision 1, which is properly paid, 
credited, or to be distributed to the beneficiaries during the 
taxable year. This subparagraph shall apply to the same taxable 
years, and to the same extent, as is provided in section 290.23, 
subdivision 5.  
    (2) [METHOD OF COMPUTING DEDUCTION.] For purposes of 
paragraph (1) of this subdivision 
    (A) The term "estate tax" means the tax imposed on the 
estate of the decedent or any prior decedent under the Internal 
Revenue Code of 1954, as amended through December 31, 1981 
section 2001 or 2101, reduced by the credits against such tax.  
    (B) The net value for estate tax purposes of all the items 
described in subdivision 1, shall be the excess of the value for 
estate tax purposes of all the items described in subdivision 1, 
over the deductions from the gross estate in respect of claims 
which represent the deductions and credit described in 
subdivision 2.  Such net value shall be determined with regard 
to the provisions of section 421(c)(2) of the Internal Revenue 
Code of 1954, as amended through December 31, 1981, relating to 
the deduction for estate tax with respect to restricted stock 
options.  
    (C) The estate tax attributable to such net value shall be 
an amount equal to the excess of the estate tax over the estate 
tax computed without including in the gross estate such net 
value.  
    (3) a deduction for the federal estate tax computed in the 
same manner and in accordance with the method as provided in 
section 691(c)(1), (2), and (4) of the Internal Revenue Code of 
1954, as amended through December 31, 1982.  
     (2) [ALLOWANCE OF DEDUCTION; MINNESOTA INHERITANCE OR 
ESTATE TAX.] (A) [GENERAL RULE.] A person who includes an amount 
in gross income under this section, shall be allowed, for the 
same taxable year, as a deduction an amount which bears the same 
ratio to the inheritance or estate tax attributable to the net 
value for inheritance or estate tax purposes of all the items 
described in subdivision 1, as the value for inheritance or 
estate tax purposes of the items of gross income or portions 
thereof in respect of which such person included the amount in 
gross income (or the amount included in gross income, whichever 
is lower) bears to the value for inheritance or estate tax 
purposes of all the items described in subdivision 1. 
    (B) [ESTATES AND TRUSTS.] In the case of an estate or 
trust, the amount allowed as a deduction under subparagraph (A) 
of this subdivision shall be computed by excluding from the 
gross income of the estate or trust the portion (if any) of the 
items described in subdivision 1, which is properly paid, 
credited, or to be distributed to the beneficiaries during the 
taxable year.  This subparagraph shall apply to the same taxable 
years, and to the same extent as is provided in section 290.23, 
subdivision 5.  
    (4) (3) [METHOD OF COMPUTING DEDUCTION.] For purposes of 
paragraph (3) (2) of this subdivision 
    (A) (i) The term "inheritance tax" means the tax imposed by 
Minnesota on the estates of decedents dying before January 1, 
1980, reduced by the credits against such tax; (ii) The term 
"estate tax" means the tax imposed by Minnesota on the estates 
of decedents dying on or after January 1, 1980, reduced by the 
credits against the tax; (iii) The terms "inheritance tax" or 
"estate tax" also include the tax imposed by other states on the 
estates of decedents reduced by the credits against the tax. 
    (B) The net value for inheritance or estate tax purposes of 
all the items described in subdivision 1, shall be the excess of 
the value for inheritance or estate tax purposes of all the 
items described in subdivision 1, over the deductions from the 
gross inheritance or gross estate in respect of claims which 
represent the deductions and credit described in subdivision 2. 
    (C) (i) The inheritance tax attributable to such net value 
shall be an amount equal to the excess of the inheritance tax 
over the inheritance tax computed without including in the gross 
inheritance such net value; (ii) The estate tax attributable to 
such net value shall be an amount equal to the excess of the 
estate tax over the estate tax computed without including in the 
gross estate the net value. 
    (5) (4) [LUMP SUM DISTRIBUTION ADJUSTMENT.] For purposes of 
section 290.032 (other than the minimum distribution allowance), 
the total taxable amount of any lump sum distribution shall be 
reduced by the amount of the deduction allowable under paragraph 
(1) of this subdivision which is attributable to the total 
taxable amount (determined without regard to this paragraph). 
    Sec. 11.  Minnesota Statutes 1982, section 290.081, is 
amended to read:  
    290.081 [INCOME OF NONRESIDENTS, RECIPROCITY.] 
    (a) The compensation received for the performance of 
personal or professional services within this state by an 
individual who resides and has his place of abode and place to 
which he customarily returns at least once a month in another 
state, shall be excluded from gross income to the extent such 
compensation is subject to an income tax imposed by the state of 
his residence; provided that such state allows a similar 
exclusion of compensation received by residents of Minnesota for 
services performed therein, or 
    (b) Whenever a nonresident taxpayer has become liable for 
income taxes to the state where he resides upon his net income 
for the taxable year derived from the performance of personal or 
professional services within this state and subject to taxation 
under this chapter, there shall be allowed as a credit against 
the amount of income tax payable by him under this chapter, such 
proportion of the tax so paid by him to the state where he 
resides as his gross income subject to taxation under this 
chapter bears to his entire gross income upon which the tax so 
paid to such other state was imposed; provided, that such credit 
shall be allowed only if the laws of such state grant a 
substantially similar credit to residents of this state subject 
to income tax under such laws, or 
    (c) If any taxpayer who is a resident of this state, or a 
domestic corporation or corporation commercially domiciled 
therein, has become liable for taxes on or measured by net 
income to another state or a province or territory of Canada 
upon, if the taxpayer is an individual, or if the taxpayer is an 
athletic team and all of the team's income is apportioned to 
Minnesota, any income, or if it is a corporation, estate, or 
trust, upon income derived from the performance of personal or 
professional services within such other state or province or 
territory of Canada and subject to taxation under this chapter 
he or it shall be entitled to a credit against the amount of 
taxes payable under this chapter, of such proportion thereof, as 
such gross income subject to taxation in such state or province 
or territory of Canada bears to his entire gross income subject 
to taxation under this chapter; provided (1) that such credit 
shall in no event exceed the amount of tax so paid to such other 
state or province or territory of Canada on the gross income 
earned within such other state or province or territory of 
Canada and subject to taxation under this chapter, and (2) that 
such credit shall not be allowed if such other state or province 
or territory of Canada allows residents of this state a credit 
against the taxes imposed by such state or province or territory 
of Canada for taxes payable under this chapter substantially 
similar to the credit provided for by paragraph (b) of this 
section, and (3) the allowance of such credit shall not operate 
to reduce the taxes payable under this chapter to an amount less 
than would have been payable if the gross income earned in such 
other state or province or territory of Canada had been excluded 
in computing net income under this chapter. 
