Office of the Revisor of Statutes
Minnesota Session Laws - 1997, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 84-H.F.No. 807
An act relating to taxation; making policy changes to
income and withholding taxes, property taxes, mortgage
registry and deed taxes, sales and use taxes,
MinnesotaCare taxes, and tax collections; providing
civil penalties; amending Minnesota Statutes 1996,
sections 8.30; 60A.15, subdivision 1; 270.02,
subdivision 3; 270.063; 270.10, subdivisions 1 and 5;
270.101, subdivisions 2, 3, and by adding a
subdivision; 270.271, by adding a subdivision;
270.273, subdivision 2; 270.276, subdivision 2;
270.67, subdivision 2; 270.68, subdivision 1; 270.69,
subdivision 11; 270.701, subdivisions 2 and 5;
270.708, subdivision 1; 270.721; 270.73, subdivision
1; 271.06, subdivision 2; 271.08, subdivision 1;
271.10, subdivision 2; 275.075; 287.08; 287.28;
287.31, subdivision 1; 289A.08, subdivision 3;
289A.09, subdivision 2; 289A.20, subdivisions 1 and 2;
289A.31, subdivision 1; 289A.36, subdivision 4;
289A.37, subdivision 1; 289A.40, subdivisions 1 and 2;
289A.60, subdivision 15; 290.095, subdivision 3;
290.17, subdivision 2; 290.35, subdivision 2; 290A.04,
subdivision 2h; 295.50, subdivisions 3 and 14; 295.52,
subdivision 4; 295.53, subdivision 4; 295.55,
subdivision 2; 297A.01, by adding a subdivision;
297A.041; 297A.07, subdivision 3; 297A.24, by adding a
subdivision; 297A.25, subdivisions 12 and 41; 297A.45,
subdivision 4; 297B.035, subdivision 3; 297B.11;
299F.21; 515B.1-105; and 515B.1-116; Laws 1995,
chapter 264, article 10, section 15; proposing coding
for new law in Minnesota Statutes, chapters 270; and
287.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
PROPERTY TAXES
Section 1. Minnesota Statutes 1996, section 275.075, is
amended to read:
275.075 [OMISSION BY INADVERTENCE; CORRECTION.]
Whenever the amount of taxes as levied and certified by the
tax levying body of any county, city, town, special taxing
district, or school district has not been, as the result of
error, inadvertence, or from the estimates as provided in
section 275.08, by the county auditor extended and spread in
conformity therewith, such tax levying body may include in its
tax levy for the year following, the whole or any part of the
amount so omitted through error, inadvertence, or from the
estimates as provided in section 275.08, in addition to its
current levy and in addition to and notwithstanding any
limitations to the contrary.
Sec. 2. Minnesota Statutes 1996, section 287.08, is
amended to read:
287.08 [TAX, HOW PAYABLE; RECEIPTS.]
(a) The tax imposed by sections 287.01 to 287.12 shall be
paid to the treasurer of the county in which the mortgaged land
or some part thereof is situated at or before the time of filing
the mortgage for record or registration. The treasurer shall
endorse receipt on the mortgage, countersigned by the county
auditor, who shall charge the amount to the treasurer and such
receipt shall be recorded with the mortgage, and such receipt of
the record thereof shall be conclusive proof that the tax has
been paid to the amount therein stated and authorize any county
recorder to record the mortgage. Its form, in substance, shall
be "registration tax hereon of ..................... dollars
paid." If the mortgages be exempt from taxation the endorsement
shall be "exempt from registration tax," to be signed in either
case by the treasurer as such, and in case of payment to be
countersigned by the auditor. In case the treasurer shall be
unable to determine whether a claim of exemption should be
allowed, the tax shall be paid to the court administrator of as
in the case of a taxable mortgage.
(b) Upon written application of the taxpayer, the county
treasurer may refund in whole or in part any tax which has been
erroneously paid, or a person having paid a mortgage registry
tax amount may seek a refund of such tax, or other appropriate
relief, by bringing an action in the district tax court of in
the county to abide the order of such court made upon motion of
the county attorney, or of the claimant upon notice as required
by the court. in which the tax was paid, within 60 days of the
payment. The action is commenced by the serving of a petition
for relief on the county treasurer, and by filing a copy with
the court. The county attorney shall defend the action. The
county treasurer shall notify the treasurer of each county that
has or would receive a portion of the tax as paid.
(c) If the county treasurer determines a refund should be
paid, or if a refund is ordered, the county treasurer of each
county that actually received a portion of the tax shall
immediately pay a proportionate share of three percent of the
refund using any available county funds. The county treasurer
of each county which received, or would have received, a portion
of the tax shall also pay their county's proportionate share of
the remaining 97 percent of the court-ordered refund on or
before the tenth day of the following month using solely the
mortgage registry tax funds that would be paid to the
commissioner of revenue on that date under section 287.12. If
the funds on hand under this procedure are insufficient to fully
fund 97 percent of the court ordered refund, the county
treasurer of the county in which the action was brought shall
file a claim with the commissioner of revenue under section
16A.48 for the remaining portion of 97 percent of the refund,
and shall pay over the remaining portion upon receipt of a
warrant from the state issued pursuant to the claim.
(d) When any such mortgage covers real property situate in
more than one county in this state the whole of such tax shall
be paid to the treasurer of the county where the mortgage is
first presented for record or registration, and the payment
shall be receipted and countersigned as above provided. The tax
shall be divided and paid over by the county treasurer receiving
the same, on or before the tenth day of each month after receipt
thereof, to the county or counties entitled thereto in the ratio
which the market value of the real property covered by the
mortgage in each county bears to the market value of all the
property described in the mortgage. In making such division and
payment the county treasurer shall send therewith a statement
giving the description of the property described in the mortgage
and the market value of the part thereof situate in each
county. For the purpose aforesaid, the treasurer of any county
may require the treasurer of any other county to certify to the
former the market valuation of any tract of land in any such
mortgage.
Sec. 3. Minnesota Statutes 1996, section 287.28, is
amended to read:
287.28 [REFUNDMENTS REFUNDS OR REDEMPTION.]
(a) The county treasurer may order the refundment refund in
whole or in part of any tax which has been erroneously or
unjustly paid and may allow for or redeem such of the stamps,
issued under the authority of sections 287.21 to 287.36 as may
have been spoiled, destroyed, or rendered useless or unfit for
the purpose intended or for which the owner may have no use or
which through mistake may have been improperly or unnecessarily
used. Such order shall be made only upon written application of
the taxpayer and upon approval of the county board. Refunds
therefor shall be paid out of the general fund of the county.
(b) A person having paid a deed tax amount may seek a
refund of the tax, or other appropriate relief, by commencing an
action in tax court in the county where the tax was paid, within
60 days of the payment. The action is commenced by serving a
petition for relief on the county treasurer, and filing a copy
with the court. The county attorney shall defend the action.
The county treasurer shall notify the treasurer of each county
that has, or would receive a portion of the tax as paid. Any
refund of deed tax which the county treasurer determines should
be made, and any court ordered refund of deed tax, shall be
accomplished using the refund procedures in section 287.08.
Sec. 4. Minnesota Statutes 1996, section 290A.04,
subdivision 2h, is amended to read:
Subd. 2h. (a) If the gross property taxes payable on a
homestead increase more than 12 percent over the net property
taxes payable in the prior year on the same property that is
owned and occupied by the same owner on January 2 of both years,
and the amount of that increase is $100 or more for taxes
payable in 1996 and 1997, a claimant who is a homeowner shall be
allowed an additional refund equal to 60 percent of the amount
of the increase over the greater of 12 percent of the prior
year's net property taxes payable or $100 for taxes payable in
1996 and 1997. This subdivision shall not apply to any increase
in the gross property taxes payable attributable to improvements
made to the homestead after the assessment date for the prior
year's taxes. This subdivision shall not apply to any increase
in the gross property taxes payable attributable to the
termination of valuation exclusions under section 273.11,
subdivision 16.
The maximum refund allowed under this subdivision is $1,000.
(b) For purposes of this subdivision, the following terms
have the meanings given:
(1) "Net property taxes payable" means property taxes
payable minus refund amounts for which the claimant qualifies
pursuant to subdivision 2 and this subdivision.
(2) "Gross property taxes" means net property taxes payable
determined without regard to the refund allowed under this
subdivision.
(c) In addition to the other proofs required by this
chapter, each claimant under this subdivision shall file with
the property tax refund return a copy of the property tax
statement for taxes payable in the preceding year or other
documents required by the commissioner.
(d) On or before December 1, 1995, the commissioner shall
estimate the cost of making the payments provided by this
subdivision for taxes payable in 1996. Notwithstanding the open
appropriation provision of section 290A.23, if the estimated
total refund claims for taxes payable in 1996 exceed $5,500,000,
the commissioner shall first reduce the 60 percent refund rate
enough, but to no lower a rate than 50 percent, so that the
estimated total refund claims do not exceed $5,500,000. If the
commissioner estimates that total claims will exceed $5,500,000
at a 50 percent refund rate, the commissioner shall also reduce
the $1,000 maximum refund amount by enough so that total
estimated refund claims do not exceed $5,500,000.
The determinations of the revised thresholds by the
commissioner are not rules subject to chapter 14.
(e) Upon request, the appropriate county official shall
make available the names and addresses of the property taxpayers
who may be eligible for the additional property tax refund under
this section. The information shall be provided on a magnetic
computer disk. The county may recover its costs by charging the
person requesting the information the reasonable cost for
preparing the data. The information may not be used for any
purpose other than for notifying the homeowner of potential
eligibility and assisting the homeowner, without charge, in
preparing a refund claim.
Sec. 5. Minnesota Statutes 1996, section 515B.1-105, is
amended to read:
515B.1-105 [SEPARATE TITLES AND TAXATION.]
(a) In a cooperative:
(1) The unit owners' interests in units and their allocated
interests are wholly personal property, unless the declaration
provides that the interests are wholly real estate. The
characterization of these interests as real or personal property
shall not affect whether homestead exemptions or classifications
apply.
(2) The ownership interest in a unit which may be sold,
conveyed, voluntarily or involuntarily encumbered, or otherwise
transferred by a unit owner, is the right to possession of that
unit under a proprietary lease coupled with the allocated
interests of that unit, and the association's interest in that
unit is not affected by the transaction.
(b) In a condominium or planned community:
(1) Each unit, and its allocated interest in the common
elements, constitutes a separate parcel of real estate.
(2) If there is any unit owner other than a declarant, each
unit shall be separately taxed and assessed, and no separate tax
or assessment may be rendered against any common elements.
(c) If a declaration is recorded prior to 30 days before
any installment of real estate taxes becomes payable, the local
taxing authority shall split the taxes so payable on the common
interest community among the units. Interest and penalties
which would otherwise accrue shall not begin to accrue until at
least 30 days after the split is accomplished.
(d) A unit used for residential purposes together with not
more than three units used for vehicular parking, and their
common element interests, shall be treated as one parcel of real
estate in determining whether homestead exemptions or
classifications apply.
Sec. 6. Minnesota Statutes 1996, section 515B.1-116, is
amended to read:
515B.1-116 [RECORDING.]
(a) A declaration, bylaws, any amendment to a declaration
or bylaws, and any other instrument affecting a common interest
community shall be entitled to be recorded. In those counties
which have a tract index, the county recorder shall enter the
declaration in the tract index for each unit affected. The
registrar of titles shall file the declaration on the
certificate of title for each unit affected.
(b) The recording officer shall upon request promptly
assign a number (CIC number) to a common interest community to
be formed or to a common interest community resulting from the
merger of two or more common interest communities.
(c) Documents recorded pursuant to this chapter shall in
the case of registered land be filed, and references to the
recording of documents shall mean filed in the case of
registered land.
(d) Subject to any specific requirements of this chapter,
if any document to be recorded pursuant to this chapter requires
approval by a certain vote or agreement of the unit owners or
secured parties, an affidavit of the secretary of the
association stating that the required vote or agreement has
occurred shall be attached to the document and shall constitute
prima facie evidence of the representations contained therein.
(e) If a common interest community is located on registered
land, the recording fee for any document affecting two or more
units shall be the then-current fee for registering the document
on the certificates of title for the first ten affected
certificates and one-third of the then-current fee for each
additional affected certificate. This provision shall not apply
to recording fees for deeds of conveyance, with the exception of
deeds given pursuant to sections 515B.2-119 and 515B.3-112.
(f) Except as permitted under this subsection, a recording
officer shall not file or record a declaration creating a new
common interest community, unless the county treasurer has
certified that the property taxes payable in the current year
for the real estate included in the proposed common interest
community have been paid. This certification is in addition to
the certification for delinquent taxes required by section
272.12. In the case of preexisting common interest communities,
the recording officer shall accept, file, and record the
following instruments, without requiring a certification as to
the current or delinquent taxes on any of the units in the
common interest community: (i) a declaration subjecting the
common interest community to this chapter; (ii) a declaration
changing the form of a common interest community pursuant to
section 515B.2-123; or (iii) an amendment to or restatement of a
the declaration or, bylaws, or an amended CIC plat, approved
by the required vote of unit owners of an association may be
recorded without the necessity of paying the current or
delinquent taxes on any of the units in the common interest
community. In order for the instruments to be accepted and
recorded under the preceding sentence, the assessor must certify
or otherwise inform the recording officer that, for taxes
payable in the current year, the assessor has allocated taxable
values to each unit or has separately assessed each unit.
(g) The registrar of titles shall not require the filing on
certificates of title previously issued for units in a flexible
common interest community of an amendment to a declaration
pursuant to section 515B.2-111 made solely to add additional
real estate.
Sec. 7. [EFFECTIVE DATE.]
Section 1 is effective for taxes payable in 1998 and
thereafter. Sections 2, 3, and 4 are effective the day
following final enactment. Sections 5 and 6 are effective for
declarations submitted for recording on or after July 1, 1997.
ARTICLE 2
INCOME AND WITHHOLDING
Section 1. Minnesota Statutes 1996, section 289A.08,
subdivision 3, is amended to read:
Subd. 3. [CORPORATIONS.] A corporation that is subject to
the state's jurisdiction to tax under section 290.014,
subdivision 5, must file a return, except that a foreign
operating corporation as defined in section 290.01, subdivision
6b, is not required to file a return. The commissioner shall
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. All members of an affiliated group
that elect to are required to file a combined report must file
one return on behalf of the members of the group under rules
adopted by the commissioner may change or rescind the election
by filing the form required by the commissioner.
Sec. 2. Minnesota Statutes 1996, section 290.095,
subdivision 3, is amended to read:
Subd. 3. [CARRYOVER.] (a) A net operating loss incurred in
a taxable year: (i) beginning after December 31, 1986, shall be
a net operating loss carryover to each of the 15 taxable years
following the taxable year of such loss; (ii) beginning before
January 1, 1987, shall be a net operating loss carryover to each
of the five taxable years following the taxable year of such
loss subject to the provisions of Minnesota Statutes 1986,
section 290.095; and (iii) beginning before January 1, 1987,
shall be a net operating loss carryback to each of the three
taxable years preceding the loss year subject to the provisions
of Minnesota Statutes 1986, section 290.095.
(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 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 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 290.191, the net operating loss deduction
incurred in any taxable year shall be allowed to the extent of
the apportionment ratio of the loss year.
(d) The provisions of sections 381, 382, and 384 of the
Internal Revenue Code apply to carryovers in certain corporate
acquisitions and special limitations on net operating loss
carryovers. The limitation amount determined under section 382
shall be applied to net income, before apportionment, in each
post change year to which a loss is carried.
Sec. 3. Minnesota Statutes 1996, section 290.17,
subdivision 2, is amended to read:
Subd. 2. [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR
BUSINESS.] 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.
Severance pay shall be considered income from labor or
personal or professional services.
(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. For purposes
of this paragraph, off-season training activities, unless
conducted at the team's facilities as part of a team imposed
program, are not included in the total number of duty days.
Bonuses earned as a result of play during the regular season or
for participation in championship, play-off, or all-star games
must be allocated under the formula. Signing bonuses are not
subject to allocation under the formula if they are not
conditional on playing any games for the team, are payable
separately from any other compensation, and are nonrefundable;
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.
(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 as "retirement income" as defined in section (b)(1)
of the State Income Taxation of Pension Income Act, Public Law
Number 104-95, 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) 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.
Gain on the sale of goodwill or income from a covenant not
to compete that is connected with a business operating all or
partially in Minnesota is allocated to this state to the extent
that the income from the business in the year preceding the year
of sale was assignable to Minnesota under subdivision 3.
When an employer pays an employee for a covenant not to
compete, the income allocated to this state is in the ratio of
the employee's service in Minnesota in the calendar year
preceding leaving the employment of the employer over the total
services performed by the employee for the employer in that year.
(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, the Minnesota state lottery, and lawful gambling as
defined in section 349.12, subdivision 24, conducted within the
boundaries of the state of Minnesota 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.
Sec. 4. Minnesota Statutes 1996, section 290.35,
subdivision 2, is amended to read:
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 and the surcharge imposed by section 168A.40,
subdivision 3) 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 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
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.
Reinsurance premiums are presumed to be received for a Minnesota
risk and are assigned to Minnesota, if:
(1) the reinsurance contract is assumed for a company
domiciled in Minnesota; and
(2) the taxpayer, upon request of the commissioner, fails
to provide reliable records indicating the reinsured contract
covered non-Minnesota risks.
For purposes of this paragraph, "Minnesota risk" means coverage
in connection with property in or liability arising out of
activity in Minnesota, or in connection with the lives or health
of Minnesota residents.
(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.
Sec. 5. Laws 1995, chapter 264, article 10, section 15, is
amended to read:
Sec. 15. [EFFECTIVE DATE.]
Section 1 is effective for returns due after December 31,
1995. Section 2 as it relates to quarterly withholding deposits
is effective for withholding done after December 31, 1995, and
the remainder of section 2 is effective for payments due after
December 31, 1995. Sections 3 and 5 are effective for federal
determinations after December 31, 1995. Section 4 is effective
for estates of decedents dying after the date of final
enactment. Section 6 is effective for deaths after December 31,
1995, and trusts that become irrevocable after December 31,
1995, or are first administered in Minnesota after December 31,
1995. Sections 7 and 9 to 11 are effective for tax years
beginning after December 31, 1995. Section 12 is effective for
wages paid after December 31, 1995. Sections 8 and 13 are
effective for tax years beginning after December 31, 1994.
Sec. 6. [INTEREST ON 1996 PENALTIES.]
Notwithstanding any law to the contrary, for calendar year
1996 individual income tax returns, the late payment penalty
under Minnesota Statutes, section 289A.60, subdivision 1, and
interest under Minnesota Statutes, section 289A.55, subdivisions
2, 4, and 9, will start on May 30, 1997 instead of April 15,
1997.
Sec. 7. [EFFECTIVE DATES.]
Section 1 is effective for tax years beginning after
December 31, 1997.
Sections 2 to 4 are effective for tax years beginning after
December 31, 1996.
Section 5 is effective for trusts first administered in
Minnesota after December 31, 1995, and tax years beginning after
December 31, 1996.
ARTICLE 3
SALES AND SPECIAL TAXES
Section 1. Minnesota Statutes 1996, section 289A.40,
subdivision 2, is amended to read:
Subd. 2. [BAD DEBT LOSS.] If a claim relates to an
overpayment because of a failure to deduct a loss due to a bad
debt or to a security becoming worthless, the claim is
considered timely if filed within seven years from the date
prescribed for the filing of the return. A claim relating to an
overpayment of taxes under chapter 297A must be filed within
3-1/2 years from the date prescribed for filing the return, plus
any extensions granted for filing the return, but only if filed
within the extended time, or within one year from the date the
taxpayer's federal income tax return is timely filed claiming
the bad debt deduction, whichever period expires later. The
refund or credit is limited to the amount of overpayment
attributable to the loss.
Sec. 2. Minnesota Statutes 1996, section 289A.60,
subdivision 15, is amended to read:
Subd. 15. [ACCELERATED PAYMENT OF JUNE SALES TAX
LIABILITY; PENALTY FOR UNDERPAYMENT.] If a vendor is required by
law to submit an estimation of June sales tax liabilities and 75
percent payment by a certain date, the vendor shall pay a
penalty equal to ten percent of the amount of actual June
liability required to be paid in June less the amount remitted
in June. The penalty must not be imposed, however, if the
amount remitted in June equals the lesser of: (1) 70 percent of
the actual June liability, (2) 75 percent of the preceding May's
liability, or (3) 75 percent of the average monthly liability
for the previous calendar year.
