Minnesota Session Laws - 1983, Regular Session

  

                         Laws of Minnesota 1983 

                        CHAPTER 180--H.F.No. 223
           An act relating to taxation; authorizing the 
          assessment of personal liability of corporate or 
          partnership officers or employees; deleting obsolete 
          references; clarifying that administrative subpoenas 
          are enforced in the judicial district where the party 
          served is located; providing that tax liens include 
          certain costs; providing for the filing of liens and 
          the transcription of liens to other counties; 
          eliminating the requirement of notification to 
          commissioner of foreclosure in certain instances; 
          providing for the assessment of taxes; providing time 
          limitations for court proceedings to collect certain 
          taxes; providing for a suspension of certain time 
          limitations in bankruptcy cases; clarifying the 
          classification of tax claims in estates; providing a 
          bond requirement to secure withholding taxes; 
          providing for payment of withholding taxes by 
          contractors and certain subcontractors prior to final 
          contract settlement; amending Minnesota Statutes 1982, 
          sections 270.06; 270.10, by adding a subdivision; 
          270.69, subdivisions 1, 4, 7, and by adding a 
          subdivision; 270.70, subdivisions 1, 10, and 14; 
          290.49, subdivision 6; 290.58; 290.92, subdivisions 6 
          and 6a; 290.97; 297A.34, subdivisions 4, 5, and by 
          adding a subdivision; 297A.42, subdivision 2; and 
          524.3-805. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1982, section 270.06, is 
amended to read: 
    270.06 [POWERS AND DUTIES.] 
    It shall be the duty of the commissioner of revenue and he 
shall have power and authority: 
    (1) To have and exercise general supervision over the 
administration of the assessment and taxation laws of the state, 
over assessors, town, county, and city boards of review and 
equalization, and all other assessing officers in the 
performance of their duties, to the end that all assessments of 
property be made relatively just and equal in compliance with 
the laws of the state; 
     (2) To confer with, advise and give the necessary 
instructions and directions to local assessors and local boards 
of review throughout the state as to their duties under the laws 
of the state; 
     (3) To direct proceedings, actions, and prosecutions to be 
instituted to enforce the laws relating to the liability and 
punishment of public officers and officers and agents of 
corporations for failure or negligence to comply with the 
provisions of the laws of this state governing returns of 
assessment and taxation of property, and to cause complaints to 
be made against local assessors, members of boards of 
equalization, members of boards of review, or any other 
assessing or taxing officer, to the proper authority, for their 
removal from office for misconduct or negligence of duty; 
     (4) To require county attorneys to assist in the 
commencement of prosecutions in actions or proceedings for 
removal, forfeiture and punishment for violation of the laws of 
this state in respect to the assessment and taxation of property 
in their respective districts or counties; 
     (5) To require town, city, county, and other public 
officers to report information as to the assessment of property, 
collection of taxes received from licenses and other sources, 
and such other information as may be needful in the work of the 
department of revenue, in such form and upon such blanks as he 
may prescribe; 
     (6) To require individuals, copartnerships, companies, 
associations, and corporations to furnish information concerning 
their capital, funded or other debt, current assets and 
liabilities, earnings, operating expenses, taxes, as well as all 
other statements now required by law for taxation purposes; 
     (7) To summon witnesses to appear and give testimony, and 
to produce books, records, papers and documents relating to any 
tax matter which he may have authority to investigate or 
determine.  Provided, that any summons which does not identify 
the person or persons with respect to whose tax liability the 
summons is issued may be served only if (a) the summons relates 
to the investigation of a particular person or ascertainable 
group or class of persons, (b) there is a reasonable basis for 
believing that such person or group or class of persons may fail 
or may have failed to comply with any tax law administered by 
the commissioner, (c) the information sought to be obtained from 
the examination of the records (and the identity of the person 
or persons with respect to whose liability the summons is 
issued) is not readily available from other sources, (d) the 
summons is clear and specific as to the information sought to be 
obtained, and (e) the information sought to be obtained is 
limited solely to the scope of the investigation.  Provided 
further that the party served with a summons which does not 
identify the person or persons with respect to whose tax 
liability the summons is issued shall have the right, within 20 
days after service of the summons, to petition the district 
court for the judicial district in which lies the county in 
which the summons is served that party is located for a 
determination as to whether the commissioner of revenue has 
complied with all the requirements in (a) to (e), and thus, 
whether the summons is enforceable.  If no such petition is made 
by the party served within the time prescribed, the summons 
shall have the force and effect of a court order; 
    (8) To cause the deposition of witnesses residing within or 
without the state, or absent therefrom, to be taken, upon notice 
to the interested party, if any, in like manner that depositions 
of witnesses are taken in civil actions in the district court, 
in any matter which he may have authority to investigate or 
determine; 
    (9) To investigate the tax laws of other states and 
countries and to formulate and submit to the legislature such 
legislation as he may deem expedient to prevent evasions of 
assessment and taxing laws, and to secure just and equal 
taxation and improvement in the system of assessment and 
taxation in this state; 
    (10) To consult and confer with the governor upon the 
subject of taxation, the administration of the laws in regard 
thereto, and the progress of the work of the department of 
revenue, and to furnish the governor, from time to time, such 
assistance and information as he may require relating to tax 
matters; 
     (11) To transmit to the governor, on or before the third 
Monday in December of each even-numbered year, and to each 
member of the legislature, on or before November 15 of each even 
numbered year, the report of the department of revenue for the 
preceding years, showing all the taxable property in the state 
and the value of the same, in tabulated form; 
     (12) To inquire into the methods of assessment and taxation 
and ascertain whether the assessors faithfully discharge their 
duties, particularly as to their compliance with the laws 
requiring the assessment of all property not exempt from 
taxation; 
     (13) To exercise and perform such further powers and duties 
as may be required or imposed upon the commissioner of revenue 
by law; 
    (14) The commissioner of revenue may promulgate rules and 
regulations for the administration and enforcement of the 
property tax.  Such rules and regulations shall have the force 
and effect of law; 
    (15) To execute and administer any agreement with the 
secretary of the treasury of the United States regarding the 
exchange of information and administration of the tax laws of 
both the United States and the state of Minnesota; 
    (16) To administer and enforce the provisions of sections 
325.64 to 325.76, the Minnesota unfair cigarette sales act.  
     Sec. 2.  Minnesota Statutes 1982, section 270.10, is 
amended by adding a subdivision to read: 
     Subd. 4.  [ORDERS ASSESSING PERSONAL LIABILITY.] The 
commissioner may, based upon information available to him and 
within the prescribed period of limitations for assessing the 
underlying tax, assess personal liability against any officer, 
director, or employee of a corporation, or a member or employee 
of a partnership, who as an officer, director, employee, or 
member, falls within the personal liability provisions of 
section 290.92, chapter 296, or chapter 297A, for taxes arising 
thereunder which are due and owing by that corporation or 
partnership.  An order assessing personal liability under this 
subdivision shall be appealable to the tax court without payment 
of the tax, penalty, or interest in the manner provided by law, 
but an appeal shall not preclude the commissioner from 
exercising any collection action he deems necessary to preserve 
the interests of the state while the matter is pending.  
     Sec. 3.  Minnesota Statutes 1982, section 270.69, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CREATION OF LIEN.] The tax imposed by any 
chapter administered by the commissioner of revenue, and 
interest and penalties imposed with respect thereto, including 
any recording fees, sheriff fees, or court costs that may 
accrue, shall become a lien upon all the property within this 
state, both real and personal, of the person liable for the 
payment or collection of the tax, except his homestead, from and 
after the filing by the commissioner of a notice of lien in the 
office of the county recorder of the county in which the 
property is situated, or in the case of personal property 
belonging to an individual who is not a resident of this state, 
or which is a corporation, partnership, or other organization, 
in the office of the secretary of state.  
     Sec. 4.  Minnesota Statutes 1982, section 270.69, 
subdivision 4, is amended to read: 
    Subd. 4.  [PERIOD OF LIMITATIONS.] The lien imposed by this 
section shall, notwithstanding any other provision of law to the 
contrary, be valid and enforceable for ten years from the date 
of filing the notice of lien, which must be filed by the 
commissioner within five years after the tax should have been 
paid or the return is filed, whichever is later.  A notice of 
lien filed in one county may be transcribed to any other county 
within ten years after the date of its filing, but the 
transcription shall not extend the period during which the lien 
is enforceable. 
     Sec. 5.  Minnesota Statutes 1982, section 270.69, 
subdivision 7, is amended to read: 
    Subd. 7.  [NOTICE OF MORTGAGE FORECLOSURE OR CONTRACT 
TERMINATION.] If a lien has been filed by the commissioner of 
revenue against real property pursuant to this section, and, 
subsequent to the recording of the lien, a mortgage foreclosure 
upon the real property is commenced under chapter 580, or a 
termination of contract of sale of the real property is 
commenced under section 559.21, notice of the mortgage 
foreclosure or termination of contract of sale shall be mailed 
to the commissioner not less than 25 days prior to the 
foreclosure or termination.  Provided, notice need not be given 
pursuant to this subdivision if the lien of the commissioner has 
been filed within 30 days or less prior to the foreclosure or 
termination.  The contents of the notice shall be as prescribed 
in section 7425(c)(1) of the Internal Revenue Code of 1954, as 
amended through December 31, 1982.  
    Sec. 6.  Minnesota Statutes 1982, section 270.69, is 
amended by adding a subdivision to read: 
     Subd. 8.  [FILING ENTITLEMENT.] Execution of notices of 
liens or of other notices affecting state tax liens by the 
commissioner of revenue or his delegate entitles them to be 
filed, and no other attestation, certification, or 
acknowledgement is necessary.  
    Sec. 7.  Minnesota Statutes 1982, section 270.70, 
subdivision 1, is amended to read: 
    Subdivision 1.  [AUTHORITY OF COMMISSIONER.] If any tax 
payable to the commissioner of revenue or to the department of 
revenue is not paid when due, such tax may be collected by the 
commissioner of revenue within five years after the tax should 
have been paid or the return is filed, whichever is later, or if 
the tax judgment has been filed, within the statutory period of 
enforcement of a valid tax judgment, by a levy upon all property 
and rights to property of the person liable for the payment or 
collection of such tax (except that which is exempt from 
execution pursuant to section 550.37) or property on which there 
is a lien provided in section 270.69.  For this purpose, the 
term "tax" shall include any penalty, interest and costs 
properly payable.  The term "levy" includes the power of 
distraint and seizure by any means.  
     Sec. 8.  Minnesota Statutes 1982, section 270.70, 
subdivision 10, is amended to read: 
    Subd. 10.  [PERSON DEFINED.] The term "person" as used in 
subdivision 8 includes an officer or employee of a corporation 
or a member or employee of a partnership who, as such officer, 
employee or member is under a duty to surrender the property or 
rights to property or to discharge the obligation.  The personal 
liability imposed by subdivision 8 and the penalty imposed by 
subdivision 9 may, after demand to honor a levy has been made, 
be assessed by the commissioner within 60 days after service of 
the levy.  An assessing tax order under this subdivision shall 
be appealable to the tax court without payment of the tax, 
penalty, or interest in the manner provided by law, but an 
appeal shall not preclude the commissioner from exercising any 
collection action he deems necessary to preserve the interests 
of the state while the matter is pending.  
     Sec. 9.  Minnesota Statutes 1982, section 270.70, 
subdivision 14, is amended to read:  
    Subd. 14.  [PRIORITY OF LEVY.] Notwithstanding section 
52.12, a levy by the commissioner made pursuant to the 
provisions of this section upon a taxpayer's funds on deposit in 
a financial institution located in this state, shall have 
priority over any unexercised right of setoff of the financial 
institution to apply the levied funds toward the balance of an 
outstanding loan or loans owed by the taxpayer to the financial 
institution.  A claim by the financial institution that it 
exercised its right to setoff prior to the levy by the 
commissioner must be substantiated by evidence of the date of 
the setoff, and shall be verified by the sworn statement of a 
responsible corporate officer of the financial institution.  
Furthermore, for purposes of determining the priority of any 
levy made under this section, the levy shall be treated as if it 
were an execution made pursuant to chapter 550. 
     Sec. 10.  Minnesota Statutes 1982, section 290.49, 
subdivision 6, is amended to read: 
    Subd. 6.  [NO RETURN OR FALSE OR FRAUDULENT RETURN.] When a 
taxpayer files a false or fraudulent return with intent to evade 
tax or when a taxpayer fails to file a return the tax may be 
assessed, and a proceeding in court for the collection of such 
tax may be begun at any time, and a proceeding in court for the 
collection of the tax must be begun within five years after the 
assessment. 
     Sec. 11.  Minnesota Statutes 1982, section 290.58, is 
amended to read: 
    290.58 [EXAMINERS, POWERS OF.] 
    Such income tax examiners, whether appointed by the 
commissioner or by the legislative auditor, shall have all the 
rights and powers with reference to the examining of books, 
records, papers, or memoranda, and with reference to the 
subpoenaing of witnesses, administering of oaths and 
affirmations, and taking of testimony conferred upon the 
commissioner by this chapter.  The clerk of any court of record, 
or any justice of the peace, upon demand of any such examiner, 
shall issue a subpoena for the attendance of any witness or the 
production of any books, papers, records, or memoranda before 
such examiner.  The commissioner may also issue such subpoenas 
for the appearance of witnesses before him or before such 
examiners.  The commissioner may appoint such referees as he 
deems necessary to review, singly or as a board of review, the 
reports of the income tax examiners and petitions or complaints 
of taxpayers, and report thereon to the commissioner.  
Disobedience of subpoenas issued under this chapter shall be 
punished by the district court of the district in which the 
subpoena is issued, or in the case of a subpoena issued by the 
commissioner, by the district court of the district in which the 
party served with the subpoena is located, as for a contempt of 
the district court.  
    Sec. 12.  Minnesota Statutes 1982, section 290.92, 
subdivision 6, is amended to read: 
    Subd. 6.  [RETURNS, DEPOSITS.] (1) (a) [RETURNS.] Every 
employer who is required to deduct and withhold tax under 
subdivision 2a or 3 shall file a return with the commissioner 
for each quarterly period, on or before the last day of the 
month following the close of each quarterly period, unless 
otherwise prescribed by the commissioner.  Any tax required to 
be deducted and withheld during the quarterly period shall be 
paid with the return unless an earlier time for payment is 
provided herein.  However, any such return may be filed on or 
before the tenth day of the second calendar month following such 
period if such return shows timely deposits in full payment of 
such taxes due for such period.  For the purpose of the 
preceding sentence, a deposit which is not required to be made 
within such return period, may be made on or before the last day 
of the first calendar month following the close of such period.  
Every employer, in preparing said quarterly return, shall take 
credit for monthly deposits previously made in accordance with 
this subdivision. 
     The return shall be in the form and contain the information 
prescribed by the commissioner.  The commissioner may grant a 
reasonable extension of time for filing the return and paying 
the tax, but no extension shall be granted for more than six 
months.  
     (b) [ADVANCE DEPOSITS REQUIRED IN CERTAIN CASES.] (i) 
Unless clause (ii) is applicable, if during any calendar month, 
other than the last month of the calendar quarter, the aggregate 
amount of the tax withheld during that quarter under subdivision 
2a or 3 exceeds $200, or beginning January 1, 1982, $500, the 
employer shall deposit the aggregate amount with the 
commissioner within 15 days after the close of the calendar 
month.  (ii) If at the close of any eighth-monthly period the 
aggregate amount of undeposited taxes is $3,000 or more, the 
employer shall deposit the undeposited taxes with the 
commissioner within three banking days after the close of the 
eighth-monthly period.  For purposes of this subparagraph, the 
term "eighth-monthly period" means the first three days of a 
calendar month, the fourth day through the seventh day of a 
calendar month, the eighth day through the 11th day of a 
calendar month, the 12th day through the 15th day of a calendar 
month, the 16th day through the 19th day of a calendar month, 
the 20th day through the 22nd day of a calendar month, the 23rd 
day through the 25th day of a calendar month, or the portion of 
a calendar month following the 25th day of such month.  
     (c) [OTHER METHODS.] The commissioner shall have the power 
by rule to prescribe other return periods or deposit 
requirements.  In prescribing the reporting period, the 
commissioner may classify employers according to the amount of 
their tax liability and may adopt an appropriate reporting 
period for each class which he deems to be consistent with 
efficient tax collection.  In no event shall the duration of the 
reporting period be more than one year, provided that for 
employers with annual withholding tax liabilities of less than 
$1,200 the reporting period shall be no more frequent than 
quarterly. 
     (2) If less than the correct amount of such tax is paid to 
the commissioner, proper adjustments, with respect to both the 
tax and the amount to be deducted, shall be made, without 
interest, in such manner and at such times as the commissioner 
may prescribe.  If such underpayment cannot be so adjusted the 
amount of the underpayment shall be assessed and collected in 
such manner and at such times as the commissioner may prescribe. 
     (3) If any employer fails to make and file any return 
required by paragraph (1) at the time prescribed therefor, or 
makes and files a false or fraudulent return, the commissioner 
shall make for him a return from his own knowledge and from such 
information as he can obtain through testimony, or otherwise, 
and assess a tax on the basis thereof.  The amount of tax shown 
thereon shall be paid to the commissioner at such times as the 
commissioner may prescribe.  Any such return or assessment so 
made by the commissioner shall be prima facie correct and valid, 
and the employer shall have the burden of establishing its 
incorrectness or invalidity in any action or proceeding in 
respect thereto. 
     (4) If the commissioner, in any case, has reason to believe 
that the collection of the tax provided for in paragraph (1) of 
this subdivision, and any added penalties and interest, if any, 
will be jeopardized by delay, he may immediately assess such 
tax, whether or not the time otherwise prescribed by law for 
making and filing the return and paying such tax has expired. 
     (5) Any assessment under this subdivision shall be made by 
recording the liability of the employer in the office of the 
commissioner in accordance with regulations prescribed by the 
commissioner.  Upon request of the employer, the commissioner 
shall furnish the employer a copy of the record of assessment. 
     (6) Any assessment of tax under this subdivision shall be 
made within three and one-half years after the due date of the 
return required by paragraph (1), or the date the return was 
filed, whichever is later; except that in the case of a false or 
fraudulent return or failure to file a return, the tax may be 
assessed at any time. 
     (7) (a) Except as provided in (b) of this paragraph, every 
employer who fails to pay to or deposit with the commissioner 
any sum or sums required by this section to be deducted, 
withheld and paid, shall be personally and individually liable 
to the state of Minnesota for such sum or sums (and any added 
penalties and interest); and any sum or sums deducted and 
withheld in accordance with the provisions of subdivision 2a or 
subdivision 3 shall be held to be a special fund in trust for 
the state of Minnesota. 
     (b) If the employer, in violation of the provision of this 
section, fails to deduct and withhold the tax under this 
section, and thereafter the taxes against which such tax may be 
credited are paid, the tax so required to be deducted and 
withheld shall not be collected from the employer; but this 
shall in no case relieve the employer from liability for any 
penalties and interest otherwise applicable in respect of such 
failure to deduct and withhold. 
     (8) Upon the failure of any employer to pay to or deposit 
with the commissioner within the time provided by paragraphs 
(1), (2) or (3) of this subdivision any tax required to be 
withheld in accordance with the provisions of subdivision 2a or 
subdivision 3, or if the commissioner has assessed a tax 
pursuant to paragraph (4), such tax shall become immediately due 
and payable, and the commissioner may deliver to the attorney 
general a certified statement of the tax, penalties and interest 
due from such employer.  The statement shall also give the 
address of the employer owing such tax, the period for which the 
tax is due, the date of the delinquency, and such other 
information as may be required by the attorney general.  It 
shall be the duty of the attorney general to institute legal 
action in the name of the state to recover the amount of such 
tax, penalties, interest and costs.  The commissioner's 
certified statement to the attorney general shall for all 
purposes and in all courts be prima facie evidence of the facts 
therein stated and that the amount shown therein is due from the 
employer named in the statement.  In event action is instituted 
as herein provided, the court shall, upon application of the 
attorney general, appoint a receiver of the property and 
business of the delinquent employer for the purpose of 
impounding the same as security for any judgment which has been 
or may be recovered.  Any such action shall be brought within 
four five years and three months after the due date of the 
return or deposit required by paragraph (1), or the date the 
return was filed, or deposit made whichever is later; except 
that in the case of failure to make and file such return or if 
such return is false or fraudulent, or such deposit is not made 
such action may be brought at any time. 
      (8a) The period of time during which a tax must be assessed 
or collection proceedings commenced under this subdivision shall 
be suspended during the period from the date of filing of a 
petition in bankruptcy until 30 days after the commissioner of 
revenue receives notice that the bankruptcy proceedings have 
been closed or dismissed or the automatic stay has been 
terminated or has expired.  
    The suspension of the statute of limitations under this 
subdivision shall apply to the person against whom the petition 
in bankruptcy is filed and all other persons who may also be 
wholly or partially liable for the tax under this chapter.  
    (9) Either party to an action for the recovery of any tax, 
interest or penalties under this subdivision may remove the 
judgment to the supreme court by appeal, as provided for appeals 
in civil cases. 
    (10) No suit shall lie to enjoin the assessment or 
collection of any tax imposed by this section, or the interest 
and penalties added thereto. 
     Sec. 13.  Minnesota Statutes 1982, section 290.92, 
subdivision 6a, is amended to read: 
    Subd. 6a.  [FAILURE TO COMPLY WITH WITHHOLDING PROVISIONS.] 
(a) Whenever any person who is required to deduct, withhold, pay 
over, or deposit any tax imposed by this chapter, at the time 
and in the manner prescribed by law or regulations fails to 
deduct, withhold, or pay over such tax, or fails to make 
deposits or payments of such tax and is notified of any such 
failure by notice served upon him in the manner prescribed for 
service of a summons in civil actions, then all the requirements 
of paragraph (b) of this subdivision shall be complied with.  In 
the case of a corporation, partnership or trust, notice served 
upon an officer, partner or trustee shall, for purposes of this 
subdivision, be deemed to be notice served upon such 
corporation, partnership or trust and all officers, partners or 
trustees thereof. 
    (b) Any person who is required to deduct, withhold, pay 
over, or deposit any tax imposed by this chapter, if notice has 
been served upon such person in accordance with paragraph (a) of 
this subdivision, shall thereafter deduct, withhold and collect 
such taxes and shall (not later than the end of the second 
banking day after any amount of such taxes is deducted, withheld 
or collected) deposit such taxes in a separate account in a 
bank, savings bank or savings and loan association and shall 
keep the amount of such taxes in such account until payment over 
to the state of Minnesota.  Any such account shall constitute 
and be designated as a special fund in trust for the state of 
Minnesota payable to the state of Minnesota by such person as 
trustee.  It shall be the duty of such person upon whom such 
notice is served to notify the commissioner of revenue in 
writing of the name and address of the bank, savings bank or 
savings and loan association wherein such account is kept, 
together with such other information as the commissioner may 
require.  In lieu of the trust fund account, the commissioner 
may, when necessary in order to secure the withholding of the 
tax imposed by this chapter, require an employer to file with 
the department of revenue a bond in an amount determined by the 
commissioner, or in lieu thereof, security in a form and in an 
amount as he determines, not to exceed twice the estimated 
average liability for future monthly withholding tax periods.  
    (c) Whenever the commissioner of revenue is satisfied with 
respect to any notification made under paragraph (a) of this 
subdivision that all requirements of law and regulations with 
respect to the taxes imposed by this chapter have been and will 
henceforth be complied with, he may cancel such notification.  
Such cancellation shall take effect at such time as is specified 
in the notice of such cancellation.  All notices authorized or 
required under this subdivision shall be in such form as the 
commissioner may determine. 
    (d) Any person who fails to comply with any provisions of 
this subdivision shall, in addition to any other penalties 
provided by law, be guilty of a gross misdemeanor, except that 
the provisions of this paragraph shall not apply 
    (1) to any person if such person shows that there was 
reasonable doubt as to (a) whether the law required deduction, 
withholding or payment of tax or (b) what person was required by 
law to deduct, withhold or pay; or 
    (2) to any person, if such person shows that the failure to 
comply with the provisions of paragraph (b) of this subdivision 
is due to circumstances beyond his control.  A lack of funds 
existing immediately after the payment of wages (whether or not 
created by such payment) shall not be considered to be 
circumstances beyond the control of a person.  
    Sec. 14.  Minnesota Statutes 1982, section 290.97, is 
amended to read: 
    290.97 [CONTRACTS WITH STATE; WITHHOLDING.] 
    No department of the state of Minnesota, nor any political 
or governmental subdivision of the state shall make final 
settlement with any contractor under a contract requiring the 
employment of employees for wages by said contractor and by 
subcontractors whose business location is outside of the state 
of Minnesota, until satisfactory showing is made that said 
contractor or out-of-state subcontractor has complied with the 
provisions of section 290.92.  A certificate by the commissioner 
of revenue shall satisfy this requirement with respect to the 
contractor or out-of-state subcontractor.  If, at the time of 
final settlement, there are any unpaid withholding taxes, 
penalties, or interest arising from the government contract, the 
department shall issue a certification to the contractor or 
out-of-state subcontractor upon payment, with certified funds, 
of any unpaid withholding taxes, penalties, and interest. 
Payment is received by the department upon delivery of the 
certified funds to the central office located in St. Paul, or 
any district or subdistrict office located throughout the state. 
    Sec. 15.  Minnesota Statutes 1982, section 297A.34, 
subdivision 4, is amended to read: 
    Subd. 4.  In the case of a false or fraudulent return with 
intent to evade tax or of failure with the same intent to file a 
return, the tax may be assessed, or a proceeding in court for 
the collection of such tax may be begun at any time, and a 
proceeding in court for the collection of the tax must be begun 
within five years after the assessment.  
     Sec. 16.  Minnesota Statutes 1982, section 297A.34, 
subdivision 5, is amended to read: 
    Subd. 5.  Where the assessment of any tax is hereafter made 
within the period of limitation properly applicable thereto, 
such tax may be collected by a proceeding in court, but only if 
begun: 
    (a) Not later than nine 24 months after the expiration of 
the period for the assessment of the tax; 
    (b) Not later than nine 24 months after final disposition 
of any appeal from the order of assessment.  
     Sec. 17.  Minnesota Statutes 1982, section 297A.34, is 
amended by adding a subdivision to read:  
     Subd. 7.  [SUSPENSION OF TIME; BANKRUPTCY PROCEEDINGS.] The 
period of time during which a tax must be assessed or collection 
proceedings commenced under this chapter shall be suspended 
during the period from the date of a filing of a petition in 
bankruptcy until 30 days after notice to the commissioner of 
revenue that the bankruptcy proceedings have been closed or 
dismissed, or that the automatic stay has been terminated or has 
expired.  
     The suspension of the statute of limitations under this 
subdivision shall apply to the person against whom the petition 
in bankruptcy is filed, and to all other persons who may be 
wholly or partially liable for the tax under this chapter.  
     Sec. 18.  Minnesota Statutes 1982, section 297A.42, 
subdivision 2, is amended to read: 
    Subd. 2.  Such examiners shall have all the rights and 
powers conferred upon the commissioner by section 297A.41.  The 
clerk of any court of record, or any justice of the peace, upon 
demand of the commissioner or any such examiner, shall issue a 
subpoena for the attendance of any witness or the production of 
any books, papers, records or memoranda before such person.  The 
commissioner may also issue such subpoenas.  Disobedience of 
subpoenas issued under this chapter shall be punished by the 
district court of the district in which the subpoena is issued, 
or in the case of a subpoena issued by the commissioner, by the 
district court of the district in which the party served with 
the subpoena is located, as for a contempt of the district court.
    Sec. 19.  Minnesota Statutes 1982, section 524.3-805, is 
amended to read: 
    524.3-805 [CLASSIFICATION OF CLAIMS.] 
    (a) If the applicable assets of the estate are insufficient 
to pay all claims in full, the personal representative shall 
make payment in the following order: 
    (1) costs and expenses of administration; 
    (2) reasonable funeral expenses; 
    (3) debts and taxes with preference under federal law; 
    (4) reasonable and necessary medical and hospital expenses 
of the last illness of the decedent, including compensation of 
persons attending him and including a claim filed pursuant to 
section 256B.15; 
    (5) debts and taxes with preference under other laws of 
this state, and state taxes; 
    (6) all other claims. 
    (b) No preference shall be given in the payment of any 
claim over any other claim of the same class, and a claim due 
and payable shall not be entitled to a preference over claims 
not due, except that if claims for expenses of the last illness 
involve only claims filed under section 246.53 for costs of 
state hospital care and claims filed under section 256B.15, 
claims filed under section 246.53 have preference over claims 
filed under section 256B.15. 
    Sec. 20.  [EFFECTIVE DATE.] 
    Sections 1, 3, 16, 18, and 19 are effective July 1, 1983. 
Section 2 is effective for taxes due on or after July 1, 1983. 
Section 17 is effective for bankruptcy proceedings filed on or 
after October 1, 1979.  This act shall not apply to any tax, the 
collection of which is barred by statute of limitations on July 
1, 1983. 
    Approved May 19, 1983