    (d) (c) The commissioner shall by regulation determine with 
respect to gross income earned in any other state the applicable 
clause of this section.  When it is deemed to be in the best 
interests of the people of this state, the commissioner may 
determine that the provisions of clause (a) shall not apply.  As 
long as the provisions of clause (a) apply between Minnesota and 
Wisconsin, the provisions of clause (a) shall apply to any 
individual who is domiciled in Wisconsin.  
    (e) (d) "Tax So Paid" as used in this section means taxes 
on or measured by net income payable to another state or 
province or territory of Canada on income earned within the 
taxable year for which the credit is claimed, provided that such 
tax is actually paid in that taxable year, or subsequent taxable 
years. 
    For purposes of clause (c) (b), where a Minnesota resident 
reported an item of income to Minnesota and is assessed tax in 
another state or a province or territory of Canada on that same 
item of income after the Minnesota statute of limitations has 
expired, the taxpayer shall be allowed to receive a credit for 
that year based on clause (c) (b), notwithstanding the 
provisions of sections 290.49, 290.50, and 290.56.  For purposes 
of the preceding sentence, the burden of proof shall be on the 
taxpayer to show that he is entitled to a credit.  
    (f) (e) For the purposes of clause (a), whenever the 
Wisconsin tax on Minnesota residents which would have been paid 
Wisconsin without clause (a) exceeds the Minnesota tax on 
Wisconsin residents which would have been paid Minnesota without 
clause (a), or vice versa, then the state with the net revenue 
loss resulting from clause (a) shall receive from the other 
state the amount of such loss.  This provision shall be 
effective for all years beginning after December 31, 1972.  The 
data used for computing the loss to either state shall be 
determined on or before September 30 of the year following the 
close of the previous calendar year. 
    Interest shall be payable on all delinquent balances 
relating to taxable years beginning after December 31, 1977.  
The commissioner of revenue is authorized to enter into 
agreements with the state of Wisconsin specifying the 
reciprocity payment due date, conditions constituting 
delinquency, interest rates, and a method for computing interest 
due on any delinquent amounts. 
    If an agreement cannot be reached as to the amount of the 
loss, the commissioner of revenue and the taxing official of the 
state of Wisconsin shall each appoint a member of a board of 
arbitration and these members shall appoint the third member of 
the board.  The board shall select one of its members as 
chairman.  Such board may administer oaths, take testimony, 
subpoena witnesses, and require their attendance, require the 
production of books, papers and documents, and hold hearings at 
such places as are deemed necessary.  The board shall then make 
a determination as to the amount to be paid the other state 
which determination shall be final and conclusive. 
    Notwithstanding the provisions of section 290.61, the 
commissioner may furnish copies of returns, reports, or other 
information to the taxing official of the state of Wisconsin, a 
member of the board of arbitration, or a consultant under joint 
contract with the states of Minnesota and Wisconsin for the 
purpose of making a determination as to the amount to be paid 
the other state under the provisions of this section.  Prior to 
the release of any information under the provisions of this 
section, the person to whom the information is to be released 
shall sign an agreement which provides that he will protect the 
confidentiality of the returns and information revealed thereby 
to the extent that it is protected under the laws of the state 
of Minnesota. 
    Sec. 12.  Minnesota Statutes 1982, section 290.09, 
subdivision 1, is amended to read:  
    Subdivision 1.  [LIMITATIONS.] (a) The following deductions 
from gross income shall be allowed in computing net income, 
provided that any item which was deducted in arriving at gross 
income under the provisions of section 290.01, subdivisions 20 
to 20f, shall not be again deducted under this section. 
    (b) Property taxes may not be deducted under this section 
if 
    (1) The taxes are attributable to a trade or business 
carried on by an individual, or 
    (2) The taxes are expenses for the production of income 
which are paid or incurred by an individual; and which are not 
allowed as a deduction under section 164 of the Internal Revenue 
Code of 1954, as amended through December 31, 1981.  
    (c) Interest and depreciation attributable to rental 
residential property may not be deducted under this section if 
the property does not comply with the requirements of Laws 1982, 
chapter 523, article 7, section 3. 
    Sec. 13.  Minnesota Statutes 1982, section 290.09, 
subdivision 6, is amended to read:  
    Subd. 6.  [BAD DEBTS.] (a) General Rule. 
    (1) Wholly worthless debts.  There shall be allowed as a 
deduction any debt which becomes worthless within the taxable 
year. 
    (2) Partially worthless debts.  When satisfied that a debt 
is recoverable only in part, the commissioner may allow such a 
debt, in an amount not in excess of the part charged off within 
the taxable year, as a deduction. 
    (b) Amount of Deduction.  For purposes of paragraph (a), 
the basis for determining the amount of the deduction for any 
bad debt shall be the adjusted basis provided in this chapter 
for determining the loss from the sale or other disposition of 
property. 
    (c) Reserve for Bad Debts.  In lieu of any deduction under 
paragraph (a), there shall be allowed (in the discretion of the 
commissioner) a deduction for a reasonable addition to a reserve 
for bad debts.  Provided that banks taxable under the provisions 
of section 290.361, which have heretofore in any taxable year 
taken such deductions by the reserve method for federal income 
tax purposes pursuant to the Internal Revenue Code of 1954, as 
amended through December 31, 1981 and regulations adopted 
pursuant thereto may take such deductions by the same method; 
and provided further that each savings, building and loan 
association and mutual savings or cooperative bank may take as a 
reasonable addition to reserve for bad debts such sums as are 
permitted to such organizations for federal income tax purposes, 
for the taxable year, under section 593 of the Internal Revenue 
Code of 1954, as amended through December 31, 1981, but the 
deductions for any such organization for any one year shall not 
exceed the greater of the following: 
    (1) In the case of savings, building and loan associations 
not to exceed 3/10 of one percent of the outstanding share 
capital as of the beginning of the taxable year or ten percent 
of the net earnings of such year before the deduction of 
interest or dividends payable to its members, and 
    (2) In the case of mutual savings or cooperative banks 3/10 
of one percent of the deposits as of the beginning of the 
taxable year or ten percent of the net earnings of such year 
before the deduction of interest or payments to its members 
and/or depositors. 
    (d) Nonbusiness Debts.  
    (1) General Rule.  In the case of a taxpayer other than a 
corporation:  
    (A) Paragraphs (a) and (c) shall not apply to any 
nonbusiness debt;  and 
    (B) Where any nonbusiness debt becomes worthless within the 
taxable year, the loss resulting therefrom shall be considered a 
loss from the sale or exchange, during the taxable year, of a 
capital asset held for not more than one year.  
    (2) For purposes of subparagraph (1), the term "nonbusiness 
debt" means a debt other than:  
    (A) A debt created or acquired (as the case may be) in 
connection with a trade or business of the taxpayer; or 
    (B) A debt the loss from the worthlessness of which is 
incurred in the taxpayer's trade or business.  
    (e) Worthless Securities.  This section shall not apply to 
a debt which is evidenced by a security as defined in 
subdivision 5(g) (2) (C) section 165(g)(2)(C) of the Internal 
Revenue Code of 1954, as amended through December 31, 1982. 
    (f) (e) Guarantor of Certain Noncorporate Obligations 
Reserve for Certain Debt Obligations.  A payment by the taxpayer 
(other than a corporation) in discharge of part or all of his 
obligation as a guarantor, endorser, or indemnitor of a 
noncorporate obligation the proceeds of which were used in the 
trade or business of the borrower shall be treated as a debt 
becoming worthless within such taxable year for purposes of this 
subdivision (except that paragraph (d) shall not apply), but 
only if the obligation of the borrower to the person to whom 
such payment was made was worthless (without regard to such 
guaranty, endorsement, or indemnity) at the time of such payment 
A reserve for certain guaranteed bad debt obligations shall be 
allowed as provided in section 166(f) of the Internal Revenue 
Code of 1954, as amended through December 31, 1982.  
    Sec. 14.  Minnesota Statutes 1982, section 290.09, 
subdivision 29, is amended to read:  
    Subd. 29.  [DEDUCTIONS ATTRIBUTABLE TO FARMING.] (a) 
[DEFINITIONS.] For purposes of this subdivision, income and 
gains and expenses and losses shall be considered as "arising 
from a farm" if such items are received or incurred in 
connection with cultivating the soil, or in connection with 
raising or harvesting any agricultural or horticultural 
commodity, including the raising, shearing, feeding, caring for, 
training, and management of livestock, bees, poultry, and 
fur-bearing animals and wildlife, and all operations incident 
thereto, including but not limited to the common use of 
"hedging". 
    (b) [DEDUCTIONS LIMITED.] Except as provided in this 
subdivision, expenses and losses, except for interest and taxes, 
arising from a farm shall not be allowed as deductions in excess 
of income and gains arising from a farm. 
    (c) [DEDUCTIONS ALLOWED; CARRYOVER DEDUCTIONS.] Expenses 
and losses arising from a farm or farms shall be allowed as 
deductions up to the amount of the income and gains arising from 
a farm or farms in any taxable year, plus the first $15,000 of 
non-farm gross income, or non-farm taxable net income in the 
case of a corporation, provided however that in any case where 
non-farm income exceeds $15,000, the maximum allowable amount of 
$15,000 shall be reduced by twice the amount by which the 
non-farm income exceeds the amount of $15,000.  For this purpose 
and for the purpose of applying the limitation in the following 
paragraph regarding the application of any carryback or 
carryforward, the term gross income shall include the ordinary 
income portion of a lump sum distribution as defined in section 
402(e) of the Internal Revenue Code of 1954, as amended through 
December 31, 1981, and no deduction shall be allowed for 
two-earner married couples as provided in section 221 of the 
Internal Revenue Code of 1954, as amended through December 31, 
1981.  Any remaining balance of the deductions shall be carried 
back three years and carried forward five years, in 
chronological order, provided, however, that in any case in 
which any individual, estate or trust which elects a net 
operating loss carryforward under section 172(b)(3)(C) of the 
Internal Revenue Code of 1954, as amended through December 31, 
1981, such losses shall not be carried back but shall only be 
carried forward. 
    Current expenses and losses shall be utilized as deductions 
in any taxable year, to the extent herein allowable, prior to 
the application of any carryback or carryover deductions.  In 
any event, the combined amounts of such current expenses and 
losses and carryback or carryover deductions shall be allowed as 
deductions up to the amount of the income and gains arising from 
a farm or farms in any taxable year, plus the first $15,000 of 
non-farm gross income, or non-farm taxable net income in the 
case of a corporation, provided however that in any case where 
non-farm income exceeds $15,000, the maximum allowable amount of 
$15,000 shall be reduced by twice the amount by which the 
non-farm income exceeds the amount of $15,000. 
    (d) [SHAREHOLDERS SEPARATE ENTITIES.] For purposes of this 
subdivision, individual shareholders of an electing small 
business corporation shall be considered separate entities. 
    (e) [SPECIAL PERIOD OF LIMITATION WITH RESPECT TO FARM LOSS 
LIMITATION CARRYBACKS.] For the purposes of sections 290.46 and 
290.50, if the claim for refund relates to an overpayment 
attributable to a farm loss limitation carryback under this 
subdivision, in lieu of the period of limitation prescribed in 
sections 290.46 and 290.50, the period of limitation shall be 
that period which ends with the expiration of the 15th day of 
the 46th month (or the 45th month, in the case of a corporation) 
following the end of the taxable year of the farm loss which 
results in the carryback.  During this extended period, married 
individuals who elected to file separate returns or a combined 
return may change their election and file a joint return.  
    (f) [INTEREST ON CLAIMS.] In any case in which a taxpayer 
is entitled to a refund in a carryback year due to the carryback 
of a farm loss, interest shall be computed only from the end of 
the taxable year in which the loss occurs. 
    (g) [ORDER OF APPLICATION.] The application of this 
subdivision shall be made after applying any limitation to out 
of state losses contained in section 290.17.  
    Sec. 15.  Minnesota Statutes 1982, section 290.095, 
subdivision 7, is amended to read:  
    Subd. 7.  [TENTATIVE CARRYBACK ADJUSTMENTS.] (a) 
Application for adjustment.  A taxpayer may file an application 
for a tentative carryback adjustment of the tax for the prior 
taxable year affected by a net operating loss or credit 
carryback, provided for by subdivision 2, from any taxable 
year.  The application shall be duly acknowledged signed and 
verified as provided in section 290.37, subdivision 1, and shall 
be filed on or after the date of filing of the return for the 
taxable year of the net operating loss from which the carryback 
results and within a period of 12 months from the end of such 
taxable year (or with respect to any portion of a credit 
carryback from a taxable year attributable to a loss carryback 
from a subsequent taxable year, the application shall be filed 
within a period of 12 months from the end of the subsequent 
taxable year), in the manner and form required by regulations 
rules prescribed by the commissioner.  The application shall set 
forth in such detail and with such supporting data and 
explanation as such regulations rules shall require: 
    (1) The amount of the net operating loss or credit; 
    (2) The amount of the tax previously determined for the 
prior taxable year affected by such carryback; 
    (3) The amount of decrease in such tax, attributable to 
such carryback, such decrease being determined by applying the 
carryback in the manner provided by law to the items on the 
basis of which such tax was determined; 
    (4) The unpaid amount of such tax; 
    (5) Such other information for purposes of carrying out the 
provisions of this subdivision as may be required by such 
regulations rules. 
    An application under this subdivision shall not constitute 
a claim for credit or refund until 90 days from the date on 
which the application was filed, at which time it will become a 
claim for refund under the provisions of section 290.50. 
    (b) Allowance of adjustments.  Within a period of 90 days 
from the date on which an application for a tentative carryback 
adjustment is filed under (a), or from the last day of the month 
in which falls the last date prescribed by law (including any 
extension of time granted the taxpayer) for filing the return 
for the taxable year of the net operating loss from which such 
carryback results, whichever is the later, the commissioner 
shall make, to the extent he deems practicable in such period a 
limited examination of the application, to discover omissions 
and errors of computation therein, and shall determine the 
amount of the decrease in the tax attributable to such carryback 
upon the basis of the application and the examination, except 
that the commissioner may disallow, without further action, any 
application which he finds contains errors of computation which 
he deems cannot be corrected by him within such 90-day period or 
material omissions.  Such decrease shall be applied against any 
unpaid amount of tax decreased and any remainder shall, within 
such 90-day period, be either credited against any tax or 
installment thereof then due from the taxpayer, or refunded to 
the taxpayer. 
    (c) The provisions of this subdivision shall apply to net 
operating loss carrybacks as provided in subdivision 3 or 11; 
capital loss carrybacks as provided in section 290.16, 
subdivision 6; farm loss carrybacks as provided in section 
290.09, subdivision 29; research credit carrybacks as provided 
in section 290.068, subdivision 3; and to any other carrybacks 
which may be provided in this chapter.  
    Sec. 16.  Minnesota Statutes 1982, section 290.12, 
subdivision 2, is amended to read:  
    Subd. 2.  [ADJUSTMENTS.] In computing the amount of gain or 
loss under subdivision 1 proper adjustment shall be made for any 
expenditure, receipt, loss, or other item properly chargeable to 
capital account by the taxpayer during his ownership thereof.  
The basis shall be diminished by the amount of the deductions 
for exhaustion, wear and tear, obsolescence, amortization, 
depletion, and the allowance for amortization of bond premium if 
an election to amortize was made in accordance with section 
290.09, subdivision 13, which could, during the period of his 
ownership thereof, have been deducted by the taxpayer under this 
chapter in respect of such property.  The basis shall also be 
diminished by the amount of depreciation relating to a 
substandard building disallowed by section 290.101.  In 
addition, if the property was acquired before January 1, 1933, 
the basis, if other than the fair market value as of such date, 
shall be diminished by the amount of exhaustion, wear and tear, 
obsolescence, amortization, or depletion actually sustained 
before such date.  In respect of any period since December 31, 
1932, during which property was held by a person or an 
organization not subject to income taxation under this chapter, 
proper adjustment shall be made for exhaustion, wear and tear, 
obsolescence, amortization, and depletion of such property to 
the extent sustained.  For the purpose of determining the amount 
of these adjustments the taxpayer who sells or otherwise 
disposes of property acquired by gift shall be treated as the 
owner thereof from the time it was acquired by the last 
preceding owner who did not acquire it by gift, and the taxpayer 
who sells or otherwise disposes of property acquired by gift 
through an inter vivos transfer in trust shall be treated as the 
owner from the time it was acquired by the grantor.  The 
adjustments in case of a sale or other disposition of property 
received in a transaction of the kind specified in section 
290.13, subdivision 1, and in the case of a transaction referred 
to in section 290.14, clause (6), shall include those which the 
taxpayer should have been required to make were he selling or 
otherwise disposing of the property exchanged, or sold, in any 
such transaction.  
    No adjustment shall be made: 
    (1) for taxes or other carrying charges described in 
section 290.10, clause (11), or 
    (2) for expenditures described in section 290.09, 
subdivision 16 (relating to circulation expenditures), for which 
deductions have been taken by the taxpayer in determining 
taxable income for the taxable year or prior years. 
    Sec. 17.  Minnesota Statutes 1982, section 290.17, 
subdivision 2, is amended to read:  
    Subd. 2.  [OTHER TAXPAYERS.] In the case of taxpayers not 
subject to the provisions of subdivision 1, items of gross 
income shall be assigned to this state or other states or 
countries in accordance with the following principles: 
    (1) (a) The entire income of all resident or domestic 
taxpayers from compensation for labor or personal services, or 
from a business consisting principally of the performance of 
personal or professional services, shall be assigned to this 
state, and the income of nonresident taxpayers from such sources 
shall be assigned to this state if, and to the extent that, the 
labor or services are performed within it; all other income from 
such sources shall be treated as income from sources without 
this state.  
    (b) In the case of an individual who is a nonresident of 
Minnesota and who is an athlete or entertainer, income from 
compensation for labor or personal services performed within 
this state shall be determined in the following manner.  
    (i) The amount of income to be assigned to Minnesota for an 
individual who is a nonresident salaried athletic team employee 
shall be determined by using a fraction in which the denominator 
contains the total number of days in which the individual is 
under a duty to perform for the employer, and the numerator is 
the total number of those days spent in Minnesota.  In order to 
eliminate the need to file state or provincial income tax 
returns in several states or provinces, Minnesota will exclude 
from income any income assigned to Minnesota under the 
provisions of this clause for a nonresident athlete who is 
employed by an athletic team whose operations are not based in 
this state if the state or province in which the athletic team 
is based provides a similar income exclusion.  If the state or 
province in which the athletic team's operations are based does 
not have an income tax on an individual's personal service 
income, it will be deemed that that state or province has a 
similar income exclusion.  As used in the preceding sentence, 
the term "province" means a province of Canada.  
    (ii) The amount of income to be assigned to Minnesota for 
an individual who is a nonresident, and who is an athlete not 
listed in clause (i), or who is an entertainer, for that 
person's athletic or entertainment performance in Minnesota 
shall be determined by assigning to this state all income from 
performances or athletic contests in this state.  
    (2) Income from the operation of a farm shall be assigned 
to this state if the farm is located within this state and to 
other states only if the farm is not located in this state.  
Income and gains received from tangible property not employed in 
the business of the recipient of such income or gains, and from 
tangible property employed in the business of such recipient if 
such business consists principally of the holding of such 
property and the collection of the income and gains therefrom, 
shall be assigned to this state if such property has a situs 
within it, and to other states only if it has no situs in this 
state.  Income or gains from intangible personal property not 
employed in the business of the recipient of such income or 
gains, and from intangible personal property employed in the 
business of such recipient if such business consists principally 
of the holding of such property and the collection of the income 
and gains therefrom, wherever held, whether in trust, or 
otherwise, shall be assigned to this state if the recipient 
thereof is domiciled within this state; income or gains from 
intangible personal property wherever held, whether in trust or 
otherwise shall be assigned to this state if the recipient of 
such income or gains is domiciled within this state, or if the 
grantor of any trust is domiciled within this state and such 
income or gains would be taxable to such grantor under section 
290.28 or 290.29; or is a resident trust or estate.  
    (3) Income derived from carrying on a trade or business, 
including in the case of a business owned by natural persons the 
income imputable to the owner for his services and the use of 
his property therein, shall be assigned to this state if the 
trade or business is conducted wholly within this state, and to 
other states if conducted wholly without this state.  This 
provision shall not apply to business income subject to the 
provisions of clause (1); 
    (4) When a trade or business is carried on partly within 
and partly without this state, the entire income derived from 
such trade or business, including income from intangible 
property employed in such business and including, in the case of 
a business owned by natural persons, the income imputable to the 
owner for his services and the use of his property therein, 
shall be governed, except as otherwise provided in sections 
290.35 and 290.36, by the provisions of section 290.19, 
notwithstanding any provisions of this section to the contrary.  
This shall not apply to business income subject to the 
provisions of clause (1), nor shall it apply to income from the 
operation of a farm which is subject to the provisions of clause 
(2).  For the purposes of this clause, a trade or business 
located in Minnesota is carried on partly within and partly 
without this state if tangible personal property is sold by such 
trade or business and delivered or shipped to a purchaser 
located outside the state of Minnesota. 
    If the trade or business carried on wholly or partly in 
Minnesota is part of a unitary business, the entire income of 
that unitary business shall be subject to apportionment under 
section 290.19.  The term "unitary business" shall mean a number 
of business activities or operations which are of mutual 
benefit, dependent upon, or contributory to one another, 
individually or as a group.  Unity shall be presumed whenever 
there is unity of ownership, operation, and use, evidenced by 
centralized management or executive force, centralized 
purchasing, advertising, accounting, or other controlled 
interaction.  Unity of ownership will not be deemed to exist 
unless the corporation owns more than 50 percent of the voting 
stock of the other corporation.  
    The entire income of a unitary business, including all 
income from each activity, operation or division, shall be 
subject to apportionment as provided in section 290.19.  None of 
the income of a unitary business shall be considered as derived 
from any particular source and none shall be allocated to any 
particular place except as provided by the applicable 
apportionment formula. 
    In determining whether or not intangible property is 
employed in a unitary business carried on partly within and 
partly without this state so that income derived therefrom is 
subject to apportionment under section 290.19 the following 
rules and guidelines shall apply. 
    (a) Intangible property is employed in a business if the 
business entity owning intangible property holds it as a means 
of furthering the business operation of which a part is located 
within the territorial confines of this state. 
    (b) Where a business operation conducted in Minnesota, is 
owned by a business entity which carries on business activity 
outside of the state different in kind from that conducted 
within this state, and such other business is conducted entirely 
outside the state, it will be presumed that the two business 
operations are unitary in nature, interrelated, connected and 
interdependent unless it can be shown to the contrary. 
    (5) In the case of a nonresident who is liable for payment 
of a penalty for having withdrawn funds from an individual 
housing account established pursuant to section 290.08, 
subdivision 25, the amount so withdrawn and for which a 
deduction was allowed shall be an item of income assignable to 
this state, and the penalty tax of ten percent shall remain an 
additional liability of that taxpayer. 
    (6) For purposes of this section, amounts received by a 
non-resident from the United States, its agencies or 
instrumentalities, the Federal Reserve Bank, the state of 
Minnesota or any of its political or governmental subdivisions, 
or a Minnesota volunteer fireman's relief association, by way of 
payment as a pension, public employee retirement benefit, or any 
combination thereof, or as a retirement or survivor's benefit 
made from a plan qualifying under section 401, 403, 404, 405, 
408, 409 or 409A of the Internal Revenue Code of 1954, as 
amended through December 31, 1981, are not considered income 
derived from carrying on a trade or business or from performing 
personal or professional services in Minnesota, and are not 
taxable under this chapter. 
    (7) All other items of gross income shall be assigned to 
the taxpayer's domicile. 
    Sec. 18.  Minnesota Statutes 1982, section 290.21, 
subdivision 4, is amended to read:  
    Subd. 4.  (a) 85 percent of dividends received by a 
corporation during the taxable year from another corporation, 
when the corporate stock with respect to which dividends are 
paid does not constitute the stock in trade of the taxpayer or 
would not be included in the inventory of the taxpayer, or does 
not constitute property held by the taxpayer primarily for sale 
to customers in the ordinary course of his trade or business, or 
when the trade or business of the taxpayer does not consist 
principally of the holding of the stocks and the collection of 
the income and gains therefrom.  The remaining 15 percent shall 
be allowed if the recipient owns 80 percent or more of all the 
voting stock of such other corporation, and the dividends were 
paid from income arising out of business done in this state by 
the corporation paying such dividends; but if the income out of 
which the dividends are declared was derived from business done 
within and without this state, then so much of the remainder 
shall be allowed as a deduction as the amount of the taxable net 
income of the corporation paying the dividends assignable or 
allocable to this state bears to the entire net income of the 
corporation, such rate being determined by the returns under 
this chapter of the corporation paying such dividends for the 
taxable year preceding the distribution thereof; the burden 
shall be on the taxpayer of showing that the amount of remainder 
claimed as a deduction has been received from income arising out 
of business done in this state, 
    (b) if the trade or business of the taxpayer consists 
principally of the holding of the stocks and the collection of 
the income and gains therefrom, dividends received by a 
corporation during the taxable year from another corporation, if 
the recipient owns 80 percent or more of all the voting stock of 
such other corporation, from income arising out of business done 
in this state by the corporation paying such dividends; but, if 
the income out of which the dividends are declared was derived 
from business done within and without this state, then so much 
of the dividends shall be allowed as deduction as the amount of 
the taxable net income of the corporation paying the dividends 
assignable or allocable to this state bears to the entire net 
income of the corporation, such rate being determined by the 
returns under this chapter of the corporation paying such 
dividends for the taxable year preceding the distribution 
thereof.  The burden shall be on the taxpayer of showing that 
the amount of dividends claimed as a deduction has been received 
from income arising out of business done in this state. 
    (c) The dividend deduction provided in this subdivision 
shall be allowed only with respect to dividends that are 
included in a corporation's Minnesota taxable net income for the 
taxable year. 
     The dividend deduction provided in this subdivision does 
not apply to a dividend from a corporation which, for the 
taxable year of the corporation in which the distribution is 
made or for the next preceding taxable year of the corporation, 
is a corporation exempt from tax under section 501 of the 
Internal Revenue Code of 1954, as amended through December 31, 
1982.  
     The dividend deduction provided in this subdivision applies 
to the amount of regulated investment company dividends only to 
the extent determined under section 854(b) of the Internal 
Revenue Code of 1954, as amended through December 31, 1982.  
    (d) If dividends received by a corporation that does not 
have nexus with Minnesota under the provisions of Public Law 
86-272 are included as income on the return of an affiliated 
corporation permitted or required to file a combined report 
under section 290.34, subdivision 2, then for purposes of this 
subdivision the determination as to whether the trade or 
business of the corporation consists principally of the holding 
of stocks and the collection of income and gains therefrom shall 
be made with reference to the trade or business of the 
affiliated corporation having a nexus with Minnesota.  
    Sec. 19.  Minnesota Statutes 1982, section 290.26, 
subdivision 2, is amended to read:  
    Subd. 2.  [EMPLOYER CONTRIBUTIONS.] Contributions of an 
employer to an employee's trust or, annuity plan, or to an 
employee's stock ownership trust and compensation under a 
deferred-payment plan or to a simplified employee pension shall 
be allowed as a deduction in accordance with the provisions of 
Section 404 or 408(k) of the Internal Revenue Code of 1954, as 
amended through December 31, 1981 as adapted to the provisions 
of this chapter under rules issued by the commissioner of 
revenue. 
    Sec. 20.  Minnesota Statutes 1982, section 290.39, 
subdivision 1, is amended to read:  
    Subdivision 1.  [IN GENERAL.] Every return shall 
specifically set forth the items of gross income, deductions, 
credits against the tax, and any other data necessary for 
computing the amount of any item required for determining the 
amount of the net income tax liability.  The return shall be in 
such form as the commissioner of revenue may prescribe.  The 
filing of a return required under this section shall be deemed 
an assessment subject to revision of the tax shown due on the 
basis of such return. 
    In the event a taxpayer files a return which does not 
contain all the information required by this subdivision, or if 
the taxpayer fails to file a return or amended return, the 
commissioner may, in addition to any other remedies which may be 
available, bring an action in equity by the state against the 
taxpayer for an injunction ordering the taxpayer to file a 
complete and proper return in accordance with this subdivision.  
The district courts of this state shall have jurisdiction over 
the action and disobedience of an injunction issued under this 
subdivision shall be punished as a contempt of district court.  
    Sec. 21.  Minnesota Statutes 1982, section 290.49, 
subdivision 8, is amended to read:  
    Subd. 8.  [CONSENT TO EXTEND TIME.] Where before the 
expiration of the time prescribed in subdivisions 1 and 2 for 
the assessment of the tax, the commissioner and the taxpayer 
consent in writing to an extension of time for the assessment of 
the tax, the tax may be assessed at any time prior to the 
expiration of the period agreed upon.  The period so agreed upon 
may be extended by subsequent agreements in writing made before 
the expiration of the period previously agreed upon.  The period 
provided for the carryback of any amount of loss or credit is 
also extended as provided in the agreement, notwithstanding any 
other law to the contrary.  
    Sec. 22.  Minnesota Statutes 1982, section 290.50, 
subdivision 1, is amended to read:  
    Subdivision 1.  [PROCEDURE, TIME LIMIT.] (a) A taxpayer who 
has paid or from whom there has been collected an amount of tax 
for any year in excess of the amount legally due for that year, 
may file with the commissioner a claim for a refund of such 
excess.  Except as otherwise provided in this section, no claim 
or refund shall be allowed or made after three and one-half 
years from the date prescribed for filing the return (plus any 
extension of time granted for filing the return, but only if 
filed within the extended time) or after two years from the date 
of overpayment, whichever period is longer, unless before the 
expiration of the period a claim is filed by the taxpayer.  For 
this purpose an income tax return or amended return claiming an 
overpayment shall constitute a claim for refund. 
    (b) If no claim was filed, the credit or refund shall not 
exceed the amount which would be allowable if a claim was filed 
on the date the credit or refund is allowed. 
    (c) If a claim relates to an overpayment on account of a 
failure to deduct a loss due to a bad debt or to a security 
becoming worthless, the claim shall be allowed if filed within 
seven years from the date prescribed in section 290.42 for the 
filing of the return, and the refund or credit shall be limited 
to the amount of overpayment attributable to the loss. 
    (d) For purposes of this section, the prepayment of tax 
made through the withholding of tax at the source, or payment of 
estimated tax, prior to the due date of the tax are considered 
as having been paid on the last day prescribed by law for the 
payment of the tax by the taxpayer.  A return filed before the 
due date shall be considered as filed on the due date. 
    (e) Except as provided in sections 290.92, subdivision 13, 
290.93, subdivision 9, and 290.936, interest on the overpayment 
refunded or credited to the taxpayer shall be allowed at the 
rate of six percent per annum computed from the date of payment 
of the tax until the date the refund is paid or credit is made 
to the taxpayer.  However, to the extent that the basis for the 
refund is a net operating loss carryback or a capital loss 
carryback, interest shall be computed only from the end of the 
taxable year in which the loss occurs. 
    (f) If a taxpayer reports a change in his federal gross 
income, items of tax preference, deductions, credits, or a 
renegotiation, or files a copy of his amended federal return, 
within 90 days as provided by section 290.56, subdivision 2, a 
refund may be made of any overpayment within one year after such 
report or amended return is filed except as provided in 
subdivision 2. 
    (g) There is hereby appropriated from the general fund to 
the commissioner of revenue the amounts necessary to make 
payments of refunds allowed pursuant to this section. 
    Sec. 23.  Minnesota Statutes 1982, section 290.50, 
subdivision 5, is amended to read:  
    Subd. 5.  [OVERPAYMENTS; CREDITS AND REFUNDS.] (a) If the 
amount allowable as a credit under section 290.92, subdivision 
12 (relating to credit for tax withheld at source) or an amount 
determined to be an overpayment under section 290.93, 
subdivision 9, or 290.936 exceeds the taxes imposed by this 
chapter against which such credit is allowable the amount of 
such excess shall be considered an overpayment.  An amount paid 
as tax shall constitute an overpayment even if in fact there was 
no tax liability with respect to which such amount was paid. 
    (b) Notwithstanding any other provision of law to the 
contrary, in the case of any overpayment the commissioner, 
within the applicable period of limitations, may credit the 
amount of such overpayment against any liability in respect of 
Minnesota income tax on the part of the person who made the 
overpayment or against any liability in respect to Minnesota 
income tax on the part of either spouse who shall have filed a 
joint or combined return for the taxable year in which the 
overpayment was made and shall refund any balance of more than 
one dollar to such person if the taxpayer shall so request. 
    The commissioner is authorized to prescribe regulations 
rules providing for the crediting against the estimated income 
tax for any taxable year of the amount determined by the 
commissioner to be an overpayment of the income tax for a 
preceding taxable year. 
    Sec. 24.  Minnesota Statutes 1982, section 290.53, 
subdivision 3a, is amended to read:  
    Subd. 3a.  [INTENTIONAL DISREGARD OF LAW OR RULES AND 
REGULATIONS.] If any part of any additional assessment is due to 
negligence or intentional disregard of the provisions of this 
chapter or rules and regulations of the commissioner of revenue 
(but without intent to defraud), there shall be added to the tax 
an amount equal to five percent of such additional assessment.  
The amount of the tax together with this amount shall bear 
interest at the rate specified in section 270.75 from the time 
the tax should have been paid until paid.  
    Sec. 25.  Minnesota Statutes 1982, section 290.53, is 
amended by adding a subdivision to read:  
    Subd. 8.  [INTEREST ON PENALTIES.] Where it is not 
specifically provided that a penalty contained in this chapter 
or chapter 290A will accrue interest, interest at the rate 
specified in section 270.75 will be added to any penalty from 
the date the penalty should have been paid, until paid.  
    Sec. 26.  Minnesota Statutes 1982, section 290.531, is 
amended to read:  
    290.531 [PAYMENT OF TAX PENDING APPEAL.] 
    When a taxpayer appeals his tax any liability assessed 
under this chapter to the tax court, and the amount in dispute 
is more than $4,000 $6,000, the entire amount of the tax, 
penalty, and interest assessed by the commissioner shall be paid 
at the time it is due unless permission to continue prosecution 
of the petition without payment is obtained as provided herein.  
The petitioner, upon ten days notice to the commissioner, may 
apply to the court for permission to continue prosecution of the 
petition without payment; and, if it is made to appear 
    (1) That the proposed review is to be taken in good faith;  
    (2) That there is probable cause to believe that the 
taxpayer may be held exempt from the tax liability or that the 
tax liability may be determined to be less than 50 percent of 
the amount due; and 
    (3) That it would work a substantial hardship upon 
petitioner to pay the tax liability, 
    the court may permit the petitioner to continue prosecution 
of the petition without payment, or may fix a lesser amount to 
be paid as a condition of continuing the prosecution of the 
petition.  
    Failure to make payment of the amount required when due 
shall operate automatically to dismiss the petition and all 
proceedings thereunder unless the payment is waived by an order 
of the court permitting the petitioner to continue prosecution 
of the petition without payment.  
    Sec. 27.  Minnesota Statutes 1982, section 290.92, 
subdivision 5a, is amended to read:  
    Subd. 5a.  [VERIFICATION OF WITHHOLDING EXEMPTIONS; 
APPEAL.] (1) An employer shall submit to the commissioner a copy 
of any withholding exemption certificate received from an 
employee on which the employee claims any of the following:  
    (a) a total number of withholding exemptions in excess of 
14 or a number prescribed by the commissioner, or 
    (b) a status that would exempt the employee from Minnesota 
withholding, including where the employee is a nonresident 
exempt from withholding under subdivision 4a, clause (3), or 
except where the employer reasonably expects, at the time that 
the certificate is received, that the employee's wages under 
subdivision 1 from the employer will not then usually exceed 
$200 per week, or 
    (c) any number of withholding exemptions which the employer 
has reason to believe is in excess of the number to which the 
employee is entitled.  
    (2) Copies of exemption certificates required to be 
submitted by clause (1) shall be submitted to the commissioner 
within 30 days after receipt by the employer unless the employer 
is also required by federal law to submit copies to the Internal 
Revenue Service, in which case the employer may elect to submit 
the copies to the commissioner at the same time that he is 
required to submit them to the Internal Revenue Service.  
    (3) An employer who submits a copy of a withholding 
exemption certificate in accordance with clause (1) shall honor 
the certificate until notified by the commissioner that the 
certificate is invalid.  The commissioner shall mail a copy of 
any such notice to the employee.  Upon notification that a 
particular certificate is invalid, the employer shall not honor 
that certificate or any subsequent certificate unless instructed 
to do so by the commissioner.  The employer shall allow the 
employee the number of exemptions and compute the withholding 
tax as instructed by the commissioner in accordance with clause 
(4).  
    (4) The commissioner may require an employee to verify that 
he or she is entitled to the number of exemptions or to the 
exempt status claimed on the withholding exemption certificate 
or, that he or she is a nonresident.  The employee shall be 
allowed at least 30 days to submit the verification, after which 
time the commissioner shall, on the basis of the best 
information available to him, determine the employee's status 
and allow the employee the maximum number of withholding 
exemptions allowable under this chapter.  The commissioner shall 
mail a notice of this determination to the employee at the 
address listed on the exemption certificate in question.  
Notwithstanding the provisions of section 290.61, the 
commissioner may notify the employer of this determination and 
instruct the employer to withhold tax in accordance with the 
determination.  
    (5) The commissioner's determination under clause (4) shall 
be appealable to tax court in accordance with section 271.06, 
and shall remain in effect for withholding tax purposes pending 
disposition of any appeal.  
    Sec. 28.  Minnesota Statutes 1982, section 290A.03, 
subdivision 13, is amended to read:  
    Subd. 13.  [PROPERTY TAXES PAYABLE.] "Property taxes 
payable" means the property tax exclusive of special 
assessments, penalties, and interest payable on a claimant's 
homestead before reductions made pursuant to section 273.13, 
subdivisions 6, 7 and 14a, but after deductions made pursuant to 
sections 124.2137, 273.115, 273.116, 273.135, 273.139, and 
273.1391, 273.42, subdivision 2, and any other state paid 
property tax credits in any calendar year.  No apportionment or 
reduction of the "property taxes payable" shall be required for 
the use of a portion of the claimant's homestead for a business 
purpose if the claimant does not deduct any business 
depreciation expenses for the use of a portion of the homestead 
in the determination of federal adjusted gross income.  For 
homesteads which are manufactured homes as defined in section 
168.011, subdivision 8, "property taxes payable" shall also 
include 23 percent of gross rent paid in the preceding year for 
the site on which the homestead is located, exclusive of charges 
for utilities or services.  When a homestead is owned by two or 
more persons as joint tenants or tenants in common, such tenants 
shall determine between them which tenant may claim the property 
taxes payable on the homestead.  If they are unable to agree, 
the matter shall be referred to the commissioner of revenue and 
his decision shall be final.  Property taxes are considered 
payable in the year prescribed by law for payment of the taxes. 
    In the case of a claim relating to "property taxes 
payable", the claimant must have owned and occupied the 
homestead on January 2 of the year in which the tax is payable 
and (i) the property must have been classified as homestead 
property pursuant to section 273.13, subdivisions 6, 7, or 14a 
on or before June 1 of the year in which the "property taxes 
payable" were levied; or (ii) the claimant must provide 
documentation from the local assessor that application for 
homestead classification has been made prior to July 1 of the 
year in which the "property taxes payable" were payable and that 
the assessor has approved the application.  
    For property taxes levied in 1981, payable 1982, "property 
taxes payable" shall be limited to that portion of the property 
taxes eligible for the homestead credit as determined pursuant 
to section 273.13, subdivision 15b.  
    Sec. 29.  Minnesota Statutes 1982, section 290A.04, 
subdivision 3, is amended to read:  
    Subd. 3.  The commissioner of revenue shall construct and 
make available to taxpayers a comprehensive table showing the 
property taxes to be paid and credit allowed at various levels 
of income and assessment.  The table shall follow the schedule 
of income percentages, maximums and other provisions specified 
in subdivisions 2, 2a, and 2b, except that the commissioner may 
graduate the transition between income brackets.  All refunds 
shall be computed in accordance with tables prepared and issued 
by the commissioner of revenue.  
    For homestead property owners who are disabled or are 65 or 
older, as provided in subdivision 1, the commissioner shall base 
his determination of the credit on the gross qualifying tax 
reduced by the average statewide effective homestead credit 
percentage for taxes payable in 1975 calculated under section 
273.13, subdivisions 6 and 7. 
    Sec. 30.  Minnesota Statutes 1982, section 290A.111, 
subdivision 2, is amended to read:  
    Subd. 2.  [ADJUDICATION AND DECREES.] In any action under 
subdivision 1, if the court finds:  
    (a) that a property tax refund return preparer has:  
    (1) engaged in any conduct subject to the criminal penalty 
provided by section 290A.11, subdivision 2, or subject to the 
civil penalty under section 290A.112, 
    (2) misrepresented his eligibility to practice before the 
department of revenue, or otherwise misrepresented his 
experience or education as a property tax refund return 
preparer, 
    (3) guaranteed the payment of any property tax refund or 
the allowance of any property tax refund credit against income 
tax, 
    (4) engaged in any other fraudulent or deceptive conduct 
which substantially interferes with the proper administration of 
the provisions of this chapter, 
    the court may decree appropriate injunctive relief pursuant 
to the authority granted in section 290.521, subdivision 2.  
    Sec. 31.  Minnesota Statutes 1982, section 290A.112, 
subdivision 2, is amended to read:  
    Subd. 2.  [OVERSTATEMENT OF CLAIM DEFINED.] For purposes of 
this section, the term "overstatement of claim" means any 
overstatement of the net amount refundable, or the net amount 
creditable against income tax, with respect to any claim for 
property tax relief provided by this chapter.  The determination 
of whether or not there is an overstatement of a claim shall be 
made without regard to any administrative or judicial action 
involving the claimant.  
    Sec. 32.  Laws 1981, Third Special Session chapter 2, 
article IV, section 14, is amended to read:  
    Sec. 14.  [PROPERTY TAX REFUND REDUCTION.] 
    For claims filed in 1982 based upon rent paid in 1981, the 
commissioner of revenue shall pay 92 percent of the credits 
allowable under section 290A.04, subdivisions 1, 2, and 2a.  For 
purposes of this section, the commissioner shall not reduce the 
property tax refund of a claimant who is disabled or who had 
attained the age of 65 by June 1 of the year in which the 
property taxes were payable.  The commissioner shall include 
with each refund a statement that the reduction is made pursuant 
to this section.  
    Sec. 33.  [REPEALER.] 
    (a) Minnesota Statutes 1982, sections 290.01, subdivision 
25; 290.07, subdivision 5a; 290.071, subdivisions 2, 3, 4, and 
6; 290.26, subdivision 2a; 290.34, subdivision 3; 290.48, 
subdivision 6, are repealed.  
    (b) Minnesota Statutes 1982, section 290A.04, subdivision 
2c, is repealed.  
    (c) Minnesota Statutes 1982, section 290A.04, subdivision 
2d, is repealed.  
    (d) Minnesota Statutes 1982, section 136A.235, is repealed. 
    Sec. 34.  [EFFECTIVE DATE.] 
    Sections 1, 2, 14, 20, 21, 22, 23, 24, 25, 26, 27, 30, 31, 
and 33, clause (d) are effective the day after final enactment. 
Sections 3, 9, 10, 11, 12, 13, 16, 17, 18, 19, and 33, clause 
(a) are effective for taxable years beginning after December 31, 
1982.  Sections 4, 6, 7, and 8 are effective for taxable years 
beginning after December 31, 1981.  Section 5 is effective for 
taxable years beginning after December 31, 1980.  Section 15 is 
effective for applications filed after the date of final 
enactment.  Section 33, clause (c) is effective July 1, 1983. 
Sections 28, 29, and 33, clause (b) are effective for claims 
based on rent paid in 1982 and subsequent years and property 
taxes payable in 1983 and subsequent years.  Section 32 is 
effective on December 31, 1982. 
    Approved March 30, 1983