Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1987, Regular Session
Key: (1) language to be deleted (2) new language
Laws of Minnesota 1987
CHAPTER 268-H.F.No. 529
An act relating to the financing of government in
Minnesota; changing tax rates and bases; modifying the
methods of administering, collecting, and enforcing
taxes; changing the computation, administration, and
payment of aids, credits, and refunds; imposing taxes;
limiting taxing powers; transferring governmental
powers and duties; allocating bonding authority;
making entitlement allocations to the cities of
Minneapolis and St. Paul; repealing income tax rules;
providing for the conveyance of land in Becker county;
making technical corrections and clarifications;
imposing and increasing fees, interest, and penalties;
appropriating money; amending Minnesota Statutes 1986,
sections 10A.31, subdivisions 1 and 2; 16A.15,
subdivisions 1 and 6; 16A.1541; 16A.26; 16A.275;
16A.48, subdivision 1; 60A.15, subdivision 1; 60A.199,
subdivisions 1, 2, 3, 5, 7, 8, 9, 10, and 11; 60A.209,
subdivisions 1 and 3; 60C.06, by adding a subdivision;
61B.02, subdivision 1; 61B.03, subdivisions 8 and 10;
62E.02, subdivision 23; 67A.11, subdivision 3; 69.011,
subdivisions 1 and 2; 69.021, subdivisions 1, 2, and 3;
69.54; 69.55; 79.34, subdivision 1, and by adding a
subdivision; 88.49, by adding a subdivision; 116C.63,
subdivision 4; 121.904, subdivisions 11a and 11b;
124.155, subdivision 2; 124.195, subdivision 2;
124.2131, subdivisions 1, 2, 3, 5, 6, 7, 8, and 11;
124.2139; 124.38, subdivision 8; 124A.02, subdivisions
3a, 8, and 11; 124A.035, subdivision 5; 124A.08,
subdivision 5; 134.33, subdivision 1; 134.34,
subdivisions 1 and 2; 176.129, subdivision 4a;
176A.08; 239.10; 270.066; 270.071, by adding a
subdivision; 270.074, subdivision 3; 270.075,
subdivision 1; 270.10, subdivisions 1 and 4; 270.11,
subdivisions 1 and 2; 270.12, subdivisions 2 and 3;
270.13; 270.72, subdivisions 1 and 2; 270.77; 270.80,
subdivision 2; 270.87; 270A.07, subdivision 1; 271.21,
subdivision 2; 272.01, subdivisions 2 and 3; 272.02,
subdivisions 1 and 1a; 272.115, subdivisions 2 and 4;
273.061, subdivisions 1, 8, and 9; 273.065; 273.11,
subdivision 8, and by adding a subdivision; 273.1102;
273.1103; 273.1104, subdivision 1; 273.12; 273.123,
subdivisions 1, 4, 5, and 7; 273.124, subdivisions 7,
8, 11, and 13; 273.13, subdivisions 15a, 22, 23, 24,
25, and 31; 273.1313, subdivisions 1, 2, and 3;
273.1314, subdivisions 9, 10, and by adding
subdivisions; 273.133, subdivision 3; 273.135,
subdivision 2; 273.1391, subdivision 2; 273.1392;
273.1393; 273.165, subdivision 2; 273.19, subdivisions
1, 3, 4, and by adding a subdivision; 273.33,
subdivision 2; 273.37, subdivision 2; 273.38; 273.42,
subdivision 2; 274.01, subdivision 1; 274.14; 274.16;
275.07, subdivision 1; 275.125, subdivisions 9, 9b,
15, and by adding a subdivision; 275.50, subdivision
2; 275.51, subdivisions 3h and 3i; 276.04; 276.11;
277.01; 278.05, subdivision 4; 279.01, subdivision 1;
279.06; 281.17; 282.014; 282.02; 282.241; 282.33,
subdivision 1; 287.05, subdivision 1; 287.09; 287.10;
287.12; 287.21, subdivision 1; 287.22; 290.01,
subdivisions 3, 4, 5, 7, 19, 20, 22, and by adding
subdivisions; 290.02; 290.03; 290.032, subdivisions 1
and 2; 290.05, subdivisions 1 and 2; 290.06,
subdivisions 1, 2c, 2d, and by adding subdivisions;
290.067, subdivisions 1, 2, and by adding
subdivisions; 290.068, subdivisions 1, 2, 3, 4, 5, and
6; 290.069, subdivisions 2a and 4b; 290.077,
subdivision 1; 290.081; 290.091, subdivisions 1, 2, 3,
4, and 5; 290.095, subdivisions 1, 2, 3, 4, 7, 9, and
11; 290.10; 290.12, subdivision 2; 290.131,
subdivision 1; 290.132, subdivision 1; 290.133,
subdivision 1; 290.134, subdivision 1; 290.135,
subdivision 1; 290.136, subdivision 1; 290.138,
subdivision 3; 290.14; 290.17; 290.171; 290.20,
subdivision 1, and by adding a subdivision; 290.21,
subdivisions 3, 4, and 8; 290.23, subdivisions 3 and
5; 290.31, subdivisions 2, 3, 5, and by adding a
subdivision; 290.34, subdivision 2; 290.35; 290.36;
290.37, subdivisions 1 and 3; 290.38; 290.39,
subdivision 3; 290.41, subdivisions 2 and 3; 290.42;
290.45, subdivisions 1 and 2; 290.46; 290.48,
subdivision 10; 290.491; 290.50, subdivision 1;
290.53, subdivisions 1, 2, 3a, 4, and by adding
subdivisions; 290.56, subdivisions 2, 3, and 4;
290.92, subdivisions 2a, 4a, 5, 5a, 6, 7, 9, 11, 12,
13, 14, 15, 18, 24, and 25; 290.93, subdivision 10;
290.934, subdivision 2; 290.9725; 290.9726,
subdivisions 1, 2, and 4; 290.974; 290A.03,
subdivisions 3, 8, 13, 14, and by adding a
subdivision; 290A.04, subdivision 2, and by adding
subdivisions; 290A.06; 290A.011, subdivision 2;
290A.18; 290A.19; 291.131, subdivisions 1, 2, 4, and
by adding a subdivision; 295.01, subdivision 10;
295.32; 295.34, subdivision 1; 295.365; 295.366, by
adding a subdivision; 295.39; 295.40; 295.41; 295.43;
296.02, by adding subdivisions; 296.025, by adding
subdivisions; 296.17, subdivisions 3, 7, and 11;
296.18, subdivision 7; 297.01, subdivisions 2, 4, 7,
10, and 14; 297.02, subdivisions 1 and 6; 297.03,
subdivisions 1, 5, and 6; 297.04, subdivisions 4, 6,
and 9; 297.07, subdivisions 1, 3, 4, and 5; 297.11,
subdivisions 3 and 5; 297.13, subdivision 1; 297.23,
subdivision 1; 297.26; 297.31, subdivisions 2, 3, and
7; 297.32, subdivisions 1, 2, and 8; 297.33,
subdivisions 4 and 5; 297.35, subdivisions 1, 3, 5,
and 8; 297.36; 297A.01, subdivisions 3, 4, 8, 11, 15,
and by adding a subdivision; 297A.07; 297A.14;
297A.151; 297A.18; 297A.211, subdivision 2, and by
adding a subdivision; 297A.25, subdivisions 3, 7, 11,
12, and by adding subdivisions; 297A.256; 297A.257,
subdivisions 1, 2, 2a, and by adding a subdivision;
297A.26, subdivision 1, and by adding a subdivision;
297A.27, subdivision 1; 297A.275; 297A.39,
subdivisions 1, 2, 4, and by adding a subdivision;
297A.43; 297B.03; 297B.031; 297B.10; 297C.02,
subdivisions 1 and 2; 297C.03, subdivision 1, and by
adding a subdivision; 297C.04; 297C.05, subdivision 2;
297C.06; 297C.09; 297D.02; 297D.07; 297D.09; 297D.10;
297D.12, subdivision 1; 297D.13; 298.01, subdivision
1, and by adding subdivisions; 298.026; 298.027;
298.028, subdivision 1; 298.03, subdivision 1;
298.031, subdivision 2; 298.08; 298.09, subdivision 1;
298.24, subdivision 1; 298.25; 298.28, subdivisions 4,
7, 10, and by adding a subdivision; 299F.21,
subdivisions 1, 2, and by adding subdivisions;
325D.30; 325D.32, subdivisions 4, 10, and 11; 325D.33,
subdivisions 1, 2, and by adding subdivisions;
325D.35; 325D.38, subdivision 1; 325D.40, subdivision
1; 325F.665, subdivision 3; 349.212, subdivisions 1,
4, and by adding a subdivision; 349.2121, subdivisions
4, 6, 7, and by adding subdivisions; 360.531,
subdivision 2; 360.654; 462C.11, subdivisions 2 and 3;
473.446, subdivision 1; 473F.02, subdivisions 4, 12,
and 17; 474A.02, subdivisions 1, 2, 3, 6, 7, 8, 12,
14, 16, 18, 19, 21, 26, and by adding subdivisions;
474A.03, subdivision 1, and by adding a subdivision;
474A.04, subdivisions 5, 6, and by adding a
subdivision; 474A.13, subdivisions 1, 4, and 5;
474A.14; 474A.15; 474A.16; 474A.17; 474A.18; 474A.20;
474A.21; 475.53, subdivision 4; 475.61, subdivision 3;
477A.012, subdivision 1; 477A.013; Laws 1985, First
Special Session chapter 14, article 3, section 18;
proposing coding for new law in Minnesota Statutes,
chapters 239; 270; 271; 272; 273; 275; 276; 290; 290A;
297; 297A; 297C; 298; 349; and 474A; repealing
Minnesota Statutes 1986, sections 13.58; 60A.15,
subdivision 2; 61A.49; 62E.11, subdivision 8; 62E.13,
subdivision 9; 69.021, subdivision 3a; 124.2131,
subdivision 4; 124.2137; 124.2139; 124.38, subdivision
10; 124A.031, subdivision 4; 270.75, subdivision 8;
270.89; 273.112, subdivision 9; 273.115; 273.116;
273.13, subdivisions 26, 27, 28, and 29; 273.1311;
273.1315; 273.135, subdivision 5; 273.1391,
subdivision 4; 282.021; 287.02; 290.01, subdivisions
20a, 20b, 20d, 20f, 21, and 24; 290.013; 290.06,
subdivisions 3f, 3g, and 11; 290.069, subdivisions 1,
2, 3, 5, 6, and 7; 290.07, subdivision 5; 290.071;
290.073; 290.075; 290.077, subdivision 3; 290.079;
290.08; 290.082; 290.085; 290.088; 290.089; 290.09;
290.095, subdivisions 8 and 10; 290.12, subdivision 4;
290.13; 290.139; 290.15; 290.16; 290.165; 290.17,
subdivision 1a; 290.175; 290.18; 290.19; 290.21,
subdivisions 5 and 6; 290.26, subdivision 2; 290.361;
290.531; 290.9726, subdivisions 3, 5, and 6; 290A.04,
subdivisions 2e and 2g; 294.21; 294.22; 294.23;
294.24; 294.25; 294.26; 295.32; 295.33; 295.34;
295.36; 295.365; 295.366; 296.04, subdivisions 1, 2,
3, and 4; 296.05; 296.07; 296.13; 296.17, subdivision
12; 296.22; 296.28; 297.07, subdivision 6; 297.23,
subdivision 5; 297.35, subdivisions 4, 6, and 7;
297A.25, subdivision 13; 297A.254; 297A.26,
subdivision 3; 297A.391; 297C.03, subdivisions 2 and
3; 297C.05, subdivision 4; 298.01, subdivision 1;
298.02; 298.026; 298.027; 298.028; 298.03; 298.031;
298.04; 298.28, subdivision 14; 298.40; 298.51; 298.52;
298.53; 298.54; 298.55; 298.61; 298.62; 298.63;
298.64; 298.65; 298.66; 298.67; 299.01; 299.012;
299.013; 299.02; 299.03; 299.04; 299.05; 299.06;
299.07; 299.08; 299.09; 299.10; 299.11; 299.12;
299.13; 299.14; 325D.32, subdivision 12; 325D.41;
474A.02, subdivisions 5, 9, 10, 11, 13, 15, 17, 20,
22, 23, 24, 25, 27, 28, and 29; 474A.03, subdivisions
2 and 3; 474A.04, subdivisions 1, 2, 3, and 4;
474A.05; 474A.06; 474A.07; 474A.08; 474A.09; 474A.10;
474A.11; 474A.12; 474A.13, subdivisions 2 and 3; and
474A.19; Laws 1981, chapters 222, section 6; 223,
section 6, subdivision 3; Laws 1985, First Special
Session chapter 14, article 14, section 3; Laws 1986,
chapter 391, section 3; Laws 1986, First Special
Session chapter 1, article 5, section 8.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
INCOME TAX
Section 1. Minnesota Statutes 1986, section 10A.31,
subdivision 1, is amended to read:
Subdivision 1. Every individual resident of Minnesota who
files an income tax return or a renter and homeowner property
tax refund return with the commissioner of revenue may designate
on their original return that $2 $5 shall be paid from the
general fund of the state into the state elections campaign
fund. If a husband and wife file a joint return, each spouse
may designate that $2 $5 shall be paid. No individual shall be
allowed to designate $2 $5 more than once in any year.
Sec. 2. Minnesota Statutes 1986, section 10A.31,
subdivision 2, is amended to read:
Subd. 2. The taxpayer may designate that the $2 amount
designated be paid into the account of a political party or into
the general account.
Sec. 3. Minnesota Statutes 1986, section 10A.31,
subdivision 3, is amended to read:
Subd. 3. The commissioner of the department of revenue
shall provide on the first page of the income tax form and the
renter and homeowner property tax refund return a space for the
individual to indicate a wish to allocate $2 $5 ($4 $10 if
filing a joint return) from the general fund of the state to
finance the election campaigns of state candidates. The form
shall also contain language prepared by the commissioner which
permits the individual to direct the state to allocate
the $2 $5 (or $4 $10 if filing a joint return) to: (i) one of
the major political parties; (ii) any minor political party as
defined in section 10A.01, subdivision 13, which qualifies under
the provisions of subdivision 3a; or (iii) all qualifying
candidates as provided by subdivision 7. The renter and
homeowner property tax refund return shall include instructions
that the individual filing the return may designate $2 $5 on the
return only if the individual has not designated $2 $5 on the
income tax return.
Sec. 4. Minnesota Statutes 1986, section 290.01,
subdivision 3, is amended to read:
Subd. 3. [PARTNERSHIP; PARTNER.] The term
terms "partnership" includes a syndicate, group, pool, joint
venture, or other unincorporated organization, through or by
means of which any business, financial operation, or venture is
carried on, and which is not, within the meaning of this
chapter, a trust or estate or a corporation; and the
term "partner" includes a member in a syndicate, group, pool,
joint venture or organization have the meanings given in section
7701(a)(2) of the Internal Revenue Code of 1986, as amended
through December 31, 1986.
Sec. 5. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 3a. [TRUST.] The term "trust" has the meaning given
in the Internal Revenue Code of 1986, as amended through
December 31, 1986.
Sec. 6. Minnesota Statutes 1986, section 290.01,
subdivision 4, is amended to read:
Subd. 4. [CORPORATIONS.] The term "corporation" shall
include joint stock companies and corporations existing under
the laws of any state or country; partnerships, limited or
otherwise, the organization of which is not interrupted by the
death of a general partner or by a change in the ownership of
the general partner's participating interest, and the management
of which is centralized in one or more persons acting in a
representative capacity; associations (other than ordinary
partnerships) and common-law trusts organized or conducted for
profit every entity which is a corporation under section
7701(a)(3) of the Internal Revenue Code of 1986, as amended
through December 31, 1986, and financial institutions. A
corporation's franchise is its authorization to exist and
conduct business, whether created by legislation, by executive
order, by a governmental agency, by contract or other private
action, or by some combination thereof. Every corporation is
deemed to have a corporate franchise. An entity described in
section 646(b) of the Tax Reform Act of 1986, Public Law Number
99-514, shall be classified in the same manner for purposes of
this chapter as it is for federal income tax purposes.
Sec. 7. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 4a. [FINANCIAL INSTITUTION.] (a) "Financial
institution" means:
(1) a holding company;
(2) any regulated financial corporation; or
(3) any other corporation organized under the laws of the
United States or organized under the laws of this state or any
other state or country that is carrying on the business of a
financial institution.
(b) "Holding company" means any corporation registered
under the Federal Bank Holding Company Act of 1956, as amended,
or registered as a savings and loan holding company under the
Federal National Housing Act, as amended.
(c) "Regulated financial corporation" means an institution,
the deposits or accounts of which are insured under the Federal
Deposit Insurance Act or by the Federal Savings and Loan
Insurance Corporation, any institution which is a member of a
Federal Home Loan Bank, any other bank or thrift institution
incorporated or organized under the laws of any state or any
foreign country which is engaged in the business of receiving
deposits, any corporation organized under the provisions of
United States Code, title 12, sections 611 to 631 (Edge Act
Corporations), and any agency of a foreign depository as defined
in United States Code, title 12, section 3101.
(d) "Business of a financial institution" means:
(1) the business that a regulated financial corporation may
be authorized to do under state or federal law or the business
that its subsidiary is authorized to do by the proper regulatory
authorities;
(2) the business that any corporation organized under the
authority of the United States or organized under the laws of
this state or any other state or country does or has authority
to do which is substantially similar to the business which a
corporation may be created to do under chapters 46 to 55 or any
business which a corporation or its subsidiary is authorized to
do by those laws; or
(3) the business that any corporation organized under the
authority of the United States or organized under the laws of
this state or any other state or country does or has authority
to do if the corporation derives more than 50 percent of its
gross income from lending activities (including discounting
obligations) in substantial competition with the businesses
described in clauses (1) and (2). For purposes of this clause,
the computation of the gross income of a corporation does not
include income from nonrecurring, extraordinary items.
Sec. 8. Minnesota Statutes 1986, section 290.01,
subdivision 5, is amended to read:
Subd. 5. [DOMESTIC AND FOREIGN CORPORATIONS.] The term
"domestic" when applied to a corporation means a corporation
created or organized in Minnesota or under its laws; and the
term "foreign" when thus applied means a corporation other than
a domestic corporation. The existence of any domestic
corporation shall be deemed the exercise by it of the privilege
of existing as a corporation; the grant to any foreign
corporation of the right to engage in transacting local business
within this state shall be deemed the grant to it of the
privilege of transacting such business within this state in
corporate or organized form; and the transaction of the local
business within this state by any foreign corporation shall be
deemed the transaction of such business within this state in
corporate or organized form.
Sec. 9. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 6a. [ABODE.] For purposes of section 290.01,
subdivision 7, the term "abode" means a dwelling maintained by
an individual, whether or not owned by the individual and
whether or not occupied by the individual, and includes a
dwelling place owned or leased by the individual's spouse.
Sec. 10. Minnesota Statutes 1986, section 290.01,
subdivision 7, is amended to read:
Subd. 7. [RESIDENT.] The term "resident" means (1) any
individual domiciled in Minnesota and any other individual
maintaining an abode therein during any portion of the tax year
who shall not, during the whole of such tax year, have been
domiciled outside the state, except that an individual is not a
"resident" for the period of time that the individual is a
"qualified individual" as defined in section 911(d)(1) of the
Internal Revenue Code of 1986, as amended through December 31,
1986, unless, during that period, a Minnesota homestead
application is filed for property in which the individual has an
interest; and (2) any individual domiciled outside the state who
maintains a place of abode in the state and spends in the
aggregate more than one-half of the tax year in Minnesota,
unless the individual is in the armed forces of the United
States.
For purposes of this subdivision, presence within the state
for any part of a calendar day constitutes a day spent in the
state. Individuals shall keep adequate records to substantiate
the days spent outside the state.
Sec. 11. Minnesota Statutes 1986, section 290.01,
subdivision 19, is amended to read:
Subd. 19. [NET INCOME.] The term "net income" means the
gross federal taxable income, as defined in subdivision 20, less
the following deductions to the extent allowed by section
290.18, subdivision 1:
(a) for corporations, the deductions allowed by section
290.09;
(b) for individuals, the deductions allowed in section
290.088, without regard to sections 290.18, subdivision 1 if the
taxpayer elects to compute the taxes under sections 290.06,
subdivision 2c, paragraph (a) or (c); 290.089; and 290.09; and
(c) for estates and trusts, the deduction allowed by
section 290.088, without regard to section 290.18, subdivision 1
if the taxpayer elects to compute the taxes under section
290.06, subdivision 2c, paragraph (c) section 63 of the Internal
Revenue Code of 1986, as amended through the date named in this
subdivision, incorporating any elections made by the taxpayer in
accordance with the Internal Revenue Code in determining federal
taxable income for federal income tax purposes, and with the
modifications provided in subdivisions 19a to 19f.
The Internal Revenue Code of 1986, as amended through
December 31, 1986, shall be in effect for taxable years
beginning after December 31, 1986.
Except as otherwise provided, references to the Internal
Revenue Code in subdivisions 19a to 19f mean the code in effect
for purposes of determining net income for the applicable year.
Sec. 12. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For
individuals, estates, and trusts, there shall be added to
federal taxable income:
(1)(i) interest income on obligations of any state other
than Minnesota or a political or governmental subdivision,
municipality, or governmental agency or instrumentality of any
state other than Minnesota exempt from federal income taxes
under the Internal Revenue Code or any other federal statute,
and
(ii) exempt-interest dividends as defined in section
852(b)(5)(A) of the Internal Revenue Code of 1986, except the
portion of the exempt-interest dividends derived from interest
income on obligations of the state of Minnesota or its political
or governmental subdivisions, municipalities, governmental
agencies or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to
all shareholders represents 95 percent or more of the
exempt-interest dividends that are paid by the fund or series of
funds making the payment; and
(2) the amount of income taxes paid or accrued within the
taxable year under this chapter and income taxes paid to any
other state or to any province or territory of Canada, to the
extent allowed as a deduction under section 63(d) of the
Internal Revenue Code, but the addition may not be more than the
amount by which the itemized deductions as allowed under 63(d)
of the Internal Revenue Code exceeds the amount of the standard
deduction as defined in section 63(c) of the Internal Revenue
Code.
Sec. 13. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For
individuals, estates, and trusts, there shall be subtracted from
federal taxable income:
(1) interest income on obligations of any authority,
commission, or instrumentality of the United States to the
extent includable in taxable income for federal income tax
purposes but exempt from state income tax under the laws of the
United States;
(2) if included in federal taxable income, the amount of
any overpayment of income tax to Minnesota or to any other
state, for any previous taxable year, whether the amount is
received as a refund or as a credit to another taxable year's
income tax liability; and
(3) the amount paid to others not to exceed $650 for each
dependent in grades kindergarten to six and $1,000 for each
dependent in grades seven to 12, for tuition, textbooks, and
transportation of each dependent in attending an elementary or
secondary school situated in Minnesota, North Dakota, South
Dakota, Iowa, or Wisconsin, wherein a resident of this state may
legally fulfill the state's compulsory attendance laws, which is
not operated for profit, and which adheres to the provisions of
the Civil Rights Act of 1964 and chapter 363. As used in this
clause, "textbooks" includes books and other instructional
materials and equipment used in elementary and secondary schools
in teaching only those subjects legally and commonly taught in
public elementary and secondary schools in this state.
"Textbooks" does not include instructional books and materials
used in the teaching of religious tenets, doctrines, or worship,
the purpose of which is to instill such tenets, doctrines, or
worship, nor does it include books or materials for, or
transportation to, extracurricular activities including sporting
events, musical or dramatic events, speech activities, driver's
education, or similar programs. In order to qualify for the
subtraction under this clause the taxpayer must elect to itemize
deductions under section 63(e) of the Internal Revenue Code of
1986, as amended through December 31, 1986.
Sec. 14. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE
INCOME.] For corporations, there shall be added to federal
taxable income:
(1) the amount of any deduction taken for federal income
tax purposes for income, excise, or franchise taxes based on net
income or related minimum taxes paid by the corporation to
Minnesota, another state, a political subdivision of another
state, the District of Columbia, or any foreign country or
possession of the United States;
(2) interest upon obligations of: the United States, its
possessions, its agencies, or its instrumentalities to the
extent the obligations are not subject to federal tax; the state
of Minnesota or any other state, any of its political or
governmental subdivisions, any of its municipalities, or any of
its governmental agencies or instrumentalities; or the District
of Columbia;
(3) exempt interest dividends as defined in section
852(b)(5) of the Internal Revenue Code of 1986, as amended
through December 31, 1986;
(4) the amount of any windfall profits tax deducted under
section 164 or 471 of the Internal Revenue Code of 1986, as
amended through December 31, 1986;
(5) the amount of any net operating loss deduction taken
for federal income tax purposes under section 172 of the
Internal Revenue Code of 1986, as amended through December 31,
1986;
(6) the amount of any special deductions taken for federal
income tax purposes under sections 241 to 247 of the Internal
Revenue Code of 1986, as amended through December 31, 1986;
(7) losses from the business of mining, as defined in
section 290.05, subdivision 1, clause (a), that are not subject
to Minnesota income tax;
(8) the amount of any capital losses deducted for federal
income tax purposes under sections 1211 and 1212 of the Internal
Revenue Code of 1986, as amended through December 31, 1986;
(9) the amount of any charitable contributions deducted for
federal income tax purposes under section 170 of the Internal
Revenue Code of 1986, as amended through December 31, 1986;
(10) the exempt foreign trade income of a foreign sales
corporation under sections 921(a) and 291 of the Internal
Revenue Code of 1986, as amended through December 31, 1986;
(11) the amount of percentage depletion deducted under
sections 611 through 614 and 291 of the Internal Revenue Code of
1986, as amended through December 31, 1986; and
(12) for certified pollution control facilities placed in
service in a taxable year beginning before December 31, 1986,
and for which amortization deductions were elected under section
169 of the Internal Revenue Code of 1954, as amended through
December 31, 1985, the amount of the amortization deduction
allowed in computing federal taxable income for those facilities.
Sec. 15. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL
TAXABLE INCOME.] For corporations, there shall be subtracted
from federal taxable income after the increases provided in
subdivision 19c:
(1) the amount of foreign dividend gross-up added to gross
income for federal income tax purposes under section 78 of the
Internal Revenue Code;
(2) the decrease in salary expense for federal income tax
purposes due to claiming the federal jobs credit under section
51 of the Internal Revenue Code;
(3) any dividend (not including any distribution in
liquidation) paid within the taxable year by a national or state
bank to the United States, or to any instrumentality of the
United States exempt from federal income taxes, on the preferred
stock of the bank owned by the United States or the
instrumentality;
(4) amounts disallowed for intangible drilling costs due to
differences between this chapter and the Internal Revenue Code
in taxable years beginning before January 1, 1987, as follows:
(i) to the extent the disallowed costs are represented by
physical property, an amount equal to the allowance for
depreciation under Minnesota Statutes 1986, section 290.09,
subdivision 7, subject to the modifications contained in
subdivision 19e; and
(ii) to the extent the disallowed costs are not represented
by physical property, an amount equal to the allowance for cost
depletion under Minnesota Statutes 1986, section 290.09,
subdivision 8;
(5) the deduction for capital losses pursuant to sections
1211 and 1212 of the Internal Revenue Code of 1986, as amended
through December 31, 1986, except that:
(i) capital loss carrybacks shall not be allowed; and
(ii) a capital loss carryover to each of the 15 taxable
years succeeding the loss year shall be allowed;
(6) an amount for interest and expenses relating to income
not taxable for federal income tax purposes, if (i) the income
is taxable under this chapter and (ii) the interest and expenses
were disallowed as deductions under the provisions of section
265 or 291 of the Internal Revenue Code of 1986, as amended
through December 31, 1986, in computing federal taxable income;
(7) in the case of mines, oil and gas wells, other natural
deposits, and timber for which percentage depletion was
disallowed pursuant to subdivision 19c, clause (11), a
reasonable allowance for depletion based on actual cost. In the
case of leases the deduction must be apportioned between the
lessor and lessee in accordance with rules prescribed by the
commissioner. In the case of property held in trust, the
allowable deduction must be apportioned between the income
beneficiaries and the trustee in accordance with the pertinent
provisions of the trust, or if there is no provision in the
instrument, on the basis of the trust's income allocable to each;
(8) for certified pollution control facilities placed in
service in a taxable year beginning before December 31, 1986 and
for which amortization deductions were elected under section 169
of the Internal Revenue Code of 1954, as amended through
December 31, 1985, an amount equal to the allowance for
depreciation under Minnesota Statutes 1986, section 290.09,
subdivision 7.
Sec. 16. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 19e. [DEPRECIATION MODIFICATIONS FOR
CORPORATIONS.] In the case of corporations, a modification shall
be made for the accelerated cost recovery system. The allowable
deduction for the accelerated cost recovery system is the same
amount as provided in section 168 of the Internal Revenue Code
with the following modifications. The modifications apply to
taxable years beginning after December 31, 1986, and to property
for which deductions under the Tax Reform Act of 1986, Public
Law Number 99-514, are elected or apply.
(a) For property placed in service after December 31, 1980,
and before January 1, 1987, 40 percent of the allowance pursuant
to section 168 of the Internal Revenue Code of 1954, as amended
through December 31, 1985, for 15-, 18-, or 19-year real
property shall not be allowed and for all other property 20
percent shall not be allowed.
(b) For property placed in service after December 31, 1987,
no modification shall be made.
(c) For property placed in service after July 31, 1986, and
before January 1, 1987, for which the taxpayer elects the
deduction pursuant to section 203 of the Tax Reform Act of 1986,
Public Law Number 99-514, and for property placed in service
after December 31, 1986, and before January 1, 1988, 15 percent
of the allowance pursuant to section 168 of the Internal Revenue
Code of 1986 shall not be allowed.
(d) For property placed in service after December 31, 1980,
and before January 1, 1987, for which the taxpayer elects to use
the straight line method provided in section 168(b)(3), (f)(12),
or (j)(1) or a method provided in section 168(e)(2) of the
Internal Revenue Code of 1986, as amended through December 31,
1986, but excluding property for which the taxpayer elects the
deduction pursuant to section 203 of the Tax Reform Act of 1986,
Public Law Number 99-514, the modifications provided in
paragraph (a) do not apply.
(e) For property subject to the modifications contained in
paragraphs (a) and (b) and Minnesota Statutes 1986, section
290.09, subdivision 7, clause (c), the following modification
shall be made after the entire amount of the allowable deduction
has been allowed for federal tax purposes for that property
under the provisions of section 168 of the Internal Revenue Code
of 1986, as amended through December 31, 1986. The remaining
depreciable basis in those assets for Minnesota purposes,
including the amount of any basis reduction to reflect the
investment tax credit for federal purposes under sections 48(q)
and 49(d) of the Internal Revenue Code of 1986, as amended
through December 31, 1986, shall be a depreciation allowance
computed using the straight line method over the following
number of years:
(1) three-year property, one year;
(2) five-year and seven-year property, two years;
(3) ten-year property, five years; and
(4) all other property, seven years.
(f) For property placed in service after December 31, 1987,
the remaining depreciable basis for Minnesota purposes that is
attributable to the basis reduction for federal purposes to
reflect the investment tax credit under sections 48(q) and 49(d)
of the Internal Revenue Code of 1986, as amended through
December 31, 1986, shall be allowed as a deduction in the first
taxable year after the entire amount of the allowable deduction
for that property under the provisions of section 168 of the
Internal Revenue Code of 1986, has been allowed, except that
where the straight line method provided in section 168(b)(3) is
used, the deduction provided in this clause shall be allowed in
the last taxable year in which an allowance for depreciation is
allowed for that property.
(g) For qualified timber property for which the taxpayer
made an election under section 194 of the Internal Revenue Code
of 1986, the remaining depreciable basis for Minnesota purposes
is allowed as a deduction in the first taxable year after the
entire allowable deduction has been allowed for federal tax
purposes.
(h) The basis of property to which section 168 of the
Internal Revenue Code applies is its basis as provided in this
chapter including the modifications provided in this subdivision
and in Minnesota Statutes 1986, section 290.09, subdivision 7,
paragraph (c). The recapture tax provisions provided in
sections 1245 and 1250 of the Internal Revenue Code of 1986, as
amended through December 31, 1986, apply but must be calculated
using the basis provided in the preceding sentence.
(i) The basis of an asset acquired in an exchange of
assets, including an involuntary conversion, is the same as its
federal basis under the provisions of the Internal Revenue Code
of 1986, except that the difference in basis due to the
modifications in this subdivision and in Minnesota Statutes
1986, section 290.09, subdivision 7, paragraph (c), is a
deduction as provided in paragraph (e).
Sec. 17. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 19f. [BASIS MODIFICATIONS AFFECTING GAIN OR LOSS ON
DISPOSITION OF PROPERTY.] (a) For individuals, estates, and
trusts, the basis of property is its adjusted basis for federal
income tax purposes except as set forth in paragraphs (f) and
(g). For corporations, the basis of property is its adjusted
basis for federal income tax purposes, without regard to the
time when the property became subject to tax under this chapter
or to whether out-of-state losses or items of tax preference
with respect to the property were not deductible under this
chapter, except that the modifications to the basis for federal
income tax purposes set forth in paragraphs (b) to (j) are
allowed to corporations, and the resulting modifications to
federal taxable income must be made in the year in which gain or
loss on the sale or other disposition of property is recognized.
(b) The basis of property shall not be reduced to reflect
federal investment tax credit.
(c) The basis of property subject to the accelerated cost
recovery system under section 168 of the Internal Revenue Code
shall be modified to reflect the modifications in depreciation
with respect to the property provided for in subdivision 19e.
For certified pollution control facilities for which
amortization deductions were elected under section 169 of the
Internal Revenue Code of 1954, the basis of the property must be
increased by the amount of the amortization deduction not
previously allowed under this chapter.
(d) For property acquired before January 1, 1933, the basis
for computing a gain is the fair market value of the property as
of that date. The basis for determining a loss is the cost of
the property to the taxpayer less any depreciation,
amortization, or depletion, actually sustained before that
date. If the adjusted cost exceeds the fair market value of the
property, then the basis is the adjusted cost regardless of
whether there is a gain or loss.
(e) The basis is reduced by the allowance for amortization
of bond premium if an election to amortize was made pursuant to
Minnesota Statutes 1986, section 290.09, subdivision 13, and the
allowance could have been deducted by the taxpayer under this
chapter during the period of the taxpayer's ownership of the
property.
(f) For assets placed in service before January 1, 1987,
corporations, partnerships, or individuals engaged in the
business of mining ores other than iron ore or taconite
concentrates subject to the occupation tax under chapter 298
must use the occupation tax basis of property used in that
business.
(g) For assets placed in service before January 1, 1990,
corporations, partnerships, or individuals engaged in the
business of mining iron ore or taconite concentrates subject to
the occupation tax under chapter 298 must use the occupation tax
basis of property used in that business.
(h) In applying the provisions of sections 301(c)(3)(B),
312(f) and (g), and 316(a)(1) of the Internal Revenue Code of
1986, as amended through December 31, 1986, the dates December
31, 1932, and January 1, 1933, shall be substituted for February
28, 1913, and March 1, 1913, respectively.
(i) In applying the provisions of section 362(a) and (c) of
the Internal Revenue Code of 1986, as amended through December
31, 1986, the date December 31, 1956, shall be substituted for
June 22, 1954.
(j) The basis of property shall be increased by the amount
of intangible drilling costs not previously allowed due to
differences between this chapter and the Internal Revenue Code.
(k) The adjusted basis of any corporate partner's interest
in a partnership is the same as the adjusted basis for federal
income tax purposes modified as required to reflect the basis
modifications set forth in paragraphs (b) to (j). The adjusted
basis of a partnership in which the partner is an individual,
estate, or trust is the same as the adjusted basis for federal
income tax purposes modified as required to reflect the basis
modifications set forth in paragraphs (f) and (g).
(l) The modifications contained in paragraphs (b) to (j)
also apply to the basis of property that is determined by
reference to the basis of the same property in the hands of a
different taxpayer or by reference to the basis of different
property.
Sec. 18. Minnesota Statutes 1986, section 290.01,
subdivision 20, is amended to read:
Subd. 20. [GROSS INCOME.] For tax years beginning after
December 31, 1986, the term "gross income" means the gross
income as defined in section 61 of the Internal Revenue Code of
1986, as amended through the date named in subdivision 19 for
the applicable taxable year, plus any additional items of income
taxable under this chapter but not taxable under the Internal
Revenue Code, less any items included in federal gross income
but of a character exempt from state income tax under the laws
of the United States. For tax years beginning before January 1,
1987, except as otherwise provided in this chapter, the term
"gross income," as applied to corporations includes every kind
of compensation for labor or personal services of every kind
from any private or public employment, office, position or
services; income derived from the ownership or use of property;
gains or profits derived from every kind of disposition of, or
every kind of dealing in, property; income derived from the
transaction of any trade or business; and income derived from
any source.
For tax years beginning before January 1, 1987, the term
"gross income" in its application to individuals, estates, and
trusts shall mean the adjusted gross income as defined in the
Internal Revenue Code of 1954, as amended through the date
specified herein for the applicable taxable year, with the
modifications specified in this subdivision and in Minnesota
Statutes 1986, section 290.01, subdivisions 20a to 20f. For
estates and trusts the adjusted gross income for purposes of the
preceding sentence shall be their federal taxable income as
defined in the Internal Revenue Code of 1954, as amended through
the date specified herein for the applicable taxable year, with
the modifications specified in this subdivision and in Minnesota
Statutes 1986, section 290.01, subdivisions 20a to 20f.
(i) The Internal Revenue Code of 1954, as amended through
December 31, 1980, and as amended by sections 302(b) and 501 to
509 of Public Law Number 97-34, shall be in effect for taxable
years beginning after December 31, 1980 including the provisions
of section 404 (relating to partial exclusions of dividends and
interest received by individuals) of the Crude Oil Windfall
Profit Tax Act of 1980, Public Law Number 96-223. The
provisions of Public Law Number 96-471 (relating to installment
sales) sections 122, 123, 126, 201, 202, 203, 204, 211, 213,
214, 251, 261, 264, 265, 311(g)(3), 313, 314(a)(1), 321(a), 501
to 507, 811, and 812 of the Economic Recovery Tax Act of 1981,
Public Law Number 97-34 and section 113 of Public Law Number
97-119 shall be effective at the same time that they become
effective for federal income tax purposes.
(ii) The Internal Revenue Code of 1954, as amended through
December 31, 1981, shall be in effect for taxable years
beginning after December 31, 1981. The provisions of sections
205(a), 214 to 222, 231, 232, 236, 247, 251, 252, 253, 265, 266,
285, 288, and 335 of the Tax Equity and Fiscal Responsibility
Act of 1982, Public Law Number 97-248, section 6(b)(2) and (3)
of the Subchapter S Revision Act of 1982, Public Law Number
97-354, section 517 of Public Law Number 97-424, sections 101(c)
and (d), 102(a), (aa), (f)(4), (g), (j), (l), 103(c), 104(b)(3),
105, 305(d), 306(a)(9) of Public Law Number 97-448, and sections
101 and 102 of Public Law Number 97-473, and section 243 of the
Tax Reform Act of 1986, Public Law Number 99-514, shall be
effective at the same time that they become effective for
federal income tax purposes. The Payment-in-Kind Tax Treatment
Act of 1983, Public Law Number 98-4, shall be effective at the
same time that it becomes effective for federal income tax
purposes.
(iii) (ii) The Internal Revenue Code of 1954, as amended
through January 15, 1983, shall be in effect for taxable years
beginning after December 31, 1982. The provisions of sections
905, 1708, and 1879(m) of the Tax Reform Act of 1986, Public Law
Number 99-514, shall be effective at the same time that they
become effective for federal income tax purposes.
(iv) (iii) The Internal Revenue Code of 1954, as amended
through December 31, 1983, shall be in effect for taxable years
beginning after December 31, 1983. The provisions of sections
13, 17, 25(b), 31, 32, 41 to 43, 52, 55, 56, 71 to 74, 77, 81,
82, 91, 92, 94, 101 to 103, 105 to 108, 111 to 113, 147(c), 171,
172, 174, 175, 179(a), 221, 223, 224, 421(b), 432, 481, 491,
512, 522 to 524, 554 to 557, 561, 611(a), 621 to 623, 626 to
628, 711(c), 712(d), 713(b), (e), (g), and (h), 721(a), (b),
(d), (g), (i), (o), (p), (r), (t), and (w), 722(e), 1001, 1026,
1061 to 1064, 1066, 1076, 1078, and 2638(b) of the Deficit
Reduction Act of 1984, Public Law Number 98-369, and section 1
of Public Law Number 98-611, and sections 1801, 1802, 1805 to
1809, 1812, 1842, 1853 to 1855, 1866, 1869 to 1873, 1875, and
1878(g) and (h) of the Tax Reform Act of 1986, Public Law Number
99-514, shall be effective at the same time that they become
effective for federal income tax purposes.
(v) (iv) The Internal Revenue Code of 1954, as amended
through May 25, 1985, shall be in effect for taxable years
beginning after December 31, 1984. The provisions of sections
101, 102, 103, 201, and 202 of Public Law Number 99-121 and
sections 402, 403, 1803, 1804, 1852, and 1861 of the Tax Reform
Act of 1986, Public Law Number 99-514, shall be effective at the
same time that they become effective for federal income tax
purposes.
(vi) (v) The Internal Revenue Code of 1954, as amended
through December 31, 1985, shall be in effect for taxable years
beginning after December 31, 1985.
The provisions of sections 121 to 123, 201, 202, 241, 401,
405, 411 to 413, 653, 654, 804, 811, 822, 1001, 1003, 1122,
1162, 1164, 1166, 1301, 1401, 1402, 1707, 1826, 1827, 1843,
1867, 1868, 1879(f), and 1895 of the Tax Reform Act of 1986,
Public Law Number 99-514, shall be effective at the same time
that they become effective for federal income tax purposes.
References to the Internal Revenue Code of 1954 in
subdivisions 20a, 20b, 20e, and 20f mean the code in effect for
the purpose of defining gross income for the applicable taxable
year.
Sec. 19. Minnesota Statutes 1986, section 290.01,
subdivision 22, is amended to read:
Subd. 22. [TAXABLE NET INCOME.] For tax years beginning
after December 31, 1986, the term "taxable net income" means:
(1) for resident individuals the same as net income;
(2) for individuals who were not residents of Minnesota for
the entire year, the same as net income except that the tax is
imposed only on the Minnesota apportioned share of that income
as determined pursuant to section 290.06, subdivision 2c,
paragraph (e);
(3) for all other taxpayers, the part of net income that is
allocable to Minnesota by assignment or apportionment under one
or more of sections 290.17, 290.191, 290.20, 290.35, and 290.36.
For tax years beginning before January 1, 1987, the term
"taxable net income" means the net income assignable to this
state pursuant to sections 290.17 to 290.20. For corporations,
taxable net income is then reduced by the deductions contained
in section 290.21.
Sec. 20. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 29. [TAXABLE INCOME.] For tax years beginning after
December 31, 1986, the term "taxable income" means:
(1) for individuals, estates, and trusts, the same as
taxable net income;
(2) for corporations, the taxable net income less
(i) the net operating loss deduction under section 290.095;
(ii) the dividends received deduction under section 290.21,
subdivision 4;
(iii) the charitable contribution deduction under section
290.21, subdivision 3; and
(iv) the foreign royalty deduction under section 290.21,
subdivision 8.
Sec. 21. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 30. [REFERENCES TO THE INTERNAL REVENUE
CODE.] Except when inappropriate, a reference in this chapter
(1) to the Internal Revenue Code of 1954 includes a reference to
the Internal Revenue Code of 1986, and (2) to the Internal
Revenue Code of 1986 includes a reference to the provisions of
law formerly known as the Internal Revenue Code of 1954.
Sec. 22. [290.014] [JURISDICTION TO TAX IN GENERAL.]
Subdivision 1. [RESIDENT INDIVIDUALS.] All net income of a
resident individual is subject to tax under this chapter.
Subd. 2. [NONRESIDENT INDIVIDUALS.] Income of a
nonresident individual is subject to tax under this chapter and
a nonresident individual is subject to the return filing
requirements under this chapter to the extent that the income is:
(1) allocable to this state under section 290.17, 290.191,
or 290.20;
(2) taxed to the individual under the Internal Revenue Code
of 1986, as amended through December 31, 1986, (or not taxed
under the Internal Revenue Code by reason of its character but
of a character which is taxable under this chapter) in the
individual's capacity as a beneficiary of an estate with income
allocable to this state under section 290.17, 290.191, or 290.20
and the income, taking into account the income character
provisions of section 662(b) of the Internal Revenue Code of
1986, as amended through December 31, 1986, would be allocable
to this state under section 290.17, 290.191, or 290.20 if
realized by the individual directly from the source from which
realized by the estate;
(3) taxed to the individual under the Internal Revenue Code
of 1986, as amended through December 31, 1986, (or not taxed
under the Internal Revenue Code by reason of its character but
of a character that is taxable under this chapter) in the
individual's capacity as a beneficiary or grantor or other
person treated as a substantial owner of a trust with income
allocable to this state under section 290.17, 290.191, or 290.20
and the income, taking into account the income character
provisions of section 652(b), 662(b), or 664(b) of the Internal
Revenue Code of 1986, as amended through December 31, 1986,
would be allocable to this state under section 290.17, 290.191,
or 290.20 if realized by the individual directly from the source
from which realized by the trust;
(4) taxed to the individual under the Internal Revenue Code
of 1986, as amended through December 31, 1986, (or not taxed
under the Internal Revenue Code by reason of its character but
of a character which is taxable under this chapter) in the
individual's capacity as a limited or general partner in a
partnership with income allocable to this state under section
290.17, 290.191, or 290.20 and the income, taking into account
the income character provisions of section 702(b) of the
Internal Revenue Code of 1986, as amended through December 31,
1986, would be allocable to this state under section 290.17,
290.191, or 290.20 if realized by the individual directly from
the source from which realized by the partnership; or
(5) taxed to the individual under the Internal Revenue Code
of 1986, as amended through December 31, 1986, (or not taxed
under the Internal Revenue Code by reason of its character but
of a character which is taxable under this chapter) in the
individual's capacity as a shareholder of a corporation having a
valid election in effect under section 1362 of the Internal
Revenue Code of 1986, as amended through December 31, 1986, and
income allocable to this state under section 290.17, 290.191, or
290.20 and the income, taking into account the income character
provisions of section 1366(b) of the Internal Revenue Code of
1986, as amended through December 31, 1986, would be allocable
to this state under section 290.17, 290.191, or 290.20 if
realized by the individual directly from the source from which
realized by the corporation.
Subd. 3. [TRUSTS AND ESTATES.] A trust or estate, whether
resident or nonresident, is subject to the return filing
requirements under this chapter and the income of a trust or
estate is subject to tax under this chapter to the extent that
the income of the trust or estate is:
(1) allocable to this state under section 290.17, 290.191,
or 290.20;
(2) taxed to the trust or estate under the Internal Revenue
Code of 1986, as amended through December 31, 1986, (or not
taxed under the Internal Revenue Code by reason of its character
but of a character which is taxable under this chapter) in its
capacity as a beneficiary of a trust or estate with income
allocable to this state under section 290.17, 290.191, or 290.20
and the income, taking into account the income character
provisions of section 662(b) of the Internal Revenue Code of
1986, as amended through December 31, 1986, would be allocable
to this state under section 290.17, 290.191, or 290.20 if
realized by the trust or beneficiary estate directly from the
source from which realized by the distributing estate;
(3) taxed to the trust or estate under the Internal Revenue
Code of 1986, as amended through December 31, 1986, (or not
taxed under the Internal Revenue Code by reason of its character
but of a character which is taxable under this chapter) in its
capacity as a beneficiary or grantor or other person treated as
a substantial owner of a trust with income allocable to this
state under section 290.17, 290.191, or 290.20 and the income,
taking into account the income character provisions of section
652(b), 662(b), or 664(b) of the Internal Revenue Code of 1986,
as amended through December 31, 1986, would be allocable to this
state under section 290.17, 290.191, or 290.20 if realized by
the beneficiary trust or estate directly from the source from
which realized by the distributing trust;
(4) taxed to the trust or estate under the Internal Revenue
Code of 1986, as amended through December 31, 1986, (or not
taxed under the Internal Revenue Code by reason of its character
but of a character which is taxable under this chapter) in its
capacity as a limited or general partner in a partnership with
income allocable to this state under section 290.17, 290.191, or
290.20 and the income, taking into account the income character
provisions of section 702(b) of the Internal Revenue Code of
1986, as amended through December 31, 1986, would be allocable
to this state under section 290.17, 290.191, or 290.20 if
realized by the trust or estate directly from the source from
which realized by the partnership; or
(5) taxed to the trust or estate under the Internal Revenue
Code of 1986, as amended through December 31, 1986, (or not
taxed under the Internal Revenue Code by reason of its character
but of a character which is taxable under this chapter) in its
capacity as a shareholder of a corporation having a valid
election in effect under section 1362 of the Internal Revenue
Code of 1986, as amended through December 31, 1986, and income
allocable to this state under section 290.17, 290.191, or 290.20
and the income, taking into account the income character
provisions of section 1366(b) of the Internal Revenue Code of
1986, as amended through December 31, 1986, would be allocable
to this state under section 290.17, 290.191, or 290.20 if
realized by the trust or estate directly from the source from
which realized by the corporation.
Subd. 4. [PARTNERSHIPS.] A partnership is not subject to
tax under this chapter but is subject to the return filing
requirements under this chapter and its partners are subject to
tax under this chapter on their shares of partnership income to
the extent that the income of the partnership is:
(1) allocable to this state under section 290.17, 290.191,
or 290.20;
(2) taxed to the partnership under the Internal Revenue
Code of 1986, as amended through December 31, 1986, (or not
taxed under the Internal Revenue Code by reason of its character
but of a character which is taxable under this chapter) in its
capacity as a beneficiary of an estate with income allocable to
this state under section 290.17, 290.191, or 290.20 and the
income, taking into account the income character provisions of
section 662(b) of the Internal Revenue Code of 1986, as amended
through December 31, 1986, would be allocable to this state
under section 290.17, 290.191, or 290.20 if realized by the
partnership directly from the source from which realized by the
estate;
(3) taxed to the partnership under the Internal Revenue
Code of 1986, as amended through December 31, 1986, (or not
taxed under the Internal Revenue Code by reason of its character
but of a character which is taxable under this chapter) in its
capacity as a beneficiary or grantor or other person treated as
a substantial owner of a trust with income allocable to this
state under section 290.17, 290.191, or 290.20 and the income,
taking into account the income character provisions of section
652(b), 662(b), or 664(b) of the Internal Revenue Code of 1986,
as amended through December 31, 1986, would be allocable to this
state under section 290.17, 290.191, or 290.20 if realized by
the partnership directly from the source from which realized by
the trust; or
(4) taxed to the partnership under the Internal Revenue
Code of 1986, as amended through December 31, 1986, (or not
taxed under the Internal Revenue Code by reason of its character
but of a character which is taxable under this chapter) in its
capacity as a limited or general partner in a partnership with
income allocable to this state under section 290.17, 290.191, or
290.20 and the income, taking into account the income character
provisions of section 702(b) of the Internal Revenue Code of
1986, as amended through December 31, 1986, would be allocable
to this state under section 290.17, 290.191, or 290.20 if
realized by the second tier partnership directly from the source
from which realized by the first tier partnership.
Subd. 5. [CORPORATIONS.] A corporation having a valid
election in effect under section 1362 of the Internal Revenue
Code of 1986, as amended through December 31, 1986, is not
subject to tax under this chapter, except as provided in section
290.9725, but its shareholders are, and it is subject to the
return filing requirements. Corporations are subject to the
return filing requirements and to tax under this chapter if the
corporation so exercises its franchise as to engage in such
contacts with this state as to cause part of the income of the
corporation to be:
(1) allocable to this state under section 290.17, 290.191,
290.20, 290.35, or 290.36;
(2) taxed to the corporation under the Internal Revenue
Code of 1986, as amended through December 31, 1986, (or not
taxed under the Internal Revenue Code by reason of its character
but of a character which is taxable under this chapter) in its
capacity as a beneficiary of an estate with income allocable to
this state under section 290.17, 290.191, or 290.20 and the
income, taking into account the income character provisions of
section 662(b) of the Internal Revenue Code of 1986, as amended
through December 31, 1986, would be allocable to this state
under section 290.17, 290.191, or 290.20 if realized by the
corporation directly from the source from which realized by the
estate;
(3) taxed to the corporation under the Internal Revenue
Code of 1986, as amended through December 31, 1986, (or not
taxed under the Internal Revenue Code by reason of its character
but of a character which is taxable under this chapter) in its
capacity as a beneficiary or grantor or other person treated as
a substantial owner of a trust with income allocable to this
state under section 290.17, 290.191, or 290.20 and the income,
taking into account the income character provisions of section
652(b), 662(b), or 664(b) of the Internal Revenue Code of 1986,
as amended through December 31, 1986, would be allocable to this
state under section 290.17, 290.191, or 290.20 if realized by
the corporation directly from the source from which realized by
the trust; or
(4) taxed to the corporation under the Internal Revenue
Code of 1986, as amended through December 31, 1986, (or not
taxed under the Internal Revenue Code by reason of its character
but of a character which is taxable under this chapter) in its
capacity as a limited or general partner in a partnership with
income allocable to this state under section 290.17, 290.191, or
290.20 and the income, taking into account the income character
provisions of section 702(b) of the Internal Revenue Code of
1986, as amended through December 31, 1986, would be allocable
to this state under section 290.17, 290.191, or 290.20 if
realized by the corporation directly from the source from which
realized by the partnership.
Sec. 23. [290.015] [MINIMUM CONTACTS REQUIRED FOR
JURISDICTION TO TAX TRADE OR BUSINESS.]
Subdivision 1. [GENERAL RULE.] A person, other than a
resident individual, that conducts a trade or business with its
principal place of business outside of Minnesota is subject to
the taxes imposed by this chapter with respect to that trade or
business if the trade or business makes sales or receives other
income that is assignable or apportionable to this state under
section 290.17, 290.191, 290.20, 290.35 or 290.36 without regard
to physical presence in this state, except as provided in
subdivision 3. Activities that create jurisdiction to tax under
this chapter include, but are not limited to:
(1) having a place of business in this state;
(2) having employees, representatives, or independent
contractors conducting business activities in this state;
(3) regularly selling products or services of any kind or
nature to customers in this state who receive the product or
service in this state;
(4) regularly soliciting business from potential customers
in this state;
(5) regularly performing services from outside this state
which are consumed within this state;
(6) regularly engaging in transactions with customers in
this state that involve intangible property, including loans but
not property described in subdivision 3, paragraph (b), and
result in income flowing to the person from within this state;
(7) owning or leasing tangible personal or real property
located in this state; or
(8) if a financial institution, regularly soliciting and
receiving deposits from customers in this state.
Subd. 2. [PRESUMPTION.] A person is presumed, subject to
rebuttal, to be engaged in regular solicitation within this
state if it conducts transactions described in any of
subdivision 1, clauses (3) to (6), with 20 or more residents of
this state during any tax period or, if a financial institution,
if the sum of its assets and the absolute value of its deposits
attributable to sources within this state equals or exceeds
$5,000,000. Assets and deposits must be attributed to sources
within this state by applying the principles established under
section 290.191.
Subd. 3. [EXCEPTIONS.] (a) A person is not subject to tax
under this chapter if the person is engaged in the business of
selling tangible personal property and taxation of that person
under this chapter is precluded by Public Law Number 86-272,
United States Code, title 15, sections 381 to 384.
(b) Ownership of an interest in the following types of
property shall not be a factor in determining whether the owner
is subject to tax under this chapter:
(1) an interest in a real estate mortgage investment
conduit, a real estate investment trust, or a regulated
investment company, as those terms are defined in the Internal
Revenue Code of 1986, as amended through December 31, 1986; and
(2) an interest in a loan-backed security representing
ownership in a pool of promissory notes or certificates of
interest or participation in such notes which provide for
payments in relation to payments or reasonable projections of
payments on the notes.
Subd. 4. [LIMITATIONS.] This section does not (1) subject
a trade or business to any regulation, including any tax, of any
local unit of government or subdivision of this state if the
trade or business does not own or lease tangible or real
property located within this state and has no employees or
independent contractors present in this state to assist in the
carrying on of the business; or (2) exclude a trade or business
from the filing requirements of the notice of business
activities report under section 290.371.
Subd. 5. [DETERMINATION AT ENTITY LEVEL.] Determinations
under this section with respect to trades or businesses
conducted by a partnership, trust, estate, or corporation with
an election in effect under section 1362 of the Internal Revenue
Code, or any other entity, the income of which is or may be
taxed to its owners or beneficiaries must be made with respect
to the entity carrying on the trade or business and not with
respect to owners or beneficiaries of the trade or business, the
taxability of which under this chapter must be determined under
section 290.014.
Sec. 24. Minnesota Statutes 1986, section 290.02, is
amended to read:
290.02 [EXCISE FRANCHISE TAX ON CORPORATIONS; IMPOSITION,
MEASUREMENT MEASURED BY NET INCOME.]
An annual excise franchise tax is hereby imposed upon every
domestic corporation for the privilege of existing as a
corporation during any part of its taxable year, and upon every
foreign corporation doing business within this state, except
those included within section 290.03, including but not limited
to railroad companies for the grant to it of the privilege of
transacting or for the actual transaction by it of any local
business within this state during any part of its taxable year,
in corporate or organized form on the exercise of the corporate
franchise to engage in contacts with this state that produce
gross income attributable to sources within this state is
imposed upon every corporation that so exercises its franchise
during the taxable year.
Contacts within this state do not include transportation in
interstate or foreign commerce, or both, by means of ships
navigating within or through waters that are made international
for navigation purposes by any treaty or agreement to which the
United States is a party.
The tax so imposed shall be measured by such corporations'
taxable net income and alternative minimum tax base for the
taxable year for which the tax is imposed, and computed in the
manner and at the rates provided in this chapter.
Sec. 25. Minnesota Statutes 1986, section 290.03, is
amended to read:
290.03 [INCOME TAX; IMPOSITION, CLASSES OF TAXPAYERS.]
An annual tax for each taxable year, computed in the manner
and at the rates hereinafter provided, is hereby imposed upon
the taxable net income for such year of the following classes of
taxpayers:
(1) Foreign corporations not taxable under section 290.02
which own property within this state or whose business within
this state during the taxable year consists exclusively of
foreign commerce, interstate commerce, or both;
Business within the state shall not be deemed to include
transportation in interstate or foreign commerce, or both, by
means of ships navigating within or through waters which are
made international for navigation purposes by any treaty or
agreement to which the United States is a party;
(2) Resident and nonresident individuals;
(3) (2) Estates of decedents, dying domiciled within or
without this state;
(4) (3) Trusts (except those taxable as corporations)
however created by residents or nonresidents or by domestic or
foreign corporations.
Sec. 26. Minnesota Statutes 1986, section 290.032,
subdivision 1, is amended to read:
Subdivision 1. There is hereby imposed as an addition to
the annual income tax for a taxable year of a taxpayer in the
classes described in section 290.03 a tax with respect to any
distribution received by such taxpayer that is treated as a lump
sum distribution under section 402(e) of the Internal Revenue
Code of 1954 1986, as amended through December 31, 1985 1986,
and that is subject to tax for such taxable year under section
402(e) of the Internal Revenue Code of 1954 1986, as amended
through December 31, 1985 1986.
Sec. 27. Minnesota Statutes 1986, 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 1986, as amended
through December 31, 1985 1986, except that the initial separate
tax shall be an amount equal to ten five times the tax which
would be imposed by section 290.06, subdivision 2c, if the
recipient was an unmarried individual electing to deduct federal
income taxes, and the taxable net income, excluding the credits
allowed in section 290.06, subdivision 3f, was an amount equal
to one-tenth one-fifth 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 1986, as amended through December 31, 1985 1986, 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:
(1) 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; or
(2) designated as an employee contribution but which the
employing unit picks up and which is treated as an employer
contribution and which was taxed on the Minnesota return but not
the federal return in the year the contribution was made.
Sec. 28. Minnesota Statutes 1986, section 290.05,
subdivision 1, is amended to read:
Subdivision 1. The following corporations, individuals,
estates, trusts, and organizations shall be exempted from
taxation under this chapter, provided that every such person or
corporation claiming exemption under this chapter, in whole or
in part, must establish to the satisfaction of the commissioner
the taxable status of any income or activity:
(a) corporations, individuals, estates, and trusts engaged
in the business of mining or producing iron ore and other ores
the mining or production of which is subject to the occupation
tax imposed by section 298.01; but if any such corporation,
individual, estate, or trust engages in any other business or
activity or has income from any property not used in such
business it shall be subject to this tax computed on the net
income from such property or such other business or activity.
Royalty (as defined in section 299.02) shall not be considered
as income from the business of mining or producing iron ore
within the meaning of this section;
(b) the United States of America, the state of Minnesota or
any political subdivision of either agencies or
instrumentalities, whether engaged in the discharge of
governmental or proprietary functions;
(c) mutual insurance companies or associations, including
interinsurers and reciprocal underwriters, that are exempt as
provided in the Revenue Act of 1936.
Sec. 29. Minnesota Statutes 1986, section 290.05,
subdivision 2, is amended to read:
Subd. 2. Except as provided in subdivisions 1 and 3,
organizations are exempted from taxation under this chapter if
they are exempt from income taxation pursuant to Subchapter F of
the Internal Revenue Code. Township mutual insurance companies,
as defined in chapter 67A, and nonprofit health service plan
corporations, as defined in chapter 62C, are subject to taxation
under chapter 290 unless they are exempt from taxation under
subchapter F of the Internal Revenue Code of 1986.
Sec. 30. Minnesota Statutes 1986, section 290.06,
subdivision 1, is amended to read:
Subdivision 1. [COMPUTATION, CORPORATIONS.] (a) The
privilege and income taxes franchise tax 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, 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 rate of 9.5 percent adjusted as
provided in paragraph (b).
(b) For taxable years beginning after December 31, 1989,
the commissioner of revenue must adjust the rate provided in
paragraph (a) as provided in this paragraph. By December 15,
1989, the commissioner shall prepare a forecast of revenues
predicted to be raised for taxable years beginning in 1990 by
the franchise tax on corporations under this chapter for taxable
years beginning in 1990, including the tax under section
290.092, computed as if the tax were imposed under section
290.092, subdivisions 1 to 4, and the rate in effect in this
subdivision were 9.5 percent. The commissioner shall adjust the
rate provided in paragraph (a) so that the amount forecast to be
raised by the franchise tax on corporations under this chapter,
including the tax under section 290.092, subdivision 5, is equal
to the amount of the forecast computed as if the tax under
section 290.092, subdivisions 1 to 4, were in effect.
Sec. 31. Minnesota Statutes 1986, section 290.06,
subdivision 2c, is amended to read:
Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES,
AND TRUSTS.] (a) The income taxes imposed by this chapter upon
married individuals filing joint returns who elect to deduct
federal income taxes under section 290.088 must be computed by
applying to their taxable net income the following schedule of
rates:
If taxable net income is: The tax is:
not over $875 1.5 percent
over $875 but not $13 plus 2.0 percent of the
over $1,750 excess over $875
over $1,750 but not $31 plus 2.9 percent of the
over $3,500 excess over $1,750
over $3,500 but not $81 plus 4.8 percent of
over $5,375 the excess over $3,500
over $5,375 but not $171 plus 5.9 percent of
over $7,000 the excess over $5,375
over $7,000 but not $267 plus 6.1 percent of
over $7,125 the excess over $7,000
over $7,125 but not $275 plus 7.2 percent of
over $8,875 the excess over $7,125
over $8,875 but not $401 plus 8.3 percent of
over $12,375 the excess over $8,875
over $12,375 but not $691 plus 9.3 percent of
over $14,000 the excess over $12,375
over $14,000 but not $842 plus 10 percent of
over $16,000 the excess over $14,000
over $16,000 but not $1,042 plus 11 percent
over $21,500 of the excess over $16,000
over $21,500 but not $1,647 plus 11.3 percent
over $22,125 of the excess over $21,500
over $22,125 but not $1,718 plus 12.3 percent
over $25,500 of the excess over $22,125
over $25,500 but not $2,133 plus 12.6 percent
over $28,500 of the excess over $25,500
over $28,500 but not $2,511 plus 13.7 percent
over $31,750 of the excess over $28,500
over $31,750 $2,957 plus 14.0 percent
of the excess over $31,750
(b) The income taxes imposed by this chapter upon all other
married individuals filing joint returns must be computed by
applying to their taxable net income the following schedule of
rates:
If taxable net income is: The tax is:
not over $1,200 1.7 percent
over $1,200 but not $20 plus 2.1 percent of the
over $1,700 excess over $1,200
over $1,700 but not $31 plus 2.3 percent of the
over $2,700 excess over $1,700
over $2,700 but not $54 plus 3.3 percent of
over $5,600 the excess over $2,700
over $5,600 but not $150 plus 5.3 percent of
over $9,100 the excess over $5,600
over $9,100 but not $335 plus 6.8 percent of
over $12,600 the excess over $9,100
over $12,600 but not $573 plus 8.5 percent of
over $17,800 the excess over $12,600
over $17,800 but not $1,015 plus 9.3 percent of
over $30,800 the excess over $17,800
over $30,800 $2,224 plus 9.9 percent of
the excess over $30,800
(1) For taxable years beginning after December 31, 1986,
and before January 1, 1988
if taxable income is: the tax is:
not over $4,000 4 percent
over $4,000, but not $160 plus 6 percent of the
over $11,000 excess over $4,000
over $11,000, but not $580 plus 8 percent of the
over $21,000 excess over $11,000
over $21,000 $1,380 plus 9 percent of
the excess over $21,000
(2) For taxable years beginning after December 31, 1987
if taxable income is: the tax is:
not over $19,000 6 percent
over $19,000 $1,140 plus 8 percent of
the excess over $19,000;
plus an amount equal to ten percent of the tax paid by the
taxpayer under section 1(g) of the Internal Revenue Code of
1986, as amended through December 31, 1986.
(c) (b) The income taxes imposed by this chapter upon
unmarried individuals, married individuals filing separate
returns, estates, and trusts that elect to deduct federal income
taxes under section 290.088 must be computed by applying to
taxable net income the following schedule of rates:
If taxable net income is: The tax is:
not over $700 1.3 percent
over $700 but not $9 plus 1.9 percent of the
over $1,400 excess over $700
over $1,400 but not $22 plus 3.2 percent of the
over $2,800 excess over $1,400
over $2,800 but not $67 plus 5.4 percent of
over $4,300 the excess over $2,800
over $4,300 but not $148 plus 6.9 percent of
over $5,700 the excess over $4,300
over $5,700 but not $245 plus 8.4 percent of
over $7,100 the excess over $5,700
over $7,100 but not $362 plus 9.8 percent of
over $9,900 the excess over $7,100
over $9,900 but not $637 plus 11.1 percent of
over $12,800 the excess over $9,900
over $12,800 but not $959 plus 12.4 percent of
over $15,400 the excess over $12,800
over $15,400 but not $1,281 plus 13.6 percent of
over $19,400 the excess over $15,400
over $19,400 $1,825 plus 14 percent
of the excess over $19,400
(1) For taxable years beginning after December 31, 1986,
and before January 1, 1988
if taxable income is: the tax is:
not over $3,000 4 percent
over $3,000, but not $120 plus 6 percent
over $9,000 of the excess over $3,000
over $9,000, but not $480 plus 8 percent
over $16,000 of the excess over $9,000
over $16,000 $1,040 plus 9 percent
of the excess over $16,000
(2) For taxable years beginning after December 31, 1987
if taxable income is: the tax is:
not over $13,000 6 percent
over $13,000 $780 plus 8 percent
of the excess over $13,000;
plus an amount equal to ten percent of the tax paid by the
taxpayer under section 1(g) of the Internal Revenue Code of
1986, as amended through December 31, 1986.
(d) (c) The income taxes imposed by this chapter upon all
other unmarried individuals, married individuals filing separate
returns, estates, and trusts qualifying as a head of household
as defined in section 2(b) of the Internal Revenue Code of 1986,
as amended through December 31, 1986, must be computed by
applying to taxable net income the following schedule of rates:
If taxable net income is: The tax is:
not over $300 1 percent
over $300 but not $3 plus 1.3 percent of the
over $600 excess over $300
over $600 but not $7 plus 1.6 percent of the
over $900 excess over $600
over $900 but not $12 plus 2.1 percent of
over $1,300 the excess over $900
over $1,300 but not $20 plus 2.7 percent of
over $2,000 the excess over $1,300
over $2,000 but not $39 plus 3.7 percent of
over $2,800 the excess over $2,000
over $2,800 but not $69 plus 4.5 percent of
over $4,300 the excess over $2,800
over $4,300 but not $136 plus 6.1 percent of
over $6,400 the excess over $4,300
over $6,400 but not $264 plus 7.5 percent of
over $9,400 the excess over $6,400
over $9,400 but not $489 plus 9.3 percent of
over $16,200 the excess over $9,400
over $16,200 $1,122 plus 9.9 percent
of the excess over $16,200
(1) For taxable years beginning after December 31, 1986,
and before January 1, 1988
if taxable income is: the tax is:
not over $3,500 4 percent
over $3,500, but not $140 plus 6 percent
over $10,000 of the excess over $3,500
over $10,000, but not $530 plus 8 percent
over $18,500 of the excess over $10,000
over $18,500 $1,210 plus 9 percent
of the excess over $18,500
(2) For taxable years beginning after December 31, 1987
if taxable income is: the tax is:
not over $16,000 6 percent
over $16,000 $960 plus 8 percent
of the excess over $16,000;
plus an amount equal to ten percent of the tax paid by the
taxpayer under section 1(g) of the Internal Revenue Code of
1986, as amended through December 31, 1986.
(e) (d) In lieu of a tax computed according to the rates
set forth in this subdivision, the tax of any individual
taxpayer whose taxable net income for the taxable year is less
than an amount determined by the commissioner must 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.
(f) (e) An individual who is not a Minnesota resident for
the entire year must compute the individual's Minnesota income
tax as provided in this subdivision. After the application of
the nonrefundable credits provided in this chapter, the tax
liability must then be multiplied by a fraction in which:
(1) The numerator is the individual's Minnesota sourced
federal adjusted gross income, computed as if the as defined in
section 62 of the Internal Revenue Code of 1986, as amended
through December 31, 1986, after applying the allocation and
assignability provisions of section 290.081, clause (a), 290.17,
subdivision 2, or 290.171 applied; and
(2) the denominator is the individual's federal adjusted
gross income as defined in section 62 of the Internal Revenue
Code of 1986, as amended through December 31, 1986.
Sec. 32. Minnesota Statutes 1986, section 290.06,
subdivision 2d, is amended to read:
Subd. 2d. [INFLATION ADJUSTMENT OF BRACKETS.] (a) For
taxable years beginning after December 31, 1985 1990, the
minimum and maximum dollar amounts for each rate bracket for
which a tax is imposed in subdivision 2c shall be adjusted for
inflation by the percentage determined under paragraph (b). For
the purpose of making the adjustment as provided in this
subdivision all of the rate brackets provided in subdivision 2c
shall be the rate brackets as they existed for taxable years
beginning after December 31, 1984 1987, and before January
1, 1986 1991. The rate applicable to any rate bracket must not
be changed. The dollar amounts setting forth the tax shall be
adjusted to reflect the changes in the rate brackets. The rate
brackets as adjusted must be rounded to the nearest $10 amount.
If the rate bracket ends in $5, it must be rounded up to the
nearest $10 amount.
(b) The commissioner shall adjust the rate brackets by the
percentage determined under pursuant to the provisions of
section 1(f) of the Internal Revenue Code of 1954 1986, as
amended through December 31, 1985 1986, except that in section
1(f)(3)(B) the word "1984 1989" shall be substituted for the
word "1983 1987." For 1991, the commissioner shall then
determine the percent change from the 12 months ending on
September 30, 1984 August 31, 1989, to, for 1986, the 12 months
ending on September 30, 1985 August 31, 1990, and in each
subsequent year, from the 12 months ending on September 30, 1984
August 31, 1989, to the 12 months ending on September 30 August
31 of the preceding year preceding the taxable year. The
determination of the commissioner pursuant to this subdivision
shall not be considered a "rule" and shall not be subject to the
administrative procedure act contained in chapter 14.
No later than December 15 of each year, the commissioner
shall announce the specific percentage that will be used to
adjust the tax rate brackets, the maximum standard deduction
amount, and the personal credit amounts.
Sec. 33. Minnesota Statutes 1986, section 290.06, is
amended by adding a subdivision to read:
Subd. 20. [ELDERLY AND DISABLED PERSONS.] An individual
may take a credit against the tax due under this chapter equal
to 40 percent of the credit for which the individual qualifies
under section 22 of the Internal Revenue Code of 1986, as
amended through December 31, 1986.
Sec. 34. Minnesota Statutes 1986, section 290.06, is
amended by adding a subdivision to read:
Subd. 21. [ALTERNATIVE MINIMUM TAX.] (a) A corporation is
allowed a credit for alternative minimum tax previously paid for
any taxable year in which the corporation has no tax liability
under section 290.092, and has an alternative minimum tax credit
carryover from a previous year. The credit shall be equal to
the lesser of (1) the excess of the tax under section 290.06 for
the taxable year over the amount computed under section 290.092,
subdivision 1, clause (a), for the taxable year, or (2) the
alternative minimum tax credit carryover to the taxable year.
(b) The tax imposed under section 290.092 for any taxable
year is a credit for alternative minimum tax previously paid
which is a carryover to each of the 15 taxable years succeeding
the taxable year. The entire amount of the alternative minimum
tax credit must be carried to the earliest of the taxable years
to which such amount may be carried. The portion of the
alternative minimum tax credit which is carried to each of the
other taxable years to which the credit may be carried is the
excess, if any, of the credit over the amount allowable under
paragraph (a) for each of the taxable years to which the credit
may be carried. In each taxable year in which a credit is
allowable under paragraph (a), the credit for alternative
minimum tax previously paid must be used beginning with the
earliest taxable year from which the credit may be carried.
Sec. 35. Minnesota Statutes 1986, section 290.067,
subdivision 1, is amended to read:
Subdivision 1. [AMOUNT OF CREDIT.] A taxpayer may take as
a credit against the tax due from the taxpayer and a spouse, if
any, under this chapter an amount equal to the dependent care
credit for which the taxpayer is eligible pursuant to the
provisions of section 21 of the Internal Revenue Code of 1954,
as amended through December 31, 1985, subject to the limitations
provided in subdivision 2.
Sec. 36. Minnesota Statutes 1986, section 290.067,
subdivision 2, is amended to read:
Subd. 2. [LIMITATIONS.] The credit for expenses incurred
for the care of each dependent shall not exceed $720 in any
taxable year, and the total credit for all dependents of a
claimant shall not exceed $1,440 in a taxable year. The maximum
total credit shall be reduced according to the amount of the
combined federal adjusted gross income, plus the ordinary income
portion of any lump sum distribution under section 402(e) of the
Internal Revenue Code of 1954, as amended through December 31,
1985, of the claimant and a spouse, if any, as follows:
income up to $10,000 $12,200, $720 maximum for one
dependent, $1,440 for all dependents;
income of $10,001 to $11,000, $660 maximum for one
dependent, $1,320 for all dependents;
income over $11,000 $12,200, the maximum credit for one
dependent shall be reduced by $10 $12 for every $200 of
additional income, $20 $24 for all dependents;
for income of $24,001 and over, no credit shall be received.
The commissioner shall construct and make available to
taxpayers tables showing the amount of the credit at various
levels of income and expenses. The tables shall follow the
schedule contained in this subdivision, except that the
commissioner may graduate the transitions between expenses and
income brackets.
Sec. 37. Minnesota Statutes 1986, section 290.067, is
amended by adding a subdivision to read:
Subd. 2a. [INCOME.] For purposes of this section, "income"
means the sum of the following:
(1) the greater of federal adjusted gross income as defined
in section 62 of the Internal Revenue Code or zero; and
(2) the sum of the following amounts to the extent not
included in clause (1):
(i) all nontaxable income;
(ii) the amount of a passive activity loss that is not
disallowed as a result of section 469, paragraph (i) or (1) of
the Internal Revenue Code and the amount of passive activity
loss carryover allowed under section 469(b) of the Internal
Revenue Code;
(iii) an amount equal to the total of any discharge of
qualified farm indebtedness of a solvent individual excluded
from gross income under section 108(g) of the Internal Revenue
Code;
(iv) cash public assistance and relief;
(v) any pension or annuity (including railroad retirement
benefits, all payments received under the federal Social
Security Act, supplemental security income, and veterans
benefits), which was not exclusively funded by the claimant or
spouse, or which was funded exclusively by the claimant or
spouse and which funding payments were excluded from federal
adjusted gross income in the years when the payments were made;
(vi) interest received from the federal or a state
government or any instrumentality or political subdivision
thereof;
(vii) workers' compensation;
(viii) nontaxable strike benefits;
(ix) the gross amounts of payments received in the nature
of disability income or sick pay as a result of accident,
sickness, or other disability, whether funded through insurance
or otherwise;
(x) the ordinary income portion of a lump sum distribution
under section 402(e) of the Internal Revenue Code; and
(xi) contributions made by the claimant to an individual
retirement account, including a qualified voluntary employee
contribution; simplified employee pension plan; self-employed
retirement plan; cash or deferred arrangement plan under section
401(k) of the Internal Revenue Code; or deferred compensation
plan under section 457 of the Internal Revenue Code.
Sec. 38. Minnesota Statutes 1986, section 290.067, is
amended by adding a subdivision to read:
Subd. 6. For purposes of this section, "Internal Revenue
Code" means the Internal Revenue Code of 1986, as amended
through December 31, 1986.
Sec. 39. Minnesota Statutes 1986, section 290.068,
subdivision 1, is amended to read:
Subdivision 1. [CREDIT ALLOWED.] In addition to the
deduction provided in section 290.09, A corporation, other than
a corporation with a valid election in effect under section
290.9725, is allowed a credit against the tax imposed by this
chapter for the taxable year equal to:
(a) 12.5 5 percent of the first $2 million of the excess
(if any) of
(1) the qualified research expenses for the taxable year,
over
(2) the base period research expenses; and
(b) 6.25 2.5 percent on all of such excess expenses over $2
million.
Sec. 40. Minnesota Statutes 1986, section 290.068,
subdivision 2, is amended to read:
Subd. 2. [DEFINITIONS.] For purposes of this section, the
following terms have the meanings given.
(a) "Qualified research expenses" means (i) qualified
research expenses as defined in section 30 41(b) and (e) of the
Internal Revenue Code, except it shall not include expenses
incurred for basic research conducted outside the state of
Minnesota pursuant to section 30 41(e); or (ii) contributions to
a nonprofit corporation established and operated pursuant to the
provisions of chapter 317 for the purpose of promoting the
establishment and expansion of business in this state, provided
the contributions are invested by the nonprofit corporation for
the purpose of providing funds for small, technologically
innovative enterprises in Minnesota during the early stages of
their development.
(b) "Qualified research" means qualified research as
defined in section 30 41(d) of the Internal Revenue Code, except
that the term shall not include qualified research conducted
outside the state of Minnesota.
(c) "Base period research expenses" means base period
research expenses as defined in section 30 41(c) of the Internal
Revenue Code, except that "December 31, 1981" shall be
substituted for "June 30, 1981" in subparagraph (B) of paragraph
(2) and the definitions contained in clauses (a) and (b) shall
apply.
(d) "Internal Revenue Code" means the Internal Revenue Code
of 1954 1986, as amended through December 31, 1984 1986.
Sec. 41. Minnesota Statutes 1986, 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 this chapter.
(2) In the case of a corporation which is a partner in a
partnership, 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 the corporation's interest in the trade or business or
entity) equal to the amount of tax attributable to that portion
of taxable income which is allocable or apportionable to the
corporation'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 45th month following the end of the taxable year in which
the research and experimental expenditure credit arises which
results in the carryback, plus any extension of time granted for
filing the return, but only if the return was filed within the
extended time. 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 45th month following the end of the subsequent taxable year,
plus any extension of time granted for filing the return, but
only if the return was filed within the extended time. 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. 42. Minnesota Statutes 1986, section 290.068,
subdivision 4, is amended to read:
Subd. 4. [PARTNERSHIPS.] In the case of partnerships the
credit shall be allocated in the same manner provided by section
30 41(f)(2) of the Internal Revenue Code.
Sec. 43. Minnesota Statutes 1986, section 290.068,
subdivision 5, is amended to read:
Subd. 5. [ADJUSTMENTS; ACQUISITIONS AND DISPOSITIONS.] If
a taxpayer acquires or disposes of the major portion of a trade
or business or the major portion of a separate unit of a trade
or business in a transaction with another taxpayer, the
taxpayer's qualified research expenses and base period shall be
adjusted in the same manner provided by section 30 41(f)(3) of
the Internal Revenue Code, except that "December 31, 1980" shall
be substituted for "June 30, 1980."
Sec. 44. Minnesota Statutes 1986, section 290.068,
subdivision 6, is amended to read:
Subd. 6. [ADDITIONAL CREDIT.] (a) For taxable years
beginning after December 31, 1986, and before January 1, 1988,
in addition to the credit allowed by subdivision 1, a credit
shall be allowed against the tax imposed by this chapter for the
taxable year equal to 12.5 five percent of the amount of
qualified research expenses paid or incurred for qualified
research performed by a Minnesota-domiciled corporation for or
on behalf of one or more of its wholly-owned subsidiary
corporations which has in effect during the taxable year a valid
election under section 936 of the Internal Revenue Code,
including any expenses paid or incurred that are attributable to
a wholly-owned subsidiary corporation by reason of paragraph (h)
of section 936 for purposes of determining each corporation's
combined taxable income.
(b) The maximum credit allowed by clause (a) for the
taxable year shall be the excess of
(1) the total amount of tax imposed by this chapter on all
members of the unitary group for the taxable year, over
(2) the sum of (A) the total amount of tax which would be
imposed on the unitary group, if the corporation or corporations
with valid elections under section 936 of the Internal Revenue
Code were excluded from the unitary group, plus (B) the tax, if
any, which would be imposed on the corporation or corporations
with valid elections under section 936 of the Internal Revenue
Code without regard to the other members of the unitary group.
(c)(1) If the amount of the credit determined under clause
(a) for any taxable year exceeds the limitation provided in
clause (b), the excess shall be 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.
(2) The amount of the unused credit which may be added
under subparagraph (1) for any preceding taxable year shall not
exceed the amount by which the limitation provided by clause (b)
for the taxable year exceeds the sum of
(i) the credit allowable under this subdivision for the
taxable year, and
(ii) the amounts, which, by reason of subparagraph (1), are
added to the amount allowable for the taxable year and which are
attributable to taxable years preceding the taxable year in
which an excess credit arises.
Sec. 45. Minnesota Statutes 1986, section 290.069,
subdivision 2a, is amended to read:
Subd. 2a. [RECAPTURE; TECHNOLOGY TRANSFER CREDIT.] (a) A
corporation which receives a tax reduction pursuant to Minnesota
Statutes 1986, section 290.069, subdivision 2 shall repay to the
commissioner an amount of the tax reduction as specified in
paragraph (b) if any of the following conditions occur within a
three-year period after the date of transfer of the technology.
(1) The transferee ceases operations in the technology
corridor project area.
(2) The transferee becomes a subsidiary or affiliate of the
transferor.
(3) The transferee sells, transfers, or otherwise disposes
of the rights to technology.
(4) The transferee fails to make the necessary payments or
expenditures required by Minnesota Statutes 1986, section
290.069, subdivision 2, paragraph (g).
(5) The transferee grants an interest to the transferor in
violation of Minnesota Statutes 1986, section 290.069,
subdivision 2, paragraph (h).
(b) The amount of the repayment is determined pursuant to
the following schedule:
Occurrence of event causing recapture Repayment portion
Less than six months 100 percent
Six months or more but less than 12 months 83-1/3 percent
12 months or more but less than 18 months 66-2/3 percent
18 months or more but less than 24 months 50 percent
24 months or more but less than 30 months 33-1/3 percent
30 months or more but less than 36 months 16-2/3 percent
Sec. 46. Minnesota Statutes 1986, section 290.069,
subdivision 4b, is amended to read:
Subd. 4b. [MULTISTATE BUSINESSES.] If a qualified small
business is engaged in a business partly within and partly
without the state, the credit allowable pursuant to subdivision
2 for technology transferred to the business must be
apportioned. The credit determined pursuant to Minnesota
Statutes 1986, section 290.069, subdivision 2 must be multiplied
by the arithmetical average of the qualified small business'
property and payrolls, determined as provided by section 290.19,
subdivision 1, clauses (2)(a)(2) and (2)(a)(3), using data from
the most recently available year. After the technology is
transferred, the qualified small business shall certify to the
transferor taxpayer its factors under section 290.19,
subdivision 1, clauses (2)(a)(2) and (2)(a)(3) for each of the
succeeding two tax years. If the factors for either of these
years would result in at least a 25 percent change in the
allowable credit, the taxpayer shall file an amended return
repaying or claiming the difference in the credit. The
preceding sentence does not apply if the qualified small
business ceases operations in Minnesota and the recapture
provisions of subdivision 2a or 4a apply.
Sec. 47. Minnesota Statutes 1986, section 290.077,
subdivision 1, is amended to read:
Subdivision 1. [INCLUSION IN GROSS INCOME.]
Notwithstanding any other provision of law, income in respect of
a decedent shall be included in gross income in accordance with
the method set forth in section 691(a) of the Internal Revenue
Code of 1954 1986, as amended through December 31, 1985 1986,
shall be included in the gross income of the estate in the year
any right to receive it is transferred to a nonresident by the
personal representative of an estate. The fair market value of
the right at the date of the transfer shall be included in the
gross income of the estate for the year in which the transfer
occurs and the value of the right shall not be allowed as a
deduction in computing the taxable net income of the estate.
The estate shall not include the value of the right in its gross
income and the personal representative shall be relieved of any
further liability with respect to that right if the
nonresident: (1) includes the fair market value of the right
(as of the date the right is received) in the nonresident's
gross income for the year the right is received and pays the tax
thereon; or (2) elects to include the amount received in payment
of the right in the nonresident's gross income for the year in
which the payment is received and pays the tax on it in the same
manner as a resident of this state and files a bond with the
commissioner of revenue during the year the right is received,
in the form and in the amount as the commissioner considers
necessary to assure payment of the tax. A bond required under
clause (2) shall be considered sufficient if in an amount
equivalent to the tax that would be due if the method provided
in clause (1) were followed.
Sec. 48. Minnesota Statutes 1986, section 290.081, is
amended to read:
290.081 [INCOME OF NONRESIDENTS, RECIPROCITY; CREDIT FOR
TAXES PAID TO ANOTHER STATE.]
(a) The compensation received for the performance of
personal or professional services within this state by an
individual whose residence, place of abode, and place
customarily returned to at least once a month is 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
residence; provided that such state allows a similar exclusion
of compensation received by residents of Minnesota for services
performed therein, or
(b) 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
the taxpayer 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 the taxpayer's 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) 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. A taxpayer who is a
resident of this state pursuant to section 290.01, subdivision
7a, clause (2), and is subject to income tax as a resident in
the state of the individual's domicile is not allowed this
credit unless the state of domicile does not allow a similar
credit.
(c) The commissioner shall by rule 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.
(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 (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 (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 entitlement to a credit.
(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 chair.
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 the person 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. 49. Minnesota Statutes 1986, section 290.091,
subdivision 1, is amended to read:
Subdivision 1. [IMPOSITION OF TAX.] In addition to all
other taxes imposed by this chapter a tax is imposed on
individuals, estates, and trusts equal to the excess (if any) of
(a) an amount equal to four six percent of alternative
minimum taxable income after subtracting the exemption amount,
over
(b) the regular tax for the taxable year.
Sec. 50. Minnesota Statutes 1986, section 290.091,
subdivision 2, is amended to read:
Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by
this section, the following terms have the meanings given:
(a) "Alternative minimum taxable income" means the sum of
the following for the taxable year:
(1) the taxpayer's federal adjusted gross alternative
minimum taxable income as defined in section 55(b)(2) of the
Internal Revenue Code;
(2) the taxpayer's itemized deductions allowed in computing
federal tax preference items alternative minimum taxable income,
but excluding the portion of the charitable contribution
deduction that constitutes an item of tax preference under
section 57(a)(6) of the Internal Revenue Code;
(3) to the extent not included in federal alternative
minimum taxable income, the amount of interest income as
provided by section 290.01, subdivision 20a, clauses (1), (3),
and (4) 19a, clause (1); less the sum of
(i) interest income as defined in section 290.01,
subdivision 20b 19b, clause (1);
(ii) an overpayment of state income tax as provided by
section 290.01, subdivision 20b 19b, clause (4) (2); and
(iii) the amount of investment interest paid or accrued
within the taxable year on indebtedness to the extent that the
amount does not exceed qualified net investment income, as
defined in section 55(e)(5) 163(d)(4) of the Internal Revenue
Code. Interest does not include amounts deducted in computing
federal adjusted gross income; and
(iv) to the extent included in the taxpayer's federal
adjusted gross income, gain excluded from gross income under
section 290.01, subdivision 20b, clause (13).
In the case of an estate or trust, adjusted gross
alternative minimum taxable income must be modified computed as
provided in section 55(e)(6)(B) 59(c) of the Internal Revenue
Code and reduced by the deductions allowed under sections
642(c), 651(a), and 661(a) of the Internal Revenue Code.
(b) "Federal tax preference items" means items as defined
in sections 57, 58, and 443(d) of the Internal Revenue Code,
modified as follows:
(1) The capital gain preference item shall be reduced
(i) where the gain would be modified because some or all of
the assets have a higher basis for Minnesota purposes than for
federal purposes; and
(ii) to the extent it includes gain excluded from gross
income under section 290.01, subdivision 20b, clause (13).
(2) In the case of a nonresident individual, or an estate
or trust, with a net operating loss that is a larger amount for
Minnesota than for federal, the capital gain preference item
shall be reduced to the extent it was reduced in the allowance
of the net operating loss.
(3) Federal preference items from the business of mining or
producing iron ore and other ores which are subject to the
occupation tax and exempt from taxation under section 290.05,
subdivision 1, shall not be a preference item for Minnesota.
(4) Other federal preference items to the extent not
allowed in the computation of Minnesota gross income, as
determined by the commissioner, are not preference items for
Minnesota.
(c) "Internal Revenue Code" means the Internal Revenue Code
of 1954 1986, as amended through December 31, 1985 1986.
(c) "Investment interest" means investment interest as
defined in section 163(d)(3) of the Internal Revenue Code.
(d) "Regular tax" means the tax that would be imposed under
this chapter (without regard to this section and section
290.032), reduced by the sum of the nonrefundable credits
allowed under this chapter.
Sec. 51. Minnesota Statutes 1986, section 290.091,
subdivision 3, is amended to read:
Subd. 3. [EXEMPTION AMOUNT.] For purposes of computing the
alternative minimum tax, the exemption amount is:
(a) $40,000 in the case of a married couple filing a joint
return;
(b) $30,000 in the case of an individual who is not
married, as defined in section 143 of the Internal Revenue Code;
(c) $20,000 in the case of
(1) an estate or trust or
(2) a married individual who files a separate tax
return the exemption determined under section 55(d) of the
Internal Revenue Code, except that alternative minimum taxable
income as determined under this section must be substituted in
the computation of the phase out under section 55(d)(3).
Sec. 52. Minnesota Statutes 1986, section 290.091,
subdivision 4, is amended to read:
Subd. 4. [PART YEAR RESIDENTS; ESTATES AND TRUSTS.] (a) An
individual who is not a Minnesota resident for the entire year
must compute alternative minimum tax liability using a regular
tax liability determined under section 290.06, subdivision 2c,
paragraph (f) (e), without regard to the provision for
allocation to Minnesota. The resulting alternative minimum tax
liability must be multiplied by the fraction defined in section
290.06, subdivision 2c, paragraph (f) (e).
(b) In the case of an estate or trust, the alternative
minimum tax liability must be computed by multiplying
alternative minimum taxable income and the exemption amount by a
fraction, the numerator of which is the amount of the taxpayer's
alternative minimum taxable income allocated to this state
pursuant to the provisions of sections 290.17 to 290.20, and the
denominator of which is the taxpayer's total alternative minimum
taxable income.
Sec. 53. Minnesota Statutes 1986, section 290.091,
subdivision 5, is amended to read:
Subd. 5. [TAX BENEFIT RULE.] The tax benefit rule
contained in section 58(h) 59(g) of the Internal Revenue Code
applies to the computation of the tax under this section only to
the extent that it determines if there is an item of tax
preference for purposes of subdivision 2, clause (a)(2) (a)(1).
Sec. 54. [290.092] [ALTERNATIVE MINIMUM TAX FOR
CORPORATIONS.]
Subdivision 1. [IMPOSITION OF TAX.] For taxable years
beginning after December 31, 1986, and before January 1, 1990,
in addition to the taxes computed under this chapter without
regard to this section, the franchise tax imposed on
corporations includes a tax equal to the excess, if any, of:
(1) .001 multiplied by the alternative minimum tax base,
over
(2) the amount of tax computed under this chapter without
regard to this section.
Subd. 2. [EXEMPTIONS.] Corporations subject to tax under
sections 290.05, subdivision 3; or 60A.15, subdivision 1 and
290.35; real estate investment trusts; regulated investment
companies; cooperatives taxable under subchapter T of the
Internal Revenue Code of 1986 or organized under chapter 308 or
a similar law of another state; and entities having a valid
election in effect under section 1362 or 860D(b) of the Internal
Revenue Code of 1986, as amended through December 31, 1986, are
not subject to the tax imposed in subdivision 1 or subdivision 5.
Subd. 3. [ALTERNATIVE MINIMUM TAX BASE.] The alternative
minimum tax base equals the sum of:
(1) the total amount of Minnesota sales and receipts;
(2) the amount of the taxpayer's total Minnesota property;
and
(3) the taxpayer's total Minnesota payrolls;
less the exemption amount, if any.
Subd. 4. [DEFINITIONS.] (a) "Minnesota sales and receipts"
means the total sales apportioned to Minnesota pursuant to
section 290.191, subdivision 5, the total receipts attributed to
Minnesota pursuant to section 290.191, subdivisions 6 to 8,
and/or the total sales or receipts apportioned or attributed to
Minnesota pursuant to any other apportionment formula applicable
to the taxpayer.
(b) "Minnesota property" means total Minnesota tangible
property as provided in section 290.191, subdivisions 9 to 11,
and any other tangible property located in Minnesota.
Intangible property shall not be included in Minnesota property
for purposes of this section. Taxpayers who do not utilize
tangible property to apportion income shall nevertheless include
Minnesota property for purposes of this section. For the first
five taxable years during which a corporation is subject to
taxation under this chapter, the amount of its Minnesota
property and payrolls shall be deemed to be zero for purposes of
this section.
(c) "Minnesota payrolls" means total Minnesota payrolls as
provided in section 290.191, subdivision 12. Taxpayers who do
not utilize payrolls to apportion income shall nevertheless
include Minnesota payrolls for purposes of this section.
(d) The "exemption amount" equals the lesser of (1) the sum
of the taxpayer's Minnesota sales and receipts, property, and
payrolls or (2) $5,000,000 reduced by one-half of the amount of
the taxpayer's total sales and receipts, property, and payrolls
in excess of $10,000,000. Total sales and receipts, property,
and payroll means the total determined under section 290.191 as
the denominator of the apportionment formula. In the case of a
unitary business, the amount must reflect the factors of the
entire unitary business as reported on the combined report. A
corporation that has as its sole or primary business activity
(1) the providing of professional services; (2) operation as a
financial institution; (3) sales or management of real estate;
or (4) operation as an insurance agency does not have an
exemption amount.
Subd. 5. [IMPOSITION OF TAX AFTER 1989.] For taxable years
beginning after December 31, 1989, in addition to the taxes
computed under this chapter without regard to this section, the
franchise tax imposed on corporations includes a tax equal to
the excess, if any, of:
(1) 40 percent of the tax imposed upon the corporation
under section 55(a) of the Internal Revenue Code of 1986, as
amended through December 31, 1986, apportioned to Minnesota
under section 290.191. In computing the amount of the liability
under section 55(a) of the Internal Revenue Code of 1986, the
regular federal tax liability under section 55(a)(2) of the
Internal Revenue Code of 1986, must be determined using federal
taxable income as modified by sections 290.01, subdivisions 19c
and 19d, 290.095, and 290.21, and alternative minimum taxable
income under section 56 of the Internal Revenue Code of 1986
must be computed as if the section 290.095 restrictions on net
operating losses applied.
(2) the amount of tax computed under this chapter without
regard to this section.
Subd. 6. [CREDITS.] In computing the tax under this
section, the following credits are allowed:
(1) the enterprise zone credits allowed by section
273.1314, subdivision 9;
(2) the credits for estimated taxes paid; and
(3) the research and development credit allowed by section
290.068.
Sec. 55. [290.093] [TAX COMPUTATION FOR MUTUAL SAVINGS
BANKS CONDUCTING LIFE INSURANCE BUSINESS.]
Mutual savings banks as defined in section 594 of the
Internal Revenue Code of 1986, as amended through December 31,
1986, are subject to a tax consisting of the sum of the taxes
determined under clauses (1) and (2):
(1) a tax computed on the taxable income determined without
regard to any items of gross income or deductions properly
allocable to the business of the life insurance department, at
the rates and in the manner as if this section did not apply;
and
(2) a tax computed on the income of the life insurance
department determined without regard to any items of gross
income or deductions not properly allocable to the department
computed in the manner provided in section 290.35 and at the
rate provided in section 290.06.
This section applies only if the life insurance department
would, if it were treated as a separate corporation, qualify as
a life insurance company under section 816 of the Internal
Revenue Code of 1986, as amended through December 31, 1986.
Sec. 56. Minnesota Statutes 1986, section 290.095,
subdivision 1, is amended to read:
Subdivision 1. [ALLOWANCE OF DEDUCTION.] (a) There shall
be allowed as a deduction for the taxable year the amount of any
net operating loss deduction as defined in subdivision 2, clause
(b); provided, however, that the modifications specified in
subdivision 4 shall be made in computing the taxable net income
for the taxable year before the net operating loss deduction
shall be allowed provided in section 172 of the Internal Revenue
Code of 1986, as amended through December 31, 1986, subject to
the limitations and modifications provided in this section.
(b) A net operating loss deduction shall be available under
this section only to corporate taxpayers except as provided in
that subdivisions 7, 9, and 11 hereof apply only to individuals,
estates, and trusts.
Sec. 57. Minnesota Statutes 1986, section 290.095,
subdivision 2, is amended to read:
Subd. 2. [DEFINED AND LIMITED.] (a) The term "net
operating loss" as used in this section shall mean the excess of
the deductions of the kind provided for in section 290.09,
permitted to be taken in computing a taxpayer's taxable net
income, as that term is defined in section 290.01, subdivision
22, over the gross income used in computing such taxable net
income a net operating loss as defined in section 172(c) of the
Internal Revenue Code of 1986, as amended through December 31,
1986, with the modifications specified in subdivision 4. The
deductions provided in section 290.21 cannot be used in the
determination of a net operating loss.
(b) The term "net operating loss deduction" as used in this
section means the aggregate of the net operating loss carrybacks
and carryovers to the taxable year, computed in accordance with
subdivision 3. The provisions of section 172(b) of the Internal
Revenue Code of 1986, as amended through December 31, 1986,
relating to the carryback of net operating losses, do not apply.
Sec. 58. Minnesota Statutes 1986, section 290.095,
subdivision 3, is amended to read:
Subd. 3. [CARRYOVER AND CARRYBACK.] (a) Except as provided
in clause (d) or subdivision 8, A net operating loss for any
taxable year shall be:
(1) A net operating loss carryback to each of the three
taxable years preceding the taxable year of such loss, and
(2) a net operating loss carryover to each of the five 15
taxable years following the taxable year of such loss.
(b) The entire amount of the net operating loss for any
taxable year shall be carried to the earliest of the taxable
years to which, by reason of subdivision 3, clause (a) or (d),
such loss may be carried. The portion of such loss which shall
be carried to each of the other taxable years shall be the
excess, if any, of the amount of such loss over the sum of the
taxable net income, adjusted by the modifications specified in
subdivision 4, for each of the prior taxable years to which such
loss may be carried.
(c) Where a corporation does business both within and
without Minnesota, and apportions its income under the
provisions of section 290.19 290.191, the net operating loss
deduction shall be allowed to the extent of the apportionment
ratio of the loss year, or the year to which the loss is
carried, whichever is smaller.
(d) Where a corporation files a combined report which
reflects the entire unitary business as provided in section
290.34, subdivision 2, the corporation shall not be allowed a
net operating loss carryback to a year in which it did not file
a combined report. The number of taxable years for which a net
operating loss carryover is allowed shall be increased by the
number of taxable years for which a net operating loss carryback
is not allowed under this clause No additional net operating
loss deduction is allowed in a subsequent taxable year for the
portion of a net operating loss deduction used to offset
Minnesota income in a year in which the taxpayer is subject to
the alternative minimum tax in section 290.092.
Sec. 59. Minnesota Statutes 1986, section 290.095,
subdivision 4, is amended to read:
Subd. 4. [COMPUTATION AND MODIFICATIONS.] The following
modifications shall be made in computing a net operating loss in
any taxable year and also in computing the taxable net income
for any taxable year before a net operating loss deduction shall
be allowed:
(a) No deduction shall be allowed for or with respect to
losses connected with income producing activities if the income
therefrom would not be required to be either assignable to this
state or included in computing the taxpayer's taxable net income.
(b) A net operating loss deduction shall not be allowed.
(c) The amount deductible on account of losses from sales
or exchanges of capital assets shall not exceed the amount
includable on account of gains from sales or exchanges of
capital assets. The deduction for long-term capital gains
provided by section 290.16, subdivision 4, shall not be allowed.
(d) Renegotiation of profits for a prior taxable year under
the renegotiation laws of the United States of America,
including renegotiation of the profits with a subcontractor,
shall not enter into the computation.
(e) Federal income and excess profits taxes shall not be
allowed as a deduction.
Sec. 60. Minnesota Statutes 1986, section 290.095,
subdivision 7, is amended to read:
Subd. 7. [TENTATIVE CARRYBACK ADJUSTMENTS.] (a)
Application for adjustment. A taxpayer An individual, estate or
trust may file an application for a tentative carryback
adjustment of the tax for the prior taxable year affected by a
loss or credit carryback from any taxable year. The application
shall be 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 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 rules
prescribed by the commissioner. The application shall set forth
in such detail and with such supporting data and explanation as
such rules shall require:
(1) the amount of the 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 rules.
An application under this subdivision shall not constitute
a claim for 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 from which such carryback results,
whichever is the later, the commissioner shall make, to the
extent the commissioner 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 on finding that it contains errors of computation
which the commissioner deems cannot be corrected by the
commissioner 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; research credit carrybacks as provided in section
290.068, subdivision 3 290.01, subdivisions 19, 19a, and 19b;
and to any other carrybacks which may be provided in this
chapter.
Sec. 61. Minnesota Statutes 1986, section 290.095,
subdivision 9, is amended to read:
Subd. 9. [SPECIAL PERIOD OF LIMITATION WITH RESPECT TO NET
OPERATING LOSS CARRYBACKS.] For the purposes of sections 290.46
and 290.50 if the claim for refund relates to an overpayment
attributable to a net operating loss carryback under this
section or as the result in the case of an individual of an
adjustment of "federal adjusted gross income" because of the
carryback under section 172 of the Internal Revenue Code of
1954, as amended through December 31, 1985, in lieu of the
period of limitation prescribed in sections 290.46 and 290.50,
the period 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 net operating loss which results in such carryback or
adjustment of "federal adjusted gross income," plus any
extension of time granted for filing the return, but only if the
return was filed within the extended time. During this extended
period, for taxable years beginning before January 1, 1985,
married individuals who elected to file separate returns or a
combined return may change their election and file a joint
return.
Sec. 62. Minnesota Statutes 1986, section 290.095,
subdivision 11, is amended to read:
Subd. 11. [CARRYBACK OR CARRYOVER ADJUSTMENTS.] (a) For
individuals the amount of a net operating loss that may be
carried back or carried over shall be the same dollar amount
allowable in the determination of federal adjusted gross
income. For, estates and trusts the amount of a net operating
loss that may be carried back or carried over shall be the same
dollar amount allowable in the determination of federal taxable
income.
(b), provided that, notwithstanding any other provision,
estates and trusts must apply the following adjustments to the
amount of the net operating loss that may be carried back or
carried over must be made for:
(1) Nonassignable income or losses for estates and trusts
as required by section 290.17, subdivision 2.
(2) Adjustments to the determination of federal adjusted
gross income that must be made because of changes in the
Internal Revenue Code that have not yet been adopted by the
legislature by updating the reference to the Internal Revenue
Code contained in section 290.01, subdivision 20.
(3) Gains or losses which result from the sale or other
disposition of property having a higher adjusted basis for
Minnesota income tax purposes than for federal income tax
purposes subject to the limitations contained in section 290.01,
subdivision 20b, clauses (2) and (3).
(4) Interest, taxes, and other expenses Deductions not
allowed allocable to Minnesota under section 290.10, clause (9),
for estates and trusts 290.17.
(5) The modification for accelerated cost recovery system
depreciation as provided in section 290.01, subdivision 20f.
(c)(1) (b) The net operating loss carryback or carryover
applied as a deduction in the taxable year to which the net
operating loss is carried back or carried over shall be equal to
the net operating loss carryback or carryover applied in the
taxable year in arriving at federal adjusted gross income (or
federal taxable income for provided that trusts and estates)
subject to must apply the following modifications contained in
clause (b) and to the following modifications:
(A) (1) Increase the amount of carryback or carryover
applied in the taxable year by the amount of losses and
interest, taxes and other expenses not assignable or allowable
to Minnesota incurred in the taxable year.
(B) (2) Decrease the amount of carryback or carryover
applied in the taxable year by the amount of income not
assignable to Minnesota earned in the taxable year.
(C) A taxpayer who is not a resident of Minnesota during
any part of the taxable year and who has no income assignable to
Minnesota during the taxable year shall apply no net operating
loss carryback or carryover in the taxable year.
(2) The provisions of section 172(b) of the Internal
Revenue Code of 1954 as amended through December 31, 1985
(relating to carrybacks and carryovers) shall apply. For
estates and trusts, the net operating loss carryback or
carryover to the next consecutive taxable year shall be the net
operating loss carryback or carryover as calculated in
clause (c)(1) (b) less the amount applied in the earlier taxable
year(s). No additional net operating loss carryback or
carryover shall be allowed to estates and trusts if the entire
amount has been used to offset Minnesota income in a year
earlier than was possible on the federal return. However, if a
net operating loss carryback or carryover that was allowed to
offset federal income in a year earlier than was possible on the
Minnesota return, an estate or trust shall still be allowed to
offset Minnesota income but only if the loss was assignable to
Minnesota in the year the loss occurred.
(d) A net operating loss shall be allowed to be carried
back or carried forward only to the extent that loss was
assignable to Minnesota in the year the loss occurred or in the
year to which the loss was carried over, whichever would allow
more of the loss to be allowed for Minnesota purposes.
Sec. 63. Minnesota Statutes 1986, section 290.10, is
amended to read:
290.10 [NONDEDUCTIBLE ITEMS.]
Notwithstanding any other provision of law, in computing
the net income of a corporation no deduction shall in any case
be allowed for:
(1) personal, living or family expenses;
(2) amounts paid out for new buildings or for permanent
improvements or betterments made to increase the value of any
property or estate, except as otherwise provided in this chapter;
(3) amounts expended in restoring property or in making
good the exhaustion thereof for which an allowance is or has
been made;
(4) premiums paid on any life insurance policy covering the
life of the taxpayer or of any other person;
(5) the shrinkage in value, due to the lapse of time, of a
life or terminable interest of any kind in property acquired by
gift, devise, bequest or inheritance;
(6) losses from sales or exchanges of property, directly or
indirectly, between persons as defined and as provided in
section 267 of the Internal Revenue Code;
(7) in computing net income, no deduction shall be allowed
under section 290.09, subdivision 2, relating to expenses
incurred or under section 290.09, subdivision 3, relating to
interest accrued as provided in section 267 of the Internal
Revenue Code;
(8)(a) contributions by employees under the federal
Railroad Retirement Act and the federal Social Security Act;
(b) Payments to Minnesota or federal public employee retirement
funds; (c) 60 percent of the amount of taxes imposed on
self-employment income under section 1401 of the Internal
Revenue Code. Effective for taxable years beginning after
December 31, 1989, no deduction is allowed for self-employment
taxes where the taxpayer claimed a deduction for those taxes
under section 164(f) of the Internal Revenue Code;
(9) expenses, interest and taxes connected with or
allocable against the production or receipt of all income not
included in the measure of the tax imposed by this chapter,
except that for persons corporations engaged in the business of
mining or producing iron ore, the mining of which is subject to
the occupation tax imposed by section 298.01, subdivision 1,
this shall not prevent a subtraction to the extent allowed under
section 290.01, subdivision 20b, clause (10)(b), or the
deduction by a corporate taxpayer of expenses and other items to
the extent that the expenses and other items are allowable under
section 290.09 this chapter and are not deductible,
capitalizable, retainable in basis, or taken into account by
allowance or otherwise in computing the occupation tax and do
not exceed the amounts taken for federal income tax purposes for
that year. Occupation taxes imposed under chapter 298, royalty
taxes imposed under chapter 299, or depletion expenses may not
be deducted under this clause;
(10) in situations where this chapter provides for a
subtraction from gross income of a specific dollar amount of an
item of income assignable to this state, and within the measure
of the tax imposed by this chapter, that portion of the federal
income tax liability assessed upon such income subtracted, and
any expenses attributable to earning such income, shall not be
deductible in computing net income;
(11) amounts paid or accrued for such taxes and carrying
charges as, under rules prescribed by the commissioner, are
chargeable to capital account with respect to property, if the
taxpayer elects, in accordance with such rules, to treat such
taxes or charges as so chargeable;
(12) no deduction or credit shall be allowed for any amount
paid or incurred during the taxable year in carrying on any
trade or business if the trade or business (or the activities
which comprise the trade or business) consists of trafficking in
controlled substances (within the meaning of schedule I and II
of the federal Controlled Substances Act) which is prohibited by
federal law or the law of Minnesota.
For purposes of this section, reference to the Internal
Revenue Code means the Internal Revenue Code of 1954, as amended
through December 31, 1985.
Sec. 64. Minnesota Statutes 1986, section 290.12,
subdivision 2, is amended to read:
Subd. 2. [ADJUSTMENTS.] For taxable years beginning before
January 1, 1987, in computing the amount of gain or loss under
subdivision 1 the basis of the property is its adjusted basis
for federal income tax purposes, except as otherwise provided in
this chapter. In addition to other adjustments provided in this
chapter, the adjusted basis of property for federal income tax
purposes shall be increased by the amount of accelerated cost
recovery system depreciation which was allowed for federal
income tax purposes but not allowed for Minnesota income tax
purposes under Minnesota Statutes 1986, section 290.01,
subdivision 20f or 290.09, subdivision 7, paragraph (A)(c). The
basis shall be diminished by the allowance for amortization of
bond premium if an election to amortize was made in accordance
with Minnesota Statutes 1986, section 290.09, subdivision 13,
which could, during the period of the taxpayer's ownership
thereof, have been deducted by the taxpayer under this chapter
in respect of such property. 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, the basis of the property is its
adjusted basis for federal income tax purposes, except as
otherwise provided in this chapter.
Sec. 65. Minnesota Statutes 1986, section 290.131,
subdivision 1, is amended to read:
Subdivision 1. [DISTRIBUTIONS OF PROPERTY.] For taxable
years beginning before January 1, 1987, the effects on
recipients of a distribution by a corporation shall be governed
by the provisions of sections 301 to 307 of the Internal Revenue
Code of 1954 1986, as amended through December 31, 1985 1986.
However, in section 301(c)(3)(B) the date January 1, 1933 shall
be substituted for March 1, 1913 when determining the amount of
a distribution that is not taxable.
Sec. 66. Minnesota Statutes 1986, section 290.132,
subdivision 1, is amended to read:
Subdivision 1. [TAXABILITY OF CORPORATION ON
DISTRIBUTION.] For taxable years beginning before January 1,
1987, no gain or loss shall be recognized to a corporation on
the distribution, with respect to its stock as provided in
section 311 of the Internal Revenue Code of 1954 1986, as
amended through December 31, 1985 1986.
The effect on earnings and profits shall be determined
according to the provisions of section 312 of the Internal
Revenue Code of 1954 1986, as amended through December 31, 1985
1986. However, when determining earnings and profits in section
312(f) and (g), the date December 31, 1932 shall be substituted
for February 28, 1913, and January 1, 1933 shall be substituted
for March 1, 1913.
Sec. 67. Minnesota Statutes 1986, section 290.133,
subdivision 1, is amended to read:
Subdivision 1. [DIVIDEND DEFINED.] For taxable years
beginning before January 1, 1987, for purposes of this chapter,
the definitions provided in sections 316 to 318 of the Internal
Revenue Code of 1954 1986, as amended through December 31, 1985
1986, shall apply. However, in section 316 (a)(1), "December
31, 1932" shall be substituted for "February 28, 1913" when
determining dividends.
Sec. 68. Minnesota Statutes 1986, section 290.134,
subdivision 1, is amended to read:
Subdivision 1. [GAIN OR LOSS TO SHAREHOLDERS IN CORPORATE
LIQUIDATIONS.] For taxable years beginning before January 1,
1987, the effects on recipients of corporate liquidations shall
be governed by the provisions of sections 331 to 334 of the
Internal Revenue Code of 1954 1986, as amended through December
31, 1985 1986. However, in section 333(f)(2), the date December
31, 1932, shall be substituted for February 28, 1913 when
determining accumulated earnings and profits.
Sec. 69. Minnesota Statutes 1986, section 290.135,
subdivision 1, is amended to read:
Subdivision 1. [GENERAL RULE.] For taxable years beginning
before January 1, 1987, gain or loss shall be recognized to a
corporation on the distribution of property in complete
liquidation or on any distribution or sale of an interest in a
partnership as provided in sections 336 to 346 and 386 of the
Internal Revenue Code of 1954 1986, as amended through December
31, 1985 1986.
Sec. 70. Minnesota Statutes 1986, section 290.136,
subdivision 1, is amended to read:
Subdivision 1. [TRANSFER TO CORPORATION CONTROLLED BY
TRANSFEROR.] For taxable years beginning before January 1, 1987,
the provisions of sections 351 to 368 of the Internal Revenue
Code of 1954 1986, as amended through December 31, 1985 1986,
shall apply to corporate organizations and reorganizations.
However, in section 362, the phrase "acquired in a taxable year
beginning after December 31, 1956" shall be substituted for
"acquired on or after June 22, 1954" when determining the
property to which this section applies.
Sec. 71. Minnesota Statutes 1986, section 290.138,
subdivision 3, is amended to read:
Subd. 3. [CARRYOVERS IN CERTAIN CORPORATE ACQUISITIONS.]
The provisions of sections 381 and 382 of the Internal Revenue
Code of 1954 1986, as amended through December 31, 1985 1986,
shall apply to carryovers in certain corporate acquisitions and
special limitations on net operating loss carryovers.
Sec. 72. Minnesota Statutes 1986, section 290.14, is
amended to read:
290.14 [GAIN OR LOSS ON DISPOSITION OF PROPERTY, BASIS.]
For taxable years beginning before January 1, 1987, except
as otherwise provided in this chapter, the basis for determining
the gain or loss from the sale or other disposition of property
acquired on or after January 1, 1933, shall be its adjusted
basis for federal income tax purposes, with the following
exceptions:
(1) Corporations, partnerships, or individuals subject to
the occupation tax under chapter 298, shall use the occupation
tax basis;
(2) The basis of property subject to the provisions of
section 1034 of the Internal Revenue Code of 1954, as amended
through December 31, 1985 (relating to the rollover of gain on
sale of principal residence) shall be increased by the amount of
gain realized on the sale of a principal residence outside of
Minnesota, while a nonresident of this state, which gain was not
recognized because of the provisions of section 1034.
Sec. 73. Minnesota Statutes 1986, section 290.17, is
amended to read:
Subdivision 1. [INCOME OF RESIDENT INDIVIDUALS SCOPE OF
ALLOCATION RULES.] The gross income of individuals shall be
their gross income as defined in section 290.01, subdivision
20 (a) The income of resident individuals is not subject to
allocation outside this state. The allocation rules apply to
nonresident individuals, estates, trusts, nonresident partners
of partnerships, nonresident shareholders of corporations having
a valid election in effect under section 1362 of the Internal
Revenue Code of 1986, as amended through December 31, 1986, and
all corporations not having such an election in effect. If a
partnership or corporation would not otherwise be subject to the
allocation rules, but conducts a trade or business that is part
of a unitary business involving another legal entity that is
subject to the allocation rules, the partnership or corporation
is subject to the allocation rules.
(b) Expenses, losses, and other deductions (referred to
collectively in this paragraph as "deductions") must be
allocated along with the item or class of gross income to which
they are definitely related for purposes of assignment under
this section or apportionment under section 290.191, 290.20,
290.35, or 290.36. Deductions not definitely related to any
item or class of gross income are assigned to the taxpayer's
domicile.
Subd. 1a. [SUBSEQUENT ADJUSTMENT.] When a loss has been
reduced by the amount of tax preference items pursuant to
Minnesota Statutes 1983 Supplement, section 290.17, subdivision
1, and the taxpayer subsequently sells or otherwise disposes of
an asset in relation to which arose an item of tax preference
which caused the reduction of the loss, the taxpayer may
increase the basis of the asset by the amount of the tax
preference item that was used to reduce the loss. If the asset
is a depletable asset, the taxpayer may elect to so increase its
basis upon disposition or to reduce the amount of otherwise
taxable income subsequently produced by that asset by the amount
of the tax preference item.
Subd. 2. [OTHER TAXPAYERS INCOME NOT DERIVED FROM CONDUCT
OF A TRADE OR BUSINESS.] In the case of an individual who is not
a full-year resident, this subdivision applies to determine what
income is assignable to Minnesota for purposes of determining
the numerator of the fraction used in section 290.06,
subdivision 2c. 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.
The income of a taxpayer subject to the allocation rules
that is not derived from the conduct of a trade or business must
be assigned in accordance with paragraphs (a) to (f):
(a)(1) Subject to paragraphs (a)(2) and (a)(3), income from
labor or personal or professional services is assigned to this
state if, and to the extent that, the labor or services are
performed within it; all other income from such sources is
treated as income from sources without this state.
(b) (2) 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 and for a nonresident salaried entertainer who is
employed by an entertainment organization whose operations are
not based in this state if the state or province in which the
athletic team or entertainment organization is based provides a
similar income exclusion. If the state or province in which the
athletic team's or the entertainment organization'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.; and
(ii) The amount of income to be assigned to Minnesota for
an individual who is a nonresident, and who is an athlete or
entertainer not listed in clause (i), 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 from winnings on Minnesota pari-mutuel betting tickets
shall be assigned to 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 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 the owner's services and the
use of the owner's 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 the owner's services and the use of the owner's
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
subdivision 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 except for business income subject to the
provisions of clause (1) and farm income subject to the
provisions of clause (2). The term "unitary business" shall
mean 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 but the absence of these centralized activities will
not necessarily evidence a nonunitary business. Unity of
ownership will not be deemed to exist when a corporation is
involved unless that corporation is a member of a group of two
or more corporations more than 50 percent of the voting stock of
each member of the group is directly or indirectly owned by a
common owner or by common owners, either corporate or
noncorporate, or by one or more of the member corporations of
the group.
The entire income of a unitary business 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) For purposes of this section, amounts received by a
nonresident 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 firefighters' 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,
408, or 409 of the Internal Revenue Code of 1954, as amended
through December 31, 1985, 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.
(6) All other items of gross income shall be assigned to
the taxpayer's domicile.
(3) For purposes of this section, amounts received by a
nonresident 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 firefighters' relief association, by
way of payment as a pension, public employee retirement benefit,
or any combination of these, or as a retirement or survivor's
benefit made from a plan qualifying under section 401, 403, 408,
or 409, or as defined in section 403(b) or 457 of the Internal
Revenue Code of 1986, as amended through December 31, 1986, 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.
(b) Income or gains from tangible property located in this
state that is not employed in the business of the recipient of
the income or gains must be assigned to this state.
(c) Except upon the sale of a partnership interest, income
or gains from intangible personal property not employed in the
business of the recipient of the income or gains must be
assigned to this state if the recipient of the income or gains
is a resident of this state or is a resident trust or estate.
Gain on the sale of a partnership interest is allocable to
this state in the ratio of the original cost of partnership
tangible property in this state to the original cost of
partnership tangible property everywhere, determined at the time
of the sale. If more than 50 percent of the value of the
partnership's assets consists of intangibles, gain or loss from
the sale of the partnership interest is allocated to this state
in accordance with the sales factor of the partnership for its
first full tax period immediately preceding the tax period of
the partnership during which the partnership interest was sold.
(d) 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.
(e) Income from winnings on Minnesota pari-mutuel betting
tickets shall be assigned to this state.
(f) All items of gross income not covered in paragraphs (a)
to (e) and not part of the taxpayer's income from a trade or
business shall be assigned to the taxpayer's domicile.
Subd. 3. [TRADE OR BUSINESS INCOME; GENERAL RULE.] Income
derived from carrying on a trade or business must be assigned to
this state if the trade or business is conducted wholly within
this state, assigned outside this state if conducted wholly
without this state and apportioned between this state and other
states and countries under this subdivision if conducted partly
within and partly without this state. For purposes of
determining whether a trade or business is carried on
exclusively within or without this state:
(a) A trade or business physically located exclusively
within this state is nevertheless carried on partly within and
partly without this state if any of the principles set forth in
section 290.191 for the allocation of sales or receipts within
or without this state when applied to the taxpayer's situation
result in the allocation of any sales or receipts without this
state.
(b) A trade or business physically located exclusively
without this state is nevertheless carried on partly within and
partly without this state if any of the principles set forth in
section 290.191 for the allocation of sales or receipts within
or without this state when applied to the taxpayer's situation
result in the allocation of any sales or receipts without this
state. The jurisdiction to tax such a business under this
chapter must be determined in accordance with sections 290.014
and 290.015.
Subd. 4. [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or
business conducted wholly within this state or partly within and
partly without this state is part of a unitary business, the
entire income of the unitary business is subject to
apportionment pursuant to section 290.191. Notwithstanding
subdivision 2, paragraph (c), none of the income of a unitary
business is considered to be derived from any particular source
and none may be allocated to a particular place except as
provided by the applicable apportionment formula. The
provisions of this subdivision do not apply to farm income
subject to subdivision 5, paragraph (a), business income subject
to subdivision 5, paragraph (b) or (c), income of an insurance
company determined under section 290.35, or income of an
investment company determined under section 290.36.
(b) The term "unitary business" means business activities
or operations which are of mutual benefit, dependent upon, or
contributory to one another, individually or as a group. The
term may be applied within a single legal entity or between
multiple entities and without regard to whether each entity is a
corporation, a partnership or a trust.
(c) Unity is 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, but the absence of
these centralized activities will not necessarily evidence a
nonunitary business.
(d) Where a business operation conducted in Minnesota is
owned by a business entity that carries on business activity
outside the state different in kind from that conducted within
this state, and the other business is conducted entirely outside
the state, it is presumed that the two business operations are
unitary in nature, interrelated, connected, and interdependent
unless it can be shown to the contrary.
(e) Unity of ownership is not deemed to exist when a
corporation is involved unless that corporation is a member of a
group of two or more business entities and more than 50 percent
of the voting stock of each member of the group is directly or
indirectly owned by a common owner or by common owners, either
corporate or noncorporate, or by one or more of the member
corporations of the group.
(f) For purposes of determining the net income of a unitary
business and the factors to be used in the apportionment of net
income pursuant to section 290.191 or 290.20, there must be
included only the income and apportionment factors of
corporations or other entities created or organized in the
United States or under the laws of the United States or of any
state, the District of Columbia, the commonwealth of Puerto
Rico, any possession of the United States, or any political
subdivision of any the foregoing and of any FSC as defined in
section 922 of the Internal Revenue Code of 1986, as amended
through December 31, 1986, that are determined to be part of the
unitary business pursuant to this subdivision, notwithstanding
that other corporations or other entities organized in foreign
countries might be included in the unitary business.
(g) Each corporation or other entity that is part of a
unitary business must file combined reports as the commissioner
determines. On the reports, all intercompany transactions
between entities included pursuant to paragraph (f) must be
eliminated and the entire net income of the unitary business
determined in accordance with this subdivision is apportioned
among the entities by using each entity's Minnesota factors for
apportionment purposes in the numerators of the apportionment
formula and the total factors for apportionment purposes of all
entities included pursuant to paragraph (f) in the denominators
of the apportionment formula.
Subd. 5. [SPECIAL RULES.] Notwithstanding subdivisions 3
and 4, all income from the operation of the following types of
businesses must be allocated as follows:
(a) All income from the operation of a farm is assigned to
this state if the farm is located within this state and no such
income is assigned to this state if the farm is located without
this state.
(b) Income from a trade or business consisting principally
of the performance of personal or professional services is
assigned to this state if, and to the extent that, the services
are performed within this state.
(c) For athletic teams when the visiting team does not
share in the gate receipts, all of the team's income is assigned
to the state in which the team's operation is based.
Subd. 6. [NONBUSINESS INCOME.] For a trade or business for
which allocation of income within and without this state is
required, if the taxpayer has any income not connected with the
trade or business carried on partly within and partly without
this state that income must be allocated under subdivision 2.
Intangible property is employed in a trade or business if the
owner of the property holds it as a means of furthering the
trade or business.
Sec. 74. Minnesota Statutes 1986, section 290.171, is
amended to read:
290.171 [ENACTMENT OF MULTISTATE TAX COMPACT.]
The "multistate tax compact" is hereby enacted into law to
the extent provided in this section and entered into with all
jurisdictions legally joining therein, in the form substantially
as follows:
Article I. Purposes.
The purposes of this compact are to:
1. Facilitate proper determination of state and local tax
liability of multistate taxpayers, including the equitable
apportionment of tax bases and settlement of apportionment
disputes.
2. Promote uniformity or compatibility in significant
components of tax systems.
3. Facilitate taxpayer convenience and compliance in the
filing of tax returns and in other phases of tax administration.
4. Avoid duplicative taxation.
Article II. Definitions.
As used in this compact:
1. "State" means a state of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, or any
territory or possession of the United States.
2. "Subdivision" means any governmental unit or special
district of a state.
3. "Taxpayer" means any corporation, partnership, firm,
association, governmental unit or agency or person acting as a
business entity in more than one state.
4. "Income tax" means a tax imposed on or measured by net
income including any tax imposed on or measured by an amount
arrived at by deducting expenses from gross income, one or more
forms of which expenses are not specifically and directly
related to particular transactions.
5. "Capital stock tax" means a tax measured in any way by
the capital of a corporation considered in its entirety.
6. "Gross receipts tax" means a tax, other than a sales
tax, which is imposed on or measured by the gross volume of
business, in terms of gross receipts or in other terms, and in
the determination of which no deduction is allowed which would
constitute the tax an income tax.
7. "Sales tax" means a tax imposed with respect to the
transfer for a consideration of ownership, possession or custody
of tangible personal property or the rendering of services
measured by the price of the tangible personal property
transferred or services rendered and which is required by state
or local law to be separately stated from the sales price by the
seller, or which is customarily separately stated from the sales
price, but does not include a tax imposed exclusively on the
sale of a specifically identified commodity or article or class
of commodities or articles.
8. "Use tax" means a nonrecurring tax, other than a sales
tax, which (a) is imposed on or with respect to the exercise or
enjoyment of any right or power over tangible personal property
incident to the ownership, possession or custody of that
property or the leasing of that property from another including
any consumption, keeping, retention, or other use of tangible
personal property and (b) is complementary to a sales tax.
9. "Tax" means an income tax, capital stock tax, gross
receipts tax, sales tax, use tax, and any other tax which has a
multistate impact, except that the provisions of articles III,
IV and article V of this compact shall apply only to the taxes
specifically designated therein and the provisions of article IX
of this compact shall apply only in respect to determinations
pursuant to article IV.
Article III. Elements of Income Tax Laws.
Taxpayer Option, State and Local Taxes.
1. Any taxpayer subject to an income tax whose income is
subject to apportionment and allocation for tax purposes
pursuant to the laws of a party state or pursuant to the laws of
subdivisions in two or more party states may elect to apportion
and allocate his income in the manner provided by the laws of
such state or by the laws of such states and subdivisions
without reference to this compact, or may elect to apportion and
allocate in accordance with article IV. This election for any
tax year may be made in all party states or subdivisions thereof
or in any one or more of the party states or subdivisions
thereof without reference to the election made in the others.
For the purposes of this paragraph, taxes imposed by
subdivisions shall be considered separately from state taxes and
the apportionment and allocation also may be applied to the
entire tax base. In no instance wherein article IV is employed
for all subdivisions of a state may the sum of all
apportionments and allocations to subdivisions within a state be
greater than the apportionment and allocation that would be
assignable to that state if the apportionment or allocation were
being made with respect to a state income tax.
Taxpayer Option, Short Form.
2. Each party state or any subdivision thereof which
imposes an income tax shall provide by law that any taxpayer
required to file a return, whose only activities within the
taxing jurisdiction consist of sales and do not include owning
or renting real estate or tangible personal property, and whose
dollar volume of gross sales made during the tax year within the
state or subdivision, as the case may be, is not in excess of
$100,000 may elect to report and pay any tax due on the basis of
a percentage of such volume, and shall adopt rates which shall
produce a tax which reasonably approximates the tax otherwise
due. The commissioner of revenue, after consultation with the
Multistate Tax Commission, not more than once in five years, may
adjust the $100,000 figure in order to reflect such changes as
may occur in the real value of the dollar, and such adjusted
figure, upon adoption by the commissioner, shall replace the
$100,000 figure specifically provided herein. Each party state
and subdivision thereof may make the same election available to
taxpayers additional to those specified in this paragraph.
Coverage.
3. Nothing in this article relates to the reporting or
payment of any tax other than an income tax.
Article IV. Division of Income.
1. As used in this article, unless the context otherwise
requires:
(a) "Business income" means income arising from
transactions and activity in the regular course of the
taxpayer's trade or business, and includes income from tangible
and intangible property if the acquisition, management, and
disposition of the property constitute integral parts of the
taxpayer's regular trade or business operations.
(b) "Commercial domicile" means the principal place from
which the trade or business of the taxpayer is directed or
managed.
(c) "Compensation" means wages, salaries, commissions and
any other form of remuneration paid to employees for personal
services.
(d) "Financial organization" means any bank, trust company,
savings bank, industrial bank, land bank, safe deposit company,
private banker, savings and loan association, credit union,
cooperative bank, small loan company, sales finance company,
investment company, or any type of insurance company.
(e) "Nonbusiness income" means all income other than
business income.
(f) "Public utility" means any business entity (1) which
owns or operates any plant, equipment, property, franchise, or
license for the transmission of communications, transportation
of goods or persons, except by pipeline, or the production,
transmission, sale, delivery, or furnishing of electricity,
water or steam; and (2) whose rates of charges for goods or
services have been established or approved by a federal, state
or local government or governmental agency.
(g) "Sales" means all gross receipts of the taxpayer not
allocated under paragraphs of this article.
(h) "State" means any state of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, any
territory or possession of the United States, and any foreign
country or political subdivision thereof.
(i) "This state" means the state in which the relevant tax
return is filed or, in the case of application of this article
to the apportionment and allocation of income for local tax
purposes, the subdivision or local taxing district in which the
relevant tax return is filed.
2. Any taxpayer having income from business activity which
is taxable both within and without this state, other than
activity as a financial organization or public utility or the
rendering of purely personal services by an individual or any
income received by a Minnesota resident individual or income
from the operation of a farm, shall allocate and apportion his
net income as provided in this article. If a taxpayer has
income from business activity as a public utility but derives
the greater percentage of his income from activities subject to
this article, the taxpayer may elect to allocate and apportion
his entire net income as provided in this article.
3. For purposes of allocation and apportionment of income
under this article, a taxpayer is taxable in another state if
(1) in that state he is subject to a net income tax, a franchise
tax measured by net income, a franchise tax for the privilege of
doing business, or a corporate stock tax, or (2) that state has
jurisdiction to subject the taxpayer to a net income tax
regardless of whether, in fact, the state does or does not.
4. All business income shall be apportioned to this state
by multiplying the income by a fraction, the numerator of which
is the property factor plus the payroll factor plus the sales
factor, and the denominator of which is three.
5. The property factor is a fraction, the numerator of
which is the average value of the taxpayer's real and tangible
personal property owned or rented and used in this state during
the tax period and the denominator of which is the average value
of all the taxpayer's real and tangible personal property owned
or rented and used during the tax period.
6. Property owned by the taxpayer is valued at its
original cost. Property rented by the taxpayer is valued at
eight times the net annual rental rate. Net annual rental rate
is the annual rental rate paid by the taxpayer less any annual
rental rate received by the taxpayer from subrentals.
7. The average value of property shall be determined by
averaging the values at the beginning and ending of the tax
period but the tax administrator may require the averaging of
monthly values during the tax period if reasonably required to
reflect properly the average value of the taxpayer's property.
8. The payroll factor is a fraction, the numerator of
which is the total amount paid in this state during the tax
period by the taxpayer for compensation and the denominator of
which is the total compensation paid everywhere during the tax
period.
9. Compensation is paid in this state if:
(a) The individual's service is performed entirely within
the state;
(b) The individual's service is performed both within and
without the state, but the service performed without the state
is incidental to the individual's service within the state; or
(c) Some of the service is performed in the state and (1)
the base of operations or, if there is no base of operations,
the place from which the service is directed or controlled is in
the state, or (2) the base of operations or the place from which
the service is directed or controlled is not in any state in
which some part of the service is performed, but the
individual's residence is in this state.
10. The sales factor is a fraction, the numerator of which
is the total sales of the taxpayer in this state during the tax
period, and the denominator of which is the total sales of the
taxpayer everywhere during the tax period.
11. Sales of tangible personal property are in this state
if:
(a) The property is delivered or shipped to a purchaser,
other than the United States government, within this state
regardless of the f.o.b. point or other conditions of the sale;
or
(b) The property is shipped from an office, store,
warehouse, factory, or other place of storage in this state and
(1) the purchaser is the United States government or (2) the
taxpayer is not taxable in the state of the purchaser.
12. Sales, other than sales of tangible personal property,
are in this state if:
(a) The income-producing activity is performed in this
state; or
(b) The income-producing activity is performed both in and
outside this state and a greater proportion of the
income-producing activity is performed in this state than in any
other state, based on costs of performance.
13. If the allocation and apportionment provisions of this
article do not fairly represent the extent of the taxpayer's
business activity in this state, the taxpayer may petition for
or the tax administrator may require, in respect to all or any
part of the taxpayer's business activity, if reasonable:
(a) Separate accounting;
(b) The exclusion of any one or more of the factors;
(c) The inclusion of one or more additional factors which
will fairly represent the taxpayer's business activity in this
state; or
(d) The employment of any other method to effectuate an
equitable allocation and apportionment of the taxpayer's income.
Article V. Elements of Sales and Use Tax Laws.
Tax Credit.
1. Each purchaser liable for a use tax on tangible
personal property shall be entitled to full credit for the
combined amount or amounts of legally imposed sales or use taxes
paid by him with respect to the same property to another state
and any subdivision thereof. The credit shall be applied first
against the amount of any use tax due the state, and any unused
portion of the credit shall then be applied against the amount
of any use tax due a subdivision.
2. Whenever a vendor receives and accepts in good faith
from a purchaser a resale or other exemption certificate or
other written evidence of exemption authorized by the
appropriate state or subdivision taxing authority, the vendor
shall be relieved of liability for a sales or use tax with
respect to the transaction.
Article VI. The Commission.
Organization and Management.
1. (a) The multistate tax commission is hereby
established. It shall be composed of one "member" from each
party state who shall be the head of the state agency charged
with the administration of the types of taxes to which this
compact applies. If there is more than one such agency the
state shall provide by law for the selection of the commission
member from the heads of the relevant agencies. State law may
provide that a member of the commission be represented by an
alternate but only if there is on file with the commission
written notification of the designation and identity of the
alternate. The attorney general of each party state or his
designee, or other counsel if the laws of the party state
specifically provide, shall be entitled to attend the meetings
of the commission, but shall not vote. Such attorneys general,
designees, or other counsel shall receive all notices of
meetings required under paragraph 1(e) of this article.
(b) Each party state shall provide by law for the selection
of representatives from its subdivisions affected by this
compact to consult with the commission member from that state.
(c) Each member shall be entitled to one vote. The
commission shall not act unless a majority of the members are
present, and no action shall be binding unless approved by a
majority of the total number of members.
(d) The commission shall adopt an official seal to be used
as it may provide.
(e) The commission shall hold an annual meeting and such
other regular meetings as its bylaws may provide and such
special meetings as its executive committee may determine. The
commission bylaws shall specify the dates of the annual and any
other regular meetings, and shall provide for the giving of
notice of annual, regular and special meetings. Notices of
special meetings shall include the reasons therefor and an
agenda of the items to be considered.
(f) The commission shall elect annually, from among its
members, a chairman, a vice chairman and a treasurer. The
commission shall appoint an executive director who shall serve
at its pleasure, and it shall fix his duties and compensation.
The executive director shall be secretary of the commission. The
commission shall make provision for the bonding of such of its
officers and employees as it may deem appropriate.
(g) Irrespective of the civil service, personnel or other
merit system laws of any party state, the executive director
shall appoint or discharge such personnel as may be necessary
for the performance of the functions of the commission and shall
fix their duties and compensation. The commission bylaws shall
provide for personnel policies and programs.
(h) The commission may borrow, accept or contract for the
services of personnel from any state, the United States, or any
other governmental entity.
(i) The commission may accept for any of its purposes and
functions any and all donations and grants of money, equipment,
supplies, materials and services, conditional or otherwise, from
any governmental entity, and may utilize and dispose of the same.
(j) The commission may establish one or more offices for
the transacting of its business.
(k) The commission shall adopt bylaws for the conduct of
its business. The commission shall publish its bylaws in
convenient form, and shall file a copy of the bylaws and any
amendments thereto with the appropriate agency or officer in
each of the party states.
(l) The commission annually shall make to the governor and
legislature of each party state a report covering its activities
for the preceding year. Any donation or grant accepted by the
commission or services borrowed shall be reported in the annual
report of the commission, and shall include the nature, amount
and conditions, if any, of the donation, gift, grant or services
borrowed and the identity of the donor or lender. The
commission may make additional reports as it may deem desirable.
Committees.
2. (a) To assist in the conduct of its business when the
full commission is not meeting, the commission shall have an
executive committee of seven members, including the chairman,
vice chairman, treasurer and four other members elected annually
by the commission. The executive committee, subject to the
provisions of this compact and consistent with the policies of
the commission, shall function as provided in the bylaws of the
commission.
(b) The commission may establish advisory and technical
committees, membership on which may include private persons and
public officials, in furthering any of its activities. Such
committees may consider any matter of concern to the commission,
including problems of special interest to any party state and
problems dealing with particular types of taxes.
(c) The commission may establish such additional committees
as its bylaws may provide.
Powers.
3. In addition to powers conferred elsewhere in this
compact, the commission shall have power to:
(a) Study state and local tax systems and particular types
of state and local taxes.
(b) Develop and recommend proposals for an increase in
uniformity or compatibility of state and local tax laws with a
view toward encouraging the simplification and improvement of
state and local tax law and administration.
(c) Compile and publish information as in its judgment
would assist the party states in implementation of the compact
and taxpayers in complying with state and local tax laws.
(d) Do all things necessary and incidental to the
administration of its functions pursuant to this compact.
Finance.
4. (a) The commission shall submit to the governor or
designated officer or officers of each party state a budget of
its estimated expenditures for such period as may be required by
the laws of that state for presentation to the legislature
thereof.
(b) Each of the commission's budgets of estimated
expenditures shall contain specific recommendations of the
amounts to be appropriated by each of the party states. The
total amount of appropriations requested under any such budget
shall be apportioned among the party states as follows:
one-tenth in equal shares; and the remainder in proportion to
the amount of revenue collected by each party state and its
subdivisions from income taxes, capital stock taxes, gross
receipts taxes, sales and use taxes. In determining such
amounts, the commission shall employ such available public
sources of information as, in its judgment, present the most
equitable and accurate comparisons among the party states. Each
of the commission's budgets of estimated expenditures and
requests for appropriations shall indicate the sources used in
obtaining information employed in applying the formula contained
in this paragraph.
(c) The commission shall not pledge the credit of any party
state. The commission may meet any of its obligations in whole
or in part with funds available to it under paragraph 1(i) of
this article, provided that the commission takes specific action
setting aside such funds prior to incurring any obligation to be
met in whole or in part in such manner. Except where the
commission makes use of funds available to it under paragraph
1(i), the commission shall not incur any obligation prior to the
allotment of funds by the party states adequate to meet the same.
(d) The commission shall keep accurate accounts of all
receipts and disbursements. The receipts and disbursements of
the commission shall be subject to the audit and accounting
procedures established under its bylaws. All receipts and
disbursements of funds handled by the commission shall be
audited yearly by a certified or licensed public accountant and
the report of the audit shall be included in and become part of
the annual report of the commission.
(e) The accounts of the commission shall be open at any
reasonable time for inspection by duly constituted officers of
the party states and by any persons authorized by the commission.
(f) Nothing contained in this article shall be construed to
prevent commission compliance with laws relating to audit or
inspection of accounts by or on behalf of any government
contributing to the support of the commission.
Article VII. Uniform Regulations and Forms.
1. Whenever any two or more party states, or subdivisions
of party states, have uniform or similar provisions of law
relating to an income tax, capital stock tax, gross receipts
tax, sales or use tax, the commission may adopt uniform
regulations for any phase of the administration of such law,
including assertion of jurisdiction to tax, or prescribing
uniform tax forms. The commission may also act with respect to
the provisions of article IV of this compact.
2. Prior to the adoption of any regulation, the commission
shall:
(a) As provided in its bylaws, hold at least one public
hearing on due notice to all affected party states and
subdivisions thereof and to all taxpayers and other persons who
have made timely request of the commission for advance notice of
its regulation-making proceedings.
(b) Afford all affected party states and subdivisions and
interested persons an opportunity to submit relevant written
data and views, which shall be considered fully by the
commission.
3. The commission shall submit any regulations adopted by
it to the appropriate officials of all party states and
subdivisions to which they might apply. Each such state and
subdivision shall consider any such regulation for adoption in
accordance with its own laws and procedures.
Article VIII. Interstate Audits.
1. Any party state or subdivision thereof desiring to make
or participate in an audit of any accounts, books, papers,
records or other documents may request the commission to perform
the audit on its behalf. In responding to the request, the
commission shall have access to and may examine, at any
reasonable time, such accounts, books, papers, records, and
other documents and any relevant property or stock of
merchandise. The commission may enter into agreements with
party states or their subdivisions for assistance in performance
of the audit. The commission shall make charges, to be paid by
the state or local government or governments for which it
performs the service, for any audits performed by it in order to
reimburse itself for the actual costs incurred in making the
audit.
2. The commission may require the attendance of any person
within the state where it is conducting an audit or part thereof
at a time and place fixed by it within such state for the
purpose of giving testimony with respect to any account, book,
paper, document, other record, property or stock of merchandise
being examined in connection with the audit. If the person is
not within the jurisdiction, he may be required to attend for
such purpose at any time and place fixed by the commission
within the state of which he is a resident, provided that such
state has adopted this article.
3. The commission may apply to any court having power to
issue compulsory process for orders in aid of its powers and
responsibilities pursuant to this article and any and all such
courts shall have jurisdiction to issue such orders. Failure of
any person to obey any such order shall be punishable as
contempt of the issuing court. If the party or subject matter
on account of which the commission seeks an order is within the
jurisdiction of the court to which application is made, such
application may be to a court in the state or subdivision on
behalf of which the audit is being made or a court in the state
in which the object of the order being sought is situated. The
provisions of this paragraph apply only to courts in a state
that has adopted this article.
4. The commission may decline to perform any audit
requested if it finds that its available personnel or other
resources are insufficient for the purpose or that, in the terms
requested, the audit is impracticable of satisfactory
performance. If the commission, on the basis of its experience,
has reason to believe that an audit of a particular taxpayer,
either at a particular time or on a particular schedule, would
be of interest to a number of party states or their
subdivisions, it may offer to make the audit or audits, the
offer to be contingent on sufficient participation therein as
determined by the commission.
5. Information obtained by any audit pursuant to this
article shall be confidential and available only for tax
purposes to party states, their subdivisions or the United
States. Availability of information shall be in accordance with
the laws of the states or subdivisions on whose account the
commission performs the audit, and only through the appropriate
agencies or officers of such states or subdivisions. Nothing in
this article shall be construed to require any taxpayer to keep
records for any period not otherwise required by law.
6. Other arrangements made or authorized pursuant to law
for cooperative audit by or on behalf of the party states or any
of their subdivisions are not superseded or invalidated by this
article.
7. In no event shall the commission make any charge
against a taxpayer for an audit.
8. As used in this article, "tax," in addition to the
meaning ascribed to it in article II, means any tax or license
fee imposed in whole or in part for revenue purposes.
Article IX. Arbitration.
1. Whenever the commission finds a need for settling
disputes concerning apportionments and allocations by
arbitration, it may adopt a regulation placing this article in
effect, notwithstanding the provisions of article VII.
2. The commission shall select and maintain an arbitration
panel composed of officers and employees of state and local
governments and private persons who shall be knowledgeable and
experienced in matters of tax law and administration.
3. Whenever a taxpayer who has elected to employ article
IV, or whenever the laws of the party state states or
subdivision subdivisions thereof are substantially identical
with the relevant provisions of article IV, this chapter, the
taxpayer, by written notice to the commission and to each party
state or subdivision thereof that would be affected, may secure
arbitration of an apportionment or allocation, if he is
dissatisfied with the final administrative determination of the
tax agency of the state or subdivision with respect thereto on
the ground that it would subject him to double or multiple
taxation by two or more party states or subdivisions thereof.
Each party state and subdivision thereof hereby consents to the
arbitration as provided herein, and agrees to be bound thereby.
4. The arbitration board shall be composed of one person
selected by the taxpayer, one by the agency or agencies
involved, and one member of the commission's arbitration panel.
If the agencies involved are unable to agree on the person to be
selected by them, such person shall be selected by lot from the
total membership of the arbitration panel. The two persons
selected for the board in the manner provided by the foregoing
provisions of this paragraph shall jointly select the third
member of the board. If they are unable to agree on the
selection, the third member shall be selected by lot from among
the total membership of the arbitration panel. No member of a
board selected by lot shall be qualified to serve if he is an
officer or employee or is otherwise affiliated with any party to
the arbitration proceeding. Residence within the jurisdiction
of a party to the arbitration proceeding shall not constitute
affiliation within the meaning of this paragraph.
5. The board may sit in any state or subdivision party to
the proceeding, in the state of the taxpayer's incorporation,
residence or domicile, in any state where the taxpayer does
business, or in any place that it finds most appropriate for
gaining access to evidence relevant to the matter before it.
6. The board shall give due notice of the times and places
of its hearings. The parties shall be entitled to be heard, to
present evidence, and to examine and cross-examine witnesses.
The board shall act by majority vote.
7. The board shall have power to administer oaths, take
testimony, subpoena and require the attendance of witnesses and
the production of accounts, books, papers, records, and other
documents, and issue commissions to take testimony. Subpoenas
may be signed by any member of the board. In case of failure to
obey a subpoena, and upon application by the board, any judge of
a court of competent jurisdiction of the state in which the
board is sitting or in which the person to whom the subpoena is
directed may be found may make an order requiring compliance
with the subpoena, and the court may punish failure to obey the
order as a contempt. The provisions of this paragraph apply
only in states that have adopted this article.
8. Unless the parties otherwise agree the expenses and
other costs of the arbitration shall be assessed and allocated
among the parties by the board in such manner as it may
determine. The commission shall fix a schedule of compensation
for members of arbitration boards and of other allowable
expenses and costs. No officer or employee of a state or local
government who serves as a member of a board shall be entitled
to compensation therefor unless he is required on account of his
service to forego the regular compensation attaching to his
public employment, but any such board member shall be entitled
to expenses.
9. The board shall determine the disputed apportionment or
allocation and any matters necessary thereto. The
determinations of the board shall be final for purposes of
making the apportionment or allocation, but for no other purpose.
10. The board shall file with the commission and with each
tax agency represented in the proceeding: the determination of
the board; the board's written statement of its reasons
therefor; the record of the board's proceedings; and any other
documents required by the arbitration rules of the commission to
be filed.
11. The commission shall publish the determinations of
boards together with the statements of the reasons therefor.
12. The commission shall adopt and publish rules of
procedure and practice and shall file a copy of such rules and
of any amendment thereto with the appropriate agency or officer
in each of the party states.
13. Nothing contained herein shall prevent at any time a
written compromise of any matter or matters in dispute, if
otherwise lawful, by the parties to the arbitration proceedings.
Article X. Entry Into Force and Withdrawal.
1. This compact shall become effective as to any other
state upon its enactment. The commission shall arrange for
notification of all party states whenever there is a new
enactment of the compact.
2. Any party state may withdraw from this compact by
enacting a statute repealing the same. No withdrawal shall
affect any liability already incurred by or chargeable to a
party state prior to the time of such withdrawal.
3. No proceeding commenced before an arbitration board
prior to the withdrawal of a state and to which the withdrawing
state or any subdivision thereof is a party shall be
discontinued or terminated by the withdrawal, nor shall the
board thereby lose jurisdiction over any of the parties to the
proceeding necessary to make a binding determination therein.
Article XI. Effect on Other Laws and Jurisdictions.
Nothing in this compact shall be construed to:
(a) Affect the power of any state or subdivision thereof to
fix rates of taxation, except that a party state shall be
obligated to implement article III 2 of this compact.
(b) Apply to any tax or fixed fee imposed for the
registration of a motor vehicle or any tax on motor fuel, other
than a sales tax, provided that the definition of "tax" in
article VIII 9 may apply for the purposes of that article and
the commission's powers of study and recommendation pursuant to
article VI 3 may apply.
(c) Withdraw or limit the jurisdiction of any state or
local court or administrative officer or body with respect to
any person, corporation or other entity or subject matter,
except to the extent that such jurisdiction is expressly
conferred by or pursuant to this compact upon another agency or
body.
(d) Supersede or limit the jurisdiction of any court of the
United States.
Article XII. Construction and Severability.
This compact shall be liberally construed so as to
effectuate the purposes thereof. The provisions of this compact
shall be severable and if any phrase, clause, sentence, or
provision of this compact is declared to be contrary to the
constitution of any state or of the United States or the
applicability thereof to any government, agency, person or
circumstance is held invalid, the validity of the remainder of
this compact and the applicability thereof to any government,
agency, person or circumstance shall not be affected thereby. If
this compact shall be held contrary to the constitution of any
state participating therein, the compact shall remain in full
force and effect as to the remaining party states and in full
force and effect as to the state affected as to all severable
matters.
Sec. 75. [290.191] [APPORTIONMENT OF NET INCOME.]
Subdivision 1. [GENERAL RULE.] Except as otherwise
provided in section 290.17, subdivision 5, the net income from a
trade or business carried on partly within and partly without
this state must be apportioned to this state as provided in this
section.
Subd. 2. [APPORTIONMENT FORMULA OF GENERAL
APPLICATION.] Except for those trades or businesses required to
use a different formula under subdivision 3 or section 290.35 or
290.36, and for those trades or businesses that receive
permission to use some other method under section 290.20 or
under subdivision 4, a trade or business required to apportion
its net income must apportion its income to this state on the
basis of the percentage obtained by taking the sum of:
(1) 70 percent of the percentage which the sales made
within this state in connection with the trade or business
during the tax period are of the total sales wherever made in
connection with the trade or business during the tax period;
(2) 15 percent of the percentage which the total tangible
property used by the taxpayer in this state in connection with
the trade or business during the tax period is of the total
tangible property, wherever located, used by the taxpayer in
connection with the trade or business during the tax period; and
(3) 15 percent of the percentage which the taxpayer's total
payrolls paid or incurred in this state or paid in respect to
labor performed in this state in connection with the trade or
business during the tax period are of the taxpayer's total
payrolls paid or incurred in connection with the trade or
business during the tax period.
Subd. 3. [APPORTIONMENT FORMULA FOR FINANCIAL
INSTITUTIONS.] Except for an investment company required to
apportion its income under section 290.36, a financial
institution that is required to apportion its net income must
apportion its net income to this state on the basis of the
percentage obtained by taking the sum of:
(1) 70 percent of the percentage which the receipts from
within this state in connection with the trade or business
during the tax period are of the total receipts in connection
with the trade or business during the tax period, from wherever
derived;
(2) 15 percent of the percentage which the sum of the total
tangible property used by the taxpayer in this state and the
intangible property owned by the taxpayer and attributed to this
state in connection with the trade or business during the tax
period is of the sum of the total tangible property, wherever
located, used by the taxpayer and the intangible property owned
by the taxpayer and attributed to all states in connection with
the trade or business during the tax period; and
(3) 15 percent of the percentage which the taxpayer's total
payrolls paid or incurred in this state or paid in respect to
labor performed in this state in connection with the trade or
business during the tax period are of the taxpayer's total
payrolls paid or incurred in connection with the trade or
business during the tax period.
Subd. 4. [APPORTIONMENT FORMULA FOR CERTAIN MAIL ORDER
BUSINESSES.] If the business consists exclusively of the selling
of tangible personal property and services in response to orders
received by United States mail or telephone, and 100 percent of
the taxpayer's property and payroll is within Minnesota, then
the taxpayer may apportion net income to Minnesota based solely
upon the percentage that the sales made within this state in
connection with the trade or business during the tax period are
of the total sales wherever made in connection with the trade or
business during the tax period. Property and payroll factors
are disregarded. In determining eligibility for this
subdivision, the sale not in the ordinary course of business of
tangible or intangible assets used in conducting business
activities must be disregarded. This subdivision is repealed
effective for taxable years beginning after December 31, 1988.
Subd. 5. [DETERMINATION OF SALES FACTOR.] (a) For purposes
of this section, the following rules apply in determining the
sales factor.
(b) Sales of tangible personal property are made within
this state if the property is received by a purchaser at a point
within this state, and the taxpayer is taxable in this state,
regardless of the f.o.b. point, other conditions of the sale, or
the ultimate destination of the property.
(c) Tangible personal property delivered to a common or
contract carrier or foreign vessel for delivery to a purchaser
in another state or nation is a sale in that state or nation,
regardless of f.o.b. point or other conditions of the sale.
(d) Notwithstanding paragraphs (b) and (c), when
intoxicating liquor, wine, fermented malt beverages, cigarettes,
or tobacco products are sold to a purchaser who is licensed by a
state or political subdivision to resell this property only
within the state of ultimate destination, the sale is made in
that state.
(e) Sales made by or through a corporation that is
qualified as a domestic international sales corporation under
section 992 of the Internal Revenue Code are not considered to
have been made within this state.
(f) Sales, other than sales of tangible personal property,
are made in this state if the property is used, or the benefits
of the services are consumed, in this state. If the property is
used or the benefits of the services are consumed in more than
one state, the sales must be apportioned pro rata according to
the portion of use or consumption of benefits in this state.
Subd. 6. [DETERMINATION OF RECEIPTS FACTOR FOR FINANCIAL
INSTITUTIONS.] (a) For purposes of this section, the rules in
this subdivision and subdivisions 7 and 8 apply in determining
the receipts factor for financial institutions.
(b) "Receipts" for this purpose means gross income,
including net taxable gain on disposition of assets, including
securities and money market transactions, when derived from
transactions and activities in the regular course of the
taxpayer's trade or business.
(c) "Money market instruments" means federal funds sold and
securities purchased under agreements to resell, commercial
paper, banker's acceptances, and purchased certificates of
deposit and similar instruments to the extent that the
instruments are reflected as assets under generally accepted
accounting principles.
(d) "Securities" means United States Treasury securities,
obligations of United States government agencies and
corporations, obligations of state and political subdivisions,
corporate stock and other securities, participations in
securities backed by mortgages held by United States or state
government agencies, loan-backed securities and similar
investments to the extent the investments are reflected as
assets under generally accepted accounting principles.
(e) Receipts from the lease or rental of real or tangible
personal property, including both finance leases and true
leases, must be attributed to this state if the property is
located in this state. Tangible personal property that is
characteristically moving property, such as motor vehicles,
rolling stock, aircraft, vessels, mobile equipment, and the
like, is considered to be located in a state if:
(1) the operation of the property is entirely within the
state; or
(2) the operation of the property is in two or more states,
but the principal base of operations from which the property is
sent out is in the state.
(f) Interest income and other receipts from assets in the
nature of loans that are secured primarily by real estate or
tangible personal property must be attributed to this state if
the security property is located in this state under the
principles stated in paragraph (e).
(g) Interest income and other receipts from consumer loans
not secured by real or tangible personal property that are made
to residents of this state, whether at a place of business, by
traveling loan officer, by mail, by telephone or other
electronic means, must be attributed to this state.
(h) Interest income and other receipts from commercial
loans and installment obligations not secured by real or
tangible personal property must be attributed to this state if
the proceeds of the loan are to be applied in this state. If it
cannot be determined where the funds are to be applied, the
income and receipts are attributed to the state in which the
business applied for the loan. "Applied for" means initial
inquiry (including customer assistance in preparing the loan
application) or submission of a completed loan application,
whichever occurs first.
(i) Interest income and other receipts from a participating
financial institution's portion of participation loans must be
attributed under paragraphs (e) to (h). A participation loan is
a loan in which more than one lender is a creditor to a common
borrower.
(j) Interest income and other receipts including service
charges from financial institution credit card and travel and
entertainment credit card receivables and credit card holders'
fees must be attributed to the state to which the card charges
and fees are regularly billed.
(k) Merchant discount income derived from financial
institution credit card holder transactions with a merchant must
be attributed to the state in which the merchant is located. In
the case of merchants located within and outside the state, only
receipts from merchant discounts attributable to sales made from
locations within the state are attributed to this state. It is
presumed, subject to rebuttal, that the location of a merchant
is the address shown on the invoice submitted by the merchant to
the taxpayer.
(l) Receipts from the performance of fiduciary and other
services must be attributed to the state in which the benefits
of the services are consumed. If the benefits are consumed in
more than one state, the receipts from those benefits must be
apportioned to this state pro rata according to the portion of
the benefits consumed in this state.
(m) Receipts from the issuance of travelers checks and
money orders must be attributed to the state in which the checks
and money orders are purchased.
(n) Receipts from investments of a financial institution in
securities of this state, its political subdivisions, agencies,
and instrumentalities must be attributed to this state.
Subd. 7. [RECEIPTS FROM INVESTMENTS IN NONSTATE
SECURITIES; HOW APPORTIONED.] Receipts from investments of a
financial institution in other securities and from money market
instruments must be apportioned to this state based on the ratio
that total deposits from this state, its residents, including
any business with an office or other place of business in this
state, its political subdivisions, agencies, and
instrumentalities bear to the total deposits from all states,
their residents, their political subdivisions, agencies, and
instrumentalities. In the case of an unregulated financial
institution subject to this section, these receipts are
apportioned to this state based on the ratio that its gross
business income earned from sources within this state bears to
gross business income earned from sources within all states.
For purposes of this subdivision, deposits made by this state,
its residents, its political subdivisions, agencies, and
instrumentalities must be attributed to this state, whether or
not the deposits are accepted or maintained by the taxpayer at
locations within this state.
Subd. 8. [DEPOSIT; DEFINITION.] (a) "Deposit," as used in
subdivision 7, has the meanings in this subdivision.
(b) "Deposit" means the unpaid balance of money or its
equivalent received or held by a financial institution in the
usual course of business and for which it has given or is
obligated to give credit, either conditionally or
unconditionally, to a commercial, checking, savings, time, or
thrift account whether or not advance notice is required to
withdraw the credited funds, or which is evidenced by its
certificate of deposit, thrift certificate, investment
certificate, or certificate of indebtedness, or other similar
name, or a check or draft drawn against a deposit account and
certified by the financial institution, or a letter of credit or
a traveler's check on which the financial institution is
primarily liable. However, without limiting the generality of
the term "money or its equivalent," any such account or
instrument must be regarded as evidencing the receipt of the
equivalent of money when credited or issued in exchange for
checks or drafts or for a promissory note upon which the person
obtaining the credit or instrument is primarily or secondarily
liable, or for a charge against a deposit account, or in
settlement of checks, drafts, or other instruments forwarded to
the bank for collection.
(c) "Deposit" means trust funds received or held by the
financial institution, whether held in the trust department or
held or deposited in any other department of the financial
institution.
(d) "Deposit" means money received or held by a financial
institution, or the credit given for money or its equivalent
received or held by a financial institution, in the usual course
of business for a special or specific purpose, regardless of the
legal relationship so established. Under this paragraph,
"deposit" includes, but is not limited to, escrow funds, funds
held as security for an obligation due to the financial
institution or others, including funds held as dealers reserves,
or for securities loaned by the bank, funds deposited by a
debtor to meet maturing obligations, funds deposited as advance
payment on subscriptions to United States government securities,
funds held for distribution or purchase of securities, funds
held to meet its acceptances or letters of credit, and withheld
taxes. It does not include funds received by the financial
institution for immediate application to the reduction of an
indebtedness to the receiving financial institution, or under
condition that the receipt of the funds immediately reduces or
extinguishes the indebtedness.
(e) "Deposit" means outstanding drafts, including advice or
authorization to charge a financial institution's balance in
another such institution, cashier's checks, money orders, or
other officer's checks issued in the usual course of business
for any purpose, but not including those issued in payment for
services, dividends, or purchases or other costs or expenses of
the financial institution itself.
(f) "Deposit" means money or its equivalent held as a
credit balance by a financial institution on behalf of its
customer if the entity is engaged in soliciting and holding such
balances in the regular course of its business.
(g) Interinstitution fund transfers are not deposits.
Subd. 9. [DETERMINATION OF PROPERTY FACTOR; GENERAL
RULES.] For all taxpayers, the property factor includes tangible
property, real, personal, and mixed, owned or rented, and used
by the taxpayer in connection with the trade or business, as set
forth in subdivision 10. For financial institutions only, the
property factor also includes intangible property, as set forth
in subdivision 11. For both tangible and intangible property,
the property included in the property factor is the average of
the total property used by the taxpayer in connection with its
business during the tax period. Such averages must be on a
commensurate basis for property within and without the state.
Subd. 10. [PROPERTY FACTOR; TANGIBLE PROPERTY.] (a)
Tangible property includes land, buildings, machinery and
equipment, inventories, and other tangible personal property
actually used by the taxpayer during the taxable year in
carrying on the business activities of the taxpayer. Tangible
property which is separately allocated under section 290.17 is
not includable in the property factor.
(b) Cash on hand or in banks, shares of stock, notes,
bonds, accounts receivable, or other evidences of indebtedness,
special privileges, franchises, and goodwill, are specifically
excluded from the property factor, except as otherwise provided
for financial institutions in subdivision 11.
(c) The value of tangible property that is owned by the
taxpayer and that is to be used in the apportionment fraction is
the original cost adjusted for any later capital additions or
improvements and partial disposition by reason of sale,
exchange, or abandonment.
(d) For purposes of computing the property factor, United
States government property that is used by the taxpayer must be
considered owned by the taxpayer.
(e) Property that is rented by the taxpayer is valued at
eight times the net annual rental. Net annual rental is the
annual rental paid by the taxpayer less any annual rental
received by the taxpayer from subrentals. If the subrents taken
into account in determining the net annual rental produce a
negative or clearly inaccurate value for any item of property,
another method that will properly reflect the value of rented
property may be required by the commissioner or requested by the
taxpayer. In no case, however, shall the value be less than an
amount which bears the same ratio to the annual rental paid by
the taxpayer for such property as the fair market value of that
portion of the property used by the taxpayer bears to the total
fair market value of the rented property. Rents paid during the
year cannot be averaged.
(f) A person filing a combined report shall use this method
of calculating the property factor for all members of the group.
Subd. 11. [FINANCIAL INSTITUTIONS; PROPERTY FACTOR.] (a)
For financial institutions, the property factor includes, as
well as tangible property, intangible property as set forth in
this subdivision.
(b) Intangible personal property must be included at its
tax basis for federal income tax purposes.
(c) Goodwill must not be included in the property factor.
(d) Coin and currency located in this state must be
attributed to this state.
(e) Lease financing receivables must be attributed to this
state if and to the extent that the property is located within
this state.
(f) Assets in the nature of loans that are secured by real
or tangible personal property must be attributed to this state
if and to the extent that the security property is located
within this state.
(g) Assets in the nature of consumer loans and installment
obligations that are unsecured or secured by intangible property
must be attributed to this state if the loan was made to a
resident of this state.
(h) Assets in the nature of commercial loan and installment
obligations that are unsecured or secured by intangible property
must be attributed to this state if the loan proceeds of the
loan are to be applied in this state. If it cannot be
determined where the funds are to be applied, the assets must be
attributed to the state in which the business applied for the
loan. "Applied for" means initial inquiry (including customer
assistance in preparing the loan application) or submission of a
completed loan application, whichever occurs first.
(i) A participating financial institution's portion of a
participation loan must be attributed under paragraphs (e) to
(h).
(j) Financial institution credit card and travel and
entertainment credit card receivables must be attributed to the
state to which the credit card charges and fees are regularly
billed.
(k) Receivables arising from merchant discount income
derived from financial institution credit card holder
transactions with a merchant are attributed to the state in
which the merchant is located. In the case of merchants located
within and without the state, only receipts from merchant
discounts attributable to sales made from locations within the
state are attributed to this state. It is presumed, subject to
rebuttal, that the location of a merchant is the address shown
on the invoice submitted by the merchant to the taxpayer.
(l) Assets in the nature of securities and money market
instruments are apportioned to this state based upon the ratio
that total deposits from this state, its residents, its
political subdivisions, agencies and instrumentalities bear to
the total deposits from all states, their residents, their
political subdivisions, agencies and instrumentalities. In the
case of an unregulated financial institution subject to this
regulation, the receipts are apportioned to this state based
upon the ratio that its gross business income earned from
sources within this state bears to gross business income earned
from sources within all states. For purposes of this
subsection, deposits made by this state, its residents, its
political subdivisions, agencies, and instrumentalities are
attributed to this state, whether or not the deposits are
accepted or maintained by the taxpayer at locations within this
state.
Subd. 12. [DETERMINATION OF PAYROLL FACTOR.] (a) The
payroll factor must be determined in the same way for all
taxpayers.
(b) Wages or salaries must be determined to be paid or
incurred in this state if the individual with respect to whom
the wages or salaries are paid is either employed within this
state or is actually engaged in work in the territorial confines
of this state, or if working without this state, is identified
with or accountable to an office within this state.
(c) The wages or salaries paid to officers and employees
working from offices within this state are considered payroll
within this state even though the officer's and employee's
employment requires them to spend working time without this
state. Officers and employees whose employment requires them to
work without the state entirely and who are assigned to an
office without the state, are not considered employees within
the state for the purpose of apportionment even though their
salaries are paid from the taxpayer's general offices within the
state.
Sec. 76. Minnesota Statutes 1986, section 290.20,
subdivision 1, is amended to read:
Subdivision 1. The methods prescribed by section 290.19
290.191 shall be presumed to determine fairly and correctly the
taxpayer's taxable net income allocable to this state. Any
taxpayer feeling aggrieved by the application of the methods so
prescribed may petition the commissioner for determination of
such net income by the use of some other method, including
separate accounting. Thereupon, the commissioner on finding
that the application of the methods prescribed by section 290.19
will be unjust to the taxpayer, may allow the use of the methods
so petitioned for by the taxpayer, or may determine such net
income by other methods if satisfied that such other methods
will fairly reflect such net income. A petition within the
meaning of this section shall be deemed to have been filed by
the taxpayer if the taxpayer's return uses a method other than
the methods prescribed by section 290.19, and if such return
shall have attached thereto a statement setting forth the
reasons for the use of such other method If the methods
prescribed by section 290.191 do not fairly reflect all or any
part of taxable net income allocable to this state, the taxpayer
may petition for or the commissioner may require the
determination of net income by the use of another method, if
that method fairly reflects net income. These other methods may
include:
(1) separate accounting;
(2) excluding any one or more of the factors;
(3) including one or more additional factors; or
(4) some other method.
Sec. 77. Minnesota Statutes 1986, section 290.20, is
amended by adding a subdivision to read:
Subd. 1a. A petition within the meaning of this section
must be filed by the taxpayer in the form required by the
commissioner.
Sec. 78. Minnesota Statutes 1986, section 290.21,
subdivision 3, is amended to read:
Subd. 3. An amount for contribution or gifts made within
the taxable year:
(a) to or for the use of the state of Minnesota, or any of
its political subdivisions for exclusively public purposes,
(b) to or for the use of any community chest, corporation,
organization, trust, fund, association, or foundation located in
and carrying on substantially all of its activities within this
state, organized and operating exclusively for religious,
charitable, public cemetery, scientific, literary, artistic, or
educational purposes, or for the prevention of cruelty to
children or animals, no part of the net earnings of which inures
to the benefit of any private stockholder or individual,
(c) to a fraternal society, order, or association,
operating under the lodge system located in and carrying on
substantially all of their activities within this state if such
contributions or gifts are to be used exclusively for the
purposes specified in subdivision 3(b), or for or to posts or
organizations of war veterans or auxiliary units or societies of
such posts or organizations, if they are within the state and no
part of their net income inures to the benefit of any private
shareholder or individual,
(d) to or for the use of the United States of America for
exclusively public purposes, and to or for the use of any
community chest, corporation, trust, fund, association, or
foundation, organized and operated exclusively for any of the
purposes specified in subdivision 3(b) and (c) no part of the
net earnings of which inures to the benefit of any private
shareholder or individual, but not carrying on substantially all
of their activities within this state, in an amount equal to the
ratio of Minnesota taxable net income to total net income if the
contribution or gift consists of real property located in
Minnesota,
(e) the total deduction hereunder shall not exceed 15
percent of the taxpayer's taxable net income less the deductions
allowable under this section other than those for contributions
or gifts,
(f) in the case of a corporation reporting its taxable
income on the accrual basis, if: (A) the board of directors
authorizes a charitable contribution during any taxable year,
and (B) payment of such contribution is made after the close of
such taxable year and on or before the fifteenth day of the
third month following the close of such taxable year; then the
taxpayer may elect to treat such contribution as paid during
such taxable year. The election may be made only at the time of
the filing of the return for such taxable year, and shall be
signified in such manner as the commissioner shall by rules
prescribe.
Sec. 79. Minnesota Statutes 1986, section 290.21,
subdivision 4, is amended to read:
Subd. 4. (a) 85 80 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 the taxpayer's 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
20 percent shall be allowed if the recipient owns 80 percent or
more of all the voting stock of the other corporation and the
dividends were paid from income arising out of business done in
this state by the corporation paying the dividends. If the
dividends were declared from income arising out of business done
within and without this state, then a proportion of the
remainder shall be allowed as a deduction. The proportion must
be that which 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. The
amounts must be determined by the returns under this chapter of
the corporation paying the dividends for the taxable year
preceding their distribution. The burden is on the taxpayer to
show 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
the other corporation, from income arising out of business done
in this state by the corporation paying the dividends. If the
dividends were declared from income arising out of business done
within and without this state, then a proportion of the
dividends shall be allowed as a deduction. The proportion must
be that which 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. The
amounts must be determined by the returns under this chapter of
the corporation paying the dividends for the taxable year
preceding their distribution. The burden is on the taxpayer to
show 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 1986, as amended through December
31, 1985 1986.
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 1986, as amended through December 31, 1985
1986.
The dividend deduction provided in this subdivision shall
not be allowed with respect to any dividend for which a
deduction is not allowed under the provisions of section 246(c)
of the Internal Revenue Code of 1954 1986, as amended through
December 31, 1985 1986.
(d) If dividends received by a corporation that does not
have nexus with Minnesota under the provisions of Public Law
Number 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.
(e) Dividends received by a corporation from another
corporation which is organized under the laws of a foreign
country or a political subdivision of a foreign country, if the
dividends are paid from income arising from sources without the
United States, the commonwealth of Puerto Rico, and the
possessions of the United States. The deduction provided by
this clause subdivision does not apply if the corporate stock
with respect to which dividends are paid constitutes the stock
in trade of the taxpayer, or would be included in the inventory
of the taxpayer, or constitutes property held by the taxpayer
primarily for sale to customers in the ordinary course of the
taxpayer's trade or business, or if the trade or business of the
taxpayer consists principally of the holding of stocks and the
collection of the income or gains therefrom, or if the dividends
are paid by a FSC as defined in section 922 of the Internal
Revenue Code of 1954 1986, as amended through December
31, 1985. No dividend may be deducted under this clause if it
is deducted under clause (a) 1986.
Sec. 80. Minnesota Statutes 1986, section 290.21,
subdivision 8, is amended to read:
Subd. 8. [FOREIGN SOURCE ROYALTIES.] (a) An amount equal
to 35 percent of rentals, fees, and royalties accrued or
received from a foreign corporation for the use of or for the
privilege of using outside of the United States patents,
copyrights, secret processes and formulas, good will, know-how,
trademarks, trade brands, franchises, and other like property.
Rentals, fees, or royalties deducted under this subdivision
shall not be included in the taxpayer's apportionment factors
under section 290.19, subdivision 1, clause (1)(a) or
(2)(a)(1). The preceding sentence shall not be construed to
imply that nondeductible rentals, fees, and royalties from such
properties are or were included in or excluded from the
apportionment factors under any other provision of law.
(b) A corporation is allowed The deduction provided by this
subdivision is allowed only if during the taxable year it the
corporation receiving the income received or accrued at least 80
percent of its gross income during the taxable year from sources
as defined in clause (a) and from dividends received from
foreign corporations. A corporation's gross income for purposes
of paragraphs (b) and (c) shall be computed without regard to
the requirement of section 290.34, subdivision 2, that a
combined report be filed reflecting the entire income of the
unitary business.
(c) For purposes of this subdivision, a foreign corporation
is (i) a corporation organized under the laws of a foreign
country or the political subdivision of a foreign country or
(ii) a corporation which for the taxable year derives at least
80 percent of its gross income from sources without the United
States, the commonwealth of Puerto Rico, and the possessions of
the United States. A foreign corporation does not include a
DISC as defined in section 992(a) of the Internal Revenue Code
of 1954, as amended through December 31, 1985, or a FSC as
defined in section 922 of the Internal Revenue Code of 1954, as
amended through December 31, 1985.
(d) The deduction provided in this subdivision is allowed
only with respect to rentals, fees, and royalties that are
included in a corporation's Minnesota taxable net income for the
taxable year.
(e) In the case of a unitary business required to file a
combined report, one or more members of which meet the
requirements of paragraph (b) and received rentals, fees or
royalties as defined in paragraph (a), the deduction under this
subdivision for each member of the unitary business required to
file a return under this chapter is the product of (1) 100
percent of the rentals, fees, and royalties as defined in
paragraph (a) received by the members of the unitary business
meeting the requirements of paragraph (b); (2) 35 percent; and
(3) the percentage of business income of the unitary business
apportionable to this state for the deducting corporation for
the taxable year under this chapter.
Sec. 81. Minnesota Statutes 1986, section 290.23,
subdivision 3, is amended to read:
Subd. 3. [UNUSED LOSS CARRYOVERS AND EXCESS DEDUCTIONS ON
TERMINATION AVAILABLE TO BENEFICIARIES.] If on the termination
of an estate or trust, the estate or trust has
(1) a net operating loss carryover under section 290.095, a
capital loss carryover under section 290.01, subdivisions 20 to
20f or any other loss or credit carryover allowed under this
chapter; or
(2) for the last taxable year of the estate or trust
deductions (other than the charitable deduction) in excess of
gross income for such year,
then such carryover or such excess shall be allowed as a
deduction, in accordance with rules prescribed by the
commissioner, to the beneficiaries succeeding to the property of
the estate or trust. This provision does not apply to
individuals, and carryovers and deductions must be reported as
provided in section 290.01, subdivisions 19 to 19b.
Sec. 82. Minnesota Statutes 1986, section 290.23,
subdivision 5, is amended to read:
Subd. 5. [DISTRIBUTABLE NET INCOME, INCOME, BENEFICIARY;
DEFINED.] (1) For purposes of sections 290.22 through 290.25,
the term "distributable net income" means the same as that term
is defined in section 643(a) of the Internal Revenue Code
of 1954 1986, as amended through December 31, 1985 1986 with the
following modification:
There shall be included any tax-exempt interest to which
section 290.01, subdivision 20b 19b, clause (1) applies, reduced
by any amounts which would be deductible in respect of
disbursements allocable to such interest but for the provisions
of section 290.10(9) (relating to disallowance of certain
deductions).
If the estate or trust is allowed a deduction under section
642(c) of the Internal Revenue Code of 1954 1986, as amended
through December 31, 1985 1986, the amount of the modification
shall be reduced to the extent that the amount of income which
is paid, permanently set aside, or to be used for the purposes
specified in that section of the Internal Revenue Code is deemed
to consist of items specified in the modification. For this
purpose, such amount shall (in the absence of specific
provisions in the governing instrument) be deemed to consist of
the same proportion of each class of items of income of the
estate or trust as the total of each class bears to the total of
all classes.
(2) The term "income," and the term "beneficiary" have the
same meaning as those terms are defined in section 643(b) and
(c) of the Internal Revenue Code of 1954 1986, as amended
through December 31, 1985 1986. The treatment of property
distributed in kind and of multiple trusts shall be the same as
provided in section 643 of the Internal Revenue Code of 1954
1986, as amended through December 31, 1985 1986.
Sec. 83. Minnesota Statutes 1986, section 290.31,
subdivision 2, is amended to read:
Subd. 2. [INCOME AND CREDITS OF PARTNER.] (1) In
determining income tax, each partner shall take into account
separately the partner's distributive share of the partnership's
(a) gains and losses from sales or exchanges of short-term
capital assets as defined in section 290.16, subdivision 3,
(b) gains and losses from sales or exchanges of long-term
capital assets as defined in section 290.16, subdivision 3,
(c) gains and losses from sales or exchanges of property
described in section 1231 of the Internal Revenue Code of 1954
1986, as amended through December 31, 1985 1986 (relating to
certain property used in a trade or business and involuntary
conversions),
(d) charitable contributions as defined in section 170(c)
of the Internal Revenue Code of 1954 1986, as amended through
December 31, 1985 1986,
(e) dividends with respect to which there is provided an
exclusion under section 116 or a deduction under sections 241 to
247 of the Internal Revenue Code of 1954 1986, as amended
through December 31, 1985 1986,
(f) other items of income, gain, loss, deduction, or
credit, to the extent provided by rules prescribed by the
commissioner, and
(g) taxable net income or loss, exclusive of items
requiring separate computation under other subparagraphs of this
paragraph (1).
(2) The character of any item of income, gain, loss,
deduction, or credit included in a partner's distributive share
under paragraphs (a) through (f) of paragraph (1) shall be
determined as if such item were realized directly from the
source from which realized by the partnership, or incurred in
the same manner as incurred by the partnership.
(3) In any case where it is necessary to determine the
gross income of a partner for purposes of this chapter, such
amount shall include the partner's distributive share of the
gross income of the partnership.
Sec. 84. Minnesota Statutes 1986, section 290.31, is
amended by adding a subdivision to read:
Subd. 2a. The provisions of subdivisions 2 and 5 do not
apply to individuals, and items of income, gain, loss, or
deduction must be reported as provided in section 290.01,
subdivisions 19 to 19b.
Sec. 85. Minnesota Statutes 1986, section 290.31,
subdivision 3, is amended to read:
Subd. 3. [PARTNERSHIP COMPUTATIONS.] The taxable net
income of a partnership shall be computed in the same manner as
in the case of an individual except that
(1) the items described in subdivision 2(1) shall be
separately stated, and
(2) the following deductions shall not be allowed to the
partnership:
(a) the deduction for taxes provided in section 164(a) of
the Internal Revenue Code of 1954, as amended through December
31, 1985, with respect to taxes, described in section 901 of the
Internal Revenue Code of 1954, as amended through December 31,
1985, paid or accrued to foreign countries and to possessions of
the United States,
(b) the deduction for charitable contributions provided in
section 290.21, subdivision 3 or section 170 of the Internal
Revenue Code of 1954, as amended through December 31, 1985,
(c) the net operating loss deduction provided in section
290.095,
(d) the additional itemized deductions for individuals
provided in sections 211 to 223 of the Internal Revenue Code of
1954, as amended through December 31, 1985, and,
(e) the deduction for depletion under section 290.09,
subdivision 8 with respect to oil and gas wells as provided in
section 703(a) of the Internal Revenue Code of 1986, as amended
through December 31, 1986, except that, in the case of a
corporate partner, the deduction for depletion shall be computed
under section 290.01, subdivisions 19c and 19d.
Any election affecting the computation of taxable net
income derived from a partnership shall be made by the
partnership except as provided in section 703(b) of the Internal
Revenue Code of 1954 1986, as amended through December 31, 1985
1986.
Sec. 86. Minnesota Statutes 1986, section 290.31,
subdivision 5, is amended to read:
Subd. 5. [DETERMINATION OF BASIS OF PARTNER'S INTEREST.]
The adjusted basis of a partner's interest in a partnership
shall, except as provided in the last paragraph of this
subdivision, be the basis of such interest determined under
section 722 or 742 of the Internal Revenue Code of 1954 1986, as
amended through December 31, 1985 1986, relating to
contributions to a partnership or transfers of partnership
interests
(1) increased by the sum of the partner's distributive
share for the taxable year and prior taxable years of
(a) net income of the partnership as determined under
subdivision 3(1) and (2),
(b) income of the partnership exempt from tax under this
chapter,
(c) the excess of the deductions for depletion over the
basis of the property subject to depletion, and
(2) decreased (but not below zero) by distributions by the
partnership as provided in section 733 of the Internal Revenue
Code of 1954 1986, as amended through December 31, 1985 1986,
and by the sum of the partner's distributive share for the
taxable year and prior taxable years of
(a) losses of the partnership, and
(b) expenditures of the partnership not deductible in
computing its taxable net income and not properly chargeable to
capital account, and
(3) decreased, but not below zero, by the amount of the
partner's deduction for depletion for any partnership oil and
gas property to the extent the deduction does not exceed the
proportionate share of the adjusted basis of the property
allocated to the partner under section 613A(c)(7)(D) of the
Internal Revenue Code of 1954 1986, as amended through December
31, 1985 1986. For corporate partners, the deduction for
depletion with respect to oil and gas wells shall be computed as
provided in section 290.09, subdivision 8 290.01, subdivisions
19c and 19d.
The commissioner shall prescribe by rule the circumstances
under which the adjusted basis of a partner's interest in a
partnership may be determined by reference to the partner's
proportionate share of the adjusted basis of partnership
property upon a termination of the partnership.
Sec. 87. Minnesota Statutes 1986, section 290.34,
subdivision 2, is amended to read:
Subd. 2. [AFFILIATED OR RELATED CORPORATIONS, COMBINED
REPORT.] (a) When a corporation which is required to file an
income tax return is affiliated with or related to any other
corporation through stock ownership by the same interests or as
parent or subsidiary corporations, or has its income regulated
through contract or other arrangement, the commissioner of
revenue may permit or require such combined report as, in the
commissioner's opinion, is necessary in order to determine the
taxable net income of any one of the affiliated or related
corporations. For purposes of computing either the arithmetic
average or weighted apportionment formulas under section 290.19,
subdivision 1 for each corporation involved, the numerator of
the fraction shall be that corporation's sales, property, and
payroll in Minnesota and the denominator shall be the total
sales, payroll, and property of all the corporations shown on
the combined report. The combined report shall reflect the
income of the entire unitary business as provided in section
290.17, subdivision 2, clause (4). The combined report shall
reflect income only from corporations created or organized in
the United States or under the laws of the United States or of
any state, the District of Columbia, the commonwealth of Puerto
Rico, any possession of the United States, or any political
subdivision of any of the foregoing and from a FSC as defined in
section 922 of the Internal Revenue Code of 1954, as amended
through December 31, 1985. All intercompany transactions
between companies which are contained on the combined report
shall be eliminated. This subdivision shall not apply to
insurance companies whose income is determined under section
290.35 or to investment companies whose income is determined
under section 290.36.
(b) If a corporation has been divested from the unitary
group and is included in a combined report for a fractional part
of the common accounting period that the report is based on,
then the sales, property, and payroll attributed to the
corporation in the apportionment formula must be prorated or
separately accounted and must show for what part of the
accounting period the corporation is included in the report.
(c) The combined report shall reflect the income of the
entire unitary business as provided in section 290.17,
subdivision 4. If a corporation has been divested from the
unitary group and is included in the combined report for a
fractional part of the common accounting period that the
combined report is based on, its income includable in the
combined report is its income for that part of the year.
Sec. 88. Minnesota Statutes 1986, section 290.35, is
amended to read:
290.35 [INSURANCE COMPANIES; REPORT OF NET INCOME;
COMPUTATION OF AMOUNT OF INCOME ALLOCABLE TO STATE.]
Subdivision 1. [COMPUTATION OF TAXABLE NET INCOME.] The
taxable net income of insurance companies taxable under this
chapter shall be computed as follows:
Each such company shall report to the commissioner the net
income returned by it for the taxable year to the United States
under the provisions of the act of congress, known as the
revenue act of 1936, or that it would be required to return as
net income thereunder if it were in effect. Notwithstanding the
provisions of the Revenue Act of 1936, whether or not an
insurance company is exempt from taxation must be determined
under section 290.05.
Subd. 2. [APPORTIONMENT OF TAXABLE NET INCOME.] The
commissioner shall compute therefrom the taxable net income of
such companies by assigning to this state that proportion
thereof which the gross premiums collected by them during the
taxable year from old and new business within this state bears
to the total gross premiums collected by them during that year
from their entire old and new business, including reinsurance
premiums; provided, the commissioner shall add to the taxable
net income so apportioned to this state the amount of any taxes
on premiums paid by the company by virtue of any law of this
state (other than the surcharge on premiums imposed by sections
69.54 to 69.56) which shall have been deducted from gross income
by the company in arriving at its total net income under the
provisions of such act of congress.
(a) For purposes of determining the Minnesota apportionment
percentage, premiums from reinsurance contracts assumed from
companies domiciled in Minnesota and premiums in connection with
property in or liability arising out of activity in, or in
connection with the lives or health of Minnesota residents shall
be assigned to Minnesota and premiums from reinsurance contracts
assumed from companies domiciled outside of Minnesota and
premiums in connection with property in or liability arising out
of activity in, or in connection with the lives or health of
non-Minnesota residents shall be assigned outside of Minnesota.
(b) The apportionment method prescribed by paragraph (a)
shall be presumed to fairly and correctly determine the
taxpayer's taxable net income. If the method prescribed in
paragraph (a) does not fairly reflect all or any part of taxable
net income, the taxpayer may petition for or the commissioner
may require the determination of taxable net income by use of
another method if that method fairly reflects taxable net
income. A petition within the meaning of this section must be
filed by the taxpayer on such form as the commissioner shall
require.
Subd. 3. [CREDIT.] An insurance company shall receive a
credit against the tax equal to any taxes based on premiums paid
by it that are attributable to the period for which the tax
under this chapter is imposed by virtue of any law of this
state, other than the surcharge on premiums imposed by sections
69.54 to 69.56.
Subd. 4. [NONPROFIT HEALTH SERVICE CORPORATION.] For
purposes of this section, a nonprofit health service corporation
is not an insurance company and the taxable income of a
nonprofit health service corporation must be determined as
provided under the Internal Revenue Code of 1986 and section
290.01, subdivisions 19c and 19d.
Sec. 89. Minnesota Statutes 1986, section 290.36, is
amended to read:
290.36 [INVESTMENT COMPANIES; REPORT OF NET INCOME;
COMPUTATION OF AMOUNT OF INCOME ALLOCABLE TO STATE.]
The taxable net income of investment companies shall be
computed as follows:
Each investment company transacting business as such in
this state shall report to the commissioner the net income
returned by the company for the taxable year to the United
States under the provisions of the Internal Revenue Code of 1954
1986, as amended through December 31, 1985 1986, less the
credits provided therein and subject to the adjustments required
by this chapter. The commissioner shall compute therefrom the
taxable net income of the investment company by assigning to
this state that proportion of such net income, less such credits
which the aggregate of the gross payments collected by the
company during the taxable year from old and new business upon
investment contracts issued by the company and held by residents
of this state, bears to the total amount of the gross payments
collected during such year by the company from such business
upon investment contracts issued by the company and held by
persons residing within the state and elsewhere.
As used in this section, the term "investment company"
means any person, copartnership, association, or corporation,
whether local or foreign, coming within the purview of section
54.26, and who or which is registered under the Investment
Company Act of 1940 (United States Code, title 15, section 80a-1
and following), as amended through December 31, 1986, and who or
which solicits or receives payments to be made to itself and
which issues therefor, or has issued therefor and has or shall
have outstanding so-called bonds, shares, coupons, certificates
of membership, or other evidences of obligation or agreement or
pretended agreement to return to the holders or owners thereof
money or anything of value at some future date; and as to whom
the gross payments received during the taxable year in question
upon outstanding investment contracts, plus interest and
dividends earned on investment contracts determined by prorating
the total dividends and interest for the taxable year in
question in the same proportion that certificate reserves as
defined by the Investment Company Act of 1940, as amended
through December 31, 1986, is to total assets, shall be at least
50 percent of the company's gross payments upon investment
contracts plus gross income from all other sources except
dividends from subsidiaries for the taxable year in question.
The term "investment contract" shall mean any such so-called
bonds, shares, coupons, certificates of membership, or other
evidences of obligation or agreement or pretended agreement
issued by an investment company.
Sec. 90. Minnesota Statutes 1986, section 290.37,
subdivision 1, is amended to read:
Subdivision 1. [PERSONS MAKING RETURNS.] (a) The
commissioner of revenue shall annually determine the gross
income levels at which individuals, trusts, and estates shall be
required to file a return for each taxable year. A taxpayer
shall file a return for each taxable year the taxpayer is
required to file a return under section 6012 of the Internal
Revenue Code of 1986, as amended through December 31, 1986,
except that an individual who is not a Minnesota resident for
any part of the year is not required to file a Minnesota income
tax return if the individual's Minnesota gross income computed
under section 290.06, subdivision 2c, clause (f)(1) derived from
Minnesota sources under sections 290.081, paragraph (a), and
290.17, is less than the filing requirements for an a single
individual who is a full year resident of Minnesota with the
same marital status and number of personal credits.
The decedent's final income tax return, and all other
income tax returns for prior years where the decedent had gross
income in excess of the minimum amount at which an individual is
required to file and did not file, shall be filed by the
decedent's personal representative, if any. If there is no
personal representative, the return or returns shall be filed by
the transferees as defined in section 290.29, subdivision 3, who
receive any property of the decedent.
The trustee or other fiduciary of property held in trust
shall file a return with respect to the taxable net income of
such trust if that exceeds an amount determined by the
commissioner if such trust belongs to the class of taxable
persons.
Every corporation shall file a return, if the corporation
is subject to the state's jurisdiction to tax under section
290.014, subdivision 5. The return in the case of a corporation
must be signed by a person designated by the corporation. The
commissioner may adopt rules for the filing of one return on
behalf of the members of an affiliated group of corporations
that are required to file a combined report if the affiliated
group includes a corporation bank subject to tax under section
290.361. The return in the case of a corporation shall be
signed by a person designated by the corporation this chapter.
Members of an affiliated group that elect to file one return on
behalf of the members of the group under rules adopted by the
commissioner may modify or rescind the election by filing the
form required by the commissioner.
The receivers, trustees in bankruptcy, or assignees
operating the business or property of a taxpayer shall file a
return with respect to the taxable net income of such taxpayer
if a return is required.
(b) Such return shall (1) contain a written declaration
that it is correct and complete, and (2) shall contain language
prescribed by the commissioner providing a confession of
judgment for the amount of the tax shown due thereon to the
extent not timely paid.
(c) For purposes of this subdivision the term "gross income"
shall mean gross income as defined in section 61 of the Internal
Revenue Code of 1954, as amended through December 31, 1985,
modified and adjusted in accordance with the provisions of
sections 290.01, subdivision 20b, clauses (1), (6), (7), and
(8), 290.08, and 290.17.
Sec. 91. Minnesota Statutes 1986, section 290.37,
subdivision 3, is amended to read:
Subd. 3. [INFORMATION INCLUDED IN RETURN.] The return
provided for herein shall require a statement of the name of the
taxpayer, or taxpayers, if the return be is a joint return, and
the address of such the taxpayer in the same name or names and
same address as the taxpayer has used in making the taxpayer's
income tax return to the United States under the terms of the
internal revenue code of 1954, and shall include the social
security number of the taxpayer, or taxpayers, if a social
security number has been issued by the United States with
respect to said the taxpayers, and shall include the amount of
the adjusted gross taxable income of such the taxpayer as the
same it appears on said the federal return to the United
States internal revenue service for the taxable year to
which such the Minnesota state return is applicable; and the
commissioner may require. The taxpayer to shall attach to the
taxpayer's Minnesota state income tax return a copy of the
federal income tax return which the taxpayer has filed or is
about to file for such the period.
Sec. 92. [290.371] [NOTICE OF BUSINESS ACTIVITIES REPORT.]
Subdivision 1. [REPORT REQUIRED.] Every corporation that,
during any calendar year or fiscal accounting year ending after
December 31, 1986, carried on any activity or owned or
maintained any property in this state, unless specifically
exempted under subdivision 3, must file a notice of business
activities report, as provided in this section. Filing of the
report is not a factor in determining whether a corporation is
subject to taxation under this chapter.
Subd. 2. [ACTIVITIES.] Activities or property maintenance
in this state which require corporations to file this report are:
(1) the maintenance in this state of an office or other
place of business;
(2) the maintenance of personnel in Minnesota, including
the presence of employees, agents, representatives, or
independent contractors in connection with the corporation's
business, even though not residing in or regularly stationed in
Minnesota;
(3) the ownership or maintenance of real property, tangible
personal property, or intangible property used by the
corporation in Minnesota; and
(4) any of the activities referred to in section 290.015,
subdivision 1, clauses (3) to (8).
Subd. 3. [EXEMPTIONS.] A corporation is not required to
file a notice of business activities report if:
(1) by the end of an accounting period for which it was
otherwise required to file a notice of business activities
report under this section, it had received a certificate of
authority to do business in this state;
(2) a timely return or report has been filed under section
290.05, subdivision 4; or 290.37; or
(3) the corporation is exempt from taxation under this
chapter pursuant to section 290.05, subdivision 1.
Subd. 4. [ANNUAL FILING.] Every corporation not exempt
under subdivision 3 must file annually a notice of business
activities report, including such forms as the commissioner may
require, with respect to all or any part of each of its calendar
or fiscal accounting years beginning after December 31, 1986, on
or before the 15th day of the fourth month after the close of
the calendar or fiscal accounting year.
Subd. 5. [FAILURE TO FILE TIMELY REPORT.] (a) Any
corporation required to file a notice of business activities
report does not have any cause of action upon which it may bring
suit under Minnesota law unless the corporation has filed a
notice of business activities report.
(b) The failure of a corporation to file a timely report
prevents the use of the courts in this state for all contracts
executed and all causes of action that arose at any time before
the end of the last accounting period for which the corporation
failed to file a required report.
(c) The court in which the issues arise has the power to
excuse the corporation for its failure to file a report when
due, and restore the corporation's cause of action under the
laws of this state, if the corporation has paid all taxes,
interest, and civil penalties due the state for all periods, or
provided for payment of them by adequate security or bond
approved by the commissioner.
Sec. 93. Minnesota Statutes 1986, section 290.38, is
amended to read:
290.38 [RETURNS OF MARRIED PERSONS.]
A husband and wife must file a joint Minnesota income tax
return if they filed a joint federal income tax return. If a
joint return is made the tax shall be computed on the aggregate
income and the liability with respect to the tax shall be joint
and several. If the husband and wife have elected to file
separate federal income tax returns they must file separate
Minnesota income tax returns. This election to file a joint or
separate returns must be changed if they change their election
for federal purposes. In the event taxpayers desire to change
their election, such change shall be done in the manner and on
such form as the commissioner shall prescribe by rule.
The determination of whether an individual is married is
shall be made as of the close of that person's taxable year;
except that if that person's spouse dies during the taxable year
the determination is made as of the time of the death. An
individual who is legally separated from a spouse under a decree
of divorce, dissolution, or of separate maintenance is not
considered to be married under provisions of section 7703 of the
Internal Revenue Code of 1986, as amended through December 31,
1986.
In the case of the death of one spouse or both spouses the
joint return with respect to the decedent may be made only by
the personal representative of the decedent's estate; except
that in the case of the death of one spouse the joint return may
be made by the surviving spouse with respect to both the
survivor and the decedent if (a) no return for the taxable year
has been made by the decedent, (b) no personal representative
has been appointed, and (c) no personal representative is
appointed before the last day prescribed by law for filing the
return of the surviving spouse. If a personal representative of
the estate of the decedent is appointed after the joint return
has been filed by the surviving spouse, the personal
representative may disaffirm such joint return by filing, within
one year after the last day prescribed by law for filing the
return of the surviving spouse, a separate return for the
taxable year of the decedent with respect to which the joint
return was made, in which case the return made by the survivor
shall constitute the survivor's separate return provided that
the election has been also disaffirmed for federal purposes.
Sec. 94. Minnesota Statutes 1986, section 290.39,
subdivision 3, is amended to read:
Subd. 3. [SHORT FORM FORMS.] The commissioner shall
provide for use a long form individual income tax return and may
provide for use a short form individual income tax
return which. The returns shall be in the form and provide for
items as the commissioner may prescribe which are consistent
with the provisions of this chapter, notwithstanding any other
law to the contrary. The political checkoff provided in section
10A.31 nongame wildlife checkoff provided in section 290.431 and
the dependent care credit provided in section 290.067 shall be
included on the short form.
Sec. 95. Minnesota Statutes 1986, section 290.41,
subdivision 2, is amended to read:
Subd. 2. [BY PERSONS, CORPORATIONS, COOPERATIVES,
GOVERNMENTAL ENTITIES OR SCHOOL DISTRICTS.] To the extent
required by section 6041 of the Internal Revenue Code of 1986,
as amended through December 31, 1986, every person, corporation,
or cooperative, the state of Minnesota and its political
subdivisions, and every city, county and school district in
Minnesota, making payments in the regular course of a trade or
business during the taxable year to any person or corporation of
$600 or more on account of rents or royalties, or of $10 or more
on account of interest, or $10 or more on account of dividends
or patronage dividends, or $600 or more on account of either
wages, salaries, commissions, fees, prizes, awards, pensions,
annuities, or any other fixed or determinable gains, profits or
income, not otherwise reportable under section 290.92,
subdivision 7, or on account of earnings of $10 or more
distributed to its members by savings, building and loan
associations or credit unions chartered under the laws of this
state or the United States, (a) shall make a return (except in
cases where a valid agreement to participate in the combined
federal and state information reporting system has been entered
into, and such return is therefore filed only with the
commissioner of internal revenue pursuant to the applicable
filing and informational reporting requirements of the Internal
Revenue Code of 1954 1986, as amended through December 31, 1985
1986) in respect to such payments in excess of the amounts
specified, giving the names and addresses of the persons to whom
such payments were made, the amounts paid to each, and (b) shall
make a return in respect to the total number of such payments
and total amount of such payments, for each category of income
specified, which were in excess of the amounts specified. This
subdivision shall not apply to the payment of interest or
dividends to a person who was a nonresident of Minnesota for the
entire year.
A person, corporation, or cooperative required to file
returns under this subdivision on interest, dividends, or
patronage dividend payments with respect to more than 50 payees
for any calendar year must file all of these returns on magnetic
media unless the person establishes to the satisfaction of the
commissioner that compliance with this requirement would be an
undue hardship.
Sec. 96. Minnesota Statutes 1986, section 290.41,
subdivision 3, is amended to read:
Subd. 3. [BY BROKERS.] The commissioner of revenue may
require every person doing business as a broker to furnish the
commissioner with the name and address of each customer for whom
they have transacted business, and with such details regarding
gross proceeds and other information as to transactions of any
customer as will enable the commissioner to determine whether
all income tax due on profits or gains of such customers has
been paid. The provisions of section 6045 of the Internal
Revenue Code of 1954 1986, as amended through December 31, 1985
1986, which define terms and provide the requirements that a
statement be furnished to the customer shall apply.
Sec. 97. Minnesota Statutes 1986, section 290.42, is
amended to read:
290.42 [FILING RETURNS, DATE.]
The returns required to be made under sections 290.37 to
290.39 and 290.41, other than those under section 290.41,
subdivisions 3 and 4, which shall be made within 30 days after
demand therefor by the commissioner, shall be filed at the
following times:
(1) Returns made on the basis of the calendar year shall be
filed on the fifteenth day of April, following the close of the
calendar year, except that returns of corporations shall be
filed on the fifteenth day of March following the close of the
calendar year;
(2) Returns made on the basis of the fiscal year shall be
filed on the fifteenth day of the fourth month following the
close of such fiscal year, except that returns of corporations
shall be filed on the fifteenth day of the third month following
the close of the fiscal year;
(3) Returns made for a fractional part of a year as an
incident to a change from one taxable year to another shall be
filed on the fifteenth day of the fourth month following the
close of the period for which made, except that such returns of
corporations shall be filed on the fifteenth day of the third
month following the close of the period for which made;
(4) Other returns for a fractional part of a year shall be
filed on the fifteenth day of the fourth month following the end
of the month in which falls the last day of the period for which
the return is made, except that such returns of corporations
shall be filed on the fifteenth day of the third month following
the end of the month in which falls the last day of the period
for which the return is made:
In the case of a final return of a decedent for a
fractional part of a year, such return shall be filed on the
fifteenth day of the fourth month following the close of the
12-month period which began with the first day of such
fractional part of a year.
(4a) In the case of the return of a cooperative association
such returns shall be filed on or before the fifteenth day of
the ninth month following the close of the taxable year.
(4b) If a corporation has been divested from a unitary
group and files a return for a fractional part of a year in
which it was a member of a unitary business that files a
combined report under section 290.34, subdivision 2, the
divested corporation's return must be filed on the 15th day of
the third month following the close of the common accounting
period that includes the fractional year.
(5) If the due date for any return required under this
chapter falls upon:
A Saturday, Sunday, or a legal holiday such return filed by
the next succeeding day which is not a Saturday, Sunday, or
legal holiday shall be considered to be timely filed. The term
"legal holiday" means any day made a holiday in Minnesota by
section 645.44, subdivision 5 or by the laws of the United
States.
(6) In case of sickness, absence, or other disability, or
when, in the commissioner's judgment, good cause exists, the
commissioner may extend the time for filing these returns for
not more than six months, except as provided for corporations
and except that where the failure is due to absence outside the
United States the commissioner may extend the period as provided
in section 6081 of the Internal Revenue Code of 1954, as amended
through December 31, 1985. The commissioner may require each
taxpayer in any of such cases to file a tentative return at the
time fixed for filing the regularly required return from the
taxpayer, and to pay a tax on the basis of such tentative return
at the times required for the payment of taxes on the basis of
the regularly required return from such taxpayer. The
commissioner may grant an extension of up to seven months for
filing the return of a corporation subject to tax under this
chapter if the corporation files a tentative return at the time
fixed for filing the regularly required return and pays the tax
on the basis of the tentative return in accordance with this
section and section 290.45.
(7) Every person making a return under section 290.41
(except subdivisions 3 and 4) shall furnish to each person whose
name is set forth in the return a written statement showing
(A) the name and address of the person making the return,
and
(B) the aggregate amount of payments to the person shown on
the return.
This written statement shall be furnished to the person on
or before January 31 of the year following the calendar year for
which the return was made. A duplicate of this written
statement shall be furnished to the commissioner on or before
February 28 of the year following the calendar year for which
the return was made.
Sec. 98. Minnesota Statutes 1986, section 290.45,
subdivision 1, is amended to read:
Subdivision 1. [DATE DUE, INSTALLMENTS.] The tax imposed
by this chapter shall be paid to the commissioner of revenue at
the time fixed for filing the return on which the tax is based,
except that at the election of estates the balance of tax due
may be paid in two equal installments.
The first shall be paid at the time fixed for filing the
return, and the second on or before six months thereafter.
If any installment is not paid on or before the date fixed
for its payment the whole amount of the tax unpaid shall become
due and payable. They shall be paid to the commissioner or to
the local officers designated by the commissioner with whom the
return is filed as hereinbefore provided.
Sec. 99. Minnesota Statutes 1986, section 290.45,
subdivision 2, is amended to read:
Subd. 2. [EXTENSIONS.] At the request of the taxpayer, and
for good cause shown, the commissioner may extend the time for
payment of the amount determined as the tax by the taxpayer, or
any installment thereof, or any amount determined as a
deficiency, for a period not to exceed six months from the date
prescribed for the payment of the tax or an installment thereof.
In such case the amount in respect of which the extension is
granted shall be paid together with interest at the rate
specified in section 270.75 on or before the date of the
expiration of the period of the extension.
Sec. 100. Minnesota Statutes 1986, section 290.46, is
amended to read:
290.46 [EXAMINATION OF RETURNS; ASSESSMENTS, REFUNDS.]
The commissioner shall, as soon as practicable after the
return is filed, examine the same and make any investigation or
examination of the taxpayer's records and accounts that the
commissioner may deem necessary for determining the correctness
of the return. The tax computed by the commissioner on the
basis of such examination and investigation shall be the tax to
be paid by such taxpayer. If the tax found due shall be greater
than the amount reported as due on the taxpayer's return, the
commissioner shall assess a tax in the amount of such excess and
the whole amount of such excess shall be paid to the
commissioner within 60 days after notice of the amount and
demand for its payment shall have been mailed to the taxpayer by
the commissioner. If the understatement of the tax on the
return was false and fraudulent with intent to evade the tax,
the installments of the tax shown by the taxpayer on the return
which have not yet been paid shall be paid to the commissioner
within 60 days after notice of the amount thereof and demand for
payment shall have been mailed to the taxpayer by the
commissioner. If the amount of the tax found due by the
commissioner shall be less than that reported as due on the
taxpayer's return, the excess shall be refunded to the taxpayer
in the manner provided by section 290.50 (except that no demand
therefor shall be necessary), if the taxpayer has already paid
the whole of such tax, or credited against any unpaid
installment thereof; provided, that no refundment shall be made
except as provided in section 290.50.
The commissioner , on examining returns of a taxpayer for
more than one year, may issue one order covering the several
years under consideration reflecting the aggregate refund or
additional tax due.
The notices and demands provided for by sections 290.46 to
290.48 shall be in such form as the commissioner may determine
(including a statement) and shall contain a brief explanation of
the computation of the tax and shall be sent by mail to the
taxpayer at the address given in the return, or to the
taxpayer's last known address.
In cases where there has been an overpayment of a
self-assessed liability as shown on the return filed by the
taxpayer, the commissioner may refund such overpayment to the
taxpayer and no demand therefor shall be necessary; further,
written findings by the commissioner, notice by mail to the
taxpayer and certificate for refundment by the commissioner
shall not be necessary and the provisions of section 270.10, in
such case, shall not be applicable.
In the case of an individual, estate or trust, The
commissioner may audit and adjust the taxpayer's computation
of federal adjusted gross income (or federal taxable income for
estates or trusts) to make it properly conform with the
provisions of section 290.01, subdivision 20 subdivisions 19 to
19e, or the items of federal tax preferences or federal credit
amounts to make them properly conform with the provisions of
this chapter. In the case of an individual, the commissioner
may audit and adjust the taxpayer's computation of itemized
deductions to make them properly conform with the provisions of
section 290.089.
Sec. 101. Minnesota Statutes 1986, section 290.48,
subdivision 10, is amended to read:
Subd. 10. [PRESUMPTIONS WHERE OWNER OF LARGE AMOUNT OF
CASH IS NOT IDENTIFIED.] (a) If the individual who is in
physical possession of cash in excess of $10,000 does not claim
such cash, or does not claim it belongs to another person whose
identity the commissioner can readily ascertain and who
acknowledges ownership of such cash, then, for purposes of
subdivisions 3 and 4, it shall be presumed that the cash
represents gross income of a single individual for the taxable
year in which the possession occurs, and that the collection of
tax will be jeopardized by delay.
(b) In the case of any assessment resulting from the
application of clause (a), the entire amount of the cash shall
be treated as taxable income for the taxable year in which the
possession occurs, such income shall be treated as taxable at an
eight percent rate, and except as provided in clause (c), the
possessor of the cash shall be treated (solely with respect to
the cash) as the taxpayer for purposes of this chapter and the
assessment and collection of the tax.
(c) If, after an assessment resulting from the application
of clause (a), the assessment is abated and replaced by an
assessment against the owner of the cash, the later assessment
shall be treated for purposes of all laws relating to lien,
levy, and collection as relating back to the date of the
original assessment.
(d) For purposes of this subdivision, the definitions
contained in section 6867 of the Internal Revenue Code of 1954
1986, as amended through December 31, 1985 1986, shall apply.
Sec. 102. Minnesota Statutes 1986, section 290.491, is
amended to read:
290.491 [TAX ON GAIN; DISCHARGE IN BANKRUPTCY.]
(a) Any tax due under this chapter on a gain realized on a
forced sale pursuant to foreclosure of a mortgage or other
security interest in agricultural production property, other
real property, or equipment, used in a farm business that was
owned and operated by the taxpayer shall be a dischargeable debt
in a bankruptcy proceeding under United States Code, title 11,
section 727.
(b) Income realized on a sale or exchange of agricultural
production property, other real property, or equipment, used in
a farm business that was owned and operated by the taxpayer
shall be exempt from taxation under this chapter, if the
taxpayer was insolvent at the time of the sale and the proceeds
of the sale were used solely to discharge indebtedness secured
by a mortgage, lien or other security interest on the property
sold. For purposes of this section, "insolvent" means insolvent
as defined in section 108(d)(3) of the Internal Revenue Code of
1954, as amended through December 31, 1985. This paragraph
applies only to the extent that the gain is includable in
federal adjusted gross income or in the computation of the
alternative minimum taxable income under section 290.091 for
purposes of the alternative minimum tax. The amount of the
exemption is limited to the excess of the taxpayer's (1)
liabilities over (2) the total assets and any exclusion claimed
under section 108 of the Internal Revenue Code of 1954, as
amended through December 31, 1985, determined immediately before
application of this paragraph.
(c) For purposes of this section, any tax due under this
chapter specifically includes, but is not limited to, tax
imposed under sections 290.02 and 290.03 on income derived from
a sale or exchange, whether constituting gain, discharge of
indebtedness or recapture of depreciation deductions, or the
alternative minimum tax imposed under section 290.091.
Sec. 103. Minnesota Statutes 1986, 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 3-1/2 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 273.1314, subdivision
10a, 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 specified in section 270.76
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 federal gross income,
items of tax preference, deductions, credits, or a
renegotiation, or files a copy of the taxpayer's 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. 104. Minnesota Statutes 1986, section 290.56,
subdivision 2, is amended to read:
Subd. 2. [CHANGE IN FEDERAL RETURN.] If the amount of
gross income, items of tax preference, deductions, or credits
for any year of any taxpayer as reported to the Internal Revenue
Service is changed or corrected by the Commissioner of Internal
Revenue or other officer of the United States or other competent
authority, or where a renegotiation of a contract or subcontract
with the United States results in a change in gross income,
items of tax preference, deductions, or credits, such taxpayer
shall report in writing to the commissioner, in such form as the
commissioner may require, such change or correction, or the
results of such renegotiation, within 90 days thereafter after
the final determination of the change, correction, or
renegotiation, and shall concede the accuracy of such
determination or state wherein it is erroneous. Any taxpayer
filing an amended federal income tax return shall also file
within 90 days thereafter a copy of such amended return with the
commissioner of revenue.
Sec. 105. Minnesota Statutes 1986, section 290.92,
subdivision 2a, is amended to read:
Subd. 2a. [COLLECTION AT SOURCE.] (1) [DEDUCTIONS.] Every
employer making payment of wages shall deduct and withhold upon
such wages a tax as provided in this section.
(2) [WITHHOLDING ON PAYROLL PERIOD.] The employer shall
withhold the tax on the basis of each payroll period or as
otherwise provided in this section.
(3) [WITHHOLDING TABLES.] Unless the amount of tax to be
withheld is determined as provided in subdivision 3, the amount
of tax to be withheld for each individual shall be based upon
tables to be prepared and distributed by the commissioner. The
tables shall be computed for the several permissible withholding
periods and shall take account of exemptions allowed under this
section; and the amounts computed for withholding shall be such
that the amount withheld for any individual during the
individual's taxable year shall approximate in the aggregate as
closely as possible the tax which is levied and imposed under
this chapter for that taxable year, upon the individual's
salary, wages, or compensation for personal services of any kind
for the employer, and shall take into consideration the
deduction allowable under section 290.089, subdivision 3, and
the personal credits allowed against the tax.
(4) [MISCELLANEOUS PAYROLL PERIOD.] If wages are paid with
respect to a period which is not a payroll period, the amount to
be deducted and withheld shall be that applicable in the case of
a miscellaneous payroll period containing a number of days,
including Sundays and holidays, equal to the number of days in
the period with respect to which such wages are paid.
(5) [MISCELLANEOUS PAYROLL PERIOD.] (a) In any case in
which wages are paid by an employer without regard to any
payroll period or other period, the amount to be deducted and
withheld shall be that applicable in the case of a miscellaneous
payroll period containing a number of days equal to the number
of days, including Sundays and holidays, which have elapsed
since the date of the last payment of such wages by such
employer during the calendar year, or the date of commencement
of employment with such employer during such year, or January 1
of such year, whichever is the later.
(b) In any case in which the period, or the time described
in clause (a), in respect of any wages is less than one week,
the commissioner, under rules prescribed by the commissioner,
may authorize an employer to determine the amount to be deducted
and withheld under the tables applicable in the case of a weekly
payroll period, in which case the aggregate of the wages paid to
the employee during the calendar week shall be considered the
weekly wages.
(6) [WAGES COMPUTED TO NEAREST DOLLAR.] If the wages
exceed the highest bracket, in determining the amount to be
deducted and withheld under this subdivision, the wages may, at
the election of the employer, be computed to the nearest dollar.
(7) [RULES ON WITHHOLDING.] The commissioner may, by rule,
authorize employers:
(a) to estimate the wages which will be paid to any
employee in any quarter of the calendar year;
(b) to determine the amount to be deducted and withheld
upon each payment of wages to such employee during such quarter
as if the appropriate average of the wages so estimated
constituted the actual wages paid; and
(c) to deduct and withhold upon any payment of wages to
such employee during such quarter such amount as may be
necessary to adjust the amount actually deducted and withheld
upon wages of such employee during such quarter to the amount
required to be deducted and withheld during such quarter without
regard to this paragraph (7).
(8) [ADDITIONAL WITHHOLDING.] The commissioner is
authorized to provide by rule for increases or decreases in the
amount of withholding otherwise required under this section in
cases where the employee requests the changes. Such additional
withholding shall for all purposes be considered tax required to
be deducted and withheld under this section.
(9) [TIPS.] In the case of tips which constitute wages,
this subdivision shall be applicable only to such tips as are
included in a written statement furnished to the employer
pursuant to section 6053 of the Internal Revenue Code of 1954
1986, as amended through December 31, 1985 1986, and only to the
extent that the tax can be deducted and withheld by the
employer, at or after the time such statement is so furnished
and before the close of the calendar year in which such
statement is furnished, from such wages of the employee
(excluding tips, but including funds turned over by the employee
to the employer for the purpose of such deduction and
withholding) as are under the control of the employer; and an
employer who is furnished by an employee a written statement of
tips (received in a calendar month) pursuant to section 6053 of
the Internal Revenue Code of 1954 1986 as amended through
December 31, 1985 1986, to which subdivision 1 is applicable may
deduct and withhold the tax with respect to such tips from any
wages of the employee (excluding tips) under the employer's
control, even though at the time such statement is furnished the
total amount of the tips included in statements furnished to the
employer as having been received by the employee in such
calendar month in the course of employment by such employer is
less than $20. Such tax shall not at any time be deducted and
withheld in an amount which exceeds the aggregate of such wages
and funds as are under the control of the employer minus any tax
required by other provisions of state or federal law to be
collected from such wages and funds.
(10) [VEHICLE FRINGE BENEFITS.] An employer shall not
deduct and withhold any tax under this section with respect to
any vehicle fringe benefit provided to an employee if the
employer has so elected for federal purposes and the requirement
of and the definition contained in section 3402(s) of the
Internal Revenue Code of 1954 1986, as amended through December
31, 1985 1986, are complied with.
Sec. 106. Minnesota Statutes 1986, section 290.92,
subdivision 4a, is amended to read:
Subd. 4a. [TAX WITHHELD FROM NONRESIDENTS.] (1) ["WAGES"
PAID TO NONRESIDENT EMPLOYEES.] For the purposes of this
section: The term "wages" means all remuneration taxable under
this chapter including all remuneration paid to a nonresident
employee for services performed in this state.
(2) ["EMPLOYER," "WAGES" AND "EMPLOYEE" CONCERNING
NONRESIDENTS.] Notwithstanding any other provision of this
section, under rules to be prescribed by the commissioner of
revenue, for purposes of this section any person having control,
receipt, custody, disposal or payment of compensation taxable
under this chapter and earned by a nonresident for personal
services, shall be deemed an employer, any compensation taxable
under this chapter and earned by a nonresident for personal
services shall be deemed wages, and a nonresident entitled to
compensation taxable under this chapter and earned by the
nonresident for personal services shall be deemed an employee.
When compensation for personal services is paid to a
corporation in which all or substantially all of the
shareholders are individual entertainers, performers or athletes
who gave an entertainment or athletic performance in this state
for which the compensation was paid, the compensation shall be
deemed wages of the individual entertainers, performers or
athletes and shall be subject to the provisions of this
section. Advance payments of compensation for personal services
to be performed in Minnesota shall be deemed wages and subject
to the provisions of this section. The individual, and not the
corporation, shall be subject to the Minnesota income tax as
provided in this chapter on the compensation for personal
services.
(3) [NONRESIDENTS, EMPLOYER'S DUTY.] The employer of any
employee domiciled in a state with which Minnesota has
reciprocity under section 290.081 is not required to withhold
under this chapter from the wages earned by such employee in
this state if the employee annually submits to the employer an
affidavit of residency in the form prescribed by the
commissioner. The affidavit must be submitted by the later of
(i) 30 days after the employment date or
(ii) August 31 for calendar year 1987 and February 28 for
subsequent calendar years.
Sec. 107. Minnesota Statutes 1986, section 290.92,
subdivision 5, is amended to read:
Subd. 5. [EXEMPTIONS.] (1) [ENTITLEMENT.] An employee
receiving wages shall on any day be entitled to claim
withholding exemptions equal to the same number as the personal
credits that the employee is entitled to claim under the
provisions of section 290.06, subdivision 3f, (not including
those credits that the taxpayer's spouse may claim) in a number
not to exceed the number of withholding exemptions that the
employee claims and that are allowable pursuant to section
3402(f)(1), (m), and (n) of the Internal Revenue Code of 1986,
as amended through December 31, 1986, for federal withholding
purposes.
(2) [WITHHOLDING EXEMPTION CERTIFICATE.] The provisions
concerning exemption certificates contained in section
3402(f)(2) and (3) of the Internal Revenue Code of 1954 1986, as
amended through December 31, 1985 1986, shall apply.
(3) [FORM OF CERTIFICATE.] Withholding exemption
certificates shall be in such form and contain such information
as the commissioner may by rule prescribe.
(4) [NUMBER MAY BE SAME AS THAT FOR FEDERAL PURPOSES.]
Notwithstanding the provisions of this subdivision, an employee
may elect to claim a number not to exceed the number of
withholding exemptions that the employee claims and which are
allowable for federal withholding purposes.
Sec. 108. Minnesota Statutes 1986, 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 or any affidavit of
residency received from an employee on which the employee claims
any of the following:
(a) a total number of withholding exemptions in excess
of 14 ten 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), 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 and affidavits of
residency 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 the employer 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
entitlement to the number of exemptions or to the exempt status
claimed on the withholding exemption certificate or, to verify
nonresidency. 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 the
commissioner, 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 or to the last known address
of the employee. 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.
However, where the commissioner has reasonable grounds for
believing that the employee is about to leave the state or that
the collection of any tax due under this chapter will be
jeopardized by delay, the commissioner may immediately notify
the employee and the employer, notwithstanding section 290.61,
that the certificate is invalid, and the employer must 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.
(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. 109. Minnesota Statutes 1986, 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. However, any return may be filed on or before the
tenth day of the second calendar month following the period if
the return shows timely deposits in full payment of the taxes
due for that period. For the purpose of the preceding sentence,
a deposit which is not required to be made within the return
period, may be made on or before the last day of the first
calendar month following the close of the period. Every
employer, in preparing a 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, but no
extension shall be granted for more than six months 60 days.
(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 $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 the month.
(c) [OTHER METHODS.] The commissioner may by rule 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 the
commissioner deems to be consistent with efficient tax
collection. In no event shall the duration of the reporting
period be more than one year.
(2) If less than the correct amount of tax is paid to the
commissioner, proper adjustments, with respect to both the tax
and the amount to be deducted, shall be made, without interest,
in the manner and at the times as the commissioner prescribes.
If the underpayment cannot be adjusted, the amount of the
underpayment shall be assessed and collected in the manner and
at the times as the commissioner prescribes.
(3) If any employer fails to make and file any return
required by paragraph (1) at the time prescribed, or makes and
files a false or fraudulent return, the commissioner shall make
for the employer a return from the commissioner's own knowledge
and from information the commissioner obtains through testimony,
or otherwise, and assess a tax on the basis of it. The amount
of tax shown on it shall be paid to the commissioner at the
times as the commissioner prescribes. Any return or assessment
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 to it.
(4) The commissioner, in any case, on having 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, may immediately assess the
tax, whether or not the time otherwise prescribed by law for
making and filing the return and paying the 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 rules 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 3-1/2 years after the due date of the return
required by paragraph (1), or the date the return was filed,
whichever is later. In the case of a false or fraudulent return
or failure to file a return, the tax may be assessed at any
time. The tax may be assessed within 6-1/2 years after the due
date of the return or the date the return was filed, whichever
is later, where the employer omitted withholding tax from the
return which is properly includable therein and the omitted
withholding tax is in excess of 25 percent of the amount of
withholding tax stated on the return.
(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 for the sum or sums (and any added penalties and
interest). Any sum or sums deducted and withheld in accordance
with the provisions of subdivision 2a or 3 shall be held to be a
special fund in trust for the state of Minnesota.
(b) If the employer, in violation of this section, fails to
deduct and withhold the tax under this section, and thereafter
the taxes against which the tax may be credited are paid, the
tax required to be deducted and withheld shall not be collected
from the employer; but this does not relieve the employer from
liability for any penalties and interest otherwise applicable
for 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 paragraph
(1), (2), or (3) of this subdivision, any tax required to be
withheld in accordance with the provisions of subdivision 2a or
3, or if the commissioner has assessed a tax pursuant to
paragraph (4), the 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
the employer. The statement shall also give the address of the
employer owing the tax, the period for which the tax is due, the
date of the delinquency, and any other information required by
the attorney general. The attorney general shall institute
legal action in the name of the state to recover the amount of
the 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
stated in it and that the amount shown in it is due from the
employer named in the statement. If an action is instituted,
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 it as security
for any judgment which has been or may be recovered. Any action
must be brought within five years after the date of assessment
of any tax under this subdivision.
(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 appeal the
judgment as in other 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 to it.
Sec. 110. Minnesota Statutes 1986, section 290.92,
subdivision 15, is amended to read:
Subd. 15. [PENALTIES.] (1) In the case of any failure to
withhold a tax on wages, make and file quarterly returns or make
payments to or deposits with the commissioner of amounts
withheld, as required by this section, within the time
prescribed by law, there shall be added to the tax a penalty
equal to ten percent of the amount of tax that should have been
properly withheld and paid over to or deposited with the
commissioner if the failure is for not more than 30 days with an
additional five percent for each additional 30 days or fraction
thereof during which the failure continues, not exceeding 25
percent in the aggregate. 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.
The amount added to the tax shall be collected at the same time
and in the same manner and as a part of the tax unless the tax
has been paid before the discovery of the negligence, in which
case the amount added shall be collected in the same manner as
the tax.
(2) If any employer required to withhold a tax on wages,
make deposits, make and file quarterly returns and make payments
to the commissioner of amounts withheld, as required by sections
290.92 to 290.97, willfully fails to withhold the tax or make
the deposits, files a false or fraudulent return, willfully
fails to make the payment or deposit, or willfully attempts in
any manner to evade or defeat the tax or the payment or deposit
of it, there shall also be imposed on the employer as a penalty
an amount equal to 50 percent of the amount of tax, less any
amount paid or deposited by the employer on the basis of the
false or fraudulent return or deposit, that should have been
properly withheld and paid over or deposited with the
commissioner. 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. The penalty
imposed by this paragraph shall be collected as a part of the
tax, and shall be in addition to any other penalties civil and
criminal, prescribed by this subdivision.
(3) If any person required under the provisions of
subdivision 7 to furnish a statement to an employee or payee and
a duplicate statement to the commissioner, or to furnish a
reconciliation of the statements, and quarterly returns, to the
commissioner, willfully furnishes a false or fraudulent
statement to an employee or payee or a false or fraudulent
duplicate statement or reconciliation of statements, and
quarterly returns, to the commissioner, or willfully fails to
furnish a statement or the reconciliation in the manner, at the
time, and showing the information required by the provisions of
subdivision 7, or rules prescribed by the commissioner
thereunder, there shall be imposed on the person a penalty of
$50 for each act or failure to act, but the total amount imposed
on the delinquent person for all such failures during any
calendar year shall not exceed $25,000. The penalty imposed by
this paragraph is due and payable within ten days after the
mailing of a written demand therefor, and may be collected in
the manner prescribed in subdivision 6, paragraph (8).
(4) In addition to any other penalties prescribed, any
person required to withhold a tax on wages, file quarterly
returns, and make payments or deposits to the commissioner of
amounts withheld, as required by this section, who attempts to
evade the tax by (i) willfully failing to withhold the tax, file
the return, or make the payment or deposit, or (ii) willfully
preparing or filing a false return, is guilty of a gross
misdemeanor unless the tax involved exceeds $300, in which event
the person is guilty of a felony.
(5) In lieu of any other penalty provided by law, except
the penalty provided by paragraph (3), any person required under
the provisions of subdivision 7 to furnish a statement of wages
to an employee and a duplicate statement to the commissioner,
who willfully furnishes a false or fraudulent statement of wages
to an employee or a false or fraudulent duplicate statement of
wages to the commissioner, or who willfully fails to furnish a
statement in the manner, at the time, and showing the
information required by the provisions of subdivision 7, or
rules prescribed by the commissioner thereunder, is guilty of a
gross misdemeanor.
(6) Any employee required to supply information to an
employer under the provisions of subdivision 5, who willfully
fails to supply information or willfully supplies false or
fraudulent information thereunder which would require an
increase in the tax to be deducted and withheld under
subdivision 2a or 3, is guilty of a gross misdemeanor.
(7) The term "person," as used in this section, includes an
officer or employee of a corporation, or a member or employee of
a partnership, who as an officer, employee, or member is under a
duty to perform the act in respect of which the violation occurs.
(8) All payments received may, in the discretion of the
commissioner of revenue, be credited first to the oldest
liability not secured by a judgment or lien, but in all cases
shall be credited first to penalties, next to interest, and then
to the tax due.
(9) In addition to any other penalty provided by law, any
employee who furnishes a withholding exemption certificate or a
residency affidavit to an employer which the employee has reason
to know contains a materially incorrect statement is liable to
the commissioner of revenue for a penalty of $500 for each
instance. The penalty is immediately due and payable and may be
collected in the same manner as any delinquent income tax.
(10) In addition to any other penalty provided by law, any
employer who fails to submit a copy of a withholding exemption
certificate or a residency affidavit required by subdivision 5a,
clause (1)(a), (1)(b), or (2) is liable to the commissioner of
revenue for a penalty of $50 for each instance. The penalty is
immediately due and payable and may be collected in the manner
provided in subdivision 6, paragraph (8).
(11) Any person who willfully aids or assists in, or
procures, counsels, or advises the preparation or presentation
under, or in connection with any matter arising under this
section, of a return, affidavit, claim, or other document, which
is fraudulent or false as to any material matter, whether or not
the falsity or fraud is with the knowledge or consent of the
person authorized or required to present the return, affidavit,
claim, or document, is guilty of a gross misdemeanor, unless the
tax involved exceeds $300, in which event the actor is guilty of
a felony.
(12) Notwithstanding the provisions of section 628.26, or
any other provision of the criminal laws of this state, an
indictment may be found and filed, upon any criminal offense
specified in this subdivision, in the proper court within six
years after the commission of the offense.
Sec. 111. Minnesota Statutes 1986, section 290.93,
subdivision 10, is amended to read:
Subd. 10. [UNDERPAYMENT OF ESTIMATED TAX.] (1) In the case
of any underpayment of estimated tax by an individual, except as
provided in paragraph (5) or (6), there must be added to and
become a part of the taxes imposed by this chapter, for the
taxable year an amount determined at the rate specified in
section 270.75 upon the amount of the underpayment for the
period of the underpayment.
(2) For purposes of the preceding paragraph, the amount of
underpayment shall be the excess of
(a) the amount of the installment required to be paid over
(b) the amount, if any, of the installment paid on or
before the last day prescribed for such payment.
(3) The period of the underpayment shall run from the date
the installment was required to be paid to whichever of the
following dates is the earlier
(a) The 15th day of the fourth month following the close of
the taxable year.
(b) With respect to any portion of the underpayment, the
date on which such portion is paid. For purposes of this
subparagraph, a payment of estimated tax on any installment date
shall be considered a payment of any unpaid required
installments in the order in which the installments are required
to be paid.
(4) The amount of any installment required to be paid shall
be 25 percent of the required annual payment except as provided
in paragraph (c). The term "required annual payment" means the
lesser of
(a) 80 90 percent (66-2/3 percent in the case of farmers
referred to in subdivision 5, paragraph (2)), of the tax shown
on the return for the taxable year or 80 90 percent (66-2/3
percent in the case of farmers referred to above) of the tax for
the year if no return is filed, or
(b) The total tax liability shown on the return of the
individual for the preceding taxable year (if a return showing a
liability for such taxes was filed by the individual for the
preceding taxable year of 12 months), or
(c) An amount equal to the applicable percentage of the tax
for the taxable year (after deducting personal credits) computed
by placing on an annualized basis the taxable income and
alternative minimum taxable income for the months in the taxable
year ending before the month in which the installment is
required to be paid. The applicable percentage of the tax is 20
22.5 percent in the case of the first installment, 40 45 percent
for the second installment, 60 67.5 percent for the third
installment, and 80 90 percent for the fourth installment. For
purposes of this subparagraph, the taxable income and
alternative minimum taxable income shall be placed on an
annualized basis by
(i) Multiplying by 12 (or in the case of a taxable year of
less than 12 months, the number of months in the taxable year)
the taxable income and alternative minimum taxable income
computed for the months in the taxable year ending before the
month in which the installment is required to be paid.
(ii) Dividing the resulting amount by the number of months
in the taxable year ending before the month in which such
installment date falls.
(5) No addition to the tax shall be imposed under this
subdivision for any taxable year if:
(a) the individual did not have any liability for tax for
the preceding taxable year,
(b) the preceding taxable year was a taxable year of 12
months, and
(c) the individual was a resident of Minnesota throughout
the preceding taxable year.
(6) No addition to the tax shall be imposed under this
subdivision with respect to any underpayment to the extent the
commissioner determines that the provisions of section
6654(e)(3) of the Internal Revenue Code of 1954, as amended
through December 31, 1985, apply.
(7) For the purposes of applying this subdivision, the
estimated tax shall be computed without any reduction for the
amount which the individual estimates as the individual's credit
under section 290.92, subdivision 12 (relating to tax withheld
at source on wages), and any other refundable credits which are
allowed against income tax liability, and the amount of such
credits for the taxable year shall be deemed a payment of
estimated tax, and an equal part of such amounts shall be deemed
paid on each installment date (determined under subdivisions 6
and 7) for such taxable year, unless the taxpayer establishes
the dates on which all amounts were actually withheld, in which
case the amounts so withheld shall be deemed payments of
estimated tax on the dates on which such amounts were actually
withheld.
Sec. 112. Minnesota Statutes 1986, section 290.934,
subdivision 2, is amended to read:
Subd. 2. [AMOUNT OF UNDERPAYMENT.] For purposes of
subdivision 1, the amount of the underpayment shall be the
excess of
(1) the amount of the installment tax shown on the return
for the tax year or, if no return is filed, the tax for the tax
year, over
(2) the amount, if any, of the installment paid on or
before the last date prescribed for payment.
Sec. 113. Minnesota Statutes 1986, section 290.9725, is
amended to read:
290.9725 [ELECTION BY SMALL BUSINESS CORPORATION.]
Any corporation having a valid election in effect under
section 1362 of the Internal Revenue Code of 1954 1986, as
amended through December 31, 1985 1986, shall not be subject to
the taxes imposed by this chapter, except the tax imposed under
section 290.92:
(1) the corporation is subject to the tax imposed under
section 290.92; and
(2) the corporation is subject to the tax imposed under
section 290.02 in any tax period in which it recognizes income
for federal income tax purposes under Internal Revenue Code,
Section 1363(d), 1374, or 1375; the total amount of income
recognized is the federal taxable income for the corporation
within the meaning of section 290.01, subdivision 19; the
provisions of sections 290.01, subdivisions 19a to 19f, and
290.17 to 290.20, must be employed to determine the taxable net
income of the corporation; and the taxable net income of the
corporation is its taxable income, except that any net operating
loss carryforward that arose in a year when there was no
election in effect under Section 1362 of the Internal Revenue
Code is allowed as a deduction.
Sec. 114. Minnesota Statutes 1986, section 290.9726,
subdivision 1, is amended to read:
Subdivision 1. [GENERAL RULE.] The gross income of the
shareholders of corporations described in section 290.9725 shall
be computed under the provisions of section 290.01, subdivisions
subdivision 20 to 20f.
Sec. 115. Minnesota Statutes 1986, section 290.9726,
subdivision 2, is amended to read:
Subd. 2. [CHARACTER OF ITEMS DISTRIBUTED OR CONSIDERED
DISTRIBUTED.] The character of any item of income, gain, loss,
or deduction included in shareholder's income, for the period of
time that the shareholder is not a resident of Minnesota, shall
be assignable as provided in section 290.17, subdivision
2, determined as if the item were realized directly from the
source from which it was realized by the corporation or incurred
in the same manner as incurred by the corporation.
Sec. 116. Minnesota Statutes 1986, section 290.9726,
subdivision 4, is amended to read:
Subd. 4. [TREATMENT OF FAMILY GROUPS.] Any amount of
taxable income apportioned or allocated to a shareholder may be
apportioned reapportioned or allocated by the commissioner
between or among shareholders of the corporation who are members
of the shareholder's family, as defined in section 290.10,
clause (6) reallocated under the provisions of section 1366(e)
of the Internal Revenue Code of 1986, as amended through
December 31, 1986, if the commissioner determines that the
apportionment or allocation is it necessary in order
to correctly reflect the value of services rendered to the
corporation by the shareholders.
Sec. 117. Minnesota Statutes 1986, section 290.974, is
amended to read:
290.974 [RETURN OF S CORPORATION.]
Every S corporation shall make a return for each taxable
year during which said election is in effect stating
specifically the names and addresses of all persons owning stock
in the corporation at any time during the taxable year, the
number of shares of stock owned by each shareholder at all times
during the taxable year, each shareholder's pro rata share of
each item of the corporation for the taxable year, and such
other information for the purposes of carrying out the
provisions of sections 290.01, subdivisions 20 19 to 20f 19b and
290.9725 as the commissioner may by forms and rules prescribe.
Sec. 118. [290.9741] [ELECTION BY REMIC.]
An entity having a valid election as a Real Estate Mortgage
Investment Conduit (REMIC) in effect under section 860D(b) of
the Internal Revenue Code of 1986, as amended through December
31, 1986, shall not be subject to the taxes imposed by this
chapter except the tax imposed under section 290.92.
Sec. 119. [290.9742] [REMIC INCOME TAXABLE TO HOLDERS OF
INTERESTS.]
The income of a REMIC is taxable to the holders of
interests in the REMIC as provided in sections 860A to 860G of
the Internal Revenue Code of 1986, as amended through December
31, 1986. The income of the holders must be computed under the
provisions of this chapter.
Sec. 120. [ESTIMATED TAXES, EXCEPTION.]
Subdivision 1. [CORPORATE MINIMUM TAX.] For taxable years
beginning after December 31, 1986, but before January 1, 1988,
the commissioner of revenue may not assess any penalties,
interest, or additions to tax that are the result of the
taxpayer's failure to make sufficient estimated tax payments due
to the alternative minimum tax imposed by section 290.092. This
exception shall apply only to the extent that the corporation's
liability for the alternative minimum tax increases the
corporation's liability under the franchise tax imposed by
section 290.02.
Subd. 2. [CORPORATE INCOME DEFINITION.] No addition to
tax, penalties or interest may be made under Minnesota Statutes,
section 290.53 or 290.934 for any period before December 15,
1987, with respect to an underpayment of estimated tax, to the
extent the underpayment was created or increased by the
enactment of changes in the definition of taxable income enacted
as part of the Tax Reform Act of 1986, Public Law Number 99-514,
and adopted by reference to federal law.
Subd. 3. [INDIVIDUAL SUBTRACTIONS ELIMINATED.] No addition
to tax, penalties, or interest may be made under Minnesota
Statutes, section 290.53 or 290.93, for any period before
January 15, 1988, with respect to an underpayment of estimated
tax, to the extent that the underpayment was created or
increased by elimination of the subtractions for pension income,
military pay, or unemployment compensation.
Sec. 121. [LUMP SUM DISTRIBUTIONS.]
If an individual elects to treat a lump sum distribution
received after December 31, 1986, and before March 16, 1987, as
if it were received in taxable year 1986 under section 1124 of
the Tax Reform Act of 1986, Public Law Number 99-514, the
individual shall treat the distribution as if it were received
in taxable year 1986 for purposes of the lump sum distribution
tax imposed under Minnesota Statutes 1986, section 290.032.
Sec. 122. [ALTERNATIVE MINIMUM TAX.]
In taxable years beginning prior to January 1, 1988, for
purposes of the tax imposed by Minnesota Statutes, section
290.091, section 13208(a), of the Consolidated Omnibus Budget
Reconciliation Act of 1985, Public Law Number 99-272, shall be
effective at the same time that it became effective for federal
income tax purposes. The time limit for filing a claim or an
amended return for the year 1982 shall be the same as the time
provided under section 1896 of the Tax Reform Act of 1986,
Public Law Number 99-514, for the filing of a similar claim or
amended return for federal purposes.
Sec. 123. [MINISTERS; MILITARY PERSONNEL.]
Mortgage interest and property taxes paid by a minister or
by military personnel allocable to a parsonage allowance or an
off base military allowance are deductible for all taxable years
to the extent allowed by section 144 of the Tax Reform Act of
1986, Public Law Number 99-514.
Sec. 124. [DEPARTMENT OF REVENUE STUDY.]
The department of revenue shall study application of the
income tax allocation and apportionment rules with respect to
income from highly technologically related agricultural
production. The department must consider whether the following
types of income are income from the operation of a farm:
(1) income of a taxpayer from an operation classified by
the United States Department of Commerce Standard Industrial
Classification as industrial, manufacturing, or distribution;
(2) income attributable to activities that occur prior to
the commencement of the biological process creating the product
or other value or after the biological process terminates;
(3) income attributable to testing; research; genetic or
biological selection; genetic engineering; creation or licensing
of patents, copyrights, trademarks, or other intellectual
property; processing, packaging, grading, promotion, or
distribution of products or value attributable thereto;
(4) income from any activity, which, if performed by
another person not otherwise engaged in farming, would not in
itself be farming; or
(5) income derived from the sale, exchange, or distribution
of living livestock and poultry purchased or leased by the
taxpayer.
The study shall also consider how income should be
apportioned between farm and nonfarm activities, particularly if:
(i) one or more activities or businesses of the taxpayer is
wholly separate and unrelated to the taxpayer's farm income; or
(ii) a small proportion of the taxpayer's income is income
from the operation of a farm.
In conducting the study the department shall solicit advice
and comments from persons outside state government.
The department of revenue shall report to the committee on
taxes and tax laws in the senate and the tax committee of the
house of representatives by January 1, 1988. The report must
summarize the scope and methodology of the study, the
conclusions reached, and recommendations for legislation, if any.
Sec. 125. [PURPOSE.]
It is the intent of the legislature to simplify Minnesota's
income tax. In order to simplify, many complicating provisions
are repealed by this article and the revenue is used to fund
income tax relief. It is the clear intent of the legislature to
eliminate all carryovers and basis adjustments of these
complicating provisions and conform with federal tax law as
quickly as possible.
Sec. 126. [INSTRUCTION TO REVISOR.]
In the next edition of Minnesota Statutes, the revisor of
statutes shall substitute the phrase "Internal Revenue Code of
1986, as amended through December 31, 1986" for the words
"Internal Revenue Code of 1954 as amended through December 31,
1985" wherever that phrase occurs in chapter 290, except in
section 290.01, subdivisions 19(e) and 20, and in chapter 291.
Sec. 127. [REPEALER.]
Minnesota Statutes 1986, sections 290.01, subdivisions 20a,
20b, 20d, 20f, 21, and 24; 290.013; 290.06, subdivisions 3f, 3g,
and 11; 290.069, subdivisions 1, 2, 3, 5, 6, and 7; 290.07,
subdivision 5; 290.071; 290.073; 290.075; 290.077, subdivision
3; 290.079; 290.08; 290.085; 290.088; 290.089; 290.09; 290.095,
subdivisions 8 and 10; 290.12, subdivision 4; 290.13; 290.139;
290.15; 290.16; 290.165; 290.17, subdivision 1a; 290.175; 290.18;
290.19; 290.21, subdivisions 5 and 6; 290.26, subdivision 2;
290.361; and 290.9726, subdivisions 3, 5, and 6, are repealed.
Sec. 128. [REPEAL OF RULES.]
The following parts of Minnesota Rules are repealed:
8001.0500; 8001.0600; 8001.0700; 8002.0100; 8006.0100;
8006.0200; 8007.0100; 8007.0400 to 8007.4000; 8008.0100 to
8008.0500; 8009.0100 to 8009.2700; 8009.4000 to 8009.6500;
8009.7000; 8010.0100 to 8010.0400; 8011.0100 to 8011.1000;
8014.1000 to 8014.2000; 8017.0100; 8017.2000; 8017.3000;
8023.0100 to 8023.0400; 8031.0200; 8031.0400; 8043.0100;
8093.0200, subpart 4; and 8099.0100 to 8099.0400.
Sec. 129. [EFFECTIVE DATE.]
Section 16 is effective the day following final enactment.
Section 18 is effective for taxable years beginning after
December 31, 1986, except as otherwise provided in clauses (i)
to (v) of that section. Section 58 is effective for losses
incurred in taxable years beginning after December 31, 1986.
Sections 64 to 72 are effective when the corresponding
provisions of the Internal Revenue Code of 1986 are effective.
Section 87, paragraph (b) and the provisions in paragraph (c)
relating to divestment of a corporation from a unitary group and
section 97 are effective for taxable years beginning after
December 31, 1985. The remainder of section 87 is effective for
taxable years beginning after December 31, 1986. Sections 98
and 99 are effective for taxable years ending after the date of
final enactment. Section 104 is effective for final
determinations made after the day after enactment of this act.
Sections 105 to 110 are effective the day after final enactment.
The repeal of Minnesota Statutes 1986, section 290.16,
subdivision 4, in section 127, is effective for sales or
exchanges occurring after December 31, 1986. The remainder of
this article is effective for taxable years beginning after
December 31, 1986.
ARTICLE 2
INSURANCE TAXES
Section 1. Minnesota Statutes 1986, section 60A.15,
subdivision 1, is amended to read:
Subdivision 1. [DOMESTIC AND FOREIGN COMPANIES OTHER THAN
TOWN AND FARMERS' MUTUAL AND DOMESTIC MUTUALS OTHER THAN LIFE.]
On or before April 15, June 15, and December 15 of each year,
every domestic and foreign company, except including town and
farmers' mutual insurance companies and domestic mutual
insurance companies other than life, shall pay to the
commissioner of revenue installments equal to one-third of the
insurer's total estimated tax for the current year based on a
sum equal to two percent of the gross premiums less return
premiums on all direct business received by it in this state, or
by its agents for it, in cash or otherwise, during such year,
excepting premiums written for marine insurance as specified in
subdivision 6. Failure of a company to make payments of at
least one-third of either (a) the total tax paid during the
previous calendar year or (b) 80 percent of the actual tax for
the current calendar year shall subject the company to the
penalty and interest provided in this subdivision section.
Sec. 2. Minnesota Statutes 1986, section 60A.199,
subdivision 1, is amended to read:
Subdivision 1. [EXAMINATION OF BOOKS AND RECORDS.] If the
commissioner considers it necessary, the commissioner may
examine the books and records of a surplus lines licensee to
determine whether the licensee is conducting business in
accordance with sections 60A.195 to 60A.209. For the purposes
of facilitating examinations, the licensee shall allow the
commissioner free access at reasonable times to all of the
licensee's books and records relating to the transactions to
which sections 60A.195 to 60A.209 apply. If an examination is
conducted, the cost of the examination shall be paid by
the insurer surplus line agent or agency.
Sec. 3. Minnesota Statutes 1986, section 60A.199,
subdivision 2, is amended to read:
Subd. 2. [EXAMINATION OF RETURNS; ASSESSMENT; REFUNDS.]
The commissioner of revenue shall, as soon as practicable after
a return required by section 60A.198 is filed, examine it and
make any investigation or examination of the company's
licensee's records and accounts that the commissioner deems
necessary for determining the correctness of the return. The
tax computed by the commissioner on the basis of the examination
and investigation is the tax to be paid by the company
licensee. If the tax found due is greater than the amount
reported due on the company's licensee's return, the
commissioner shall assess a tax in the amount of the excess and
the whole amount of the excess shall be paid to the commissioner
within 60 days after notice of the amount and demand for its
payment is mailed to the company licensee by the commissioner.
If the understatement of the tax on the return was false and
fraudulent with intent to evade the tax, the installments of the
tax shown by the company on its return which are not paid shall
be paid to the state treasurer within 60 days after notice of
the amount thereof and demand for payment is mailed to the
company by the commissioner. If the amount of the tax found due
by the commissioner is less than that reported due on
the company's licensee's return, the excess shall be refunded to
the company licensee in the manner provided by this section,
except that no demand therefor is necessary, if the whole of the
tax has been paid or credited against any unpaid installment
thereof. No refund shall be made except as provided in this
section after the expiration of 3-1/2 years after the filing of
the return.
If the commissioner examines returns of a company licensee
for more than one year, the commissioner may issue one order
covering the several years under consideration reflecting the
aggregate refund or additional tax due.
The notices and demands provided for by this section shall
be in the form the commissioner determines, including a
statement, and shall contain a brief explanation of the
computation of the tax and shall be sent by mail to the company
licensee at the address given in its on the return. If the
address is not given, then they will be sent to the last known
address.
At the request of the commissioner of revenue, the
commissioner of commerce may examine and investigate the returns
under section 60A.198 that the commissioner of revenue
designates. The commissioner of commerce shall report to the
commissioner of revenue the results of the examination in the
manner required by the commissioner of revenue.
Sec. 4. Minnesota Statutes 1986, section 60A.199,
subdivision 3, is amended to read:
Subd. 3. [FAILURE TO FILE; FALSE OR FRAUDULENT RETURN.] If
any company licensee required by section 60A.198 to file any
return fails to do so within the time prescribed or makes,
willfully or otherwise, an incorrect, false, or fraudulent
return, it the licensee must, on the written demand of the
commissioner of revenue, file the return, or corrected return,
within 60 days after the mailing of the written demand and at
the same time pay the whole tax, or additional tax, due on the
basis thereof. If the company licensee fails within that time
to file the return, or corrected return, the commissioner shall
make for it a return, or corrected return, from personal
knowledge and from the information obtainable through testimony,
or otherwise, and assess a tax on the basis thereof. The tax
assessed, less any payments theretofore made on account of the
tax for the taxable year covered by the return, must be paid
within 60 days after the commissioner has mailed to the company
licensee a written notice of the amount thereof and demand
for its payment. Any return or assessment made by the
commissioner on account of the failure of the company licensee
to make a return, or a corrected return, is prima facie correct
and valid, and the company licensee has the burden of
establishing its incorrectness or invalidity in any action or
proceeding in respect thereto.
Sec. 5. Minnesota Statutes 1986, section 60A.199,
subdivision 5, is amended to read:
Subd. 5. [INTENT TO EVADE TAX; PENALTY.] If any company
licensee with intent to evade the tax imposed by this chapter,
fails to file any return required by this chapter or with such
intent files a false or fraudulent return there shall also be
imposed on it a penalty as provided in section 290.53,
subdivision 3.
Sec. 6. Minnesota Statutes 1986, section 60A.199,
subdivision 7, is amended to read:
Subd. 7. [COLLECTION OF TAX.] The tax required to be paid
by section 60A.198 may be collected in any ordinary action at
law by the commissioner of revenue against the company
licensee. In any action commenced pursuant to this section,
upon the filing of an affidavit of default, the court
administrator of the district court wherein the action was
commenced shall enter judgment for the state for the amount
demanded in the complaint together with costs and disbursements.
Sec. 7. Minnesota Statutes 1986, section 60A.199,
subdivision 8, is amended to read:
Subd. 8. [REFUND PROCEDURE; TIME LIMIT; APPROPRIATION.] A
company licensee which has paid, voluntarily or otherwise, or
from which there was collected an amount of tax for any year in
excess of the amount legally due for that year, may file with
the commissioner of revenue a claim for a refund of the excess.
Except as provided in subdivision 3, no claim or refund shall be
allowed or made after 3-1/2 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 company licensee. For this purpose, a return or
amended return claiming an overpayment constitutes a claim for
refund.
Upon the filing of a claim the commissioner shall examine
the same it, shall make and file written findings thereon
denying or allowing the claim in whole or in part, and shall
mail a notice thereof to the company licensee at the address
stated upon the return. If the claim is allowed in whole or in
part, the commissioner shall issue a certificate for a refund of
the excess paid by the company licensee, with interest at the
rate specified in section 270.76 computed from the date of the
payment of the tax until the date the refund is paid or credit
is made to the company licensee. The commissioner of finance
shall cause the refund to be paid as other state moneys are
expended. So much of the proceeds of the taxes as is necessary
are appropriated for that purpose.
Sec. 8. Minnesota Statutes 1986, section 60A.199,
subdivision 9, is amended to read:
Subd. 9. [DENIAL OF CLAIM; COURT PROCEEDINGS.] If the
claim is denied in whole or in part, the commissioner shall mail
an order of denial to the company licensee in the manner
prescribed in this section. An appeal from this order may be
taken to the Minnesota tax court in the manner prescribed in
section 271.06, or the company licensee may commence an action
against the commissioner to recover the denied overpayment. The
action may be brought in the district court of the district in
which lies the county of its principal place of business, or in
the district court for Ramsey county. The action in the
district court shall be commenced within 18 months following the
mailing of the order of denial to the company licensee. If a
claim for refund is filed by a company licensee and no order of
denial is issued within six months of the filing, the company
licensee may commence an action in the district court as in the
case of a denial, but the action must be commenced within two
years of the date that the claim for refund was filed.
Sec. 9. Minnesota Statutes 1986, section 60A.199,
subdivision 10, is amended to read:
Subd. 10. [CONSENT TO EXTEND TIME.] If the commissioner
and the company licensee have, within the periods prescribed in
subdivision 1 by this section, consented in writing to any
extension of time for the assessment of the tax, the period
within which a claim for refund may be filed, or a refund may be
made or allowed, if no claim is filed, is the period within
which the commissioner and the company licensee have consented
to an extension for the assessment of the tax and six months
thereafter, the period within which a claim for refund may be
filed shall not expire prior to two years after the tax was paid.
Sec. 10. Minnesota Statutes 1986, section 60A.199,
subdivision 11, is amended to read:
Subd. 11. [OVERPAYMENT; REFUNDS.] If the amount determined
to be an overpayment exceeds the taxes imposed by section
60A.198, the amount of 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 the amount was paid.
Notwithstanding any other provision of law to the contrary,
in the case of any overpayment the commissioner, within the
applicable period of limitations, shall refund any balance of
more than $1 to the company $10 if the company licensee so
requests.
Sec. 11. Minnesota Statutes 1986, section 60A.209,
subdivision 1, is amended to read:
Subdivision 1. [AUTHORIZATION; REGULATION.] A resident of
this state may obtain insurance from an ineligible surplus lines
insurer in this state through a surplus lines licensee. The
licensee shall first attempt to place the insurance with a
licensed insurer, or if that is not possible, with an eligible
surplus lines insurer. If coverage is not obtainable from a
licensed insurer or an eligible surplus lines insurer, the
licensee shall certify to the commissioner, on a form prescribed
by the commissioner, that these attempts were made. Upon
obtaining coverage from an ineligible surplus lines insurer, the
licensee shall:
(a) Have printed, typed, or stamped in red ink upon the
face of the policy in not less than 10 point type the following
notice: "THIS INSURANCE IS ISSUED PURSUANT TO THE MINNESOTA
SURPLUS LINES INSURANCE ACT. THIS INSURANCE IS PLACED WITH AN
INSURER THAT IS NOT LICENSED BY THE STATE NOR RECOGNIZED BY THE
COMMISSIONER OF COMMERCE AS AN ELIGIBLE SURPLUS LINES INSURER.
IN CASE OF ANY DISPUTE RELATIVE TO THE TERMS OR CONDITIONS OF
THE POLICY OR THE PRACTICES OF THE INSURER, THE COMMISSIONER OF
COMMERCE WILL NOT BE ABLE TO ASSIST IN THE DISPUTE. IN CASE OF
INSOLVENCY, PAYMENT OF CLAIMS IS NOT GUARANTEED." The notice
may not be covered or concealed in any manner; and
(b) Collect from the insured appropriate premium taxes and
report the transaction to the commissioner of revenue on a form
prescribed by the commissioner. If the insured fails to pay the
taxes when due, the insured shall be subject to a civil fine of
not more than $3,000, plus accrued interest from the inception
of the insurance.
Sec. 12. Minnesota Statutes 1986, section 60A.209,
subdivision 3, is amended to read:
Subd. 3. [DUTY TO REPORT.] Each insured in this state who
procures, causes to be procured, or continues or renews
insurance with an ineligible surplus lines insurer or any
self-insurer in this state who procures or continues excess of
loss, catastrophe, or other insurance upon a subject of
insurance resident, located, or to be performed within this
state, other than insurance procured pursuant to section 60A.201
or subdivision 1 of this section shall file a written report
regarding the insurance with the commissioner of revenue on
forms prescribed by the commissioner of revenue and furnished to
the insured upon request. The report shall be filed within 30
days after the date the insurance was procured, continued, or
renewed and shall be accompanied by the tax on the premiums of
two percent. The report shall show all of the following:
(a) The name and address of the insured;
(b) The name and address of the insurer;
(c) The subject of the insurance;
(d) A general description of the coverage;
(e) The amount of premium currently charged for the
insurance; and
(f) Any additional pertinent information reasonably
requested by the commissioner of revenue.
Sec. 13. Minnesota Statutes 1986, section 60C.06, is
amended by adding a subdivision to read:
Subd. 5. [SURCHARGE.] (a) The plan of operation adopted
pursuant to section 60C.07 must require each member insurer to
recoup over a reasonable length of time a sum reasonably
calculated to recoup the assessments paid by the member insurer
under this article by way of a surcharge on premiums charged for
insurance policies to which this chapter applies.
(b) The amount of any surcharge must be separately stated
on either a billing or policy declaration sent to an insured.
The association shall determine the rate of the surcharge and
the collection period for each category and these are mandatory
for all member insurers of the association who write business in
those categories. The amount of the surcharge determined under
this section is included in the insurance company's premiums for
purposes of the gross premiums tax imposed under section 60A.15.
(c) The plan of operation may permit a member insurer to
omit collection of the surcharge from its insured when the
expense of collecting the surcharge would exceed the amount of
the surcharge. However, nothing in this section shall relieve
the member insurer of its obligation to recoup the amount of the
surcharge otherwise collectible.
Sec. 14. Minnesota Statutes 1986, section 61B.02,
subdivision 1, is amended to read:
Subdivision 1. [SCOPE.] Sections 61B.01 to 61B.16 apply to
direct life insurance policies, health insurance
policies including subscriber contracts issued by a nonprofit
health service plan corporation operating under chapter 62C,
annuity contracts, and contracts supplemental to life and health
insurance policies or annuity contracts, issued by persons
authorized at any time to transact insurance or business as a
nonprofit health service plan corporation operating under
chapter 62C in this state. Sections 61B.01 to 61B.16 do not
apply to:
(a) any policy or contract or part thereof under which the
risk is borne by the policyholder;
(b) any policy or contract or part thereof assumed by an
impaired insurer under a contract of reinsurance other than
reinsurance for which assumption certificates have been issued;
(c) any policy or contract issued by an assessment benefit
association operating under chapter 63, or a fraternal benefit
society operating under chapter 64B;
(d) any subscriber contract issued by a nonprofit health
service plan corporation operating under chapter 62C; or
(e) (d) any health insurance policies issued by a person
other than a person authorized to write life insurance in this
state or other than a person whose corporate charter would
permit the writing of life insurance but who is authorized to
write only health insurance in this state.
Sec. 15. Minnesota Statutes 1986, section 61B.03,
subdivision 8, is amended to read:
Subd. 8. "Health insurance" means accident and health
insurance regulated under chapter 62A and credit accident and
health insurance regulated under chapter 62B and subscriber
contracts issued by a nonprofit health service plan corporation
operating under chapter 62C.
Sec. 16. Minnesota Statutes 1986, section 61B.03,
subdivision 10, is amended to read:
Subd. 10. "Member insurer" means any person authorized to
transact in this state any kind of insurance or business to
which sections 61B.01 to 61B.16 apply under section 61B.02.
Sec. 17. Minnesota Statutes 1986, section 62E.02,
subdivision 23, is amended to read:
Subd. 23. "Contributing member" means those companies
operating pursuant to chapter 62A, paying premium taxes pursuant
to section 60A.15, and offering, selling, issuing, or renewing
policies or contracts of accident and health insurance or health
maintenance organizations and nonprofit health service plan
corporations incorporated under chapter 62C or fraternal benefit
society operating under chapter 64.
Sec. 18. Minnesota Statutes 1986, section 67A.11,
subdivision 3, is amended to read:
Subd. 3. [ANNUAL STATEMENT.] (a) On or before March first,
following the end of each fiscal year, the president and the
secretary shall file with the commissioner a verified statement
of the entire business and condition of the company, which
statement shall contain such data and information in reference
to the business of the preceding fiscal year as shall be
required by the commissioner.
(b) On or before March 1 of each year, the president and
secretary shall also file with the commissioner of revenue a
copy of the verified statement required by paragraph (a).
Failure to file the statement on or before March 1 will subject
the company to a penalty of $10 a day up to a maximum of $100.
Sec. 19. Minnesota Statutes 1986, section 69.011,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] Unless the language or
context clearly indicates that a different meaning is intended,
the following words and terms shall for the purposes of this
chapter and chapters 423, 423A, 424 and 424A have the meanings
ascribed to them:
(a) "Commissioner" means the commissioner of revenue.
(b) "Municipality" means any home rule charter or statutory
city, organized town or park district subject to chapter 398,
and the University of Minnesota.
(c) "Minnesota Firetown Premium Report" means a form
prescribed by the commissioner containing space for reporting by
insurers of fire, lightning, sprinkler leakage and extended
coverage premiums received upon risks located or to be performed
in this state less return premiums and dividends.
(d) "Firetown" means the area serviced by any municipality
having a qualified fire department or a qualified incorporated
fire department having a subsidiary volunteer firefighters'
relief association.
(e) "Assessed property valuation" means latest available
assessed value of all property in a taxing jurisdiction, whether
the property is subject to taxation, or exempt from ad valorem
taxation obtained from information which appears on abstracts
filed with the commissioner of revenue or equalized by the state
board of equalization.
(f) "Minnesota Aid to Police Premium Report" means a form
prescribed by the commissioner for reporting by each fire and
casualty insurer of all premiums received upon direct business
received by it in this state, or by its agents for it, in cash
or otherwise, during the preceding calendar year, with reference
to insurance written for insuring against the perils contained
in auto liability-bodily injury, auto liability-property damage,
and auto physical damage insurance coverages as reported in the
Minnesota business schedule of the fire and casualty insurance
companies annual financial statement which each insurer is
required to file with the commissioner in accordance with the
governing laws or rules less return premiums and dividends.
(g) "Peace officer" means any person:
(1) whose primary source of income derived from wages is
from direct employment by a municipality or county as a law
enforcement officer on a full-time basis of not less than 30
hours per week;
(2) who has been employed for a minimum of six months prior
to December 31 preceding the date of the current year's
certification pursuant to subdivision 2, clause (b);
(3) who is sworn to enforce the general criminal laws of
the state and local ordinances;
(4) who is licensed by the peace officers standards and
training board and is authorized to arrest with a warrant; and
(5) who is a member of a local police relief association to
which section 69.77 applies or the public employees police and
fire fund.
(h) "Full-time equivalent number of peace officers
providing contract service" means the integral or fractional
number of peace officers which would be necessary to provide the
contract service if all peace officers providing service were
employed on a full-time basis as defined by the employing unit
and the municipality receiving the contract service.
(i) "Retirement benefits other than a service pension"
means any disbursement authorized pursuant to section 424A.05,
subdivision 3, clauses (2), (3) and (4).
(j) "Municipal clerk, municipal clerk-treasurer or county
auditor" means the person who was elected or appointed to the
specified position or, in the absence of the person, another
person who is designated by the applicable governing body. In a
park district the clerk is the secretary of the board of park
district commissioners. In the case of the University of
Minnesota, the clerk is that official designated by the board of
regents.
Sec. 20. Minnesota Statutes 1986, section 69.011,
subdivision 2, is amended to read:
Subd. 2. [QUALIFICATION FOR FIRE OR POLICE STATE AID.] (a)
In order to qualify to receive fire state aid, on or before July
1, annually, in conjunction with the financial report required
pursuant to section 69.051, the clerk of each municipality
having a duly organized fire department as provided in
subdivision 4, or the secretary of each independent nonprofit
firefighting corporation having a subsidiary incorporated
firefighters' relief association whichever is applicable, and
the secretary and the treasurer of the firefighters' relief
association fire chief, shall jointly certify the existence of
the municipal fire department or of the independent nonprofit
firefighting corporation, whichever is applicable, which meets
the minimum qualification requirements set forth in this
subdivision, and the fire personnel and equipment of the
municipal fire department or the independent nonprofit
firefighting corporation as of the preceding December 31.
Certification shall be made to the commissioner on a form
prescribed by the commissioner and shall include any other facts
the commissioner may require. The certification shall be made
to the commissioner in duplicate. Each copy of the certificate
shall be duly executed and deemed an original. The commissioner
shall forward one copy to the auditor of the county wherein the
fire department is located and retain one copy.
(b) On or before July 1 annually the clerk of each
municipality having a duly organized police department and
having a duly incorporated relief association shall certify that
fact to the county auditor of the county where the police
department is located and to the commissioner on a form
prescribed by the commissioner together with the other facts the
commissioner or auditor may require.
On or before July 1 annually, the clerk of each
municipality and the auditor of each county employing one or
more peace officers as defined in subdivision 1, clause (h),
shall certify the number of such peace officers to the
commissioner on forms prescribed by the commissioner. Credit
for officers employed less than a full year shall be
apportioned. Each full month of employment of a qualifying
officer during the calendar year shall entitle the employing
municipality or county to credit for 1/12 of the payment for
employment of a peace officer for the entire year. For purposes
of sections 69.011 to 69.051, employment of a peace officer
shall commence when the peace officer is entered on the payroll
of the respective municipal police department or county
sheriff's department. No peace officer shall be included in the
certification of the number of peace officers by more than one
municipality or county for the same month.
Sec. 21. Minnesota Statutes 1986, section 69.021,
subdivision 1, is amended to read:
Subdivision 1. [MINNESOTA FIRETOWN PREMIUM REPORT AND
MINNESOTA AID TO POLICE PREMIUM REPORT.] The commissioner of
revenue shall, at the time of mailing annual statement and tax
forms, send blank copies of the Minnesota Firetown Premium
Report and when applicable the Minnesota Aid to Police Premium
Report to each insurer, including township and farmers mutual
insurance companies licensed to write insurance as described in
section 69.011, subdivision 1, clauses (c) and (f) in this
state. These reports shall contain space for the insurers name,
address, gross premiums less return premiums, dividends, net
premiums, certification and other facts the commissioner may
require.
Sec. 22. Minnesota Statutes 1986, section 69.021,
subdivision 2, is amended to read:
Subd. 2. [REPORT OF PREMIUMS.] Each insurer, including
township and farmers mutual insurers where applicable, shall
return to the commissioner of commerce with its annual financial
statement the reports described in subdivision 1 certified by
its secretary and president or chief financial officer. The
Minnesota Firetown Premium Report shall contain a true and
accurate statement of the total premium for all gross direct
fire, lightning, and sprinkler leakage insurance of all domestic
mutual insurers and the total premiums for all gross direct
fire, lightning, sprinkler leakage and extended coverage
insurance of all other insurers, less return premiums and
dividends received by them on that business written or done
during the preceding calendar year upon property located within
the state or brought into the state for temporary use. The fire
and extended coverage portion of multiperil and multiple peril
package premiums and all other combination premiums shall be
determined by applying percentages determined by the
commissioner of commerce or by rating bureaus recognized by the
commissioner of commerce. The Minnesota Aid to Police Premium
Report shall contain a true and accurate statement of the total
premiums, less return premiums and dividends received, on all
direct business received by such insurer in this state, or by
its agents for it, in cash or otherwise, during the preceding
calendar year, with reference to insurance written for perils
described in section 69.011, subdivision 1, clause (f), except
that domestic mutual insurance companies must not file a report.
Each insurer shall, in addition to filing with the
commissioner of commerce the reports required by this
subdivision, file the reports required by this subdivision with
the commissioner of revenue.
Sec. 23. Minnesota Statutes 1986, section 69.021,
subdivision 3, is amended to read:
Subd. 3. [PENALTY FOR FRAUDULENT, INCORRECT, INCOMPLETE
RETURNS AND LATE FILING OF REPORT WITH THE COMMISSIONER OF
COMMERCE.] When it appears to the commissioner of commerce that
any insurer has made an incomplete or inaccurate report the
commissioner of commerce shall return the report and demand that
a complete and accurate report be filed. If the insurer fails
to file a report by on or before March 1, annually, or within 30
days after demand by the commissioner of commerce, the insurer
shall be liable and shall pay $25 for each seven days delinquent
or fraction thereof not to exceed $200. If the insurer fails to
file a corrected report within 30 days after demand, the insurer
is liable for the penalties provided in this subdivision for
knowingly filing an inaccurate or false report.
Any insurer who knowingly makes and files an inaccurate or
false report shall be liable to a fine of not less than $25 nor
more than $1,000 and the commissioner of commerce may revoke the
insurer's certificate of authority.
Any person whose duty it is to make the report who fails or
refuses to make it within 30 days after notification by the
commissioner of commerce shall be fined not more than $1,000.
Failure of the insurer to receive a reporting form shall not
excuse the insurer from filing the report.
Sec. 24. Minnesota Statutes 1986, section 69.54, is
amended to read:
69.54 [SURCHARGE ON PREMIUMS TO RESTORE DEFICIENCY IN
SPECIAL FUND.]
The commissioner shall order and direct a surcharge to be
collected of two percent of the fire, lightning, and sprinkler
leakage gross premiums, less return premiums, on all direct
business received by any licensed foreign or domestic fire
insurance company on property in this city of the first class,
or by its agents for it, in cash or otherwise. This surcharge
shall be due and payable from these companies to the state
treasurer, in equal installments, on March 15, May 15, and
November 15 of each calendar year, and if not paid within 30
days after these dates, a penalty of ten percent shall accrue
thereon and thereafter this sum and penalty shall draw interest
at the rate of one percent per month until paid.
Sec. 25. Minnesota Statutes 1986, section 69.55, is
amended to read:
69.55 [WARRANT ON STATE TREASURER.]
The commissioner of finance semiannually after July 31,
1934, by July 31 and December 31 of each year shall issue and
deliver to the treasurer of the relief association in such each
city a warrant upon the state treasurer for an amount equal to
the total amount of the surcharge on the premiums within the
city theretofore so collected and transmitted to the state
treasurer by these insurance companies. There is hereby
appropriated out of any money in from the general fund in the
state treasury not otherwise appropriated such sums as may, from
time to time, be the amount necessary to pay these warrants.
Sec. 26. Minnesota Statutes 1986, section 79.34,
subdivision 1, is amended to read:
Subdivision 1. A nonprofit association known as the
workers' compensation reinsurance association is created, which
may be incorporated under chapter 317 with all the powers of a
corporation formed under that chapter, except that if the
provisions of that chapter are inconsistent with sections 79.34
to 79.40 or any amendments thereto, sections 79.34 to 79.40
shall govern. Each insurer as defined by section 79.01,
subdivision 2, shall as a condition of its authority to transact
workers' compensation insurance in this state, be a member of
the reinsurance association and shall be bound by the plan of
operation of the reinsurance association; provided, that all
affiliated insurers within a holding company system as defined
in sections 60D.01 to 60D.13 shall be considered a single entity
for purposes of the exercise of all rights and duties of
membership in the reinsurance association. Each self-insurer
approved pursuant to section 176.181 and each political
subdivision which self-insures shall, as a condition of its
authority to self-insure workers' compensation liability in this
state, be a member of the reinsurance association and shall be
bound by its plan of operation; provided, that (a) all
affiliated companies within a holding company system, as
determined by the commissioner in a manner consistent with the
standards and definitions in sections 60D.01 to 60D.13, shall be
considered a single entity for purposes of the exercise of all
rights and duties of membership in the reinsurance association,
and (b) all group self-insurers granted authority to self-insure
pursuant to section 176.181 shall be considered a single entity
for purposes of the exercise of all the rights and duties of
membership in the reinsurance association. As a condition of
its authority to self-insure workers' compensation liability,
and for losses incurred on or after January 1, 1984, the state
shall be a member of the reinsurance association and is bound by
its plan of operation. The commissioner of labor and industry
represents the state in the exercise of all the rights and
duties of membership in the reinsurance association. The state
treasurer shall pay the premium to the reinsurance association
from the state compensation revolving fund upon warrants of the
commissioner of labor and industry. For the purposes of this
section "state" means the administrative branch of state
government, the legislative branch, the judicial branch, the
University of Minnesota, and any other entity whose workers'
compensation liability is paid from the state revolving fund.
The commissioner of finance may calculate, prorate, and charge a
department or agency the portion of premiums paid to the
reinsurance association for employees who are paid wholly or in
part by federal funds, dedicated funds, or special revenue
funds. The reinsurance association is not a state agency.
Actions of the reinsurance association and its board of
directors and actions of the commissioner of labor and industry
with respect to the reinsurance association are not subject to
chapters 13, 14, and 15. The reinsurance association is exempt
from taxation under the laws of this state and All property
owned by the association is exempt from taxation. The
reinsurance association is not obligated to make any payments or
pay any assessments to any funds or pools established pursuant
to this chapter or chapter 176 or any other law.
Sec. 27. Minnesota Statutes 1986, section 79.34, is
amended by adding a subdivision to read:
Subd. 1a. The direct funded premium received by the
reinsurance association is subject to the gross premium tax
imposed by section 60A.15. Only direct funded premium payments
made to the reinsurance association by self-insurers approved
pursuant to section 176.181 and each political subdivision that
self-insures shall be subject to the gross premiums tax.
Sec. 28. Minnesota Statutes 1986, section 176.129,
subdivision 4a, is amended to read:
Subd. 4a. [CONTRIBUTION RATE ADJUSTMENT.] In determining
the rate of adjustment as provided by subdivision 3, the
commissioner shall determine the revenues received less claims
received for the preceding 12 months ending June 30, 1984, and
each June 30 thereafter.
If the result is: the range of adjustment is:
over $15,000,000 -10% to 0%
less than $15,000,000 but
more than $10,000,000 -7% to +3%
less than $10,000,000 but
more than $5,000,000 -5% to +5%
less than $5,000,000
but more than $0 -3% to +7%
$0 but less than a
$5,000,000 deficit 0% to +10%
more than a $5,000,000
deficit +5% to +12%
The adjustment under this subdivision shall be used for
assessments for calendar year 1984 and each year thereafter.
An amount assessed pursuant to this section is payable to
the commissioner within 45 days of mailing notice of the amount
due unless the commissioner orders otherwise.
The commissioner may allow an offset of the reimbursements
due an employer pursuant to sections 176.131 and 176.132 against
the assessment due under this section and may promulgate rules
to establish the terms and conditions under which an employer
will be allowed the offset.
Sec. 29. Minnesota Statutes 1986, section 176A.08, is
amended to read:
176A.08 [EXEMPTION FROM AND APPLICABILITY OF CERTAIN LAWS.]
The fund shall not be considered a state agency for any
purpose including, but not limited to, chapters 13, 14, 15, 15A,
and 43A. However, the fund shall be subject to sections 179A.01
to 179A.25. The insurance operations of the fund are subject to
all of the provisions of chapters 60A and 60B. The commissioner
of commerce has the same powers with respect to the board as the
commissioner has with respect to a private workers' compensation
insurer under chapters 60A and 60B. The fund is considered an
insurer for the purposes of chapters 60C, 72A, 79, and 176. The
fund is subject to the same tax liability as a mutual insurance
company in this state pursuant to section 60A.15, subdivision
2. As a condition of its authority to transact business in this
state the fund shall be a member of the workers' compensation
reinsurance association and is bound by its plan of operation.
Sec. 30. Minnesota Statutes 1986, section 299F.21,
subdivision 1, is amended to read:
Subdivision 1. [ESTIMATED INSTALLMENT PAYMENTS.] On or
before April 15, June 15, and December 15 of each year,
every licensed insurance company, including reciprocals, or
interinsurance exchanges or Lloyds, doing business in the state,
excepting farmers' mutual fire insurance companies and township
mutual fire insurance companies, shall pay to the commissioner
of revenue installments equal to one-third of, a tax upon its
fire premiums or assessments or both, as follows:
A based on a sum equal to one-half of one percent of the
estimated gross fire premiums and assessments, less return
premiums and dividends, on all direct business received by it in
this state, or by its agents for it, in cash or otherwise,
during the calendar year, including premiums on policies
covering fire risks only on automobiles, whether written under
floater form or otherwise. In the case of a mutual company or
reciprocal exchange the dividends or savings paid or credited to
members in this state shall be construed to be return premiums.
The money so received into the state treasury shall be credited
to the general fund.
If the tax prescribed by this section is not paid by those
dates, penalties and interest as provided in section 290.53,
subdivision 1, shall be imposed. A company that fails to make
payments of at least one-third of either (1) the total tax paid
during the previous calendar year or (2) 80 percent of the
actual tax for the current calendar year is subject to the
penalty and interest provided in this chapter.
Sec. 31. Minnesota Statutes 1986, section 299F.21, is
amended by adding a subdivision to read:
Subd. 1a. [ADDITION TO THE TAX.] In case of an
underpayment of installments by an insurer, there must be added
to the tax for the taxable year an amount determined at the rate
specified in section 270.75 upon the amount of underpayment.
Sec. 32. Minnesota Statutes 1986, section 299F.21 is
amended by adding a subdivision to read:
Subd. 1b. [AMOUNT OF UNDERPAYMENT.] For purposes of
subdivision 1a, the amount of the underpayment is the excess
of: (1) the amount of the installment; over (2) the amount, if
any, of the installment paid on or before the last date
prescribed for payment.
Sec. 33. Minnesota Statutes 1986, section 299F.21, is
amended by adding a subdivision to read:
Subd. 1c. [PERIOD OF UNDERPAYMENT.] The period of the
underpayment runs from the date the installment was required to
be paid to the earliest of the following dates:
(1) on March 1 following the close of the taxable year;
(2) with respect to any portion of the underpayment, the
date on which that portion is paid. For purposes of this
clause, a payment of estimated tax on any installment date is
considered a payment of any previous underpayment only to the
extent the payment exceeds the amount of the installment
determined under clause (1), for the installment date.
Sec. 34. Minnesota Statutes 1986, section 299F.21, is
amended by adding a subdivision to read:
Subd. 1d. [DEFINITION OF TAX.] The term "tax" means the
tax imposed by chapter 299F.
Sec. 35. Minnesota Statutes 1986, section 299F.21, is
amended by adding a subdivision to read:
Subd. 1e. [FAILURE TO FILE AN ESTIMATE.] In the case of an
insurer that fails to file an estimated tax statement for a
taxable year when one is required, the period of the
underpayment runs from the installment dates as set forth in
subdivision 1 to whichever of the periods set forth in
subdivision 1c is the earlier.
Sec. 36. Minnesota Statutes 1986, section 299F.21,
subdivision 2, is amended to read:
Subd. 2. [ANNUAL RETURNS.] (a) Every insurer required to
pay a premium tax under this section shall make and file a
statement of estimated premium taxes for the period covered by
the installment tax payment. The statement shall be in the form
prescribed by the commissioner of revenue.
(b) On or before March 1, annually every insurer subject to
taxation under this section shall make an annual return for the
preceding calendar year setting forth information the
commissioner of revenue may reasonably require on forms
prescribed by the commissioner.
(c) On March 1, the insurer shall pay any additional amount
due for the preceding calendar year; if there has been an
overpayment, the overpayment may be credited without interest on
the estimated tax due April 15.
(d) If unpaid by this date, penalties and interest as
provided in section 290.53, subdivision 1, shall be imposed.
Sec. 37. [COMPUTATION OF 1987 GROSS PREMIUMS TAX.]
For calendar year 1987 the gross premiums tax under
Minnesota Statutes, section 60A.15, as applied to the premiums
of town and farmers mutual insurance companies, domestic mutual
insurance companies, and the workers' compensation reinsurance
association or other companies or entities that were exempt
prior to enactment of this act shall equal one-half of the
amount of tax that would be due if the tax were imposed for the
full calendar year. Estimated tax equal to, at least, 80
percent of the tax computed under this section must be paid by
December 15, 1987, or the penalties and interest for failure to
pay or for underpayments of estimated tax under Minnesota
Statutes, section 60A.15, apply.
Sec. 38. [REPEALER.]
(a) Minnesota Statutes 1986, sections 60A.15, subdivision 2;
61A.49; 62E.13, subdivision 9; and 69.021, subdivision 3a, are
repealed.
(b) Section 62E.11, subdivision 8, is repealed.
Sec. 39. [EFFECTIVE DATE.]
Section 17 is effective January 1, 1987 for the calendar
year 1987 assessments of the Comprehensive Health Association.
Section 38, clause (b) is effective for taxable years beginning
after December 31, 1986. The remainder of the article is
effective July 1, 1987.
ARTICLE 3
PROPERTY TAX REFUND
Section 1. Minnesota Statutes 1986, section 290A.03,
subdivision 3, is amended to read:
Subd. 3. [INCOME.] (1) "Income" means the sum of the
following:
(a) the greater of federal adjusted gross income as defined
in the Internal Revenue Code of 1954 as amended through December
31, 1985 or zero; and
(b) the sum of the following amounts to the extent not
included in clause (a):
(i) additions to federal adjusted gross income as provided
in section 290.01, subdivision 20a, clauses (1), (2), (3), and
(4);
(ii) all nontaxable income;
(iii) recognized net long-term capital gains (ii) the
amount of a passive activity loss that is not disallowed as a
result of section 469, paragraph (i) or (1) of the Internal
Revenue Code and the amount of passive activity loss carryover
allowed under section 469(b) of the Internal Revenue Code;
(iv) dividends excluded from federal adjusted gross income
under section 116 of the Internal Revenue Code of 1954 (iii) an
amount equal to the total of any discharge of qualified farm
indebtedness of a solvent individual excluded from gross income
under section 108(g) of the Internal Revenue Code;
(v) (iv) cash public assistance and relief;
(vi) (v) any pension or annuity (including railroad
retirement benefits, all payments received under the federal
Social Security Act, supplemental security income, and veterans
benefits), which was not exclusively funded by the claimant or
spouse, or which was funded exclusively by the claimant or
spouse and which funding payments were excluded from federal
adjusted gross income in the years when the payments were made;
(vii) (vi) nontaxable interest received from the state or
federal or a state government or any instrumentality or
political subdivision thereof;
(viii) (vii) workers' compensation;
(ix) (viii) unemployment benefits;
(x) nontaxable strike benefits;
(xi) (ix) the gross amounts of payments received in the
nature of disability income or sick pay as a result of accident,
sickness, or other disability, whether funded through insurance
or otherwise;
(xii) (x) the ordinary income portion of a lump sum
distribution under section 402(e) of the Internal Revenue Code
of 1954; and
(xiii) (xi) contributions made by the claimant to an
individual retirement account, including a qualified voluntary
employee contribution; simplified employee pension plan;
self-employed retirement plan; cash or deferred arrangement plan
under section 401(k) of the Internal Revenue Code of 1954; or
deferred compensation plan under section 457 of the Internal
Revenue Code of 1954.
In the case of an individual who files an income tax return
on a fiscal year basis, the term "federal adjusted gross income"
shall mean federal adjusted gross income reflected in the fiscal
year ending in the calendar year. Federal adjusted gross income
shall not be reduced by the amount of a net operating loss
carryback.
(2) "Income" does not include
(a) amounts excluded pursuant to the Internal Revenue Code,
sections 101(a), 102, 117, and 121;
(b) amounts of any pension or annuity which was exclusively
funded by the claimant or spouse and which funding payments were
not excluded from federal adjusted gross income in the years
when the payments were made;
(c) surplus food or other relief in kind supplied by a
governmental agency;
(d) relief granted under this chapter; or
(e) child support payments received under a temporary or
final decree of dissolution or legal separation; or
(f) the first $2,000 of household income if the claimant
was disabled on or before June 1 or attained the age of 65 prior
to June 1 of the year following the year for which the taxes
were levied or in which the rent was paid.
Sec. 2. Minnesota Statutes 1986, section 290A.03,
subdivision 8, is amended to read:
Subd. 8. [CLAIMANT.] (a) "Claimant" means a person, other
than a dependent, who filed a claim authorized by this chapter
and who was domiciled in a resident of this state as provided in
chapter 290 during the calendar year for which the claim for
relief was filed.
(b) In the case of a claim relating to rent constituting
property taxes, the claimant shall have resided in a rented or
leased unit on which ad valorem taxes or payments made in lieu
of ad valorem taxes, including payments of special assessments
imposed in lieu of ad valorem taxes, are payable at some time
during the calendar year covered by the claim.
(c) "Claimant" shall not include a resident of a nursing
home, intermediate care facility, or long-term residential
facility whose rent constituting property taxes is paid pursuant
to the supplemental security income program under title XVI of
the Social Security Act, the Minnesota supplemental aid program
under sections 256D.35 to 256D.41, the medical assistance
program pursuant to title XIX of the Social Security Act, or the
general assistance medical care program pursuant to section
256D.03, subdivision 3. If only a portion of the rent
constituting property taxes is paid by these programs, the
resident shall be a claimant for purposes of this chapter, but
the refund calculated pursuant to section 290A.04 shall be
multiplied by a fraction, the numerator of which is income as
defined in subdivision 3 reduced by the total amount of income
from the above sources other than vendor payments under the
medical assistance program or the general assistance medical
care program and the denominator of which is income as defined
in subdivision 3 plus vendor payments under the medical
assistance program or the general assistance medical care
program, to determine the allowable refund pursuant to this
chapter. For purposes of this paragraph and paragraph (d),
household income or income as defined in subdivision 3 must not
be reduced by the $2,000 reduction provided in subdivision 3,
paragraph (2), clause (f), for claimants who are disabled or age
65 or more.
(d) Notwithstanding paragraph (c), if the claimant was a
resident of the nursing home, intermediate care facility or
long-term residential facility for only a portion of the
calendar year covered by the claim, the claimant may compute
rent constituting property taxes by disregarding the rent
constituting property taxes from the nursing home, intermediate
care facility, or long-term residential facility and use only
that amount of rent constituting property taxes or property
taxes payable relating to that portion of the year when the
claimant was not in the facility. The claimant's household
income is the income for the entire calendar year covered by the
claim.
(e) In the case of a claim for rent constituting property
taxes of a part-year Minnesota resident, the income and rental
reflected in this computation shall be for the period of
Minnesota residency only. Any rental expenses paid which may be
reflected in arriving at federal adjusted gross income cannot be
utilized for this computation. When two individuals of a
household are able to meet the qualifications for a claimant,
they may determine among them as to who the claimant shall be.
If they are unable to agree, the matter shall be referred to the
commissioner of revenue whose decision shall be final. If a
homestead property owner was a part-year Minnesota resident, the
income reflected in the computation made pursuant to section
290A.04 shall be for the entire calendar year, including income
not assignable to Minnesota.
(f) If a homestead is occupied by two or more renters, who
are not husband and wife, the rent shall be deemed to be paid
equally by each, and separate claims shall be filed by each.
The income of each shall be each renter's household income for
purposes of computing the amount of credit to be allowed.
Sec. 3. Minnesota Statutes 1986, section 290A.03, is
amended by adding a subdivision to read:
Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code"
means the Internal Revenue Code of 1986, as amended through
December 31, 1986.
Sec. 4. Minnesota Statutes 1986, section 290A.04,
subdivision 2, is amended to read:
Subd. 2. A claimant who is disabled or has attained the
age of 65 by June 1 of the year in which a refund is payable or
who, on the federal tax return filed for the prior year, claimed
a personal exemption for a dependent pursuant to section 151 of
the Internal Revenue Code, and whose property taxes payable or
rent constituting property taxes are in excess of the percentage
of the household income stated below shall pay an amount equal
to the percent of income shown for the appropriate household
income level along with the percent to be paid by the claimant
of the remaining amount of property taxes payable or rent
constituting property taxes. The state refund will be equal to
the amount of property taxes payable or rent constituting
property taxes that remain, up to the state refund amount shown
below.
Percent Percent Maximum
Household Income of Income Paid by State
Claimant Refund
Net loss and
up to $2,999 1.0 percent 5 percent $1,125
3,000 to 3,499 1.0 percent 6 percent $1,125
3,500 to 3,999 1.0 percent 7 percent $1,125
4,000 to 4,499 1.0 percent 8 percent $1,125
4,500 to 4,999 1.0 percent 9 percent $1,125
5,000 to 5,999 1.0 percent 10 percent $1,125
6,000 to 6,999 1.0 percent 11 percent $1,125
7,000 to 7,999 1.0 percent 12 percent $1,125
8,000 to 8,999 1.1 percent 13 percent $1,125
9,000 to 9,999 1.2 percent 14 percent $1,125
10,000 to 10,999 1.3 percent 15 percent $1,125
11,000 to 11,999 1.4 percent 16 percent $1,125
12,000 to 12,999 1.5 percent 17 percent $1,125
13,000 to 13,999 1.5 percent 18 percent $1,125
14,000 to 14,999 1.5 percent 19 percent $1,125
15,000 to 15,999 1.5 percent 20 percent $1,125
16,000 to 16,999 1.5 percent 21 percent $1,125
17,000 to 17,999 1.5 percent 22 percent $1,125
18,000 to 18,999 1.5 percent 23 percent $1,125
19,000 to 19,999 1.5 percent 24 percent $1,125
20,000 to 20,999 1.6 percent 25 percent $1,125
21,000 to 21,999 1.6 percent 27 percent $1,125
22,000 to 22,999 1.6 percent 29 percent $1,125
23,000 to 23,999 1.8 percent 31 percent $1,125
24,000 to 24,999 1.8 percent 33 percent $1,105
25,000 to 25,999 1.8 percent 35 percent $1,080
26,000 to 26,999 2.0 percent 38 percent $1,050
27,000 to 27,999 2.0 percent 41 percent $1,020
28,000 to 28,999 2.0 percent 44 percent $ 990
29,000 to 29,999 2.0 percent 47 percent $ 960
30,000 to 30,999 2.0 percent 50 percent $ 930
31,000 to 31,999 2.2 percent 50 percent $ 900
32,000 to 32,999 2.2 percent 50 percent $ 800
33,000 to 33,999 2.2 percent 50 percent $ 700
34,000 to 34,999 2.2 percent 50 percent $ 600
35,000 to 35,999 2.2 percent 50 percent $ 500
36,000 to 36,999 2.4 percent 50 percent $ 400
37,000 to 37,999 2.4 percent 50 percent $ 300
38,000 to 38,999 2.4 percent 50 percent $ 200
39,000 to 39,999 2.4 percent 50 percent $ 100
40,000 and over 2.4 percent 50 percent -0-
$0 to 999 1.0 percent 10 percent $1,100
1,000 to 1,999 1.0 percent 10 percent $1,100
2,000 to 2,999 1.0 percent 10 percent $1,100
3,000 to 3,499 1.0 percent 11 percent $1,100
3,500 to 3,999 1.0 percent 11 percent $1,100
4,000 to 4,499 1.0 percent 11 percent $1,100
4,500 to 4,999 1.0 percent 12 percent $1,100
5,000 to 5,999 1.0 percent 12 percent $1,100
6,000 to 6,999 1.1 percent 12 percent $1,100
7,000 to 7,999 1.1 percent 13 percent $1,100
8,000 to 8,999 1.2 percent 13 percent $1,100
9,000 to 9,999 1.2 percent 13 percent $1,100
10,000 to 10,999 1.3 percent 14 percent $1,075
11,000 to 11,999 1.4 percent 14 percent $1,075
12,000 to 12,999 1.5 percent 14 percent $1,075
13,000 to 13,999 1.5 percent 15 percent $1,075
14,000 to 14,999 1.5 percent 16 percent $1,075
15,000 to 15,999 1.6 percent 17 percent $1,075
16,000 to 16,999 1.7 percent 18 percent $1,075
17,000 to 17,999 1.8 percent 19 percent $1,050
18,000 to 18,999 1.9 percent 20 percent $1,050
19,000 to 19,999 2.0 percent 22 percent $1,050
20,000 to 20,999 2.1 percent 24 percent $1,050
21,000 to 21,999 2.2 percent 26 percent $1,050
22,000 to 22,999 2.2 percent 28 percent $1,050
23,000 to 23,999 2.2 percent 30 percent $1,025
24,000 to 24,999 2.3 percent 32 percent $1,025
25,000 to 25,999 2.3 percent 34 percent $1,025
26,000 to 26,999 2.3 percent 36 percent $1,025
27,000 to 27,999 2.4 percent 38 percent $1,000
28,000 to 28,999 2.4 percent 40 percent $ 900
29,000 to 29,999 2.4 percent 42 percent $ 800
30,000 to 30,999 2.4 percent 44 percent $ 700
31,000 to 31,999 2.5 percent 46 percent $ 600
32,000 to 32,999 2.5 percent 48 percent $ 500
33,000 to 33,999 2.5 percent 50 percent $ 300
34,000 to 34,999 2.5 percent 50 percent $ 100
The payment made to a claimant shall be the amount of the
state refund calculated pursuant to this subdivision, less the
homestead credit given pursuant to section 273.13, subdivisions
22 and 23. No payment is allowed if the claimant's household
income is $40,000 $35,000 or more.
Sec. 5. Minnesota Statutes 1986, section 290A.04, is
amended by adding a subdivision to read:
Subd. 2a. A claimant who is ineligible for a refund
pursuant to subdivision 2 and whose property taxes payable or
rent constituting property taxes are in excess of the percentage
of the household income stated below shall pay an amount equal
to the percent of income shown for the appropriate household
income level along with the percent to be paid by the claimant
of the remaining amount of property taxes payable or rent
constituting property taxes. The state refund equals the amount
of property taxes payable or rent constituting property taxes
that remain, up to the state refund amount shown below.
Percent Percent Maximum
Household Income of Income Paid by State
Claimant Refund
$0 to 999 2.5 percent 10 percent $1,100
1,000 to 1,999 2.5 percent 10 percent $1,100
2,000 to 2,999 2.5 percent 10 percent $1,100
3,000 to 3,499 2.5 percent 11 percent $1,100
3,500 to 3,999 2.5 percent 11 percent $1,100
4,000 to 4,499 2.5 percent 11 percent $1,100
4,500 to 4,999 2.5 percent 12 percent $1,100
5,000 to 5,999 2.5 percent 12 percent $1,100
6,000 to 6,999 2.6 percent 12 percent $1,100
7,000 to 7,999 2.6 percent 13 percent $1,100
8,000 to 8,999 2.7 percent 13 percent $1,100
9,000 to 9,999 2.7 percent 13 percent $1,100
10,000 to 10,999 2.8 percent 14 percent $1,075
11,000 to 11,999 2.9 percent 14 percent $1,075
12,000 to 12,999 3.0 percent 14 percent $1,075
13,000 to 13,999 3.0 percent 15 percent $1,075
14,000 to 14,999 3.0 percent 16 percent $1,075
15,000 to 15,999 3.1 percent 17 percent $1,075
16,000 to 16,999 3.2 percent 18 percent $1,075
17,000 to 17,999 3.3 percent 19 percent $1,050
18,000 to 18,999 3.4 percent 20 percent $1,050
19,000 to 19,999 3.5 percent 22 percent $1,050
20,000 to 20,999 3.6 percent 24 percent $1,050
21,000 to 21,999 3.7 percent 26 percent $1,050
22,000 to 22,999 3.7 percent 28 percent $1,050
23,000 to 23,999 3.7 percent 30 percent $1,025
24,000 to 24,999 3.8 percent 32 percent $1,025
25,000 to 25,999 3.8 percent 34 percent $1,025
26,000 to 26,999 3.8 percent 36 percent $1,025
27,000 to 27,999 3.9 percent 38 percent $1,000
28,000 to 28,999 3.9 percent 40 percent $ 900
29,000 to 29,999 3.9 percent 42 percent $ 800
30,000 to 30,999 3.9 percent 44 percent $ 700
31,000 to 31,999 4.0 percent 46 percent $ 600
32,000 to 32,999 4.0 percent 48 percent $ 500
33,000 to 33,999 4.0 percent 50 percent $ 300
34,000 to 34,999 4.0 percent 50 percent $ 100
The payment made to a claimant must be the amount of the
state refund calculated pursuant to this subdivision, less the
homestead credit given pursuant to section 273.13, subdivisions
22 and 23. No payment is allowed if the claimant's household
income is $35,000 or more.
Sec. 6. Minnesota Statutes 1986, section 290A.04, is
amended by adding a subdivision to read:
Subd. 2b. The commissioner may reconstruct the tables in
subdivisions 2 and 2a to reflect the elimination of the
homestead credit beginning for claims based on taxes payable in
1989.
Sec. 7. Minnesota Statutes 1986, section 290A.06, is
amended to read:
290A.06 [FILING TIME LIMIT, LATE FILING; INCOME TAX
RETURN.]
Any claim for a refund based on property taxes payable
shall be filed with the department of revenue on or before
August 15 of the year in which the property taxes are due and
payable. A copy of the claimant's federal income tax return for
the taxable year preceding the year in which the property taxes
are payable must be filed with the claim if the claimant filed a
federal income tax return for that year.
Any claim for rent constituting property taxes shall be
filed with the department of revenue on or before August 15 of
the year following the year in which the rent was paid. A copy
of the claimant's federal income tax return for the taxable year
in which the rent was paid must be filed with the claim if the
claimant filed a federal income tax return for that year.
The commissioner may extend the time for filing these
claims for a period not to exceed six months in the case of
sickness, absence, or other disability, or when in the
commissioner's judgment other good cause exists.
A claim filed after the original or extended due date shall
be allowed, but the amount of credit shall be reduced by five
percent of the amount otherwise allowable, plus an additional
five percent for each month of delinquency, not exceeding a
total reduction of 25 percent which may be canceled or reduced
by the commissioner in the case of sickness, absence, or other
disability, or when in the commissioner's judgment other good
cause exists. In any event no claim shall be allowed if the
initial claim is filed one year after the original due date for
filing the claim.
The time limit on redetermination of claims for refund and
examination of records shall be governed by sections 290.49,
290.50, and 290.56 and for purposes of computing the time limit
as provided in these sections the due date of the property tax
refund return shall be the same as the due date contained in
section 290.42 for an income tax return covering the year in
which the rent was paid or the year preceding the year in which
the property taxes are payable.
Sec. 8. [290A.091] [CLAIMS OF TENANTS IN LEASEHOLD
COOPERATIVES.]
The cooperative manager of a leasehold cooperative shall
furnish a statement to each tenant by March 31 of the year in
which the property tax is payable showing each unit's share of
the gross property tax and each unit's share of any property tax
credits. Each tenant may apply for a property tax refund under
this chapter as a homeowner based on each tenant's share of
property taxes. The tenant may not include any rent
constituting property taxes paid on that unit.
Sec. 9. Minnesota Statutes 1986, section 290A.18, is
amended to read:
290A.18 [RIGHT TO FILE CLAIM; RIGHT TO RECEIVE CREDIT.]
Subdivision 1. [CLAIM BY SURVIVING SPOUSE OR DEPENDENT.]
If a person entitled to relief under this chapter dies prior to
receiving relief, the surviving spouse or dependent of the
person shall be entitled to file the claim and receive relief.
If there is no surviving spouse or dependent, the right to the
credit shall lapse.
Subd. 2. [CLAIMANT CANNOT BE LOCATED.] If the commissioner
cannot locate the claimant within two years from the date that
the original warrant was issued, the right to the credit shall
lapse, and the warrant shall be deposited in the general fund.
Sec. 10. Minnesota Statutes 1986, section 290A.19, is
amended to read:
290A.19 [OWNER OR MANAGING AGENT TO FURNISH RENT
CERTIFICATE; PENALTY.]
(a) The owner or managing agent of any property for which
rent is paid for occupancy as a homestead shall furnish a
certificate of rent constituting property tax to each person who
is a renter on December 31, in the form prescribed by the
commissioner. If the renter moves prior to December 31, the
owner or managing agent has the option to either provide the
certificate to the renter at the time of moving, or mail the
certificate to the forwarding address if an address has been
provided by the renter. The certificate shall be made available
to the renter not later than January 31 of the year following
the year in which the rent was paid.
(b) Any owner or managing agent who willfully fails to
furnish a certificate as provided herein shall be to the renter
and the commissioner as required by this section is liable to
the commissioner for a penalty of $20 $100 for each act or
failure to act. The penalty shall be assessed and collected in
the manner provided in chapter 290 for the assessment and
collection of income tax. If the owner or managing agent
willfully furnishes certificates that report total rent
constituting property taxes in excess of the amount of actual
property taxes paid on the rented part of a property, as
determined under this section, the owner or managing agent is
liable for a penalty equal to the greater of (1) $100 or (2) 50
percent of the excess that is reported. If the owner or
managing agent reports a total amount of rent constituting
property taxes that exceeds by ten percent or more the actual
property taxes, the report is deemed to be willful.
(b) (c) If the owner or managing agent elects to provide
the renter with the certificate at the time of moving, rather
than after December 31, the amount of rent constituting property
taxes shall be computed as follows:
(i) The net tax shall be reduced by 1/12 for each month
remaining in the calendar year.
(ii) In calculating the denominator of the fraction
pursuant to section 290A.03, subdivision 11, the gross rent paid
through the last month of claimant's occupancy shall be
substituted for "the gross rent paid for the calendar year for
the property in which the unit is located."
(c) (d) The certificate of rent constituting property taxes
shall include the address of the property, including the county,
and the property tax parcel identification number and any
additional information which the commissioner determines is
appropriate.
(d) (e) If the owner or managing agent fails to provide the
renter with a certificate of rent constituting property taxes,
the commissioner shall allocate the net tax on the building to
the unit on a square footage basis or other appropriate basis as
the commissioner determines. The renter shall supply the
commissioner with a statement from the county treasurer which
gives the amount of property tax on the parcel, the address and
property tax parcel identification number of the property, and
the number of units in the building.
(f) The owner or managing agent must file a copy of the
certificate of rent paid with the commissioner before April 15
of the year following the year in which the rent was paid. The
commissioner may require that each owner or managing agent
report on a single form the total property taxes for a property
and the allocation of the property taxes as rent constituting
property taxes among the renters of the property.
Sec. 11. [AUDIT; REPORT TO LEGISLATURE.]
The department of revenue shall, during fiscal years 1988
and 1989, verify and audit a sample of property tax refund
claims for accuracy. The sampling methods, size of the sample,
and the study methodology must permit reliable conclusions to be
drawn regarding compliance with the property tax refund law by
both renters and landlords regarding the reporting of household
income, property taxes paid, and rent constituting property
taxes by claimants and landlords. The department shall report
the results of the study to the legislature by February 1, 1989.
Sec. 12. [LIMITATIONS ON PROPERTY TAX REFUNDS.]
(a) For claims filed based on rent paid in 1986 and
property taxes payable in 1987, the commissioner shall pay 67
percent of the payments allowable under section 290A.04,
subdivisions 1 and 2. The commissioner shall include with each
reduced refund a statement that the reduction is required by
this section.
(b) Minnesota Statutes 1986, section 290A.23 does not apply
to claims based on property taxes payable in 1988 and rent paid
in 1987 under section 290A.04, subdivisions 1 and 2.
$125,000,000 is appropriated to the commissioner of revenue for
fiscal year 1989 to pay the claims. The commissioner shall
estimate the amount of payments allowable under section 290A.04,
subdivisions 1 and 2, by August 25, 1988. If the estimate
exceeds the $125,000,000 limitation, the commissioner shall
proportionally reduce the refunds paid so that the refunds paid
equal $125,000,000. All refunds for claims based on property
taxes payable in 1988 and rent paid in 1987 must be reduced by
the same percentage. If reduced, the commissioner shall include
with each refund a statement that the reduction is required by
this section.
Sec. 13. [REPEALER.]
Minnesota Statutes 1986, section 290A.04, subdivisions 2e
and 2g, are repealed.
Sec. 14. [EFFECTIVE DATE.]
Sections 1 to 8 and 10 are effective for claims based on
property taxes payable in 1988 and rent paid during calendar
year 1987, and thereafter, except the requirement in section 10
that copies of the certificate of rent paid be filed with the
commissioner of revenue is effective for rent paid during
calendar year 1988. Section 9 is effective the day following
final enactment and applies to all unclaimed warrants held by
the commissioner on January 1, 1987, or issued after that date.
ARTICLE 4
SALES TAX
Section 1. Minnesota Statutes 1986, section 297A.01,
subdivision 3, is amended to read:
Subd. 3. A "sale" and a "purchase" includes, but is not
limited to, each of the following transactions:
(a) Any transfer of title or possession, or both, of
tangible personal property, whether absolutely or conditionally,
and the leasing of or the granting of a license to use or
consume tangible personal property other than manufactured homes
used for residential purposes for a continuous period of 30 days
or more, for a consideration in money or by exchange or barter.
"Sales" also include the transfer of computer software, meaning
information and directions which dictate the function to be
performed by data processing equipment and which are sold
without adaptation to the specific requirements of the
purchaser. This type of computer software, whether contained on
tape, discs, cards, or other devices, shall be considered
tangible personal property;
(b) The production, fabrication, printing or processing of
tangible personal property for a consideration for consumers who
furnish either directly or indirectly the materials used in the
production, fabrication, printing or processing;
(c) The furnishing, preparing or serving for a
consideration of food, meals or drinks, not including meals or
drinks served to patients or persons residing at hospitals,
sanatoriums, nursing homes or senior citizens homes, meals or
drinks purchased for and served exclusively to individuals who
are 60 years of age or over and their spouses or to the
handicapped and their spouses by governmental agencies,
nonprofit organizations, agencies, or churches or pursuant to
any program funded in whole or part through 42 USCA sections
3001 through 3045, wherever delivered, prepared or served, meals
and lunches served at public and private schools, universities
or colleges, or the occasional meal thereof by a charitable or
church organization. "Sales" also includes meals furnished by
employers to employees at less than fair market value.
Notwithstanding section 297A.25, subdivision 2, taxable food or
meals include, but are not limited to, the following:
(i) heated food or drinks;
(ii) sandwiches prepared by the retailer;
(iii) single sales of prepackaged ice cream or ice milk
novelties prepared by the retailer;
(iv) hand-prepared or dispensed ice cream or ice milk
products including cones, sundaes, and snow cones;
(v) soft drinks and other beverages prepared or served by
the retailer;
(vi) gum;
(vii) ice;
(viii) all food sold in vending machines;
(ix) party trays prepared by the retailers; and
(x) all meals and single servings of packaged snack food,
single cans or bottles of pop, sold in restaurants and bars;
(d) The granting of the privilege of admission to places of
amusement, recreational areas, or athletic events and the
privilege of having access to and the use of amusement devices,
tanning facilities, reducing salons, steam baths, turkish baths,
massage parlors, health clubs, and spas or athletic facilities;
(e) The furnishing for a consideration of lodging and
related services by a hotel, rooming house, tourist court, motel
or trailer camp and of the granting of any similar license to
use real property other than the renting or leasing thereof for
a continuous period of 30 days or more;
(f) The furnishing for a consideration of electricity, gas,
water, or steam for use or consumption within this state, or
local exchange telephone service and, intrastate toll service,
and interstate toll service, if that service originates from and
is charged to a telephone located in this state; the tax imposed
on amounts paid for telephone services is the liability of and
shall be paid by the person paying for the services. Sales by
municipal corporations in a proprietary capacity are included in
the provisions of this clause. The furnishing of water and
sewer services for residential use shall not be considered a
sale;
(g) The furnishing for a consideration of cable television
services, including charges for basic monthly service, charges
for monthly premium service, and charges for any other similar
television services;
(h) Notwithstanding subdivision 4, and section 297A.25,
subdivision 9, the sales of horses including claiming sales and
fees paid for breeding a stallion to a mare. This clause
applies to sales and fees with respect to a horse to be used for
racing whose birth has been recorded by the Jockey Club or the
United States Trotting Association or the American Quarter Horse
Association but shall not apply with respect to the sale of a
horse bred and born in the state of Minnesota;
(i) The furnishing for a consideration of parking services,
whether on a contractual, hourly, or other periodic basis,
except for parking at a meter; and
(j) The furnishing for a consideration of services listed
in this paragraph:
(i) laundry and dry cleaning services including cleaning,
pressing, repairing, altering, and storing clothes, linen
services and supply, cleaning and blocking hats, and carpet,
drapery, upholstery, and industrial cleaning. Laundry and dry
cleaning services do not include services provided by coin
operated facilities operated by the customer;
(ii) motor vehicle washing, waxing, and cleaning services,
including services provided by coin-operated facilities operated
by the customer, and rustproofing, undercoating, and towing of
motor vehicles;
(iii) building and residential cleaning, maintenance, and
disinfecting and exterminating services;
(iv) services provided by detective agencies, security
services, burglar, fire alarm, and armored car services;
(v) pet grooming services; and
(vi) lawn care, fertilizing, mowing, spraying and sprigging
services; garden planting and maintenance; arborist services;
tree, bush, and shrub planting, pruning, bracing, spraying, and
surgery; and tree trimming for public utility lines.
The services listed in this paragraph are taxable under section
297A.02 if the service is performed wholly within Minnesota or
if the service is performed partly within and partly without
Minnesota and the greater proportion of the service is performed
in Minnesota, based on the cost of performance. In applying the
provisions of this chapter, the terms "tangible personal
property" and "sales at retail" include taxable services and the
provision of taxable services, unless specifically provided
otherwise. Services performed by an employee for an employer
are not taxable under this paragraph. Services performed by a
corporation, partnership, or association for another
corporation, partnership, or association are not taxable under
this paragraph if one of the entities owns or controls more than
80 percent of the voting power of the equity interest in the
other entity.
(k) A "sale" and a "purchase" includes the transfer of
computer software, meaning information and directions that
dictate the function performed by data processing equipment. A
"sale" and a "purchase" does not include the design,
development, writing, translation, fabrication, lease, or
transfer for a consideration of title or possession of a custom
computer program.
Sec. 2. Minnesota Statutes 1986, section 297A.01,
subdivision 4, is amended to read:
Subd. 4. A "retail sale" or "sale at retail" means a sale
for any purpose other than resale in the regular course of
business. Property utilized by the owner only by leasing such
property to others or by holding it in an effort to so lease it,
and which is put to no use by the owner other than resale after
such lease or effort to lease, shall be considered property
purchased for resale. Master computer software programs that
are purchased and used to make copies for sale or lease are
considered property purchased for resale. Sales of building
materials, supplies and equipment to owners, contractors,
subcontractors or builders for the erection of buildings or the
alteration, repair or improvement of real property are "retail
sales" or "sales at retail" in whatever quantity sold and
whether or not for purpose of resale in the form of real
property or otherwise. A sale of carpeting, linoleum, or other
similar floor covering which includes installation of the
carpeting, linoleum, or other similar floor covering is a
contract for the improvement of real property. Aircraft and
parts for the repair thereof purchased by a nonprofit,
incorporated flying club or association utilized solely by the
corporation by leasing such aircraft to shareholders of the
corporation shall not be considered property purchased for
resale. The leasing of the aircraft to the shareholders by the
flying club or association shall not be considered a
sale notwithstanding subdivision 3 if the tax imposed by this
chapter was paid on the initial purchase as provided by this
subdivision.
Leasing of aircraft utilized by a lessee for the purpose of
leasing to others, whether or not the lessee also utilizes the
aircraft for flight instruction where no separate charge is made
for aircraft rental or for charter service, shall be considered
a purchase for resale; provided, however, that a proportionate
share of the lease payment reflecting use for flight instruction
or charter service is subject to tax pursuant to section 297A.14.
Sec. 3. Minnesota Statutes 1986, section 297A.01,
subdivision 8, is amended to read:
Subd. 8. "Sales price" means the total consideration
valued in money, for a retail sale whether paid in money or
otherwise, excluding therefrom any amount allowed as credit for
tangible personal property taken in trade for resale, without
deduction for the cost of the property sold, cost of materials
used, labor or service cost, interest, or discount allowed after
the sale is consummated, the cost of transportation incurred
prior to the time of sale, any amount for which credit is given
to the purchaser by the seller, or any other expense
whatsoever. A deduction may be made for charges for services
that are part of the sale, including charges up to 15 percent in
lieu of tips, if the consideration for such charges is
separately stated, but no deduction shall be allowed for charges
for services that are part of a sale as defined in subdivision
3, clauses (b) to (f). A deduction may also be made for
interest, financing, or carrying charges, charges for labor or
services used in installing or applying the property sold or
transportation charges if the transportation occurs after the
retail sale of the property only if the consideration for such
charges is separately stated. There shall not be included in
"sales price" cash discounts allowed and taken on sales, or the
amount refunded either in cash or in credit for property
returned by purchasers or the amount of any tax (not including,
however, any manufacturers' or importers' excise tax) imposed by
the United States upon or with respect to retail sales, whether
imposed upon the retailer or the consumer.
Sec. 4. Minnesota Statutes 1986, section 297A.01,
subdivision 11, is amended to read:
Subd. 11. "Tangible personal property" means corporeal
personal property of any kind whatsoever, including property
which is to become real property as a result of incorporation,
attachment, or installation following its acquisition.
Personal property does not include:
(a) large ponderous machinery and equipment used in a
business or production activity which at common law would be
considered to be real property;
(b) property which is subject to an ad valorem property tax;
(c) property described in section 272.02, subdivision 1,
clause (8), paragraphs (a) to (d);
(d) property described in section 272.03, subdivision 2,
clauses (3) and (5).
Tangible personal property includes computer software,
whether contained on tape, discs, cards, or other devices.
Sec. 5. Minnesota Statutes 1986, section 297A.01, is
amended by adding a subdivision to read:
Subd. 18. [CUSTOM COMPUTER PROGRAM.] "Custom computer
program" means a computer program prepared to the special order
of the customer, either in the form of written procedures or in
the form of storage media on which, or in which, the program is
recorded, or any required documentation or manuals designed to
facilitate the use of the custom computer program transferred.
It includes those services represented by separately stated
charges for modifications to an existing prewritten program that
are prepared to the special order of the customer. It does not
include a "canned" or prewritten computer program that is held
or existing for general or repeated sale or lease, even if the
prewritten or "canned" program was initially developed on a
custom basis or for in-house use. Modification to an existing
prewritten program to meet the customer's needs is custom
computer programming only to the extent of the modification.
For purposes of this subdivision:
(1) "Storage media" includes punched cards, tapes, discs,
diskettes, or drums on which computer programs may be embodied
or stored;
(2) "Computer" does not include tape-controlled automatic
drilling, milling, or other manufacturing machinery or
equipment; and
(3) "Computer program" means the complete plan for the
solution of a problem, such as the complete sequence of
automatic data processing equipment instructions necessary to
solve a problem and includes both systems and application
programs and subdivisions, such as assemblers, compilers,
routines, generators, and utility programs.
Sec. 6. Minnesota Statutes 1986, section 297A.01,
subdivision 15, is amended to read:
Subd. 15. "Farm machinery" means new or used machinery,
equipment, implements, accessories and contrivances used
directly and principally in the production for sale, but not
including the processing, of livestock, dairy animals, dairy
products, poultry and poultry products, fruits, vegetables,
forage, grains and bees and apiary products. "Farm machinery"
shall include includes
(1) machinery for the preparation, seeding or cultivation
of soil for growing agricultural crops and sod, harvesting and
threshing of agricultural products, harvesting or mowing of sod,
and certain machinery for dairy, livestock and poultry farms,
together with;
(2) barn cleaners, milking systems, grain dryers, automatic
feeding systems and similar installations., whether or not the
equipment is installed by the seller and becomes part of the
real property;
(3) irrigation equipment sold for exclusively agricultural
use, including pumps, pipe fittings, valves, sprinklers and
other equipment necessary to the operation of an irrigation
system when sold as part of an irrigation system, except
irrigation equipment which is situated below ground and
considered to be a part of the real property, shall be included
in the definition of farm machinery.; and
(4) logging equipment, including chain saws used for
logging only if the engine displacement equals or exceeds five
cubic inches, shall be included in the definition of farm
machinery.
Repair or replacement parts for farm machinery shall not be
included in the definition of farm machinery.
Tools, shop equipment, grain bins, feed bunks, fencing
material, communication equipment and other farm supplies shall
not be considered to be farm machinery. "Farm machinery" does
not include motor vehicles taxed under chapter 297B,
snowmobiles, snow blowers, lawn mowers except those used in the
production of sod for sale, garden-type tractors or garden
tillers and the repair and replacement parts for those vehicles
and machines.
Sec. 7. Minnesota Statutes 1986, section 297A.14, is
amended to read:
297A.14 [USING, STORING OR CONSUMING TANGIBLE PERSONAL
PROPERTY; ADMISSIONS; UTILITIES USE TAX.]
Subdivision 1. [IMPOSITION.] For the privilege of using,
storing or consuming in Minnesota tangible personal property,
tickets or admissions to places of amusement and athletic
events, electricity, gas, and local exchange telephone service
purchased for use, storage or consumption in this state, a use
tax is imposed on every person in this state at the rate of six
percent of tax imposed under section 297A.02 on the sales price
of sales at retail of the items, unless the tax imposed by
section 297A.02 was paid on the sales price. Notwithstanding
the provisions of the preceding sentence, the rate of the use
tax imposed upon the sales price of sales of special tooling,
and capital equipment is four percent and upon the sales price
of sales of farm machinery is two percent.
Subd. 2. [MOTOR VEHICLES.] A motor vehicle subject to tax
under this section shall be taxed at its fair market value at
the time of transport into Minnesota if the motor vehicle was
acquired more than three months prior to its transport into this
state.
Sec. 8. Minnesota Statutes 1986, section 297A.18, is
amended to read:
297A.18 [ADVERTISING NO TAX; MINIMUM TAX.]
It shall be unlawful for any retailer to advertise or hold
out or state to the public or to any customer, directly or
indirectly, that the use tax or any part thereof will be assumed
or absorbed by the retailer, or that it will not be added to the
sales price or that, if added, it or any part thereof will be
refunded except that in computing the tax to be collected as the
result of any transaction amounts of tax less than one-half of
one cent may be disregarded and amounts of tax of one-half cent
or more may be considered an additional cent.
It is unlawful for a person to broadcast or publish, or
arrange to have broadcast or published, an advertisement in a
publication or broadcast media, printed, distributed, broadcast,
or intended to be received in this state, that states that no
sales or use tax is due under this chapter, when the person
knows the advertisement is false.
Sec. 9. Minnesota Statutes 1986, section 297A.211,
subdivision 2, is amended to read:
Subd. 2. (a) Such persons, when properly registered as
retailers, may make purchases in this state, or import property
into this state, without payment of the sales or use taxes
imposed by this chapter at the time of purchase or importation,
provided that such purchases or importations come within the
provisions of this section and are made in strict compliance
with the rules of the commissioner.
(b) Any person described in subdivision 1 may elect to pay
directly to the commissioner any sales or use tax that may be
due under this chapter for the acquisition of mobile
transportation equipment and parts and accessories attached or
to be attached to such equipment.
(c) The total cost of such equipment and parts and
accessories attached or to be attached to such equipment shall
be multiplied by a fraction, the numerator of which is the
mileage operated during the past calendar year within the state
of Minnesota and the denominator is the total mileage operated
during the past calendar year. The amount so determined shall
be multiplied by the tax rate to disclose the tax due.
In computing the tax under this section "sales price" does not
include the amount of any tax, except any manufacturer's or
importer's excise tax, imposed by the United States upon or with
respect to retail sales, whether imposed on the retailer or the
consumer.
(d) Each such retailer shall make a return and remit to the
commissioner the tax due for the preceding calendar month in
accordance with the provisions of sections 297A.26 and 297A.27.
Sec. 10. Minnesota Statutes 1986, section 297A.211, is
amended by adding a subdivision to read:
Subd. 4. Notwithstanding subdivisions 1 to 3, the
commissioner may enter into an agreement with the commissioner
of public safety, whereby upon approval of both commissioners,
the commissioner of public safety will collect the motor vehicle
excise tax from persons defined in subdivision 1. For the
purpose of collecting the tax, the commissioner of public safety
shall act as the agent of the commissioner of revenue and shall
be subject to all rules not inconsistent with the provisions of
this chapter, that may be prescribed by the commissioner.
Sec. 11. [297A.212] [RAILROAD ROLLING STOCK.]
Railroad rolling stock used by a railroad operating in this
state that is licensed as a common carrier by the Interstate
Commerce Commission and used to transport persons or property in
interstate or foreign commerce is subject to taxation under this
chapter only to the extent provided in this section. The ratio
of intrastate mileage to interstate or foreign mileage traveled
by the carrier during the previous fiscal year of the carrier
must be determined at the close of the carrier's fiscal year.
This ratio must be applied each month to the purchase price of
total purchases of rolling stock that are used in this state by
the railroad to establish that portion of the total used and
consumed in intrastate movement and subject to tax under this
chapter. "Railroad rolling stock" means all portable or moving
apparatus and machinery of a railroad company and includes
engines, cars, tenders, coaches, sleeping cars, and parts
necessary for the repair and maintenance of the rolling stock.
Sec. 12. Minnesota Statutes 1986, section 297A.25,
subdivision 3, is amended to read:
Subd. 3. [MEDICINES; MEDICAL DEVICES.] The gross receipts
from the sale of prescribed drugs and, prescribed medicine and
insulin, intended for use, internal or external, in the cure,
mitigation, treatment or prevention of illness or disease in
human beings and products consumed by humans for the
preservation of health are exempt, including together with
prescription glasses, therapeutic, and prosthetic devices, but
not including cosmetics or toilet articles notwithstanding the
presence of medicinal ingredients therein.
Sec. 13. Minnesota Statutes 1986, section 297A.25,
subdivision 7, is amended to read:
Subd. 7. [PETROLEUM PRODUCTS.] The gross receipts from the
sale of and storage, use or consumption of the following
petroleum products are exempt:
(1) products upon which a tax has been imposed and paid
under the provisions of chapter 296, whether or not any part of
said tax may be subsequently refunded and no refund has been or
will be allowed because the buyer used the fuel for nonhighway
use, or
(2) products which are used in the improvement of
agricultural land by constructing, maintaining, and repairing
drainage ditches, tile drainage systems, grass waterways, water
impoundment, and other erosion control structures.
Sec. 14. Minnesota Statutes 1986, section 297A.25,
subdivision 11, is amended to read:
Subd. 11. [SALES TO GOVERNMENT.] The gross receipts from
all sales, including sales in which title is retained by a
seller or a vendor or is assigned to a third party under an
installment sale or lease purchase agreement under section
465.71, of tangible personal property to, and all storage, use
or consumption of such property by, the United States and its
agencies and instrumentalities or a state and its agencies,
instrumentalities, and political subdivisions of the state are
exempt. Sales exempted by this subdivision include sales
pursuant to section 297A.01, subdivision 3, clauses (d) and
(f). This exemption shall not apply to building, construction
or reconstruction materials purchased by a contractor or a
subcontractor as a part of a lump-sum contract or similar type
of contract with a guaranteed maximum price covering both labor
and materials for use in the construction, alteration or repair
of a building or facility. This exemption does not apply to
construction materials purchased by tax exempt entities or their
contractors to be used in constructing buildings or facilities
which will not be used principally by the tax exempt entities.
Sec. 15. Minnesota Statutes 1986, section 297A.25,
subdivision 12, is amended to read:
Subd. 12. [OCCASIONAL SALES.] The gross receipts from the
isolated or occasional sale of tangible personal property in
Minnesota not made in the normal course of business of selling
that kind of property, and the storage, use, or consumption of
property acquired as a result of such a sale are exempt. For
purposes of this subdivision, sales by a nonprofit organization
shall be deemed to be "isolated or occasional" if they occur at
sale events that have a duration of three or fewer consecutive
days. The granting of the privilege of admission to places of
amusement and the privilege of use of amusement devices by a
nonprofit organization at an isolated or occasional event
conducted on property owned or leased for a continuous period of
more than 30 days by the nonprofit organization are also
exempt. The exemption provided for isolated sales of tangible
personal property and of the granting of admissions or the
privilege of use of amusement devices by nonprofit organizations
pursuant to this subdivision shall be available only if the sum
of the days on which the organization and any subsidiary
nonprofit organization sponsored by it that does not have a
separate sales tax exemption permit conduct sales of tangible
personal property, plus the days with respect to which the
organization charges for the use of amusement devices or
admission to places of amusement, does not exceed eight days in
a calendar year. For purposes of this subdivision, a "nonprofit
organization" means any corporation, society, association,
foundation, or institution organized and operated exclusively
for charitable, religious, or educational purposes, no part of
the net earnings of which inures to the benefit of a private
individual.
Sec. 16. Minnesota Statutes 1986, section 297A.25, is
amended by adding a subdivision to read:
Subd. 35. [FOOD STAMPS.] The gross receipts from the sale
of tangible personal property purchased with food stamps,
coupons, or vouchers issued by the federal government under the
Food Stamp Program are exempt. This exemption also applies to
food purchased under the Special Supplemental Food Program for
Women, Infants, and Children. The exemption provided by this
subdivision is effective and applies only to the extent required
by federal law.
Sec. 17. Minnesota Statutes 1986, section 297A.25, is
amended by adding a subdivision to read:
Subd. 36. [INCOMING, INTERSTATE WATS LINES.] The gross
receipts from the sale of long distance telephone services are
exempt, if the service consists of a wide area telephone line
that permits a long distance call to an individual or business
located in Minnesota to be made from a location outside of
Minnesota at no toll charge to the person placing the call.
Sec. 18. Minnesota Statutes 1986, section 297A.256, is
amended to read:
297A.256 [EXEMPTIONS FOR CERTAIN NONPROFIT GROUPS.]
Notwithstanding the provisions of this chapter, the
following sales made by a "nonprofit organization" are exempt
from the sales and use tax.
(a) All sales made by an organization for fundraising
purposes if that organization exists solely for the purpose of
providing educational or social activities for young people
primarily age 18 and under. This exemption shall apply only if
the gross annual sales receipts of the organization from
fundraising do not exceed $10,000.
(b) All sales made by an organization for fundraising
purposes if that organization is a senior citizen group which
qualifies for exemption on its purchases pursuant to section
297A.25, subdivision 16 or association of groups that in general
limits membership to persons age 55 or older and is organized
and operated exclusively for pleasure, recreation and other
nonprofit purposes and no part of the net earnings inure to the
benefit of any private shareholders. This exemption shall apply
only if the gross annual sales receipts of the organization from
fundraising do not exceed $10,000.
(c) The gross receipts from the sales of tangible personal
property at, admission charges for, and sales of food, meals, or
drinks at fundraising events sponsored by a nonprofit
organization when the entire proceeds, except for the necessary
expenses therewith, will be used solely and exclusively for
charitable, religious, or educational purposes. This exemption
does not apply to admission charges for events involving bingo
or other gambling activities or to charges for use of amusement
devices involving bingo or other gambling activities. For
purposes of this clause, a "nonprofit organization" means any
unit of government, corporation, society, association,
foundation, or institution organized and operated for
charitable, religious, educational, civic, fraternal, senior
citizens' or veterans' purposes, no part of the net earnings of
which enures to the benefit of a private individual.
If the profits are not used solely and exclusively for
charitable, religious, or educational purposes, the entire gross
receipts are subject to tax.
Each nonprofit organization shall keep a separate
accounting record, including receipts and disbursements from
each fundraising event. All deductions from gross receipts must
be documented with receipts and other records. If records are
not maintained as required, the entire gross receipts are
subject to tax.
The exemption provided by this section does not apply to
any sale made by or in the name of a nonprofit corporation as
the active or passive agent of a person that is not a nonprofit
corporation.
The exemption for fundraising events under this section is
limited to no more than 24 days a year. Fundraising events
conducted on premises leased or occupied for more than four days
but less than 30 days do not qualify for this exemption.
Sec. 19. Minnesota Statutes 1986, section 297A.26, is
amended by adding a subdivision to read:
Subd. 4. When a retailer located outside of a city that
imposes a local sales and use tax collects use tax to be
remitted to that city, the retailer is not required to remit the
tax until the amount collected reaches $10.
Sec. 20. Minnesota Statutes 1986, section 297A.43, is
amended to read:
297A.43 [CONFIDENTIAL NATURE OF INFORMATION.]
It shall be unlawful for the commissioner or any other
public official or employee to divulge or otherwise make known
in any manner any particulars disclosed in any report or return
required by sections 297A.01 to 297A.44, or any information
concerning the affairs of the person making the return acquired
from the person's records, officers, or employees while
examining or auditing under the authority of sections 297A.01 to
297A.44, except in connection with a proceeding involving taxes
due under this chapter from the taxpayer making such report or
return or to comply with the provisions of section 297A.431 or
where a question arises as to the proper tax applicable, that
is, sales or use tax. In the latter instance, the commissioner
may furnish information to a buyer and a seller with respect to
the specific transaction in question. Nothing herein contained
shall be construed to prohibit the commissioner from publishing
statistics so classified as not to disclose the identity of
particular returns or reports and the contents thereof. Any
person violating the provisions of this section shall be guilty
of a gross misdemeanor.
The commissioner may enter into an agreement with the
commissioner or other taxing officials of another state for the
interpretation and administration of the acts of their several
states providing for the collection of a sales and/or use tax
for the purpose of promoting fair and equitable administration
of such acts and to eliminate double taxation.
Notwithstanding the above provisions of this section, the
commissioner, in order to implement the purposes of this
chapter, may furnish information on a reciprocal basis to the
taxing officials of another state, or to the taxing officials of
any municipality of the state of Minnesota which has a local
sales and/or use tax. The commissioner may furnish to the
Minnesota supreme court and the board of professional
responsibility information regarding the amount of any
uncontested delinquent taxes due under this chapter or a failure
to file a return due under this chapter by an attorney admitted
to practice law in this state under chapter 481. The
commissioner may furnish information to taxing officials of
another state where necessary in the administration of the laws
of that state, to the extent that the state provides similar
rights of examination or information to officials of this state,
if the other state agrees to be subject to the confidentiality
restrictions of this section.
In order to facilitate processing of returns and payments
of taxes required by this chapter, the commissioner may contract
with outside vendors and may disclose private and nonpublic data
to the vendor. The data disclosed will be administered by the
vendor consistent with this section.
Sec. 21. Minnesota Statutes 1986, section 297B.03, is
amended to read:
297B.03 [EXEMPTIONS.]
There is specifically exempted from the provisions of this
chapter and from computation of the amount of tax imposed by it
the following:
(1) Purchase or use, including use under a lease purchase
agreement or installment sales contract made pursuant to section
465.71, of any motor vehicle by the United States and its
agencies and instrumentalities and by any person described in
and subject to the conditions provided in section
297A.25, subdivisions 11, 16, and subdivision 18.
(2) Purchase or use of any motor vehicle by any person who
was a resident of another state at the time of the purchase and
who subsequently becomes a resident of Minnesota, provided the
purchase occurred more than 60 days prior to the date such
person began residing in the state of Minnesota.
(3) Purchase or use of any motor vehicle by any person
making a valid election to be taxed under the provisions of
section 297A.211.
(4) Purchase or use of any motor vehicle previously
registered in the state of Minnesota by any corporation or
partnership when such transfer constitutes a transfer within the
meaning of section 351 or 721 of the Internal Revenue Code of
1954, as amended through December 31, 1974.
(5) Purchase or use of any vehicle owned by a resident of
another state and leased to a Minnesota based private or for
hire carrier for regular use in the transportation of persons or
property in interstate commerce provided the vehicle is titled
in the state of the owner or secured party, and that state does
not impose a sales or motor vehicle excise tax on motor vehicles
used in interstate commerce.
Sec. 22. Minnesota Statutes 1986, section 297B.031, is
amended to read:
297B.031 [REFUND OF TAX; MANDATORY REFUND OR REPLACEMENT
LAWS.]
If a manufacturer of motor vehicles is required by a court
order under section 325F.665 or a decision of an informal
dispute settlement mechanism as defined in section 325F.665,
subdivision 3, to refund pay the consumer the tax imposed by
this chapter, a portion of the tax so paid by the purchaser
shall be refunded to the manufacturer. The amount of the refund
shall be the tax paid by the purchaser less an amount equal to
the tax paid multiplied by a fraction, the denominator of which
is the purchase price of the vehicle and the numerator of which
is the allowance deducted from the refund for the consumer's use
of the vehicle. The refund shall be paid to the manufacturer
only upon filing of a written application, in a form and
providing information as prescribed by the commissioner.
Payment of a refund pursuant to this section shall be made out
of the general and highway user funds in the same proportion
provided for deposit of tax proceeds for the fiscal year
pursuant to section 297B.09, subdivision 1. The amounts
necessary to pay the refunds are appropriated out of the
respective funds.
Sec. 23. Minnesota Statutes 1986, section 325F.665,
subdivision 3, is amended to read:
Subd. 3. [MANUFACTURER'S DUTY TO REFUND OR REPLACE.] (a)
If the manufacturer, its agents, or its authorized dealers are
unable to conform the new motor vehicle to any applicable
express warranty by repairing or correcting any defect or
condition which substantially impairs the use or market value of
the motor vehicle to the consumer after a reasonable number of
attempts, the manufacturer shall, at the consumer's option,
either replace the new motor vehicle with a comparable motor
vehicle or accept return of the vehicle from the consumer and
refund to the consumer the full purchase price, or the total
amount actually paid by the consumer under any vehicle lease,
including the cost of any options or other modifications
arranged, installed, or made by the manufacturer, its agent, or
its authorized dealer within 30 days after the date of original
delivery, and all other charges including, but not limited to,
sales tax, license fees and registration fees, reimbursement for
towing and rental vehicle expenses incurred by the consumer as a
result of the vehicle being out of service for warranty repair,
less a reasonable allowance for the consumer's use of the
vehicle not exceeding ten cents per mile driven or ten percent
of the purchase price or full lease cost of the vehicle,
whichever is less. Refunds must be made to the consumer, and
lienholder, if any, as their interests appear on the records of
the registrar of motor vehicles. Refunds shall include the
amount stated by the dealer as the trade-in value of a
consumer's used motor vehicle, plus any additional amount paid
by the consumer for the new motor vehicle. For a lease vehicle,
refunds shall include the total amount actually paid by the
consumer under any vehicle lease, less any finance charges paid
by the consumer. A reasonable allowance for use is that amount
directly attributable to use by the consumer and any previous
consumer prior to the first report of the nonconformity to the
manufacturer, agent, or dealer. It is an affirmative defense to
any claim under this section (1) that an alleged nonconformity
does not substantially impair the use or market value, or (2)
that a nonconformity is the result of abuse, neglect, or
unauthorized modifications or alterations of a motor vehicle by
anyone other than the manufacturer, its agent or its authorized
dealer.
(b) It is presumed that a reasonable number of attempts
have been undertaken to conform a new motor vehicle to the
applicable express warranties, if (1) the same nonconformity has
been subject to repair four or more times by the manufacturer,
its agents, or its authorized dealers within the express
warranty term or during the period of one year following the
date of original delivery of the motor vehicle to a consumer,
whichever is the earlier date, but the nonconformity continues
to exist, or (2) the vehicle is out of service by reason of
repair for a cumulative total of 30 or more business days during
the term or during the period, whichever is the earlier date.
(c) If the nonconformity results in a complete failure of
the braking or steering system of the new motor vehicle and is
likely to cause death or serious bodily injury if the vehicle is
driven, it is presumed that a reasonable number of attempts have
been undertaken to conform the vehicle to the applicable express
warranties if the nonconformity has been subject to repair at
least once by the manufacturer, its agents, or its authorized
dealers within the express warranty term or during the period of
one year following the date of original delivery of the motor
vehicle to a consumer, whichever is the earlier date, and the
nonconformity continues to exist.
(d) The term of an express warranty, the one-year period
and the 30-day period shall be extended by any period of time
during which repair services are not available to the consumer
because of a war, invasion, strike, or fire, flood, or other
natural disaster.
(e) The presumption contained in paragraph (b) applies
against a manufacturer only if the manufacturer, its agent, or
its authorized dealer has received prior written notification
from or on behalf of the consumer at least once and an
opportunity to cure the defect alleged. If the notification is
received by the manufacturer's agent or authorized dealer, the
agent or dealer must forward it to the manufacturer by certified
mail, return receipt requested.
(f) A consumer is eligible to receive a refund or
replacement vehicle under this section if the nonconformity is
reported to the manufacturer, its authorized agent or dealer, at
any time during the motor vehicle's express warranty period,
even if the motor vehicle's express warranty expires before the
requirements of paragraphs (a), (b), and (c) have been met.
(g) At the time of purchase the manufacturer must provide
directly to the consumer a written statement on a separate piece
of paper, in 10-point all capital type, in substantially the
following form: "IMPORTANT: IF THIS VEHICLE IS DEFECTIVE, YOU
MAY BE ENTITLED UNDER STATE LAW TO REPLACEMENT OF IT OR A REFUND
OF ITS PURCHASE PRICE. HOWEVER, TO BE ENTITLED TO REFUND OR
REPLACEMENT, YOU MUST FIRST NOTIFY THE MANUFACTURER, ITS AGENT,
OR ITS AUTHORIZED DEALER OF THE PROBLEM IN WRITING AND GIVE THEM
AN OPPORTUNITY TO REPAIR THE VEHICLE."
(h) The amount of the sales tax to be paid by the
manufacturer to the consumer under paragraph (a) shall be the
tax paid by the consumer when the vehicle was purchased less an
amount equal to the tax paid multiplied by a fraction, the
denominator of which is the purchase price of the vehicle and
the numerator of which is the allowance deducted from the refund
for the consumer's use of the vehicle.
Sec. 24. Minnesota Statutes 1986, section 360.654, is
amended to read:
360.654 [AIRCRAFT DEALER'S COMMERCIAL USE PERMIT.]
Upon written application by a dealer licensed in accordance
with section 360.63 and payment of a fee of $20 for each
aircraft identified in the application, the commissioner of
revenue shall issue a commercial use permit which shall entitle
the dealer to use the aircraft for commercial purposes without
payment of the tax imposed by section 297A.02 or 297A.14 for a
period of 12 months or until the aircraft is sold, whichever
first occurs. The dealer shall pay the tax imposed by section
297A.14 on all consideration received for use of the aircraft
for commercial purposes during the period the dealer holds the
commercial use permit. Commercial purposes as used herein does
not include rental or lease of the aircraft for which the
aircraft dealers normally collect the sales tax from their
customers. Applications shall be on forms prescribed and
furnished by the commissioner of revenue and shall include the
federal aircraft registration number of each aircraft for which
a permit is to be issued. A permit shall be affixed to the
dealer's license and shall be conspicuously displayed in the
aircraft for which it was issued, which aircraft shall remain in
the possession of or under the control of the licensed dealer to
whom the permit was issued. The permit shall expire and the tax
imposed by section 297A.02 or 297A.14 shall become due upon
either sale of the aircraft by the dealer or expiration of the
12-month period. If the aircraft has not been sold within the
12-month period the tax is due on the purchase price of the
aircraft and its auxiliary equipment to the dealer and the tax
imposed by section 297A.02 shall become due on the eventual sale
of the aircraft. Laws 1971, chapter 740 shall in no way apply
to registration or taxation pursuant to sections 360.511 to
360.67.
Sec. 25. [REPEALER.]
(a) Minnesota Statutes 1986, section 270.89 is repealed.
(b) Minnesota Statutes 1986, section 297A.25, subdivision
13, is repealed.
(c) Laws 1986, chapter 391, section 3, is repealed.
Sec. 26. [EFFECTIVE DATE.]
Sections 1, paragraphs (a), (c), (d), except the reference
to having access to and the use of amusement devices and
athletic facilities, (f), and (k), 2, 4, 5, 11 to 14, 17, 20,
21, and 25, paragraph (b), are effective for sales at retail
made after May 31, 1987, but shall not apply to sales of
tangible personal property made pursuant to bona fide written
contracts that were enforceable before June 1, 1987, and
delivery is made on or before December 31, 1987. Section 6 is
effective for sales at retail made after May 31, 1987. Sections
3, 8, 9, 24, and 25, paragraph (a), are effective June 1, 1987.
Section 16 is effective for sales after September 30, 1987. The
reference to having access to and the use of amusement devices
and athletic facilities in section 1, paragraph (d), is
effective February 1, 1987. Section 1, paragraphs (i) and (j),
are effective for services provided after June 30, 1987, except
that taxation of services described in paragraph (j), clauses
(i), (iii), (iv), and (vi), is effective for services provided
after September 30, 1987. Section 10 is effective upon approval
of the agreement by the commissioner of revenue and the
commissioner of public safety.
ARTICLE 5
PROPERTY TAXES
Section 1. Minnesota Statutes 1986, section 273.11,
subdivision 8, is amended to read:
Subd. 8. [LIMITED EQUITY COOPERATIVE APARTMENTS.] For the
purposes of this subdivision, the terms defined in this
subdivision have the meanings given them.
A "limited equity cooperative" is a corporation organized
under chapter 308, which has as its primary purpose the
provision of housing and related services to its members, whose
income must not exceed 90 percent of the median St.
Paul-Minneapolis metropolitan area income as determined by the
United States Department of Housing and Urban Development at the
time they purchase their membership, and which meets the
following requirements:
(a) The articles of incorporation set the sale price of
occupancy entitling cooperative shares or memberships at no more
than a transfer value determined as provided in the articles.
That value may not exceed the sum of the following:
(1) the consideration paid for the membership or shares by
the first occupant of the unit, as shown in the records of the
corporation;
(2) the fair market value, as shown in the records of the
corporation, of any improvements to the real property that were
installed at the sole expense of the member with the prior
approval of the board of directors;
(3) accumulated interest, or an inflation allowance not to
exceed the greater of a ten percent annual noncompounded
increase on the consideration paid for the membership or share
by the first occupant of the unit, or the amount that would have
been paid on that consideration if interest had been paid on it
at the rate of the percentage increase in the revised consumer
price index for all urban consumers for the Minneapolis-St. Paul
metropolitan area prepared by the United States Department of
Labor, provided that the amount determined pursuant to this
clause may not exceed $500 for each year or fraction of a year
the membership or share was owned; plus
(4) real property capital contributions shown in the
records of the corporation to have been paid by the transferor
member and previous holders of the same membership, or of
separate memberships that had entitled occupancy to the unit of
the member involved. These contributions include contributions
to a corporate reserve account the use of which is restricted to
real property improvements or acquisitions, contributions to the
corporation which are used for real property improvements or
acquisitions, and the amount of principal amortized by the
corporation on its indebtedness due to the financing of real
property acquisition or improvement or the averaging of
principal paid by the corporation over the term of its real
property-related indebtedness.
(b) The articles of incorporation require that the board of
directors limit the purchase price of stock or membership
interests for new member-occupants or resident shareholders to
an amount which does not exceed the transfer value for the
membership or stock as defined in clause (a).
(c) The articles of incorporation require that the total
distribution out of capital to a member shall not exceed that
transfer value.
(d) The articles of incorporation require that upon
liquidation of the corporation any assets remaining after
retirement of corporate debts and distribution to members will
be conveyed to a charitable organization described in section
501(c)(3) of the Internal Revenue Code of 1954 1986, as amended
through December 31, 1984 1986, or a public agency.
A "limited equity cooperative apartment" is a dwelling unit
owned or leased by a limited equity cooperative. If the
dwelling unit is leased by the cooperative the lease agreement
must meet the conditions for a cooperative lease stated in
section 273.124, subdivision 6.
"Occupancy entitling cooperative share or membership" is
the ownership interest in a cooperative organization which
entitles the holder to an exclusive right to occupy a dwelling
unit owned or leased by the cooperative.
For purposes of taxation, the assessor shall value a unit
owned by a limited equity cooperative at the lesser of its
market value or the value determined by capitalizing the net
operating income of a comparable apartment operated on a rental
basis at the capitalization rate used in valuing comparable
buildings that are not limited equity cooperatives. If a
cooperative fails to operate in accordance with the provisions
of clauses (a) to (d), the property shall be subject to
additional property taxes in the amount of the difference
between the taxes determined in accordance with this subdivision
for the last ten years that the property had been assessed
pursuant to this subdivision and the amount that would have been
paid if the provisions of this subdivision had not applied to
it. The additional taxes, plus interest at the rate specified
in section 549.09, shall be extended against the property on the
tax list for the current year.
Sec. 2. [273.1195] [STATE PAID SMALL BUSINESS PROPERTY TAX
TRANSITION CREDIT.]
For property taxes payable in 1988 only, class 3a
commercial industrial property is eligible for a state paid
small business transition property tax credit if the payable
1988 property taxes on the first $120,000 of market value of the
property exceed three percent of the January 2, 1987 market
value. The credit is equal to 50 percent of the property tax
amount which is in excess of three percent of market value.
Only the first $120,000 of market value of a qualifying parcel
and the taxes attributable to the first $120,000 of market value
are eligible for the computation of this credit. Only a parcel
that qualifies for the 28 percent assessment ratio contained in
section 273.13, subdivision 24, paragraph (a), qualifies for the
credit provided in this section.
In the case of taxes paid in installments pursuant to
section 279.01, subdivision 1, the credit under this section
must be deducted from the second one-half installment payable
October 15. The amount of the reduction must be reported to the
commissioner of revenue as part of the abstracts of tax lists
required to be filed with the commissioner under section 275.29.
There is annually appropriated from the general fund to the
commissioners of revenue and education the amount necessary to
replace the revenue lost to local units of government and school
districts as a result of the reduction in property taxes
provided in this section. The payment amounts must be
determined and the installments paid under the provisions of
sections 273.13, subdivision 15a, and 273.1392.
Sec. 3. Minnesota Statutes 1986, section 273.124,
subdivision 7, is amended to read:
Subd. 7. [LEASED BUILDINGS OR LAND.] For purposes of class
1 determinations, homesteads include:
(a) buildings and appurtenances owned and used by the
occupant as a permanent residence which are located upon land
the title to which is vested in a person or entity other than
the occupant;
(b) all buildings and appurtenances located upon land owned
by the occupant and used for the purposes of a homestead
together with the land upon which they are located, if all of
the following criterial are met:
(1) the occupant is using the property as a permanent
residence;
(2) the occupant is paying the property taxes and any
special assessments levied against the property;
(3) the occupant has signed a lease which has an option to
purchase the buildings and appurtenances; and
(4) the term of the lease is at least five years; and
(5) the occupant has made a down payment of at least $5,000
in cash if the property was purchased by means of a contract for
deed or subject to a mortgage.
Any taxpayer meeting all the requirements of this paragraph
must notify the county assessor, or the assessor who has the
powers of the county assessor pursuant to section 273.063, in
writing, as soon as possible after signing the lease agreement
and occupying the buildings as a homestead.
Sec. 4. Minnesota Statutes 1986, section 273.13,
subdivision 22, is amended to read:
Subd. 22. [CLASS 1.] (a) Except as provided in subdivision
23, real estate which is residential and used for homestead
purposes is class 1. The market value of class 1a property must
be determined based upon the value of the house, garage, and
land.
The first $64,000 $68,000 of market value of class 1a
property must be assessed at 18 17 percent of its market value.
The homestead value of class 1a property that
exceeds $64,000 $68,000 must be assessed at 28 27 percent of its
value.
(b) Class 1b property includes real estate or manufactured
homes used for the purposes of a homestead by
(1) any blind person, if the blind person is the owner
thereof or if the blind person and the blind person's spouse are
the sole owners thereof; or
(2) any person, hereinafter referred to as "veteran," who:
(i) served in the active military or naval service of the
United States; and
(ii) is entitled to compensation under the laws and
regulations of the United States for permanent and total
service-connected disability due to the loss, or loss of use, by
reason of amputation, ankylosis, progressive muscular
dystrophies, or paralysis, of both lower extremities, such as to
preclude motion without the aid of braces, crutches, canes, or a
wheelchair; and
(iii) with assistance by the administration of veterans
affairs has acquired a special housing unit with special
fixtures or movable facilities made necessary by the nature of
the veteran's disability, or the surviving spouse of the
deceased veteran for as long as the surviving spouse retains the
special housing unit as a homestead; or
(3) any person who:
(i) is permanently and totally disabled and
(ii) receives 90 percent or more of total income from
(A) aid from any state as a result of that disability; or
(B) supplemental security income for the disabled; or
(C) workers' compensation based on a finding of total and
permanent disability; or
(D) social security disability, including the amount of a
disability insurance benefit which is converted to an old age
insurance benefit and any subsequent cost of living increases;
or
(E) aid under the Federal Railroad Retirement Act of 1937,
United States Code Annotated, title 45, section 228b(a)5; or
(F) a pension from any local government retirement fund
located in the state of Minnesota as a result of that disability.
Property is classified and assessed pursuant to clause (1)
only if the commissioner of human services certifies to the
assessor that the owner of the property satisfies the
requirements of this subdivision. The commissioner of human
services shall provide a copy of the certification to the
commissioner of revenue.
Class 1b property is valued and assessed as follows: in
the case of agricultural land, including a manufactured home,
used for a homestead, the first $32,000 $33,000 of market value
shall be valued and assessed at five percent, the
next $32,000 $33,000 of market value shall be valued and
assessed at 14 percent, and the remaining market value shall be
valued and assessed at 18 percent; and in the case of all other
real estate and manufactured homes, the first $32,000 $34,000 of
market value shall be valued and assessed at five percent, the
next $32,000 $34,000 of market value shall be valued and
assessed at 18 17 percent, and the remaining market value shall
be valued and assessed at 28 27 percent. In the case of
agricultural land including a manufactured home used for
purposes of a homestead, the commissioner of revenue shall
adjust, as provided in section 273.1311, the maximum amount of
the market value of the homestead brackets subject to the five
percent and 18 percent rates; and for all other real estate and
manufactured homes, the commissioner of revenue shall adjust, as
provided in section 273.1311, the maximum amount of the market
value of the homestead brackets subject to the five percent
and 18 17 percent rates. Permanently and totally disabled for
the purpose of this subdivision means a condition which is
permanent in nature and totally incapacitates the person from
working at an occupation which brings the person an income.
(c) Class 1c property is commercial use real property that
abuts a lakeshore line and is devoted to temporary and seasonal
residential occupancy for recreational purposes but not devoted
to commercial purposes for more than 200 days in the year
preceding the year of assessment, and that includes a portion
used as a homestead by the owner. It must be assessed at 12
percent of market value with the following limitation: the area
of the property must not exceed 100 feet of lakeshore footage
for each cabin or campsite located on the property up to a total
of 800 feet and 500 feet in depth, measured away from the
lakeshore.
(d) The tax to be paid on class 1a or class 1b property,
less any reduction received pursuant to sections 273.123 and
473H.10, shall be reduced by 54 percent of the tax imposed on
the first $68,000 of market value. The amount of the reduction
shall not exceed $700.
Sec. 5. Minnesota Statutes 1986, section 273.133,
subdivision 3, is amended to read:
Subd. 3. [LEASEHOLD COOPERATIVES.] When one or more
dwellings or one or more buildings which each contain several
dwelling units is owned by a nonprofit corporation subject to
the provisions of chapter 317 or a limited partnership which
corporation or partnership operates the property in conjunction
with a cooperative association, homestead treatment, as provided
under section 273.13, subdivision 7, may be claimed for each
dwelling unit occupied by a member of the cooperative. To
qualify for the treatment provided by this subdivision, the
following conditions shall be met: (a) the cooperative
association must be organized under sections 308.05 to 308.18;
(b) the cooperative association must have a lease for occupancy
of the property for a term of at least 20 years; (c) the
cooperative association must have a right under a written
agreement with the owner to purchase the property if the owner
proposes to sell it; if the cooperative association does not
purchase the property when it is offered for sale, the owner may
not subsequently sell the property to another purchaser at a
price lower than the price at which it was offered for sale to
the cooperative association unless the cooperative association
approves the sale; (d) the cooperative must meet one of the
following criteria with respect to the income of its members:
(1) a minimum of 75 percent of members must have incomes at or
less than 90 percent of area median income, (2) a minimum of 40
percent of members must have incomes at or less than 60 percent
of area median income, or (3) a minimum of 20 percent of members
must have incomes at or less than 50 percent of area median
income. For purposes of this clause, "member income" shall mean
the income of a member existing at the time the member acquires
his or her cooperative membership, and median income shall mean
the St. Paul-Minneapolis metropolitan area median income as
determined by the United States Department of Housing and Urban
Development; and (d) (e) if a limited partnership owns the
property, it must include as the managing general partner either
the cooperative association or a nonprofit organization
operating under the provisions of chapter 317. Homestead
treatment shall be afforded to units occupied by members of the
cooperative association and the units shall be assessed as
provided in subdivision 1, provided that any unit not so
occupied shall be classified and assessed pursuant to section
273.13, subdivision 19. No more than three acres of land shall,
for assessment purposes, be included with each dwelling unit
that qualifies for homestead treatment under this subdivision.
Sec. 6. Minnesota Statutes 1986, section 273.1392, is
amended to read:
273.1392 [PAYMENT; AIDS TO SCHOOL DISTRICTS.]
The amounts of homestead credit under section 273.13,
subdivisions 22 and 23; wetlands credit and reimbursement under
section 273.115; native prairie credit and reimbursement under
section 273.116; small business transition credit under section
2; disaster or emergency reimbursement under section 273.123;
attached machinery aid under section 273.138; and metropolitan
agricultural preserve reduction under section 473H.10, shall be
certified to the department of education by the department of
revenue. The amounts so certified shall be paid according to
section 124.195, subdivisions 6 and 10.
Sec. 7. Minnesota Statutes 1986, section 273.1393, is
amended to read:
273.1393 [COMPUTATION OF NET PROPERTY TAXES.]
Notwithstanding any other provisions to the contrary, "net"
property taxes are determined by subtracting the credits in the
order listed from the gross tax:
(1) small business property tax transition credit as
provided in section 2;
(2) disaster credit as provided in section 273.123;
(2)(3) wetlands credit as provided in section 273.115;
(3)(4) native prairie credit as provided in section 273.116;
(4)(5) powerline credit as provided in section 273.42;
(5)(6) agricultural preserves credit as provided in section
473H.10;
(6)(7) enterprise zone credit as provided in section
273.1314;
(7)(8) state school agricultural credit as provided in
section 124.2137;
(8)(9) state paid homestead credit as provided in section
273.13, subdivisions 22 and 23;
(9)(10) taconite homestead credit as provided in section
273.135;
(10)(11) supplemental homestead credit as provided in
section 273.1391.
The combination of all property tax credits must not exceed
the gross tax amount.
Sec. 8. [273.1397] [INCOME MAINTENANCE TAX DISPARITY AID.]
Subdivision 1. [DEFINITIONS.] (a) In this section, the
following terms have the meanings given them.
(b) "Income maintenance programs" means general assistance
payments as defined in section 256D.02, subdivision 4, less any
amounts paid under the third paragraph of section 256D.03,
subdivision 2; general assistance medical care payments as
defined in section 256D.02, subdivision 4a; and work readiness
assistance under section 256D.051.
(c) "Unreimbursed local share" means the county's cost of
income maintenance programs for the previous state fiscal year,
excluding administrative costs, and excluding costs that are
reimbursed by the federal government, or by the state under
section 256D.03, subdivisions 2, 4, and 6.
(d) "Adjusted assessed value" has the meaning given it in
section 124A.02, subdivision 3a.
(e) "Preliminary aid amount" means the unreimbursed local
share, less the product of one-half mill times the most recent
adjusted assessed value of all taxable property in the county
excluding the captured value of tax increment financing property
and the net value adjustment under chapter 473F.
Subd. 2. [AID TO COUNTY.] A county whose preliminary aid
amount is greater than zero shall receive a payment equal to the
lesser of (1) the preliminary aid amount, or (2) 95 percent of
the unreimbursed local share. The commissioner of revenue shall
annually determine the amounts pursuant to this section and
shall notify the county of the resulting income maintenance tax
disparity aid amount. The commissioner of revenue shall pay to
each affected county treasurer the county's total payment for
the year in equal installments on or before July 15 and December
15 of each year.
Subd. 3. [APPROPRIATION.] An amount sufficient to make the
payments required in this section is annually appropriated from
the general fund to the commissioner of revenue.
Sec. 9. Minnesota Statutes 1986, section 276.04, is
amended to read:
276.04 [NOTICE OF RATES; PROPERTY TAX STATEMENTS.]
On receiving the tax lists from the county auditor, the
county treasurer shall, if directed by the county board, give
three weeks' published notice in a newspaper specifying the
rates of taxation for all general purposes and the amounts
raised for each specific purpose. The treasurer shall, whether
or not directed by the county board, cause to be printed on all
tax statements, or on an attachment, a tabulated statement of
the dollar amount due to each taxing authority from the parcel
of real property for which a particular tax statement is
prepared. The dollar amounts due the county, township or
municipality and school district shall be separately stated but
the amounts due other taxing districts, if any, may be
aggregated. The dollar amounts, including the dollar amount of
any special assessments, may be rounded to the nearest even
whole dollar. For purposes of this section whole odd-numbered
dollars may be adjusted to the next higher even-numbered
dollar. The statement shall include the following sentence,
printed in upper case letters in bold face print: "THE STATE OF
MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES. THE STATE
OF MINNESOTA REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND
REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT." The property tax
statements for manufactured homes and sectional structures taxed
as personal property shall contain the same information that is
required on the tax statements for real property. The county
treasurer shall mail to taxpayers statements of their personal
property taxes due, such statements to be mailed not later than
February 15 (except in the case of manufactured homes and
sectional structures taxed as personal property), statements of
the real property taxes due shall be mailed not later than
January 31; provided, that the validity of the tax shall not be
affected by failure of the treasurer to mail such statement.
The taxpayer is defined as the owner who is responsible for the
payment of the tax. Such real and personal property tax
statements shall contain the market value, as defined in section
272.03, subdivision 8, used in determining the tax. The
statement shall show the amount attributable to section 124.2137
as "state paid agricultural credit" and the amount attributable
to section 273.13, subdivisions 22 and 23 as "state paid
homestead credit." The statement must state the amount deducted
under section 2 and identify it as "state paid small business
transition credit." If so directed by the county board, the
treasurer shall visit places in the county as the treasurer
deems expedient for the purpose of receiving taxes and the
county board is authorized to pay the expenses of such visits
and of preparing duplicate tax lists. Failure to mail the tax
statement shall not be deemed a material defect to affect the
validity of any judgment and sale for delinquent taxes.
Sec. 10. Minnesota Statutes 1986, section 477A.012,
subdivision 1, is amended to read:
Subdivision 1. [AID AMOUNT.] In calendar year 1987 1988
and calendar years thereafter, each county government shall
receive a distribution equal to 104 percent of the aid amount
certified for 1986 1987 pursuant to sections 477A.011 to
477A.03. Each county government that received no distribution
in 1986 pursuant to sections 477A.011 to 477A.03 shall receive a
distribution in calendar year 1987 computed by multiplying the
county's population by a factor equal to the total increase in
aid certified to all other counties under this section in 1987
over the total amount certified in 1986, divided by the total
population of those counties this subdivision.
Sec. 11. Minnesota Statutes 1986, section 477A.013, is
amended to read:
477A.013 [MUNICIPAL GOVERNMENT DISTRIBUTIONS.]
Subdivision 1. [TOWNS.] In calendar year 1987 1988 and
calendar years thereafter, each town which had levied for taxes
payable in the previous year at least one mill on the dollar of
the assessed value of the town shall receive a distribution
equal to 104 percent of the greater of: (a) 60 percent of the
amount received in 1983 pursuant to Minnesota Statutes 1982,
sections 273.138, 273.139, and 477A.011 to 477A.03; or (b) the
amount received certified in 1986 1987 pursuant to sections
477A.011 to 477A.03.
Subd. 2. [CITIES.] In calendar year 1987 1988 and calendar
years thereafter, each city shall receive a local government aid
distribution as determined by the following steps.
(1) A preliminary aid amount shall be computed for each
city equal to the amount obtained by subtracting its local
effort mill rate multiplied by its equalized assessed value from
its fiscal need factor, except that its preliminary aid amount
may not be less than its previous year aid amount.
For any city which received more than $70 per capita in
attached machinery aids in 1983 pursuant to Minnesota Statutes
1982, section 273.138, an amount equal to the amount of attached
machinery aids received in 1983 shall be added to the
preliminary aid amount.
(2) For each city, an aid increase amount equal to the
amount by which its preliminary aid amount exceeds its previous
year aid amount shall be determined. Each city's aid increase
amount shall be reduced by a uniform percentage as determined by
the commissioner of revenue, to make the sum of the final aid
distributions for all cities equal the aid limitation imposed by
subdivision 3.
(3) Each city's final aid amount shall be equal to the sum
of its aid increase amount, as adjusted, and its previous year
aid amount; provided, however, that no city's aid shall exceed
its maximum aid amount, and further provided that no city which
is a city of the first class shall have a final aid amount which
is less than 102 percent of its previous year aid.
Subd. 3. [AID LIMITATION.] The total amount available for
distribution to cities pursuant to subdivision 2 shall be
$297,440,000 for calendar year 1987 equal to the amount that the
city was certified to receive for calendar year 1987 under this
subdivision.
Sec. 12. [LEVY LIMITATIONS FOR TAXES PAYABLE IN 1988.]
Subdivision 1. [GENERALLY.] Notwithstanding any other law
to the contrary, for taxes levied in 1987, payable in 1988 only,
the provisions of Minnesota Statutes, sections 275.50 to 275.56,
shall not apply, and the provisions of this section shall govern
the levies for all counties and all cities regardless of
population.
Subd. 2. [CITIES.] For any home rule charter or statutory
city, the levy limit base for taxes payable in 1988 is the sum
of (1) the city's total levy for taxes payable in 1987,
excluding the amount levied in that year for debt service and
the amount claimed as a special levy for unfunded accrued
pension liabilities under section 275.50, subdivision 5, clause
(o); and (2) the amount received in 1987 under Minnesota
Statutes 1986, section 275.51, subdivision 3i. This sum shall
be increased by a percentage equal to the greater of the
percentage increases in population or in number of households,
if any, for the most recent 12-month period for which data is
available, using figures derived under Minnesota Statutes,
section 275.51, subdivision 6. The resulting amount for each
home rule charter or statutory city multiplied by 103 percent is
the city's levy limit base for taxes payable in 1988. The
payable 1988 levy limitation for each city shall be equal to the
levy limit base determined under this section reduced by the
aids for 1988 enumerated in section 275.51, subdivision 3i.
Subd. 3. [COUNTIES.] For any county, the levy limit base
for taxes payable in 1988 is the sum of (1) the county's total
levy for taxes payable in 1987, excluding the amount levied in
that year for (a) debt service; (b) amount claimed as a special
levy for unfunded accrued pension liabilities under section
275.50, subdivision 5, clause (o); (c) income maintenance
programs except for the administrative costs associated with
those programs; and (d) social services programs, including the
administrative costs associated with those programs, plus (2)
the amount received in 1987 under Minnesota Statutes 1986,
section 275.51, subdivision 3i. This sum shall be increased by
a percentage equal to the greater of the percentage increases in
population or in number of households, if any, for the most
recent 12-month period for which data is available, using
figures derived under Minnesota Statutes, section 275.51,
subdivision 6. The resulting amount for each county multiplied
by 103 percent is the county's levy limit base for taxes payable
in 1988. The payable 1988 levy limitation for each county shall
be equal to the levy limit base determined under this section
reduced by the aids for 1988 enumerated in section 275.51,
subdivision 3i.
Subd. 4. [EXCEPTIONS.] For taxes payable in 1988, the
amounts levied for the following costs are not subject to the
limitation under subdivision 2 or 3:
(1) levies for debt service,
(2) levies for unfunded accrued pension liabilities as
specified under section 275.50, subdivision 5, clause (o),
(3) levies for income maintenance programs, net of any aid
payments received under section 8, and excluding the
administrative costs associated with those programs, and
(4) levies for social service programs including the
administrative costs associated with those programs.
The amount levied by the county for taxes payable in 1988
to pay the costs of programs described in clauses (3) and (4) of
this subdivision shall be subject to the percentage limitations
provided in section 275.50, subdivision 5, clause (d).
Subd. 5. [APPEALS.] A governmental subdivision subject to
the limitations in this section may appeal to the commissioner
of revenue for an adjustment in its levy limit base under this
section. If the governmental subdivision can provide evidence
satisfactory to the commissioner that its levy for taxes payable
in 1987 had been reduced because it had made expenditures from
reserve funds, or for any other reason, or that it is necessary
to levy additional amounts for taxes payable in 1988 which were
not levied in 1987, the commissioner may permit the governmental
subdivision to increase its levy limit base under this section
by the amount determined by the commissioner. The
commissioner's decision is final.
Sec. 13. [EFFECTIVE DATE.]
Sections 1, 3, 4, 5, and 8 are effective for taxes levied
in 1987 payable in 1988 and subsequent years.
ARTICLE 6
1989 AND SUBSEQUENT PROPERTY TAX
Section 1. Minnesota Statutes 1986, section 116C.63,
subdivision 4, is amended to read:
Subd. 4. When private real property defined as class 1a,
1b, 1c, 2a, 2c, 4a, 5a, or 6a pursuant to that is an
agricultural or nonagricultural homestead, nonhomestead
agricultural land, rental residential property, and both
commercial and noncommercial seasonal residential recreational
property, as those terms are defined in section 273.13 is
proposed to be acquired for the construction of a site or route
by eminent domain proceedings, the fee owner, or when
applicable, the fee owner with the written consent of the
contract for deed vendee, or the contract for deed vendee with
the written consent of the fee owner, shall have the option to
require the utility to condemn a fee interest in any amount of
contiguous, commercially viable land which the owner or vendee
wholly owns or has contracted to own in undivided fee and elects
in writing to transfer to the utility within 60 days after
receipt of the notice of the objects of the petition filed
pursuant to section 117.055. Commercial viability shall be
determined without regard to the presence of the utility route
or site. The owner or, when applicable, the contract vendee
shall have only one such option and may not expand or otherwise
modify an election without the consent of the utility. The
required acquisition of land pursuant to this subdivision shall
be considered an acquisition for a public purpose and for use in
the utility's business, for purposes of chapter 117 and section
500.24, respectively; provided that a utility shall divest
itself completely of all such lands used for farming or capable
of being used for farming not later than the time it can receive
the market value paid at the time of acquisition of lands less
any diminution in value by reason of the presence of the utility
route or site. Upon the owner's election made under this
subdivision, the easement interest over and adjacent to the
lands designated by the owner to be acquired in fee, sought in
the condemnation petition for a high voltage transmission line
right-of-way shall automatically be converted into a fee taking.
Sec. 2. Minnesota Statutes 1986, section 124.155,
subdivision 2, is amended to read:
Subd. 2. [ADJUSTMENT TO AIDS.] The amount specified in
subdivision 1 shall be used to adjust the following state aids
and credits in the order listed:
(a) foundation aid as defined in section 124A.01;
(b) secondary vocational aid authorized in section 124.573;
(c) special education aid authorized in section 124.32;
(d) secondary vocational aid for handicapped children
authorized in section 124.574;
(e) gifted and talented aid authorized in section 124.247;
(f) aid for pupils of limited English proficiency
authorized in section 124.273;
(g) aid for chemical use programs authorized in section
124.246;
(h) interdistrict cooperation aid authorized in section
124.272;
(i) summer program aid authorized in section 124A.033;
(j) transportation aid authorized in section 124.225;
(k) community education programs aid authorized in section
124.271;
(l) adult education aid authorized in section 124.26;
(m) early childhood family education aid authorized in
section 124.2711;
(n) capital expenditure equalization aid authorized in
section 124.245;
(o) homestead credit replacement aid authorized in section
273.13, subdivisions 22 and 23 273.1394;
(p) state school agricultural tax credit replacement aid
authorized in section 124.2137 273.1395;
(q) wetlands credit authorized in section 273.115;
(r) native prairie credit authorized in section 273.116;
(s) attached machinery aid authorized in section 273.138,
subdivision 3; and
(t) (r) teacher retirement and F.I.C.A. aid authorized in
sections 124.2162 and 124.2163.
The commissioner of education shall schedule the timing of
the adjustments to state aids and credits specified in
subdivision 1, as close to the end of the fiscal year as
possible.
Sec. 3. Minnesota Statutes 1986, section 124.2131,
subdivision 3, is amended to read:
Subd. 3. [DECREASE IN IRON ORE ASSESSED VALUE.] If in any
year the assessed value of class 9a and 9b iron ore property, as
defined in section 273.13, subdivision 30, in any district is
less than the assessed value of such property in the immediately
preceding year, the equalization aid review committee shall
redetermine for all purposes the adjusted assessed value of
the immediately preceding year taking into account only the
decrease in assessed value of class 9a and 9b iron ore
property. If subdivision 2, clause (a) is applicable to such
a the district, the decrease in class 9a and 9b iron ore
property shall be applied to the adjusted assessed value as
limited therein. In all other respects, the provisions of
clause (1) shall be applicable apply.
Sec. 4. Minnesota Statutes 1986, section 124.2139, is
amended to read:
124.2139 [REDUCTION OF HOMESTEAD CREDIT PAYMENTS TO SCHOOL
DISTRICTS.]
The commissioner of revenue shall reduce homestead credit
replacement aid payments made to school districts pursuant to
section 273.13, subdivisions 22 and 23, 273.1394 by the product
of:
(1) the district's fiscal year 1984 payroll for coordinated
plan members of the public employees retirement association,
times
(2) the difference between the employer contribution rate
in effect prior to July 1, 1984, and the total employer
contribution rate in effect after June 30, 1984.
Sec. 5. Minnesota Statutes 1986, section 124A.02,
subdivision 11, is amended to read:
Subd. 11. [MINIMUM AID.] A qualifying district's minimum
aid for each school year shall equal its minimum guarantee for
that school year, minus the sum of:
(1) the amount of the district's state school homestead
credit replacement aid paid under section 273.1394 and its
agricultural tax credit replacement aid under section 273.1395
for that school year, after any positive tax base adjustment but
prior to any negative tax base adjustment under section 273.1396;
(2) the amount by which property taxes of the district for
use in that school year are reduced by the homestead credit
provisions in section 273.13, subdivisions 22 and 23;
(3) the amount by which property taxes of the district for
use in that school year are reduced by the taconite homestead
credit provisions in section 273.135;
(4) the amount by which property taxes of the district for
use in that school year are reduced by the attached machinery
provisions in section 273.138, subdivision 6;
(5) the amount by which property taxes of the district for
use in that school year are reduced by the state paid wetlands
credit provisions in section 273.115;
(6) the amount by which property taxes of the district for
use in that school year are reduced by the state paid native
prairie credit provisions in section 273.116;
(7) (3) the amount by which property taxes of the district
for use in that school year are reduced by the state reimbursed
disaster or emergency reassessment provisions in section
273.123; and
(8) (4) the amount by which property taxes of the district
for use in that school year are reduced by the metropolitan
agricultural preserve provisions in section 473H.10.
Sec. 6. Minnesota Statutes 1986, section 272.02,
subdivision 1, is amended to read:
Subdivision 1. All property described in this section to
the extent herein limited shall be exempt from taxation:
(1) All public burying grounds;
(2) All public schoolhouses;
(3) All public hospitals;
(4) All academies, colleges, and universities, and all
seminaries of learning;
(5) All churches, church property, and houses of worship;
(6) Institutions of purely public charity except parcels of
property containing structures and the structures assessed as
class 7(a), (b), (c), or (d) described in section 273.13,
subdivision 25, paragraph (c), clauses (1) or (2), or paragraph
(d), clause (2);
(7) All public property exclusively used for any public
purpose;
(8) Except for the taxable personal property enumerated
below, all personal property and the property described in
section 272.03, subdivision 1, paragraphs (c) and (d) shall be
exempt.
The following personal property shall be taxable:
(a) personal property which is part of an electric
generating, transmission, or distribution system or a pipeline
system transporting or distributing water, gas, crude oil, or
petroleum products or mains and pipes used in the distribution
of steam or hot or chilled water for heating or cooling
buildings and structures;
(b) railroad docks and wharves which are part of the
operating property of a railroad company as defined in section
270.80;
(c) personal property defined in section 272.03,
subdivision 2, clause (3);
(d) leasehold or other personal property interests which
are taxed pursuant to section 272.01, subdivision 2; 273.124,
subdivision 7; or 273.19, subdivision 1; or any other law
providing the property is taxable as if the lessee or user were
the fee owner;
(e) manufactured homes and sectional structures; and
(f) flight property as defined in section 270.071.
(9) Real and personal property used primarily for the
abatement and control of air, water, or land pollution to the
extent that it is so used, other than real property used
primarily as a solid waste disposal site.
Any taxpayer requesting exemption of all or a portion of
any equipment or device, or part thereof, operated primarily for
the control or abatement of air or water pollution shall file an
application with the commissioner of revenue. The equipment or
device shall meet standards, rules or criteria prescribed by the
Minnesota pollution control agency, and must be installed or
operated in accordance with a permit or order issued by that
agency. The Minnesota pollution control agency shall upon
request of the commissioner furnish information or advice to the
commissioner. On determining that property qualifies for
exemption, the commissioner shall issue an order exempting the
property from taxation. The equipment or device shall continue
to be exempt from taxation as long as the permit issued by the
Minnesota pollution control agency remains in effect.
(10) Wetlands. For purposes of this subdivision,
"wetlands" means (1) land described in section 105.37,
subdivision 15, or (2) land which is mostly under water,
produces little if any income, and has no use except for
wildlife or water conservation purposes, provided it is
preserved in its natural condition and drainage of it would be
legal, feasible, and economically practical for the production
of livestock, dairy animals, poultry, fruit, vegetables, forage
and grains, except wild rice. "Wetlands" shall include adjacent
land which is not suitable for agricultural purposes due to the
presence of the wetlands. "Wetlands" shall not include woody
swamps containing shrubs or trees, wet meadows, meandered water,
streams, rivers, and floodplains or river bottoms. Exemption of
wetlands from taxation pursuant to this section shall not grant
the public any additional or greater right of access to the
wetlands or diminish any right of ownership to the wetlands.
(11) Native prairie. The commissioner of the department of
natural resources shall determine lands in the state which are
native prairie and shall notify the county assessor of each
county in which the lands are located. Pasture land used for
livestock grazing purposes shall not be considered native
prairie for the purposes of this clause and section 273.116.
Upon receipt of an application for the exemption and credit
provided in this clause and section 273.116 for lands for which
the assessor has no determination from the commissioner of
natural resources, the assessor shall refer the application to
the commissioner of natural resources who shall determine within
30 days whether the land is native prairie and notify the county
assessor of the decision. Exemption of native prairie pursuant
to this clause shall not grant the public any additional or
greater right of access to the native prairie or diminish any
right of ownership to it.
(12) Property used in a continuous program to provide
emergency shelter for victims of domestic abuse, provided the
organization that owns and sponsors the shelter is exempt from
federal income taxation pursuant to section 501(c)(3) of the
Internal Revenue Code of 1954 1986, as amended through December
31, 1982 1986, notwithstanding the fact that the sponsoring
organization receives funding under section 8 of the United
States Housing Act of 1937, as amended.
(13) If approved by the governing body of the municipality
in which the property is located, property not exceeding one
acre which is owned and operated by any senior citizen group or
association of groups that in general limits membership to
persons age 55 or older and is organized and operated
exclusively for pleasure, recreation, and other nonprofit
purposes, no part of the net earnings of which inures to the
benefit of any private shareholders; provided the property is
used primarily as a clubhouse, meeting facility or recreational
facility by the group or association and the property is not
used for residential purposes on either a temporary or permanent
basis.
(14) To the extent provided by section 295.44, real and
personal property used or to be used primarily for the
production of hydroelectric or hydromechanical power on a site
owned by the state or a local governmental unit which is
developed and operated pursuant to the provisions of section
105.482, subdivisions 1, 8 and 9.
(15) If approved by the governing body of the municipality
in which the property is located, and if construction is
commenced after June 30, 1983:
(a) a "direct satellite broadcasting facility" operated by
a corporation licensed by the federal communications commission
to provide direct satellite broadcasting services using direct
broadcast satellites operating in the 12-ghz. band;
(b) a "fixed satellite regional or national program service
facility" operated by a corporation licensed by the federal
communications commission to provide fixed satellite-transmitted
regularly scheduled broadcasting services using satellites
operating in the 6-ghz. band; and
(c) a facility at which a licensed Minnesota manufacturer
produces distilled spirituous liquors, liqueurs, cordials, or
liquors designated as specialties regardless of alcoholic
content, but not including ethyl alcohol, distilled with a
majority of the ingredients grown or produced in Minnesota.
An exemption provided by paragraph (15) shall apply for a period
not to exceed five years. When the facility no longer qualifies
for exemption, it shall be placed on the assessment rolls as
provided in subdivision 4. Before approving a tax exemption
pursuant to this paragraph, the governing body of the
municipality shall provide an opportunity to the members of the
county board of commissioners of the county in which the
facility is proposed to be located and the members of the school
board of the school district in which the facility is proposed
to be located to meet with the governing body. The governing
body shall present to the members of those boards its estimate
of the fiscal impact of the proposed property tax exemption.
The tax exemption shall not be approved by the governing body
until the county board of commissioners has presented its
written comment on the proposal to the governing body, or 30
days has passed from the date of the transmittal by the
governing body to the board of the information on the fiscal
impact, whichever occurs first.
(16) Real and personal property owned and operated by a
private, nonprofit corporation exempt from federal income
taxation pursuant to United States Code, title 26, section
501(c)(3), primarily used in the generation and distribution of
hot water for heating buildings and structures.
(17) Notwithstanding section 273.19, state lands that are
leased from the department of natural resources under section
92.46.
(18) Electric power distribution lines and their
attachments and appurtenances, that are used primarily for
supplying electricity to farmers at retail.
Sec. 7. Minnesota Statutes 1986, section 272.02,
subdivision 1a, is amended to read:
Subd. 1a. The exemptions granted by subdivision 1 are
subject to the limits contained in the other subdivisions of
this section, section 272.025, or 273.13, subdivision 28 25,
paragraphs (a), (b), (c) and (d) paragraph (c), clause (1) or
(2), or paragraph (d), clause (2).
Sec. 8. Minnesota Statutes 1986, section 272.115,
subdivision 4, is amended to read:
Subd. 4. No real estate sold on or after January 1, 1978
for which a certificate of value is required pursuant to
subdivision 1 shall receive the homestead credit provided under
section 273.13, subdivisions 22 and 23; value exemption amount
or the agricultural mill credit provided exemption amount
computed in section 124.2137 275.081; or the taconite homestead
credit provided in sections 273.134 to 273.136, unless a
certificate of value has been filed with the county auditor in
accordance with this section.
This subdivision shall apply to any real estate taxes that
are payable the year or years following the sale of the property.
Sec. 9. Minnesota Statutes 1986, section 273.1102, is
amended to read:
273.1102 [RATE OF TAX, TERMINOLOGY OF LAWS OR CHARTERS.]
Subdivision 1. [PRE-1988 ADJUSTMENT.] The rate of property
taxation by any political subdivision or other public
corporation for any purpose for which any law or charter now
provides a maximum tax rate expressed in mills times the
assessed value or times the full and true value of taxable
property (except any value determined by the state equalization
aid review committee) shall not exceed 33-1/3 percent of such
maximum tax rate until and unless such law or charter is amended
to provide a different maximum tax rate.
Subd. 2. [1988 ADJUSTMENT.] The rate of property taxation,
salary limits, or aid formulas set for any political subdivision
or other public corporation for which any law or charter provide
a maximum tax rate expressed in mills effective on July 1, 1988,
shall be adjusted by multiplying the mill rate provision in
effect for taxes levied in 1987, payable in 1988, by 45 percent.
Sec. 10. Minnesota Statutes 1986, section 273.1104,
subdivision 1, is amended to read:
Subdivision 1. The term value as applied to iron ore in
sections 273.165, subdivision 2 and 273.13, subdivision 30 31,
paragraph (b) shall be deemed to be three times the present
value of future income notwithstanding the provisions of section
273.11. The present value of future income shall be determined
by the commissioner of revenue in accordance with professionally
recognized mineral valuation practice and procedure. Nothing
contained herein shall be construed as requiring any change in
the method of determining present value of iron ore utilized by
the commissioner prior to the enactment hereof or as limiting
any remedy presently available to the taxpayer in connection
with the commissioner's determination of present value, or
precluding the commissioner from making subsequent changes in
the present worth formula.
Sec. 11. Minnesota Statutes 1986, section 273.123,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] For purposes of this section
(a) "disaster or emergency" means
(1) a major disaster as determined by the president of the
United States;
(2) a natural disaster as determined by the secretary of
agriculture;
(3) a disaster as determined by the administrator of the
small business administration; or
(4) a tornado, storm, flood, earthquake, landslide,
explosion, fire or similar catastrophe, as a result of which a
local emergency is declared pursuant to section 12.29.
(b) "disaster or emergency area" means an area
(1) in which the president of the United States, the
secretary of agriculture, or the administrator of the small
business administration has determined that a disaster exists
pursuant to federal law or in which a local emergency has been
declared pursuant to section 12.29; and
(2) for which an application by the local unit of
government requesting property tax relief under this section has
been received by the governor and approved by the executive
council.
(c) "homestead property" means homestead dwelling that is
classified as class 1a, 1b 1, or 2a property or a manufactured
home or sectional home used as a homestead and taxed pursuant to
section 274.19, subdivision 8, paragraph (b), (c), or (d).
Sec. 12. Minnesota Statutes 1986, section 273.123,
subdivision 4, is amended to read:
Subd. 4. [STATE REIMBURSEMENT.] The county auditor shall
calculate the tax on the property described in subdivision 2
based on the assessment made on January 2 of the year in which
the disaster or emergency occurred. The difference between the
tax determined on the January 2 assessed value and the tax
actually payable based on the reassessed value determined under
subdivision 2 shall be reimbursed to each taxing jurisdiction in
which the damaged property is located. The amount shall be
certified by the county auditor and reported to the commissioner
of revenue. The commissioner shall make the payments to the
taxing jurisdictions containing the property at the time
distributions are made pursuant to section 273.13, subdivision
15a 273.1394, in the same proportion that the ad valorem tax is
distributed.
Sec. 13. Minnesota Statutes 1986, section 273.123,
subdivision 5, is amended to read:
Subd. 5. [COMPUTATION OF CREDITS.] The amounts of any
credits or tax relief which reduce the gross tax shall be
computed upon the reassessed value determined under subdivision
2. Payment shall be made pursuant to section 273.13,
subdivision 15a 273.1394. For purposes of the property tax
refund, property taxes payable, as defined in section 290A.03,
subdivision 13, and net property taxes payable, as defined in
section 290A.04, subdivision 2d, shall be computed upon the
reassessed value determined under subdivision 2.
Sec. 14. Minnesota Statutes 1986, section 273.123,
subdivision 7, is amended to read:
Subd. 7. [LOCAL OPTION; OTHER PROPERTY.] The owner of
homestead property not qualifying for an adjustment in valuation
pursuant to subdivisions 1 to 5 or of nonhomestead property may
receive a reduction in the amount of taxes payable for the year
in which the destruction occurs on the homestead portion
property if:
(a) 50 percent or more of the homestead dwelling or other
structure, as established by the county assessor, is
unintentionally or accidentally destroyed and the homestead is
uninhabitable or the other structure is not usable;
(b) the owner of the property makes written application to
the county assessor as soon as practical after the damage has
occurred; and
(c) the owner of the property makes written application to
the county board, upon completion of the restoration of the
destroyed structure.
The county board may grant a reduction in the amount of
property tax which the owner must pay on the qualifying home
property in the year of destruction. Any reduction in the
amount of tax payable which is authorized by county board action
shall be calculated based upon the number of months that the
home is uninhabitable or the other structure is unusable. The
amount of net tax due from the taxpayer shall be multiplied by a
fraction, the numerator of which is the number of months the
dwelling was occupied by that taxpayer, or the number of months
the other structure was used by the taxpayer, and the
denominator of which is 12. For purposes of this subdivision,
if a structure is occupied or used for a fraction of a month, it
is considered a month. "Net tax" is defined as the amount of
tax after the subtraction of all of the state paid property tax
credits. If application is made following payment of all
property taxes due for the year of destruction, the amount of
the reduction granted by the county board shall be refunded to
the taxpayer by the county treasurer as soon as practical.
Any reductions or refunds approved by the county board
shall not be subject to approval by the commissioner of revenue.
The county board may levy in the following year the amount
of tax dollars lost to the county government as a result of the
reductions granted pursuant to this subdivision. Any amount
levied for this purpose shall be exempt from the levy limit
provisions of sections 275.50 to 275.56.
Sec. 15. Minnesota Statutes 1986, section 273.124,
subdivision 8, is amended to read:
Subd. 8. [HOMESTEAD OWNED BY FAMILY FARM CORPORATION OR
PARTNERSHIP.] (a) Each family farm corporation and each
partnership operating a family farm is entitled to class 1b or
class 2a assessment for one homestead occupied by a shareholder
or partner thereof who is residing on the land and actively
engaged in farming of the land owned by the corporation or
partnership. Homestead treatment applies even if legal title to
the property is in the name of the corporation or partnership
and not in the name of the person residing on it. "Family farm
corporation" and "family farm" have the meanings given in
section 500.24.
(b) In addition to property specified in paragraph (a), any
other residences owned by corporations or partnerships described
in paragraph (a) which are located on agricultural land and
occupied as homesteads by shareholders or partners who are
actively engaged in farming on behalf of the corporation or
partnership must also be assessed as class 1b or class 2a
property, but the property eligible is limited to the residence
itself and as much of the land surrounding the homestead, not
exceeding one acre, as is reasonably necessary for the use of
the dwelling as a home, and does not include any other
structures that may be located on it.
Sec. 16. Minnesota Statutes 1986, section 273.124,
subdivision 11, is amended to read:
Subd. 11. [LIMITATION ON HOMESTEAD CLASSIFICATION.] If the
assessor has classified a property as both homestead and
nonhomestead, the greater of the value attributable to the
portion of the property classified as class 1a, 1b, 1 or class
2a or the value of the first tier of assessment percentages
provided under section 273.13, subdivision 22, paragraph (a) or
(b) or subdivision 23, paragraph (a) is entitled to assessment
as a homestead treatment under section 273.13, subdivision 22 or
23, and the homestead exemption under section 275.081,
subdivision 2. The limitation in this subdivision does not
apply to buildings containing fewer than four residential units
or to a single rented or leased dwelling unit located within or
attached to a private garage or similar structure owned by the
owner of a homestead and located on the premises of that
homestead.
If the assessor has classified a property as both homestead
and nonhomestead, the homestead credit provided in section
273.13, subdivisions 22 and 23, and the reductions in tax
provided under sections 273.135 and 273.1391 apply to the value
of both the homestead and the nonhomestead portions of the
property.
Sec. 17. Minnesota Statutes 1986, section 273.124,
subdivision 13, is amended to read:
Subd. 13. [SOCIAL SECURITY NUMBER REQUIRED FOR HOMESTEAD
APPLICATION.] Beginning with the January 2, 1987, assessment,
every property owner applying for homestead classification must
furnish to the county assessor that owner's social security or
taxpayer identification number. If the social security or
taxpayer identification number is not provided, the county
assessor shall classify the property as nonhomestead. The
social security numbers of the property owners are private data
on individuals as defined by section 13.02, subdivision 12, but,
notwithstanding that section, the private data may be disclosed
to the commissioner of revenue.
At the request of the commissioner, each county must give
the commissioner a listing that includes the name and social
security or taxpayer identification number of each property
owner applying for homestead classification.
If, in comparing the lists supplied by the counties, the
commissioner finds that a property owner is claiming more than
one homestead, the commissioner shall notify the appropriate
counties. Within 90 days of the notification, the county
assessor shall investigate to determine if the homestead
classification was properly claimed. If the property owner does
not qualify, the county assessor shall notify the county auditor
who will determine the amount of homestead benefits that had
been improperly allowed. For the purpose of this section,
"homestead benefits" means the tax reduction resulting from the
homestead credit exemption amount provided under section
275.081, taconite homestead credit, supplemental homestead
credit, and the the tax reduction resulting from agricultural
school credit which is in excess of the credit which would be
allowed if the property had been classified as nonhomestead
property exemption amount provided in section 275.081. The
county auditor shall send a notice to the owners of the affected
property, demanding reimbursement of the homestead benefits plus
a penalty equal to 25 percent of the homestead benefits. The
property owners may appeal the county's determination by filing
a notice of appeal with the Minnesota tax court within 60 days
of the date of the notice from the county.
If the amount of homestead benefits and penalty is not paid
within 60 days, and if no appeal has been filed, the county
auditor shall certify the amount to the succeeding year's tax
list to be collected as part of the property taxes.
Any amount of homestead benefits recovered from the
property owner must be transmitted to the commissioner by the
end of each calendar quarter. Any amount recovered attributable
to taconite homestead credit shall be transmitted to the St.
Louis county auditor to be deposited in the taconite property
tax relief account. The amount of penalty collected must be
deposited in the county general fund.
The commissioner will provide suggested homestead
applications to each county. If a property owner has applied
for more than one homestead and the county assessors cannot
determine which property should be classified as homestead, the
county assessors will refer the information to the commissioner.
The commissioner shall make the determination and notify the
counties within 60 days.
In addition to lists of homestead properties, the
commissioner may ask the counties to furnish lists of all
properties and the record owners.
Sec. 18. Minnesota Statutes 1986, section 273.13,
subdivision 15a, is amended to read:
Subd. 15a. [GENERAL FUND, REPLACEMENT OF REVENUE.] (1)
Payment from the general fund shall be made, as provided herein,
for the purpose of replacing revenue lost as a result of the
reduction of property taxes provided in subdivisions 22 and
subdivision 23.
(2) Each county auditor shall certify, not later than May 1
of each year to the commissioner of revenue the amount of
reduction resulting from subdivisions 22 and subdivision 23 in
the auditor's county. This certification shall be submitted to
the commissioner of revenue as part of the abstracts of tax
lists required to be filed with the commissioner under the
provisions of section 275.29. Any prior year adjustments shall
also be certified in the abstracts of tax lists. The
commissioner of revenue shall review such certifications to
determine their accuracy. The commissioner may make such
changes in the certification as are deemed necessary or return a
certification to the county auditor for corrections.
(3) Based on current year tax data reported in the
abstracts of tax lists, the commissioner of revenue shall
annually determine the taxing district distribution of the
amounts certified under clause (2). The commissioner of revenue
shall pay to each taxing district, other than school districts,
its total payment for the year in equal installments on or
before July 15 and December 15 of each year.
Sec. 19. Minnesota Statutes 1986, section 273.13,
subdivision 22, is amended to read:
Subd. 22. [CLASS 1.] (a) Except as provided in subdivision
23, real estate which is residential and used for homestead
purposes is class 1. The market value of class 1a 1 property
must be determined based upon the value of the house, garage,
and land.
The first $64,000 $68,000 of market value of class 1a 1
property must be assessed at 18 37 percent of its market value.
The homestead value of class 1a 1 property that exceeds
$64,000 $68,000 must be assessed at 28 60 percent of its value.
(b) Class 1b property includes real estate or manufactured
homes used for the purposes of a homestead by
(1) any blind person, if the blind person is the owner
thereof or if the blind person and the blind person's spouse are
the sole owners thereof; or
(2) any person, hereinafter referred to as "veteran," who:
(i) served in the active military or naval service of the
United States; and
(ii) is entitled to compensation under the laws and
regulations of the United States for permanent and total
service-connected disability due to the loss, or loss of use, by
reason of amputation, ankylosis, progressive muscular
dystrophies, or paralysis, of both lower extremities, such as to
preclude motion without the aid of braces, crutches, canes, or a
wheelchair; and
(iii) with assistance by the administration of veterans
affairs has acquired a special housing unit with special
fixtures or movable facilities made necessary by the nature of
the veteran's disability, or the surviving spouse of the
deceased veteran for as long as the surviving spouse retains the
special housing unit as a homestead; or
(3) any person who:
(i) is permanently and totally disabled and
(ii) receives 90 percent or more of total income from
(A) aid from any state as a result of that disability; or
(B) supplemental security income for the disabled; or
(C) workers' compensation based on a finding of total and
permanent disability; or
(D) social security disability, including the amount of a
disability insurance benefit which is converted to an old age
insurance benefit and any subsequent cost of living increases;
or
(E) aid under the Federal Railroad Retirement Act of 1937,
United States Code Annotated, title 45, section 228b(a)5; or
(F) a pension from any local government retirement fund
located in the state of Minnesota as a result of that disability.
Property is classified and assessed pursuant to clause (1)
only if the commissioner of human services certifies to the
assessor that the owner of the property satisfies the
requirements of this subdivision. The commissioner of human
services shall provide a copy of the certification to the
commissioner of revenue.
Class 1b property is valued and assessed as follows: in
the case of agricultural land, including a manufactured home,
used for a homestead, the first $32,000 of market value shall be
valued and assessed at five percent, the next $32,000 of market
value shall be valued and assessed at 14 percent, and the
remaining market value shall be valued and assessed at 18
percent; and in the case of all other real estate and
manufactured homes, the first $32,000 of market value shall be
valued and assessed at five percent, the next $32,000 of market
value shall be valued and assessed at 18 percent, and the
remaining market value shall be valued and assessed at 28
percent. In the case of agricultural land including a
manufactured home used for purposes of a homestead, the
commissioner of revenue shall adjust, as provided in section
273.1311, the maximum amount of the market value of the
homestead brackets subject to the five percent and 18 percent
rates; and for all other real estate and manufactured homes, the
commissioner of revenue shall adjust, as provided in section
273.1311, the maximum amount of the market value of the
homestead brackets subject to the five percent and 18 percent
rates. Permanently and totally disabled for the purpose of this
subdivision means a condition which is permanent in nature and
totally incapacitates the person from working at an occupation
which brings the person an income.
(c) Class 1c property is commercial use real property that
abuts a lakeshore line and is devoted to temporary and seasonal
residential occupancy for recreational purposes but not devoted
to commercial purposes for more than 200 days in the year
preceding the year of assessment, and that includes a portion
used as a homestead by the owner. It must be assessed at 12
percent of market value with the following limitation: the area
of the property must not exceed 100 feet of lakeshore footage
for each cabin or campsite located on the property up to a total
of 800 feet and 500 feet in depth, measured away from the
lakeshore.
(d) The tax to be paid on class 1a or class 1b property,
less any reduction received pursuant to sections 273.123 and
473H.10, shall be reduced by 54 percent of the tax imposed on
the first $68,000 of market value. The amount of the reduction
shall not exceed $700.
Sec. 20. Minnesota Statutes 1986, section 273.13,
subdivision 23, is amended to read:
Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural
land that is homesteaded, together with the house and garage.
The first $64,000 $66,000 of market value of an agricultural
homestead is valued at 14 30 percent. The remaining value of
class 2a property is assessed at 18 40 percent of market value.
Noncontiguous land shall constitute class 2a only if the
homestead is classified as class 2a and the detached land is
located in the same township or city or not farther than two
townships or cities or combination thereof from the homestead.
Agricultural land used for purposes of a homestead and
actively farmed by a person holding a vested remainder interest
in it must be classified class 2a. If agricultural land is
classified class 2a, any other dwellings on the land used for
purposes of a homestead by persons holding vested remainder
interests who are actively engaged in farming the property, and
up to one acre of the land surrounding each homestead and
reasonably necessary for the use of the dwelling as a home, must
also be assessed class 2a and is entitled to the homestead
credit.
The tax to be paid on class 2a property, less any reduction
received pursuant to sections 124.2137, 273.123, and 473H.10
shall be reduced by 54 52 percent of the tax. The amount of the
reduction shall not exceed $700.
(b) Class 2b property is (1) real estate, rural in
character and used exclusively for growing trees for timber,
lumber, and wood and wood products. It is assessed at 18
percent of market value.
(c) Class 2c Property is; and (2) real estate that is
nonhomestead agricultural land. It Class 2b property is
assessed at 18 40 percent of market value.
Agricultural land as used in this section shall mean
contiguous acreage of ten acres or more, primarily used during
the preceding year for agricultural purposes. Agricultural use
may include pasture, timber, waste, unusable wild land and land
included in federal farm programs.
Real estate of less than ten acres used principally for
raising poultry, livestock, fruit, vegetables or other
agricultural products, shall be considered as agricultural land,
if it is not used primarily for residential purposes.
The assessor shall determine and list separately on the
records the market value of the homestead dwelling and the one
acre of land on which that dwelling is located. If any farm
buildings or structures are located on this homesteaded acre of
land, their market value shall not be included in this separate
determination.
Sec. 21. Minnesota Statutes 1986, section 273.13,
subdivision 24, is amended to read:
Subd. 24. [CLASS 3.] (a) Commercial and industrial
property is class 3a. It is assessed at 28 60 percent of the
first $60,000 $80,000 of market value and 43 96 percent for
of the market value over $60,000 $80,000. In the case of
state-assessed commercial or industrial property owned by one
person or entity, only one parcel may qualify for the 28 60
percent assessment. In the case of other commercial or
industrial property owned by one person or entity, only one
parcel in each county may qualify for the 28 60 percent
assessment.
(b) Employment property defined in section 273.1313, during
the period provided in section 273.1313, shall constitute class
3b and shall be valued and assessed at 20 45 percent of the
first $50,000 of market value and 21.5 50 percent of the
remainder, except that for employment property located in an
enterprise zone designated pursuant to section 273.1312,
subdivision 4, paragraph (c), clause (3), the first
$60,000 $80,000 of market value shall be valued and assessed
at 28 60 percent and the remainder shall be assessed and valued
at 38.5 86 percent, unless the governing body of the city
designated as an enterprise zone determines that a specific
parcel shall be assessed pursuant to the first clause of this
sentence. The governing body may provide for assessment under
the first clause of the preceding sentence only for property
which is located in an area which has been designated by the
governing body for the receipt of tax reductions authorized by
section 273.1314, subdivision 9, paragraph (a).
(c) Real property which is not improved with a structure
and which is not utilized as part of a commercial or industrial
activity shall constitute class 3c and shall be valued and
assessed at 40 percent of market value.
Sec. 22. Minnesota Statutes 1986, section 273.13,
subdivision 25, is amended to read:
Subd. 25. [CLASS 4.] (a) Class 4a is residential real
estate containing four or more units and used or held for use by
the owner or by the tenants or lessees of the owner as a
residence for rental periods of 30 days or more. Class 4a also
includes hospitals licensed under sections 144.50 to 144.56,
other than hospitals exempt under section 272.02, and contiguous
property used for hospital purposes, without regard to whether
the property has been platted or subdivided. Class 4a property
is assessed at 34 70 percent of market value.
(b) Class 4b is tools, implements, and machinery of an
electric generating, transmission, or distribution system or a
pipeline system transporting or distributing water, gas, crude
oil, or petroleum products or mains and pipes used in the
distribution of steam or hot or chilled water for heating or
cooling buildings, which are fixtures. Class 4b property is
assessed at 33-1/3 percent of market value.
(b) Class 4b includes:
(1) residential real estate containing less than four
units, other than seasonal residential, recreational, and
homesteads;
(2) post-secondary student housing not to exceed one acre
of land which is owned by a nonprofit corporation organized
under chapter 317 and is used exclusively by a sorority or
fraternity organization for housing;
(3) manufactured homes not classified under any other
provision; and
(4) a dwelling, garage, and surrounding one acre of
property on a nonhomestead farm classified under subdivision 23,
paragraph (b).
Class 4b property is assessed at 60 percent for taxes
levied in 1988, payable in 1989 and thereafter.
(c) Class 4c property includes:
(1) a structure that is situated on real property that is
used for housing for the elderly or for low and moderate income
families as defined by Title II of the National Housing Act or
the Minnesota housing finance agency law of 1971 or rules
promulgated by the agency pursuant thereto and financed by a
direct federal loan or federally insured loan or a loan made by
the Minnesota housing finance agency pursuant to the provisions
of either of those acts and acts amendatory thereof. This
clause applies only to property of a nonprofit or limited
dividend entity. Property is classified as class 4c under this
clause for 15 years from the date of the completion of the
original construction or substantial rehabilitation, or for the
original term of the loan;
(2) a structure that is:
(i) situated upon real property that is used for housing
lower income families or elderly or handicapped persons, as
defined in section 8 of the United States Housing Act of 1937,
as amended; and
(ii) owned by an entity which has entered into a housing
assistance payments contract under section 8 which provides
assistance for 100 percent of the dwelling units in the
structure, other than dwelling units intended for management or
maintenance personnel. Property is classified as class 4c under
this clause for the term of the housing assistance payments
contract, including all renewals, or for the term of its
permanent financing, whichever is shorter.
For all properties described in clauses (1) and (2) and in
paragraph (d), clause (2), the market value determined by the
assessor must be based on the normal approach to value using
normal unrestricted rents.
(3) a parcel of land, not to exceed one acre, and its
improvements or a parcel of unimproved land, not to exceed one
acre, if it is owned by a neighborhood real estate trust and at
least 60 percent of the dwelling units, if any, on all land
owned by the trust are leased to or occupied by lower income
families or individuals. This clause does not apply to any
portion of the land or improvements used for nonresidential
purposes. For purposes of this clause, a lower income family is
a family with an income that does not exceed 65 percent of the
median family income for the area, and a lower income individual
is an individual whose income does not exceed 65 percent of the
median individual income for the area, as determined by the
United States Secretary of Housing and Urban Development. For
purposes of this clause, "neighborhood real estate trust" means
an entity which is certified by the governing body of the
municipality in which it is located to have the following
characteristics: (a) it is a nonprofit corporation organized
under chapter 317; (b) it has as its principal purpose providing
housing for lower income families in a specific geographic
community designated in its articles or bylaws; (c) it limits
membership with voting rights to residents of the designated
community; and (d) it has a board of directors consisting of at
least seven directors, 60 percent of whom are members with
voting rights and, to the extent feasible, 25 percent of whom
are elected by resident members of buildings owned by the trust;
and
(4) except as provided in paragraph (d), clause (1), real
property devoted to temporary and seasonal residential occupancy
for recreation purposes, including real property devoted to
temporary and seasonal residential occupancy for recreation
purposes and not devoted to commercial purposes for more than
200 days in the year preceding the year of assessment. For this
purpose, property is devoted to commercial use on a specific day
if it is used, or offered for use, and a fee is charged for the
use. Class 4c also includes commercial use real property used
exclusively for recreational purposes in conjunction with class
4c property devoted to temporary and seasonal residential
occupancy for recreational purposes, up to a total of two acres,
provided the property is not devoted to commercial recreational
use for more than 200 days in the year preceding the year of
assessment and is located within two miles of the class 4c
property with which it is used. Class 4c property also includes
the remainder of class 4d resorts; and
(5) real property up to a maximum of one acre of land owned
by a nonprofit community service oriented organization; provided
that the property is not used for a revenue-producing activity
for more than six days in the calendar year preceding the year
of assessment and the property is not used for residential
purposes on either a temporary or permanent basis. For purposes
of this clause, a "nonprofit community service oriented
organization" means any corporation, society, association,
foundation, or institution organized and operated exclusively
for charitable, religious, fraternal, civic, or educational
purposes, and which is exempt from federal income taxation
pursuant to section 501(c)(3), (10), or (19) of the Internal
Revenue Code of 1986, as amended through December 31, 1986. For
purposes of this clause, "revenue-producing activities" shall
include but not be limited to property or that portion of the
property that is used as an on-sale intoxicating liquor or
nonintoxicating malt liquor establishment licensed under chapter
340A, a restaurant open to the public, bowling alley, a retail
store, gambling conducted by organizations licensed under
chapter 349, an insurance business, or office or other space
leased or rented to a lessee who conducts a for-profit
enterprise on the premises. Any portion of the property which
is used for revenue-producing activities for more than six days
in the calendar year preceding the year of assessment shall be
assessed as class 3a. The use of the property for social events
open exclusively to members and their guests for periods of less
than 24 hours, when an admission is not charged nor any revenues
are received by the organization shall not be considered a
revenue-producing activity; and
Class 4c property is assessed at 50 percent.
(d) Class 4d property includes:
(1) commercial use real property that abuts a lakeshore
line and is devoted to temporary and seasonal residential
occupancy for recreational purposes but not devoted to
commercial purposes for more than 200 days in the year preceding
the year of assessment, and that includes a portion used as a
homestead by the owner. The area of the property that is
classified as class 4d must not exceed 100 feet of lakeshore
footage for each cabin or campsite located on the property up to
a total of 800 feet and 500 feet in depth, measured away from
the lakeshore;
(2) any structure:
(i) situated on real property that is used for housing for
the elderly or for low and moderate income families as defined
by the farmers home administration;
(ii) located in a municipality of less than 10,000
population; and
(iii) financed by a direct loan or insured loan from the
farmers home administration. Property must be assessed under
this clause for 15 years from the date of the completion of the
original construction or for the original term of the loan.
The 30 percent and 50 percent assessment ratios apply to
the properties described in paragraph (c), clauses (1) and (2)
and this clause, only in proportion to occupancy of the
structure by elderly or handicapped persons or low and moderate
income families as defined in the applicable laws unless
construction of the structure had been commenced prior to
January 1, 1984; or the project had been approved by the
governing body of the municipality in which it is located prior
to June 30, 1983; or financing of the project had been approved
by a federal or state agency prior to June 30, 1983.
Classification under this clause is only available to property
of a nonprofit or limited dividend entity; and
(3) the first $34,000 of market value of real estate or
manufactured homes used for the purposes of a homestead by
(i) any blind person, if the blind person is the owner
thereof or if the blind person and the blind person's spouse are
the sole owners thereof; or
(ii) any person, hereinafter referred to as "veteran," who:
(A) served in the active military or naval service of the
United States; and
(B) is entitled to compensation under the laws and
regulations of the United States for permanent and total
service-connected disability due to the loss, or loss of use, by
reason of amputation, ankylosis, progressive muscular
dystrophies, or paralysis, of both lower extremities, such as to
preclude motion without the aid of braces, crutches, canes, or a
wheelchair; and
(C) with assistance by the administration of veterans
affairs has acquired a special housing unit with special
fixtures or movable facilities made necessary by the nature of
the veteran's disability, or the surviving spouse of the
deceased veteran for as long as the surviving spouse retains the
special housing unit as a homestead; or
(iii) any person who:
(A) is permanently and totally disabled and
(B) receives 90 percent or more of total income from
(1) aid from any state as a result of that disability; or
(2) supplemental security income for the disabled; or
(3) workers' compensation based on a finding of total and
permanent disability; or
(4) social security disability, including the amount of a
disability insurance benefit which is converted to an old age
insurance benefit and any subsequent cost of living increases;
or
(5) aid under the Federal Railroad Retirement Act of 1937,
United States Code Annotated, title 45, section 228b(a)5; or
(6) a pension from any local government retirement fund
located in the state of Minnesota as a result of that disability.
Property is classified and assessed pursuant to this clause
only if the commissioner of human services certifies to the
assessor that the owner of the property satisfies the
requirements of this subdivision. The commissioner of human
services shall provide a copy of the certification to the
commissioner of revenue.
The remaining value of class 4(d)(3) property in excess of
$34,000 shall be valued and assessed under subdivision 22 or 23,
as appropriate, provided that only the value in excess of
$34,000 but not in excess of $68,000 is assessed at the rate
provided for the first tier of value in subdivision 22 or only
the value in excess of $34,000 but not in excess of $66,000 is
assessed at the rate provided for the first tier of value in
subdivision 23.
Class 4d property is assessed at 30 percent of market value.
Sec. 23. Minnesota Statutes 1986, section 273.13,
subdivision 31, is amended to read:
Subd. 31. [CLASS 10 5.] All property not included in any
other class is class 10 5 property and is assessed at 43 96
percent of market value.
Sec. 24. Minnesota Statutes 1986, section 273.1313,
subdivision 3, is amended to read:
Subd. 3. [CLASSIFICATION.] Property shall be classified as
employment property and assessed as provided for class 4d 3b
property in section 273.13, subdivision 24, paragraph (b), for
taxes levied in the year in which the classification is approved
and for the four succeeding years after the approval. If the
classification is revoked, the revocation is effective for taxes
levied in the next year after revocation.
Sec. 25. Minnesota Statutes 1986, section 273.135,
subdivision 2, is amended to read:
Subd. 2. The amount of the reduction authorized by
subdivision 1 shall be
(a) In the case of property located within the boundaries
of a municipality which meets the qualifications prescribed in
section 273.134, 66 percent of the net tax up to the taconite
breakpoint plus a percentage equal to the homestead credit
equivalency percentage of the net tax in excess of the taconite
breakpoint, provided that the reduction shall not exceed the
maximum amounts specified in clause (c).
(b) In the case of property located within the boundaries
of a school district which qualifies as a tax relief area but
which is outside the boundaries of a municipality which meets
the qualifications prescribed in section 273.134, 57 percent of
the net tax up to the taconite breakpoint plus a percentage
equal to the homestead credit equivalency percentage of the net
tax in excess of the taconite breakpoint, provided that the
reduction shall not exceed the maximum amounts specified in
clause (c).
(c) (1) The maximum reduction of the net tax up to the
taconite breakpoint is $225.40 on property described in clause
(a) and $200.10 on property described in clause (b), for taxes
payable in 1985. These maximum amounts shall increase by $15
times the quantity one minus the homestead credit equivalency
percentage per year for taxes payable in 1986 and subsequent
years.
(2) The total maximum reduction of the net tax on property
described in clause (a) is $490 for taxes payable in 1985. The
total maximum reduction for the net tax on property described in
clause (b) is $435 for taxes payable in 1985. These maximum
amounts shall increase by $15 per year for taxes payable in 1986
and thereafter.
For the purposes of this subdivision, "net tax" means the
tax on the property after deduction of any credit under section
273.13, subdivision 22 or 23, "taconite breakpoint" means the
lowest possible net tax for a homestead qualifying for the
maximum reduction pursuant to section 273.13, subdivision 22,
rounded to the nearest whole dollar, and "homestead credit
equivalency percentage" means a percentage equal to the
percentage reduction authorized in section 273.13, subdivision
22 before application of the credit payable under this section.
Sec. 26. Minnesota Statutes 1986, section 273.1391,
subdivision 2, is amended to read:
Subd. 2. The amount of the reduction authorized by
subdivision 1 shall be:
(a) In the case of property located within a school
district which does not meet the qualifications of section
273.134 as a tax relief area, but which is located in a county
with a population of less than 100,000 in which taconite is
mined or quarried and wherein a school district is located which
does meet the qualifications of a tax relief area, and provided
that at least 90 percent of the area of the school district
which does not meet the qualifications of section 273.134 lies
within such county, 57 percent of the net tax up to the taconite
breakpoint plus a percentage equal to the homestead credit
equivalency percentage of the net tax in excess of the taconite
breakpoint on qualified property located in the school district
that does not meet the qualifications of section 273.134,
provided that the amount of said reduction shall not exceed the
maximum amounts specified in clause (c). The reduction provided
by this clause shall only be applicable to property located
within the boundaries of the county described therein.
(b) In the case of property located within a school
district which does not meet the qualifications of section
273.134 as a tax relief area, but which is located in a school
district in a county containing a city of the first class and a
qualifying municipality, but not in a school district containing
a city of the first class or adjacent to a school district
containing a city of the first class unless the school district
so adjacent contains a qualifying municipality, 57 percent of
the net tax up to the taconite breakpoint plus a percentage
equal to the homestead credit equivalency percentage of the net
tax in excess of the taconite breakpoint, but not to exceed the
maximums specified in clause (c).
(c) (1) The maximum reduction of the net tax up to the
taconite breakpoint is $200.10 for taxes payable in 1985. This
maximum amount shall increase by $15 multiplied by the quantity
one minus the homestead credit equivalency percentage per year
for taxes payable in 1986 and subsequent years.
(2) The total maximum reduction of the net tax is $435 for
taxes payable in 1985. This total maximum amount shall increase
by $15 per year for taxes payable in 1986 and thereafter.
For the purposes of this subdivision, "net tax" means the
tax on the property after deduction of any credit under section
273.13, subdivision 22 or 23, "taconite breakpoint" means the
lowest possible net tax for a homestead qualifying for the
maximum reduction pursuant to section 273.13, subdivision 22,
rounded to the nearest whole dollar, and "homestead credit
equivalency percentage" means a percentage equal to the
percentage reduction authorized in section 273.13, subdivision
22 before application of the credit under this section.
Sec. 27. Minnesota Statutes 1986, section 273.1392, is
amended to read:
273.1392 [PAYMENT; AIDS TO SCHOOL DISTRICTS.]
The amounts of homestead credit under section 273.13,
subdivisions 22 and 23; wetlands credit and reimbursement under
section 273.115; native prairie credit and reimbursement under
section 273.116; disaster or emergency reimbursement under
section 273.123; attached machinery aid under section 273.138;
homestead credit replacement aid under section 273.1394;
agricultural credit replacement aid under section 273.1395; and
metropolitan agricultural preserve reduction under section
473H.10, shall be certified to the department of education by
the department of revenue. The amounts so certified shall be
paid according to section 124.195, subdivisions 6 and 10.
Sec. 28. Minnesota Statutes 1986, section 273.1393, is
amended to read:
273.1393 [COMPUTATION OF NET PROPERTY TAXES.]
Notwithstanding any other provisions to the contrary, "net"
property taxes are determined by subtracting the credits in the
order listed from the gross tax:
(1) disaster credit as provided in section 273.123;
(2) wetlands credit as provided in section 273.115;
(3) native prairie credit as provided in section 273.116;
(4) powerline credit as provided in section 273.42;
(5) (3) agricultural preserves credit as provided in
section 473H.10;
(6) (4) enterprise zone credit as provided in section
273.1314;
(7) state school agricultural credit as provided in section
124.2137;
(8) (5) state paid homestead credit as provided in section
273.13, subdivisions 22 and subdivision 23;
(9) (6) taconite homestead credit as provided in section
273.135;
(10) (7) supplemental homestead credit as provided in
section 273.1391.
The combination of all property tax credits must not exceed
the gross tax amount.
Sec. 29. [273.1394] [HOMESTEAD CREDIT REPLACEMENT AID.]
Subdivision 1. [PAYMENT.] There shall be paid to each
taxing jurisdiction in 1989 and subsequent years a homestead
credit replacement aid, determined as provided in this section.
Subd. 2. [COMPUTATION.] (a) The initial aid will be
computed as follows:
(1) for aids paid in 1989 only, determine the amount of
homestead credit reimbursement that would have been paid to the
taxing jurisdiction in 1988 under Minnesota Statutes 1986,
section 273.13, subdivision 15a, on nonagricultural homesteads
in 1988 if the homestead credit percentage provided in Minnesota
Statutes 1986, section 273.13, subdivision 22, had been
determined by using a rate of 52 percent and as if there had
been no $700 maximum;
(2) for aids payable in 1990 and subsequent years, the
initial aid is the amount paid in the previous year; and
(3) for aids paid in 1988 only, the initial amount
determined under clause (1) for all taxing jurisdictions levying
within each school district shall be reapportioned among all
taxing jurisdictions in proportion to their share of the total
levy by all taxing jurisdictions in payable 1988.
(b) The amount determined in paragraph (a) shall be
multiplied by a fraction, the numerator of which is the ratio of
the estimated assessed value of the total homestead base value
of nonagricultural homesteads in the taxing jurisdiction for the
current assessment year to the estimated total assessed value of
all property within the taxing jurisdiction for the current
assessment year, and the denominator of which is the ratio of
the estimated assessed value of the total homestead base value
of nonagricultural homesteads in the taxing jurisdiction for the
previous assessment year to the estimated total assessed value
of all property within the taxing jurisdiction for the previous
assessment year. The county auditor shall certify the estimated
assessed value of the total homestead base value and the total
homestead exemption amount, of nonagricultural homesteads and
the estimated assessed value of all property in the taxing
jurisdiction as of July 15 to the commissioner of revenue.
(c) for aids paid in 1989 and thereafter, the amounts
determined under paragraph (b) shall be adjusted as follows:
(i) for cities, towns, and special taxing districts,
multiply the amount by one plus the implicit price deflator as
defined in section 275.50, subdivision 8;
(ii) for counties, multiply the amount by the following
factors: first, by the ratio of the total county levy, except
the sum of the levy for income maintenance not including
administrative costs plus the levy for social services, to the
total county levy multiplied by one plus the implicit price
deflator as defined in section 275.50, subdivision 8; second, by
the ratio of the sum of the levy for income maintenance, not
including administrative costs plus the social service levy of
the county to the total county levy multiplied by the estimated
increase in county social service costs and income maintenance
program costs, not including income maintenance administrative
costs; as used in this subclause (ii), "levy" means the levy for
taxes payable in the year preceding the year in which the aid is
paid;
(iii) for school districts, multiply the amount by the
ratio of the school district's levy limit, exclusive of any
referendum levy authorized under section 124A.03, subdivision 2,
for taxes payable in the preceding year to its levy limit for
taxes payable in the year in which the aid is paid exclusive of
any such referendum levy.
The county must certify actual social service and income
maintenance levies to the commissioner of revenue, who will
adjust the final aid amounts paid under this section and section
273.1395 accordingly.
Subd. 3. [PAYMENT.] The commissioner shall certify and pay
the homestead credit replacement aid at the times provided in
sections 477A.014 and 477A.015 for certification and payment of
local government aid to other taxing jurisdictions. Aids to
school districts must be certified to the commissioner of
education and paid pursuant to section 273.1392. Payment shall
not be made to any taxing jurisdiction that has ceased to levy a
property tax.
Subd. 4. [APPROPRIATION.] An amount sufficient to make the
payments required in this section is annually appropriated from
the general fund to the commissioner of revenue.
Sec. 30. [273.1395] [AGRICULTURAL CREDIT REPLACEMENT AID.]
Subdivision 1. [PAYMENT.] There shall be paid to each
taxing jurisdiction in 1989 and subsequent years an agricultural
credit replacement aid determined as provided in this section.
Subd. 2. [COMPUTATION.] (a) The initial aid will be
computed as follows:
(1) The amount of aid that would have been paid to a taxing
jurisdiction in 1988 pursuant to Minnesota Statutes 1986,
section 124.2137, if the aid paid to school districts under that
provision had been distributed among all taxing jurisdictions
containing property with respect to which the credit had been
paid in proportion to their share of the total levy by all
taxing jurisdictions in payable 1988. For aid payable in 1990
and subsequent years, the initial aid is the amount paid in the
previous year.
(2) An amount determined in clause (1) shall be multiplied
by a fraction, the numerator of which is the ratio of the
estimated assessed value of property qualifying for the
agricultural credit under Minnesota Statutes 1986, section
124.2137, in the taxing jurisdiction for the current assessment
year to the estimated total assessed value of all property
within the taxing jurisdiction for the current assessment year,
and the denominator of which is the ratio of the estimated
assessed value of property qualifying for the agricultural
credit under Minnesota Statutes 1986, section 124.2137, in the
taxing jurisdiction for the previous assessment year to the
estimated total assessed value of all property within the taxing
jurisdiction for the previous assessment year. The county
auditor shall certify the estimated assessed value of property
qualifying for the agricultural credit under Minnesota Statutes
1986, section 124.2137, and the estimated assessed value of all
property in the taxing jurisdiction as of July 15 to the
commissioner of revenue.
(b) For aids paid in 1989 and subsequent years, the amounts
determined in paragraph (a) would be adjusted according to the
formula provided in section 273.1394, subdivision 2, paragraph
(c).
Subd. 3. [CERTIFICATION AND PAYMENT.] The commissioner
shall certify and pay the agricultural credit replacement aid at
the times provided in sections 477A.014 and 477A.015 for
certification and payment of local government aid to other
taxing jurisdictions. Aids to school districts must be
certified to the commissioner of education and paid pursuant to
section 273.1392. Payment shall not be made to any special
taxing district that has ceased to levy a property tax.
Subd. 4. [APPROPRIATION.] An amount sufficient to make the
payments required in this section is annually appropriated from
the general fund to the commissioner of revenue.
Sec. 31. [273.1396] [TAX BASE ADJUSTMENT AID.]
Subdivision 1. [ADJUSTMENT.] There shall be added to or
subtracted from the aid paid to each taxing jurisdiction under
sections 273.1394, 273.1395, 477A.015, and chapter 124A an
amount determined under this section.
Subd. 2. [1989 COMPUTATION.] The amount shall be computed
for aids paid to each taxing jurisdiction in 1989 as follows:
(a) multiply the assessment ratios provided in section
273.13, for taxes payable in 1989 by 45 percent and redetermine
the assessed value of the taxing jurisdiction for taxes payable
in 1988 using the resulting ratios. Any recomputed captured
assessed value of a tax increment district as defined in section
273.73 would not be included in the assessed value of the taxing
jurisdiction. The recomputed assessed values would not be
adjusted to reflect any change in the effects of chapter 473F or
in assessed value pursuant to section 273.425 as a result of the
recomputation but would be adjusted for those values as
originally certified;
(b) subtract the amount determined in paragraph (a) from
the actual taxable assessed value of the taxing jurisdiction for
taxes payable in 1988, and multiply that amount by the actual
mill rate of the taxing jurisdiction for taxes payable in 1988;
(c) if the amount determined in paragraph (b) is positive,
it shall be added to the taxing jurisdiction's homestead credit
replacement aid under section 273.1394 or if no homestead credit
replacement aid is payable, granted as an additional aid. If
the amount determined in paragraph (b) is negative, it shall be
subtracted from the sum of the taxing jurisdiction's homestead
credit replacement aid under section 273.1394, and agricultural
credit replacement aid under section 273.1394. If the amount
determined in paragraph (b) is negative and is not totally
offset against the homestead and agricultural credit
reimbursement aid then the remainder shall be subtracted from a
taxing jurisdiction's local government aid paid under section
477A.015 and school aids paid under chapter 124A.
Subd. 3. [SUBSEQUENT COMPUTATIONS.] For aids paid under
sections 273.1394 and 273.1395 in 1990 and subsequent years, the
amount to be added or subtracted under this section shall be
equal to the amount determined under subdivision 2.
Subd. 4. [APPROPRIATION.] An amount sufficient to make the
payments required in this section is annually appropriated from
the general fund to the commissioner of revenue.
Sec. 32. Minnesota Statutes 1986, section 273.165,
subdivision 2, is amended to read:
Subd. 2. [IRON ORE.] Unmined iron ore included in class 9
5 must be assessed with and as a part of the real estate in
which it is located, but at the rate established in section
273.13, subdivision 30. The real estate in which iron ore is
located, other than the ore, must be classified and assessed in
accordance with the provisions of the appropriate classes. In
assessing any tract or lot of real estate in which iron ore is
known to exist, the assessable value of the ore exclusive of the
land in which it is located, and the assessable value of the
land exclusive of the ore must be determined and set down
separately and the aggregate of the two must be assessed against
the tract or lot.
Sec. 33. Minnesota Statutes 1986, section 273.37,
subdivision 2, is amended to read:
Subd. 2. Transmission lines of less than 69 kv,
transmission lines of 69 kv and above located in an unorganized
township, and distribution lines, and equipment attached
thereto, having a fixed situs outside the corporate limits of
cities except distribution lines taxed as provided in sections
273.40 and 273.41, shall be listed with and assessed by the
commissioner of revenue in the county where situated. The
commissioner shall assess such property at the percentage of
market value fixed by law; and, on or before the 15th day of
November, shall certify to the auditor of each county in which
such property is located the amount of the assessment made
against each company and person owning such property.
Sec. 34. Minnesota Statutes 1986, section 273.38, is
amended to read:
273.38 [PERCENTAGE OF ASSESSMENTS; EXCEPTIONS.]
The commissioner of revenue shall assess distribution
lines, and the attachments and appurtenances thereto, used
primarily for supplying electricity to farmers at retail, which
shall be taxed at the average rate of taxes levied for all
purposes throughout the county, and which shall be entered,
certified and credited as provided in section 273.42. It is
further provided that The distribution lines and the attachments
and appurtenances thereto of cooperative associations organized
under the provisions of Laws 1923, chapter 326, and laws
amendatory thereof and supplemental thereto, and engaged in the
electrical heat, light and power business, upon a mutual,
nonprofit and cooperative plan, shall be assessed and taxed as
provided in sections 273.40 and 273.41.
Sec. 35. Minnesota Statutes 1986, section 273.42,
subdivision 2, is amended to read:
Subd. 2. Owners of land defined as class 1a, 1b, 1c, 2a,
2c, 4a, 5a, or 6a, pursuant to that is an agricultural or
nonagricultural homestead, nonhomestead agricultural land,
rental residential property, and both commercial and
noncommercial seasonal residential recreational property, as
those terms are defined in section 273.13 listed on records of
the county auditor or county treasurer over which runs a high
voltage transmission line as defined in section 116C.52,
subdivision 3, except a high voltage transmission line the
construction of which was commenced prior to July 1, 1974, shall
receive a property tax credit in an amount determined by
multiplying a fraction, the numerator of which is the length of
high voltage transmission line which runs over that parcel and
the denominator of which is the total length of that particular
line running over all property within the city or township by
ten percent of the transmission line tax revenue derived from
the tax on that portion of the line within the city or township
pursuant to section 273.36. In the case of property owners in
unorganized townships, the property tax credit shall be
determined by multiplying a fraction, the numerator of which is
the length of the qualifying high voltage transmission line
which runs over the parcel and the denominator of which is the
total length of the qualifying high voltage transmission line
running over all property within all the unorganized townships
within the county, by the total utility property tax credit fund
amount available within the county for that year pursuant to
subdivision 1. Where a right-of-way width is shared by more
than one property owner, the numerator shall be adjusted by
multiplying the length of line on the parcel by the proportion
of the total width on the parcel owned by that property owner.
The amount of credit for which the property qualifies shall not
exceed 20 percent of the total gross tax on the parcel prior to
deduction of the state paid agricultural credit and the state
paid homestead credit, provided that, if the property containing
the right-of-way is included in a parcel which exceeds 40 acres,
the total gross tax on the parcel shall be multiplied by a
fraction, the numerator of which is the sum of the number of
acres in each quarter-quarter section or portion thereof which
contains a right-of-way and the denominator of which is the
total number of acres in the parcel set forth on the tax
statement, and the maximum credit shall be 20 percent of the
product of that computation, prior to deduction of those
credits. The auditor of the county in which the affected parcel
is located shall calculate the amount of the credit due for each
parcel and transmit that information to the county treasurer.
The county auditor, in computing the credits credit received
pursuant to sections 273.13 and section 273.135, shall reduce
the gross tax by the amount of the credit received pursuant to
this section, unless the amount of the credit would be less than
$10.
If, after the county auditor has computed the credit to
those qualifying property owners in unorganized townships, there
is money remaining in the utility property tax credit fund, then
that excess amount in the fund shall be returned to the general
school fund of the county.
Sec. 36. Minnesota Statutes 1986, section 275.07,
subdivision 1, is amended to read:
Subdivision 1. The taxes voted by cities, and towns, and
school districts shall be certified by the proper authorities to
the county auditor on or before October 10 in each year. The
taxes of a school district must be certified to the commissioner
of education by October 10 in each year. If a city, town,
county, school district or special district fails to certify its
levy by that date, its levy shall be the amount levied by it for
the preceding year. If the local unit notifies the commissioner
of revenue, or the commissioner of education in the case of a
school district, before October 10 of its inability to certify
its levy by that date, and the commissioner is satisfied that
the delay is unavoidable and is not due to the negligence of the
local unit's officials or staff, the commissioner shall extend
the time within which the local unit shall certify its levy.
Sec. 37. [275.081] [FARM AND HOMESTEAD VALUE EXEMPTION.]
Subdivision 1. [PROCEDURE.] After certification of
assessed valuations pursuant to section 274.04 and adjustments
pursuant to sections 270.13, 274.01, 274.08, 274.09, 274.12,
274.16, and 274.17, the county auditor shall reduce the assessed
value of each farm and homestead according to this section.
Subd. 2. [NONAGRICULTURAL HOMESTEADS.] The assessed value
of a nonagricultural homestead is reduced by 52 percent, but not
to exceed 52 percent of the assessed value of a class 1
homestead having an estimated market value of $68,000.
Subd. 3. [AGRICULTURAL HOMESTEADS.] The assessed value of
the first 320 acres of property classified as an agricultural
homestead is reduced by 36 percent of the assessed value of the
first 320 acres less the value of the homestead dwelling,
garage, and one acre on which the dwelling is situated. The
assessed value of the property in excess of 320 acres is reduced
by 26 percent of its assessed value.
Subd. 4. [NONHOMESTEAD FARMS AND TIMBERLAND.] The assessed
value of a nonhomestead farm, excluding the value of any
dwelling, garage, and one acre surrounding it, is reduced by 26
percent of its assessed value. For purposes of this section,
nonhomestead farms shall include timberlands.
Subd. 5. [SEASONAL RESIDENTIAL RECREATIONAL PROPERTY.] The
assessed value of noncommercial seasonal residential
recreational property is reduced by 15 percent, but not to
exceed 15 percent of the assessed value of a noncommercial
seasonal residential recreational property with $31,000 of
assessed value.
Sec. 38. [275.082] [COMPUTATION OF TAX ON PARCELS.]
Subdivision 1. [NONAGRICULTURAL HOMESTEADS.] For use in
taxing nonagricultural homesteads, a mill rate shall be computed
for each taxing jurisdiction based on the assessed value of
properties as reduced under section 275.081. The homestead
credit amount for each nonagricultural homestead shall be the
exemption amount computed under section 275.081, multiplied by
the total mill rate, and the gross tax is the sum of that credit
amount plus the net tax determined by multiplying the mill rate
by the assessed value of the property after subtraction of the
exemption amount.
Subd. 2. [AGRICULTURAL AND OTHER PROPERTY.] For use in
taxing agricultural homesteads, nonhomestead agricultural land,
timberland, and seasonal recreational property, the mill rate as
computed under subdivision 1 shall be applied to the assessed
value of the property after deduction of the exemption amount
computed under section 275.081. From that amount of tax on
agricultural homesteads there shall be deducted a homestead
credit in an amount equal to 52 percent of the tax on the
property, less any reduction received under sections 273.123 and
473H.10, but not to exceed $700.
Sec. 39. Minnesota Statutes 1986, section 275.125, is
amended by adding a subdivision to read:
Subd. 22. [AID ADJUSTMENT.] If a school district's aids
pursuant to chapter 124A or sections 273.1394 and 273.1395 for
the school year beginning following the levy year are reduced
pursuant to section 273.1396, then the district's levy limit
shall be increased by the amount of the reduction. If the
district's aids are increased pursuant to section 273.1396, then
its levy limit shall be reduced by the amount of the increase.
Sec. 40. Minnesota Statutes 1986, section 275.50,
subdivision 2, is amended to read:
Subd. 2. [GOVERNMENTAL SUBDIVISION.] (a) "Governmental
subdivision" means a county, home rule charter city, or
statutory city, except a home rule charter or statutory city
that has a population of less than 5,000 according to the most
recent federal census.
(b) "Governmental subdivision" also includes any city or
town that receives a distribution from the taconite municipal
aid account in the levy year.
Sec. 41. Minnesota Statutes 1986, section 275.51,
subdivision 3h, is amended to read:
Subd. 3h. [ADJUSTED LEVY LIMIT BASE.] For taxes levied in
1985 and thereafter 1988 and thereafter, the adjusted levy limit
base is equal to the levy limit base computed pursuant
to article 5, section 12, or subdivision 3f, increased by:
(a) a percentage equal to the percentage growth in the
implicit price deflator, or five three percent, whichever is
lesser;
(b) a percentage equal to the greater of the percentage
increases in population or in number of households, if any, for
the most recent 12-month period for which data is available,
using figures derived pursuant to subdivision 6;
(c) one-half of the amount levied as a special levy in the
previous year for paying the costs of municipal services
provided to new private industrial and nonresidential commercial
development pursuant to section 275.50, subdivision 5, clause
(m), if the special levy is discontinued;
(d) the amount of any permanent increase in the levy limit
base approved at a general or special election held during the
12-month period ending September 30 of the levy year, pursuant
to section 275.58, subdivisions 1 and 2; and
(e) the amount, if known, equal to the decrease in federal
revenue sharing allotment from the levy year to the year in
which the levy is payable; otherwise the amount equal to the
decrease in federal revenue sharing allotment in the levy year
as compared to the previous year if the levy base for the
previous year has not been adjusted for a decrease in federal
revenue sharing allotment.
Sec. 42. Minnesota Statutes 1986, section 276.04, is
amended to read:
276.04 [NOTICE OF RATES; PROPERTY TAX STATEMENTS.]
On receiving the tax lists from the county auditor, the
county treasurer shall, if directed by the county board, give
three weeks' published notice in a newspaper specifying the
rates of taxation for all general purposes and the amounts
raised for each specific purpose. The treasurer shall, whether
or not directed by the county board, cause to be printed on all
tax statements, or on an attachment, a tabulated statement of
the dollar amount due to each taxing authority from the parcel
of real property for which a particular tax statement is
prepared. The dollar amounts due the county, township or
municipality and school district shall be separately stated but
the amounts due other taxing districts, if any, may be
aggregated. The dollar amounts, including the dollar amount of
any special assessments, may be rounded to the nearest even
whole dollar. For purposes of this section whole odd-numbered
dollars may be adjusted to the next higher even-numbered
dollar. The statement shall include the following sentence,
printed in upper case letters in bold face print: "THE STATE OF
MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES. THE STATE
OF MINNESOTA REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND
REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT." The property tax
statements for manufactured homes and sectional structures taxed
as personal property shall contain the same information that is
required on the tax statements for real property. The county
treasurer shall mail to taxpayers statements of their personal
property taxes due, such statements to be mailed not later than
February 15 (except in the case of manufactured homes and
sectional structures taxed as personal property), statements of
the real property taxes due shall be mailed not later than
January 31; provided, that the validity of the tax shall not be
affected by failure of the treasurer to mail such statement.
The taxpayer is defined as the owner who is responsible for the
payment of the tax. Such real and personal property tax
statements shall contain the market value, as defined in section
272.03, subdivision 8, used in determining the tax. The
statement shall show the amount attributable to the decrease in
tax under section 275.082 attributable to Minnesota Statutes
1986, section 124.2137 as "state paid agricultural
credit amount" and the amount attributable to the decrease in
tax under section 275.082 attributable to Minnesota Statutes
1986, section 273.13, subdivisions 22 and 23 as "state paid
homestead credit amount." If so directed by the county board,
the treasurer shall visit places in the county as the treasurer
deems expedient for the purpose of receiving taxes and the
county board is authorized to pay the expenses of such visits
and of preparing duplicate tax lists. Failure to mail the tax
statement shall not be deemed a material defect to affect the
validity of any judgment and sale for delinquent taxes.
Sec. 43. Minnesota Statutes 1986, section 279.01,
subdivision 1, is amended to read:
Subdivision 1. Except as provided in subdivision 3, on May
16, of each year, with respect to property actually occupied and
used as a homestead by the owner of the property, a penalty of
three percent shall accrue and thereafter be charged upon all
unpaid taxes on real estate on the current lists in the hands of
the county treasurer, and a penalty of seven percent on
nonhomestead property, except that this penalty shall not accrue
until June 1 of each year on commercial use real property used
for seasonal residential recreational purposes and classified as
class 1c 4d or 6a 4c, and on other commercial use real property
classified as class 3a, provided that over 60 percent of the
gross income earned by the enterprise on the class 3a property
is earned during the months of May, June, July, and August. Any
property owner of such class 3a property who pays the first half
of the tax due on the property after May 15 and before June 1
shall attach an affidavit to the payment attesting to compliance
with the income provision of this subdivision. Thereafter, for
both homestead and nonhomestead property, on the 16th day of
each month, up to and including October 16 following, an
additional penalty of one percent for each month shall accrue
and be charged on all such unpaid taxes. When the taxes against
any tract or lot exceed $50, one-half thereof may be paid prior
to May 16; and, if so paid, no penalty shall attach; the
remaining one-half shall be paid at any time prior to October 16
following, without penalty; but, if not so paid, then a penalty
of four percent shall accrue thereon for homestead property and
a penalty of four percent on nonhomestead property. Thereafter,
for homestead property, on the 16th day of each month up to and
including December 16 following, an additional penalty of two
percent for each month shall accrue and be charged on all such
unpaid taxes. Thereafter, for nonhomestead property, on the
16th day of each month up to and including December 16
following, an additional penalty of four percent for each month
shall accrue and be charged on all such unpaid taxes. If
one-half of such taxes shall not be paid prior to May 16, the
same may be paid at any time prior to October 16, with accrued
penalties to the date of payment added, and thereupon no penalty
shall attach to the remaining one-half until October 16
following; provided, also, that the same may be paid in
installments as follows: One-fourth prior to March 16;
one-fourth prior to May 16; one-fourth prior to August 16; and
the remaining one-fourth prior to October 16, subject to the
aforesaid penalties. Where the taxes delinquent after October
16 against any tract or parcel exceed $100, upon resolution of
the county board, they may be paid in installments of not less
than 25 percent thereof, together with all accrued penalties and
costs, up to the next tax judgment sale, and after such payment,
penalties, interest, and costs shall accrue only on the sum
remaining unpaid. Any county treasurer who shall make out and
deliver or countersign any receipt for any such taxes without
including all of the foregoing penalties therein, shall be
liable to the county for the amount of such penalties.
Sec. 44. Minnesota Statutes 1986, section 279.06, is
amended to read:
279.06 [COPY OF LIST AND NOTICE.]
Within five days after the filing of such list, the court
administrator shall return a copy thereof to the county auditor,
with a notice prepared and signed by the court administrator,
and attached thereto, which may be substantially in the
following form:
State of Minnesota )
) ss.
County of ............... )
District Court
.......... Judicial District.
The state of Minnesota, to all persons, companies, or
corporations who have or claim any estate, right, title, or
interest in, claim to, or lien upon, any of the several parcels
of land described in the list hereto attached:
The list of taxes and penalties on real property for the
county of ............................... remaining delinquent
on the first Monday in January, 19....., has been filed in the
office of the court administrator of the district court of said
county, of which that hereto attached is a copy. Therefore,
you, and each of you, are hereby required to file in the office
of said court administrator, on or before the 20th day after the
publication of this notice and list, your answer, in writing,
setting forth any objection or defense you may have to the
taxes, or any part thereof, upon any parcel of land described in
the list, in, to, or on which you have or claim any estate,
right, title, interest, claim, or lien, and, in default thereof,
judgment will be entered against such parcel of land for the
taxes on such list appearing against it, and for all penalties,
interest, and costs. Based upon said judgment, the land shall
be sold to the state of Minnesota on the second Monday in May,
19... The period of redemption for all lands sold to the state
at a tax judgment sale shall be three years from the date of
sale to the state of Minnesota if the land is within an
incorporated area unless it is: (a) nonagricultural homesteaded
land as defined in section 273.13, subdivision 22; (b)
homesteaded agricultural land as defined in section 273.13,
subdivision 23, paragraph (a); or (c) seasonal recreational land
as defined in section 273.13, subdivision 22 25,
paragraph (c) (d)(1) or subdivision 27, paragraph (a) (c)(4), in
which event the period of redemption is five years from the date
of sale to the state of Minnesota.
The period of redemption for all other lands sold to the
state at a tax judgment sale shall be five years from the date
of sale.
Inquiries as to the proceedings set forth above can be made
to the county auditor of ..... county whose address is ..... .
(Signed) .............................................,
Court Administrator of the District Court of the County
of ....................................................
(Here insert list.)
The list referred to in the notice shall be substantially
in the following form:
List of real property for the county of
......................., on which taxes remain delinquent on the
first Monday in January, 19...:
Town of (Fairfield),
Township (40), Range (20),
Names (and
Current Filed
Addresses) for
the Taxpayers
and Fee Owners
and in Addition
Those Parties
Who Have Filed
Their Addresses Tax
Pursuant to Subdivision of Parcel Total Tax
section 276.041 Section Section Number and Penalty
$ cts.
John Jones S.E. 1/4 of S.W. 1/4 10 23101 2.20
(825 Fremont
Fairfield, MN
55000)
Bruce Smith That part of N.E. 1/4
(2059 Hand of S.W. 1/4 desc. as
Fairfield, follows: Beg. at the
MN 55000) S.E. corner of said
and N.E. 1/4 of S.W. 1/4;
Fairfield thence N. along the E.
State Bank line of said N.E. 1/4
(100 Main of S.W. 1/4 a distance
Street of 600 ft.; thence W.
Fairfield, parallel with the S.
MN 55000) line of said N.E. 1/4
of S.W. 1/4 a distance
of 600 ft.; thence S.
parallel with said E.
line a distance of 600
ft. to S. line of said
N.E. 1/4 of S.W. 1/4;
thence E. along said S.
line a distance of 600
ft. to the point of
beg. ............... 21 33211 3.15
As to platted property, the form of heading shall conform
to circumstances and be substantially in the following form:
City of (Smithtown)
Brown's Addition, or Subdivision
Names (and
Current Filed
Addresses) for
the Taxpayers
and Fee Owners
and in Addition
Those Parties
Who have Filed
Their Addresses Tax
Pursuant to Parcel Total Tax
section 276.041 Lot Block Number and Penalty
$ cts
John Jones 15 9 58243 2.20
(825 Fremont
Fairfield,
MN 55000)
Bruce Smith 16 9 58244 3.15
(2059 Hand
Fairfield,
MN 55000)
and
Fairfield
State Bank
(100 Main Street
Fairfield,
MN 55000)
The names, descriptions, and figures employed in
parentheses in the above forms are merely for purposes of
illustration.
The name of the town, township, range or city, and addition
or subdivision, as the case may be, shall be repeated at the
head of each column of the printed lists as brought forward from
the preceding column.
Errors in the list shall not be deemed to be a material
defect to affect the validity of the judgment and sale.
Sec. 45. Minnesota Statutes 1986, section 281.17, is
amended to read:
281.17 [PERIOD FOR REDEMPTION.]
The period of redemption for all lands sold to the state at
a tax judgment sale shall be three years from the date of sale
to the state of Minnesota if the land is within an incorporated
area unless it is: (a) nonagricultural homesteaded land as
defined in section 273.13, subdivision 22, (b) homesteaded
agricultural land as defined in section 273.13, subdivision 23,
paragraph (a), or (c) seasonal recreational land as defined in
section 273.13, subdivision 27 25, paragraph (a), (d)(1) or
subdivision 22, paragraph (c)(4), in which event the period of
redemption is five years from the date of sale to the state of
Minnesota.
The period of redemption for all other lands sold to the
state at a tax judgment sale shall be five years from the date
of sale.
Sec. 46. Minnesota Statutes 1986, 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 22 and 23, but after deductions made pursuant to
sections 124.2137, 273.115, 273.116, 273.135, 273.1391, 273.42,
subdivision 2, and any other state paid property tax credits in
any calendar year. In the case of a claimant who makes ground
lease payments, "property taxes payable" includes the amount of
the payments directly attributable to the property taxes
assessed against the parcel on which the house is located. 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 274.19, subdivision 8, "property taxes payable" shall
also include the amount of the gross rent paid in the preceding
year for the site on which the homestead is located, which is
attributable to the net tax paid on the site. The amount
attributable to property taxes shall be determined by
multiplying the net tax on the parcel by a fraction, the
numerator of which is the gross rent paid for the calendar year
for the site and the denominator of which is the gross rent paid
for the calendar year for the parcel. When a homestead is owned
by two or more persons as joint tenants or tenants in common,
such tenants shall determine between them which tenant may claim
the property taxes payable on the homestead. If they are unable
to agree, the matter shall be referred to the commissioner of
revenue whose decision shall be final. Property taxes are
considered payable in the year prescribed by law for payment of
the taxes.
In the case of a claim relating to "property taxes
payable," the claimant must have owned and occupied the
homestead on January 2 of the year in which the tax is payable
and (i) the property must have been classified as homestead
property pursuant to section 273.13, subdivision 22 or 23 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 October 1 of the year in
which the "property taxes payable" were payable and that the
assessor has approved the application.
Sec. 47. Minnesota Statutes 1986, section 290A.03,
subdivision 14, is amended to read:
Subd. 14. [NET TAX.] "Net tax" means
(a) the property tax, exclusive of special assessments,
interest, and penalties, and after reduction for any state paid
property tax credits as required in subdivision 13 except for
the reduction pursuant to section 273.13, subdivisions 22 and
23, or
(b) the payments made in lieu of ad valorem taxes,
including payments of special assessments imposed in lieu of ad
valorem taxes,
for the calendar year in which the rent was paid. If a
portion of the property is occupied as a homestead or is used
for other than rental purposes, the net tax shall be the amount
of tax reduced by the percentage that the nonrental use
comprises of the total square footage of the building. If a
portion of the property is used for purposes other than for
residential rental and none of the property is occupied as a
homestead, the net tax shall be the amount of the tax of the
parcel multiplied by a fraction, the numerator of which is the
assessed value of the residential rental portion and the
denominator of which is the total assessed value of the parcel.
If a portion of the property is used for other than rental
residential purposes, the county treasurer shall list on the
property tax statement the amount of net tax pertaining to the
rental residential portion of the property.
The amount of the net tax shall not be reduced by an
abatement or a court ordered reduction in the property tax on
the property made after the certificate of rent constituting
property tax has been provided to the renter.
Sec. 48. Minnesota Statutes 1986, section 290A.04,
subdivision 2, is amended to read:
Subd. 2. A claimant whose property taxes payable or rent
constituting property taxes are in excess of the percentage of
the household income stated below shall pay an amount equal to
the percent of income shown for the appropriate household income
level along with the percent to be paid by the claimant of the
remaining amount of property taxes payable or rent constituting
property taxes. The state refund will be equal to the amount of
property taxes payable or rent constituting property taxes that
remain, up to the state refund amount shown below.
Percent Percent Maximum
Household Income of Income Paid by State
Claimant Refund
Net loss and
up to $2,999 1.0 percent 5 percent $1,125
3,000 to 3,499 1.0 percent 6 percent $1,125
3,500 to 3,999 1.0 percent 7 percent $1,125
4,000 to 4,499 1.0 percent 8 percent $1,125
4,500 to 4,999 1.0 percent 9 percent $1,125
5,000 to 5,999 1.0 percent 10 percent $1,125
6,000 to 6,999 1.0 percent 11 percent $1,125
7,000 to 7,999 1.0 percent 12 percent $1,125
8,000 to 8,999 1.1 percent 13 percent $1,125
9,000 to 9,999 1.2 percent 14 percent $1,125
10,000 to 10,999 1.3 percent 15 percent $1,125
11,000 to 11,999 1.4 percent 16 percent $1,125
12,000 to 12,999 1.5 percent 17 percent $1,125
13,000 to 13,999 1.5 percent 18 percent $1,125
14,000 to 14,999 1.5 percent 19 percent $1,125
15,000 to 15,999 1.5 percent 20 percent $1,125
16,000 to 16,999 1.5 percent 21 percent $1,125
17,000 to 17,999 1.5 percent 22 percent $1,125
18,000 to 18,999 1.5 percent 23 percent $1,125
19,000 to 19,999 1.5 percent 24 percent $1,125
20,000 to 20,999 1.6 percent 25 percent $1,125
21,000 to 21,999 1.6 percent 27 percent $1,125
22,000 to 22,999 1.6 percent 29 percent $1,125
23,000 to 23,999 1.8 percent 31 percent $1,125
24,000 to 24,999 1.8 percent 33 percent $1,105
25,000 to 25,999 1.8 percent 35 percent $1,080
26,000 to 26,999 2.0 percent 38 percent $1,050
27,000 to 27,999 2.0 percent 41 percent $1,020
28,000 to 28,999 2.0 percent 44 percent $ 990
29,000 to 29,999 2.0 percent 47 percent $ 960
30,000 to 30,999 2.0 percent 50 percent $ 930
31,000 to 31,999 2.2 percent 50 percent $ 900
32,000 to 32,999 2.2 percent 50 percent $ 800
33,000 to 33,999 2.2 percent 50 percent $ 700
34,000 to 34,999 2.2 percent 50 percent $ 600
35,000 to 35,999 2.2 percent 50 percent $ 500
36,000 to 36,999 2.4 percent 50 percent $ 400
37,000 to 37,999 2.4 percent 50 percent $ 300
38,000 to 38,999 2.4 percent 50 percent $ 200
39,000 to 39,999 2.4 percent 50 percent $ 100
40,000 and over 2.4 percent 50 percent -0-
The payment made to a claimant shall be the amount of the
state refund calculated pursuant to this subdivision, less the
homestead credit given pursuant to section 273.13, subdivisions
22 and 23. No payment is allowed if the claimant's household
income is $40,000 or more.
Sec. 49. Minnesota Statutes 1986, section 473.446,
subdivision 1, is amended to read:
Subdivision 1. [TAXATION WITHIN TRANSIT TAXING DISTRICT.]
For the purposes of sections 473.401 to 473.451 and the
metropolitan transit system, except as otherwise provided in
this subdivision the regional transit board shall levy each year
upon all taxable property within the metropolitan transit taxing
district, defined in subdivision 2, a transit tax consisting of:
(a) an amount up to two mills times the assessed value of
all such property, based upon the level of transit service
provided for the property, the proceeds of which shall be used
for payment of the expenses of operating transit and paratransit
service and to provide for payment of obligations issued by the
commission under section 473.436, subdivision 6;
(b) an additional amount, if any, as the board determines
to be necessary to provide for the full and timely payment of
its certificates of indebtedness and other obligations
outstanding on July 1, 1985, to which property taxes under this
section have been pledged; and
(c) an additional amount necessary to provide full and
timely payment of certificates of indebtedness, bonds, or other
obligations issued or to be issued under section 473.39 by the
council for purposes of acquisition and betterment of property
and other improvements of a capital nature and to which the
council or board has specifically pledged tax levies under this
clause.
The county auditor shall reduce the tax levied pursuant to
this subdivision on all property within statutory and home rule
charter cities and towns that receive full peak service and
limited off-peak service by an amount equal to the tax levy that
would be produced by applying a rate of 0.5 mills on the
property. The county auditor shall reduce the tax levied
pursuant to this subdivision on all property within statutory
and home rule charter cities and towns that receive limited peak
service by an amount equal to the tax levy that would be
produced by applying a rate of 0.75 mills on the property. The
amounts so computed by the county auditor shall be submitted to
the commissioner of revenue as part of the abstracts of tax
lists required to be filed with the commissioner under section
275.29. Any prior year adjustments shall also be certified in
the abstracts of tax lists. The commissioner shall review the
certifications to determine their accuracy and may make changes
in the certification as necessary or return a certification to
the county auditor for corrections. The commissioner shall pay
to the regional transit board the amounts certified by the
county auditors on the dates provided in section 273.13,
subdivision 15a, clause (3) 273.1394. There is annually
appropriated from the general fund in the state treasury to the
department of revenue the amounts necessary to make these
payments in fiscal year 1987 and thereafter.
For the purposes of this subdivision, "full peak and
limited off-peak service" means peak period regular route
service, plus weekday midday regular route service at intervals
longer than 60 minutes on the route with the greatest frequency;
and "limited peak period service" means peak period regular
route service only.
Sec. 50. Minnesota Statutes 1986, section 473F.02,
subdivision 4, is amended to read:
Subd. 4. "Residential property" means the following
categories of property, as defined in section 273.13, excluding
that portion of such property exempt from taxation pursuant to
section 272.02:
(a) Class 1a, 1b 1, 2a, 4a, 5a, 5b, 7a, 7b, 7c, and 7d 4b,
4c, and 4d property except resorts
(b) And that portion of class 3a, 3b, and 10 5 property
used exclusively for residential occupancy.
Sec. 51. Minnesota Statutes 1986, section 473F.02,
subdivision 17, is amended to read:
Subd. 17. "Public grants" means (1) the sum of all money
received by a municipality pursuant to sections 273.13,
subdivisions 3 and 15(4), 290.361, subdivision 4, 297.13 section
273.1394; and (2) one-tenth of all other money received by a
municipality from the federal and state governments, and their
agencies and political subdivisions, under programs of
intergovernmental aids and grants distributed by formula or upon
application. The state auditor shall certify the public grants
of each municipality for each year to the commissioner of
finance not later than September 1 of the subsequent year.
Sec. 52. Minnesota Statutes 1986, section 475.61,
subdivision 3, is amended to read:
Subd. 3. [IRREVOCABILITY.] Tax levies so made and filed
shall be irrevocable, except as provided in this subdivision.
In each year when there is on hand any excess amount in the
debt redemption fund of a school district at the time the
district makes its property tax levies, the amount of the excess
shall be certified by the school board to the commissioner of
education who shall compute the reduced tax levy, after
adjustment for the homestead credit replacement aid paid
pursuant to section 273.1394, the agricultural credit
replacement aid paid pursuant to section 273.1395, and the tax
base adjustment pursuant to section 273.1396. The commissioner
of education shall certify the adjusted reduced tax levy to the
county auditor and the auditor shall reduce the tax levy
otherwise to be included in the rolls next prepared by the
amount certified, unless the school board determines that the
excess amount is necessary to ensure the prompt and full payment
of the obligations and any call premium on the obligations, or
will be used for redemption of the obligations in accordance
with their terms. An amount shall be presumed to be excess for
a school district in the amount that it, together with the levy
required by subdivision 1, will exceed 106 percent of the amount
needed to meet when due the principal and interest payments on
the obligations due before the second following July 1. This
subdivision shall not limit a school board's authority to
specify a tax levy in a higher amount if necessary because of
anticipated tax delinquency or for cash flow needs to meet the
required payments from the debt redemption fund.
If the governing body, including the governing body of a
school district, in any year makes an irrevocable appropriation
to the debt service fund of moneys actually on hand or if there
is on hand any excess amount in the debt service fund, the
recording officer may certify to the county auditor the fact and
amount thereof and the auditor shall reduce by the amount so
certified the amount otherwise to be included in the rolls next
thereafter prepared.
Sec. 53. [REPEALER.]
Minnesota Statutes 1986, sections 13.58; 124.2131,
subdivision 4; 124.2137; 124.2139; 124A.031, subdivision 4;
273.112, subdivision 9; 273.115; 273.116; 273.13, subdivisions
26, 27, 28, and 29; 273.1311; 273.1315; 273.135, subdivision 5;
and 273.1391, subdivision 4, are repealed.
Sec. 54. [EFFECTIVE DATE.]
Except where provided otherwise, sections 1 to 53 are
effective for taxes levied in 1988, payable in 1989, and
thereafter.
ARTICLE 7
PROPERTY TAX ADMINISTRATION
Section 1. [3.861] [TAX STUDY COMMISSION.]
Subdivision 1. [CREATION.] A legislative tax study
commission is created.
Subd. 2. [DUTIES.] The commission shall:
(1) examine the burden of income maintenance and social
services on the property tax levies of the counties, and of each
county individually, and determine the impact of total or
increased state funding of income maintenance and social
services on those levies;
(2) examine and recommend to the legislature alternative
methods of income adjusted property tax relief for homeowners
and renters;
(3) examine and recommend to the legislature alternative
property tax classification systems that reduce the number of
property classifications, and determine the effects of the
consolidation by type and use of property;
(4) examine the tax structures and revenue needs and
revenue resources of state and local governments;
(5) study and make recommendations about long-range tax
policy;
(6) analyze proposed tax legislation, with particular
reference to revenue and distribution impact, local government
financing, and adherence to sound tax policies, and report its
findings to the legislature;
(7) examine the property tax burdens on agricultural,
commercial, industrial, and employment property by county, and
by type, use, and market value; and
(8) file a report at least biennially with the legislature.
Subd. 3. [MEMBERSHIP.] The commission consists of seven
members of the senate, including the chair of the committee on
taxes and tax laws, to be appointed by the subcommittee on
committees of the committee on rules and administration, and
seven members of the house of representatives, including the
chair of the committee on taxes, to be appointed by the speaker.
Appointees are members of the commission only while they
are members of the bodies from which they were appointed. The
first members serve for a term expiring on January 15 of the
next biennial session of the legislature and until their
successors are appointed. Later members must be appointed at
the start of each biennial session of the legislature for a
two-year term beginning on January 16 of that year. Vacancies
must be filled in the same manner as the original appointment.
Subd. 4. [MEETINGS; OFFICERS.] The commission shall hold
meetings at the times and places it designates. The
commission's first chair shall be the chair of the house tax
committee. Every two years, the chair of the house tax
committee and the chair of the senate committee on taxes and tax
laws shall alternate the office of commission chair. The
commission shall select a vice-chair and other officers from its
membership.
Subd. 5. [STAFF; OFFICE; EQUIPMENT.] (a) In performing its
duties, the commission must utilize existing legislative staff.
(b) The commission may purchase equipment and supplies, and
may enter into contracts for the furnishing of services,
equipment, and supplies necessary to discharge its duties.
Subd. 6. [ASSISTANCE OF OTHER AGENCIES.] (a) The
commission may request information from any state officer or
agency to assist in carrying out this section. The officer or
agency shall promptly provide the data requested to the extent
permitted by law.
(b) The commissioner of revenue shall prepare, maintain,
and make available to the commission data that compares (1)
household incomes with rents and property tax burdens; and (2)
household incomes with home market values and property tax
burdens. The data must be furnished and made available in the
form and manner that the commission determines will facilitate
its use to discharge the duty imposed in subdivision 2, clause
(2). The data must not disclose the name, address, social
security number, or any other item of information that the
commissioner believes may identify an individual. The data must
be furnished to the commission by September 15, 1987, and
subsequently maintained by the commissioner so that the most
complete and current data available is furnished to the
commission.
Subd. 7. [EXPENSES AND REIMBURSEMENT OF MEMBERS AND
STAFF.] The members of the commission may receive per diem when
attending meetings and other commission business. Members and
legislative employees must be reimbursed for expenses actually
and necessarily incurred in the performance of their duties
under the rules governing legislators and legislative employees.
Subd. 8. [COMMISSION EXPENSES AND REPORTS.] Expenses of
the commission must be approved by the chair or other member as
the rules of the commission may provide. The expenses must then
be paid in the same way as other state expenses are paid. A
general summary or statement of expenses incurred by the
commission and paid must be made to the legislature by November
15 of each even-numbered year.
Subd. 9. [APPROPRIATION.] $300,000 is appropriated for the
biennium ending June 30, 1989, from the general fund to the tax
study commission.
Sec. 2. Minnesota Statutes 1986, section 88.49, is amended
by adding a subdivision to read:
Subd. 9a. [LAND TRADES WITH GOVERNMENTAL
UNITS.] Notwithstanding subdivisions 6 and 9, or section 88.491,
subdivision 2, if an owner trades land under auxiliary forest
contract for land owned by a governmental unit and the owner
agrees to use the land received in trade from the governmental
unit for the production of forest products, upon resolution of
the county board, no taxes and assessments shall be levied
against the land traded, except that any current or delinquent
annual taxes or yield taxes due on that land while it was under
the auxiliary forest provision must be paid prior to the land
exchange. The land received from the governmental unit in the
land trade automatically qualifies for inclusion in the tree
growth tax law.
Sec. 3. Minnesota Statutes 1986, section 124.2131,
subdivision 1, is amended to read:
Subdivision 1. [ADJUSTED ASSESSED VALUE.] (a)
[COMPUTATION.] The equalization aid review committee, consisting
of the commissioner of education, the commissioner of
administration, the commissioner of agriculture, and the
commissioner of revenue, is hereby continued and permanently
established. The duty of this committee shall be to review the
assessed valuation of the districts of the state. The
department of revenue shall annually conduct an assessment/sales
ratio study of the taxable property in each school district in
accordance with the procedures referenced in paragraphs (b) and
(c). Based upon the results of this assessment/sales ratio
study, the department of revenue shall determine an aggregate
equalized assessed value for the various strata of taxable
property in each school district, which value shall be
designated as the adjusted assessed value. The department of
revenue shall take such steps as are necessary in the
performance of that duty and may incur such expense as is
necessary therefor. The commissioner of revenue is authorized
to reimburse any county or governmental official for requested
services performed in ascertaining such adjusted valuation. On
or before March 15 annually, the department of revenue shall
file with the chair of the tax committee of the house of
representatives and the chair of the committee on taxes and tax
laws of the senate a report of adjusted assessed values. On or
before March June 15, annually, the department of revenue
shall submit file its final report on the assessed values
established by the previous year's assessment to said committee
for approval or rejection and, if approved, such report shall be
filed not later than the following July 1 with the commissioner
of education and each county auditor for those school districts
for which the auditor has the responsibility for determination
of mill rates. A copy of the adjusted assessed value so filed
shall be forthwith mailed to the clerk of each district involved
and to the county assessor or supervisor of assessments of the
county or counties in which such each district is located.
(b) [METHODOLOGY.] In making its annual assessment/sales
ratio studies, the department of revenue shall use a methodology
consistent with the most recent Standard on Assessment Ratio
Studies published by the assessment standards committee of the
International Association of Assessing Officers. The
commissioner of revenue shall supplement this general
methodology with specific procedures necessary for proper
execution of the study in accordance with other Minnesota laws
impacting the assessment/sales ratio study. The commissioner
shall document these specific procedures in writing and shall
publish the procedures in the State Register, but these
procedures will not be considered "rules" pursuant to the
Minnesota administrative procedure act. By January 15, 1985,
the commissioner shall report to the chairs of the house tax
committee and the senate committee on taxes and tax laws the
results of a study which the commissioner shall prepare
comparing the 1983 sales ratio study based upon the original
1983 assessment/sales ratio study methodology with the new
methodology as provided in clause (b). The 1984 adjusted
assessed values which are certified to the commissioner of
education shall be computed using the 1983 assessment/sales
ratio study methodology unless the 1985 legislature directs
otherwise.
(c) [AGRICULTURAL LANDS.] For purposes of determining the
adjusted assessed value of agricultural lands for the
calculation of 1977 1987 adjusted assessed values and
thereafter, the market value of agricultural lands shall be the
arithmetic average of (1) the price for which the property would
sell in an arms length transaction, and (2) the income which
could be derived from its free market gross rental rate
capitalized at a rate of nine percent.
Sec. 4. Minnesota Statutes 1986, section 124.2131,
subdivision 2, is amended to read:
Subd. 2. [ADJUSTED ASSESSED VALUE; GROWTH LIMIT.] In the
calculation of adjusted assessed valuations for 1979 1987 and
each year thereafter, the committee commissioner of revenue
shall not increase the adjusted assessed valuation of taxable
property for any school district over the adjusted assessed
valuation established and filed with the commissioner of
education for the immediately preceding year by more than the
greater of (1) 19 percent of the certified adjusted assessed
valuation established and filed with the commissioner of
education for the year immediately preceding, or (2) 40 percent
of the difference between the district's total adjusted assessed
valuation for the current year calculated without the
application of this subdivision and the district's certified
adjusted assessed valuation established and filed with the
commissioner of education for the immediately preceding year.
Sec. 5. Minnesota Statutes 1986, section 124.2131,
subdivision 3, is amended to read:
Subd. 3. [DECREASE IN IRON ORE ASSESSED VALUE.] If in any
year the assessed value of class 9a and 9b iron ore property, as
defined in section 273.13, subdivision 30, in any district is
less than the assessed value of such property in the immediately
preceding year, the equalization aid review
committee commissioner of revenue shall redetermine for all
purposes the adjusted assessed value of the immediately
preceding year taking into account only the decrease in assessed
value of class 9a and 9b iron ore property. If subdivision 2,
clause (a) is applicable to such a district, the decrease
in class 9a and 9b iron ore property shall be applied to the
adjusted assessed value as limited therein. In all other
respects, the provisions of clause (1) shall be applicable.
Sec. 6. Minnesota Statutes 1986, section 124.2131,
subdivision 5, is amended to read:
Subd. 5. [ADJUSTED ASSESSED VALUE; APPEALS.] Should any
district within 60 30 days after receipt of a copy of a report
filed with the commissioner of education made pursuant to
subdivision 1 or 3, be of the opinion that the equalization aid
review committee commissioner of revenue has made an error in
the determination of the school district's market value, it may
appeal from the report or portion thereof relating to the school
district to the commissioner of revenue for a review and
determination of the matters contained in the appeal. The
commissioner shall advise the school district of the
determination within 30 days. If the school district wishes to
appeal the determination of the commissioner, it must file a
notice of appeal with the tax court, as provided in subdivisions
6 to 11 within ten days of the notice of determination from the
commissioner.
Sec. 7. Minnesota Statutes 1986, section 124.2131,
subdivision 6, is amended to read:
Subd. 6. [NOTICE OF APPEAL.] The school district shall
file with the court administrator of the tax court a notice of
appeal from the determination of the equalization aid review
committee commissioner of revenue fixing the market value of the
school district, and such notice shall show the basis of the
alleged error. A copy of such notice of appeal shall be served
upon the commissioners commissioner of revenue and education,
and proof of service shall be filed with the court administrator.
Sec. 8. Minnesota Statutes 1986, section 124.2131,
subdivision 7, is amended to read:
Subd. 7. [HEARING.] Upon receipt of the notice of appeal
the tax court shall review the notice of appeal and determine
whether it appears from the allegations and proofs therein
contained that an error has been made in the determination by
the equalization aid review committee commissioner of revenue of
the market value of the property in the school district. If the
court finds it probable that such an error has been made, it
shall notice the matter for hearing; otherwise, it shall dismiss
the appeal and notify the parties thereof. Hearing shall be set
and held in the same manner as other hearings of the tax court
are set and heard, except that an appeal filed under subdivision
5 shall take precedence over other appeals pending before the
court. The attorney general shall represent the
commissioners commissioner of revenue and education and
equalization aid review committee;. The administrative
procedure act, sections 14.09 to 14.36, 14.38, 14.44 to 14.45,
and 14.57 to 14.70, shall apply to hearings insofar as it is
applicable.
Sec. 9. Minnesota Statutes 1986, section 124.2131,
subdivision 8, is amended to read:
Subd. 8. [TAX COURT DETERMINATION.] The tax court shall
hear, consider and determine such appeal, de novo upon the
issues made by the notice of appeal, if a hearing has been
granted thereon. At the conclusion of the hearing the court
shall (1) file findings of fact, or (2) rerefer refer the issues
to the equalization aid review committee commissioner of revenue
with instructions and recommendations for a determination and
correction of the market value of the appealing school
district. The decision of the tax court, if it decides the
matter de novo, shall have the same force and effect as a
determination by the equalization aid review committee
commissioner of revenue in the first instance under this
section, and the equalization aid review committee commissioner
of revenue shall be notified thereof. If the matter is
rereferred to the equalization aid review committee commissioner
of revenue, a redetermination by the equalization aid review
committee commissioner of revenue in accordance with the
recommendations of the tax court shall likewise have the same
force and effect as a determination by it in the first instance
under this section.
Sec. 10. Minnesota Statutes 1986, section 124.2131,
subdivision 11, is amended to read:
Subd. 11. [AIDS PENDING APPEALS.] During the pendency of
any appeal from an equalization aid review committee the
commissioner of revenue evaluation, state aids to the district
so appealing shall be paid on the basis of the evaluation
subject to adjustment upon final determination of the appeal.
Sec. 11. Minnesota Statutes 1986, section 124.38,
subdivision 8, is amended to read:
Subd. 8. "Adjusted assessed valuation" means, as of any
date, the valuation of all taxable property most recently
determined by the equalization aid review committee commissioner
of revenue in accordance with the provisions of section
124.2131. "Market value" means the value of all taxable property
in the district on which its net debt limit is based as provided
in section 475.53, subdivision 4.
Sec. 12. Minnesota Statutes 1986, section 124A.02,
subdivision 3a, is amended to read:
Subd. 3a. [ADJUSTED ASSESSED VALUATION.] "Adjusted
assessed valuation" or "EARC valuation" means the assessed
valuation of the taxable property notwithstanding the provisions
of section 275.49 of the school district as adjusted by
the equalization aid review committee commissioner of revenue
under section 124.2131. The adjusted assessed valuation for any
given calendar year shall be used to compute levy limitations
for levies certified in the succeeding calendar year and aid for
the school year beginning in the second succeeding calendar year.
Sec. 13. Minnesota Statutes 1986, section 124A.02,
subdivision 8, is amended to read:
Subd. 8. [EQUALIZING FACTOR.] "Equalizing factor" means a
number equal to the minimum EARC adjusted assessed valuation per
total pupil unit which disqualifies a district from earning any
basic foundation aid. The equalizing factor for each school
year and for levies for use in that school year equals the
ratio, rounded to the nearest dollar, of the foundation aid
formula allowance for that school year to the basic maintenance
mill rate for that school year.
Sec. 14. Minnesota Statutes 1986, section 124A.08,
subdivision 5, is amended to read:
Subd. 5. [SECOND TIER LEVY FUND BALANCE.] Beginning with
the 1983 payable 1984 levy, for a district where the net
unappropriated operating fund balance as of the June 30 before
the levy is certified exceeds $500 per total pupil unit in the
year when the levy is certified, the second tier levy shall be
reduced by the amount of the excess times the lesser of (a) one,
or (b) the ratio of the district's EARC adjusted assessed
valuation for the preceding year per total pupil unit in the
school year for which the levy is attributable, to the
equalizing factor. Beginning with the 1984-1985 school year,
the second tier aid for the year when that levy is used shall be
reduced by any amount of the excess which is not subtracted from
the levy.
Sec. 15. Minnesota Statutes 1986, section 134.33,
subdivision 1, is amended to read:
Subdivision 1. An establishment grant as described in
section 134.32, subdivision 2, shall be made to any regional
public library system for the first two state fiscal years after
a board of county commissioners has contracted to join that
system and has agreed that the county will provide the levels of
support for public library service specified in this section.
In the first year of participation, the county shall provide an
amount of support equivalent to .3 mill times the adjusted
assessed valuation of the taxable property of the county as
determined by the equalization aid review committee commissioner
of revenue for the second year preceding that calendar year or
two-thirds of the per capita amount established under the
provisions of section 134.34, subdivision 1, whichever amount is
less. In the second year of participation and in each year
thereafter, the county shall provide an amount of support
equivalent to .4 mill times the adjusted assessed valuation of
the taxable property of the county as determined by
the equalization aid review committee commissioner of revenue
for the second year preceding that calendar year or the per
capita amount established under the provisions of section
134.34, subdivision 1, whichever is less. The minimum level of
support shall be certified annually to the county by the
department of education. In no event shall the department of
education require any county to provide a higher level of
support than the level of support specified in this section in
order for a system to qualify for an establishment grant. This
section shall not be construed to prohibit any county from
providing a higher level of support for public libraries than
the level of support specified in this section.
Sec. 16. Minnesota Statutes 1986, section 134.34,
subdivision 1, is amended to read:
Subdivision 1. A regional library basic system support
grant shall be made to any regional public library system where
there are at least three participating counties and where each
participating city and county, except in the first year of
participation as provided in section 134.33, is providing for
public library service support the lesser of (a) an amount
equivalent to .4 mill times the adjusted assessed valuation of
the taxable property of that city or county, as determined by
the equalization aid review committee commissioner of revenue
for the second year preceding that calendar year or (b) a per
capita amount calculated under the provisions of this
subdivision. The per capita amount is established for calendar
year 1980 as $3. In succeeding calendar years, the per capita
amount shall be increased by a percentage equal to one-half of
the percentage by which the total state adjusted assessed
valuation of property as determined by the equalization aid
review committee commissioner of revenue for the second year
preceding that calendar year increases over that total adjusted
assessed valuation for the third year preceding that calendar
year. The minimum level of support shall be certified annually
to the participating cities and counties by the department of
education. A city which is a part of a regional public library
system shall not be required to provide this level of support if
the property of that city is already taxable by the county for
the support of that regional public library system. In no event
shall the department of education require any city or county to
provide a higher level of support than the level of support
specified in this section in order for a system to qualify for a
regional library basic system support grant. This section shall
not be construed to prohibit a city or county from providing a
higher level of support for public libraries than the level of
support specified in this section.
Sec. 17. Minnesota Statutes 1986, section 134.34,
subdivision 2, is amended to read:
Subd. 2. Notwithstanding the provisions of section 134.33
and subdivision 1 of this section, after the second year of
participation by a city or county, the dollar amount of the
minimum level of support for that city or county shall not be
required to increase by more than ten percent over the dollar
amount of the minimum level of support required of it in the
previous year. If a participating city or county which has been
providing for public library service support in an amount
equivalent to .67 mill times the assessed valuation of the
taxable property of that city or county for the year preceding
that calendar year would be required to increase the dollar
amount of such support by more than ten percent to reach the
equivalent of .4 mill times the adjusted assessed valuation of
the taxable property of that participating city or county as
determined by the equalization aid review committee commissioner
of revenue for the second year preceding that calendar year or
the per capita amount calculated under the provisions of
subdivision 1, it shall only be required to increase the dollar
amount of such support by ten percent per year until such time
as it reaches an amount equivalent to .4 mill times the adjusted
assessed valuation of that taxable property as determined by the
equalization aid review committee commissioner of revenue for
the second year preceding that calendar year or the per capita
amount calculated under the provisions of subdivision 1.
Sec. 18. Minnesota Statutes 1986, section 270.11,
subdivision 1, is amended to read:
Subdivision 1. [TO ACT AS STATE BOARD OF EQUALIZATION.]
The commissioner of revenue shall have and exercise all the
rights, powers and authority by law vested in the state board of
equalization, which board of equalization is hereby continued,
with full power and authority to review, modify, and revise all
of the acts and proceedings of the commissioner in so far as
they relate to the equalization and valuation of property
assessed for taxation, as prescribed by section 270.12, which
state board of equalization shall meet on August 15 of each year
during its existence.
Sec. 19. Minnesota Statutes 1986, section 270.11,
subdivision 2, is amended to read:
Subd. 2. [COUNTY ASSESSOR'S REPORTS OF ASSESSMENT FILED
WITH COMMISSIONER.] Each county assessor shall file by June 15
with the commissioner of revenue a copy of the abstract that
will be acted upon by the county board of review. The abstract
must list the real and personal property in the county, as
equalized by the local board of review or equalization, itemized
by assessment districts. A printed or typewritten copy of the
proceedings of the local board of review or equalization must
also be filed with the commissioner. The commissioner of
revenue may require The assessor of each county in the state to
shall file with the commissioner, on or before August 1, each
year, complete abstracts of all real and personal property in
the county, as equalized by the county board of equalization,
and itemized by assessment districts, within five working days
following final action of the county board of equalization, any
changes made by the county board of equalization. The
information must be filed in the manner prescribed by the
commissioner. It must be accompanied by a printed or
typewritten copy of the proceedings of the county board of
equalization, and it shall be the duty of the county assessor to
so report to the commissioner of revenue.
The final abstract of assessments after adjustments by the
state board of equalization and inclusion of any omitted
property shall be submitted to the commissioner of revenue on or
before January 1 November 15 of each calendar year.
Sec. 20. Minnesota Statutes 1986, section 270.12,
subdivision 2, is amended to read:
Subd. 2. The board shall meet annually on August
15 between July 15 and October 1 at the office of the
commissioner of revenue and examine and compare the returns of
the assessment of the property in the several counties, and
equalize the same so that all the taxable property in the state
shall be assessed at its market value, subject to the following
rules:
(1) The board shall add to the aggregate valuation of the
real property of every county, which the board believes to be
valued below its market value in money, such percent as will
bring the same to its market value in money;
(2) The board shall deduct from the aggregate valuation of
the real property of every county, which the board believes to
be valued above its market value in money, such percent as will
reduce the same to its market value in money;
(3) If the board believes the valuation of the real
property of any town or district in any county, or the valuation
of the real property of any county not in towns or cities,
should be raised or reduced, without raising or reducing the
other real property of such county, or without raising or
reducing it in the same ratio, the board may add to, or take
from, the valuation of any one or more of such towns or cities,
or of the property not in towns or cities, such percent as the
board believes will raise or reduce the same to its market value
in money;
(4) The board shall add to the aggregate valuation of any
class of personal property of any county, town, or city, which
the board believes to be valued below the market value thereof,
such percent as will raise the same to its market value in money;
(5) The board shall take from the aggregate valuation of
any class of personal property in any county, town or city,
which the board believes to be valued above the market value
thereof, such percent as will reduce the same to its market
value in money;
(6) The board shall not reduce the aggregate valuation of
all the property of the state, as returned by the several county
auditors, more than one percent on the whole valuation thereof;
(7) When it would be of assistance in equalizing values the
board may require any county auditor to furnish statements
showing assessments of real and personal property of any
individuals, firms, or corporations within the county. The
board shall consider and equalize such assessments and may
increase the assessment of individuals, firms, or corporations
above the amount returned by the county board of equalization
when it shall appear to be undervalued, first giving notice to
such persons of the intention of the board so to do, which
notice shall fix a time and place of hearing. The board shall
not decrease any such assessment below the valuation placed by
the county board of equalization; and
(8) In equalizing values pursuant to this section, the
board shall utilize a 12-month assessment/sales ratio study
conducted by the department of revenue containing only sales
that occurred between October 1 of the year immediately
preceding the previous year to September 30 of the previous
year. The sales prices used in the study must be discounted for
terms of financing. The board shall use the median ratio as the
statistical measure of the level of assessment for any
particular category of property.
Sec. 21. Minnesota Statutes 1986, section 270.12,
subdivision 3, is amended to read:
Subd. 3. For taxes levied in 1985 and thereafter When a
taxing jurisdiction lies in two or more counties, if the sales
ratio studies prepared by the department of revenue show that
the average levels of assessment in the several portions of the
taxing jurisdictions in the different counties differ by more
than five percent, the board may order the apportionment of the
levy. When the sales ratio studies prepared by the department
of revenue show that the average levels of assessment in the
several portions of the taxing jurisdictions in the different
counties differ by more than ten percent, the board shall order
the apportionment of the levy unless (a) the proportion of total
adjusted assessed value in one of the counties is less than ten
percent of the total adjusted assessed value in the taxing
jurisdiction and the average level of assessment in that portion
of the taxing jurisdiction is the level which differs by more
than five percent from the assessment level in any one of the
other portions of the taxing jurisdiction; (b) significant
changes have been made in the level of assessment in the taxing
jurisdiction which have not been reflected in the sales ratio
study, and those changes alter the assessment levels in the
portions of the taxing jurisdiction so that the assessment level
now differs by five percent or less; or (c) commercial,
industrial, mineral, or public utility property predominates in
one county within the taxing jurisdiction and another class of
property predominates in another county within that same taxing
jurisdiction. If one or more of these factors are present, the
board may order the apportionment of the levy.
Notwithstanding any other provision, the levy for the
metropolitan mosquito control district, metropolitan council,
metropolitan transit district, and metropolitan transit area
must be apportioned without regard to the percentage difference.
If, pursuant to this subdivision, the board apportions the
levy, then that levy apportionment among the portions in the
different counties shall be made in the same proportion as the
adjusted assessed value as determined by the equalization aid
review committee commissioner in each portion is to the total
adjusted assessed value of the taxing jurisdiction.
For the purposes of this section, the average level of
assessment in a taxing jurisdiction or portion thereof shall be
the aggregate assessment sales ratio. Assessed values as
determined by the equalization aid review committee commissioner
shall be the values as determined for the year preceding the
year in which the levy to be apportioned is levied.
Actions pursuant to this subdivision shall be commenced
subsequent to the annual meeting on August July 15 of the state
board of equalization, but notice of the action shall be given
to the affected jurisdiction and the appropriate county auditors
by the following November 15 October 1.
Apportionment of a levy pursuant to this subdivision shall
be considered as a remedy to be taken after equalization
pursuant to subdivision 2, and when equalization within the
jurisdiction would disturb equalization within other
jurisdictions of which the several portions of the jurisdiction
in question are a part.
Sec. 22. Minnesota Statutes 1986, section 270.13, is
amended to read:
270.13 [RECORD OF PROCEEDINGS CHANGING ASSESSED VALUATION;
DUTIES OF COUNTY AUDITOR.]
A record of all proceedings of the commissioner of revenue
affecting any change in the assessed valuation of any property,
as revised by the state board of equalization, shall be kept by
the commissioner of revenue and a copy thereof, duly certified,
shall be mailed each year to the auditor of each county wherein
such property is situated, on or before November 15 October 1 or
30 days after submission of the abstract required by section
270.11, subdivision 2, whichever is later. This record shall
specify the amounts or amount, or both, added to or deducted
from the valuation of the real property of each of the several
towns and cities, and of the real property not in towns or
cities, also the percent or amount of both, added to or deducted
from the several classes of personal property in each of the
towns and cities, and also the amount added to or deducted from
the assessments of individuals, copartnerships, associations, or
corporations. The county auditor shall add to or deduct from
such tract or lot, or portion thereof, of any real property in
the county the required percent or amount, or both, on the
valuation thereof as it stood after equalized by the county
board, adding in each case a fractional sum of 50 cents or more,
and deducting in each case any fractional sum of less than 50
cents, so that no valuation of any separate tract or lot shall
contain any fraction of a dollar; and add to, or deduct from,
the several classes of personal property in the county the
required percent or amount, or both, on the valuation thereof as
it stood after equalized by the county board, adding or
deducting in manner aforesaid any fractional sum so that no
valuation of any separate class of personal property shall
contain a fraction of a dollar, and add to or deduct from
assessments of individuals, copartnerships, associations, or
corporations, as they stood after equalization by the county
board, the required amounts to agree with the assessments as
returned by the commissioner of revenue.
Sec. 23. [270.485] [SENIOR ACCREDITATION.]
The legislature finds that the property tax system would be
enhanced by requiring that every county assessor and senior
appraiser in the department of revenue's property tax review
division obtain senior accreditation from the state board of
assessors. By January 1, 1989, every county assessor and senior
appraiser, including the department's regional representatives,
must obtain senior accreditation from the state board of
assessors. The board shall provide the necessary courses or
training. If a department senior appraiser or regional
representative fails to obtain senior accreditation by January
1, 1989, the failure shall be grounds for dismissal,
disciplinary action, or corrective action. After December 30,
1988, the commissioner must not approve the appointment of a
county assessor who is not senior accredited by the state board
of assessors. No employee hired by the commissioner as a senior
appraiser or regional representative after June 30, 1987, shall
attain permanent status until the employee obtains senior
accreditation.
Sec. 24. Minnesota Statutes 1986, section 270.87, is
amended to read:
270.87 [CERTIFICATION TO COUNTY ASSESSORS.]
After making an annual determination of the equalized fair
market value of the operating property of each company in each
of the respective counties, and in the taxing districts therein,
the commissioner shall certify the equalized fair market value
to the county assessor on or before October 1, which shall
constitute the equalized fair market value of the operating
property of the railroad company in such county and the taxing
districts therein upon which taxes shall be levied and collected
in the same manner as on the commercial and industrial property
of such county and the taxing districts therein.
Sec. 25. Minnesota Statutes 1986, section 271.21,
subdivision 2, is amended to read:
Subd. 2. At the election of the taxpayer, the small claims
division shall have jurisdiction only in the following matters:
(a) any case concerning the valuation, assessment, or
taxation of residential property homesteaded by the taxpayer; or
(b) any other case concerning the tax laws as defined in
section 271.01, subdivision 5 in which the amount in controversy
does not exceed $2,500 $5,000, including penalty and interest.
Sec. 26. Minnesota Statutes 1986, section 272.115,
subdivision 2, is amended to read:
Subd. 2. The certificate of value shall require such facts
and information as may be determined by the equalization aid
review committee commissioner to be reasonably necessary in the
administration of the state education aid formulas. The form of
the certificate of value shall be prescribed by the department
of revenue which shall provide an adequate supply of forms to
each county auditor.
Sec. 27. [272.121] [CURRENT TAX ON DIVIDED PARCELS.]
If a deed or other instrument conveys a parcel of land that
is less than a whole parcel of land as described in the current
tax list, the county auditor shall not transfer or divide the
land in the auditor's official records, and the county recorder
shall not file and record the instrument, unless the instrument
of conveyance contains a certification by the county treasurer
that the taxes due in the current tax year for the whole parcel
have been paid. This certification is in addition to the
certification for delinquent tax required by section 272.12. No
certification of current tax paid is required for any sheriff's
or referee's certificate of sale or other instrument if a
certification of delinquent tax for the instrument is not
required under section 272.12.
Sec. 28. Minnesota Statutes 1986, section 273.061,
subdivision 1, is amended to read:
Subdivision 1. [OFFICE CREATED; APPOINTMENT,
QUALIFICATIONS.] Every county in this state shall have a county
assessor. The county assessor shall be appointed by the board
of county commissioners and shall be a resident of this state.
The assessor shall be selected and appointed because of
knowledge and training in the field of property taxation and
appointment shall be approved by the commissioner of revenue
before the same shall become effective. Upon receipt by the
county commissioners of the commissioner of revenue's refusal to
approve an appointment, the term of the appointee shall
terminate at the end of that day. Notwithstanding any law to
the contrary, a county assessor must have senior accreditation
from the state board of assessors by January 1, 1989.
Sec. 29. Minnesota Statutes 1986, section 273.061,
subdivision 8, is amended to read:
Subd. 8. [POWERS AND DUTIES.] The county assessor shall
have the following powers and duties:
(1) To call upon and confer with the township and city
assessors in the county, and advise and give them the necessary
instructions and directions as to their duties under the laws of
this state, to the end that a uniform assessment of all real
property in the county will be attained.
(2) To assist and instruct the local assessors in the
preparation and proper use of land maps and record cards, in the
property classification of real and personal property, and in
the determination of proper standards of value.
(3) To keep the local assessors in the county advised of
all changes in assessment laws and all instructions which the
assessor receives from the commissioner of revenue relating to
their duties.
(4) To have authority to require the attendance of groups
of local assessors at sectional meetings called by the assessor
for the purpose of giving them further assistance and
instruction as to their duties.
(5) To immediately commence the preparation of a large
scale topographical land map of the county, in such form as may
be prescribed by the commissioner of revenue, showing thereon
the location of all railroads, highways and roads, bridges,
rivers and lakes, swamp areas, wooded tracts, stony ridges and
other features which might affect the value of the land.
Appropriate symbols shall be used to indicate the best, the fair
and the poor land of the county. For use in connection with the
topographical land map, the assessor shall prepare and keep
available in the assessor's office tables showing fair average
minimum and maximum market values per acre of cultivated,
meadow, pasture, cut-over, timber and waste lands of each
township. The assessor shall keep the map and tables available
in the office for the guidance of town assessors, boards of
review, and the county board of equalization.
(6) To also prepare and keep available in the office for
the guidance of town assessors, boards of review and the county
board of equalization, a land valuation map of the county, in
such form as may be prescribed by the commissioner of revenue.
This map, which shall include the bordering tier of townships of
each county adjoining, shall show the average market value per
acre, both with and without improvements, as finally equalized
in the last assessment of real estate, of all land in each town
or unorganized township which lies outside the corporate limits
of cities.
(7) To regularly examine all conveyances of land outside
the corporate limits of cities of the first and second class,
filed with the county recorder of the county, and keep a file,
by descriptions, of the considerations shown thereon. From the
information obtained by comparing the considerations shown with
the market values assessed, the assessor shall make
recommendations to the county board of equalization of necessary
changes in individual assessments or aggregate valuations.
(8) To prepare annually and keep available in the
assessor's office for the guidance of boards of review and the
county board of equalization, a table showing the market value
per capita of all personal property in each assessment district
in the county as finally equalized in the last previous
assessment of personal property. For the guidance of the county
board of equalization, the assessor shall also add to the table
the market value per capita of all personal property of each
assessment district for the current year as equalized by the
local board of review.
(9) To become familiar with the values of the different
items of personal property so as to be in a position when called
upon to advise the boards of review and the county board of
equalization concerning property, market values thereof.
(10) While the county board of equalization is in session,
to give it every possible assistance to enable it to perform its
duties. The assessor shall furnish the board with all necessary
charts, tables, comparisons and data which it requires in its
deliberations, and shall make whatever investigations the board
may desire.
(11) At the request of either the board of county
commissioners or the commissioner of revenue, to investigate
applications for reductions of valuation and abatements and
settlements of taxes, examine the real or personal property
involved, and submit written reports and recommendations with
respect to the applications, in such form as may be prescribed
by the board of county commissioners and commissioner of revenue.
(12) To make diligent search each year for real and
personal property which has been omitted from assessment in the
county, and report all such omissions to the county auditor.
(13) To regularly confer with county assessors in all
adjacent counties about the assessment of property in order to
uniformly assess and equalize the value of similar properties
and classes of property located in adjacent counties. The
conference shall emphasize the assessment of agricultural and
commercial and industrial property or other properties that may
have an inadequate number of sales in a single county.
(14) To render such other services pertaining to the
assessment of real and personal property in the county as are
not inconsistent with the duties set forth in this section, and
as may be required by the board of county commissioners or by
the commissioner of revenue.
Sec. 30. Minnesota Statutes 1986, section 273.061,
subdivision 9, is amended to read:
Subd. 9. [ADDITIONAL GENERAL DUTIES.] Additional duties of
the county assessor shall be as follows: (a) to make all
assessments, based upon the appraised values reported by the
local assessors or assistants and the county assessor's own
knowledge of the value of the property assessed; (b) to
personally view and determine the value of any property which
because of its type or character may be difficult for the local
assessor to appraise; (c) to make all changes ordered by the
local boards of review, relative to the assessed value of the
property of any individual, firm or corporation after notice has
been given and hearings held as provided by law. A local board
of review shall have the power to reduce assessments upon
petition of the taxpayer but the total of such adjustments shall
not reduce the aggregate assessment made by the county assessor
by more than one percent of said aggregate assessment. If the
total of such adjustments would lower the aggregate assessments
made by the county assessor by more than one percent, none of
such adjustments shall be allowed. The assessor shall correct
any clerical errors or double assessments discovered by the
board of review without affecting the one percent referred to
above; (d) to enter all assessments in the assessment books,
furnished by the county auditor, with each book and the tabular
statements for each book in correct balance; (e) to prepare all
assessment cards, charts, maps and any other forms prescribed by
the commissioner of revenue; (f) to attend the meeting of the
county board of equalization; to investigate and report on any
assessment ordered by said board; to enter all changes made by
said board in the assessment books and prepare the abstract of
assessments for the commissioner of revenue; to enter all
changes made by the state board of equalization in the
assessment books; to deduct all exemptions authorized by law
from each assessment and certify to the county auditor the
taxable value of each parcel of land, as described and listed in
the assessment books by the county auditor, and the taxable
value of the personal property of each person, firm, or
corporation assessed; (g) to investigate and make
recommendations relative to all applications for the abatement
of taxes or applications for the reduction of the assessed
valuation of any property; (h) to perform all other duties
relating to the assessment of property for the purpose of
taxation which may be required by the commissioner of revenue.
Sec. 31. Minnesota Statutes 1986, section 273.065, is
amended to read:
273.065 [DELIVERY OF ASSESSMENT APPRAISAL RECORDS;
EXTENSIONS.]
Assessment districts shall complete the assessment
appraisal records on or before May 1 March 15. The records
shall be delivered to the county assessor as of that date and
any work which is the responsibility of the local assessor which
is not completed by May 1 March 15 shall be accomplished by the
county assessor or persons employed by the county assessor and
the cost of such work shall be charged against the assessment
district as provided in section 273.064. Extensions of time to
complete the assessment appraisal records may be granted to the
local assessor by the county assessor if such extension is
approved by the county board.
Sec. 32. Minnesota Statutes 1986, section 273.11, is
amended by adding a subdivision to read:
Subd. 10. [VALUATION OF AGRICULTURAL LAND.] Annually on
November 15, beginning in 1988 and each year thereafter, the
commissioner of revenue shall provide county assessors with a
land valuation schedule showing a range of values to be used in
the valuation of agricultural lands for the succeeding year's
assessment. The land valuation schedule shall be developed
matching the sales data obtained on the certificates of real
estate value filed in the 12-month period between October 1 of
the year immediately preceding to September 30 of the current
year with information obtained from soil surveys. A range of
values for each major soil type by region will be provided.
Counties having similar soil types, number of degree days, and
other similar characteristics will be grouped into regions for
purposes of the valuation schedule. The department of revenue,
in consultation with the county assessors, shall develop the
land valuation schedule.
Sec. 33. Minnesota Statutes 1986, section 273.1102, is
amended to read:
273.1102 [RATE OF TAX, TERMINOLOGY OF LAWS OR CHARTERS.]
The rate of property taxation by any political subdivision
or other public corporation for any purpose for which any law or
charter now provides a maximum tax rate expressed in mills times
the assessed value or times the full and true value of taxable
property (except any value adjusted assessed values determined
by the state equalization aid review committee by the
commissioner under section 124.2131) shall not exceed 33-1/3
percent of such maximum tax rate until and unless such law or
charter is amended to provide a different maximum tax rate.
Sec. 34. Minnesota Statutes 1986, section 273.1103, is
amended to read:
273.1103 [NET DEBT, TERMINOLOGY OF LAWS OR CHARTERS.]
Net debt incurred by any political subdivision or other
public corporation for which any law or any charter provision
provides a limit expressed as a percentage of the assessed value
or the full and true value of taxable property (except
any adjusted assessed value determined by the state equalization
aid review committee commissioner under section 124.2131) shall
not exceed 33-1/3 percent of such limit until and unless such
law or charter is amended to provide a different limit.
Sec. 35. Minnesota Statutes 1986, section 273.33,
subdivision 2, is amended to read:
Subd. 2. The personal property, consisting of the pipeline
system of mains, pipes and equipment attached thereto, of
pipeline companies and others engaged in the operations or
business of transporting natural gas, gasoline, crude oil, or
other petroleum products by pipe lines, shall be listed with and
assessed by the commissioner of revenue. This subdivision shall
not apply to the assessment of the products transported through
the pipe lines nor to the lines of local commercial gas
companies engaged primarily in the business of distributing gas
to consumers at retail nor to pipe lines used by the owner
thereof to supply natural gas or other petroleum products
exclusively for such owner's own consumption and not for resale
to others. On or before the fifteenth day of November October
1, the commissioner shall certify to the auditor of each county,
the amount of such personal property assessment against each
company in each district in which such property is located.
Sec. 36. Minnesota Statutes 1986, section 273.37,
subdivision 2, is amended to read:
Subd. 2. Transmission lines of less than 69 kv,
transmission lines of 69 kv and above located in an unorganized
township, and distribution lines, and equipment attached
thereto, having a fixed situs outside the corporate limits of
cities except distribution lines taxed as provided in sections
273.40 and 273.41, shall be listed with and assessed by the
commissioner of revenue in the county where situated. The
commissioner shall assess such property at the percentage of
market value fixed by law; and, on or before the 15th day of
November October 1, shall certify to the auditor of each county
in which such property is located the amount of the assessment
made against each company and person owning such property.
Sec. 37. Minnesota Statutes 1986, section 274.01,
subdivision 1, is amended to read:
Subdivision 1. (a) The town board of each town, the
council or other governing body of each city, except in cities
whose charters provide for a board of equalization, shall be a
board of review. The county assessor shall fix a day and time
when each of such boards board and the board of equalization of
any city whose charter provides for a board of equalization
shall meet in the several assessment districts of the county,
and shall on or before April 1st February 15 of each year give
written notice thereof to the clerk. Such meetings
Notwithstanding the provisions of any charter to the contrary
shall, the meeting must be held between April 1st and June
30th May 31 in each year, and. The clerk shall give published
and posted notice of such the meeting at least ten days prior to
the date fixed. Such The board shall meet at the office of the
clerk to review the assessment and classification of property in
such town or district, and immediately proceed to examine and
see that all taxable property in the town or district has been
properly placed upon the list, and duly valued by the assessor.
In case If any property, real or personal shall have has been
omitted, the board shall place it upon the list with its market
value, and correct the assessment so that each tract or lot of
real property, and each article, parcel, or class of personal
property, shall be is entered on the assessment list at its
market value; but no assessment of the property of any person
shall be raised until the person has been duly notified of the
intent of the board so to do. On application of any person
feeling aggrieved, the board shall review the assessment or
classification or both, and correct it as shall appear just. A
majority of the members may act at such meeting, and adjourn
from day to day until they finish the hearing of all cases
presented. The assessor shall attend, with the assessment books
and papers, and take part in the proceedings, but shall not
vote. The county assessor, or an assistant delegated by the
county assessor shall attend such meetings. The board shall
list separately, on a form appended to the assessment book, all
omitted property added to the list by the board and all items of
property increased or decreased, with the market value of each
item of property, added or changed by the board, placed opposite
such item. The county assessor shall enter all changes made by
the board in the assessment book.
(b) If a person fails to appear in person, by counsel, or
by written communication before the board after being duly
notified of the board's intent to raise the assessment of the
property, or if a person feeling aggrieved by an assessment or
classification fails to apply for a review of the assessment or
classification, the person may not appear before the county
board of equalization for a review of the assessment or
classification, except when an assessment was made subsequent to
the meeting of the board, as provided in section 273.01, or that
the person can establish not having received notice of market
value at least five days before the local board of review
meeting.
(c) A local board of review may reduce assessments upon
petition of the taxpayer but the total reductions must not
reduce the aggregate assessment made by the county assessor by
more than one percent. If the total reductions would lower the
aggregate assessments made by the county assessor by more than
one percent, none of the adjustments may be made. The assessor
shall correct any clerical errors or double assessments
discovered by the board of review without regard to the one
percent limitation.
(d) The board of review, and the board of equalization of
any city, unless a longer period is approved by the commissioner
of revenue, shall complete its work and adjourn within 20 days
from the time of convening specified in the notice of the clerk
and no action taken subsequent to such date shall be valid. All
complaints in reference to any assessment or classification made
after the meeting of such board, shall be heard and determined
by the county board of equalization. Any nonresident may, at
any time, before the meeting of the board of review file written
objections to an assessment or classification with the county
assessor and if any such objections are filed they shall be
presented to the board of review at its meeting by the county
assessor for its consideration.
Sec. 38. Minnesota Statutes 1986, section 274.14, is
amended to read:
274.14 [LENGTH OF SESSION; RECORD.]
The county board of equalization or the special board of
equalization appointed by it may continue in session and adjourn
from time to time commencing on the first Monday following the
fourth day of July or, if the first Monday following the fourth
day of July is a legal holiday, the first Tuesday following the
fourth day of July and ending on or before the tenth following
working day, when it shall adjourn and no action taken
subsequent to the day of adjournment shall be valid unless a
longer session period is approved by the commissioner of revenue
meet during the last two weeks in June. The commissioner may
extend the session period to August 10 July 15 but no action
taken by the county board of review after the extended
termination date shall be valid. The county auditor shall keep
an accurate record of the proceedings and orders of the board,
which record shall be published in the same manner as other
proceedings of county commissioners. A copy of such the
published record shall must be transmitted to the commissioner
of revenue, with the abstract of assessment required by section
274.16.
Sec. 39. Minnesota Statutes 1986, section 274.16, is
amended to read:
274.16 [CORRECTED LISTS, ABSTRACTS.]
The county assessor or, in Ramsey county, the official
designated by the board of county commissioners shall calculate
the changes of the assessment lists determined by the county
board of equalization, and make corrections accordingly, in the
real or personal lists, or both, and shall make duplicate
abstracts of the same; one shall be filed in the assessor's
office, and one shall be forwarded to the commissioner of
revenue on or before August 1 as provided in section 270.11,
subdivision 2.
Sec. 40. Minnesota Statutes 1986, section 275.07,
subdivision 1, is amended to read:
Subdivision 1. The taxes voted by cities, towns, and
school districts shall be certified by the proper authorities to
the county auditor on or before October 10 in each year. If a
city, town, county, school district or special district fails to
certify its levy by that date, its levy shall be the amount
levied by it for the preceding year. If the local unit notifies
the commissioner of revenue before October 10 of its inability
to certify its levy by that date, and the commissioner is
satisfied that the delay is unavoidable and is not due to the
negligence of the local unit's officials or staff, the
commissioner shall extend the time within which the local unit
shall certify its levy up to 15 calendar days beyond the date of
request for extension. For 1988 only, the commissioner may
extend the certification time to November 7 if the requirements
of this subdivision are met.
Sec. 41. Minnesota Statutes 1986, section 275.125,
subdivision 9, is amended to read:
Subd. 9. [LEVY REDUCTIONS; TACONITE.] (1) Reductions in
levies pursuant to subdivision 10, and section 273.138, shall be
made prior to the reductions in clause (2).
(2) Notwithstanding any other law to the contrary,
districts which received payments pursuant to sections 294.21 to
294.26; 298.23 to 298.28, except an amount distributed under
section 298.28, subdivision 4, paragraph (c), clause (ii);
298.34 to 298.39; 298.391 to 298.396; 298.405; 298.51 to 298.67;
477A.15; and any law imposing a tax upon severed mineral values,
or under any other law distributing proceeds in lieu of ad
valorem tax assessments on copper or nickel properties, or
recognized revenue pursuant to section 477A.15; shall not
include a portion of these aids in their permissible levies
pursuant to those sections, but instead shall reduce the
permissible levies authorized by this section and sections
124A.03, 124A.06, subdivision 3a, 124A.08, subdivision 3a,
124A.10, subdivision 3a, 124A.12, subdivision 3a, 124A.14,
subdivision 5a, and 124A.20, subdivision 2, by the greater of
the following:
(a) an amount equal to 50 percent of the total dollar
amount of the payments received pursuant to those sections or
revenue recognized pursuant to section 477A.15 in the previous
fiscal year; or
(b) an amount equal to the total dollar amount of the
payments received pursuant to those sections or revenue
recognized pursuant to section 477A.15 in the previous fiscal
year less the product of the same dollar amount of payments or
revenue times the ratio of the maximum levy allowed the district
under sections 124A.03, subdivision 2, 124A.06, subdivision 3a,
124A.08, subdivision 3a, 124A.10, subdivision 3a, 124A.12,
subdivision 3a, and 124A.14, subdivision 5a, to the total levy
allowed the district under this section and sections 124A.03,
124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10,
subdivision 3a, 124A.12, subdivision 3a, 124A.14, subdivision
5a, and 124A.20, subdivision 2, in the year in which the levy is
certified.
(3) No reduction pursuant to this subdivision shall reduce
the levy made by the district pursuant to section 124A.03,
subdivision 1, to an amount less than the amount raised by a
levy of 12.5 mills times the adjusted assessed valuation of that
district for the preceding year as determined by
the equalization aid review committee commissioner. The amount
of any increased levy authorized by referendum pursuant to
section 124A.03, subdivision 2 shall not be reduced pursuant to
this subdivision. The amount of any levy authorized by
subdivision 4, to make payments for bonds issued and for
interest thereon, shall not be reduced pursuant to this
subdivision.
(4) Before computing the reduction pursuant to this
subdivision of the capital expenditure levy authorized by
subdivision 11a, and the community service levy authorized by
subdivision 8, the commissioner shall ascertain from each
affected school district the amount it proposes to levy for
capital expenditures pursuant to subdivision 11a and for
community services pursuant to subdivision 8. The reduction of
the capital expenditure levy and the community services levy
shall be computed on the basis of the amount so ascertained.
(5) Notwithstanding any law to the contrary, any amounts
received by districts in any fiscal year pursuant to sections
294.21 to 294.26; 298.23 to 298.28; 298.34 to 298.39; 298.391 to
298.396; 298.405; 298.51 to 298.67; or any law imposing a tax on
severed mineral values, or under any other law distributing
proceeds in lieu of ad valorem tax assessments on copper or
nickel properties; and not deducted from foundation aid pursuant
to section 124A.035, subdivision 5, clause (2), and not applied
to reduce levies pursuant to this subdivision shall be paid by
the district to the St. Louis county auditor in the following
amount by March 15 of each year except 1986, the amount required
to be subtracted from the previous fiscal year's foundation aid
pursuant to section 124A.035, subdivision 5, which is in excess
of the foundation aid earned for that fiscal year. The county
auditor shall deposit any amounts received pursuant to this
clause in the St. Louis county treasury for purposes of paying
the taconite homestead credit as provided in section 273.135.
Sec. 42. Minnesota Statutes 1986, section 275.125,
subdivision 9b, is amended to read:
Subd. 9b. [OPERATING DEBT LEVY.] (1) Each year, a district
may make an additional levy to eliminate a deficit in the net
unappropriated operating funds of the district, determined as of
June 30, 1983, and certified and adjusted by the commissioner.
This levy may in each year be an amount not to exceed the amount
raised by a levy of 1.5 mills times the adjusted assessed
valuation of the district for the preceding year as determined
by the equalization aid review committee commissioner. However,
the total amount of this levy for all years it is made shall not
exceed the lesser of (a) the amount of the deficit in the net
unappropriated operating funds of the district as of June 30,
1983, or (b) the amount of the aid reduction, according to Laws
1981, Third Special Session chapter 2, article 2, section 2, but
excluding clauses (l), (m), (n), (o), and (p), and Laws 1982,
Third Special Session chapter 1, article 3, section 6, to the
district in fiscal year 1983. When the cumulative levies made
pursuant to this subdivision equal the total amount permitted by
this subdivision, the levy shall be discontinued.
(2) The proceeds of this levy shall be used only for cash
flow requirements and shall not be used to supplement district
revenues or income for the purposes of increasing the district's
expenditures or budgets.
(3) Any district which levies pursuant to this subdivision
shall certify the maximum levy allowable under section 124A.03,
subdivision 1 or 3 in that same year.
Sec. 43. Minnesota Statutes 1986, section 275.125,
subdivision 15, is amended to read:
Subd. 15. [ADJUSTMENTS.] If any school district levy is
found to be excessive as a result of a decision of the tax court
or a redetermination by the equalization aid review committee
commissioner of revenue under section 124.2131, subdivisions 2
to 11 or for any other reason, the amount of the excess shall be
deducted from the levy certified in the next year for the same
purpose; provided that if no levy is certified in the next year
for the same purpose or if the amount certified is less than the
amount of the excess, the excess shall be deducted from that
levy and the levy certified pursuant to section 124A.03,
subdivision 1. If any aid entitlement pursuant to sections
124.225, 124.245, and 124A.02 would have been increased in a
prior year as a result of a decision of the tax court or a
redetermination by the equalization aid review
committee commissioner, the amount of the increase shall be
added to the current aid entitlement for the same purposes.
Sec. 44. Minnesota Statutes 1986, section 276.11, is
amended to read:
276.11 [WHEN TREASURER SHALL PAY FUNDS FROM MARCH AND MAY
SETTLEMENTS.]
Subdivision 1. [GENERALLY.] As soon as practical after the
March and May settlements the county treasurer shall pay over to
the state treasurer or the treasurer of any town, city, school
district, or special district, on the warrant of the county
auditor, all receipts arising from taxes levied by and belonging
to the state, or to such municipal corporation, or other body,
and deliver up all orders and other evidences of indebtedness of
such municipal corporation or other body, taking triplicate
receipts therefor. The treasurer shall file one of the receipts
with the county auditor, and shall return one by mail on the day
of its reception to the clerk of the town, city, school
district, or special district to which payment was made. The
clerk shall preserve the receipt in the clerk's office. Upon
written request of the state, a municipal corporation or other
public body, the county treasurer shall, to the extent
practicable, make partial payments of amounts collected
periodically in advance of the next settlement and
distribution. Accompanying each payment shall be a statement
prepared by the county treasurer designating the years for which
taxes included in the payment were collected and, for each year,
the amount of the taxes and any penalties thereon. The county
treasurer shall pay, upon written request of the state, a
municipal corporation or other public body except school
districts, at least 70 percent of the estimated collection
within 30 days after the March and May settlement dates. Within
seven business days after the due date, the county treasurer
shall pay to the treasurer of the school districts 50 percent of
the estimated collections arising from taxes levied by and
belonging to the school district and the remaining 50 percent of
the estimated collections shall be paid to the treasurer of the
school district within the next seven business days. The
treasurer shall pay the balance of the amounts collected to the
state or to a municipal corporation or other body within 60 days
after the March and May settlement dates, provided, however,
that after 45 days interest shall accrue at a rate of eight
percent per annum to the credit of and shall be paid to the
state, municipal corporation or other body. Interest shall be
payable upon appropriation from the general revenue fund of the
county and, if not paid, may be recovered by the state,
municipal corporation, or other body, in a civil action.
Subd. 2. [DEFINITION.] For purposes of this section and
section 276.111, "estimated collections" includes estimated
collections of taxes and special assessments, and penalties and
interest due to the taxing district.
Subd. 3. [APPEAL.] The treasurer or other appropriate
fiscal officer of a town, city, school district, or special
district may appeal to the county board the determination of the
amount of estimated collections by the county treasurer under
this section or section 276.111. If the county board finds that
the amount of estimated collections has been determined by the
county treasurer incorrectly, resulting in underpayment to the
local taxing districts, it shall order the county treasurer to
pay the additional amount necessary to comprise the correct
estimated collection amount.
Sec. 45. [276.19] [UNCLAIMED OVERPAYMENTS.]
Subdivision 1. [NOTICE OF OVERPAYMENT.] If an overpayment
of property tax arises on a parcel for any reason, the
responsible county official shall promptly notify the payer by
regular mail that the overpayment has occurred. The notice must
state the amount of overpayment and identify the parcel on which
the overpayment occurred. The notice must also instruct the
payer how to claim the overpayment and advise that the
overpayment is subject to forfeiture under this section. If the
name or address of the payer is not known, the notice of
unclaimed overpayment must be mailed to the taxpayer of record
in the office of the county auditor.
Subd. 2. [FAILURE TO CLAIM REFUND.] If the person entitled
to the refund fails to claim the overpayment within three years
after the date of overpayment, the county auditor shall cause
notice to be published at least once in an English language
newspaper of general circulation in the county. The county
board shall designate the newspaper of publication that in the
judgment of the board is most likely to be read by the
claimants, notwithstanding any law to the contrary. The
published notice must be called "Notice of unclaimed property
tax refunds." The notice must contain:
(1) the names in alphabetical order and last known
addresses, if any, of persons listed in the notice that may be
entitled to unclaimed property tax refund;
(2) a statement that information concerning the amount of
overpayment and affected property may be obtained from the
county auditor at the address given in the notice; and
(3) a statement that if proof of claim is not presented to
the county auditor within 90 days from the date of publication
of notice, the overpayment will be considered abandoned and all
claims to property tax overpayment will be forfeited.
The county auditor is not required to include and publish
in the notice any item of less than $25 overpaid on a parcel.
Subd. 3. [DISTRIBUTION OF REFUNDS.] If the person entitled
to the refund fails to claim the overpayment within the time
provided in this section, the county auditor shall distribute
the refund to the affected taxing districts in proportion to the
amount of their respective taxes included in the levy for the
tax year overpaid. At the option of the county auditor, the
overpayment may be distributed to the affected taxing districts
in proportion to the current tax year levy.
Subd. 4. [APPLICABILITY.] Sections 345.31 to 345.60 do not
apply to unclaimed property tax refunds, overpayments, and
warrants.
Sec. 46. Minnesota Statutes 1986, section 277.01, is
amended to read:
277.01 [WHEN TAX IS DELINQUENT; PENALTY.]
Subdivision 1. All unpaid personal property taxes where
the amount is $10 $50 or less shall be deemed delinquent on the
later of March 1 next after they become due or 30 days after the
postmark date on the envelope containing the property tax
statement, and thereupon a penalty of eight percent shall attach
and be charged upon all such taxes. When the amount of such tax
exceeds the sum of $10 $50 the first half shall become
delinquent if not paid prior to March 1 or 30 days after the
postmark date on the envelope containing the property tax
statement, whichever is later, and thereupon a penalty of eight
percent shall attach on such unpaid first half. The second half
of a tax in excess of $10 $50 shall become delinquent if not
paid prior to July 1 and thereupon a penalty of eight percent
shall attach on such unpaid second half. This section shall not
apply to class 2a property.
A county may provide by resolution that in the case of a
property owner that has multiple personal property tax
statements with the aggregate taxes exceeding $50, payments may
be made in installments as provided in this subdivision.
The county treasurer may accept payments of more or less
than the exact amount of a tax installment due. If the accepted
payment is less than the amount due, payments must be applied
first to the penalty accrued for the year the payment is made.
Acceptance of partial payment of tax does not constitute a
waiver of the minimum payment required as a condition for filing
an appeal under section 277.011 or any other law, nor does it
affect the order of payment of delinquent taxes under section
280.39.
Sec. 47. Minnesota Statutes 1986, section 278.05,
subdivision 4, is amended to read:
Subd. 4. [SALES RATIO STUDIES AS EVIDENCE.] The sales
ratio studies published by the department of revenue, or any
part of the studies, or any copy of the studies or records
accumulated to prepare the studies which is prepared by the
commissioner of revenue for the equalization aid review
committee for use in determining school aids shall be admissible
in evidence as a public record without the laying of a
foundation if the sales prices used in the study are adjusted
for the terms of the sale to reflect market value and are
adjusted to reflect the difference in the date of sale compared
to the assessment date. Additional evidence relevant to the
sales ratio study is also admissible. No sales ratio study
received into evidence shall be conclusive or binding on the
court and evidence of its reliability or unreliability may be
introduced by any party including, but not limited to, evidence
of inadequate adjustment of sale prices for terms of financing,
inadequate adjustment of sales prices to reflect the difference
in the date of sale compared to the assessment date, and
inadequate sample size.
No reduction in value on the grounds of discrimination
shall be granted on the basis of a sales ratio study published
by the department of revenue unless
(a) the sales prices are adjusted for the terms of the sale
to reflect market value,
(b) the sales prices are adjusted to reflect the difference
in the date of sale compared to the assessment date, and
(c) there is an adequate sample size.
Sec. 48. Minnesota Statutes 1986, section 279.01,
subdivision 1, is amended to read:
Subdivision 1. Except as provided in subdivision 3, on May
16, of each year, with respect to property actually occupied and
used as a homestead by the owner of the property, a penalty of
three percent shall accrue and thereafter be charged upon all
unpaid taxes on real estate on the current lists in the hands of
the county treasurer, and a penalty of seven percent on
nonhomestead property, except that this penalty shall not accrue
until June 1 of each year on commercial use real property used
for seasonal residential recreational purposes and classified as
class 1c or 6a, and on other commercial use real property
classified as class 3a, provided that over 60 percent of the
gross income earned by the enterprise on the class 3a property
is earned during the months of May, June, July, and August. Any
property owner of such class 3a property who pays the first half
of the tax due on the property after May 15 and before June 1
shall attach an affidavit to the payment attesting to compliance
with the income provision of this subdivision. Thereafter, for
both homestead and nonhomestead property, on the 16th day of
each month, up to and including October 16 following, an
additional penalty of one percent for each month shall accrue
and be charged on all such unpaid taxes. When the taxes against
any tract or lot exceed $50, one-half thereof may be paid prior
to May 16; and, if so paid, no penalty shall attach; the
remaining one-half shall be paid at any time prior to October 16
following, without penalty; but, if not so paid, then a penalty
of four percent shall accrue thereon for homestead property and
a penalty of four percent on nonhomestead property. Thereafter,
for homestead property, on the 16th day of each month up to and
including December 16 following, an additional penalty of two
percent for each month shall accrue and be charged on all such
unpaid taxes. Thereafter, for nonhomestead property, on the
16th day of each month up to and including December 16
following, an additional penalty of four percent for each month
shall accrue and be charged on all such unpaid taxes. If
one-half of such taxes shall not be paid prior to May 16, the
same may be paid at any time prior to October 16, with accrued
penalties to the date of payment added, and thereupon no penalty
shall attach to the remaining one-half until October 16
following; provided, also, that the same may be paid in
installments as follows: One-fourth prior to March 16;
one-fourth prior to May 16; one-fourth prior to August 16; and
the remaining one-fourth prior to October 16, subject to the
aforesaid penalties. Where the taxes delinquent after October
16 against any tract or parcel exceed $100, upon resolution of
the county board, they may be paid in installments of not less
than 25 percent thereof, together with all accrued penalties and
costs, up to the next tax judgment sale, and after such payment,
penalties, interest, and costs shall accrue only on the sum
remaining unpaid. Any county treasurer who shall make out and
deliver or countersign any receipt for any such taxes without
including all of the foregoing penalties therein, shall be
liable to the county for the amount of such penalties.
A county may provide by resolution that in the case of a
property owner that has multiple tracts or parcels with
aggregate taxes exceeding $50, payments may be made in
installments as provided in this subdivision.
The county treasurer may accept payments of more or less
than the exact amount of a tax installment due. If the accepted
payment is less than the amount due, payments must be applied
first to the penalty accrued for the year the payment is made.
Acceptance of partial payment of tax does not constitute a
waiver of the minimum payment required as a condition for filing
an appeal under section 278.03 or any other law, nor does it
affect the order of payment of delinquent taxes under section
280.39.
Sec. 49. Minnesota Statutes 1986, section 282.014, is
amended to read:
282.014 [COMPLETION OF SALE AND CONVEYANCE.]
Upon compliance by the purchaser with the provisions of
sections 282.011 to 282.015 and with the terms and conditions of
the sale, and upon full payment for the land, plus a $10 $20 fee
in addition to the sale price, the sale shall be complete and a
conveyance of the land shall be issued to the purchaser as
provided by the appropriate statutes according to the status of
the land upon forfeiture.
The conveyance must be forwarded to the county recorder who
shall record the conveyance before the auditor issues it to the
purchaser.
Sec. 50. Minnesota Statutes 1986, section 282.02, is
amended to read:
282.02 [LIST OF LANDS OFFERED FOR SALE.]
Immediately after classification and appraisal of the land,
and after approval by the commissioner of natural resources when
required pursuant to section 282.01, subdivision 3, the county
board shall provide and file with the county auditor a list of
parcels of land to be offered for sale. This list shall contain
a description of the parcels of land and the appraised value
thereof; provided that the description and appraised value may
be omitted in the discretion of the county board. The auditor
shall publish a notice of the forfeiture and intended public
sale of such parcels of land and a copy of the resolution of the
county board fixing the terms of the sale, if other than for
cash only, by publication once a week for two weeks in the
official newspaper of the county, the last publication to be not
less than ten days previous to the commencement of the sale.
A notice in substantially the following form shall be
sufficient:
"Notice is hereby given that I shall sell to the highest
bidder, at my office in the courthouse in the city of
........................................, in the county of
......................., the following described parcels of land
forfeited to the state for nonpayment of taxes which have been
classified and appraised as provided by law. Such sale will be
governed, as to terms, by the resolution of the county board
authorizing the same, and commence at .......... o'clock a.m.,
on the .............. day of .........................,
19...........
Description .............. Appraised value
Subdivision Sec. Twp. Range $
or or
Lot Block
Given under my hand and seal this .... day of ..........., 19..
......................
County Auditor,
.......... County, Minnesota."
The notice shall include the parcel's description and
appraised value. The notice shall also indicate the amount of
any special assessments which may be the subject of a
reassessment or new assessment or which may result in the
imposition of a fee or charge pursuant to sections 429.071,
subdivision 4, 435.23, and 444.076. The county auditor shall
also mail notice to the owners of land adjoining the parcel to
be sold and to the owners of platted or unplatted land whose
boundaries are within 300 feet of the boundaries of a parcel
offered for sale having an appraised value of $1,000 or more.
For purposes of this section, "owner" means the taxpayer as
listed in the records of the county auditor.
If the county board of St. Louis or Koochiching counties
determines that the sale shall take place in a county facility
other than the courthouse, the notice shall specify the facility
and its location.
Sec. 51. Minnesota Statutes 1986, section 282.241, is
amended to read:
282.241 [REPURCHASE AFTER FORFEITURE FOR TAXES.]
The owner at the time of forfeiture or the owner's heirs,
devisees, or representatives, or any person to whom the right to
pay taxes was given by statute, mortgage, or other agreement,
may repurchase any parcel of land claimed by the state to be
forfeited to the state for taxes unless prior to the time
repurchase is made such parcel shall have been sold under
installment payments, or otherwise, by the state as provided by
law, or is under mineral prospecting permit or lease, or
proceedings have been commenced by the state or any of its
political subdivisions or by the United States to condemn such
parcel of land. Said parcel of land may be repurchased for a
sum equal to the aggregate of all delinquent taxes and
assessments computed as provided by section 282.251, together
with penalties, interest, and costs, which did or would have
accrued if such parcel of land had not forfeited to the state.
Except for property which was homesteaded on the date of
forfeiture, such repurchase shall be permitted during one year
only from the date of forfeiture, and in any case only after the
adoption of a resolution by the board of county commissioners
determining that thereby undue hardship or injustice resulting
from the forfeiture will be corrected, or that permitting such
repurchase will promote the use of such lands that will best
serve the public interest; provided further such. If the county
board has good cause to believe that a repurchase installment
payment plan for a particular parcel is unnecessary and not in
the public interest, the county board may require as a condition
of repurchase that the entire repurchase price be paid at the
time of repurchase. A repurchase shall be subject to any
easement, lease or other encumbrance granted by the state prior
thereto, and if said land is located within a restricted area
established by any county under Laws 1939, Chapter 340, such
repurchase shall not be permitted unless said resolution with
respect thereto is adopted by the unanimous vote of the board of
county commissioners.
Sec. 52. Minnesota Statutes 1986, section 282.33,
subdivision 1, is amended to read:
Subdivision 1. Whenever an unrecorded deed from the state
of Minnesota conveying tax-forfeited lands shall have been lost
or destroyed, an application, in form approved by the attorney
general, for a new deed may be made by the grantee or the
grantee's successor in interest to the commissioner of revenue.
If it appears to the commissioner of revenue that the facts
stated in the petition are true, the commissioner shall issue a
new deed to the original grantee, in form approved by the
attorney general, with like effect as the original deed. The
commissioner shall send the new deed to the county recorder, who
after recording the deed will forward it to the county auditor.
The application shall be accompanied by a fee of $10 $20,
payable to the commissioner of revenue, which shall be deposited
with the state treasurer and credited to the general fund.
Sec. 53. Minnesota Statutes 1986, section 473F.02,
subdivision 12, is amended to read:
Subd. 12. "Market value" of real property within a
municipality means the "actual market value" of real property
within the municipality, determined in the manner and with
respect to the property described for school districts in
section 475.53, subdivision 4, except that no adjustment shall
be made for property on which taxes are paid into the state
treasury under gross earnings tax laws applicable to common
carrier railroads. For purposes of sections 473F.01 to 473F.13,
the equalization aid review committee commissioner of revenue
shall annually make determinations and reports with respect to
each municipality which are comparable to those it makes for
school districts under section 124.2131, subdivision 1, in the
same manner and at the same times as are prescribed by the
subdivision. The commissioner of revenue shall annually
determine, for each municipality, information comparable to that
required by section 475.53, subdivision 4, for school districts,
as soon as practicable after it becomes available. The
commissioner of revenue shall then compute the market value of
property within each municipality.
Sec. 54. Minnesota Statutes 1986, section 475.53,
subdivision 4, is amended to read:
Subd. 4. [SCHOOL DISTRICTS.] Except as otherwise provided
by law, no school district shall be subject to a net debt in
excess of ten percent of the actual market value of all taxable
property and of exempt property referred to in section 275.49,
situated within its corporate limits, as computed in accordance
with this subdivision. The county auditor of each county
containing taxable real or personal property situated within any
school district shall certify to the district upon request the
market value of all such property. The county auditor of each
county containing exempt property referred to in section 275.49,
situated within any school district, shall certify to the
district upon request the total market value of all such
property as determined under section 275.49. The commissioner
of revenue shall certify to the district upon request the market
value of railroad property within the district as most recently
determined under section 270.87. Whenever the state
equalization aid review committee commissioner of revenue, in
accordance with section 124.2131, subdivision 1, has determined
that the assessed valuation of any district furnished by county
auditors is not based upon the market value of taxable property
in the district, the commissioner of revenue shall certify to
the district upon request the ratio most recently ascertained to
exist between such value and the actual market value of property
within the district. The actual market value of property within
a district, on which its debt limit under this subdivision is
based, is (a) the value certified by the county auditors and,
where applicable, by the commissioner of revenue under section
270.87, or (b) this value divided by the ratio certified by the
commissioner of revenue, whichever results in a higher value.
Sec. 55. [REPEALER.]
(a) Minnesota Statutes 1986, section 124.38, subdivision
10, is repealed.
(b) Minnesota Statutes 1986, section 282.021, is repealed.
Sec. 56. [EFFECTIVE DATE.]
Section 2 is effective August 1, 1987.
Sections 1, 3 to 17, 26, 30, 33, 34, 41 to 43, 47, 53, 54,
and 55, paragraph (a), are effective the day following final
enactment, except that paragraph (c) of section 3 is effective
for the calculation of 1987 adjusted assessed values and
thereafter. Sections 27, 46, 48 to 52, and 55, paragraph (b),
are effective July 1, 1987. Section 44 is effective for taxes
paid after July 31, 1987. Sections 18 to 22, 24, 29, 31, and 35
to 40, are effective for the 1988 assessment and thereafter, and
taxes payable in 1989 and thereafter, except that the changes in
references in section 21 from the equalization aid review
committee to the commissioner are effective the day following
final enactment, and the recodification of the local board of
review's powers contained in section 37, clause (c), is
effective the day after final enactment. Section 25 is
effective for claims filed after July 1, 1987. Section 32 is
effective for the 1989 assessment and thereafter, and taxes
payable in 1990 and thereafter. Section 45 is effective for
property tax overpayments unclaimed on or after the day of final
enactment.
ARTICLE 8
TAX EXEMPT PROPERTY
Section 1. Minnesota Statutes 1986, section 272.01,
subdivision 2, is amended to read:
Subd. 2. (a) When any real or personal property which for
any reason is exempt from ad valorem taxes, and taxes in lieu
thereof, is leased, loaned, or otherwise made available and used
by a private individual, association or corporation in
connection with a business conducted for profit, there shall be
imposed a tax, for the privilege of so using or possessing such
real or personal property, in the same amount and to the same
extent as though the lessee or user was the owner of such
property.
(b) The tax imposed by this subdivision shall not apply to
(1) property leased or used by way of a concession in or
relative to the use in whole or part of a public park, market,
fairgrounds, port authority, economic development authority
established under chapter 458C, municipal auditorium, airport
owned by a city, town, county or group thereof but not the
metropolitan airports commission, municipal museum or municipal
stadium or (2) property constituting or used as a public
pedestrian ramp, or concourse, passenger check-in area or ticket
sale counter, boarding area or luggage claim area in connection
with a public airport; provided that real estate which is owned
by a municipality in connection with the operation of a public
airport and which is leased or used for agricultural purposes
shall not be exempt.
(c) Taxes imposed by this subdivision shall be due and
payable as in the case of personal property taxes and such taxes
shall be assessed to such lessees or users of real or personal
property in the same manner as taxes assessed to owners of real
or personal property, except that such taxes shall not become a
lien against the property. When due, the taxes shall constitute
a debt due from the lessee or user to the state, township, city,
county and school district for which the taxes were assessed and
shall be collected in the same manner as personal property
taxes. If property subject to the tax imposed by this
subdivision is leased or used jointly by two or more persons,
each lessee or user shall be jointly and severally liable for
payment of the tax.
Sec. 2. Minnesota Statutes 1986, section 272.01,
subdivision 3, is amended to read:
Subd. 3. The provisions of subdivision 2 shall not apply
to:
(a) Federal property for which payments are made in lieu of
taxes in amounts equivalent to taxes which might otherwise be
lawfully assessed;
(b) Real estate exempt from ad valorem taxes and taxes in
lieu thereof which is leased, loaned, or otherwise made
available to telephone companies or electric, light and power
companies upon which personal property consisting of
transmission and distribution lines is situated and assessed
pursuant to sections 273.37, 273.38, 273.40 and 273.41, or upon
which are situated the communication lines of express, railway,
telephone or telegraph companies, and pipelines used for the
transmission and distribution of petroleum products;
(c) Property presently owned by any educational institution
chartered by the territorial legislature;
(d) Inventories of raw materials, work in process and
finished goods and machinery and equipment owned by the federal
government and leased, loaned or otherwise made available and
used by private individuals, associations or corporations in
connection with the production of goods for sale to the federal
government;
(e) Indian lands;
(f) (e) Property of any corporation organized as a tribal
corporation under the Indian Reorganization Act of June 18,
1934, (Statutes at Large, volume 48, page 984);
(g) (f) Real property owned by the state and leased
pursuant to section 161.23 and acts amendatory thereto;
(h) (g) Real property owned by a seaway port authority on
June 1, 1967 upon which there has been constructed docks,
warehouses, tank farms, administrative and maintenance
buildings, railroad and ship terminal facilities and other
maritime and transportation facilities or those directly related
thereto, together with facilities for the handling of passengers
and baggage and for the handling of freight and bulk liquids,
and personal property owned by a seaway port authority used or
usable in connection therewith, when said property is leased to
a private individual, association or corporation, but only when
such lease provides that the said facilities are available to
the public for the loading and unloading of passengers and their
baggage and the handling, storage, care, shipment and delivery
of merchandise, freight and baggage and other maritime and
transportation activities and functions directly related
thereto, but not including property used for grain elevator
facilities; it being the declared policy of this state that such
property when so leased is public property used exclusively for
a public purpose, notwithstanding the three one year limitation
in the provisions of section 273.19.
(i) (h) Notwithstanding the provisions of clause (h) (g),
when the annual rental received by a seaway port authority in
any calendar year for such leased property exceeds an amount
reasonably required for administrative expense of the authority
per year, plus promotional expense for the authority not to
exceed the sum of $100,000 per year, to be expended when and in
the manner decided upon by the commissioners, plus an amount
sufficient to pay all installments of principal and interest
due, or to become due, during such calendar year and the next
succeeding year on any revenue bonds issued by the authority,
plus 25 percent of the gross annual rental to be retained by the
authority for improvement, development or other contingencies,
the authority shall make a payment in lieu of real and personal
property taxes of a reasonable portion of the remaining annual
rental to the county treasurer of the county in which such
seaway port authority is principally located. Any such payments
to the county treasurer shall be disbursed by the treasurer on
the same basis as real estate taxes are divided among the
various governmental units, but if such port authority shall
have received funds from the state of Minnesota and funds from
any city and county pursuant to Laws 1957, chapters 648, 831 and
849 and acts amendatory thereof, then such disbursement by the
county treasurer shall be on the same basis as real estate taxes
are divided among the various governmental units, except that
the portion of such payments which would otherwise go to other
taxing units shall be divided equally among the state of
Minnesota and said county and city.
Sec. 3. Minnesota Statutes 1986, section 272.02,
subdivision 1, is amended to read:
Subdivision 1. All property described in this section to
the extent herein limited shall be exempt from taxation:
(1) All public burying grounds;
(2) All public schoolhouses;
(3) All public hospitals;
(4) All academies, colleges, and universities, and all
seminaries of learning;
(5) All churches, church property, and houses of worship;
(6) Institutions of purely public charity except parcels of
property containing structures and the structures assessed as
class 7(a), (b), (c), or (d);
(7) All public property exclusively used for any public
purpose;
(8) Except for the taxable personal property enumerated
below, all personal property and the property described in
section 272.03, subdivision 1, paragraphs (c) and (d) shall be
exempt.
The following personal property shall be taxable:
(a) personal property which is part of an electric
generating, transmission, or distribution system or a pipeline
system transporting or distributing water, gas, crude oil, or
petroleum products or mains and pipes used in the distribution
of steam or hot or chilled water for heating or cooling
buildings and structures;
(b) railroad docks and wharves which are part of the
operating property of a railroad company as defined in section
270.80;
(c) personal property defined in section 272.03,
subdivision 2, clause (3);
(d) leasehold or other personal property interests which
are taxed pursuant to section 272.01, subdivision 2; 273.124,
subdivision 7; or 273.19, subdivision 1; or any other law
providing the property is taxable as if the lessee or user were
the fee owner;
(e) manufactured homes and sectional structures; and
(f) flight property as defined in section 270.071.
(9) Real and personal property used primarily for the
abatement and control of air, water, or land pollution to the
extent that it is so used, other than real property used
primarily as a solid waste disposal site.
Any taxpayer requesting exemption of all or a portion of
any equipment or device, or part thereof, operated primarily for
the control or abatement of air or water pollution shall file an
application with the commissioner of revenue. The equipment or
device shall meet standards, rules or criteria prescribed by the
Minnesota pollution control agency, and must be installed or
operated in accordance with a permit or order issued by that
agency. The Minnesota pollution control agency shall upon
request of the commissioner furnish information or advice to the
commissioner. On determining that property qualifies for
exemption, the commissioner shall issue an order exempting the
property from taxation. The equipment or device shall continue
to be exempt from taxation as long as the permit issued by the
Minnesota pollution control agency remains in effect.
(10) Wetlands. For purposes of this subdivision,
"wetlands" means (1) land described in section 105.37,
subdivision 15, or (2) land which is mostly under water,
produces little if any income, and has no use except for
wildlife or water conservation purposes, provided it is
preserved in its natural condition and drainage of it would be
legal, feasible, and economically practical for the production
of livestock, dairy animals, poultry, fruit, vegetables, forage
and grains, except wild rice. "Wetlands" shall include adjacent
land which is not suitable for agricultural purposes due to the
presence of the wetlands. "Wetlands" shall not include woody
swamps containing shrubs or trees, wet meadows, meandered water,
streams, rivers, and floodplains or river bottoms. Exemption of
wetlands from taxation pursuant to this section shall not grant
the public any additional or greater right of access to the
wetlands or diminish any right of ownership to the wetlands.
(11) Native prairie. The commissioner of the department of
natural resources shall determine lands in the state which are
native prairie and shall notify the county assessor of each
county in which the lands are located. Pasture land used for
livestock grazing purposes shall not be considered native
prairie for the purposes of this clause and section 273.116.
Upon receipt of an application for the exemption and credit
provided in this clause and section 273.116 for lands for which
the assessor has no determination from the commissioner of
natural resources, the assessor shall refer the application to
the commissioner of natural resources who shall determine within
30 days whether the land is native prairie and notify the county
assessor of the decision. Exemption of native prairie pursuant
to this clause shall not grant the public any additional or
greater right of access to the native prairie or diminish any
right of ownership to it.
(12) Property used in a continuous program to provide
emergency shelter for victims of domestic abuse, provided the
organization that owns and sponsors the shelter is exempt from
federal income taxation pursuant to section 501(c)(3) of the
Internal Revenue Code of 1954, as amended through December 31,
1982, notwithstanding the fact that the sponsoring organization
receives funding under section 8 of the United States Housing
Act of 1937, as amended.
(13) If approved by the governing body of the municipality
in which the property is located, property not exceeding one
acre which is owned and operated by any senior citizen group or
association of groups that in general limits membership to
persons age 55 or older and is organized and operated
exclusively for pleasure, recreation, and other nonprofit
purposes, no part of the net earnings of which inures to the
benefit of any private shareholders; provided the property is
used primarily as a clubhouse, meeting facility or recreational
facility by the group or association and the property is not
used for residential purposes on either a temporary or permanent
basis.
(14) To the extent provided by section 295.44, real and
personal property used or to be used primarily for the
production of hydroelectric or hydromechanical power on a site
owned by the state or a local governmental unit which is
developed and operated pursuant to the provisions of section
105.482, subdivisions 1, 8, and 9.
(15) If approved by the governing body of the municipality
in which the property is located, and if construction is
commenced after June 30, 1983:
(a) a "direct satellite broadcasting facility" operated by
a corporation licensed by the federal communications commission
to provide direct satellite broadcasting services using direct
broadcast satellites operating in the 12-ghz. band; and
(b) a "fixed satellite regional or national program service
facility" operated by a corporation licensed by the federal
communications commission to provide fixed satellite-transmitted
regularly scheduled broadcasting services using satellites
operating in the 6-ghz. band; and
(c) a facility at which a licensed Minnesota manufacturer
produces distilled spirituous liquors, liqueurs, cordials, or
liquors designated as specialties regardless of alcoholic
content, but not including ethyl alcohol, distilled with a
majority of the ingredients grown or produced in Minnesota.
An exemption provided by paragraph (15) shall apply for a period
not to exceed five years. When the facility no longer qualifies
for exemption, it shall be placed on the assessment rolls as
provided in subdivision 4. Before approving a tax exemption
pursuant to this paragraph, the governing body of the
municipality shall provide an opportunity to the members of the
county board of commissioners of the county in which the
facility is proposed to be located and the members of the school
board of the school district in which the facility is proposed
to be located to meet with the governing body. The governing
body shall present to the members of those boards its estimate
of the fiscal impact of the proposed property tax exemption.
The tax exemption shall not be approved by the governing body
until the county board of commissioners has presented its
written comment on the proposal to the governing body, or 30
days has passed from the date of the transmittal by the
governing body to the board of the information on the fiscal
impact, whichever occurs first.
(16) Real and personal property owned and operated by a
private, nonprofit corporation exempt from federal income
taxation pursuant to United States Code, title 26, section
501(c)(3), primarily used in the generation and distribution of
hot water for heating buildings and structures.
(17) Notwithstanding section 273.19, state lands that are
leased from the department of natural resources under section
92.46.
Sec. 4. Minnesota Statutes 1986, section 273.19,
subdivision 1, is amended to read:
Subdivision 1. Except as provided in subdivision 3 or 4,
property held under a lease for a term of three or more years at
least one year, and not taxable under section 272.01,
subdivision 2, or under a contract for the purchase thereof,
when the property belongs to the United States, to the state, or
to any religious, scientific, or benevolent society or
institution, incorporated or unincorporated, or to any railroad
company or other corporation whose property is not taxed in the
same manner as other property, or when the property is school or
other state lands, shall be considered, for all purposes of
taxation, as the property of the person so holding the same.
This subdivision does not apply to property exempt from taxation
under section 272.01, subdivision 2, clause (b)(2).
Sec. 5. Minnesota Statutes 1986, section 273.19, is
amended by adding a subdivision to read:
Subd. 1a. For purposes of this section, a lease includes
any agreement permitting a nonexempt person or entity to use the
property, regardless of whether the agreement is characterized
as a lease. A lease has a "term of at least one year" if the
term is for a period of less than one year and the lease permits
the parties to renew the lease without requiring that similar
terms for leasing the property will be offered to other
applicants or bidders through a competitive bidding or other
form of offer to potential lessees or users.
Sec. 6. Minnesota Statutes 1986, section 273.19,
subdivision 3, is amended to read:
Subd. 3. The assessed value of property held under a lease
for a term of three or more years at least one year which (i) is
located within a federal reservation; (ii) has been conveyed to
the state of Minnesota by the federal government; and (iii) had
been occupied and used by a branch of the armed services of the
United States, shall be no greater than the value added to the
property by improvements to the property made by the lessee.
Sec. 7. Minnesota Statutes 1986, section 273.19,
subdivision 4, is amended to read:
Subd. 4. Property held under a lease for a term of three
or more years at least one year which is owned by the United
States and located within a national park shall be exempt,
provided the property was acquired by the United States by
condemnation or purchased by the United States under threat of
condemnation, and within a reasonable time leased back for
noncommercial residential purposes to the person owning the
property at the time of acquisition by the United States. If
property exempt under this subdivision is subsequently leased or
subleased for a term of three or more years at least one year to
another person, it shall no longer qualify for the exemption
provided in this subdivision and shall be placed on the
assessment rolls as provided in section 272.02, subdivision 4,
and taxed pursuant to subdivision 1 of this section.
The value of improvements made to property otherwise exempt
pursuant to this subdivision which are owned by the lessee or to
which the lessee has salvage rights shall be taxable to the
lessee pursuant to subdivision 1.
Sec. 8. [REPEALER.]
Minnesota Statutes 1986, section 297A.254 is repealed.
Sec. 9. [EFFECTIVE DATE.]
Sections 1 to 7 are effective beginning for property taxes
assessed in 1987 and payable in 1988.
ARTICLE 9
MINERALS
Section 1. Minnesota Statutes 1986, section 16A.26, is
amended to read:
16A.26 [ONE DEPOSITORY ACCOUNT FOR EACH TAX.]
Notwithstanding sections 290.361, 297.13, 298.17, 298.282,
298.39, 298.396, 298.51, 298.64, 298.65, 297C.02 to 297C.08 and
similar laws to the contrary relating to the depositing,
disposition, or apportionment of tax receipts, the commissioner
may use one depository account for each tax. To do so, there
must be enough information to identify and dispose of or
apportion the tax under law. The commissioner shall ask the
appropriate officials for the transfers and necessary
certifications. The commissioner may issue directives to carry
out this section.
Sec. 2. Minnesota Statutes 1986, section 121.904,
subdivision 11a, is amended to read:
Subd. 11a. Beginning with payments received in fiscal year
1978, Revenues received pursuant to sections 294.21 to
294.28; 29; 298.23 to 298.28; 298.32; 298.34 to 298.39; 298.391
to 298.396; 298.405; 298.51 to 298.67; or any law imposing a tax
on severed mineral values or any other law distributing proceeds
in lieu of ad valorem tax assessments on copper or nickel
properties, shall be recognized as revenue in the school year
received.
Sec. 3. Minnesota Statutes 1986, section 121.904,
subdivision 11b, is amended to read:
Subd. 11b. (1) Each district affected by the provisions of
subdivision 11a shall account for and expend according to the
provisions of this subdivision the total amount by which its
1976 payable 1977 and its 1977 payable 1978 permissible levies
pursuant to sections 124A.03, 124A.06, subdivision 3a, 124A.08,
subdivision 3a, 124A.10, subdivision 3a, 124A.12, subdivision
3a, 124A.14, subdivision 5a, and 275.125 were reduced on account
of payments pursuant to Minnesota Statutes 1976, sections 294.21
or 294.28; 298.23 to 298.28; 298.32; 298.34 to 298.39; 298.391
to 298.396; 298.405; 298.51 to 298.67; any law imposing a tax
upon severed mineral values, or under any other law distributing
proceeds in lieu of ad valorem tax assessments on copper or
nickel properties. Notwithstanding the provisions of section
124A.035, subdivision 5, clause (2) and the provisions of
section 275.125, subdivision 9, clause (2) or any other law to
the contrary, this total amount shall not be applied to reduce
the foundation aid which the district is entitled to receive
pursuant to section 124A.02 or again be applied to reduce the
permissible levies of the district.
(2) The lesser of the amount in (1) or an amount equal to
$200 times the pupil units in the district computed pursuant to
section 124.17 for the 1977-1978 school year shall be reflected
in an "appropriated fund balance reserve account for current use
of taconite payments" which shall be established in the general
fund. Each school year, beginning in 1978-1979, each affected
district shall transfer an amount equal to $20 times the number
of pupil units in the district in 1977-1978 out of this account
into other operating accounts in the general fund, until the
amount transferred equals the amount originally reflected in the
reserve account; provided that in the last year in which the
district is required to make this transfer, it shall transfer
the balance of the reserve account, not to exceed an amount
equal to $20 times the number of pupil units in the district in
1977-1978. Notwithstanding the provisions of section 121.917,
each affected district may use the amount so transferred each
year to increase its expenditures above the amount it would
otherwise be authorized to expend in that school year.
(3) Of the amount in (1), any amount not reflected in the
account established pursuant to clause (2) shall be reflected in
the district's appropriated fund balance reserve account for
purposes of reducing statutory operating debt, if the district
has established this account pursuant to section 275.125,
subdivision 9a. The June 30, 1977 statutory operating debt of
the district shall be reduced by the amount so reflected and
shall be recertified accordingly by the commissioner.
(4) Notwithstanding the provisions of section 121.912, any
portion of the amount in (1) remaining after the application of
clauses (2) and (3) shall be transferred to the district's
capital expenditure fund; provided that before July 1, 1979 not
exceeding $75,000 of the amount transferred to the capital
expenditure fund pursuant to this clause may be transferred to
the district's general fund.
Sec. 4. Minnesota Statutes 1986, section 124.195,
subdivision 2, is amended to read:
Subd. 2. [DEFINITIONS.] (a) The term "other district
receipts" means payments by county treasurers pursuant to
section 276.10, apportionments from the school endowment fund
pursuant to section 124.09, apportionments by the county auditor
pursuant to section 124.10, subdivision 2, and payments to
school districts by the commissioner of revenue pursuant to
sections 294.21 to 294.26 and chapter 298.
(b) The term "cumulative amount guaranteed" means the sum
of the following:
(1) one-third of the final adjustment payment according to
subdivision 6; plus
(2) the product of
(i) the cumulative disbursement percentage shown in
subdivision 3; times
(ii) the sum of
85 percent of the estimated aid and credit entitlements
paid according to subdivision 10; plus
100 percent of the entitlements paid according to
subdivisions 8 and 9; plus
the other district receipts; plus
the final adjustment payment according to subdivision 6.
Sec. 5. Minnesota Statutes 1986, section 124A.035,
subdivision 5, is amended to read:
Subd. 5. [TACONITE DEDUCTIONS.] (1) Notwithstanding any
provisions of any other law to the contrary, the adjusted
assessed valuation used in calculating foundation aid shall
include only that property which is currently taxable in the
district.
(2) For districts which received payments under sections
294.21 to 294.26; 29; 298.23 to 298.28; 298.34 to 298.39;
298.391 to 298.396; 298.405; 298.51 to 298.67; any law imposing
a tax upon severed mineral values, or under any other law
distributing proceeds in lieu of ad valorem tax assessments on
copper or nickel properties or recognized revenue pursuant to
section 477A.15; the foundation aid shall be reduced in the
October adjustment payment by the difference between the dollar
amount of the payments received pursuant to those sections, or
revenue recognized pursuant to section 477A.15 in the fiscal
year to which the October adjustment is attributable and the
amount which was calculated, pursuant to section 275.125,
subdivision 9, as a reduction of the levy attributable to the
fiscal year to which the October adjustment is attributable. If
the October adjustment of a district's foundation aid for a
fiscal year is a negative amount because of this clause, the
next fiscal year's foundation aid to that district shall be
reduced by this negative amount in the following manner: there
shall be withheld from each monthly scheduled foundation aid
payment due the district in such fiscal year, 15 percent of the
total negative amount, until the total negative amount has been
withheld. The amount reduced from foundation aid pursuant to
this clause shall be recognized as revenue in the fiscal year to
which the October adjustment payment is attributable.
Sec. 6. Minnesota Statutes 1986, section 270.80,
subdivision 2, is amended to read:
Subd. 2. "Railroad company" means:
(1) any company which as a common carrier operates a
railroad or a line or lines of railway situated within or partly
within Minnesota; or
(2) any company owning or operating, other than as a common
carrier, a railway principally used for transportation of
taconite concentrates from the plant at which the taconite
concentrates are produced in shipping form to a point of
consumption or port for shipment beyond the state; or
(3) any company that produces concentrates from taconite
and transports that taconite in the course of the concentrating
process and before the concentrating process is completed to a
concentrating plant located within the state over a railroad
that is not a common carrier and shall not use a common carrier
or taconite railroad company as defined in clause (2) of this
section for the movement of the concentrate to a point of
consumption or port for shipment beyond the state.
Sec. 7. Minnesota Statutes 1986, section 273.12, is
amended to read:
273.12 [ASSESSMENT OF REAL PROPERTY.]
It shall be the duty of every assessor and board, in
estimating and determining the value of lands for the purpose of
taxation, to consider and give due weight to every element and
factor affecting the market value thereof, including its
location with reference to roads and streets and the location of
roads and streets thereon or over the same, and to take into
consideration a reduction in the acreage of each tract or lot
sufficient to cover the amount of land actually used for any
improved public highway and the reduction in area of land caused
thereby, provided, that in determining the market value of
vacant land, the fact that such land is platted shall not be
taken into account. An individual lot of such platted property
shall not be assessed in excess of the assessment of the land as
if it were unplatted until the lot is improved with a permanent
improvement all or a portion of which is located upon the lot,
or for a period of three years after final approval of said plat
whichever is shorter. When a lot is sold or construction begun,
the assessed value of that lot or any single contiguous lot
fronting on the same street shall be eligible for reassessment.
It shall be the duty of every assessor and board, in estimating
and determining the value of lands for the purpose of taxation,
to consider and give due weight to lands which are comparable in
character, quality, and location, to the end that all lands
similarly located and improved will be assessed upon a uniform
basis and without discrimination and, for agricultural lands, to
consider and give recognition to its earning potential as
measured by its free market rental rate.
Notwithstanding the provisions of this or any other
section, no additional value shall be assessed for unmined
mineral value except for iron ore or taconite.
Sec. 8. Minnesota Statutes 1986, section 275.125,
subdivision 9, is amended to read:
Subd. 9. [LEVY REDUCTIONS; TACONITE.] (1) Reductions in
levies pursuant to subdivision 10, and section 273.138, shall be
made prior to the reductions in clause (2).
(2) Notwithstanding any other law to the contrary,
districts which received payments pursuant to sections 294.21 to
294.26; 29; 298.23 to 298.28, except an amount distributed under
section 298.28, subdivision 4, paragraph (c), clause (ii);
298.34 to 298.39; 298.391 to 298.396; 298.405; 298.51 to 298.67;
477A.15; and any law imposing a tax upon severed mineral values,
or under any other law distributing proceeds in lieu of ad
valorem tax assessments on copper or nickel properties, or
recognized revenue pursuant to section 477A.15; shall not
include a portion of these aids in their permissible levies
pursuant to those sections, but instead shall reduce the
permissible levies authorized by this section and sections
124A.03, 124A.06, subdivision 3a, 124A.08, subdivision 3a,
124A.10, subdivision 3a, 124A.12, subdivision 3a, 124A.14,
subdivision 5a, and 124A.20, subdivision 2, by the greater of
the following:
(a) an amount equal to 50 percent of the total dollar
amount of the payments received pursuant to those sections or
revenue recognized pursuant to section 477A.15 in the previous
fiscal year; or
(b) an amount equal to the total dollar amount of the
payments received pursuant to those sections or revenue
recognized pursuant to section 477A.15 in the previous fiscal
year less the product of the same dollar amount of payments or
revenue times the ratio of the maximum levy allowed the district
under sections 124A.03, subdivision 2, 124A.06, subdivision 3a,
124A.08, subdivision 3a, 124A.10, subdivision 3a, 124A.12,
subdivision 3a, and 124A.14, subdivision 5a, to the total levy
allowed the district under this section and sections 124A.03,
124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10,
subdivision 3a, 124A.12, subdivision 3a, 124A.14, subdivision
5a, and 124A.20, subdivision 2, in the year in which the levy is
certified.
(3) No reduction pursuant to this subdivision shall reduce
the levy made by the district pursuant to section 124A.03,
subdivision 1, to an amount less than the amount raised by a
levy of 12.5 mills times the adjusted assessed valuation of that
district for the preceding year as determined by the
equalization aid review committee. The amount of any increased
levy authorized by referendum pursuant to section 124A.03,
subdivision 2 shall not be reduced pursuant to this
subdivision. The amount of any levy authorized by subdivision
4, to make payments for bonds issued and for interest thereon,
shall not be reduced pursuant to this subdivision.
(4) Before computing the reduction pursuant to this
subdivision of the capital expenditure levy authorized by
subdivision subdivisions 11a, llc, 12, and 12a, and the
community service levy authorized by subdivision subdivisions 8
and 8b, the commissioner shall ascertain from each affected
school district the amount it proposes to levy for capital
expenditures pursuant to subdivision subdivisions 11a, llc, 12,
and 12a, and for community services pursuant to subdivision
subdivisions 8 and 8b. The reduction of the capital expenditure
levy and the community services levy shall be computed on the
basis of the amount so ascertained.
(5) Notwithstanding any law to the contrary, any amounts
received by districts in any fiscal year pursuant to sections
294.21 to 294.26; 29; 298.23 to 298.28; 298.34 to 298.39;
298.391 to 298.396; 298.405; 298.51 to 298.67; or any law
imposing a tax on severed mineral values, or under any other law
distributing proceeds in lieu of ad valorem tax assessments on
copper or nickel properties; and not deducted from foundation
aid pursuant to section 124A.035, subdivision 5, clause (2), and
not applied to reduce levies pursuant to this subdivision shall
be paid by the district to the St. Louis county auditor in the
following amount by March 15 of each year except 1986 and 1987,
the amount required to be subtracted from the previous fiscal
year's foundation aid pursuant to section 124A.035, subdivision
5, which is in excess of the foundation aid earned for that
fiscal year. The county auditor shall deposit any amounts
received pursuant to this clause in the St. Louis county
treasury for purposes of paying the taconite homestead credit as
provided in section 273.135.
Sec. 9. Minnesota Statutes 1986, section 275.51,
subdivision 3i, is amended to read:
Subd. 3i. [LEVY LIMITATION.] The levy limitation for a
governmental subdivision shall be equal to the adjusted levy
limit base determined pursuant to subdivision 3h, reduced by (a)
the total amount of local government aid that the governmental
subdivision has been certified to receive pursuant to sections
477A.011 to 477A.014; (b) taconite aids pursuant to sections
298.28 and 298.282 including any aid received in the levy year
which was required to be placed in a special fund for
expenditure in the next succeeding year; (c) state
reimbursements for wetlands and native prairie property tax
exemptions pursuant to sections 273.115, subdivision 3 and
273.116, subdivision 3; and (d) payments in lieu of taxes to a
county pursuant to section 477A.12 which are required to be used
to provide property tax levy reduction certified to be paid in
the calendar year in which property taxes are payable; and (e)
payments from the proceeds of the net proceeds tax under section
29. If the sum of the taconite aids deducted exceeds the
adjusted levy limit base, the excess must be used to reduce the
amounts levied as special levies pursuant to section 275.50,
subdivisions 5 and 7. The commissioner of revenue shall notify
a governmental subdivision of any excess taconite aids to be
used to reduce special levies.
As provided in section 298.28, one cent per taxable ton of
the amount distributed under section 298.28, subdivision 5,
paragraph d shall not be deducted from the levy limit base of
the counties that receive that aid. The resulting figure is the
amount of property taxes which a governmental subdivision may
levy for all purposes other than those for which special levies
and special assessments are made.
For taxes levied in 1987 and subsequent years, the levy
limit for a county as calculated under paragraph (b) shall be
decreased by an additional amount equal to the reduction in the
distribution to the county under section 298.28, from the 1986
distribution to the 1987 distribution.
Sec. 10. Minnesota Statutes 1986, section 287.09, is
amended to read:
287.09 [MORTGAGE ON EXEMPT PROPERTY; PROPERTY NOT DIRECTLY
TAXED; RECEIPT; APPORTIONMENT OF TAX.]
When any real estate situate in this state and described in
any such a mortgage is exempt from taxation under the
Constitution of the state of Minnesota, article 10, section 1,
the mortgage registry tax herein provided shall be paid to the
treasurer of the county in which such the real estate is situate
located in the same manner as if such the real estate was were
not exempt from taxation. When any real estate situate in this
state and described in such a mortgage is not exempt from
taxation under such that section, but is not taxed by direct tax
upon the assessed valuation thereof, then the mortgage registry
tax herein provided shall be paid to the county.; this sentence
does not apply to real estate taxed under sections 298.23 to
298.28, relating to taconite and taconite operations or under
sections 294.21 to 294.28, relating to railroads transporting
taconite or taconite concentrates other than as a common
carrier, shall not be considered to be real estate not taxed by
direct tax upon the assessed valuation thereof within the
meaning of this section.
Sec. 11. Minnesota Statutes 1986, 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 and every person required to deduct and
withhold tax under section 21, subdivision 2, 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. However, any return
may be filed on or before the tenth day of the second calendar
month following the period if the return shows timely deposits
in full payment of the taxes due for that period. For the
purpose of the preceding sentence, a deposit which is not
required to be made within the return period, may be made on or
before the last day of the first calendar month following the
close of the period. Every employer, in preparing a 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, 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, or under section 21, subdivision 2, exceeds $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, or person withholding tax under section 21,
subdivision 2, 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 the month.
(c) [OTHER METHODS.] The commissioner may by rule prescribe
other return periods or deposit requirements. In prescribing
the reporting period, the commissioner may classify employers
payors according to the amount of their tax liability and may
adopt an appropriate reporting period for each class which the
commissioner deems to be consistent with efficient tax
collection. In no event shall the duration of the reporting
period be more than one year.
(2) If less than the correct amount of tax is paid to the
commissioner, proper adjustments, with respect to both the tax
and the amount to be deducted, shall be made, without interest,
in the manner and at the times as the commissioner prescribes.
If the underpayment cannot be adjusted, the amount of the
underpayment shall be assessed and collected in the manner and
at the times as the commissioner prescribes.
(3) If any employer fails to make and file any return
required by paragraph (1) at the time prescribed, or makes and
files a false or fraudulent return, the commissioner shall make
for the employer a return from the commissioner's own knowledge
and from information the commissioner obtains through testimony,
or otherwise, and assess a tax on the basis of it. The amount
of tax shown on it shall be paid to the commissioner at the
times as the commissioner prescribes. Any return or assessment
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 to it.
(4) The commissioner, in any case, on having 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, may immediately assess the
tax, whether or not the time otherwise prescribed by law for
making and filing the return and paying the tax has expired.
(5) Any assessment under this subdivision shall be made by
recording the liability of the employer, or person withholding
tax under section 21, subdivision 2, in the office of the
commissioner in accordance with rules 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 3-1/2 years after the due date of the return
required by paragraph (1), or the date the return was filed,
whichever is later. In the case of a false or fraudulent return
or failure to file a return, the tax may be assessed at any
time. The tax may be assessed within 6-1/2 years after the due
date of the return or the date the return was filed, whichever
is later, where the employer omitted withholding tax from the
return which is properly includable therein and the omitted
withholding tax is in excess of 25 percent of the amount of
withholding tax stated on the return.
(7)(a) Except as provided in (b) of this paragraph, every
employer, or person withholding tax under section 21,
subdivision 2, 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 for the sum or sums (and any
added penalties and interest). Any sum or sums deducted and
withheld in accordance with the provisions of subdivision 2a or
3, or section 21, subdivision 2, shall be held to be a special
fund in trust for the state of Minnesota.
(b) If the employer, or person withholding tax under
section 21, subdivision 2, in violation of this section, fails
to deduct and withhold the tax under this section, and
thereafter the taxes against which the tax may be credited are
paid, the tax required to be deducted and withheld shall not be
collected from the employer; but this does not relieve the
employer from liability for any penalties and interest otherwise
applicable for failure to deduct and withhold.
(8) Upon the failure of any employer, or person required to
withhold tax under section 21, subdivision 2, to pay to or
deposit with the commissioner, within the time provided by
paragraph (1), (2), or (3) of this subdivision, any tax required
to be withheld in accordance with the provisions of subdivision
2a or 3, or section 21, subdivision 2, if the commissioner has
assessed a tax pursuant to paragraph (4), the 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 the employer. The statement shall also
give the address of the employer owing the tax, the period for
which the tax is due, the date of the delinquency, and any other
information required by the attorney general. The attorney
general shall institute legal action in the name of the state to
recover the amount of the 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 stated in it and that the amount shown in it is due
from the employer named in the statement. If an action is
instituted, 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 it as security
for any judgment which has been or may be recovered. Any action
must be brought within five years after the date of assessment
of any tax under this subdivision.
(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 appeal the
judgment as in other 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 to it.
Sec. 12. Minnesota Statutes 1986, section 290.92,
subdivision 7, is amended to read:
Subd. 7. [WITHHOLDING STATEMENT TO EMPLOYEE OR PAYEE AND
TO COMMISSIONER.] (1) Every person required to deduct and
withhold from an employee a tax under subdivision 2a or
subdivision 3, or section 21, subdivision 2, or who would have
been required to deduct and withhold a tax under subdivision 2a
or subdivision 3, or persons required to withhold tax under
section 21, subdivision 2, determined without regard to
subdivision 19, if the employee or payee had claimed no more
than one withholding exemption, or who paid wages or made
payments not subject to withholding under subdivision 2a or 3,
or section 21, subdivision 2, to an employee or person receiving
royalty payments in excess of $600, or who has entered into a
voluntary withholding agreement with a payee pursuant to
subdivision 20, shall furnish to each such employee or person
receiving royalty payments in respect to the remuneration paid
by such person to such employee or person receiving royalty
payments during the calendar year, on or before January 31 of
the succeeding year, or, if employment is terminated before the
close of such calendar year, within 30 days after the date of
receipt of a written request from the employee if the 30-day
period ends before January 31, a written statement showing the
following:
(a) Name of such person,
(b) The name of the employee or payee and the employee's or
payee's social security account number,
(c) The total amount of wages as that term is defined in
subdivision 1(1), and/or the total amount of remuneration
subject to withholding pursuant to subdivision 20, and the
amount of sick pay as required under section 6051(f) of the
Internal Revenue Code of 1954, as amended through December 31,
1985,
(d) The total amount deducted and withheld as tax under
subdivision 2a or subdivision 3, or section 21, subdivision 2.
(2) The statement required to be furnished by this
subdivision in respect of any remuneration shall be furnished at
such other times, shall contain such other information, and
shall be in such form as the commissioner may prescribe.
(3) The commissioner may prescribe rules providing for
reasonable extensions of time, not in excess of 30 days, to
employers or payers required to furnish such statements to their
employees or payees under this subdivision.
(4) A duplicate of any statement made pursuant to this
subdivision and in accordance with rules prescribed by the
commissioner, along with a reconciliation in such form as the
commissioner may prescribe of all such statements for the
calendar year (including a reconciliation of the quarterly
returns required to be filed pursuant to subdivision 6), shall
be filed with the commissioner on or before February 28 of the
year after the payments were made.
Sec. 13. Minnesota Statutes 1986, section 290.92,
subdivision 9, is amended to read:
Subd. 9. [DETERMINATION OF TAX DUE.] The commissioner may
grant permission to employers, or persons withholding tax under
section 21, subdivision 2, who do not desire to use the
withholding tax tables provided in accordance with paragraph (3)
of subdivision 2a, or section 21, subdivision 2, to determine
the amount of tax to be withheld by use of a method of
withholding other than withholding tax tables, provided such
method will withhold from each employee or person receiving
royalty payments substantially the same amount of tax as would
be withheld by use of the withholding tax tables. Employers, or
persons withholding tax under section 21, subdivision 2, who
desire to determine the amount of tax to be withheld by a method
other than by use of the withholding tax tables shall obtain
permission from the commissioner before the beginning of a
payroll period for which the employer, or person withholding tax
under section 21, subdivision 2, desires to withhold the tax by
such other method. Applications to use such other method must
be accompanied by evidence establishing the need for the use of
such method.
Sec. 14. Minnesota Statutes 1986, section 290.92,
subdivision 11, is amended to read:
Subd. 11. [REFUNDS.] Where there has been an overpayment
of tax imposed by this section, refund of such overpayment or
credit shall be made to the employer, or person withholding tax
under section 21, subdivision 2, in accordance with rules
prescribed by the commissioner, but only to the extent that the
amount of such overpayment was not deducted and withheld under
subdivision 2a or 3, or section 21, subdivision 2, by the
employer or other person subject to withholding. Any
overpayment which is refunded shall bear interest at the rate
specified in section 270.76, computed from the date of payment
until the date the refund is paid to the employer. The
commissioner of finance shall cause any such refund of tax and
interest to be paid out of the general fund in accordance with
the provisions of section 290.62 and so much of said fund as may
be necessary is hereby appropriated for that purpose.
Notwithstanding the provisions of section 290.50, written
findings by the commissioner, notice by mail to the taxpayer,
and certificate for refundment by the commissioner, shall not be
necessary. The provisions of section 270.10, shall not be
applicable.
Sec. 15. Minnesota Statutes 1986, section 290.92,
subdivision 12, is amended to read:
Subd. 12. [WITHHELD AMOUNT, CREDIT AGAINST TAX.] The
amount deducted and withheld as tax under subdivision 2a or
subdivision 3, or section 21, subdivision 2, during any calendar
year upon the wages of any individual or person receiving
royalty payments shall be allowed as a credit to the recipient
of the income against the taxes imposed by this chapter or by
chapter 298, for a taxable year beginning in such calendar
year. If more than one taxable year begins in such calendar
year, such amount shall be allowed as a credit against the taxes
for the last taxable year so beginning.
Sec. 16. Minnesota Statutes 1986, section 290.92,
subdivision 13, is amended to read:
Subd. 13. [REFUNDS.] (1) Where the amount of the tax
withheld at the source under subdivision 2a or 3, or section 21,
subdivision 2, exceeds by $1 or more the taxes (and any added
penalties and interest) reported in the return of the employee
taxpayer or imposed upon the employee taxpayer by this chapter,
the amount of such excess shall be refunded to the employee
taxpayer. If the amount of such excess is less than $1 the
commissioner shall not be required to refund that amount. Where
any amount of such excess to be refunded exceeds $10, such
amount on the original return shall bear interest at the rate
specified in section 270.76, computed from 90 days after (a) the
due date of the return of the employee taxpayer or (b) the date
on which the return is filed, whichever is later, to the date
the refund is paid to the taxpayer. A return shall not be
treated as filed until it is in processible form. A return is
in processible form when it is filed on a permitted form
containing the taxpayer's name, address, social security account
number, the required signature, and sufficient required
information (whether on the return or on required attachments)
to permit the mathematical verification of tax liability shown
on the return. Notwithstanding the provisions of section
290.50, written findings by the commissioner, notice by mail to
the taxpayer, and certificate for refundment by the
commissioner, shall not be necessary. The provisions of section
270.10, shall not be applicable.
(2) Any action of the commissioner in refunding the amount
of such excess shall not constitute a determination of the
correctness of the return of the employee taxpayer within the
purview of section 290.46.
(3) The commissioner of finance shall cause any such refund
of tax and interest, to be paid out of the general fund in
accordance with the provisions of section 290.62, and so much of
said fund as may be necessary is hereby appropriated for that
purpose.
Sec. 17. Minnesota Statutes 1986, section 290.92,
subdivision 14, is amended to read:
Subd. 14. [RECORDS MUST BE KEPT.] Every person liable for
any tax imposed by this section, or for the collection thereof,
shall keep such records, render such statements, make such
returns, and comply with such rules, as the commissioner may
from time to time prescribe. Any such return or statement shall
include therein the information required by such rules and by
the forms prescribed by the commissioner. For the purpose of
determining compliance with the provisions of this subdivision,
or for the purpose of collection of any taxes due under this
section or section 21, the commissioner shall have power to
examine, or cause to be examined, any books, papers, records, or
memoranda relevant to making such determination, whether such
books, papers, records, or memoranda are the property of or in
the possession of such person or any other person or
corporation. The commissioner shall further have power to
require the attendance of any persons having knowledge or
information in the premises, to compel the production of books,
papers, records, or memoranda by persons so required to attend,
to take testimony on matters material to such determination, and
to administer oaths or affirmations.
Sec. 18. Minnesota Statutes 1986, section 290.92,
subdivision 18, is amended to read:
Subd. 18. [RETURNS; CONFESSION OF JUDGMENT.] Any return
that is required to be filed with the commissioner of revenue
under this section or section 21 shall (a) contain a written
declaration that it is correct and complete, and (b) shall
contain language prescribed by the commissioner providing a
confession of judgment for the amount of the tax shown due
thereon to the extent not timely paid.
Sec. 19. Minnesota Statutes 1986, section 290.92,
subdivision 24, is amended to read:
Subd. 24. [APPLICATION FOR ACCOUNT NUMBER.] An employer,
or person withholding tax under section 21, desiring to engage
in business in Minnesota shall file with the commissioner an
application for a withholding account number on or before the
due date of the first payment required to be made under the
provisions of subdivision 6. An application for an account
number shall be made upon a form prescribed by the commissioner
and shall set forth the name of the employer or payor, the
location of the place or places of business, the names,
addresses and social security numbers of the owners or partners,
or if the employer or payor is a corporation of the officers, or
if the employer or payor is a trust of the trustees, and such
other information as the commissioner may require. The
application shall be filed by the owner if the employer or payor
is a natural person; by a member or partner if the employer or
payor is an association or partnership; by a trustee if the
employer or payor be a trust, or by a person authorized to sign
the application if the employer or payor is a corporation.
No fee shall be charged for the application.
The account number is not assignable.
An employer or payor who fails to file an application for a
withholding account number shall be liable to the commissioner
for a penalty of $100. The penalty shall be collected in the
same manner as delinquent withholding tax is collected. The
commissioner may abate this penalty.
Sec. 20. Minnesota Statutes 1986, section 290.92,
subdivision 25, is amended to read:
Subd. 25. [DELEGATION OF DUTY OF EMPLOYER OR PAYOR.] The
delegation to an agent, fiduciary or employee of an employer, or
person withholding tax under section 21, of any duty prescribed
for the employer or payor by this section shall not relieve the
employer or payor of full compliance with such duty.
Sec. 21. [290.923] [TAX WITHHELD ON ROYALTIES UPON ORE.]
Subdivision 1. [DEFINITION.] In this section, "royalty"
means the amount in money or value of property received by any
person having any right, title, or interest in any tract of land
in this state for permission to explore, mine, take out, and
remove ore from the land.
Subd. 2. [COLLECTION AT SOURCE.] (a) Every person making
payment of royalties shall deduct and withhold upon the
royalties a tax as provided in this section.
(b) The amount of tax to be withheld shall be based upon
tables to be prepared and distributed by the commissioner. The
tables must be computed for several permissible withholding
periods and shall take into account any exemptions allowed under
this chapter. The amounts computed for withholding shall be
such that the amount withheld for any person during the person's
taxable year shall approximate in the aggregate as closely as
possible the tax levied and imposed under this chapter for that
taxable year upon the person's income subject to tax.
Subd. 3. [RETURNS; DEPOSITS.] Every person who is required
to deduct and withhold tax under subdivision 2 shall file
returns and make deposits as required under section 290.92,
subdivision 6.
Subd. 4. [WITHHOLDING STATEMENT.] Every person required to
deduct and withhold tax under this section shall furnish
withholding statements as required by section 290.92,
subdivision 7.
Subd. 5. [PAYOR LIABLE FOR TAX WITHHELD.] The payor shall
be liable for the payment of tax required to be deducted and
withheld under subdivision 2 and shall not be liable to any
person for the amount of the payment.
Subd. 6. [DETERMINATION OF TAX DUE.] The commissioner may
grant permission to payors who do not wish to use the
withholding tax tables provided in accordance with subdivision
(2), paragraph (b), in accordance with section 290.92,
subdivision 9.
Subd. 7. [REFUNDS.] Refunds of overpayments or credits due
to overpayments of tax imposed by this section shall be allowed
in accordance with section 290.92, subdivisions 11 to 13.
Subd. 8. [RECORDS.] Every person liable for tax imposed by
this section or for the collection of it shall be subject to the
provisions of section 290.92, subdivision 14.
Subd. 9. [PAYEES INCURRING NO INCOME TAX LIABILITY.]
Notwithstanding any other provision of this section a payor
shall not be required to deduct and withhold any tax under this
chapter upon a payment of royalties to a payee if there is in
effect with respect to the payment a withholding exemption
certificate, in the form and containing the information
prescribed by the commissioner, furnished to the payor by the
payee certifying that the payee:
(1) incurred no liability for income tax imposed under this
chapter for the payee's preceding taxable year; and
(2) anticipates incurring no liability for income tax under
this chapter for the current taxable year.
The commissioner shall provide by rule for the coordination
of the provisions of this subdivision with the provisions of
subdivision 4.
Subd. 10. [APPLICATION FOR ACCOUNT NUMBER.] A payor
desiring to engage in business in Minnesota shall file with the
commissioner an application for a withholding account number in
accordance with section 290.92, subdivisions 24 and 25.
Sec. 22. Minnesota Statutes 1986, section 298.01,
subdivision 1, is amended to read:
Subdivision 1. [OCCUPATION TAX; IRON ORE; TACONITE
CONCENTRATES.] Every person engaged in the business of mining or
producing iron ore or other ores taconite concentrates in this
state shall pay to the state of Minnesota an occupation tax
equal to 15 percent of the valuation of all ores mined or
produced before January 1, 1986, 14.5 percent of the valuation
of all ores produced after December 31, 1985 and before January
1, 1987, and 14 percent of the valuation of all the ores
produced after December 31, 1986. Said The tax shall be in
addition to all other taxes provided for by law and shall be due
and payable from such person on or before June 15 of the year
next succeeding the calendar year covered by the report thereon
to be filed as hereinafter provided during which the ore was
produced.
Sec. 23. Minnesota Statutes 1986, section 298.01, is
amended by adding a subdivision to read:
Subd. 3. [OCCUPATION TAX; OTHER ORES.] Every person
engaged in the business of mining or producing ores, except iron
ore or taconite concentrates, shall pay an occupation tax to the
state of Minnesota as provided in this subdivision. The tax is
measured by the person's taxable income for the year for which
the tax is imposed, and computed in the manner and at the rates
provided in chapter 290, except that section 290.05, subdivision
1, clause (a), does not apply. Corporations and individuals
shall be subject to the alternative minimum taxes imposed under
chapter 290. The tax is in addition to all other taxes and is
due and payable on or before June 15 of the year succeeding the
calendar year covered by the report required by section 298.05.
Sec. 24. Minnesota Statutes 1986, section 298.01, is
amended by adding a subdivision to read:
Subd. 4. [OCCUPATION TAX; IRON ORE; TACONITE
CONCENTRATES.] A person engaged in the business of mining or
producing of iron ore or taconite concentrates shall pay an
occupation tax to the state of Minnesota. The tax is measured
by the person's taxable income for the year for which the tax is
imposed, and computed in the manner and at the rates provided
for in chapter 290, except that section 290.05, subdivision 1,
clause (a), does not apply. Corporations and individuals shall
be subject to the alternative minimum taxes imposed under
chapter 290. The tax is in addition to all other taxes and is
due and payable on or before June 15 of the year succeeding the
calendar year covered by the report required by section 298.05.
Sec. 25. Minnesota Statutes 1986, section 298.01, is
amended by adding a subdivision to read:
Subd. 5. [IF DECLARED UNCONSTITUTIONAL.] If the taxes
imposed in subdivisions 3 and 4 are found unconstitutional by
any court of last resort, then persons engaged in the business
of mining or producing iron ore or other ores shall pay the
occupation taxes imposed in Minnesota Statutes 1986, chapter 298.
Sec. 26. [298.015] [NET PROCEEDS TAX ON MINING.]
Subdivision 1. [TAX IMPOSED.] A person engaged in the
business of mining shall pay to the state of Minnesota for
distribution as provided in section 29 a net proceeds tax equal
to two percent of the net proceeds from mining in Minnesota.
The tax applies to all mineral and energy resources mined or
extracted within the state of Minnesota except for sand, silica
sand, gravel, building stone, crushed rock, limestone, granite,
dimension granite, dimension stone, horticultural peat, soil,
iron ore, and taconite concentrates. The tax is in addition to
all other taxes provided for by law. The tax is due by June 15
of the year succeeding the calendar year covered by the report
required by section 298.05.
Subd. 2. [NET PROCEEDS.] For purposes of this section, the
term "net proceeds" means the gross proceeds from mining, as
defined in section 27, less the deductions allowed in section
28. No other credits or deductions shall apply to this tax
except for those provided in section 28.
Sec. 27. [298.016] [GROSS PROCEEDS.]
Subdivision 1. [COMPUTATION; ARMS-LENGTH TRANSACTIONS.]
When a metal or mineral product is sold by the producer in an
arms-length transaction, the gross proceeds are equal to the
proceeds from the sale of the product. This subdivision applies
to sales realized on all metal or mineral products produced from
mining, including reduction, beneficiation, or any treatment
used by a producer to obtain a metal or mineral product which is
commercially marketable.
Subd 2. [OTHER TRANSACTIONS.] When a metal or mineral
product is used by the producer or disposed of in a
non-arms-length transaction, the gross proceeds must be
determined using the alternative computation in subdivision 3.
Transactions subject to this subdivision include, but are not
limited to, shipments to a wholly owned smelter, transactions
with associated or affiliated companies, and any other
transactions which are not at arms-length.
Subd. 3. [ALTERNATIVE COMPUTATION.] The commissioner of
revenue shall determine the alternative computation of gross
proceeds using the following procedure:
(a)(1) Metal and mineral prices shall be determined by
using the average annual market price as published in the
Engineering and Mining Journal; (2) For metals or mineral
products with a monthly or weekly price quotation in the
Engineering and Mining Journal, but for which no average annual
price has been published, an arithmetic average of the monthly
or weekly prices published in the Engineering and Mining Journal
shall be used; (3) If the price of a particular metal or mineral
product is not published in the Engineering and Mining Journal,
another recognized published price, as established by the
commissioner of revenue will be used.
(b) The quantity of each particular metal or mineral
product recovered and paid or credited for by the smelter will
be multiplied by the average annual market price as determined
in clause (a). Special smelter charges for particular metals
will be allowed as a deduction from this price. The resulting
amount will be the gross proceeds for calculating the tax in
section 26.
Subd. 4. [DEFINITIONS.] For the purposes of this section
and sections 26 and 28, the terms defined in this subdivision
have the meaning given them unless the context clearly indicates
otherwise.
(a) "Metal or mineral products" means all those mineral and
energy resources subject to the tax provided in section 26.
(b) "Exploration" means activities designed and engaged in
to ascertain the existence, location, extent, or quality of any
deposit of metal or mineral products prior to the development of
a mining site.
(c) "Development" means activities designed and engaged in
to prepare or develop a potential mining site for mining after
the existence of metal or mineral products in commercially
marketable quantities has been disclosed including, but not
limited to, the clearing of forestation, the building of roads,
removal of overburden, or the sinking of shafts.
(d) "Research" means activities designed and engaged in to
create new or improved methods of mining, producing, processing,
beneficiating, smelting, or refining metal or mineral products.
Sec. 28. [298.017] [DEDUCTIONS.]
Subdivision 1. [DEDUCTIONS NOT ALLOWED.] For purposes of
calculating the net proceeds under section 26, the following
expenses are not deductible: (1) all sales, marketing, and
interest expenses; (2) all insurance expense and taxes, except
as specifically provided in this section; (3) all administrative
expenses outside of Minnesota; (4) any research expense prior to
production; (5) all reclamation expenses after production ends;
(6) royalty expenses, depletion allowances, and cost of mining
land.
Subd. 2. [DEDUCTIONS ALLOWED.] (a) In calculating the net
proceeds for the purpose of determining the tax provided in
section 26, only those expenses specifically allowed in this
subdivision may be deducted from gross proceeds. The carryback
or carryforward of deductions shall not be allowed.
(b) Ordinary and necessary expenses actually paid for the
mining, production, processing, beneficiation, smelting, or
refining of metal or mineral products for (1) labor, including
wages, salaries, fringe benefits, unemployment and workers'
compensation insurance; (2) machinery, equipment, and supplies,
including any sales and use tax paid on it, except that
machinery and equipment subject to depreciation shall only be
deductible under clause (b)(3); (3) depreciation as defined and
allowed by section 167 of the Internal Revenue Code of 1986, as
amended through December 31, 1986; and (4) administrative
expenses inside Minnesota are deductible.
(c) Ordinary and necessary expenses of transporting metal
or mineral products are allowed as a deduction if the costs are
included in the sale price of the products.
(d) Expenses of exploration, research, or development in
this state for the mining and processing of minerals within
Minnesota paid in a production year are deductible in the
production year.
(e) Expenses of exploration and development in Minnesota
incurred prior to production must be amortized and deducted on a
straight-line basis over the first five years of production.
Sec. 29. [298.018] [DISTRIBUTION OF PROCEEDS.]
Subdivision 1. [WITHIN TACONITE TAX RELIEF AREA.] The
proceeds of the tax paid under sections 26 to 28 on minerals and
energy resources mined or extracted within the taconite tax
relief area defined in section 273.134 shall be allocated as
follows:
(1) five percent to the city or town within which the
minerals or energy resources are mined or extracted;
(2) ten percent to the taconite municipal aid account to be
distributed as provided in section 298.282;
(3) ten percent to the school district within which the
minerals or energy resources are mined or extracted;
(4) 20 percent to a group of school districts comprised of
those school districts wherein the mineral or energy resource
was mined or extracted or in which there is a qualifying
municipality as defined by section 273.134 in direct proportion
to school district indexes as follows: for each school
district, its pupil units determined under section 124.17 for
the prior school year shall be multiplied by the ratio of the
average adjusted assessed value per pupil unit for school
districts receiving aid under this clause as calculated pursuant
to chapter 124A for the school year ending prior to distribution
to the adjusted assessed value per pupil unit of the district.
Each district shall receive that portion of the distribution
which its index bears to the sum of the indices for all school
districts that receive the distributions;
(5) 20 percent to the county within which the minerals or
energy resources are mined or extracted;
(6) 20 percent to St. Louis county acting as the counties'
fiscal agent to be distributed as provided in sections 273.134
to 273.136;
(7) five percent to the iron range resources and
rehabilitation board for the purposes of section 298.22;
(8) five percent to the northeast Minnesota economic
protection trust fund; and
(9) five percent to the taconite environmental protection
fund.
The proceeds of the tax shall be distributed on July 15
each year.
Subd. 2. [OUTSIDE TACONITE TAX RELIEF AREA.] The proceeds
of the tax paid under sections 26 to 28 on minerals and energy
resources mined or extracted outside of the taconite tax relief
area shall be deposited in the general fund.
Sec. 30. Minnesota Statutes 1986, section 298.026, is
amended to read:
298.026 [CREDIT FOR RESEARCH, EXPERIMENTATION, AND
EXPLORATION.]
A tax credit shall be allowed to each taxpayer against the
taxes payable by such taxpayer as computed each year under
sections 298.01, subdivision 1, and 298.02, for the cost of all
research, experimentation, pilot plant tests and exploration
work performed in Minnesota in such year for the express purpose
of furthering the discovery, development, or beneficiation of
Minnesota iron ore or other Minnesota ores.
Such credit shall be computed by applying to such costs and
allowances the weighted average net effective rate of all the
occupation taxes applicable to such taxpayer for such year
imposed pursuant to section 298.01, subdivision 1, after the
application of the credits against such occupation taxes allowed
under section 298.02, subdivision 1, but before the application
of the credit herein provided.
Any such credit shall be applied against the tax for the
year for which such credit is computed except that any such
credit in excess of such tax shall be applied in like manner in
the next year and thereafter from year to year, but not
exceeding two years, until the entire credit has been so applied.
The determination as to what type of costs will qualify
under this law, and the amount allowable, will be made by the
commissioner of revenue who may use the services of the
University of Minnesota department of civil and mineral
engineering which is hereby established as a technical
consultant to the commissioner for the purposes of this section.
Sec. 31. Minnesota Statutes 1986, section 298.027, is
amended to read:
298.027 [COSTS OF MINING EXCEEDING VALUE OF ORE TAX
CREDIT.]
A tax credit shall be allowed to each taxpayer against the
taxes computed under this chapter where the allowable costs for
any mine determined under section 298.03 except taconite and
semitaconite exceed the value of the ore at the place where the
same is brought to the surface of the earth. The said allowable
costs shall not include amounts attributable to or payable by
reason of the termination of mining operations.
The credit shall be computed by applying the tax rates
specified in section 298.01, subdivision 1, to the excess of
such deductions over such value, but limited to; in the case of
open pit iron ore mines, 53.68 percent of the credit so computed
and in the case of underground mines, 42.10 percent of the
credit so computed.
Such credit shall be allowed for the year in which such
excess occurs.
Sec. 32. Minnesota Statutes 1986, section 298.028,
subdivision 1, is amended to read:
Subdivision 1. A credit of five percent of the net cost of
equipment used primarily to abate or control pollutants to meet
or exceed state laws, rules or standards to the extent the
property is so used may be deducted from the tax imposed by
section 298.01, subdivision 1, in the first year in which the
equipment is installed.
The credit allowed by this subdivision shall not exceed so
much of the liability for tax for the taxable year as does not
exceed $75,000. The credit shall apply only if the equipment
meets rules prescribed by the Minnesota pollution control agency
and is installed or operated in accordance with a permit or
order issued by the agency.
Sec. 33. Minnesota Statutes 1986, section 298.03,
subdivision 1, is amended to read:
Subdivision 1. [GENERAL RULES.] The valuation of iron or
other ores for the purposes of determining the amount of tax to
be paid under the provisions of section 298.01, subdivision 1,
shall be ascertained by subtracting from the value of such ore,
at the place where the same is brought to the surface of the
earth, such value to be determined by the commissioner of
revenue:
(1) the reasonable cost of supplies used and labor
performed at the mine in separating the ore from the ore body,
including hoisting, elevating, or conveying the same to the
surface of the earth;
(2) if the ore is taken from an open pit mine, an amount
for each ton of ore mined or produced during the year equal to
the cost of removing the overburden, divided by the number of
tons of ore uncovered, the number of tons of ore uncovered in
each case to be determined by the commissioner of revenue;
(3) if the ore is taken from an underground mine, an amount
for each ton of ore mined or produced during the year equal to
the cost of sinking and constructing shafts and running drifts,
divided by the number of tons of ore that can be advantageously
taken out through such shafts and drifts, the number of tons of
ore that can be advantageously taken out in each case to be
determined by the commissioner of revenue;
(4) the amount of royalties paid on the ore mined or
produced during the year;
(5) for persons mining or producing iron ore the mining or
production of which is subject to the occupation tax imposed by
section 298.01, subdivision 1, the amount of the ad valorem
taxes levied and paid for the year against the realty in which
the ore is deposited; for all others a percentage of the ad
valorem taxes levied and paid for such year against the realty
in which the ore is deposited equal to the percentage that the
tons mined or produced during such year bears to the total
tonnage in the mine;
(6) in the case of taconite, semitaconite and iron sulphide
operations, the tax payable under section 298.24, and that
payable under section 298.35, on the concentrates produced in
said year and any taxes paid under Laws 1955, chapter 391, 429,
514, 576 or 540, or any other law imposing on such taconite
operations a specific tax for school or other governmental
purposes;
(7) the amount or amounts of all the foregoing subtractions
shall be ascertained and determined by the commissioner of
revenue. Deductions for interest on plant investment shall not
exceed the greater of (a) four percent of book value, or (b) the
amount actually paid but not exceeding six percent of book
value. No subtraction shall be allowed for shrinkage of iron ore.
Sec. 34. Minnesota Statutes 1986, section 298.031,
subdivision 2, is amended to read:
Subd. 2. [VALUE OF CERTAIN ORE; HOW ASCERTAINED.] (1) The
taxpayer shall be given a credit in each taxable year upon the
occupation tax assessed in such year upon iron ore or taconite
concentrates, under Minnesota Statutes 1957, chapter 298,
against a given mine after credit for labor credits has been
given, in an amount equal to the occupation tax under said
chapter 298 upon an amount produced by multiplying the number of
tons of ore sold at a discount by the amount of such discount.
(2) The aggregate amount of all credits allowed under this
section to all mines shall not exceed four percent of the
aggregate amount of all occupation taxes imposed under section
298.01, subdivision 1, assessed against all mines in the state
for said year prior to the deduction of the credit allowed by
this section.
(3) The amount of the foregoing subtraction shall be
ascertained and determined by the commissioner.
(4) If ore stockpiled from previous years operations is
sold at a discount, the discount credit shall be allowed against
all ore currently being produced by the same company to the
extent that the discount credit is available. Any unused credit
may be carried forward and utilized with future years production
of ore from the stockpiled property or other properties operated
by the same company.
Sec. 35. Minnesota Statutes 1986, section 298.08, is
amended to read:
298.08 [PROCEDURE WHEN NO REPORT IS FILED; PENALTY FOR
FAILURE TO REPORT.]
If any person subject to sections 298.01, 298.03, 298.05 to
298.16, and 298.21 shall fail and section 26 fails to make the
report provided for in section 298.05 at the time and in the
manner therein provided, the commissioner of revenue shall in
such case, upon information as the commissioner may possess or
obtain, ascertain the kind and amount of ore mined or produced,
together with the its valuation thereof, and thereon find and
determine the amount of the tax due from such person. There
shall be added thereto to the tax a penalty for failure to
report, which penalty shall equal to ten percent of the tax
imposed and which shall be treated as a part thereof of the
tax.
Sec. 36. Minnesota Statutes 1986, section 298.09,
subdivision 1, is amended to read:
Subdivision 1. On or before May 1 in each year, the
commissioner of revenue shall send to each person subject to an
occupation tax taxes under the provisions of Laws 1921, chapter
223 section 298.01, as amended, or the net proceeds tax under
the provisions of section 26, a notice of the amount of the tax
so determined to be due. Said notice shall be sent by certified
mail and directed to the person at the address given in the
report filed by the person, and, if no report has been filed or
no address given, then at such address as the commissioner of
revenue may be able to ascertain; but the validity of the tax
shall not be affected by the failure of the commissioner of
revenue to mail such notice or the failure of the person subject
to the tax to receive it.
Sec. 37. Minnesota Statutes 1986, section 298.24,
subdivision 1, is amended to read:
Subdivision 1. (a) For concentrate produced in 1986 and
1987 there is hereby imposed upon taconite and iron sulphides,
and upon the mining and quarrying thereof, and upon the
production of iron ore concentrate therefrom, and upon the
concentrate so produced, a tax of $1.90 per gross ton of
merchantable iron ore concentrate produced therefrom.
(b) Except as provided in paragraph (c), for concentrates
produced in 1987 1988 and subsequent years, the tax rate shall
be equal to the preceding year's tax rate plus an amount equal
to the preceding year's tax multiplied by the percentage
increase in the implicit price deflator from the fourth quarter
of the second preceding year to the fourth quarter of the
preceding year. "Implicit price deflator" for the gross
national product means the implicit price deflator prepared by
the bureau of economic analysis of the United States Department
of Commerce.
(c) The provisions of paragraph (b) will not be in effect
for concentrates produced in 1987 if the 1987 production is not
less than 33,000,000 tons, and will not be in effect for
concentrates produced in 1988 if the 1988 production is not less
than 34,000,000 tons. If the provisions of paragraph (b) are
not in effect for concentrates produced in a year, the rate of
the tax for that year's production will be the rate of the tax
imposed on the previous year's production. The tax shall be
imposed on the average of the production for the current year
and the previous two years. The rate of the tax imposed will be
the current year's tax rate. This clause shall not apply in the
case of the closing of a taconite facility if the property taxes
on the facility would be higher if this clause and section
298.25 were not applicable.
(d) If the tax or any part of the tax imposed by this
subdivision is held to be unconstitutional, a tax of $1.90 per
gross ton of merchantable iron ore concentrate produced shall be
imposed.
(e) Consistent with the intent of this subdivision to
impose a tax based upon the weight of merchantable iron ore
concentrate, the commissioner of revenue may indirectly
determine the weight of merchantable iron ore concentrate
included in fluxed pellets by subtracting the weight of the
limestone, dolomite, or olivine derivatives or other basic flux
additives included in the pellets from the weight of the
pellets. For purposes of this paragraph, "fluxed pellets" are
pellets produced in a process in which limestone, dolomite,
olivine, or other basic flux additives are combined with
merchantable iron ore concentrate. No subtraction from the
weight of the pellets shall be allowed for binders, mineral and
chemical additives other than basic flux additives, or moisture.
Sec. 38. Minnesota Statutes 1986, section 298.25, is
amended to read:
298.25 [TAXES ADDITIONAL TO OTHER TAXES.]
The taxes imposed under section 298.24 shall be in addition
to the occupation tax imposed upon the business of mining and
producing iron ore and in addition to the royalty tax imposed
upon royalties received for permission to mine and produce iron
ore. Except as herein otherwise provided, such taxes shall be
in lieu of all other taxes upon such taconite and iron
sulphides, or the lands in which they are contained, or upon the
mining or quarrying thereof, or the production of concentrate
therefrom, or upon the concentrate produced, or upon the
machinery, equipment, tools, supplies and buildings used in such
mining, quarrying or production, or upon the lands occupied by,
or used in connection with, such mining, quarrying or production
facilities. If electric or steam power for the mining,
transportation or concentration of such taconite or the
concentrates produced therefrom is generated in plants
principally devoted to the generation of power for such
purposes, the plants in which such power is generated and all
machinery, equipment, tools, supplies, transmission and
distribution lines used in the generation and distribution of
such power, shall be considered to be machinery, equipment,
tools, supplies and buildings used in the mining, quarrying or
production of taconite and taconite concentrates within the
meaning of this section. If part of the power generated in such
a plant is used for purposes other than the mining or
concentration of taconite or the transportation or loading of
taconite or the concentrates thereof, a proportionate share of
the value of such generating facilities, equal to the proportion
that the power used for such other purpose bears to the
generating capacity of the plant, shall be subject to the
general property tax in the same manner as other property;
provided, power generated in such a plant and exchanged for an
equivalent amount of power which is used for the mining,
transportation or concentration of such taconite or concentrates
produced therefrom, shall be considered as used for such
purposes within the meaning of this section. Nothing herein
shall prevent the assessment and taxation of the surface of
reserve land containing taconite and not occupied by such
facilities or used in connection therewith at the value thereof
without regard to the taconite or iron sulphides therein, nor
the assessment and taxation of merchantable iron ore or other
minerals, or iron-bearing materials other than taconite or iron
sulphides in such lands in the manner provided by law, nor the
assessment and taxation of facilities used in producing sulphur
or sulphur products from iron sulphide concentrates, or in
refining such sulphur products, under the general property tax
laws. Nothing herein shall except from general taxation or from
taxation as provided by other laws any property used for
residential or townsite purposes, including utility services
thereto.
Sec. 39. Minnesota Statutes 1986, section 298.28,
subdivision 4, is amended to read:
Subd. 4. [SCHOOL DISTRICTS.] (a) 27.5 cents per taxable
ton plus the increase provided in paragraph (d) must be
allocated to qualifying school districts to be distributed,
based upon the certification of the commissioner of revenue,
under paragraphs (b) and (c).
(b) 5.5 cents per taxable ton must be distributed to the
school districts in which the lands from which taconite was
mined or quarried were located or within which the concentrate
was produced. The distribution must be based on the
apportionment formula prescribed in subdivision 2.
(c)(i) 22 cents per taxable ton, less any amount
distributed under paragraph (e), shall be distributed to a group
of school districts comprised of those school districts wherein
the taconite was mined or quarried or the concentrate produced
or in which there is a qualifying municipality as defined by
section 273.134 in direct proportion to school district indexes
as follows: for each school district, its pupil units
determined under section 124.17 for the prior school year shall
be multiplied by the ratio of the average adjusted assessed
value per pupil unit for school districts receiving aid under
this clause as calculated pursuant to chapter 124A for the
school year ending prior to distribution to the adjusted
assessed value per pupil unit of the district. Each district
shall receive that portion of the distribution which its index
bears to the sum of the indices for all school districts that
receive the distributions.
(ii) Notwithstanding clause (i), each school district that
receives a distribution under sections 294.21 to 294.26; 29;
298.23 to 298.28, exclusive of any amount received under this
clause; 298.34 to 298.39; 298.391 to 298.396; 298.405; 298.51 to
298.67 or any law imposing a tax on several severed mineral
values or any other law distributing proceeds in lieu of ad
valorem tax assessments on copper or nickel properties that is
less than the amount of its levy reduction under section
275.125, subdivision 9, for the second year prior to the year of
the distribution shall receive a distribution equal to the
difference; the amount necessary to make this payment shall be
derived from proportionate reductions in the initial
distribution to other school districts under clause (i).
(d) On July 15, in years prior to 1988, an amount equal to
the increase derived by increasing the amount determined by
paragraph (c) in the same proportion as the increase in the
steel mill products index over the base year of 1977 as provided
in section 298.24, subdivision 1, clause (a), shall be
distributed to any school district described in paragraph (c)
where a levy increase pursuant to section 124A.03, subdivision
2, is authorized by referendum, according to the following
formula. On July 15, 1988, the increase over the amount
established for 1987 shall be determined as if there had been an
increase in the tax rate under section 298.24, subdivision 1,
paragraph (b), according to the increase in the implicit price
deflator. On July 15, 1988 1989 and subsequent years, the
increase over the amount established for the prior year shall be
determined according to the increase in the implicit price
deflator as provided in section 298.24, subdivision 1, paragraph
(a). Each district shall receive the product of:
(i) $150 times the pupil units identified in section
124.17, subdivision 1, enrolled in the second previous year or
the 1983-1984 school year, whichever is greater, less the
product of 1-3/4 mills times the district's taxable valuation in
the second previous year; times
(ii) the lesser of:
(A) one, or
(B) the ratio of the amount certified pursuant to section
124A.03, subdivision 2, in the previous year, to the product of
1-3/4 mills times the district's taxable valuation in the second
previous year.
If the total amount provided by paragraph (d) is
insufficient to make the payments herein required then the
entitlement of $150 per pupil unit shall be reduced uniformly so
as not to exceed the funds available. Any amounts received by a
qualifying school district in any fiscal year pursuant to
paragraph (d) shall not be applied to reduce foundation aids
which the district is entitled to receive pursuant to section
124A.02 or the permissible levies of the district. Any amount
remaining after the payments provided in this paragraph shall be
paid to the commissioner of iron range resources and
rehabilitation who shall deposit the same in the taconite
environmental protection fund and the northeast Minnesota
economic protection trust fund as provided in subdivision 11.
(e) There shall be distributed to any school district the
amount which the school district was entitled to receive under
section 298.32 in 1975.
Sec. 40. Minnesota Statutes 1986, section 298.28,
subdivision 7, is amended to read:
Subd. 7. [IRON RANGE RESOURCES AND REHABILITATION BOARD.]
Three cents per taxable ton shall be paid to the iron range
resources and rehabilitation board for the purposes of section
298.22. The amount determined in this subdivision shall be
increased in 1981 and subsequent years prior to 1988 in the same
proportion as the increase in the steel mill products index as
provided in section 298.24, subdivision 1, and shall be
increased in 1988 1989 and subsequent years according to the
increase in the implicit price deflator as provided in section
298.24, subdivision 1. The amount distributed in 1988 shall be
increased according to the increase that would have occurred in
the rate of tax under section 298.24 if the rate had been
adjusted according to the implicit price deflator for 1987
production. The amount distributed pursuant to this subdivision
shall be expended within or for the benefit of a tax relief area
defined in section 273.134. No part of the fund provided in
this subdivision may be used to provide loans for the operation
of private business unless the loan is approved by the governor
and the legislative advisory commission.
Sec. 41. Minnesota Statutes 1986, section 298.28,
subdivision 10, is amended to read:
Subd. 10. [INCREASE.] The amounts determined under
subdivisions 6, paragraph (a), and 9 shall be increased in 1979
and subsequent years prior to 1988 in the same proportion as the
increase in the steel mill products index as provided in section
298.24, subdivision 1. The amount distributed in 1988 shall be
increased according to the increase that would have occurred in
the rate of tax under section 298.24 if the rate had been
adjusted according to the implicit price deflator for 1987
production. Those amounts shall be increased in 1988 1989 and
subsequent years in the same proportion as the increase in the
implicit price deflator as provided in section 298.24,
subdivision 1.
The distributions per ton determined under subdivisions 5,
paragraphs (b) and (d), and 6, paragraphs (b) and (c) for
distribution in 1988 and subsequent years shall be the
distribution per ton determined for distribution in 1987.
Sec. 42. Minnesota Statutes 1986, section 298.28, is
amended by adding a subdivision to read:
Subd. 15. [DISTRIBUTION OF DELAYED
PAYMENTS.] Notwithstanding any other provision of this section
or any other law, if payment of taxes collected under section
298.24 is delayed past the due date because the taxpayer is a
debtor in a pending bankruptcy proceeding, the amount paid shall
be distributed as follows when received:
(1) 50 percent to St. Louis county acting as the counties'
fiscal agent, to be distributed as provided in sections 273.134
to 273.136;
(2) 25 percent to the northeast Minnesota economic
protection trust fund; and
(3) 25 percent to the taconite environmental protection
fund.
Sec. 43. [REPEALER.]
(a) Minnesota Statutes 1986, sections 294.21; 294.22;
294.23; 294.24; 294.25; 294.26; 299.01; 299.012; 299.013;
299.02; 299.03; 299.04; 299.05; 299.06; 299.07; 299.08; 299.09;
299.10; 299.11; 299.12; 299.13; and 299.14, are repealed.
(b) Minnesota Statutes 1986, sections 290.082; 298.04;
298.28, subdivision 14; 298.51; 298.52; 298.53; 298.54; 298.55;
298.61; 298.62; 298.63; 298.64; 298.65; 298.66; and 298.67, are
repealed.
(c) Minnesota Statutes 1986, sections 298.01, subdivision 1;
298.02; 298.026; 298.027; 298.028; 298.03; 298.031; and 298.40
are repealed.
Sec. 44. [EFFECTIVE DATE.]
Section 1 and the parts of sections 2, 3, 5, 8, and 39 that
strike references to sections 298.51 to 298.67 and references to
other laws distributing proceeds in lieu of ad valorem tax
assessments on copper or nickel properties are effective
December 31, 1986. Section 6 is effective for taxes assessed in
1989 and thereafter. Sections 4, 10 to 21, 38, and 43,
paragraph (a), and the parts of sections 2, 3, 5, 8, and 39 that
strike references to sections 294.21 to 294.26 or sections
294.21 to 294.28 are effective for taxable years beginning after
December 31, 1989. Sections 7, 9, 22, 26 to 36, and 43,
paragraph (b), are effective for taxable years beginning after
December 31, 1986. Section 23 is effective for ores mined after
December 31, 1986. Section 24 and section 43, paragraph (c),
are effective for iron ore and taconite concentrates mined after
December 31, 1989. Section 37 is effective for taconite
concentrates mined after December 31, 1986.
ARTICLE 10
ECONOMIC DEVELOPMENT
Section 1. Minnesota Statutes 1986, section 273.1313,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] (a) As used in this section,
the following terms have the meanings given them.
(b) "Commissioner" means the commissioner of revenue energy
and economic development.
(c) "Employment property" means taxable property, excluding
land but including buildings, structures, fixtures, and
improvements that satisfy each of the following conditions:
(1) The property is located within an enterprise zone
designated according to section 273.1312.
(2) The property is commercial or industrial property which
is not used in a trade or business which either is described in
section 103(b)(6)(O) of the Internal Revenue Code of 1954, as
amended through December 31, 1984, or is property of a public
utility (i) a facility the primary purpose of which is one of
the following: retail food and beverage services, automobile
sales or service, or the provision of recreation or
entertainment, or a private or commercial golf course, country
club, massage parlor, tennis club, skating facility including
roller skating, skateboard, and ice skating, racquet sports
facility, including any handball or racquetball court, hot tub
facility, suntan facility, or racetrack; (ii) property of a
public utility; (iii) property used in the operation of a
financial institution; (iv) property owned by a fraternal or
veterans' organization; or (v) property of a business operating
under a franchise agreement that requires the business to be
located in the state; except that, in an enterprise zone
designated under section 273.1312, subdivision 4, paragraph (c),
clause (3), that is not in a city of the first class, employment
property includes property used as a retail food or beverage
facility or an automobile sales or service facility, and
property described in (v) except for property of a retail food
or beverage facility.
(d) "Market value" of a parcel of employment property means
the value of the taxable property as annually determined
pursuant to section 273.12, less (i) the market value of all
property existing at the time of application for classification,
as last assessed prior to the time of application, and (ii) any
increase in the market value of the property referred to in
clause (i) as assessed in each year after the employment
property is first placed in service. In each year, any change
in the values of the employment property and the other property
on the land shall be deemed to be proportionate unless caused by
a capital improvement or loss.
(e) "Municipality" means any home rule charter or statutory
city or county, but a county may not exercise the powers granted
in this section with reference to property situated within a
city.
(f) Notwithstanding the provisions of paragraphs (c) and (d)
"employment property" and "market value" includes in the case of
taxable real property located in an enterprise zone designated
under section 273.1312, subdivision 4, paragraph (c), clause
(3), the entire value of the commercial and industrial
employment property, including land, used in a trade or business
which is not used in a trade or business which either is
described in section 103(b)(0)(ii) of the Internal Revenue Code
of 1954, as amended through December 31, 1984, or is the
property of a public utility. The provisions of this paragraph
shall not apply to employment property located in an enterprise
zone designated pursuant to section 273.1312, subdivision 4,
paragraph (c), clause (3), that is assessed pursuant to the
first clause of the first sentence of section 273.13,
subdivision 24, paragraph (b).
Sec. 2. Minnesota Statutes 1986, section 273.1313,
subdivision 2, is amended to read:
Subd. 2. [PROGRAM.] (a) The governing body of any
municipality which contains a designated enterprise zone as
provided by section 273.1312 shall by resolution establish a
program for classification of new property or improvements to
existing property as employment property pursuant to the
provisions of this section. Applications for classification
under the program shall be filed with the municipal clerk or
auditor in a form prescribed by the commissioner, with additions
as may be prescribed by the municipal governing body. The
application shall contain, where appropriate, a legal
description of the parcel of land on which the facility is to be
situated or improved; a general description of the facility or
improvement and its proposed use, the probable time schedule for
undertaking any construction or improvement, and information
regarding the matters referred to in paragraph (d); the market
value and the assessed value of the land and of all other
taxable property then situated on it, according to the most
recent assessment; and if the property is to be improved or
expanded, an estimate of the probable cost of the new
construction or improvement and the market value of the new or
improved facility (excluding land) when completed.
(b) Upon receipt of an application the municipal clerk or
auditor, subject to any prior approval required by the
resolution establishing the program, shall furnish a copy to the
assessor for the property and to the governing body of each
school district and other public body authorized to levy taxes
on the property, and shall publish a notice in the official
newspaper of the time and place of a hearing to be held by the
governing body on the application, not less than 30 days after
the notice is published, stating that the applicant, the
assessor, representatives of the affected taxing authorities,
and any taxpayer of the municipality may be heard or may present
their views in writing at or before the hearing. The hearing
may be adjourned from time to time, but the governing body shall
take action on the application by resolution within 30 days
after the hearing. If disapproved, the reasons shall be set
forth in the resolution, and the applicant may appeal to the
commissioner within 30 days thereafter, but only on the ground
that the determination is arbitrary, in relation to prior
determinations as to classification under the program, or based
upon a mistake of law. If approved, the resolution shall
include determinations as to the matters set forth in paragraph
(d), and the clerk or auditor shall transmit it to the
commissioner.
(c) Within 60 days after receipt of an approved application
or an appeal from the disapproval of an application, the
commissioner shall take action on it. The commissioner shall
approve each application approved by the governing body on
finding that it complies with the provisions of this section.
If the commissioner disapproves the application, or finds
grounds exist for appeal of a disapproved application, the
commissioner shall transmit the finding to the governing body
and the applicant. When grounds for appeal have been determined
to exist, the governing body shall reconsider and take further
action on the application within 30 days after receipt of the
commissioner's notice and serve written notice of the action
upon the applicant. The applicant, within 30 days after receipt
of notice of final disapproval by the commissioner or the
governing body, may appeal from the disapproval to a court of
competent jurisdiction.
(d) In the case of enterprise zones qualifying pursuant to
section 273.1312, subdivision 4, paragraph (c), clause (1), an
application shall not be approved unless the governing body
finds and determines that the construction or improvement of the
facility:
(1) is reasonably likely to create new employment or
prevent a loss of employment in the municipality;
(2) is not likely to have the effect of transferring
existing employment from one or more other municipalities within
the state;
(3) is not likely to cause the total market value of
employment property within the municipality to exceed five
percent of the total market value of all taxable property within
the municipality; or if it will, the resulting limitation upon
the increase of the assessed value of all taxable property
within the municipality, considering the amount of additional
municipal services likely to be required for the employment
property, is not likely to substantially impede the operation or
the financial integrity of the municipality or any other public
body levying taxes on property in the municipality; and
(4) will not result in the reduction of the assessed value
of existing property within the municipality owned by the
applicant, through abandonment, demolition, or otherwise,
without provision for the restoration of the existing property
within a reasonable time in a manner sufficient to restore the
assessed valuation.
(e) In the case of enterprise zones qualifying pursuant to
section 273.1312, subdivision 4, paragraph (c), clause (3), an
application for assessment as employment property under section
273.13, subdivision 24, paragraph (b), or for a tax reduction
pursuant to section 273.1314, subdivision 9, may not be approved
unless the governing body finds and determines that the
construction or improvement of the facility is not likely to
have the effect of transferring existing employment from one or
more other municipalities within the state.
(f) All participating enterprise zone municipalities must
submit, with each application from businesses that previously
have not received enterprise zone credits, a written multiyear
enterprise zone tax credit distribution plan. The plan must set
forth: (1) the maximum amount of credits to be drawn over the
five year allowable period; and (2) the maximum amount of state
tax credits to be drawn each of those five years, and whether
the form will be in tax credits or refunds.
(g) Within 90 days of final enactment of this act, all
participating enterprise zone municipalities, except those
containing an enterprise zone designated under section 273.1312,
subdivision 4, paragraph (c), clause (3), other than a zone in
the city of the first class, must submit a written multiyear
enterprise zone tax credit distribution plan. The plan must
specify the maximum amounts of state tax credits previously
approved business applicants are eligible to receive in each of
the remaining years for which credits have been authorized. The
commissioner may only approve requests for state tax credits
from a business that meets the requirements established in
sections 273.1312 to 273.1314. The commissioner shall not
approve any request for state tax credits from a business that
exceeds the amount set forth in an enterprise zone
municipality's multiyear enterprise zone tax credit distribution
plan for that business entity for that year.
(h) Border city enterprise zones designated under section
273.1312, subdivision 4, paragraph (c), clause (3), that are not
located in cities of the first class shall, within 90 days of
final enactment of this act, submit a written multiyear
enterprise zone tax distribution plan. The plan must specify
the maximum aggregate amount of tax credits all previously
approved business applicants are eligible to receive in each of
the remaining years for which credits have been authorized. The
commissioner may only approve requests for state tax credits for
a business that meets the requirements established in sections
273.1312 to 273.1314.
Sec. 3. Minnesota Statutes 1986, section 273.1314,
subdivision 9, is amended to read:
Subd. 9. [AUTHORIZED FORMS OF STATE TAX REDUCTIONS.] (a)
The following types of tax reductions may be approved by the
commissioner for businesses located in an enterprise zone:
(1) an exemption from the general sales tax imposed by
chapter 297A for purchases of construction materials or
equipment for use in the zone if the purchase was made after the
date of application for the zone;
(2) a credit against the income tax of an employer for
additional workers employed in the zone, other than workers
employed in construction, up to a maximum of $3,000 per employee
per year;
(3) an income tax credit for a percentage of the cost of
debt financing to construct new or expanded facilities in the
zone;
(4) a state paid property tax credit for a portion of the
property taxes paid by a new commercial or industrial facility
or the additional property taxes paid by an expansion of an
existing commercial or industrial facility in the zone; and
(5) a complete abatement of all corporate income and excise
taxes under chapter 290, property taxes, and sales and use taxes
under chapter 297A on the purchase of construction materials or
equipment for use in the zone if the zone is designated pursuant
to section 273.1312, subdivision (4), paragraph (c), clause
(4). Local taxing authorities with an enterprise zone
designated pursuant to section 273.1312, subdivision 4,
paragraph (c), clause (4), will be reimbursed by the state for
foregone property taxes only to the extent that the local taxing
authority can demonstrate the development within that zone has
imposed an additional net financial burden on its budget. The
additional net financial burden shall be determined by
subtracting the increase in the total equalized assessed
property value of the local taxing authority that is in excess
of a statewide average increase in equalized assessed property
values as determined by the commissioner of revenue, multiplied
by the mill rate of the local taxing authority for taxes payable
in the current year, from the additional direct costs the
development has placed on the local taxing authority's budget
for the current year. The commissioner of energy and economic
development, in consultation with the commissioner of revenue,
shall review that local taxing authority's demonstration of
additional financial burden and determine the amount which the
state will reimburse the local taxing authority for foregone
property tax revenue.
(b) The municipality shall specify in its application for
designation the types of tax reductions it seeks to be made
available in the zone and the percentage rates and other
appropriate limitations on the reductions.
(c) Upon designation of an enterprise zone and approval by
the commissioner of the tax reductions to be made available
therein, the commissioner of revenue shall take the steps
necessary to implement the tax reductions.
(d) The tax reductions provided by this subdivision shall
not apply to any facility described in section 103(b)(6)(O) of
the Internal Revenue Code of 1954, as amended through January
15, 1983, or to any regulated public utility (1) a facility the
primary purpose of which is one of the following: retail food
and beverage services, automobile sales or service, or the
provision of recreation or entertainment, or a private or
commercial golf course, country club, massage parlor, tennis
club, skating facility including roller skating, skateboard, and
ice skating, racquet sports facility, including any handball or
racquetball court, hot tub facility, suntan facility, or
racetrack; (2) property of a public utility; (3) property used
in the operation of a financial institution; (4) property owned
by a fraternal or veterans' organization; or (5) property of a
business operating under a franchise agreement that requires the
business to be located in the state; except that, in an
enterprise zone designated under section 273.1312, subdivision
4, paragraph (c), clause (3), that is not in a city of the first
class, tax reductions may be provided to a retail food or
beverage facility or an automobile sales or service facility, or
a business operating under a franchise agreement that requires
the business to be located in this state except for such a
franchised retail food or beverage facility.
(e) The commissioner shall approve tax reductions
authorized by paragraph (a) within an enterprise zone designated
pursuant to section 273.1312, subdivision 4, paragraph (c),
clause (3), only after the governing body of a city designated
as an enterprise zone has designated an area or areas, each
consisting of at least 100 acres, of the city not in excess of
400 acres in which the tax reductions may be provided.
(f) In addition to the tax reductions authorized by
paragraph (a), for an enterprise zone designated under section
273.1312, subdivision 4, paragraph (c), clause (3), the
following types of tax reductions may be approved:
(1) A credit against income tax for workers employed in the
zone and not qualifying for a credit under paragraph (a), clause
(2), subject to a maximum of $1,500 per employee per year;
(2) A state paid property tax credit for a portion of the
property taxes paid by a commercial or industrial facility
located in the zone. Notwithstanding paragraph (d), the credits
provided by this paragraph may be provided to the businesses
described in section 103(b)(6)(0)(i) of the Internal Revenue
Code of 1954, as amended through December 31, 1983.
(g) Each tax reduction provided to a business pursuant to
this subdivision shall terminate not longer than five years
after the effective date of the tax reduction for the
business unless the business is located in a border city
enterprise zone designated under section 273.1312, subdivision
4, paragraph (c), clause (3), that is not a city of the first
class. Each tax reduction provided to a business that is
located in a border city enterprise zone designated under
section 273.1312, subdivision 4, paragraph (c), clause (3), that
is not located in a city of the first class shall terminate not
longer than seven years after the effective date of the tax
reduction for the business. Subject to the five-year or the
seven-year limitation, the tax reductions may be provided after
expiration of the zone's designation.
(h) The income tax credits provided pursuant to clauses (a)
and (f) may be refundable.
Sec. 4. Minnesota Statutes 1986, section 273.1314,
subdivision 10, is amended to read:
Subd. 10. [RECAPTURE.] Any business which (a) receives tax
reductions authorized by subdivision 9, classification as
employment property pursuant to section 273.1312, or an
alternative local contribution under subdivision 6; and (b)
ceases to operate its facility located within the enterprise
zone within two years after the expiration of the tax reductions
shall repay the amount of the tax reduction or local
contribution pursuant to the following schedule:
Termination Repayment
of operations Portion
Less than 6 months 100 percent
6 months or more but less than 12 months 75 percent
12 months or more but less than 18 months 50 percent
18 months or more but less than 24 months 25 percent
The repayment must be paid to the state to the extent it
represents a tax reduction under subdivision 9 and to the
municipality to the extent it represents a property tax
reduction or other local contribution. Any amount repaid to the
state must be credited to the amount certified as available for
tax reductions in the zone pursuant to subdivision 8. Any
amount repaid to the municipality must be used by the
municipality for economic development purposes.
The commissioner of revenue may seek repayment of tax
credits from a business ceasing to operate within an enterprise
zone.
Sec. 5. Minnesota Statutes 1986, section 273.1314, is
amended by adding a subdivision to read:
Subd. 8b. [ADDITIONAL BORDER CITY ALLOCATIONS.] In
addition to tax reductions authorized in subdivisions 8 and 8a,
the commissioner may allocate $2,000,000 for tax reductions
pursuant to subdivision 9 to enterprise zones designated under
section 273.1312, subdivision 4, paragraph (c), clause (3),
except for zones located in cities of the first class. This
money shall be allocated among the zones on a per capita basis.
Limits on the maximum allocation to a zone imposed by
subdivision 8 do not apply to allocations made under this
subdivision. Tax reductions authorized by this subdivision may
not be allocated to any property which is:
(1) a facility the primary purpose of which is one of the
following: the provision of recreation or entertainment, or a
private or commercial golf course, country club, massage parlor,
tennis club, skating facility including roller skating,
skateboard, and ice skating, racquet sports facility, including
any handball or racquetball court, hot tub facility, suntan
facility, or racetrack;
(2) property of a public utility;
(3) property used in the operation of a financial
institution;
(4) property owned by a fraternal or veterans' organization;
(5) property of a retail food or beverage service business
operating under a franchise agreement that requires the business
to be located in the state.
Sec. 6. Minnesota Statutes 1986, section 273.1314, is
amended by adding a subdivision to read:
Subd. 10a. [INTEREST.] When tax credits allowed under
subdivision 9 result in an overpayment within the meaning of
section 290.50, the excess to be refunded to the taxpayer shall
bear interest at the amount specified in section 270.76,
computed from 90 days after (1) the due date of the return or
(2) the date on which the return is filed, whichever is later,
to the date the refund is paid.
Sec. 7. Minnesota Statutes 1986, section 297A.257,
subdivision 1, is amended to read:
Subdivision 1. [DESIGNATION OF DISTRESSED COUNTIES.] (a)
The commissioner of energy and economic development shall
annually on June 1 designate those counties which are
distressed. A county is distressed if it satisfies either at
least one of the following two criteria:
(1) The county has an average unemployment rate of ten
percent or more for the one-year period ending on April 30 of
the year in which the designation is made; or
(2) the unemployment rate for the entire county was greater
than 110 percent of the state average for the 12-month period
ending the previous April 30, and 20 percent or more of the
county's economy, as determined by the commissioner of jobs and
training, is dependent upon agriculture; or
(3) for counties designated for periods beginning after
June 30, 1986, but before July 1, 1988, at least 20 percent of
the county's economy, as determined by the commissioner of jobs
and training, is dependent upon agriculture and the total market
value of real and personal property for the entire county for
taxes payable in 1986, as determined by the commissioner of
revenue, has decreased by at least 22 percent from the total
market value of real and personal property for the entire county
for taxes payable in 1984.
If, as a result of a plant closing, layoffs or another
similar event affecting a significant number of employees in the
county, the commissioner has reason to believe that the average
unemployment in the county will exceed ten percent during the
one-year period beginning April 30, the commissioner may
designate the county as distressed, notwithstanding clause (1).
(b) The commissioner shall designate a portion of a county
containing a city of the first class located outside of the
metropolitan area as a distressed county if:
(1) that portion of the county has an unemployment rate of
ten percent or more for the one-year period ending on April 30
of the year in which the designation is made; and
(2) that portion of the county has a population of at least
50,000 as determined by the 1980 federal census.
(c) A county or the portion of a county designated pursuant
to this subdivision shall be considered a distressed county for
purposes of this section and chapter 116M.
(d) Except as otherwise specifically provided, the
determination of whether a county is distressed must be made
using the most current data available from the state
demographer. The designation of a distressed county is
effective for the 12-month period beginning July 1. A county
may be designated as distressed as often as it qualifies.
(e) The authority to designate counties as distressed
expires on June 30, 1989.
Sec. 8. Minnesota Statutes 1986, section 297A.257,
subdivision 2, is amended to read:
Subd. 2. [SALES TAX EXEMPTION.] Purchase and use of
capital equipment is exempt from the sales and use tax imposed
by this chapter if the capital equipment is placed in service in
connection with the construction of a new or an expansion of an
existing manufacturing facility in a distressed county or in the
taconite tax relief area defined in section 273.134. Purchase
or use of equipment for use in an existing plant qualifies under
this section and section 297A.01, subdivision 16, as an
expansion if either the production capacity of the plant is
increased by at least 20 percent as a result or if the total
capital investments made within a 12-month period exceed
$25,000,000. Purchases of capital equipment are exempt under
this section only to the extent that the purchases of capital
equipment for the project during the calendar year exceed
$100,000. The county is a distressed county for purposes of
this subdivision if it was designated as a distressed county for
the time period during which the contract to purchase the
equipment was executed.
A county meeting only the criteria in paragraph (a), clause
(3), of subdivision 1 is a distressed county for purposes of
this subdivision if it was designated as a distressed county for
the time period during which sales and use tax on capital
equipment purchased became due and payable.
Sec. 9. Minnesota Statutes 1986, section 297A.257,
subdivision 2a, is amended to read:
Subd. 2a. [EXEMPTION FOR CONSTRUCTION MATERIALS.]
Construction materials and supplies are exempt from the tax
imposed under this chapter, regardless of whether purchased by
the owner or a contractor, subcontractor, or builder, if all of
the following conditions are met:
(a)(1) the materials and supplies are used or consumed in
constructing a new manufacturing facility or expanding an
existing one in a distressed county; and
(2) the total capital investment made within a three-year
period exceeds $75,000,000; or
(b)(1) the materials and supplies are used or consumed in
constructing a new manufacturing facility or expanding an
existing one within the taconite tax relief area defined in
section 273.134; and
(2) the total capital investment made within a three-year
period exceeds $50,000,000.
A county is a distressed county for purposes of a project
qualifying under this subdivision if it was designated as a
distressed county at the time the initial contract to purchase
the materials and supplies was executed.
Sec. 10. Minnesota Statutes 1986, section 297A.257, is
amended by adding a subdivision to read:
Subd. 2b. [PROJECTS; CONTINUED EXEMPTION.] If construction
of a project is begun during a time period in which the county
was designated as a distressed county and if the county ceases
to be a distressed county, the provision of subdivisions 2 and
2a apply to the project as if the county were distressed for 12
months after the designation expired.
Sec. 11. [APPROPRIATION.]
$500,000 is appropriated from the general fund to the
commissioner of energy and economic development to be disbursed
to the Aitkin county growth fund to be expended for economic
development projects and activities within the county.
ARTICLE 11
GROSS EARNINGS
Section 1. Minnesota Statutes 1986, section 295.01,
subdivision 10, is amended to read:
Subd. 10. [TELEPHONE COMPANY.] The term "telephone
company" as used in this chapter means any person, firm,
association or corporation, excluding municipal telephone
companies, owning or operating any telephone line or telephone
exchange for hire wholly or partly within this state, including
radio and other advancements in the art of telephony but
excluding cellular radio and sellers of telephone services, but
excluding resellers and cellular radio. "Resellers of telephone
services" as used in this chapter means any person, firm,
association, or corporation that:
(1) resells telecommunications services purchased from
telephone companies as defined in this chapter;
(2) does not own, operate, manage, or control transmission
facilities that have the technological capability to provide
telecommunication services; and
(3) incurs costs equal to at least 50 percent of its gross
revenues for the telephone services purchased from telephone
companies that own, operate, manage, or control transmission
facilities.
Sec. 2. Minnesota Statutes 1986, section 295.32, is
amended to read:
295.32 [GROSS EARNINGS TAX; ANNUAL RETURN.]
Every telegraph company as defined in section 295.01,
subdivision 9, shall file a return with the commissioner of
revenue, in such form as the commissioner shall prescribe,
containing a true and just report of its gross earnings derived
from business within the state during the preceding calendar
year, which return shall contain a computation of tax of six
percent and make payment of the tax based upon the following
percentages of such gross earnings:
for calendar years beginning before December 31, 1989, 6
percent,
for calendar year 1990, 4.5 percent,
for calendar year 1991, 3 percent,
for calendar year 1992, 1.5 percent, and
for calendar years beginning after December 31, 1992,
exempt.
Such return and payment of the tax due therewith shall be
submitted on or before March first of each year, and shall be in
lieu of all ad valorem taxes upon the property of such company
within the state for the year during which such gross earnings
accrued. The provisions of chapter 294 and acts amendatory
thereto, shall be applicable to such telegraph companies and to
the returns and to the taxes submitted therewith by them.
Sec. 3. Minnesota Statutes 1986, section 295.34,
subdivision 1, is amended to read:
Subdivision 1. Except as provided in subdivision 2 every
telephone company shall file a return with the commissioner of
revenue on or before April 15 of each year, and submit payment
therewith, of the following percentages of its gross earnings,
including long distance access charges, of the preceding
calendar year derived from business within this state:
(a) for gross earnings from service to rural subscribers
and from exchange business of all cities of the fourth class and
statutory cities having a population of 10,000 or less
for calendar years beginning before December 31, 1986 1988,
4 percent,
for calendar year 1987 1989, 3 percent, provided that the
estimated tax payments made on March 15 and June 15, 1989,
pursuant to section 295.365, must be made as if the tax were
imposed at a rate of four percent,
for calendar year 1988 1990, 1.5 percent,
for calendar year 1989 1991, 1 percent, and
for calendar years beginning after December 31, 1989 1992,
exempt; and
(b) for gross earnings derived from all other business
for calendar years beginning before December 31, 1986 1988,
7 percent,
for calendar year 1987 1989, 5.5 percent, provided that the
estimated tax payments made on March 15 and June 15, 1989,
pursuant to section 295.365, must be made as if the tax were
imposed at a rate of seven percent,
for calendar year 1988 1990, 3 percent,
for calendar year 1989 1991, 2.5 percent, and
for calendar years beginning after December 31, 1989 1992,
exempt.
Beginning January 1, 1986, A tax shall not be imposed on
the gross earnings of a telephone company from business
originating or terminating outside of Minnesota, except that the
gross earnings tax is imposed on all long distance access
charges allocated to interstate service received in payment from
a telephone company before December 31, 1989.
The tax imposed is in lieu of all other taxes, except the
taxes imposed by chapter 290, property taxes assessed beginning
in 1987 1989, payable in 1988 1990, and sales and use taxes
imposed as a result of section 296.22, subdivision 13 chapter
297A. All money paid by a company for connecting fees and
switching charges to any other company shall be reported as
earnings by the company to which they are paid, but shall not be
deemed earnings of the collecting and paying company. For the
purposes of this section, the population of any statutory city
shall be considered as that stated in the latest federal census.
Sec. 4. Minnesota Statutes 1986, section 295.365, is
amended to read:
295.365 [DECLARATIONS OF ESTIMATED GROSS EARNINGS TAX BY
TELEGRAPH AND TELEPHONE COMPANIES.]
Subdivision 1. [PAYMENTS.] Every telegraph company subject
to taxation pursuant to section 295.32 and every telephone
company subject to taxation pursuant to section 295.34, shall
make a declaration of estimated gross earnings tax for the
calendar year if the gross earnings tax can reasonably be
expected to be in excess of $1,000. The declaration of
estimated tax shall be filed on or before March 15. The amount
of estimated tax with respect to which a declaration is required
shall be paid in four equal installments on or before the 15th
day of March, June, September, and December. For calendar year
1989 only, the March 15 and June 15 installments for telephone
companies shall be made as provided in section 295.34,
subdivision 1. The remaining two installments for calendar year
1989 shall be calculated by subtracting the sum of the March 15
and June 15 installments from the estimated tax for the year and
dividing the difference by two. An amendment of a declaration
may be filed in any interval between installment dates
prescribed above but only one amendment may be filed in each
such interval.
Subd. 2. [AMENDMENT OF DECLARATIONS.] (a) If any amendment
of a declaration is filed, the amount of each remaining
installment shall be the amount which would have been payable if
the new estimate had been made when the first estimate for the
calendar year was made, increased or decreased, as the case may
be, by the amount computed by dividing
(1) the difference between (A) the amount of estimated tax
required to be paid before the date on which the amendment was
made, and (B) the amount of estimated tax which would have been
required to be paid before such date if the new estimate had
been made when the first estimate was made, by
(2) the number of installments remaining to be paid on or
after the date on which the amendment is made.
(b) Notwithstanding paragraph (a), if an amendment of a
declaration is filed for calendar year 1989 prior to payment of
the June 15 installment, the amount of the June 15 installment
shall be 31.5 percent of the estimated tax for the calendar year
plus the difference between 31.5 percent of the reestimated tax
for the calendar year and the March 15 installment.
Subd. 3. [EXTENSIONS.] The commissioner of revenue may
grant a reasonable extension of time for filing any declaration
but such extension shall not be for more than six months.
Sec. 5. Minnesota Statutes 1986, section 295.366, is
amended by adding a subdivision to read:
Subd. 5. [1989 EXCEPTION.] Notwithstanding subdivision 4,
for calendar year 1989 only, the addition to the tax with
respect to any underpayment of the March 15 or June 15 payment
is imposed if the total amount of the payments of estimated tax
made on or before June 15 does not equal or exceed the amount
which would have been required to be paid on or before that date
if the estimated tax for the first six months of 1989 were the
lesser of:
(1) 50 percent of the tax shown on the return of the
corporation for the preceding year; or
(2) 60 percent of the actual liability for the calendar
year.
The addition to tax under this subdivision shall reduce any
addition to tax imposed under subdivision 4 but not to less than
zero.
Sec. 6. Minnesota Statutes 1986, section 295.39, is
amended to read:
295.39 [REPORTS FILED BY TRUST COMPANIES WITH COMMISSIONER
OF REVENUE COUNTY TREASURER.]
It shall be the duty of every trust company which is
required to pay a tax of six percent of its gross earnings in
lieu of taxes and assessments upon its capital stock and
personal property pursuant to the provisions of section 295.37,
on or before the first day of February, in each year, to make
and file with the commissioner of revenue county treasurer of
the county in which the trust has its principal place of
business a report covering the preceding calendar year, verified
by the oath of an officer of such company, setting forth
correctly the full amount of the gross earnings of such company
during the preceding calendar year, and such other and further
information as the commissioner of revenue county treasurer may
require.
Sec. 7. Minnesota Statutes 1986, section 295.40, is
amended to read:
295.40 [TAX DETERMINED.]
Upon receipt of such report the commissioner of revenue
county treasurer shall determine therefrom and from such other
information as the commissioner treasurer may possess or obtain
the amount of tax due from such company; and, on or before the
15th day of February, the commissioner of revenue county
treasurer shall certify the amount of the taxes found and
determined to be due from such company to the treasurer of the
county in which such trust company has its principal place of
business.
Sec. 8. Minnesota Statutes 1986, section 295.41, is
amended to read:
295.41 [FAILURE TO REPORT; PENALTY.]
If any company subject to sections 295.39 to 295.43 shall
fail to make the report provided for in section 295.39, at the
time and in the manner therein provided, there shall be added to
the tax found and determined by the commissioner of revenue
county treasurer to be due from such company a penalty equal to
ten percent of the tax imposed, which shall be treated as a part
thereof.
Sec. 9. Minnesota Statutes 1986, section 295.43, is
amended to read:
295.43 [LIEN OF TAX.]
Gross earnings taxes imposed under and pursuant to the
provisions of section 295.37, which become delinquent, shall be
a lien upon all of the property of the company owning the same,
and shall be collected at the same time and in the same manner
that delinquent personal property taxes are collected.
Sec. 10. Laws 1985, First Special Session chapter 14,
article 3, section 18, is amended to read:
Sec. 18. [EFFECTIVE DATE.]
Section 3 and section 4, paragraph (d), are effective
beginning with taxes assessed in 1987 1989 and payable in 1988
1990 and thereafter. Sections 2, 4, paragraph (c), 5 to 12, and
14 are effective beginning with taxes assessed in 1985 and
payable in 1986 and thereafter. Sections 15 and 16 are
effective the day after final enactment. The change in the
classification ratio for employment property in section 9 does
not modify the required amount of local contribution for
enterprise zones, approved prior to enactment of this act, that
provide local contributions in lieu of the employment
classification for projects already approved.
Sec. 11. [REPEALER.]
(a) Laws 1985, First Special Session chapter 14, article
14, section 3, is repealed.
(b) Minnesota Statutes 1986, sections 295.32; 295.33;
295.34; 295.36; 295.365; and 295.366, are repealed.
Sec. 12. [EFFECTIVE DATE.]
Sections 1 to 3 and 6 to 11, paragraph (a), are effective
for all tax years after December 31, 1986. Section 11,
paragraph (b), is effective beginning calendar year 1992.
ARTICLE 12
LIQUOR TAX
Section 1. Minnesota Statutes 1986, section 297C.02,
subdivision 1, is amended to read:
Subdivision 1. [DISTILLED SPIRITS AND WINE.] There is
imposed on all distilled spirits and wine manufactured,
imported, sold, or possessed in this state the following excise
tax:
Standard Metric
(a) Distilled spirits, $4.39 per gallon $1.16 per liter
$5.03 $1.33
liqueurs, cordials,
and specialties
regardless of
alcohol content
(excluding ethyl
alcohol)
(b) Wine containing 14 $.27 per gallon $.07 per liter
$.30 $.08
percent or less
alcohol by volume
(c) Wine containing more $.79 per gallon $.21 per liter
$.95 $.25
than 14 percent but
not more than 21
percent alcohol by
volume
(d) Wine containing more $1.58 per gallon $.42 per liter
$1.82 $.48
than 21 percent but
not more than 24
percent alcohol by
volume
(e) Wine containing more $3.08 per gallon $.81 per liter
$3.52 $.93
than 24 percent
alcohol by volume
(f) Natural and $1.50 per gallon $.40 per liter
$1.82 $.48
artificial sparkling
wines containing
alcohol
The metric tax is imposed on all products taxable under this
subdivision when the net contents are stated in metric units of
measure.
In computing the tax on a package of distilled spirits or
wine a proportional tax at a like rate on all fractional parts
of a gallon or liter must be paid, except that the tax on a
fractional part of a gallon less than 1/16 of a gallon is the
same as for 1/16 of a gallon.
The tax on miniatures of two fluid ounces or less or 50
milliliters or less is 12 14 cents.
The commissioner of revenue may establish by rule a date
and procedure for the conversion of excise tax computation and
reporting from rates expressed in gallons to rates expressed in
metric volumes. The official conversion factor is one liter
equals 0.264172 United States gallons.
Sec. 2. Minnesota Statutes 1986, section 297C.02,
subdivision 2, is amended to read:
Subd. 2. [FERMENTED MALT BEVERAGES.] There is imposed on
the direct or indirect sale of fermented malt beverages the
following excise tax:
(1) On fermented malt beverages containing not more than
3.2 percent alcohol by weight, $2 $2.40 per barrel of 31 gallons;
(2) On fermented malt beverages containing more than 3.2
percent alcohol by weight, $4 $4.60 per barrel of 31 gallons.
The tax is at a proportional rate for fractions of a barrel
of 31 gallons.
Sec. 3. Minnesota Statutes 1986, section 297C.03,
subdivision 1, is amended to read:
Subdivision 1. [MANNER AND TIME OF PAYMENT; PENALTIES;
DEPOSIT OF TAX PROCEEDS.] The tax on wines and distilled spirits
on which the excise tax has not been previously paid must be
paid to the commissioner by persons having on file with the
commissioner a sufficient bond as provided in subdivision 4 on
or before the 25th 18th day of the month following the month in
which the first sale is made in this state by a licensed
manufacturer or wholesaler. Every person liable for the tax on
wines or distilled spirits imposed by section 297C.02 must file
with the commissioner on or before the 25th 18th day of the
month following first sale in this state by a licensed
manufacturer or wholesaler a return in the form prescribed
by rule of the commissioner, and must keep records and render
reports required by rule of the commissioner. A person liable
for any tax on wines or distilled spirits not having on file a
sufficient bond must pay the tax within 24 hours after first
sale in this state. The commissioner may certify to the
commissioner of public safety any failure to pay taxes when due
as a violation of a statute relating to the sale of intoxicating
liquor for possible revocation or suspension of license.
If a person fails to pay the tax within the time specified
or within 30 days after final determination of an appeal to the
Minnesota tax court relating thereto, there is added a penalty
equal to ten percent of the remaining unpaid amount. The
penalty must be collected as part of the tax. The amount of tax
not timely paid, together with the penalty, must bear interest
at the rate specified in section 270.75 from the time the tax
should have been paid until it is paid.
Sec. 4. Minnesota Statutes 1986, section 297C.03, is
amended by adding a subdivision to read:
Subd. 4a. [CERTIFIED CHECK.] In lieu of the bond required
in subdivision 4, a certified check may be filed with the
commissioner. The check must be payable to the commissioner in
an amount to be established by the commissioner or the
commissioner's designee but not to exceed twice the average
monthly liability of the taxpayer. The department of revenue
shall not pay interest on funds encumbered by the check.
Sec. 5. Minnesota Statutes 1986, section 297C.04, is
amended to read:
297C.04 [PAYMENT OF TAX; MALT LIQUOR.]
The commissioner shall may by rule provide a reporting
method for paying and collecting the excise tax on fermented
malt beverages. The rules must require reports to be filed with
and the excise tax to be paid to the commissioner on or before
the 25th 18th day of the month following the month in which the
importation into or the first sale is made in this state,
whichever first occurs. The rules must also require payments in
June of 1987 and subsequent years according to the provisions of
section 297C.05, subdivision 2, paragraph (b). If the excise
tax is not paid when due, the amount due is increased by a
penalty of ten percent thereof, and interest on the tax and
penalty at an annual rate of 20 percent, adjusted as provided in
section 270.75, from the date the tax became due until paid.
Sec. 6. Minnesota Statutes 1986, section 297C.05,
subdivision 2, is amended to read:
Subd. 2. [MONTHLY ACCELERATED TAX PAYMENTS; PENALTY FOR
NONPAYMENT PAYMENT.] (a) Subject to paragraph (b), all taxes
shall be due and payable as directed in this chapter, and taxes
not paid shall bear interest at the rate specified in section
270.75. The commissioner in issuing a final assessment shall
add to the amount of tax found due and unpaid a penalty of ten
percent thereof, except that, if the commissioner finds that the
taxpayer has made a false and fraudulent return with intent to
evade the tax imposed by this chapter, the penalty shall be 25
percent of the entire tax as shown by the corrected return. If
the tax is not paid within the time herein specified for the
payment thereof or within 30 days after final determination of
an appeal to the Minnesota tax court relating thereto, there
shall be added thereto a specific penalty equal to ten percent
of the amount so remaining unpaid, but in no event shall the
penalty for failure to pay the tax within the time provided for
payment be less than $10. The commissioner may extend the time
for paying the tax without penalty for good cause shown.
(b) Every person liable for tax under this chapter having a
liability of $1,500 or more in May 1987 or in May of each
subsequent year, shall remit the June liability in the manner
required by this section.
On or before June 25 18, 1987, or June 25 18 of each
subsequent year, the taxpayer shall remit the actual May
liability and one-half of the estimated June liability to the
commissioner and file the return on a form prescribed by the
commissioner.
On or before August 25 18, 1987, or August 25 18 of each
subsequent year, the taxpayer shall submit a return showing the
actual June liability and paying any additional amount of tax
not remitted in June. A penalty is hereby imposed equal to ten
percent of the amount of June liability required to be paid in
June less the amount remitted in June. However, the penalty
shall not be imposed if the amount remitted in June equals the
lesser of (a) 45 percent of the actual June liability, or (b) 50
percent of the preceding May's liability.
Sec. 7. Minnesota Statutes 1986, section 297C.06, is
amended to read:
297C.06 [REFUNDS.]
Subdivision 1. [PRODUCTS DESTROYED.] The commissioner may
refund to a taxpayer the amount of tax paid under this chapter
on intoxicating liquor or malt liquor which becomes unfit for
human consumption and is destroyed under an order by a federal,
state, or local agency while being held for sale by a licensed
retailer. Any destruction must meet the requirements of the
environmental laws of this state.
Subd. 2. [BAD DEBTS.] The commissioner may adopt rules
providing a refund of the tax paid under this chapter on
intoxicating liquor or wine if the tax paid qualifies as a bad
debt under section 166(a) of the Internal Revenue Code of 1986,
as amended through December 31, 1986.
Subd. 3. [PROOF OF LOSS.] Refunds shall be made only if
satisfactory proof is presented to the commissioner by the
taxpayer and the licensed retailer that the retailer was not
indemnified by insurance for the tax. The commissioner may
prescribe the method of proof required for obtaining the refund.
The commissioner may refund to a taxpayer the amount of tax
paid under this chapter for the breakage of inventory not
subject to reimbursement from any insurance proceeds. The
method of proof for obtaining the refund will be prescribed by
the commissioner.
The commissioner may refund any overpayment of tax imposed
under section 297C.02 provided that the claim for refund is
filed within three years from the due date of the return for
which the refund is claimed. The refund of tax shall be paid
out of the general fund and amounts necessary to pay the refunds
are appropriated out of the general fund.
Subd. 4. [CREDIT AGAINST TAX.] The commissioner may credit
the amount determined under this section against taxes otherwise
payable under this chapter by the taxpayer.
Subd. 5. [CLAIMS; TIME LIMIT.] Claims for refund must be
filed with the commissioner (1) for refunds under subdivision 1
within one year from the date of the breakage or the destruction
order; and (2) for refunds under subdivision 2, within two years
of the date the product is sold to the retailer.
Subd. 6. [ANNUAL APPROPRIATION.] There is appropriated
annually from the general fund to the commissioner the sums
necessary to make the refunds provided by this section.
Sec. 8. Minnesota Statutes 1986, section 297C.09, is
amended to read:
297C.09 [IMPORTATION BY INDIVIDUALS.]
A person, other than a person under the age of 19 21 years,
entering Minnesota from another state may have in possession one
liter of intoxicating liquor or 288 ounces of malt liquor and a
person entering Minnesota from a foreign country may have in
possession four liters of intoxicating liquor or ten quarts (320
ounces) of malt liquor without the required payment of the
Minnesota excise tax. A collector of commemorative bottles,
other than a person under the age of 19 21 years, entering
Minnesota from another state may have in possession 12 or fewer
commemorative bottles without the required payment of the
Minnesota excise tax. A person who imports or has in possession
untaxed intoxicating liquor or malt liquor in excess of the
quantities provided for in this section is guilty of a
misdemeanor. This section does not apply to the consignments of
alcoholic beverages shipped into this state by holders of
Minnesota import licenses or Minnesota manufacturers and
wholesalers when licensed by the commissioner of public safety
or to common carriers with licenses to sell intoxicating liquor
in more than one state. A peace officer, the commissioner, or
their authorized agents, may seize untaxed liquor.
Sec. 9. [297C.14] [PENALTIES.]
Subdivision 1. [PENALTY ON UNPAID TAX.] If a tax imposed
by this chapter, or any part of it, is not paid within the time
required for the payment, or an extension of time, or within 30
days after final determination of an appeal to the tax court
relating to it if the taxpayer is not required to pay the amount
in dispute pending appeal under section 271.061, there shall be
added to the tax a penalty equal to three percent of the amount
remaining unpaid if the failure is for not more than 30 days,
with an additional penalty of three percent of the amount of tax
remaining unpaid during each additional 30 days or fraction
thereof, not exceeding 24 percent in the aggregate.
Subd. 2. [PENALTY FOR FAILURE TO FILE.] If a person fails
to make and file a return within the time required by this
chapter or an extension of time, there shall be added to the tax
three percent of the amount of tax not paid on or before the
date prescribed for payment of the tax if the failure is for not
more than 30 days, with an additional five percent of the amount
of tax remaining unpaid for each additional 30 days or fraction
thereof during which such failure continues, not exceeding 23
percent in the aggregate. The amount so added to any tax under
subdivisions 1 and 2 shall be collected at the same time and in
the same manner and as a part of the tax and shall bear interest
at the rate specified in section 270.75 from the time the tax
should have been paid, unless the tax has been paid before the
discovery of the negligence, in which case the amount so added
shall be collected in the same manner as the tax.
In the case of a failure to file a return within 60 days of
the date prescribed for filing of the return (determined with
regard to any extension of time for filing), the addition to tax
under this subdivision shall not be less than the lesser of (i)
$200; or (ii) the greater of (a) 25 percent of the amount
required to be shown as tax on the return without reduction for
any payments made or refundable credits allowable against the
tax; or (b) $50.
Subd. 3. [COMBINED PENALTIES.] Where penalties are imposed
under subdivisions 1 and 2, the penalties imposed under both
subdivisions combined, other than the minimum penalty under
subdivision 2, shall not exceed 38 percent in the aggregate.
Subd. 4. [WILLFUL FAILURE; FRAUD.] If a person willfully
fails to file a return or make a payment required by this
chapter, or willfully files a false or fraudulent return, or
willfully attempts in any manner to evade or defeat the tax or
payment of it, there shall also be imposed a penalty in an
amount equal to 50 percent of the tax (less any amounts paid on
the basis of such false or fraudulent return) found due for the
period to which the return related. The penalty imposed by this
subdivision shall be collected as part of the tax and is in
addition to any other penalties, civil and criminal, provided by
this section.
Subd. 5. [ORDER PAYMENTS CREDITED.] All payments received
may, in the discretion of the commissioner of revenue, be
credited first to the oldest liability not secured by a judgment
or lien, but in all cases shall be credited first to penalties,
next to interest, and then to the tax due.
Subd. 6. [INTEREST.] The amount of tax not timely paid,
together with any penalty imposed by this chapter, shall bear
interest at the rate specified in section 270.75 from the time
such tax should have been paid until paid. Any interest and
penalty shall be added to the tax and collected as a part of it.
Subd. 7. [NEGLIGENCE; INTENTIONAL DISREGARD OF LAW OR
RULES.] If any part of any additional assessment is due to
negligence or intentional disregard of the provisions of this
chapter or rules of the commissioner of revenue (but without
intent to defraud), there shall be added to the tax an amount
equal to ten percent of the additional assessment. The amount
of tax together with this penalty shall bear interest at the
rate specified in section 270.75 from the time the tax should
have been paid until paid.
Subd. 8. [FAILURE TO FILE INFORMATIONAL RETURNS.] Any
person required to file informational returns or reports that
fails to do so by the time period established by law, will be
assessed a $25 penalty for each month the return remains unfiled.
Sec. 10. [297C.16] [PERSONAL DEBT; LIEN.]
The tax imposed by this chapter, and interest and penalties
imposed with respect to it, shall be a personal debt of the
person required to file a return from the time the liability for
it arises, irrespective of when the time for payment of the
liability occurs. The debt shall, in the case of the executor
or administrator of the estate of a decedent and in the case of
any fiduciary, be that of the person in the person's official or
fiduciary capacity only, unless the person has voluntarily
distributed the assets held in that capacity without reserving
sufficient assets to pay the tax, interest, and penalties. Then
the person shall be personally liable for the deficiency.
Sec. 11. [REPEALER.]
Minnesota Statutes 1986, sections 297C.03, subdivisions 2
and 3, and 297C.05, subdivision 4, are repealed.
Sec. 12. [EFFECTIVE DATE.]
Sections 1 to 11 are effective June 1, 1987.
ARTICLE 13
CIGARETTE TAX AND SALES
Section 1. Minnesota Statutes 1986, section 297.01,
subdivision 2, is amended to read:
Subd. 2. "Cigarette" means any roll for smoking made
wholly or in part of tobacco, and encased in any irrespective of
size and shape and whether or not the tobacco is flavored,
adulterated, or mixed with any other ingredient, the wrapper or
cover of which is made of paper or any other substance or
material except tobacco.
Sec. 2. Minnesota Statutes 1986, section 297.01,
subdivision 4, is amended to read:
Subd. 4. "Person" means any individual, firm, trade
association, company, partnership, joint stock company, joint
adventure, corporation, trustee club, syndicate, agency,
or receiver, or any legal representative of any of the foregoing
engaged in the sale of cigarettes.
Sec. 3. Minnesota Statutes 1986, section 297.01,
subdivision 7, is amended to read:
Subd. 7. "Distributor" means any and each of the following:
(1) Any person engaged in the business of selling
cigarettes in this state who brings, or causes to be brought,
into this state from without the state any packages of
cigarettes for sale;
(2) Any person who makes, manufactures, or fabricates
cigarettes in this state for sale in this state;
(3) Any person engaged in the business without this state
who ships or transports cigarettes to retailers in this state,
to be sold by those retailers;
(4) Any person who engages in this state in the business of
selling packages of cigarettes which the person purchases
unstamped from a licensee under sections 297.01 to 297.13. Any
person who is on direct purchase from a cigarette manufacturer
and applies cigarette stamps or indicia on at least 50 percent
of cigarettes sold by that person.
A distributor who also sells at retail must maintain a
separate inventory, substantiated with invoices for cigarettes
that were acquired for retail sale.
A distributor may transfer another state's stamped
cigarettes to another distributor for the purpose of resale in
the other state.
Sec. 4. Minnesota Statutes 1986, section 297.01,
subdivision 10, is amended to read:
Subd. 10. "Retailer" means any person engaged in this
state in the business of selling cigarettes to ultimate
consumers, or offering to sell, cigarettes at retail.
Sec. 5. Minnesota Statutes 1986, section 297.01,
subdivision 14, is amended to read:
Subd. 14. "Subjobber" means any person who buys acquires
stamped cigarettes and sells them to persons other than ultimate
consumers for the primary purpose of resale to retailers, and
any licensed distributor who delivers to and sells or
distributes stamped cigarettes from a place of business other
than that licensed in the distributor's license. The definition
of subjobber does not include the occasional sale of stamped
cigarettes from one retailer to another. Notwithstanding the
foregoing, "subjobber" shall also mean any person who is a
vending machine operator. A vending machine operator is any
person whose principal business is operating, or owning and
leasing to operators, machines for the vending of merchandise or
service.
For the purpose of this section, any subjobber that sells
at retail must maintain a separate inventory, substantiated with
invoices, that reflect the cigarettes were acquired for retail
sale.
Sec. 6. Minnesota Statutes 1986, section 297.02,
subdivision 1, is amended to read:
Subdivision 1. [RATES.] A tax is hereby imposed upon the
sale of cigarettes in this state or having cigarettes in
possession in this state with intent to sell and upon any person
engaged in business as a distributor thereof, at the following
rates, subject to the discount provided in section 297.03:
(1) On cigarettes weighing not more than three pounds per
thousand, 19.5 19 mills minus the tax, not more than eight
mills, imposed by United States Code, title 26, section 5701, as
amended, on each such cigarette;
(2) On cigarettes weighing more than three pounds per
thousand, 39.8 38 mills minus the tax, not more than 16.8 mills,
imposed by United States Code, title 26, section 5701, as
amended, on each such cigarette.
Sec. 7. Minnesota Statutes 1986, section 297.02,
subdivision 6, is amended to read:
Subd. 6. [SALES BY STATE.] The state of Minnesota or any
of its agencies, instrumentalities, or governmental subdivisions
except institutions under the control and management of the
commissioner of corrections shall be subject to the tax imposed
by this chapter on all cigarettes sold, in the same manner as
distributors, if such unit is engaged in the purchase and sale
of cigarettes.
Sec. 8. Minnesota Statutes 1986, section 297.03,
subdivision 1, is amended to read:
Subdivision 1. [STAMP PUT ON BY DISTRIBUTOR; EXCEPTION.]
Except as otherwise provided in this section payment of the tax
imposed by section 297.02 shall be evidenced by stamps affixed
to each package. Before delivering, or causing to be delivered,
any package to any person in this state, other than a licensed
distributor, every distributor shall firmly affix to each
package of cigarettes stamps in amounts equal to the tax on
those cigarettes as provided for in section 297.02.
Sec. 9. Minnesota Statutes 1986, section 297.03,
subdivision 5, is amended to read:
Subd. 5. [SALE OF STAMPS.] (a) Except as provided in
paragraph (b), The commissioner shall sell stamps to any person
licensed as a distributor at a discount of two 1.25 percent from
the face amount of the stamps for the
first $1,000,000 $1,500,000 of such stamps purchased in any
fiscal year; and at a discount of 1.25 .75 percent on the
remainder of such stamps purchased in any fiscal year. The
commissioner shall not sell stamps to any other person.
(b) If the tax exceeds 12.5 mills a cigarette, the discount
is 1.5 percent from the face amount of the stamps for the first
$1,000,000 of the stamps purchased in a fiscal year and one
percent for additional stamps purchased during the fiscal year.
The commissioner may prescribe the method of shipment of the
stamps to the distributor as well as the quantities of stamps
purchased.
Sec. 10. Minnesota Statutes 1986, section 297.03,
subdivision 6, is amended to read:
Subd. 6. [TAX METER MACHINES.] (1) Before January 1, 1989
1990, the commissioner may authorize any person licensed as a
distributor to stamp packages with a tax meter machine, approved
by the commissioner, which shall be provided by the
distributor. The commissioner may provide for the use of such a
machine by the distributor, supervise and check its operation,
provide for the payment of the tax on any package so stamped,
subject to the discount provided in subdivision 5, and in that
connection require the furnishing of a corporate surety bond,
check guarantee bond, or certified check in a suitable amount to
guarantee the payment of the tax.
(2) Before January 1, 1989 1990, the commissioner may
authorize, and after December 31, 1988 1989, the commissioner
shall require any person licensed as a distributor to stamp
packages with a heat-applied tax stamping machine, approved by
the commissioner, which shall be provided by the distributor.
The commissioner shall supervise and check the operation of the
machines and shall provide for the payment of the tax on any
package so stamped, subject to the discount provided in
subdivision 5. The commissioner may sell heat-applied stamps on
a credit basis under conditions prescribed by the commissioner,
and in that connection require the furnishing of a corporate
surety bond, check guarantee bond, or certified check in an
amount suitable to guarantee payment of the tax stamps so
purchased by a distributor. The stamps shall be sold by the
commissioner at a price which includes the tax after giving
effect to the discount provided in subdivision 5. The
commissioner shall recover the actual costs of the stamps from
the distributor.
(3) If the commissioner finds that a stamping machine is
not printing or affixing a legible stamp on the package, the
commissioner may order the distributor to immediately cease the
stamping process until the machine is functioning properly.
Sec. 11. Minnesota Statutes 1986, section 297.04,
subdivision 4, is amended to read:
Subd. 4. [DISTRIBUTOR'S APPLICATION; FEE, BOND; CERTIFIED
CHECK; SUBJOBBER'S LICENSE.] (a) Except as otherwise provided in
clause paragraph (b), each application for a distributor's
license shall be accompanied by a fee of $150 and a corporate
surety bond issued by a surety licensed to do business in this
state in the sum of $1,000, conditioned upon the true and
faithful compliance by the licensee with all of the provisions
of this act. This bond, or a reissue thereof, or a substitute
therefor, shall be kept in full force and effect during the
entire period covered by the license. A separate application
for license shall be made for each place of business at which a
distributor proposes to engage in business as such under
sections 297.01 to 297.13, provided that a separate application
for a subjobber's license may be made by a licensed distributor
for each place of business (other than that licensed in the
distributor's license) to which the distributor delivers and
from which the distributor sells or distributes stamped
cigarettes.
Each application for a subjobber's license shall be
accompanied by a fee of $12.
A distributor or subjobber applying for a license between
July 1 and December 31 of any year shall be required to pay only
one-half of the license fee provided for herein.
(b) Each application for a distributor's license for the
period beginning July 1, 1971 shall be accompanied by a fee of
$75 and the corporate surety bond prescribed by clause (a).
Each application for a subjobber's license for the period
beginning July 1, 1971 shall be accompanied by a fee of $6.
Each license issued for the period beginning July 1, 1971 shall
expire on December 31, 1971. In lieu of the bond required in
paragraph (a), a certified check made payable to the
commissioner may be filed with the commissioner. The department
of revenue shall not pay interest on funds encumbered by the
check.
Sec. 12. Minnesota Statutes 1986, section 297.04,
subdivision 6, is amended to read:
Subd. 6. [EXPIRATION.] Each license issued for any period
subsequent to June 30, 1971, shall expire on December 31
following its date of issue unless sooner revoked by the
commissioner or unless the business with respect to which the
license was issued is transferred. In either case the holder of
the license shall immediately surrender it to the commissioner.
Sec. 13. Minnesota Statutes 1986, section 297.04,
subdivision 9, is amended to read:
Subd. 9. [REVOCATION.] The commissioner may revoke,
cancel, or suspend the license or licenses of any distributor or
subjobber for violation of sections 297.01 to 297.13, or any
other act applicable to the sale of cigarettes, or any rule
promulgated by the commissioner, and may also revoke any such
license or licenses of any distributor or subjobber for the
violation of sections 297.31 to 297.39, or any other act
applicable to the sale of tobacco products, or any rule
promulgated by the commissioner in furtherance of sections
297.31 to 297.39. The commissioner may revoke, cancel, or
suspend the license or licenses of any distributor or subjobber
for violation of sections 325D.31 to 325D.42.
No license shall be revoked, canceled, or suspended except
after notice and a hearing by the commissioner as provided in
section 297.09.
Sec. 14. Minnesota Statutes 1986, section 297.07,
subdivision 1, is amended to read:
Subdivision 1. [MONTHLY RETURN FILED WITH COMMISSIONER.]
On or before the 25th 18th day of each calendar month every
distributor with a place of business in this state shall file a
return with the commissioner showing the quantity of cigarettes
manufactured or brought in from without the state or purchased
during the preceding calendar month and the quantity of
cigarettes sold or otherwise disposed of in this state and
outside this state during that month. Every licensed
distributor outside this state shall in like manner file a
return showing the quantity of cigarettes shipped or transported
into this state during the preceding calendar month. Returns
shall be made upon forms furnished and prescribed by the
commissioner and shall contain such other information as the
commissioner may require. The return shall be accompanied by a
remittance for the full unpaid tax liability shown by it.
Sec. 15. Minnesota Statutes 1986, section 297.07,
subdivision 3, is amended to read:
Subd. 3. [DEALER MAY PROTEST; HEARING.] If, within 20 30
days after mailing of notice of the proposed assessment, the
distributor or a legal representative shall file a protest to
said proposed assessment and request a hearing thereon, the
commissioner shall give notice to that distributor or legal
representative of the time and place fixed for the hearing,
shall hold a hearing in conformity with the provisions of
sections 297.01 to 297.13, and pursuant thereto shall issue a
final assessment to the distributor or legal representative for
the amount found to be due as a result of the hearing. This
hearing shall be held within 45 days after filing of the
protest. If a protest is not filed within the time herein
prescribed, the commissioner shall issue a final assessment to
the distributor or legal representative, as such. Any tax due
and owing after a final assessment order has been issued to the
distributor or legal representative of such distributor shall be
paid within 60 days. The tax due must be paid within 60 days
after the mailing date of the assessment notice.
Sec. 16. Minnesota Statutes 1986, section 297.07,
subdivision 4, is amended to read:
Subd. 4. [MONTHLY ACCELERATED TAX PAYMENTS; PENALTY FOR
NONPAYMENT PAYMENT.] (a) Except as provided in paragraph (b),
all taxes shall be due and payable not later than the
twenty-fifth day of the month following the calendar month in
which they were incurred, and thereafter shall bear interest at
the rate specified in section 270.75. The commissioner in
issuing the final assessment pursuant to subdivision 3 shall add
to the amount of tax found due and unpaid a penalty of ten
percent thereof, except that, on finding that the distributor
has made a false and fraudulent return with intent to evade the
tax imposed by sections 297.01 to 297.13, the penalty shall be
25 percent of the entire tax as shown by the corrected return.
If any such tax is not paid within the time herein specified for
the payment thereof or within 30 days after final determination
of an appeal to the Minnesota tax court relating thereto, there
shall be added thereto a specific penalty equal to ten percent
of the amount so remaining unpaid, but in no event shall the
penalty for failure to pay such tax within the time provided for
such payment be less than $10. The commissioner is authorized
to extend the time for paying such tax without penalty for good
cause shown.
(b) Every distributor having a liability of $1,500 or more
in May 1987 or in May of each subsequent year, shall remit the
June liability in the manner required by this section.
On or before June 25 18, 1987, or June 25 18 of each
subsequent year, the distributor shall remit the actual May
liability and one-half of the estimated June liability to the
commissioner and file the return on a form prescribed by the
commissioner.
On or before August 25 July 18, 1987, or August 25 July 18
of each subsequent year, the distributor shall submit a return
showing the actual June liability and paying any additional
amount of tax not remitted in June. A penalty is imposed equal
to ten percent of the amount of June liability required to be
paid in June less the amount remitted in June. However, the
penalty shall not be imposed if the amount remitted in June
equals the lesser of (a) 45 percent of the actual June
liability, or (b) 50 percent of the preceding May's liability.
Sec. 17. Minnesota Statutes 1986, section 297.07,
subdivision 5, is amended to read:
Subd. 5. [RECOVERY BY COMMISSIONER OFFSET.] The
commissioner may recover the amount of any tax due and unpaid,
interest, and any penalty in a civil action. The collection of
such a tax, interest, or penalty shall not be a bar to any
prosecution under sections 297.01 to 297.13 Upon audit, if a
distributor's return reflects an overpayment, the overpayment
may only be offset against an additional tax liability for the
month immediately preceding or immediately after the month of
overpayment.
Sec. 18. Minnesota Statutes 1986, section 297.11,
subdivision 3, is amended to read:
Subd. 3. [PACKAGES STAMPED, EXCEPTION.] No distributor
shall sell a package of cigarettes not stamped in accordance
with the provisions of sections 297.01 to 297.13, except when
the sale is made by the distributor to another distributor
licensed under sections 297.01 to 297.13 or when the sale is
made under such circumstances that the tax imposed by sections
297.01 to 297.13 may not legally be levied because of the
constitution or laws of the United States.
Sec. 19. Minnesota Statutes 1986, section 297.11,
subdivision 5, is amended to read:
Subd. 5. [TRANSPORTING UNSTAMPED PACKAGES.] No person
shall transport into, or receive, carry, or move from place to
place in this state, any packages of cigarettes not stamped in
accordance with the provisions of this act except in the course
of interstate commerce, unless the cigarettes are moving from a
public warehouse to a distributor upon orders from the
manufacturer or distributor or from one distributor to another.
This subdivision shall not apply to a person carrying for
personal use not more than 200 cigarettes when those cigarettes
have had the individual packages or seals thereof broken and are
intended for personal use by that person and not to be sold or
offered for sale.
Common carriers transporting cigarettes into this state
shall file with the commissioner reports of all such shipments
other than those which are delivered to public warehouses of
first destination in this state which are licensed under the
provisions of chapter 231. Such reports shall be filed monthly
on or before the 10th day of each month and shall show with
respect to deliveries made in the preceding month: the date,
point of origin, point of delivery, name of consignee, the
quantity of cigarettes delivered and such other information as
the commissioner may require.
All common carriers transporting cigarettes into Minnesota
shall permit examination by the commissioner of their records
relating to the shipment of cigarettes.
Any person who fails or refuses to transmit to the
commissioner the required reports or whoever refuses to permit
the examination of the records by the commissioner shall be
guilty of a misdemeanor.
Sec. 20. Minnesota Statutes 1986, section 297.13,
subdivision 1, is amended to read:
Subdivision 1. [CIGARETTE TAX APPORTIONMENT.] Revenues
received from taxes, penalties and interest under sections
297.01 to 297.13 and from license fees and miscellaneous sources
of revenue shall be deposited by the commissioner of revenue in
a separate and special fund, designated as the tobacco tax
revenue fund, in the state treasury and credited as follows:
(a) first to the general obligation special tax bond debt
service account in each fiscal year the amount required to
increase the balance on hand in the account on each December 1
to an amount equal to the full amount of principal and interest
to come due on all outstanding bonds whose debt service is
payable primarily from the proceeds of the tax to and including
the second following July 1; and
(b) after the requirements of paragraph (a) of this
subdivision have been met:
(1) the revenue produced by one mill of the tax on
cigarettes weighing not more than three pounds a thousand and
two mills of the tax on cigarettes weighing more than three
pounds a thousand must be credited to a Minnesota resources fund
for purposes of natural resources acceleration as provided in
chapter 86;
(2) the revenue produced by two mills of the tax on
cigarettes weighing not more than three pounds a thousand and
four mills of the tax on cigarettes weighing more than three
pounds a thousand must be credited to the Minnesota state water
pollution control fund created in section 116.16, provided that,
if the tax on cigarettes imposed by United States Code, title
26, section 5701, as amended, is reduced after June 1, 1985, an
additional one mill of the tax on cigarettes weighing not more
than three pounds a thousand and two mills of the tax on
cigarettes weighing more than three pounds a thousand must be
credited to the Minnesota state water pollution control fund
created in section 116.16 less any amount credited to the
general obligation special tax debt service account under
paragraph (a), with respect to bonds issued for the prevention,
control, and abatement of water pollution;
(3) the revenue produced by one-half one mill of the tax on
cigarettes weighing not more than three pounds a thousand and
one mill two mills of the tax on cigarettes weighing more than
three pounds a thousand must be credited to a public health
fund, provided that if the tax on cigarettes imposed by United
States Code, title 26, section 5701, as amended, is reduced
after June 1, 1985, an additional two-tenths of one mill of the
tax on cigarettes weighing not more than three pounds a thousand
and an additional four-tenths of one mill of the tax on
cigarettes weighing more than three pounds a thousand must be
credited to the public health fund;
(4) the balance of the revenues derived from taxes,
penalties, and interest under sections 297.01 to 297.13 and from
license fees and miscellaneous sources of revenue shall be
credited to the general fund.
Sec. 21. Minnesota Statutes 1986, section 297.23,
subdivision 1, is amended to read:
Subdivision 1. On or before the 25th 18th day of each
calendar month, every consumer who during the preceding calendar
month has acquired title to or possession of cigarettes for use
or storage in this state, upon which cigarettes the tax imposed
by sections 297.01 to 297.13 has not been paid, shall file a
return with the commissioner showing the quantity of cigarettes
so acquired. The return shall be made upon a form furnished and
prescribed by the commissioner, and shall contain such other
information as the commissioner may require. The return shall
be accompanied by a remittance for the full unpaid tax liability
shown by it.
Sec. 22. Minnesota Statutes 1986, section 297.26, is
amended to read:
297.26 [REVENUE DISTRIBUTION.]
All revenues derived from taxes, penalties and interest
under sections 297.21 to 297.26 shall be deposited by the
commissioner in the general tobacco tax revenue fund and
disposed of in the same manner as provided by section 297.13 for
revenues received under sections 297.01 to 297.13.
Sec. 23. Minnesota Statutes 1986, section 297.31,
subdivision 2, is amended to read:
Subd. 2. (a) "Tobacco products" means cigars; little
cigars as defined herein; cheroots; stogies; periques;
granulated, plug cut, crimp cut, ready rubbed, and other smoking
tobacco; snuff; snuff flour; cavendish; plug and twist tobacco;
fine-cut and other chewing tobaccos; shorts; refuse scraps,
clippings, cuttings and sweepings of tobacco, and other kinds
and forms of tobacco, prepared in such manner as to be suitable
for chewing or smoking in a pipe or otherwise, or both for
chewing and smoking; but shall not include cigarettes as defined
in section 297.01, subdivision 2.
(b) "Little cigar" means any roll for smoking, made wholly
or in part of tobacco, which has a factory list price not
exceeding $12 per thousand, irrespective of size or shape and
irrespective of whether the tobacco is flavored, adulterated or
mixed with any other ingredient, where such roll has a wrapper
or cover made wholly or in part of tobacco, and where such roll
weighs not more than three pounds per thousand.
Sec. 24. Minnesota Statutes 1986, section 297.31,
subdivision 3, is amended to read:
Subd. 3. "Person" means any individual, firm, trade
association, company, partnership, joint stock company, joint
adventure, corporation, trustee, club, syndicate, agency, or
receiver, or any legal representative of any of the
foregoing engaged in the sale of tobacco.
Sec. 25. Minnesota Statutes 1986, section 297.31,
subdivision 7, is amended to read:
Subd. 7. "Retailer" means any person engaged in this state
in the business of selling tobacco products to ultimate
consumers, or offering to sell, tobacco at retail.
Sec. 26. Minnesota Statutes 1986, section 297.32,
subdivision 1, is amended to read:
Subdivision 1. A tax is hereby imposed upon all tobacco
products in this state and upon any person engaged in business
as a distributor thereof, at the rate of 25 35 percent of the
wholesale sales price of such tobacco products except little
cigars as defined in section 297.31, subdivision 2, clause (b).
Little cigars shall be subject to the same rate of tax imposed
on cigarettes weighing not more than three pounds per thousand
subject to the discount provided in section 297.35, subdivision
1. Such tax shall be imposed at the time the distributor (1)
brings, or causes to be brought, into this state from without
the state tobacco products for sale; (2) makes, manufactures, or
fabricates tobacco products in this state for sale in this
state; or (3) ships or transports tobacco products to retailers
in this state, to be sold by those retailers.
Sec. 27. Minnesota Statutes 1986, section 297.32,
subdivision 2, is amended to read:
Subd. 2. A tax is hereby imposed upon the use or storage
by consumers of tobacco products in this state, and upon such
consumers, at the rate of 25 35 percent of the cost of such
tobacco products, except little cigars as defined in section
297.31, subdivision 2, clause (b). Little cigars shall be
subject to the same rate of tax imposed on cigarettes weighing
not more than three pounds per thousand.
The tax imposed by this subdivision shall not apply if the
tax imposed by subdivision 1 on such tobacco products has been
paid.
This tax shall not apply to the use or storage of tobacco
products in quantities of:
1. not more than 50 cigars;
2. not more than ten oz. snuff or snuff powder;
3. not more than one lb. smoking or chewing tobacco or
other tobacco products not specifically mentioned herein, in the
possession of any one consumer.
Sec. 28. Minnesota Statutes 1986, section 297.32,
subdivision 8, is amended to read:
Subd. 8. The state of Minnesota or any of its agencies,
instrumentalities, or governmental subdivisions except
institutions under the control and management of the
commissioner of corrections shall be subject to the tax imposed
by sections 297.32 to 297.39 in the same manner as distributors,
if such unit is engaged in the purchase and sale of tobacco
products.
Sec. 29. Minnesota Statutes 1986, section 297.33,
subdivision 4, is amended to read:
Subd. 4. (a) Except as otherwise provided in clause
paragraph (b), each application for a distributor's license
shall be accompanied by a fee of $37.50. The application shall
also be accompanied by a corporate surety bond issued by a
surety licensed to do business in this state, in the sum of
$1,000, conditioned upon the true and faithful compliance by the
distributor with all the provisions of sections 297.31 to 297.39
and the payment when due of all taxes, penalties and accrued
interest arising in the ordinary course of business or by reason
of any delinquent money which may be due the state of
Minnesota. This bond shall be in a form to be fixed by the
commissioner and approved by the attorney general. Whenever it
is the opinion of the commissioner that the bond given by a
licensee is inadequate in amount to fully protect the state, the
commissioner shall require either an increase in the amount of
said bond or additional bond, in such amount as the commissioner
deems sufficient. Any bond required by this subdivision, or a
reissue thereof, or a substitute therefor, shall be kept in full
force and effect during the entire period covered by the license.
A separate application for license shall be made for each
place of business at which a distributor proposes to engage in
business as such under sections 297.31 to 297.39. A separate
application for a subjobber's license may be made by a licensed
distributor for each place of business, other than that licensed
in the distributor's license, to which the distributor sells or
distributes tobacco products upon which the tax imposed by this
chapter has been imposed to other than the ultimate consumer.
(b) Each application for a distributor's license for the
period beginning July 1, 1971 shall be accompanied by a fee of
$18.75 and the corporate surety bond prescribed by clause (a) of
this subdivision. Each license issued for the period beginning
July 1, 1971 shall expire on December 31, 1971 In lieu of the
bond required in paragraph (a), a certified check may be filed
with the commissioner. The check must be made payable to the
commissioner and in an amount to be established by the
commissioner or the commissioner's designee but not less than
twice the average monthly liability of the taxpayer. The
department of revenue shall pay no interest on funds encumbered
by the check.
Sec. 30. Minnesota Statutes 1986, section 297.33,
subdivision 5, is amended to read:
Subd. 5. (a) Except as otherwise provided in clause (b),
Each application for a subjobber's license shall be accompanied
by a fee of $10.
(b) Each application for a subjobber's license for the
period beginning July 1, 1971 shall be accompanied by a fee of
$5. Each license issued for the period beginning July 1, 1971
shall expire on December 31, 1971 All licenses expire on
December 31 of the year they were issued.
Sec. 31. Minnesota Statutes 1986, section 297.35,
subdivision 1, is amended to read:
Subdivision 1. On or before the twenty-fifth 18th day of
each calendar month every distributor with a place of business
in this state shall file a return with the commissioner showing
the quantity and wholesale sales price of each tobacco product
(1) brought, or caused to be brought, into this state for sale;
and (2) made, manufactured or fabricated in this state for sale
in this state, during the preceding calendar month. Every
licensed distributor outside this state shall in like manner
file a return showing the quantity and wholesale sales price of
each tobacco product shipped or transported to retailers in this
state to be sold by those retailers, during the preceding
calendar month. Returns shall be made upon forms furnished and
prescribed by the commissioner and shall contain such other
information as the commissioner may require. Each return shall
be accompanied by a remittance for the full tax liability shown
therein, less two 1.5 percent of such liability as compensation
to reimburse the distributor for expenses incurred in the
administration of sections 297.31 to 297.39.
Sec. 32. Minnesota Statutes 1986, section 297.35,
subdivision 3, is amended to read:
Subd. 3. If, within 20 30 days after mailing of notice of
the proposed assessment, the taxpayer or a legal representative
shall file a protest to said proposed assessment and request a
hearing thereon, the commissioner shall give notice to that
taxpayer or legal representative of the time and place fixed for
the hearing, shall hold a hearing on such protest, and shall
issue a final assessment to the taxpayer or legal representative
for the amount found to be due as a result of the hearing. This
hearing shall be held within 45 days after filing of the
protest. If a protest is not filed within the time herein
prescribed, the commissioner shall issue a final assessment to
the taxpayer or legal representative, as such. Any tax due and
owing after a final an assessment order has been issued to the
distributor or legal representative of such distributor shall be
paid within 60 days. Any such assessment made by the
commissioner shall be prima facie correct and valid, and the
taxpayer shall have the burden of establishing its incorrectness
or invalidity in any action or proceeding in respect thereto.
Sec. 33. Minnesota Statutes 1986, section 297.35,
subdivision 5, is amended to read:
Subd. 5. (a) Except as provided in paragraph (b), all taxes
shall be due and payable not later than the 25th day of the
month following the calendar month in which they were incurred,
and thereafter shall bear interest at the rate specified in
section 270.75. If any tax required to be paid under the
provisions of this section is not paid within the time herein
specified, a penalty of five percent of the unpaid tax remaining
each month up to a maximum of 25 percent is herein imposed but
in no event shall the penalty for failing to pay such tax within
the time so provided be less than $10. The commissioner of
revenue is authorized to extend the time for paying such tax
without penalty for good cause shown.
Where, under the provisions of subdivisions 2 and 3, the
amount of tax due for a given period is assessed without
allocating it to any particular month or months, the interest
shall commence to run from the date of such assessment.
The commissioner shall have power to reduce or abate the
penalty or interest when in the commissioner's opinion the facts
warrant such reduction or abatement. The exercise of this power
shall be subject to the provisions of chapter 270 if the
reduction or abatement exceeds $500.
(b) Every distributor having a liability of $1,500 or more
in May 1987 or in May of each subsequent year, shall remit the
June liability in the manner required by this section.
On or before June 25 18, 1987, or June 25 18 of each
subsequent year, the distributor shall remit the actual May
liability and one-half of the estimated June liability to the
commissioner and file the return on a form prescribed by the
commissioner.
On or before August 25 July 18, 1987, or August 25 July 18
of each subsequent year, the distributor shall submit a return
showing the actual June liability and paying any additional
amount of tax not remitted in June. A penalty is imposed equal
to ten percent of the amount of June liability required to be
paid in June less the amount remitted in June. However, the
penalty is not imposed if the amount remitted in June equals the
lesser of (a) 45 percent of the actual June liability, or (b) 50
percent of the preceding May's liability.
Sec. 34. Minnesota Statutes 1986, section 297.35,
subdivision 8, is amended to read:
Subd. 8. On or before the twenty-fifth 18th day of each
calendar month, every consumer who, during the preceding
calendar month, has acquired title to or possession of tobacco
products for use or storage in this state, upon which tobacco
products the tax imposed by section 297.32 has not been paid,
shall file a return with the commissioner showing the quantity
of tobacco products so acquired. The return shall be made upon
a form furnished and prescribed by the commissioner, and shall
contain such other information as the commissioner may require.
The return shall be accompanied by a remittance for the full
unpaid tax liability shown by it.
Sec. 35. Minnesota Statutes 1986, section 297.36, is
amended to read:
297.36 [REFUNDS, CREDITS.]
Where tobacco products upon which the tax imposed by
sections 297.31 to 297.39 has been reported and paid, are
shipped or transported by the distributor to consumers, to be
consumed without the state, or to retailers or subjobbers
without the state, to be sold by those retailers, or subjobbers
without the state, or are returned to the manufacturer by the
distributor or destroyed by the distributor, refund of such tax
or credit may be made to the distributor in accordance with
rules prescribed by the commissioner. Any overpayment of the
tax imposed under section 297.32 may be made to the taxpayer in
accordance with rules prescribed by the commissioner. The
commissioner of finance shall cause any such refund of tax to be
paid out of the general fund, and so much of said fund as may be
necessary is hereby appropriated for that purpose. Any claims
for refund must be filed within three years from the due date of
the return for which the refund is claimed.
Sec. 36. [297.41] [PERSONAL DEBT; LIEN.]
The tax imposed by sections 297.01 to 297.40, and interest
and penalties imposed with respect to it, shall be a personal
debt of the person required to file a return from the time the
liability for it arises, irrespective of when the time for
payment of the liability occurs. The debt shall, in the case of
the executor or administrator of the estate of a decedent and in
the case of any fiduciary, be that of the person in the person's
official or fiduciary capacity only, unless the person has
voluntarily distributed the assets held in that capacity without
reserving sufficient assets to pay the tax, interest, and
penalties. Then the person shall be personally liable for the
deficiency.
Sec. 37. [297.42] [FAILURE TO FILE RETURN.]
If a person required by chapter 297 to file a return fails
to do so within the time prescribed, or makes, willfully or
otherwise, an incorrect, false, or fraudulent return, the person
shall, upon written notice and demand, immediately file the
return, or corrected return, and at the same time pay any tax
due on the basis of it. If the person fails to file the return
or corrected return, the commissioner shall make a return, or
corrected return, for the person from the commissioner's own
knowledge and from information that the commissioner can obtain
through testimony, or otherwise, and assess a tax on the basis
of it. The tax (less any payments previously made on account of
the tax for the taxable period covered by such return) must be
paid immediately upon written notice and demand. A return or
assessment made by the commissioner is prima facie correct and
valid, and the person shall have the burden of establishing its
incorrectness or invalidity in an action or proceeding in
respect to it.
Sec. 38. [297.43] [PENALTIES.]
Subdivision 1. [PENALTY ON UNPAID TAX.] If a tax imposed
by chapter 297, or any part of it, is not paid within the time
required for the payment, or an extension of time, or within 30
days after final determination of an appeal to the tax court
relating to it if the taxpayer is not required to pay the amount
in dispute pending appeal under section 271.061, there shall be
added to the tax a penalty equal to three percent of the amount
remaining unpaid if the failure is for not more than 30 days,
with an additional penalty of three percent of the amount of tax
remaining unpaid during each additional 30 days or fraction
thereof, not exceeding 24 percent in the aggregate.
Subd. 2. [PENALTY FOR FAILURE TO FILE.] If a person fails
to make and file a return within the time required under
sections 297.07, 297.23, and 297.35, there shall be added to the
tax three percent of the amount of tax not paid on or before the
date prescribed for payment of the tax if the failure is for not
more than 30 days, with an additional five percent of the amount
of tax remaining unpaid for each additional 30 days or fraction
thereof during which such failure continues, not exceeding 23
percent in the aggregate. The amount so added to any tax under
subdivisions 1 and 2 shall be collected at the same time and in
the same manner and as a part of the tax and shall bear interest
at the rate specified in section 270.75 from the time the tax
should have been paid, unless the tax has been paid before the
discovery of the negligence, in which case the amount so added
shall be collected in the same manner as the tax.
In the case of a failure to file a return within 60 days of
the date prescribed for filing of the return (determined with
regard to any extension of time for filing), the addition to tax
under this subdivision shall not be less than the lesser of (i)
$200; or (ii) the greater of (a) 25 percent of the amount
required to be shown as tax on the return without reduction for
any payments made or refundable credits allowable against the
tax; or (b) $50.
Subd. 3. [COMBINED PENALTIES.] Where penalties are imposed
under subdivisions 1 and 2, the penalties imposed under both
subdivisions combined, other than the minimum penalty under
subdivision 2, shall not exceed 38 percent in the aggregate.
Subd. 4. [WILLFUL FAILURE; FRAUD.] If a person willfully
fails to file a return or make a payment required by chapter
297, or willfully files a false or fraudulent return, or
willfully attempts in any manner to evade or defeat the tax or
payment of it, there shall also be imposed a penalty in an
amount equal to 50 percent of the tax (less any amounts paid on
the basis of the false or fraudulent return) found due for the
period to which the return related. The penalty imposed by this
subdivision shall be collected as part of the tax, and is in
addition to any other penalties, civil and criminal, provided by
this section.
Subd. 5. [ORDER PAYMENTS CREDITED.] All payments received
may, in the discretion of the commissioner of revenue, be
credited first to the oldest liability not secured by a judgment
or lien, but in all cases shall be credited first to penalties,
next to interest, and then to the tax due.
Subd. 6. [INTEREST.] The amount of tax not timely paid,
together with any penalty imposed in this section, shall bear
interest at the rate specified in section 270.75 from the time
such tax should have been paid until paid. Any interest and
penalty shall be added to the tax and collected as a part of it.
Subd. 7. [EXTENSION OF TIME.] The commissioner may extend
the time for filing returns and remittance of tax, deficiencies,
and penalties for not more than 60 days. The commissioner may
require that a tentative return be filed at the time fixed for
filing the regularly required return and that payment of the tax
be made with it on the basis of the tentative return.
When an extension of time for payment has been granted
under this section, interest shall be payable at the rate
provided in section 270.75 from the date when the payment should
have been made, if no extension had been granted, until the tax
is paid.
Subd. 8. [CIVIL ACTION.] The commissioner may recover the
amount of any tax due and unpaid, interest, and any penalty in a
civil action. The collection of the tax, interest, or penalty
is not a bar to any prosecution under chapter 297.
Subd. 9. [NEGLIGENCE; INTENTIONAL DISREGARD OF LAW OR
RULES.] If any part of any additional assessment is due to
negligence or intentional disregard of the provisions of this
chapter or rules of the commissioner of revenue (but without
intent to defraud), there shall be added to the tax an amount
equal to ten percent of the 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. 39. [FLOOR STOCKS TAX.]
Subdivision 1. [CIGARETTES.] A floor stocks tax is imposed
upon every person engaged in business in this state as a
distributor of cigarettes, on the cigarettes in the person's
possession or under the person's control at 12:01 a.m. on June
1, 1987. The tax is imposed at the following rates, subject to
the discount in section 297.03:
(1) on cigarettes weighing not more than three pounds a
thousand, 7.5 mills on each cigarette;
(2) on cigarettes weighing more than three pounds a
thousand, 15 mills on each cigarette.
Each distributor, by June 20, 1987, shall file a report
with the commissioner, in the form the commissioner prescribes,
showing the cigarettes on hand at 12:01 a.m. on June 1, 1987,
and the amount of tax due on them. The tax imposed by this
section less the discount provided in section 297.03,
subdivision 5, is due and payable by July 20, 1987, and after
that date bears interest at the rate of one percent a month.
Subd. 2. [TOBACCO PRODUCTS.] A floor stocks tax is imposed
upon every person engaged in business in this state as a
distributor of tobacco products, at the rate of ten percent of
the wholesale sales price of each tobacco product in the
person's possession or under the person's control at 12:01 a.m.
on June 1, 1987. Each distributor, by June 20, 1987, shall file
a report with the commissioner, in the form the commissioner
prescribes, showing the tobacco products on hand at 12:01 a.m.
on June 1, 1987, and the amount of tax due on them. The tax
imposed by this section less the discount provided in section
297.35, subdivision 1, is due and payable by July 20, 1987, and
after that date bears interest at the rate of one percent a
month.
Subd. 3. [DEPOSIT OF PROCEEDS.] The revenue from the tax
imposed under this section shall be deposited by the
commissioner in the tobacco tax revenue fund in the state
treasury.
Sec. 40. Minnesota Statutes 1986, section 325D.30, is
amended to read:
325D.30 [MINNESOTA UNFAIR CIGARETTE SALES ACT; FINDINGS AND
POLICY.]
The legislature finds that unfair, dishonest and fraudulent
business practices exist in transactions involving the sale of,
or offer to sell, cigarettes in the wholesale and retail trades
in this state and are demoralizing and disorganizing the said
trades.
Offering for sale, or sale of cigarettes below cost in the
wholesale and retail trade is declared by the legislature to
have the intent or effect of injuring a competitor, destroying
or lessening competition, and is deemed an unfair and deceptive
business practice and an unfair method of competition.
Such practices affect collection of taxes and license fees
imposed on distributors, wholesalers, retailers, and persons
engaged in the sale of cigarettes.
It is hereby declared to be the policy of the state of
Minnesota and the purposes of sections 325D.30 to 325D.42 to
protect the public by prohibiting such sales.
Sec. 41. Minnesota Statutes 1986, section 325D.32,
subdivision 4, is amended to read:
Subd. 4. "Wholesaler" means and includes any person who
acquires cigarettes for the purpose of sale to retailers or to
other persons for resale, and who maintains an established place
of business when any part of the business is the sale of
cigarettes at wholesale to persons licensed to sell cigarettes
by the state or any municipality, and where at all times a stock
of cigarettes is available to retailers for resale, or any
cigarette manufacturer or manufacturer's representative who
sells to retailers or to other persons for resale, and any
person defined as a "distributor" under section 297.01,
subdivision 7. The term "wholesaler" shall also include a
"subjobber" as defined by section 297.01, subdivision 14. This
subdivision does not prohibit any person from engaging in
business as a retailer as defined in subdivision 5.
Sec. 42. Minnesota Statutes 1986, section 325D.32,
subdivision 10, is amended to read:
Subd. 10. (1) (a) "Cost to wholesaler" means the basic
cost of the cigarettes, prior to deducting manufacturer's timely
payment and stamping discounts and any other discounts or
rebates, plus the cost of doing business by the wholesaler, as
defined in sections 325D.30 to 325D.42.
(2) (b) The cost of doing business by the wholesaler is
presumed to be four percentum percent of the basic cost of said
the cigarettes, plus cartage to the retail outlet, if furnished
or paid for by the wholesaler, in the absence of proof of a
lesser or higher cost, except that the cost of doing business by
the wholesaler is two percent of the basic cost of said
cigarettes, when such cigarettes are sold to a wholesaler, in
the absence of proof of a lesser or a higher cost. Such cartage
cost is presumed to be one-half of one percent of the basic cost
of the cigarettes in the absence of proof of a lesser or higher
cost.
Sec. 43. Minnesota Statutes 1986, section 325D.32,
subdivision 11, is amended to read:
Subd. 11. (1) (a) "Cost of the retailer" means the basic
cost of the cigarettes involved to the retailer plus the cost of
doing business by the retailer as defined in sections 325D.30 to
325D.42.
(2) (b) The cost of doing business by the said retailer is
presumed to be eight percentum percent of the basic cost of
cigarettes in the absence of proof of a lesser or a higher cost.
(3) If any retailer in connection with the purchase of any
cigarettes shall receive the discounts ordinarily allowed upon
purchases by a retailer and in whole or in part discounts
ordinarily allowed upon purchases by a wholesaler, the cost of
doing business by the retailer with respect to the said
cigarettes shall be, in the absence of a lesser or a higher cost
of doing business, the sum of the cost of doing business by the
retailer and, to the extent that the retailer shall have
received the full discounts allowed to a wholesaler, the cost of
doing business by a wholesaler as defined in subdivision 10,
clause (2) (c) If a retailer qualifies for the purchase of
cigarettes at a manufacturer's price to wholesaler and
ultimately sells the cigarettes at retail, the cost of doing
business by the retailer with respect to the cigarettes shall
be, in the absence of showing of a lesser or higher cost of
doing business, the sum of the cost of doing business by the
wholesaler, as defined in subdivision 10, paragraph (b), and the
cost of doing business by the retailer, as defined in paragraph
(b) of this subdivision.
Sec. 44. Minnesota Statutes 1986, section 325D.33,
subdivision 1, is amended to read:
Subdivision 1. It shall be unlawful for any wholesaler,
subjobber or retailer to offer to sell, or sell, at wholesale or
retail, cigarettes at less than cost to such wholesaler,
subjobber or retailer, as the case may be, as defined in
sections 325D.30 to 325D.42 for the purpose or with the effect
of injuring a competitor or destroying competition, or for a
retailer to induce or to attempt to induce a wholesaler or
subjobber to violate the provisions of the Minnesota unfair
cigarette sales act. Any wholesaler, subjobber or retailer who
violates the provisions of this section shall be guilty of a
misdemeanor.
Sec. 45. Minnesota Statutes 1986, section 325D.33,
subdivision 2, is amended to read:
Subd. 2. Evidence of advertisement, offering to sell or
sale of cigarettes by any wholesaler, subjobber or retailer at
less than cost as defined by sections 325D.30 to 325D.42 shall
be prima facie evidence of a violation of sections 325D.30 to
325D.42 in civil case