Sec. 3. Minnesota Statutes 1996, section 297A.01, is
amended by adding a subdivision to read:
Subd. 22. [LEASING.] "Leasing" includes all transfers of
possession of tangible personal property or the use thereof by
the lessee for a consideration when title remains with the
lessor at the end of the lease. If a contract designated as a
lease binds the lessee for a fixed term and the lessee is to
obtain title at the end of the term of the agreement or has the
option at that time to purchase the property for a nominal
amount, the contract is regarded as a sale and not as a lease.
For purposes of this chapter, a lease of tangible personal
property is a series of transactions that impose upon the lessee
multiple payment obligations. A taxable transaction is
considered to have occurred when an obligation to make a lease
payment becomes due under the terms of the agreement or trade
practices of the lessor. For purposes of this subdivision,
"nominal amount" means an amount so small, slight, or negligible
that it is not economically significant and bears no relation to
the real value of the item being purchased.
Sec. 4. Minnesota Statutes 1996, section 297A.041, is
amended to read:
297A.041 [OPERATOR OF FLEA MARKETS; SELLER'S PERMITS
REQUIRED.]
The operator of a flea market, craft show, antique show,
coin show, stamp show, comic book show, convention exhibit area,
or similar selling event, as a prerequisite to renting or
leasing space on the premises owned or controlled by the
operator to a person desiring to engage in or conduct business
as a seller, shall obtain evidence that the seller is the holder
of a valid seller's permit issued under section 297A.04, or a
written statement from the seller that the seller is not
offering for sale any item that is taxable under this chapter.
Flea market, craft show, antique show, coin show, stamp
show, comic book show, convention exhibit area, or similar
selling event, as used in this section, means an activity
involving a series of sales sufficient in number, scope, and
character to constitute a regular course of business, and that
would not qualify as an isolated or occasional sale under
section 297A.25, subdivision 12.
This section does not apply to an operator of a flea
market, craft show, antique show, coin show, stamp show, comic
book show, convention exhibit area, or similar selling event
that is: (1) held in conjunction with a community sponsored
festival that has a duration of four or fewer consecutive days
no more than once a year; or (2) conducted by a nonprofit
organization annually or less frequently.
Sec. 5. Minnesota Statutes 1996, section 297A.24, is
amended by adding a subdivision to read:
Subd. 3. [LOCAL TAXES.] If an item has been subjected to a
sales tax imposed by a political subdivision of this state and
is used, stored, or consumed in another political subdivision
imposing a local use tax, a credit shall be given for all
legally imposed sales taxes paid by the purchaser with respect
to that item.
Sec. 6. Minnesota Statutes 1996, section 297A.25,
subdivision 12, is amended to read:
Subd. 12. [OCCASIONAL SALES.] (a) 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.
(b) This exemption does not apply to sales of tangible
personal property primarily used in a trade or business unless
(1) the sale occurs in a transaction subject to or described in
section 118, 331, 332, 336, 337, 338, 351, 355, 368, 721, 731,
1031, or 1033 of the Internal Revenue Code of 1986, as amended
through December 31, 1990; (2) the sale is between members of a
controlled group as defined in section 1563(a) of the Internal
Revenue Code of 1986, as amended through December 31, 1990; (3)
the sale is a sale of farm machinery; (4) the sale is a farm
auction sale; (5) the sale is a sale of substantially all of the
assets of a trade or business; or (6) the total amount of gross
receipts from the sale of trade or business property made during
the calendar month of the sale and the preceding 11 calendar
months does not exceed $1,000.
(c) For purposes of this subdivision, the following terms
have the meanings given.
(1) A "farm auction" is a public auction conducted by a
licensed auctioneer if substantially all of the property sold
consists of property used in the trade or business of farming
and property not used primarily in a trade or business.
(2) "Trade or business" includes the assets of a separate
division, branch, or identifiable segment of a trade or business
if, before the sale, the income and expenses attributable to the
separate division, branch, or identifiable segment could be
separately ascertained from the books of account or record (the
lease or rental of an identifiable segment does not qualify for
the exemption).
(3) A "sale of substantially all of the assets of a trade
or business" must occur as a single transaction or a series of
related transactions occurring within the 12-month period
beginning on the date of the first sale of assets intended to
qualify for the exemption provided in paragraph (b), clause (5).
For purposes of this subdivision, "normal course of
business" means activities that demonstrate a commercial
continuity or consistency of making sales or performing services
for the purposes of attaining profit or producing income.
Factors that indicate that a person is acting in the normal
course of business include:
(1) systematic solicitation of sales through advertising
media;
(2) entering into contracts to perform services or provide
tangible personal property;
(3) maintaining a place of business; or
(4) use of exemption certificates to purchase goods exempt
from the sales tax.
Sec. 7. Minnesota Statutes 1996, section 297A.25,
subdivision 41, is amended to read:
Subd. 41. [BULLET-PROOF VESTS.] The gross receipts from
the sale of bullet-resistant soft body armor that is flexible,
concealable, and custom-fitted to provide provides the wearer
with ballistic and trauma protection are exempt if purchased by
a law enforcement agency of the state or a political subdivision
of the state, or a licensed peace officer, as defined in section
626.84, subdivision 1. The bullet-resistant soft body armor
must meet or exceed the requirements of standard 0101.01 of the
National Institute of Law Enforcement and Criminal Justice in
effect on December 30, 1986, or meet or exceed the requirements
of the standard except wet armor conditioning.
Sec. 8. Minnesota Statutes 1996, section 297A.45,
subdivision 4, is amended to read:
Subd. 4. [CITY LOCAL SALES TAX MAY NOT BE IMPOSED.]
Notwithstanding any other law or charter provision to the
contrary, a home rule charter or statutory city political
subdivision that imposes a general sales tax may shall not
impose the sales tax on solid waste management services that are
subject to the tax under this section.
Sec. 9. [EFFECTIVE DATE.]
Section 1 is effective for refund claims filed for bad
debts recognized for federal income tax purposes after June 30,
1997.
Section 2 is effective for returns filed after January 1,
1998.
Sections 3 to 5 and 8 are effective July 1, 1997.
Sections 6 and 7 are effective for sales and purchases
occurring after June 30, 1997.
ARTICLE 4
MINNESOTACARE
Section 1. Minnesota Statutes 1996, section 295.50,
subdivision 3, is amended to read:
Subd. 3. [GROSS REVENUES.] "Gross revenues" are total
amounts received in money or otherwise by:
(1) a hospital for patient services;
(2) a surgical center for patient services;
(3) a health care provider, other than a staff model health
carrier, for patient services;
(4) a wholesale drug distributor for sale or distribution
of legend drugs that are delivered: (i) to a Minnesota resident
by a wholesale drug distributor who is a nonresident pharmacy
directly, by common carrier, or by mail; or (ii) in Minnesota by
the wholesale drug distributor, by common carrier, or by mail,
unless the legend drugs are delivered to another wholesale drug
distributor who sells legend drugs exclusively at wholesale.
Legend drugs do not include nutritional products as defined in
Minnesota Rules, part 9505.0325;
(5) a staff model health plan company as gross premiums for
enrollees, copayments, deductibles, coinsurance, and fees for
patient services covered under its contracts with groups and
enrollees; and
(6) a pharmacy for medical supplies, appliances, and
equipment.
Sec. 2. Minnesota Statutes 1996, section 295.50,
subdivision 14, is amended to read:
Subd. 14. [WHOLESALE DRUG DISTRIBUTOR.] "Wholesale drug
distributor" means a wholesale drug distributor required to be
licensed under sections 151.42 to 151.51 or a nonresident
pharmacy required to be registered under section 151.19.
Sec. 3. Minnesota Statutes 1996, section 295.52,
subdivision 4, is amended to read:
Subd. 4. [USE TAX; PRESCRIPTION DRUGS.] A person that
receives prescription drugs for resale or use in Minnesota,
other than from a wholesale drug distributor that paid the tax
under subdivision 3, is subject to a tax equal to two percent of
the price paid. Liability for the tax is incurred when
prescription drugs are received or delivered in Minnesota by the
person.
Sec. 4. Minnesota Statutes 1996, section 295.53,
subdivision 4, is amended to read:
Subd. 4. [DEDUCTION FOR RESEARCH.] (a) In addition to the
exemptions allowed under subdivision 1, a hospital or health
care provider which is exempt under section 501(c)(3) of the
Internal Revenue Code of 1986 or is owned and operated under
authority of a governmental unit, may deduct from its gross
revenues subject to the hospital or health care provider taxes
under sections 295.50 to 295.57 revenues equal to expenditures
for qualifying research conducted by an allowable research
programs program.
(b) For purposes of this subdivision, the following
requirements apply:
(1) expenditures for allowable research programs are the
direct and general must be for program costs for activities
which are part of qualifying research conducted by an allowable
research program;
(2) an allowable research program must be a formal program
of medical and health care research approved by the governing
body of the hospital or health care provider which also includes
active solicitation of research funds from government and
private sources. Allowable conducted by an entity which is
exempt under section 501(c)(3) of the Internal Revenue Code of
1986 or is owned and operated under authority of a governmental
unit;
(3) qualifying research must:
(A) be approved in writing by the governing body of the
hospital or health care provider which is taking the deduction
under this subdivision;
(1) (B) have as its purpose the development of new
knowledge in basic or applied science relating to the diagnosis
and treatment of conditions affecting the human body;
(2) (C) be subject to review by individuals with expertise
in the subject matter of the proposed study but who have no
financial interest in the proposed study and are not involved in
the conduct of the proposed study; and
(3) (D) be subject to review and supervision by an
institutional review board operating in conformity with federal
regulations if the research involves human subjects or an
institutional animal care and use committee operating in
conformity with federal regulations if the research involves
animal subjects. Research expenses are not exempt if the study
is a routine evaluation of health care methods or products used
in a particular setting conducted for the purpose of making a
management decision. Costs of clinical research activities paid
directly for the benefit of an individual patient are excluded
from this exemption. Basic research in fields including
biochemistry, molecular biology, and physiology are also
included if such programs are subject to a peer review process.
(c) No deduction shall be allowed under this subdivision
for any revenue received by the hospital or health care provider
in the form of a grant, gift, or otherwise, whether from a
government or nongovernment source, on which the tax liability
under section 295.52 is not imposed or for which the tax
liability under section 295.52 has been received from a third
party as provided for in section 295.582.
(d) Effective beginning with calendar year 1995, the
taxpayer shall not take the deduction under this section into
account in determining estimated tax payments or the payment
made with the annual return under section 295.55. The total
deduction allowable to all taxpayers under this section for
calendar years beginning after December 31, 1994, may not exceed
$65,000,000. To implement this limit, each qualifying hospital
and qualifying health care provider shall submit to the
commissioner by March 15 its total expenditures qualifying for
the deduction under this section for the previous calendar
year. The commissioner shall sum the total expenditures of all
taxpayers qualifying under this section for the calendar year.
If the resulting amount exceeds $65,000,000, the commissioner
shall allocate a part of the $65,000,000 deduction limit to each
qualifying hospital and health care provider in proportion to
its share of the total deductions. The commissioner shall pay a
refund to each qualifying hospital or provider equal to its
share of the deduction limit multiplied by two percent. The
commissioner shall pay the refund no later than May 15 of the
calendar year.
Sec. 5. Minnesota Statutes 1996, section 295.55,
subdivision 2, is amended to read:
Subd. 2. [ESTIMATED TAX; HOSPITALS; SURGICAL CENTERS.] (a)
Each hospital or surgical center must make estimated payments of
the taxes for the calendar year in monthly installments to the
commissioner within ten 15 days after the end of the month.
(b) Estimated tax payments are not required of hospitals or
surgical centers if the tax for the calendar year is less than
$500 or if a hospital has been allowed a grant under section
144.1484, subdivision 2, for the year.
(c) Underpayment of estimated installments bear interest at
the rate specified in section 270.75, from the due date of the
payment until paid or until the due date of the annual return at
the rate specified in section 270.75. An underpayment of an
estimated installment is the difference between the amount paid
and the lesser of (1) 90 percent of one-twelfth of the tax for
the calendar year or (2) the tax for the actual gross revenues
received during the month.
Sec. 6. [EFFECTIVE DATE.]
Sections 1, 2, and 3 are effective for gross revenues
received on or after July 1, 1997. Section 4 is effective for
research expenditures incurred on or after January 1, 1997.
Section 5 is effective for estimated payments due after July 1,
1997.
ARTICLE 5
COLLECTIONS
Section 1. Minnesota Statutes 1996, section 270.063, is
amended to read:
270.063 [COLLECTION OF DELINQUENT TAXES; COSTS.]
Subdivision 1. [APPROPRIATION.] For the purpose of
collecting delinquent state tax liabilities, there is
appropriated to the commissioner of revenue an amount
representing the cost of collection by contract with collection
agencies, revenue departments of other states, or attorneys to
enable the commissioner to reimburse these agencies,
departments, or attorneys for this service. The commissioner
shall report quarterly on the status of this program to the
chair of the house tax and appropriation committees and senate
tax and finance committees.
Subd. 2. [PREPAYMENT.] Notwithstanding section 16A.15,
subdivision 3, the commissioner of revenue may authorize the
prepayment of sheriff's fees, attorney fees, fees charged by
revenue departments of other states, or court costs to be
incurred in connection with the collection of delinquent tax
liabilities owed to the commissioner of revenue.
Subd. 3. [COLLECTION OF FINANCIAL INSTITUTION FEES.] The
commissioner shall collect from a taxpayer any collection fees
or costs charged by financial institutions and incurred by the
commissioner.
Sec. 2. Minnesota Statutes 1996, section 270.101,
subdivision 3, is amended to read:
Subd. 3. [PROCEDURE FOR ASSESSMENT.] The commissioner may
assess liability for the taxes described in subdivision 1
against a person liable under this section. The assessment may
be based upon information available to the commissioner. It
must be made within the prescribed period of limitations for
assessing the underlying tax, or within one year after the date
of an order assessing underlying tax, whichever period expires
later. An order assessing personal liability under this section
is reviewable under section 289A.65 and is appealable to tax
court.
If a person has been assessed under this section for an
amount for a given period and the time for appeal has expired or
there has been a final determination that the person is liable,
collection action is not stayed pursuant to section 270.10,
subdivision 5, for subsequent assessments of additional amounts
for the same person for the same period and tax type.
Sec. 3. Minnesota Statutes 1996, section 270.68,
subdivision 1, is amended to read:
Subdivision 1. [LEGAL ACTION.] In addition to all other
methods authorized by law for the collection of tax, if any tax
payable to the commissioner of revenue or to the department of
revenue, including penalties and interest thereon, is not paid
within 60 days after it is required by law to be paid, the
commissioner of revenue may proceed under this subdivision.
Within five years after the date of assessment of the tax or at
any time a lien filed under section 270.69 is enforceable, or,
if the action is to renew or enforce a judgment, at any time
before the judgment's expiration, the commissioner may bring an
action at law against the person liable for the payment or
collection of the tax, in the name of the state, for the
recovery of the tax and interest and penalties due in respect
thereof. The action shall be brought in the district court of
the judicial district in which lies the county of the residence
or principal place of business within this state of the
taxpayer, or, in the case of an estate or trust, of the place of
its principal administration, and for this purpose the place
named as such in the return, if any, made by the taxpayer shall
be conclusive against the taxpayer in this matter. If no place
is named in the return, the action may be commenced in Ramsey
county. The action shall be commenced by filing with the court
administrator a statement showing the name and address of the
taxpayer, if known, an itemized summary of the taxable periods
and the type of tax, the tax due and unpaid and the interest and
penalties due with respect thereto under the provisions of law
applicable to the tax, and shall contain a prayer that the court
adjudge the taxpayer to be indebted on account of the taxes,
interest, and penalties in the amount specified in the
statement; a copy of the statement shall be furnished to the
court administrator therewith. The court administrator shall
mail a copy of the statement by certified mail to the taxpayer
at the address given in the return, if any; and to the
taxpayer's last known address, within five days after the same
is filed, except that, if the taxpayer's address is not known,
notice shall be made by posting a copy of the statement for ten
days in the place in the courthouse where public notices are
regularly posted. To litigate the claim, or any part of it, the
taxpayer shall serve an answer upon the commissioner on or
before the 20th day after the date of mailing the statement; or,
if notice has been given by posting, on or before the 20th day
after the expiration of the period during which the notice was
required to be posted. If no answer is served within the
specified time, the court administrator, upon the filing of an
affidavit of default, shall enter judgment for the state in the
amount prayed for, plus costs of $10. If an answer is filed,
the issues raised shall stand for trial as soon as possible
after the filing of the answer, and the court shall determine
the issues and direct judgment accordingly; and, if the taxes,
interest, or penalties are sustained to any extent over the
amount rendered by the taxpayer, shall assess $10 costs against
the taxpayer. The court shall disregard all technicalities and
matters of form not affecting the substantial merits. The
commissioner may call upon the county attorney or the attorney
general to conduct the proceedings on behalf of the state. If a
proceeding is referred to a county attorney, and the county
attorney fails to issue or cause to be issued an indictment or
criminal complaint within 30 days after the referral by the
commissioner, the attorney general may conduct the proceeding.
Execution shall be issued upon the judgment at the request of
the commissioner, and the execution shall, in all other
respects, be governed by the laws applicable to executions
issued on judgments. Only the homestead and household goods of
the judgment debtor shall be exempt from seizure and sale upon
the execution.
In addition to the procedure in this subdivision, legal
action may be commenced by the commissioner in district court in
the same manner or venue as any other civil action.
Sec. 4. Minnesota Statutes 1996, section 270.701,
subdivision 2, is amended to read:
Subd. 2. [NOTICE OF SALE.] The commissioner shall as soon
as practicable after the seizure of the property give notice of
sale of the property to the owner, in the manner of service
prescribed in subdivision 1. In the case of personal property,
the notice shall be served at least 10 days prior to the sale.
In the case of real property, the notice shall be served at
least four weeks prior to the sale. The commissioner shall also
cause public notice of each sale to be made. In the case of
personal property, notice shall be posted at least 10 days prior
to the sale at the post office nearest the place county
courthouse for the county where the seizure is made, and in not
less than two other public places. In the case of real property,
six weeks' published notice shall be given prior to the sale, in
a newspaper published or generally circulated in the county.
The notice of sale provided in this subdivision shall specify
the property to be sold, and the time, place, manner and
conditions of the sale. Whenever levy is made without regard to
the ten-day period provided in section 270.70, subdivision 2,
public notice of sale of the property seized shall not be made
within the ten-day period unless section 270.702 (relating to
sale of perishable goods) is applicable.
Sec. 5. Minnesota Statutes 1996, section 270.701,
subdivision 5, is amended to read:
Subd. 5. [MANNER AND CONDITIONS OF SALE.] (a) Before the
sale the commissioner shall determine a minimum price for which
the property shall be sold, and if no person offers for the
property at the sale the amount of the minimum price, the
property shall be declared to be purchased at the minimum price
for the state of Minnesota; otherwise the property shall be
declared to be sold to the highest bidder. In determining the
minimum price, the commissioner shall take into account the
expense of making the levy and sale. The announcement of the
minimum price determined by the commissioner may be delayed
until the receipt of the highest bid.
(b) The sale shall not be conducted in any manner other
than:
(i) by public auction, or
(ii) by public sale under sealed bids., or
(iii) in the case of items which individually or in usually
marketable units have a value of $50 or less, by public or
private proceedings as a unit or in parcels at any time and
place and on any terms, but every aspect of the disposition
including the method, manner, time, place, and terms must be
commercially reasonable.
(c) In the case of seizure of several items of property,
the items may be offered separately, in groups, or in the
aggregate, and shall be sold under whichever method produces the
highest aggregate amount, except that sales under paragraph (b),
item (iii), must produce a reasonable amount under the
circumstances.
(d) Payment in full shall be required at the time of
acceptance of a bid, except that a part of the payment may be
deferred by the commissioner for a period not to exceed 30 days.
(e) Other methods (including advertising) in addition to
those prescribed in subdivision 2 may be used in giving notice
of the sale.
(f) The commissioner may adjourn the sale from time to time
for a period not to exceed 30 days.
(g) If payment in full is required at the time of
acceptance of a bid and is not then and there paid, the
commissioner shall forthwith proceed to again sell the property
in the manner provided in this section. If the conditions of
the sale permit part of the payment to be deferred, and if the
part is not paid within the prescribed period, suit may be
instituted against the purchaser for the purchase price or that
part thereof as has not been paid, together with interest at the
rate specified in section 549.09 from the date of the sale; or,
in the discretion of the commissioner, the sale may be declared
by the commissioner to be null and void for failure to make full
payment of the purchase price and the property may again be
advertised and sold as provided in this section. In the event
of a readvertisement and sale, any new purchaser shall receive
the property or rights to property free and clear of any claim
or right of the former defaulting purchaser, of any nature
whatsoever, and the amount paid upon the bid price by the
defaulting purchaser shall be forfeited.
Sec. 6. Minnesota Statutes 1996, section 270.708,
subdivision 1, is amended to read:
Subdivision 1. [COLLECTION OF LIABILITY.] Any money
realized by proceedings under this chapter, whether by seizure,
by surrender under section 270.70 (except pursuant to
subdivision 9 thereof), by sale of seized property, or by sale
of property redeemed by the state of Minnesota (if the interest
of the state of Minnesota in the property was a lien arising
under the provisions of section 270.69), or by agreement,
arrangement, or any other means shall be applied as follows:
(a) First, against the expenses of the proceedings; then
(b) If the property seized and sold is subject to a tax
administered by the commissioner of revenue which has not been
paid, the amount remaining after applying clause (a) shall next
be applied against the tax liability (and, if the tax was not
previously assessed, it shall then be assessed); and
(c) The amount, if any, remaining after applying clauses
(a) and (b) shall be applied against the tax liability in
respect of which the levy was made or the sale was conducted.
Sec. 7. Minnesota Statutes 1996, section 270.721, is
amended to read:
270.721 [REVOCATION OF CORPORATE CERTIFICATES OF AUTHORITY
TO DO BUSINESS IN THIS STATE.]
When a foreign corporation authorized to do business in
this state under chapter 303, or a foreign limited liability
company or partnership authorized to do business in this state
under chapter 322B, fails to comply with any tax laws
administered by the commissioner of revenue, the commissioner
may serve the secretary of state with a certified copy of an
order finding such failure to comply. The secretary of state,
upon receipt of the order, shall revoke the certificate of
authority of the corporation to do business in this state, and
shall reinstate the certificate under section 303.19 or section
322B.960, subdivision 6, only when the corporation or limited
liability company or partnership has obtained from the
commissioner an order finding that the corporation or limited
liability company or partnership is in compliance with state tax
law. An order requiring revocation of a certificate shall not
be issued unless the commissioner gives the corporation or
limited liability company or partnership 30 days' written notice
of the proposed order, specifying the violations of state tax
law, and affording the corporation an opportunity to request a
contested case hearing under chapter 14.
Sec. 8. Minnesota Statutes 1996, section 270.73,
subdivision 1, is amended to read:
Subdivision 1. [POSTING, NOTICE.] Pursuant to the
authority to disclose under section 270B.12, subdivision 4, the
commissioner shall, by the 15th of each month, submit to the
commissioner of public safety a list of all taxpayers who are
required to pay, withhold, or collect the tax imposed by section
290.02, 290.92, or 297A.02, or local sales and use tax payable
to the commissioner of revenue, or a local option tax
administered and collected by the commissioner of revenue, and
who are 30 ten days or more delinquent in either filing a tax
return or paying the tax.
The commissioner of revenue is under no obligation to list
a taxpayer whose business is inactive. At least ten days before
notifying the commissioner of public safety, the commissioner of
revenue shall notify the taxpayer of the intended action.
The commissioner of public safety shall post the list in
the same manner as provided in section 340A.318, subdivision 3.
The list will prominently show the date of posting. If a
taxpayer previously listed cures the delinquency by filing files
all returns and paying pays all taxes then due, the commissioner
shall notify the commissioner of public safety within two
business days that the delinquency was cured.
Sec. 9. Minnesota Statutes 1996, section 289A.36,
subdivision 4, is amended to read:
Subd. 4. [THIRD PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY
IS KNOWN.] An investigation may extend to a person that the
commissioner determines has access to information that may be
relevant to the examination or investigation. When a subpoena
requiring the production of records as described in subdivision
2 is served on a third-party record keeper, written notice of
the subpoena must be mailed to the taxpayer and to any other
person who is identified in the subpoena. The notices must be
given within three days of the day on which the subpoena is
served. Notice to the taxpayer required by this section is
sufficient if it is mailed to the last address on record with
the commissioner.
The provisions of this subdivision relating to notice to
the taxpayer or other parties identified in the subpoena do not
apply if there is reasonable cause to believe that the giving of
notice may lead to attempts to conceal, destroy, or alter
records or assets relevant to the examination, to prevent the
communication of information from other persons through
intimidation, bribery, or collusion, or to flee to avoid
prosecution, testifying, or production of records.
Sec. 10. Minnesota Statutes 1996, section 297A.07,
subdivision 3, is amended to read:
Subd. 3. [NEW PERMITS AFTER REVOCATION.] The commissioner
shall not issue a new permit or reinstate a revoked permit after
revocation unless the taxpayer applies for a permit and provides
reasonable evidence of intention to comply with the sales and
use tax laws and rules. The commissioner may require the
applicant to supply security, in addition to that authorized by
section 297A.28, as is reasonably necessary to insure compliance
with the sales and use tax laws and rules.
If a taxpayer has had a permit or permits revoked three
times in a five-year period, the commissioner shall not issue a
new permit or reinstate the revoked permit until 24 months have
elapsed after revocation and the taxpayer has satisfied the
conditions for reinstatement of a revoked permit or issuance of
a new permit imposed by this section and rules adopted hereunder.
For purposes of this subdivision, the term "taxpayer" means
an individual, if a revoked permit was issued to or in the name
of an individual, or a corporation or partnership, if a revoked
permit was issued to or in the name of a corporation or
partnership. Taxpayer also means an officer of a corporation, a
member of a partnership, or an individual who is liable for
delinquent sales taxes, either for the entity for which the new
or reinstated permit is at issue, or for another entity for
which a permit was previously revoked, or personally as a permit
holder.
Sec. 11. [EFFECTIVE DATES.]
Section 1 is effective for fees and costs incurred on or
after the day following final enactment.
Section 2 as it pertains to the period of limitations for
orders assessing personal liability is effective for personal
liability assessments based on underlying taxes assessed on or
after the day following final enactment. Section 2 as it
pertains to the stay of collection action for subsequent
assessments is effective for personal liability assessments made
on or after the day following final enactment.
Section 3 is effective for causes of action arising before
the day following final enactment which are not barred by the
statute of limitations as of that date, and for causes of action
arising thereafter.
Section 4 is effective for notices posted on or after the
day following final enactment.
Section 5 is effective for sales of property seized on or
after the day following final enactment.
Section 6 is effective for money realized in connection
with property seized on or after the day following final
enactment.
Section 7 is effective for orders issued on or after July
1, 1997.
Section 8 is effective with respect to lists submitted to
the commissioner of public safety on or after July 1, 1997.
Section 9 is effective with respect to subpoenas served on
or after the day following final enactment.
Section 10 is effective for all cases in which the third
permit revocation occurs on or after July 1, 1997.
ARTICLE 6
MISCELLANEOUS
Section 1. Minnesota Statutes 1996, section 8.30, is
amended to read:
8.30 [COMPROMISE OF TAX CLAIMS.]
Notwithstanding any other provisions of law to the
contrary, the attorney general shall have authority to
compromise taxes, penalties, and interest in any case referred
to the attorney general, whether reduced to judgment or not,
where, in the attorney general's opinion, it shall be in the
best interests of the state to do so. A compromise made
hereunder of a tax debt shall be in such form as the attorney
general shall prescribe and shall be in writing signed by the
attorney general, the taxpayer or taxpayer's representative, and
the commissioner of revenue.
Sec. 2. Minnesota Statutes 1996, section 60A.15,
subdivision 1, is amended to read:
Subdivision 1. [DOMESTIC AND FOREIGN COMPANIES.] (a) On or
before April 1, June 1, and December 1 of each year, every
domestic and foreign company, including town and farmers' mutual
insurance companies, domestic mutual insurance companies, marine
insurance companies, health maintenance organizations,
integrated service networks, community integrated service
networks, and nonprofit health service plan corporations, shall
pay to the commissioner of revenue installments equal to
one-third of the insurer's total estimated tax for the current
year. Except as provided in paragraphs (d) and (e),
installments must be based on a sum equal to two percent of the
premiums described in paragraph (b).
(b) Installments under paragraph (a), (d), or (e) are
percentages of gross premiums less return premiums on all direct
business received by the insurer in this state, or by its agents
for it, in cash or otherwise, during such year.
(c) Failure of a company 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 shall subject the company to the penalty
and interest provided in this section, unless the total tax for
the current tax year is $500 or less.
(d) For health maintenance organizations, nonprofit health
services plan corporations, integrated service networks, and
community integrated service networks, the installments must be
based on an amount equal to one percent of premiums described in
paragraph (b) that are paid after December 31, 1995.
(e) For purposes of computing installments for town and
farmers' mutual insurance companies and for mutual property
casualty companies with total assets on December 31, 1989, of
$1,600,000,000 or less, the following rates apply:
(1) for all life insurance, two percent;
(2) for town and farmers' mutual insurance companies and
for mutual property and casualty companies with total assets of
$5,000,000 or less, on all other coverages, one percent; and
(3) for mutual property and casualty companies with total
assets on December 31, 1989, of $1,600,000,000 or less, on all
other coverages, 1.26 percent.
(f) If the aggregate amount of premium tax payments under
this section and the fire marshal tax payments under section
299F.21 made during a calendar year is equal to or exceeds
$120,000, all tax payments in the subsequent calendar year must
be paid by means of a funds transfer as defined in section
336.4A-104, paragraph (a). The funds transfer payment date, as
defined in section 336.4A-401, must be on or before the date the
payment is due. If the date the payment is due is not a funds
transfer business day, as defined in section 336.4A-105,
paragraph (a), clause (4), the payment date must be on or before
the funds transfer business day next following the date the
payment is due.
(g) Premiums under medical assistance, general assistance
medical care, the MinnesotaCare program, and the Minnesota
comprehensive health insurance plan are not subject to tax under
this section.
Sec. 3. Minnesota Statutes 1996, section 270.02,
subdivision 3, is amended to read:
Subd. 3. [POWERS, ORGANIZATION, ASSISTANTS.] Subject to
the provisions of this chapter and other applicable laws the
commissioner shall have power to organize the department with
such divisions and other agencies as the commissioner deems
necessary and to appoint one deputy commissioner, a department
secretary, directors of divisions, and such other officers,
employees, and agents as the commissioner may deem necessary to
discharge the functions of the department, define the duties of
such officers, employees, and agents, and delegate to them any
of the commissioner's powers or duties, subject to the
commissioner's control and under such conditions as the
commissioner may prescribe. Appointments to exercise delegated
power to sign documents which require the signature of the
commissioner or a delegate by law shall be by written order
filed with the secretary of state.
Sec. 4. Minnesota Statutes 1996, section 270.10,
subdivision 1, is amended to read:
Subdivision 1. [IN WRITING; APPROVAL BY ATTORNEY GENERAL.]
All orders and decisions of the commissioner of revenue, or any
subordinates, respecting any tax, assessment, or other
obligation, shall be in writing, filed in the offices of the
department. Any order or decision increasing or decreasing any
tax, assessment, or other obligation by a sum exceeding $1,000
on real or personal property, or the net tax capacity thereof,
or other obligation relating thereto, the result of which is to
increase or decrease the total amount payable including
penalties and interest, by a sum exceeding $1,000, and any order
or decision increasing or decreasing any other tax by a sum
exceeding $1,000 exclusive of penalties and interest, must bear
the written signature or facsimile signature of the commissioner
or the commissioner's delegate. Written notice of every order
granting a reduction, abatement, or refundment exceeding $5,000
of any tax exclusive of penalties and interest, shall be given
within five days to the attorney general. The attorney general
shall forthwith examine the order, and if proper and legal,
approve it in writing. The attorney general may waive the right
of appeal from the order on behalf of the state or may appeal
from the order on behalf of the state as herein provided in
chapter 271. Written approval of the commissioner or a delegate
and written notice to the attorney general shall not be required
with respect to the following orders: (1) orders reducing net
tax capacity of property by reason of its classification as a
homestead; (2) orders not involving refunds which have the
effect only of correcting income and franchise tax assessments
to conform to the amounts shown on final returns filed as
provided by section 289A.19, subdivisions 1 and 2; and (3)
original orders for the refundment of gasoline and special fuel
taxes.
Sec. 5. Minnesota Statutes 1996, section 270.10,
subdivision 5, is amended to read:
Subd. 5. [APPEAL; PAYMENT OF ORDER.] Except for orders
relating to property tax matters, no collection action may be
taken, including the filing of liens under section 270.69, and
no late payment penalties may be imposed when a return has been
filed for the tax type and period upon which the order is based,
if an order of the commissioner, excluding orders relating to
property tax matters, is paid:
(1) within 60 days after notice and demand for payment of
the order have has been mailed to the taxpayer; or
(2) if an administrative appeal or a tax court appeal under
chapter 271 is timely filed, within 60 days following final
determination of the appeal if the appeal is based upon a
constitutional challenge to the tax, and if not, when the
decision of the tax court is made.
Sec. 6. Minnesota Statutes 1996, section 270.101,
subdivision 2, is amended to read:
Subd. 2. [PERSON DEFINED.] The term "person" includes, but
is not limited to, a corporation, estate, trust, organization,
or association, whether organized for profit or not, an officer
or director of a corporation, a member of a partnership, an
employee, a third party (including, but not limited to, a
financial institution, lender, or surety), and any other
individual or entity. "Person" does not include an unpaid,
volunteer member of a board of trustees or directors of an
organization exempt from taxation under section 290.05, if the
member is solely serving in an honorary capacity, does not
participate in the day-to-day or financial operations of the
organization, and has no actual knowledge of the failure to file
returns or remit taxes.
Sec. 7. Minnesota Statutes 1996, section 270.101, is
amended by adding a subdivision to read:
Subd. 4. [RIGHT OF CONTRIBUTION.] A person who has paid
all or part of a liability assessed under this section has a
cause of action against other liable persons to recover the
amount paid in excess of that person's share of the liability.
A claim for recovery of contribution may be made only in a
proceeding which is separate from, and cannot be joined or
consolidated with, an administrative or judicial proceeding or
investigation involving the commissioner's administration or
enforcement of this section. An order assessing liability under
this section against the person from whom contribution is being
sought is not a prerequisite for bringing an action for recovery
of contribution, nor is the issuance of an order binding on the
court in which the proceeding is brought. The court can
determine whether each person would be liable under this section
and the share of liability. The commissioner cannot be made a
party to any proceeding for recovery of contribution, nor is a
determination in such a proceeding binding on the commissioner
for the purpose of administering or enforcing this section. An
action for contribution arises when the liability under this
section is paid in full, or the liability of the person seeking
contribution has been determined by agreement between the
commissioner and such person and paid, and must be brought
within the time period prescribed in section 541.05.
Sec. 8. Minnesota Statutes 1996, section 270.271, is
amended by adding a subdivision to read:
Subd. 5. [PRIVATE DELIVERY SERVICES.] A reference in this
section to the United States mail shall be treated as including
a reference to any designated delivery service, and any
reference in this section to a postmark by the United States
Postal Service shall be treated as including a reference to any
date recorded or marked by any designated delivery service in
accordance with section 7502(f) of the Internal Revenue Code.
Sec. 9. Minnesota Statutes 1996, section 270.273,
subdivision 2, is amended to read:
Subd. 2. [TERMS OF A TAXPAYER ASSISTANCE ORDER.] A
taxpayer assistance order may require the department within a
specified time period to release property of the taxpayer levied
on, cease any action, take any action as permitted by law, or
refrain from taking any action to enforce the state tax laws
against the taxpayer, until the issue or issues giving rise to
the order have been resolved.
Sec. 10. Minnesota Statutes 1996, section 270.276,
subdivision 2, is amended to read:
Subd. 2. [DAMAGES.] On a finding of liability on the part
of the defendant in an action brought under subdivision 1, the
defendant is liable to the plaintiff in an amount equal to the
lesser of $100,000 $200,000, or the sum of (1) actual, direct
economic damages sustained by the plaintiff as a proximate
result of the reckless or intentional actions of the employee
and (2) the costs of the action. Damages must be paid in
accordance with section 3.736, subdivision 7.
Sec. 11. Minnesota Statutes 1996, section 270.67,
subdivision 2, is amended to read:
Subd. 2. [EXTENSION AGREEMENTS.] When any portion of any
tax payable to the commissioner of revenue together with
interest and penalty thereon, if any, has not been paid, the
commissioner may extend the time for payment for a further
period. When the authority of this section is invoked, the
extension shall be evidenced by written agreement signed by the
taxpayer and the commissioner, stating the amount of the tax
with penalty and interest, if any, and providing for the payment
of the amount in regular weekly, semimonthly or monthly
installments. The agreement shall may contain a confession of
judgment for the amount and for any unpaid portion thereof and
shall provide that the commissioner may forthwith enter judgment
against the taxpayer in the district court of the county of
residence as shown upon the taxpayer's tax return for the unpaid
portion of the amount specified in the extension agreement. The
agreement shall provide that it can be terminated, after notice
by the commissioner, if information provided by the taxpayer
prior to the agreement was inaccurate or incomplete, collection
of the tax covered by the agreement is in jeopardy, there is a
subsequent change in the taxpayer's financial condition, the
taxpayer has failed to make a payment due under the agreement,
or has failed to pay any other tax or file a tax return coming
due after the agreement. The notice must be given at least 14
calendar days prior to termination, and shall advise the
taxpayer of the right to request a reconsideration from the
commissioner of whether termination is reasonable and
appropriate under the circumstances. A request for
reconsideration does not stay collection action beyond the
14-day notice period. The commissioner may accept other
collateral the commissioner considers appropriate to secure
satisfaction of the tax liability. The principal sum specified
in the agreement shall bear interest at the rate specified in
section 270.75 on all unpaid portions thereof until the same has
been fully paid or the unpaid portion thereof has been entered
as a judgment. The judgment shall bear interest at the rate
specified in section 270.75. If it appears to the commissioner
that the tax reported by the taxpayer is in excess of the amount
actually owing by the taxpayer, the extension agreement or the
judgment entered pursuant thereto shall be corrected. If after
making the extension agreement or entering judgment with respect
thereto, the commissioner determines that the tax as reported by
the taxpayer is less than the amount actually due, the
commissioner shall assess a further tax in accordance with the
provisions of law applicable to the tax. The authority granted
to the commissioner by this section is in addition to any other
authority granted to the commissioner by law to extend the time
of payment or the time for filing a return and shall not be
construed in limitation thereof.
Sec. 12. Minnesota Statutes 1996, section 270.69,
subdivision 11, is amended to read:
Subd. 11. [ERRONEOUS LIENS.] After the filing of a notice
of lien under this section on the property or rights to property
of a person, the person may appeal to the commissioner, in the
form and at the time prescribed by the commissioner, alleging an
error in the filing of the lien and requesting its release. If
the commissioner determines that the filing of the notice of any
lien was erroneous, within 14 days after the determination, the
commissioner must issue a certificate of release of the lien.
The certificate must include a statement that the filing of the
lien was erroneous. In the event that the lien is erroneous and
is not released within the 14-day period, reasonable attorney
fees shall be paid. Damages must be paid in accordance with
section 3.736, subdivision 7. Even if a lien is not erroneous,
the commissioner may withdraw the lien if the filing of the lien
was premature or not in accordance with administrative
procedures of the commissioner, or withdrawal of the lien will
facilitate the collection of the tax liability.
Sec. 13. [270.771] [PAYMENTS REQUIRED TO BE MADE BY
ELECTRONIC FUNDS TRANSFER.]
(a) If a taxpayer is required to make payment of a tax to
the commissioner by means of electronic funds transfer as
defined in section 336.4A-104, paragraph (a), the taxpayer shall
make all payments of all taxes and fees paid to the commissioner
by means of electronic funds transfer.
(b) Paragraph (a) does not apply to payments required to be
made for individual income taxes under section 289A.20,
subdivision 1, paragraph (a), or 289A.25.
Sec. 14. Minnesota Statutes 1996, section 271.06,
subdivision 2, is amended to read:
Subd. 2. [TIME; NOTICE; INTERVENTION.] Except as otherwise
provided by law, within 60 days after notice of the making and
filing of an order of the commissioner of revenue, the
appellant, or the appellant's attorney, shall serve a notice of
appeal upon the commissioner and file the original, with proof
of such service, with the tax court administrator or with the
court administrator of district court acting as court
administrator of the tax court; provided, that the tax court,
for cause shown, may by written order extend the time for
appealing for an additional period not exceeding 30 days. The
notice of appeal shall be in the form prescribed by the tax
court. Within five days after receipt, the commissioner shall
transmit a copy of the notice of appeal to the attorney general
in all cases where the amount at issue exceeds $100. The
attorney general shall represent the commissioner, if requested,
upon all such appeals except in cases where the attorney general
has appealed in behalf of the state, or in other cases where the
attorney general deems it against the interests of the state to
represent the commissioner, in which event the attorney general
may intervene or be substituted as an appellant in behalf of the
state at any stage of the proceedings.
Upon a final determination of any other matter over which
the court is granted jurisdiction under section 271.01,
subdivision 5, the taxpayer or the taxpayer's attorney shall
file a petition or notice of appeal as provided by law with the
court administrator of district court, acting in the capacity of
court administrator of the tax court, with proof of service of
the petition or notice of appeal as required by law and within
the time required by law. As used in this subdivision, "final
determination" includes a notice of assessment and equalization
for the year in question received from the local assessor, an
order of the local board of equalization, or an order of a
county board of equalization.
The tax court shall prescribe a filing system so that the
notice of appeal or petition filed with the district court
administrator acting as court administrator of the tax court is
forwarded to the tax court administrator. In the case of an
appeal or a petition concerning property valuation for which the
assessor, a local board of equalization, a county board of
equalization or the commissioner of revenue has issued an order,
the officer issuing the order shall be notified of the filing of
the appeal. The notice of appeal or petition shall be in the
form prescribed by the tax court.
Sec. 15. Minnesota Statutes 1996, section 271.08,
subdivision 1, is amended to read:
Subdivision 1. [WRITTEN ORDER.] The tax court, except in
small claims division, shall determine every appeal by written
order containing findings of fact and the decision of the tax
court. A memorandum of the grounds of the decision shall be
appended. A certified copy of the order shall be transmitted to
the commissioner of revenue or the appropriate unit of
government and filed in that office. Notice of the entry of the
order and of the substance of the decision shall be given by
mail mailed to all other parties who have appeared, and also, in
all cases where the amount at issue exceeds $100, to the
attorney general. A motion for rehearing, which includes a
motion for amended findings of fact, conclusions of law, or a
new trial, must be served by the moving party within 15 days
after mailing of the notice by the court as specified in this
subdivision, and the motion must be heard within 30 days
thereafter, unless the time for hearing is extended by the court
within the 30-day period for good cause shown.
Sec. 16. Minnesota Statutes 1996, section 271.10,
subdivision 2, is amended to read:
Subd. 2. [SERVICE OF WRIT.] Within 60 days after notice of
the making and filing of the order of the tax court, or the
making and filing of an order on a petition motion for
rehearing, which includes a motion for amended findings of fact,
conclusions of law, or a new trial, the petitioner for review
shall obtain from the supreme court a writ of certiorari, and
shall serve the same upon all other parties appearing in the
proceedings before the tax court, and shall file the original,
with proof of such service, with the court administrator of the
tax court. Every petitioner, except the attorney general, the
commissioner of revenue, the state and its political
subdivisions, shall also pay to the court administrator the fee
prescribed by rule 103.01 of the rules of civil appellate
procedure which shall be disposed of in the manner provided by
that rule, and file a bond or make a deposit in like manner and
amount as in case of an appeal from the district court. The fee
shall be disposed of as in such case. Return upon the writ
shall be made to the supreme court and the matter shall be heard
and determined by the court as in other certiorari cases,
subject to the provisions hereof and to such rules as the court
may prescribe for cases arising hereunder.
Sec. 17. [287.13] [VIOLATIONS; PENALTIES.]
Subdivision 1. [FAILURE TO PAY FULL AMOUNT.] Any person
liable for the tax imposed by section 287.05 who fails to pay
the full amount of tax imposed under sections 287.01 to 287.12,
unless such failure is shown to be due to reasonable cause, is
liable for a civil penalty of $250 for each such failure.
Subd. 2. [ADDITIONAL PENALTY.] Any person who willfully
attempts to evade or defeat the tax imposed under sections
287.01 to 287.12, or the payment thereof, shall, in addition to
the penalty provided in subdivision 1, be liable for a penalty
of 50 percent of the total amount of the underpayment of the tax.
Sec. 18. Minnesota Statutes 1996, section 287.31,
subdivision 1, is amended to read:
Subdivision 1. [FAILURE TO COMPLY.] Any person liable for
the tax imposed by section 287.21 who fails to comply with the
provisions of section 287.25 relating to the attachment or
cancellation of documentary stamps, unless such failure is shown
to be due to reasonable cause, shall be liable to a civil
penalty of $50 $250 for each such failure.
Sec. 19. Minnesota Statutes 1996, section 289A.09,
subdivision 2, is amended to read:
Subd. 2. [WITHHOLDING STATEMENT TO EMPLOYEE OR PAYEE AND
TO COMMISSIONER.] (a) A person required to deduct and withhold
from an employee a tax under section 290.92, subdivision 2a or
3, or 290.923, subdivision 2, or who would have been required to
deduct and withhold a tax under section 290.92, subdivision 2a
or 3, or persons required to withhold tax under section 290.923,
subdivision 2, determined without regard to section 290.92,
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 section 290.92,
subdivision 2a or 3, or 290.923, 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
under section 290.92, subdivision 20, must give every employee
or person receiving royalty payments in respect to the
remuneration paid by the person to the 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 the 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:
(1) name of the person;
(2) the name of the employee or payee and the employee's or
payee's social security account number;
(3) the total amount of wages as that term is defined in
section 290.92, subdivision 1, paragraph (1); the total amount
of remuneration subject to withholding under section 290.92,
subdivision 20; the amount of sick pay as required under section
6051(f) of the Internal Revenue Code; and the amount of
royalties subject to withholding under section 290.923,
subdivision 2; and
(4) the total amount deducted and withheld as tax under
section 290.92, subdivision 2a or 3, or 290.923, subdivision 2.
(b) The statement required to be furnished by this
paragraph with respect to any remuneration must be furnished at
those times, must contain the information required, and must be
in the form the commissioner prescribes.
(c) The commissioner may prescribe rules providing for
reasonable extensions of time, not in excess of 30 days, to
employers or payers required to give the statements to their
employees or payees under this subdivision.
(d) A duplicate of any statement made under this
subdivision and in accordance with rules prescribed by the
commissioner, along with a reconciliation in the form the
commissioner prescribes of the statements for the calendar year,
including a reconciliation of the quarterly returns required to
be filed under subdivision 1, must be filed with the
commissioner on or before February 28 of the year after the
payments were made.
(e) The employer must submit the statements required to be
sent to the commissioner on magnetic media, if the magnetic
media was required to satisfy the federal reporting requirements
of section 6011(e) of the Internal Revenue Code and the
regulations issued under it.
(f) A "provider of payroll services" as defined in section
289A.20, subdivision 2, paragraph (f), must submit the returns
required by this subdivision and subdivision 1, paragraph (a),
with the commissioner by electronic means.
Sec. 20. Minnesota Statutes 1996, section 289A.20,
subdivision 1, is amended to read:
Subdivision 1. [INDIVIDUAL INCOME, FIDUCIARY INCOME,
MINING COMPANY, CORPORATE FRANCHISE, AND ENTERTAINMENT TAXES.]
(a) Individual income, fiduciary, mining company, and corporate
franchise taxes must be paid to the commissioner on or before
the date the return must be filed under section 289A.18,
subdivision 1, or the extended due date as provided in section
289A.19, unless an earlier date for payment is provided.
Notwithstanding any other law, a taxpayer whose unpaid
liability for income or corporate franchise taxes, as reflected
upon the return, is $1 or less need not pay the tax.
(b) Entertainment taxes must be paid on or before the date
the return must be filed under section 289A.18, subdivision 1.
(c) If a fiduciary administers 100 or more trusts,
fiduciary income taxes for all trusts administered by the
fiduciary must be paid by funds transfer as defined in section
336.4A-104, paragraph (a). The funds transfer payment date, as
defined in section 336.4A-401, must be on or before the date the
tax payment is due. If the date the payment is due is not a
funds transfer business day, as defined in section 336.4A-105,
paragraph (a), clause (4), the payment date must be on or before
the funds transfer business day next following the date the
payment is due.
Sec. 21. Minnesota Statutes 1996, section 289A.20,
subdivision 2, is amended to read:
Subd. 2. [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING,
WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND
WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.]
(a) A tax required to be deducted and withheld during the
quarterly period must be paid on or before the last day of the
month following the close of the quarterly period, unless an
earlier time for payment is provided. A tax required to be
deducted and withheld from compensation of an entertainer and
from a payment to an out-of-state contractor must be paid on or
before the date the return for such tax must be filed under
section 289A.18, subdivision 2. Taxes required to be deducted
and withheld by partnerships and S corporations must be paid on
or before the date the return must be filed under section
289A.18, subdivision 2.
(b) An employer who, during the previous quarter, withheld
more than $1,500 of tax under section 290.92, subdivision 2a or
3, or 290.923, subdivision 2, must deposit tax withheld under
those sections with the commissioner within the time allowed to
deposit the employer's federal withheld employment taxes under
Treasury Regulation, section 31.6302-1, without regard to the
safe harbor or de minimus rules in subparagraph (f) or the
one-day rule in subsection (c), clause (3). Taxpayers must
submit a copy of their federal notice of deposit status to the
commissioner upon request by the commissioner.
(c) The commissioner may prescribe by rule other return
periods or deposit requirements. In prescribing the reporting
period, the commissioner may classify payors according to the
amount of their tax liability and may adopt an appropriate
reporting period for the class that the commissioner judges to
be consistent with efficient tax collection. In no event will
the duration of the reporting period be more than one year.
(d) 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 must be made, without interest, in
the manner and at the times the commissioner prescribes. If the
underpayment cannot be adjusted, the amount of the underpayment
will be assessed and collected in the manner and at the times
the commissioner prescribes.
(e) If the aggregate amount of the tax withheld during a
fiscal year ending June 30 under section 290.92, subdivision 2a
or 3, is equal to or exceeds $50,000 the amounts established for
remitting federal withheld taxes pursuant to the regulations
promulgated under section 6302(h) of the Internal Revenue Code,
the employer must remit each required deposit in the subsequent
calendar year by means of a funds transfer as defined in section
336.4A-104, paragraph (a). The funds transfer payment date, as
defined in section 336.4A-401, must be on or before the date the
deposit is due. If the date the deposit is due is not a funds
transfer business day, as defined in section 336.4A-105,
paragraph (a), clause (4), the payment date must be on or before
the funds transfer business day next following the date the
deposit is due.
(f) Providers of payroll services who remit withholding
deposits on behalf of 50 or more employers, or on behalf of any
employer with aggregate amounts over the threshold in paragraph
(e), must remit all deposits by means of a funds transfer as
provided in paragraph (e), regardless of the aggregate amount of
tax withheld during a fiscal year for all of the employers. For
the purposes of this paragraph, "providers of payroll services"
means persons who have custody of or control over another
employer's funds for the purpose of paying on behalf of the
other employer's Minnesota withholding taxes.
Sec. 22. Minnesota Statutes 1996, section 289A.31,
subdivision 1, is amended to read:
Subdivision 1. [INDIVIDUAL INCOME, FIDUCIARY INCOME,
MINING COMPANY, CORPORATE FRANCHISE, AND ENTERTAINMENT TAXES.]
(a) Individual income, fiduciary income, mining company, and
corporate franchise taxes, and interest and penalties, must be
paid by the taxpayer upon whom the tax is imposed, except in the
following cases:
(1) The tax due from a decedent for that part of the
taxable year in which the decedent died during which the
decedent was alive and the taxes, interest, and penalty due for
the prior years must be paid by the decedent's personal
representative, if any. If there is no personal representative,
the taxes, interest, and penalty must be paid by the
transferees, as defined in section 289A.38, subdivision 13, to
the extent they receive property from the decedent;
(2) The tax due from an infant or other incompetent person
must be paid by the person's guardian or other person authorized
or permitted by law to act for the person;
(3) The tax due from the estate of a decedent must be paid
by the estate's personal representative;
(4) The tax due from a trust, including those within the
definition of a corporation, as defined in section 290.01,
subdivision 4, must be paid by a trustee; and
(5) The tax due from a taxpayer whose business or property
is in charge of a receiver, trustee in bankruptcy, assignee, or
other conservator, must be paid by the person in charge of the
business or property so far as the tax is due to the income from
the business or property.
(b) Entertainment taxes are the joint and several liability
of the entertainer and the entertainment entity. The payor is
liable to the state for the payment of the tax required to be
deducted and withheld under section 290.9201, subdivision 7, and
is not liable to the entertainer for the amount of the payment.
(c) The tax imposed under section 290.0922 on partnerships
is the joint and several liability of the partnership and the
general partners.
Sec. 23. Minnesota Statutes 1996, section 289A.37,
subdivision 1, is amended to read:
Subdivision 1. [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO
TAXPAYER.] (a) When a return has been filed and the commissioner
determines that the tax disclosed by the return is different
than the tax determined by the examination, the commissioner
shall send an order of assessment to the taxpayer. When no
return has been filed, the commissioner may make a return for
the taxpayer under section 289A.35 or may send an order of
assessment under this subdivision. The order must explain the
basis for the assessment and must explain the taxpayer's appeal
rights. An order of assessment is final when made but may be
reconsidered by the commissioner under section 289A.65.
(b) No collection action can be taken, including the filing
of liens under section 270.69, and the penalty under section
289A.60, subdivision 1, is not imposed and no collection action
can be taken, including the filing of liens under section 270.69
when a return has been filed for the tax type and period upon
which the order is based, if the amount shown on the order is
paid to the commissioner: (1) within 60 days after notice of
the amount and demand for its payment have the order has been
mailed to the taxpayer by the commissioner; or (2) if an
administrative appeal is filed under section 289A.65 or a tax
court appeal is filed under chapter 271, within 60 days
following final determination of the appeal if the appeal is
based upon a constitutional challenge to the tax, and if not,
when the decision of the tax court is made.
Sec. 24. Minnesota Statutes 1996, section 289A.40,
subdivision 1, is amended to read:
Subdivision 1. [TIME LIMIT; GENERALLY.] Unless otherwise
provided in this chapter, a claim for a refund of an overpayment
of state tax must be filed within 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 one year from the date of an order assessing
tax under section 289A.37, subdivision 1, or one year from the
date of a return made by the commissioner under section 289A.35,
upon payment in full of the tax, penalties, and interest shown
on the order or return made by the commissioner, whichever
period expires later. Claims for refund, except for taxes under
chapter 297A, filed after the 3-1/2 year period but within the
one-year period are limited to the amount of the tax, penalties,
and interest on the order or return made by the commissioner and
to issues determined by the order or return made by the
commissioner.
In the case of assessments under section 289A.38,
subdivision 5 or 6, claims for refund under chapter 297A filed
after the 3-1/2 year period but within the one-year period are
limited to the amount of the tax, penalties, and interest on the
order or return made by the commissioner that are due for the
period before the 3-1/2 year period.
Sec. 25. Minnesota Statutes 1996, section 297B.035,
subdivision 3, is amended to read:
Subd. 3. [SALES IN VIOLATION OF LICENSING REQUIREMENTS.]
Motor vehicles sold by a new motor vehicle dealer in
contravention of section 168.27, subdivision 10, clause (1)(b)
shall not be considered to have been acquired or purchased for
resale in the ordinary or regular course of business for the
purposes of this chapter, and the dealer shall be required to
pay the excise tax due on the purchase of those vehicles. The
sale by a lessor of a new motor vehicle under lease within 120
days of the commencement of the lease is deemed a sale in
contravention of section 168.27, subdivision 10, clause (1)(b)
unless the lessor holds a valid contract or franchise with the
manufacturer or distributor of the vehicle. Notwithstanding
section 297B.11, the rights of a dealer to appeal any amounts
owed by the dealer under this subdivision are governed
exclusively by the hearing procedure under section 168.27,
subdivision 13.
Sec. 26. Minnesota Statutes 1996, section 297B.11, is
amended to read:
297B.11 [REGISTRAR AS AGENT OF COMMISSIONER OF REVENUE;
POWERS.]
The state commissioner of revenue is charged with the
administration of the sales tax on motor vehicles. The
commissioner may prescribe all rules not inconsistent with the
provisions of this chapter, necessary and advisable for the
proper and efficient administration of the law. The collection
of this sales tax on motor vehicles shall be carried out by the
motor vehicle registrar who shall act as the agent of the
commissioner and who shall be subject to all rules not
inconsistent with the provisions of this chapter, that may be
prescribed by the commissioner.
The provisions of chapters 289A and 297A relating to the
commissioner's authority to audit, assess, and collect the tax,
and to refunds and appeals, are applicable to the sales tax on
motor vehicles. The commissioner may impose civil penalties as
provided in chapters 289A and 297A, and the additional tax and
penalties are subject to interest at the rate provided in
section 270.75.
Sec. 27. Minnesota Statutes 1996, section 299F.21, is
amended to read:
299F.21 [FIRE INSURANCE COMPANIES PAY TAX.]
Subdivision 1. [ESTIMATED INSTALLMENT PAYMENTS.] On or
before April 1, June 1, and December 1 of each year, every
licensed insurance company, including reciprocals or
interinsurance exchanges, 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, based on a sum equal to
one-half of one percent of the estimated 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 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. 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,
unless the total tax for the current tax year is $500 or less.
Subd. 1a. [ELECTRONIC FUNDS TRANSFER PAYMENTS.] If the
aggregate amount of fire marshal tax payments under this section
and the premium tax payments under section 60A.15 made during a
calendar year is equal to or exceeds $120,000, all tax payments
in the subsequent calendar year must be paid by means of a funds
transfer as defined in section 336.4A-104, paragraph (a). The
funds transfer payment date, as defined in section 336.4A-401,
must be on or before the date the payment is due. If the date
the payment is due is not a funds transfer business day, as
defined in section 336.4A-105, paragraph (a), clause (4), the
payment date must be on or before the funds transfer business
day next following the date the payment is due.
Subd. 1b. [ADDITION TO 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.
Subd. 1b. 1c. [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.
Subd. 1c. 1d. [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.
Subd. 1d. 1e. [DEFINITION OF TAX.] The term "tax" means
the tax imposed by this chapter.
Subd. 1e. 1f. [FAILURE TO FILE 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.
Subd. 2. [ANNUAL RETURNS.] (a) Every insurer required to
pay a tax under this section shall make and file a statement of
estimated 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 as provided in
section 289A.60, subdivision 1, as related to withholding and
sales or use taxes, shall be imposed.
Sec. 28. [STATUS OF EXEMPT RULES.]
Notwithstanding Minnesota Statutes, section 14.387, the
following statutes, and any rules adopted or determinations,
actions, or positions taken pursuant to these statutes, have the
force and effect of law on and after July 1, 1997: Minnesota
Statutes, sections 124.2131, subdivision 1, paragraph (b);
270.75, subdivision 5; 270.76; 270.79, subdivision 4, paragraph
(f); 290.06, subdivision 2d; 290A.04, subdivision 6; and
297E.15, subdivision 11.
Sec. 29. [EFFECTIVE DATES.]
Sections 1, 3, 4, 6, 8 to 12, 14 to 16, 22, 25, 26, and 28
are effective the day following final enactment.
Sections 2, 13, and 27 are effective for all payments due
after December 31, 1997.
Sections 5 and 23 are effective for orders of assessment
issued on or after the day following final enactment.
Section 7 is effective for causes of action arising before
the day following final enactment which are not barred by the
statute of limitations as of that date, and for causes of action
arising thereafter.
Sections 17 and 18 are effective for mortgages submitted
for recording and deeds executed and delivered after June 30,
1997.
Section 19 is effective for returns for amounts withheld
for periods after December 31, 1997.
Section 20 is effective for tax payments for the taxable
years beginning after December 31, 1997.
Section 21 is effective for withholding on wages after
December 31, 1997.
Section 24 is effective for claims for refund filed on or
after the day following final enactment.
Presented to the governor May 1, 1997
Signed by the governor May 2, 1997, 3:25 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes