Office of the Revisor of Statutes
Minnesota Session Laws - 1995, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 1-H.F.No. 45
An act relating to taxation; making technical
corrections and clarifications; making administrative
changes; amending Minnesota Statutes 1994, sections
270.0604, subdivision 4; 273.11, subdivision 16;
273.121; 290.067, subdivision 1; and 297B.01,
subdivision 8; and Laws 1994, chapter 587, article 11,
section 9, subdivision 5.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1994, section 270.0604,
subdivision 4, is amended to read:
Subd. 4. [ISSUANCE.] The issuance of revenue notices is at
the discretion of the commissioner of revenue. The commissioner
shall establish procedures governing the issuance of revenue
notices and tax information bulletins. At least one week before
publication of a revenue notice in the State Register, the
commissioner shall provide a copy of the notice to the chairs of
the taxes committee of the house of representatives and the
taxes and tax laws committee of the senate.
Sec. 2. Minnesota Statutes 1994, section 273.11,
subdivision 16, is amended to read:
Subd. 16. [VALUATION EXCLUSION FOR CERTAIN IMPROVEMENTS.]
Improvements to homestead property made before January 2, 2003,
shall be fully or partially excluded from the value of the
property for assessment purposes provided that (1) the house is
at least 35 years old at the time of the improvement and (2)
either (a) the assessor's estimated market value of the house on
January 2 of the current year is equal to or less than $150,000,
or (b) if the estimated market value of the house is over
$150,000 market value but is less than $300,000 on January 2 of
the current year, the property qualifies if
(i) it is located in a city or town in which 50 percent or
more of the homes were constructed before 1960 based upon the
1990 federal census, and
(ii) the city or town's median family income based upon the
1990 federal census is less than the statewide median family
income based upon the 1990 federal census.
Any house which has an estimated market value of $300,000
or more on January 2 of the current year is not eligible to
receive any property valuation exclusion under this section.
For purposes of determining this eligibility, "house" means land
and buildings.
The age of a residence is the number of years that the
residence has existed at its present site. In the case of an
owner-occupied duplex or triplex, the improvement is eligible
regardless of which portion of the property was improved.
If the property lies in a jurisdiction which is subject to
a building permit process, a building permit must have been
issued prior to commencement of the improvement. Any
improvement must add at least $1,000 to the value of the
property to be eligible for exclusion under this subdivision.
Only improvements to the structure which is the residence of the
qualifying homesteader or construction of or improvements to no
more than one two-car garage per residence qualify for the
provisions of this subdivision. If an improvement was begun
between January 2, 1992, and January 2, 1993, any value added
from that improvement for the January 1994 and subsequent
assessments shall qualify for exclusion under this subdivision
provided that a building permit was obtained for the improvement
between January 2, 1992, and January 2, 1993. Whenever a
building permit is issued for property currently classified as
homestead, the issuing jurisdiction shall notify the property
owner of the possibility of valuation exclusion under this
subdivision. The assessor shall require an application,
including documentation of the age of the house from the owner,
if unknown by the assessor. The application may be filed
subsequent to the date of the building permit provided that the
application is must be filed prior to July 1 of the next
assessment date year in which the market value from the
qualifying improvement is added to that property's assessment.
After the adjournment of the 1994 county board of
equalization meetings, no exclusion may be granted for an
improvement by a local board of review or county board of
equalization unless (1) a building permit was issued prior to
the commencement of the improvement if the jurisdiction requires
a building permit, and (2) an application was completed on a
timely basis. No abatement of the taxes for qualifying
improvements may be granted by a county board unless (1) a
building permit was issued prior to commencement of the
improvement if the jurisdiction requires a building permit, and
(2) an application was completed on a timely basis.
The assessor shall note the qualifying value of each
improvement on the property's record, and the sum of those
amounts shall be subtracted from the value of the property in
each year for ten years after the improvement has been made, at
which time an amount equal to 20 percent of the qualifying value
shall be added back in each of the five subsequent assessment
years. The valuation exclusion shall terminate whenever (1) the
property is sold, or (2) the property is reclassified to a class
which does not qualify for treatment under this subdivision.
Improvements made by an occupant who is the purchaser of the
property under a conditional purchase contract do not qualify
under this subdivision unless the seller of the property is a
governmental entity. The qualifying value of the property shall
be computed based upon the increase from that structure's market
value as of January 2 preceding the acquisition of the property
by the governmental entity.
The total qualifying value for a homestead may not exceed
$50,000. The total qualifying value for a homestead with a
house that is less than 70 years old may not exceed $25,000.
The term "qualifying value" means the increase in estimated
market value resulting from the improvement if the improvement
occurs when the house is at least 70 years old, or one-half of
the increase in estimated market value resulting from the
improvement otherwise. The $25,000 and $50,000 maximum
qualifying value under this subdivision may result from up to
three separate improvements to the homestead. The application
shall state, in clear language, that if more than three
improvements are made to the qualifying property, a taxpayer may
choose which three improvements are eligible, provided that
after the taxpayer has made the choice and any valuation
attributable to those improvements has been excluded from
taxation, no further changes can be made by the taxpayer.
If 50 percent or more of the square footage of a structure
is voluntarily razed or removed, the valuation increase
attributable to any subsequent improvements to the remaining
structure does not qualify for the exclusion under this
subdivision. If a structure is unintentionally or accidentally
destroyed by a natural disaster, the property is eligible for an
exclusion under this subdivision provided that the structure was
not completely destroyed. The qualifying value on property
destroyed by a natural disaster shall be computed based upon the
increase from that structure's market value as determined on
January 2 of the year in which the disaster occurred. A
property receiving benefits under the homestead disaster
provisions under section 273.123 is not disqualified from
receiving an exclusion under this subdivision. If any
combination of improvements made to a structure after January 1,
1993, increases the size of the structure by 100 percent or
more, the valuation increase attributable to the portion of the
improvement that causes the structure's size to exceed 100
percent does not qualify for exclusion under this subdivision.
Sec. 3. Minnesota Statutes 1994, section 273.121, is
amended to read:
273.121 [VALUATION OF REAL PROPERTY, NOTICE.]
Any county assessor or city assessor having the powers of a
county assessor, valuing or classifying taxable real property
shall in each year notify those persons whose property is to be
assessed or reclassified that year if the person's address is
known to the assessor, otherwise the occupant of the property.
The notice shall be in writing and shall be sent by ordinary
mail at least ten days before the meeting of the local board of
review or equalization. It shall contain: (1) the market
value, (2) the limited market value under section 273.11,
subdivision 1a, (3) the qualifying amount of any improvements
under section 273.11, subdivision 16, (4) the market value
subject to taxation after subtracting the amount of any
qualifying improvements, (5) the new classification, (6) a note
that if the property is homestead and at least 35 years old,
improvements made to the property may be eligible for a
valuation exclusion under section 273.11, subdivision 16, (7)
the assessor's office address, and (7)(8) the dates, places, and
times set for the meetings of the local board of review or
equalization and the county board of equalization. If the
assessment roll is not complete, the notice shall be sent by
ordinary mail at least ten days prior to the date on which the
board of review has adjourned. The assessor shall attach to the
assessment roll a statement that the notices required by this
section have been mailed. Any assessor who is not provided
sufficient funds from the assessor's governing body to provide
such notices, may make application to the commissioner of
revenue to finance such notices. The commissioner of revenue
shall conduct an investigation and, if satisfied that the
assessor does not have the necessary funds, issue a
certification to the commissioner of finance of the amount
necessary to provide such notices. The commissioner of finance
shall issue a warrant for such amount and shall deduct such
amount from any state payment to such county or municipality.
The necessary funds to make such payments are hereby
appropriated. Failure to receive the notice shall in no way
affect the validity of the assessment, the resulting tax, the
procedures of any board of review or equalization, or the
enforcement of delinquent taxes by statutory means.
Sec. 4. Minnesota Statutes 1994, section 290.067,
subdivision 1, is amended to read:
Subdivision 1. [AMOUNT OF CREDIT.] (a) 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 subject to
the limitations provided in subdivision 2 except that in
determining whether the child qualified as a dependent, income
received as an aid to families with dependent children grant or
allowance to or on behalf of the child must not be taken into
account in determining whether the child received more than half
of the child's support from the taxpayer, and the provisions of
section 32(b)(1)(D) of the Internal Revenue Code do not apply.
(b) If a child who is six years of age or less at the close
of the taxable year is cared for at a licensed family day care
home operated by the child's parent, the taxpayer is deemed to
have paid employment-related expenses. If the child is 16
months old or younger at the close of the taxable year, the
amount of expenses deemed to have been paid equals the maximum
limit for one qualified individual under section 21(c) and (d)
of the Internal Revenue Code. If the child is older than 16
months of age but not older than six years of age at the close
of the taxable year, the amount of expenses deemed to have been
paid equals the amount the licensee would charge for the care of
a child of the same age for the same number of hours of care.
(c) If a married couple:
(1) has a child one year of age or less who has not
attained the age of one year at the close of the taxable year;
(2) files a joint tax return for the taxable year; and
(3) does not participate in a dependent care assistance
program as defined in section 129 of the Internal Revenue Code,
in lieu of the actual employment related expenses paid for that
child under paragraph (a) or the deemed amount under paragraph
(b), the lesser of (i) the combined earned income of the couple
or (ii) $2,400 will be deemed to be the employment related
expense paid for that child. The earned income limitation of
section 21(d) of the Internal Revenue Code shall not apply to
this deemed amount. These deemed amounts apply regardless of
whether any employment-related expenses have been paid.
(d) If the taxpayer is not required and does not file a
federal individual income tax return for the tax year, no credit
is allowed for any amount paid to any person unless:
(1) the name, address, and taxpayer identification number
of the person are included on the return claiming the credit; or
(2) if the person is an organization described in section
501(c)(3) of the Internal Revenue Code and exempt from tax under
section 501(a) of the Internal Revenue Code, the name and
address of the person are included on the return claiming the
credit.
In the case of a failure to provide the information required
under the preceding sentence, the preceding sentence does not
apply if it is shown that the taxpayer exercised due diligence
in attempting to provide the information required.
In the case of a nonresident, part-year resident, or a
person who has earned income not subject to tax under this
chapter, the credit determined under section 21 of the Internal
Revenue Code must be allocated based on the ratio by which the
earned income of the claimant and the claimant's spouse from
Minnesota sources bears to the total earned income of the
claimant and the claimant's spouse.
Sec. 5. Minnesota Statutes 1994, section 297B.01,
subdivision 8, is amended to read:
Subd. 8. [PURCHASE PRICE.] "Purchase price" means the
total consideration valued in money for a sale, whether paid in
money or otherwise, provided however, that when. The purchase
price excludes the amount of a manufacturer's rebate paid or
payable to the purchaser. If a motor vehicle is taken in trade
as a credit or as part payment on a motor vehicle taxable
under Laws 1971, chapter 853 this chapter, the credit or
trade-in value allowed by the person selling the motor vehicle
shall be deducted from the total selling price to establish the
purchase price of the vehicle being sold and the trade-in
allowance allowed by the seller shall constitute the purchase
price of the motor vehicle accepted as a trade-in. The purchase
price in those instances where the motor vehicle is acquired by
gift or by any other transfer for a nominal or no monetary
consideration shall also include the average value of similar
motor vehicles, established by standards and guides as
determined by the motor vehicle registrar. The purchase price
in those instances where a motor vehicle is manufactured by a
person who registers it under the laws of this state shall mean
the manufactured cost of such motor vehicle and manufactured
cost shall mean the amount expended for materials, labor and
other properly allocable costs of manufacture, except that in
the absence of actual expenditures for the manufacture of a part
or all of the motor vehicle, manufactured costs shall mean the
reasonable value of the completed motor vehicle.
The term "purchase price" shall not include the portion of
the value of a motor vehicle due solely to modifications
necessary to make the motor vehicle handicapped accessible. The
term "purchase price" shall not include the transfer of a motor
vehicle by way of gift between a husband and wife or parent and
child, nor shall it include the transfer of a motor vehicle by a
guardian to a ward when there is no monetary consideration and
the title to such vehicle was registered in the name of the
guardian, as guardian, only because the ward was a minor. There
shall not be included in "purchase price" the amount of any tax
imposed by the United States upon or with respect to retail
sales whether imposed upon the retailer or the consumer.
Sec. 6. Laws 1994, chapter 587, article ll, section 9,
subdivision 5, is amended to read:
Subd. 5. [PUBLIC INSTRUMENTALITY.] Revenue bonds of the
authority are deemed and must be treated as instrumentalities of
the public government agency; and as such, together with
interest on the bonds, are exempt from taxation.
Sec. 7. [EFFECTIVE DATE.]
Sections 1 and 5 are effective the day following final
enactment. Section 2 is effective July 1, 1994, and thereafter.
Section 3 is effective beginning with 1995 valuation notices.
Section 4 is effective for taxable years beginning after
December 31, 1993. Section 6 is effective September 21, 1994.
Presented to the governor February 13, 1995
Signed by the governor February 14, 1995, 11:32 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes