Office of the Revisor of Statutes
Minnesota Session Laws - 1997, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 31-H.F.No. 293
An act relating to taxation; making technical and
administrative changes and corrections; amending
Minnesota Statutes 1996, sections 60A.15, subdivision
2a; 60E.04, subdivision 4; 69.021, subdivision 2;
270.07, subdivision 3; 272.02, subdivision 4; 272.04,
subdivision 1; 273.032; 273.124, subdivisions 1 and
13; 273.1392; 273.1398, subdivision 1; 275.011,
subdivision 1; 275.065, subdivision 3; 275.295,
subdivision 3; 276A.01, subdivision 7; 277.21,
subdivision 3; 287.22; 289A.01; 289A.08, subdivision
11; 289A.09, subdivision 2; 289A.10, subdivision 1;
289A.11, subdivision 1; 289A.18, subdivision 2;
289A.19, subdivisions 1, 2, 3, and 4; 289A.35;
289A.38, subdivision 7; 289A.65, subdivision 1;
290.01, subdivisions 2 and 4a; 290.06, subdivision 22;
290.17, subdivision 2; 290.92, subdivision 24;
290A.04, subdivision 6; 295.50, subdivisions 3, 4, 7,
13, and by adding a subdivision; 295.51, subdivision
1; 295.52, subdivision 1b; 295.53, subdivisions 1, 3,
and 5; 295.54, subdivision 1; 295.582; 297A.01,
subdivision 1; 297A.09; 297A.12; 297A.14, subdivision
4; 297A.22; 297A.23; 297A.25, subdivisions 1, 2, 3, 6,
8, 9, 11, 16, 17, 18, 19, 20, 21, 23, 26, 27, 28, 29,
30, 34, 35, 38, 39, 40, 41, 42, 43, 46, 49, 51, 52,
53, 57, and 61; 297A.256, subdivision 1; 297A.44,
subdivision 1; 297B.03; 297B.035, subdivision 3;
297B.11; 299F.21, subdivision 2; 414.033, subdivisions
7 and 12; 469.177, subdivision 9; 473.388, subdivision
7; and 473F.02, subdivision 7.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
INCOME AND WITHHOLDING
Section 1. Minnesota Statutes 1996, section 270.07,
subdivision 3, is amended to read:
Subd. 3. [ADDITIONAL POWERS OF COMMISSIONER.]
Notwithstanding any other provision of law the commissioner of
revenue may,
(a) based upon the administrative costs of processing,
determine minimum standards for the determination of additional
tax for which an order shall be issued, and
(b) based upon collection costs as compared to the amount
of tax involved, determine minimum standards of collection, and
(c) based upon the administrative costs of processing,
determine the minimum amount of refunds for which an order shall
be issued and refund made where no claim therefor has been
filed, and
(d) cancel any amounts below these minimum standards
determined under (a) and (b) hereof, and
(e) based upon the inability of a taxpayer to pay a
delinquent tax liability, abate the liability if the taxpayer
agrees to perform uncompensated public service work for a state
agency, a political subdivision or public corporation of this
state, or a nonprofit educational, medical, or social service
agency. The department of corrections shall administer the work
program. No benefits under chapter 176 or 268 shall be
available, but a claim authorized under section 3.739 may be
made by the taxpayer. The state may not enter into any
agreement that has the purpose of or results in the displacement
of public employees by a delinquent taxpayer under this
section. The state must certify to the appropriate bargaining
agent or employees, as applicable, that the work performed by a
delinquent taxpayer will not result in the displacement of
currently employed workers or layoff from a substantially
equivalent position, including partial displacement such as
reduction in hours of nonovertime work, wages, or other
employment benefits. The program authorized under this
paragraph terminates June 30, 1998.
Sec. 2. Minnesota Statutes 1996, section 289A.01, is
amended to read:
289A.01 [APPLICATION OF CHAPTER.]
This chapter applies to taxes laws administered by or paid
to the commissioner under chapters 290, 290A, 291, and 297A, and
sections 298.01 and 298.015.
Sec. 3. Minnesota Statutes 1996, section 289A.08,
subdivision 11, is amended to read:
Subd. 11. [INFORMATION INCLUDED IN INCOME TAX RETURN.] The
return must state the name of the taxpayer, or taxpayers, if the
return is a joint return, and the address of the taxpayer in the
same name or names and same address as the taxpayer has used in
making the taxpayer's income tax return to the United States,
and must state the social security number of the taxpayer, or
taxpayers, if a social security number has been issued by the
United States with respect to the taxpayers, and must state the
amount of the taxable income of the taxpayer as it appears on
the federal return for the taxable year to which the Minnesota
state return applies. The taxpayer must attach to the
taxpayer's Minnesota state income tax return a copy of the
federal income tax return that the taxpayer has filed or is
about to file for the period, unless the taxpayer is eligible to
telefile the federal return and does file the Minnesota return
by telefiling.
Sec. 4. 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) If an employer cancels the employer's Minnesota
withholding account number required by section 290.92,
subdivision 24, the information required by paragraph (d), must
be filed with the commissioner within 30 days of the end of the
quarter in which the employer cancels its account number.
(f) 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.
Sec. 5. Minnesota Statutes 1996, section 289A.10,
subdivision 1, is amended to read:
Subdivision 1. [RETURN REQUIRED.] In the case of a
decedent who has an interest in property with a situs in
Minnesota, the personal representative must submit a Minnesota
estate tax return to the commissioner, on a form prescribed by
the commissioner, in instances in which a federal estate tax
return is required to be filed.
The return must be accompanied by a federal estate tax
return, a schedule of the assets in the estate at their date of
death values, and must contain a computation of the Minnesota
estate tax due. The return must be signed by the personal
representative.
Sec. 6. Minnesota Statutes 1996, section 289A.18,
subdivision 2, is amended to read:
Subd. 2. [WITHHOLDING RETURNS, ENTERTAINER WITHHOLDING
RETURNS, RETURNS FOR WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE
CONTRACTORS, AND WITHHOLDING RETURNS FROM PARTNERSHIPS AND S
CORPORATIONS.] Withholding returns for the first, second, and
third quarters are due on or before the last day of the month
following the close of the quarterly period. However, if the
return shows timely deposits in full payment of the taxes due
for that period, the returns for the first, second, and third
quarters may be filed on or before the tenth day of the second
calendar month following the period and. The return for the
fourth quarter may must be filed on or before the 28th day of
the second calendar month following the period. An employer, in
preparing a quarterly return, may take credit for monthly
deposits previously made for that quarter. Entertainer
withholding tax returns are due within 30 days after each
performance. Returns for withholding from payments to
out-of-state contractors are due within 30 days after the
payment to the contractor. Returns for withholding by
partnerships are due on or before the due date specified for
filing partnership returns. Returns for withholding by S
corporations are due on or before the due date specified for
filing corporate franchise tax returns.
Sec. 7. Minnesota Statutes 1996, section 289A.19,
subdivision 1, is amended to read:
Subdivision 1. [FIDUCIARY INCOME, ENTERTAINMENT TAX, AND
INFORMATION RETURNS.] When, in the commissioner's judgment, good
cause exists, the commissioner may extend the time for
filing fiduciary income tax returns, entertainment tax returns,
and information returns for not more than six months. If an
extension to file the federal fiduciary income tax return or
information return has been granted under section 6081 of the
Internal Revenue Code, the time for filing the state return is
extended for that period. The commissioner may require the
taxpayer to file a tentative return when the regularly required
return is due, and to pay a tax on the basis of the tentative
return at the times required for the payment of taxes on the
basis of the regularly required return from the taxpayer.
Sec. 8. Minnesota Statutes 1996, section 289A.19,
subdivision 2, is amended to read:
Subd. 2. [CORPORATE FRANCHISE AND MINING COMPANY TAXES.]
The commissioner may grant Corporations or mining companies
shall receive an extension of up to seven months for filing the
return of a corporation subject to tax under chapter 290 or a
mining company for filing the return of a mining company subject
to tax under sections 298.01 and 298.015 if:
(1) the corporation or mining company files a tentative
return when the regularly required return is due;
(2) the corporation or mining company pays the tax on the
basis of the tentative return and at least 90 percent of the
amount of tax, determined without regard to any prepayment of
tax, shown on the tentative return, or the amount of tax paid on
or before the regular due date of the return, is at least 90
percent of the amount shown on the corporation's or mining
company's regularly required return;
(3) (2) the balance due shown on the regularly required
return is paid on or before the extended due date of the return;
and
(4) (3) interest on any balance due is paid at the rate
specified in section 270.75 from the regular due date of the
return until the tax is paid.
Sec. 9. Minnesota Statutes 1996, section 289A.19,
subdivision 3, is amended to read:
Subd. 3. [WITHHOLDING RETURNS.] The commissioner shall
grant an automatic extension of 60 days to file a withholding
tax return with the commissioner provided all the withholding
taxes have been paid by the date prescribed by section 289A.20,
subdivision 2. In any case where good cause exists, the
commissioner may grant an extension of time of not more than 60
days for filing a withholding return.
Sec. 10. Minnesota Statutes 1996, section 289A.19,
subdivision 4, is amended to read:
Subd. 4. [ESTATE TAX RETURNS.] Where good cause exists,
the commissioner may extend the time for filing an estate tax
return for not more than six months. When an extension to file
the federal estate tax return has been granted under section
6081 of the Internal Revenue Code, the time for filing the
estate tax return is extended for that period.
Sec. 11. Minnesota Statutes 1996, section 289A.38,
subdivision 7, is amended to read:
Subd. 7. [FEDERAL TAX CHANGES.] If the amount of income,
items of tax preference, deductions, or credits for any year of
a taxpayer as reported to the Internal Revenue Service is
changed or corrected by the commissioner of Internal Revenue or
other officer of the United States or other competent authority,
or where a renegotiation of a contract or subcontract with the
United States results in a change in income, items of tax
preference, deductions, or credits, or withholding tax, or, in
the case of estate tax, where there are adjustments to the
taxable estate resulting in a change to the credit for state
death taxes, the taxpayer shall report the change or correction
or renegotiation results in writing to the commissioner. The
report must be submitted within 180 days after the final
determination and must be in the form of either an amended
Minnesota return conceding the accuracy of the federal
determination or a letter detailing how the federal
determination is incorrect or does not change the Minnesota
tax. A taxpayer filing an amended federal tax return must also
file a copy of the amended return with the commissioner of
revenue within 180 days after filing the amended return.
Sec. 12. Minnesota Statutes 1996, section 289A.65,
subdivision 1, is amended to read:
Subdivision 1. [TAXPAYER RIGHT TO RECONSIDERATION.] A
taxpayer may obtain reconsideration by the commissioner of an
order assessing tax, a denial of a request for abatement of
penalty or interest, or a denial of a claim for refund by filing
an administrative appeal under subdivision 4. A taxpayer cannot
obtain reconsideration under this section if the action taken by
the commissioner is the outcome of an administrative appeal.
Sec. 13. Minnesota Statutes 1996, section 290.01,
subdivision 2, is amended to read:
Subd. 2. [PERSON.] The term "person" includes individuals,
fiduciaries, estates, and trusts, and partnerships not included
in the definition of corporations and may, where the context
requires, include corporations as herein defined.
Sec. 14. Minnesota Statutes 1996, section 290.01,
subdivision 4a, is amended to read:
Subd. 4a. [FINANCIAL INSTITUTION.] (a) "Financial
institution" means:
(1) a holding company;
(2) any regulated financial corporation; or
(3) any other corporation organized under the laws of the
United States or organized under the laws of this state or any
other state or country that is carrying on the business of a
financial institution.
(b) "Holding company" means any corporation registered
under the Federal Bank Holding Company Act of 1956, as amended,
or registered as a savings and loan holding company under the
Federal National Housing Act, as amended, or a federal savings
bank holding company.
(c) "Regulated financial corporation" means an institution,
the deposits or accounts of which are insured under the Federal
Deposit Insurance Act or by the Federal Savings and Loan
Insurance Corporation, any institution which is a member of a
Federal Home Loan Bank, any other bank or thrift institution
incorporated or organized under the laws of any state or any
foreign country which is engaged in the business of receiving
deposits, any corporation organized under the provisions of
United States Code, title 12, sections 611 to 631 (Edge Act
Corporations), and any agency of a foreign depository as defined
in United States Code, title 12, section 3101.
(d) "Business of a financial institution" means:
(1) the business that any corporation organized under the
authority of the United States or organized under the laws of
this state or any other state or country does or has authority
to do which is substantially similar to the business which a
corporation may be created to do under chapters 46 to 55 or any
business which a corporation is authorized to do by those laws;
or
(2) the business that any corporation organized under the
authority of the United States or organized under the laws of
this state or any other state or country does or has authority
to do if the corporation derives more than 50 percent of its
gross income from lending activities (including discounting
obligations) in substantial competition with the businesses
described in clause (1). For purposes of this clause, the
computation of the gross income of a corporation does not
include income from nonrecurring, extraordinary items.
Sec. 15. Minnesota Statutes 1996, section 290.06,
subdivision 22, is amended to read:
Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A
taxpayer who is liable for taxes on or measured by net income to
another state or province or territory of Canada, as provided in
paragraphs (b) through (f), upon income allocated or apportioned
to Minnesota, is entitled to a credit for the tax paid to
another state or province or territory of Canada if the tax is
actually paid in the taxable year or a subsequent taxable year.
A taxpayer who is a resident of this state pursuant to section
290.01, subdivision 7, clause (2), and who is subject to income
tax as a resident in the state of the individual's domicile is
not allowed this credit unless the state of domicile does not
allow a similar credit.
(b) For an individual, estate, or trust, the credit is
determined by multiplying the tax payable under this chapter by
the ratio derived by dividing the income subject to tax in the
other state or province or territory of Canada that is also
subject to tax in Minnesota while a resident of Minnesota by the
taxpayer's federal adjusted gross income, as defined in section
62 of the Internal Revenue Code, modified by the addition
required by section 290.01, subdivision 19a, clause (1), and the
subtraction allowed by section 290.01, subdivision 19b, clause
(1), to the extent the income is allocated or assigned to
Minnesota under sections 290.081 and 290.17.
(c) If the taxpayer is an athletic team that apportions all
of its income under section 290.17, subdivision 5, paragraph
(c), the credit is determined by multiplying the tax payable
under this chapter by the ratio derived from dividing the total
net income subject to tax in the other state or province or
territory of Canada by the taxpayer's Minnesota taxable income.
(d) The credit determined under paragraph (b) or (c) shall
not exceed the amount of tax so paid to the other state or
province or territory of Canada on the gross income earned
within the other state or province or territory of Canada
subject to tax under this chapter, nor shall the allowance of
the credit reduce the taxes paid under this chapter to an amount
less than what would be assessed if such income amount was
excluded from taxable net income.
(e) In the case of the tax assessed on a lump sum
distribution under section 290.032, the credit allowed under
paragraph (a) is the tax assessed by the other state or province
or territory of Canada on the lump sum distribution that is also
subject to tax under section 290.032, and shall not exceed the
tax assessed under section 290.032. To the extent the total
lump sum distribution defined in section 290.032, subdivision 1,
includes lump sum distributions received in prior years or is
all or in part an annuity contract, the reduction to the tax on
the lump sum distribution allowed under section 290.032,
subdivision 2, includes tax paid to another state that is
properly apportioned to that distribution.
(f) If a Minnesota resident reported an item of income to
Minnesota and is assessed tax in such other state or province or
territory of Canada on that same income after the Minnesota
statute of limitations has expired, the taxpayer shall receive a
credit for that year under paragraph (a), notwithstanding any
statute of limitations to the contrary. The claim for the
credit must be submitted within one year from the date the taxes
were paid to the other state or province or territory of
Canada. The taxpayer must submit sufficient proof to show
entitlement to a credit.
(g) For the purposes of this subdivision, a resident
shareholder of a corporation having a valid election in effect
under section 1362 of the Internal Revenue Code must be
considered to have paid a tax imposed on the shareholder in an
amount equal to the shareholder's pro rata share of any net
income tax paid by the S corporation to another state. For the
purposes of the preceding sentence, the term "net income tax"
means any tax imposed on or measured by a corporation's net
income.
(h) For the purposes of this subdivision, a resident member
partner of a limited liability company an entity taxed as a
partnership under the Internal Revenue Code must be considered
to have paid a tax imposed on the member partner in an amount
equal to the member's partner's pro rata share of any net income
tax paid by the limited liability company partnership to a
another state that does not measure the income of the member of
the limited liability company by reference to the income of the
limited liability company. For purposes of the preceding
sentence, the term "net income" tax means any tax imposed on or
measured by a limited liability company's partnership's net
income.
(i) For the purposes of this subdivision, "another state"
includes the District of Columbia, but does not include Puerto
Rico or the several territories organized by Congress.
(j) The limitations on the credit in paragraphs (b), (c),
and (d), are imposed on a state by state basis.
Sec. 16. 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; 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, 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) (e) All items of gross income not covered in paragraphs
(a) to (e) (d) and not part of the taxpayer's income from a
trade or business shall be assigned to the taxpayer's domicile.
Sec. 17. Minnesota Statutes 1996, section 290.92,
subdivision 24, is amended to read:
Subd. 24. [APPLICATION FOR ACCOUNT NUMBER.] An employer,
or person withholding tax under section 290.923, desiring to
engage in business in Minnesota shall file with the commissioner
an application for a withholding account number on or before the
due date of the first payment required to be made under
subdivision 6 date the employer is required to withhold
Minnesota taxes under this section. An application for an
account number must be made upon a form prescribed by the
commissioner. It must give the name of the employer or payor,
the location of the place or places of business, the names,
addresses and social security numbers of the owners or partners,
or if the employer or payor is a corporation of the officers, or
if the employer or payor is a trust of the trustees, and other
information the commissioner may require. The application must
be filed by the owner if the employer or payor is a natural
person; by a member or partner if the employer or payor is an
association or partnership; by a trustee if the employer or
payor be a trust, or by a person authorized to sign the
application if the employer or payor is a corporation.
No fee shall be charged for the application.
The account number is not assignable.
Sec. 18. Minnesota Statutes 1996, section 290A.04,
subdivision 6, is amended to read:
Subd. 6. [INFLATION ADJUSTMENT.] Beginning for property
tax refunds payable in calendar year 1996, the commissioner
shall annually adjust the dollar amounts of the income
thresholds and the maximum refunds under subdivisions 2 and 2a
for inflation. The commissioner shall make the inflation
adjustments in accordance with section 290.06, subdivision 2d,
except that for purposes of this subdivision the percentage
increase shall be determined from the year ending on August 31
June 30, 1994, to the year ending on August 31 June 30 of the
year preceding that in which the refund is payable. The
commissioner shall use the appropriate percentage increase to
annually adjust the income thresholds and maximum refunds under
subdivisions 2 and 2a for inflation without regard to whether or
not the income tax brackets are adjusted for inflation in that
year. The commissioner shall round the thresholds and the
maximum amounts, as adjusted to the nearest $10 amount. If the
amount ends in $5, the commissioner shall round it up to the
next $10 amount.
The commissioner shall annually announce the adjusted
refund schedule at the same time provided under section 290.06.
The determination of the commissioner under this subdivision is
not a rule under the administrative procedure act.
Sec. 19. [EFFECTIVE DATE.]
Section 2 is effective the day following final enactment.
Section 3 is effective for taxable years beginning after
December 31, 1995. Sections 5 and 10 are effective for estates
of decedents dying after the date of final enactment. Sections
6 and 7 are effective for returns due after December 31, 1996.
Section 9 is effective for returns due after July 30, 1997.
Section 11 is effective for federal changes beginning after the
date of final enactment. Section 12 is effective for actions of
the commissioner after the date of final enactment. Sections 13
to 16 are effective for taxable years beginning after December
31, 1996. Section 17 is effective for wages paid after December
31, 1997. Section 18 is effective for property tax refunds
based on rents paid in 1997 and property taxes payable in 1998
and thereafter.
ARTICLE 2
SALES AND SPECIAL TAXES
Section 1. Minnesota Statutes 1996, section 60A.15,
subdivision 2a, is amended to read:
Subd. 2a. [PROCEDURE FOR FILING AND ADJUSTMENT OF
STATEMENTS AND TAXES.] (a) Every insurer required to pay a
premium tax in this state shall make and file a statement of
estimated premium taxes for the period covered by the
installment tax payment. Such 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 such information as 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, such overpayment may be credited without interest
on the estimated tax due April 15 1.
(d) If unpaid by this date, penalties as provided in
section 289A.60, subdivision 1, as it relates to withholding and
sales or use taxes, shall be imposed.
Sec. 2. Minnesota Statutes 1996, section 60E.04,
subdivision 4, is amended to read:
Subd. 4. [TAXATION.] (a) Each risk retention group is
liable for the payment of premium taxes and taxes on premiums of
direct business for risks resident or located within this state,
and shall report to the commissioner of revenue the net premiums
written for risks resident or located within this state. The
risk retention group shall be subject to taxation, and any
applicable taxation-related fines and penalties, on the same
basis as a foreign admitted insurer.
(b) To the extent licensed agents or brokers are utilized
pursuant to section 60E.12, they shall report to the
commissioner of revenue the premiums for direct business for
risks resident or located within this state which the licensees
have placed with or on behalf of a risk retention group not
chartered in this state.
(c) To the extent that insurance agents or brokers are
utilized pursuant to section 60E.12, each agent or broker shall
keep a complete and separate record of all policies procured
from each risk retention group, which shall be open to
examination by the commissioner, as provided in section
60A.031 and by the commissioner of revenue. These records
shall, for each policy and each kind of insurance provided,
include the following:
(1) the limit of liability;
(2) the time period covered;
(3) the effective date;
(4) the name of the risk retention group which issued the
policy;
(5) the gross premium charged; and
(6) the amount of return premiums, if any.
Sec. 3. Minnesota Statutes 1996, section 69.021,
subdivision 2, is amended to read:
Subd. 2. [REPORT OF PREMIUMS.] Each insurer, including
township and farmers mutual insurers where applicable, shall
return to the commissioner with its annual financial statement
the reports described in subdivision 1 certified by its
secretary and president or chief financial officer. The
Minnesota Firetown Premium Report shall contain a true and
accurate statement of the total premium for all gross direct
fire, lightning, sprinkler leakage, and extended coverage
insurance of all domestic mutual insurers and the total premiums
for all gross direct fire, lightning, sprinkler leakage and
extended coverage insurance of all other insurers, less return
premiums and dividends received by them on that business written
or done during the preceding calendar year upon property located
within the state or brought into the state for temporary use.
The fire and extended coverage portion of multiperil and
multiple peril package premiums and all other combination
premiums shall be determined by applying percentages determined
by the commissioner or by rating bureaus recognized by the
commissioner. The Minnesota Aid to Police Premium Report shall
contain a true and accurate statement of the total premiums,
less return premiums and dividends, on all direct business
received by such insurer in this state, or by its agents for it,
in cash or otherwise, during the preceding calendar year, with
reference to insurance written for perils described in section
69.011, subdivision 1, clause (f).
Sec. 4. Minnesota Statutes 1996, section 289A.11,
subdivision 1, is amended to read:
Subdivision 1. [RETURN REQUIRED.] Except as provided in
section 289A.18, subdivision 4, for the month in which taxes
imposed by sections 297A.01 to 297A.44 chapter 297A are payable,
or for which a return is due, a return for the preceding
reporting period must be filed with the commissioner in the form
and manner the commissioner prescribes. A person making sales
at retail at two or more places of business may file a
consolidated return subject to rules prescribed by the
commissioner. In computing the dollar amount of items on the
return, the amounts are rounded off to the nearest whole dollar,
disregarding amounts less than 50 cents and increasing amounts
of 50 cents to 99 cents to the next highest dollar.
Notwithstanding this subdivision, a person who is not
required to hold a sales tax permit under chapter 297A and who
makes annual purchases of less than $18,500 that are subject to
the use tax imposed by section 297A.14, may file an annual use
tax return on a form prescribed by the commissioner. If a
person who qualifies for an annual use tax reporting period is
required to obtain a sales tax permit or makes use tax purchases
in excess of $18,500 during the calendar year, the reporting
period must be considered ended at the end of the month in which
the permit is applied for or the purchase in excess of $18,500
is made and a return must be filed for the preceding reporting
period.
Sec. 5. Minnesota Statutes 1996, section 289A.35, is
amended to read:
289A.35 [ASSESSMENTS.]
The commissioner shall make determinations, corrections,
and assessments with respect to state taxes, including interest,
additions to taxes, and assessable penalties. The commissioner
may audit and adjust the taxpayer's computation of federal
taxable income, items of federal tax preferences, or federal
credit amounts to make them conform with the provisions of
chapter 290 or section 298.01. If a taxpayer fails to file a
required return, the commissioner, from information in the
commissioner's possession or obtainable by the commissioner, may
make a return for the taxpayer. The return will be prima facie
correct and valid. If a return has been filed, the commissioner
shall examine the return and make any audit or investigation
that is considered necessary. The commissioner may use
statistical or other sampling techniques consistent with
generally accepted accounting principles auditing standards in
examining returns or records and making assessments.
Sec. 6. Minnesota Statutes 1996, section 297A.01,
subdivision 1, is amended to read:
Subdivision 1. The following words, terms, and phrases
when used in sections 297A.01 to 297A.44 this chapter shall have
the meanings ascribed to them in this section except where the
context clearly indicates a different meaning.
Sec. 7. Minnesota Statutes 1996, section 297A.09, is
amended to read:
297A.09 [PRESUMPTION OF TAX; BURDEN OF PROOF.]
For the purpose of the proper administration of sections
297A.01 to 297A.44 this chapter and to prevent evasion of the
tax, it shall be presumed that all gross receipts are subject to
the tax until the contrary is established. The burden of
proving that a sale is not a sale at retail is upon the person
who makes the sale, but that person may take from the purchaser
an exemption certificate to the effect that the property
purchased is for resale or that the sale is otherwise exempt
from the application of the tax imposed by sections 297A.01 to
297A.44.
Sec. 8. Minnesota Statutes 1996, section 297A.12, is
amended to read:
297A.12 [IMPROPER USE OF SUBJECT OF PURCHASE OBTAINED WITH
EXEMPTION CERTIFICATE.]
If a purchaser who gives an exemption certificate makes any
use of the subject of the purchase other than for a purpose
exempted by sections 297A.01 to 297A.44 under this chapter, such
use shall be deemed a retail sale by the purchaser as of the
time of first use by the purchaser, and the sales price to the
purchaser shall be deemed the gross receipts from such retail
sale. If the sole nonexempt use is rental while holding for
sale, the purchaser shall include in the purchaser's gross
receipts the amount of the rental charged. Upon subsequent sale
of such property, the seller shall include the entire amount of
gross receipts received therefrom without deduction of amounts
previously received as rentals.
Sec. 9. Minnesota Statutes 1996, section 297A.14,
subdivision 4, is amended to read:
Subd. 4. [DE MINIMIS EXEMPTION.] Purchases subject to use
tax under this section are exempt if (1) the purchase is made by
an individual for personal use, and (2) the total purchases that
are subject to the use tax do not exceed $770 in the calendar
year. For purposes of this subdivision, "personal use" includes
purchases for gifts. If an individual makes purchases, which
are subject to use tax, of more than $770 in the calendar year
the individual must pay the use tax on the entire amount. This
exemption does not apply to purchases made from retailers who
are required or registered to collect taxes under this chapter.
Sec. 10. Minnesota Statutes 1996, section 297A.22, is
amended to read:
297A.22 [PRESUMPTION OF PURPOSE OF SALE, BURDEN OF PROOF.]
For the purpose of the proper administration of sections
297A.01 to 297A.44 and to prevent evasion of the use tax and the
duty to collect the use tax, it shall be presumed that all
retail sales for delivery in Minnesota are for storage, use or
other consumption in Minnesota until the contrary is
established. The burden of proving the contrary shall be upon
The person retailer who makes the sale but that person may take
from the purchaser an exemption certificate in accordance with
sections 297A.09 to 297A.13.
Sec. 11. Minnesota Statutes 1996, section 297A.23, is
amended to read:
297A.23 [PROPERTY BROUGHT TO STATE; PRESUMPTION; BURDEN OF
PROOF.]
Any purchaser of tangible personal property or any items
enumerated in section 297A.14 which are shipped or brought to
Minnesota by the purchaser after July 31, 1967, shall have the
burden of proving that the same were not purchased from a
retailer for storage, use or consumption in Minnesota.
Sec. 12. Minnesota Statutes 1996, section 297A.25,
subdivision 1, is amended to read:
Subdivision 1. [SCOPE.] The items contained in this
section are specifically exempted from the taxes imposed by
sections 297A.01 to 297A.44 this chapter.
Sec. 13. Minnesota Statutes 1996, section 297A.25,
subdivision 2, is amended to read:
Subd. 2. [FOOD PRODUCTS.] The gross receipts from the sale
of and storage, use, or consumption of food products including
but not limited to cereal and cereal products, butter, cheese,
milk and milk products, oleomargarine, meat and meat products,
fish and fish products, eggs and egg products, vegetables and
vegetable products, fruit and fruit products, spices and salt,
sugar and sugar products, coffee and coffee substitutes, tea,
cocoa and cocoa products, and food products which are not
taxable pursuant to section 297A.01, subdivision 3, clause (c)
are exempt. This exemption does not include the following:
(1) candy and candy products, except when sold for
fundraising purposes by a nonprofit organization that provides
educational and social activities for young people primarily
aged 18 and under;
(2) carbonated beverages, beverages commonly referred to as
soft drinks containing less than 15 percent fruit juice, or
bottled water other than noncarbonated and noneffervescent
bottled water sold in individual containers of one-half gallon
or more in size.
Sec. 14. Minnesota Statutes 1996, section 297A.25,
subdivision 3, is amended to read:
Subd. 3. [MEDICINES; MEDICAL DEVICES.] The gross receipts
from the sale of and storage, use, or consumption of prescribed
drugs, prescribed medicine and insulin, intended for use,
internal or external, in the cure, mitigation, treatment or
prevention of illness or disease in human beings are exempt,
together with prescription glasses, fever thermometers,
therapeutic, and prosthetic devices. "Prescribed drugs" or
"prescribed medicine" includes over-the-counter drugs or
medicine prescribed by a licensed physician. "Therapeutic
devices" includes reusable finger pricking devices for the
extraction of blood, blood glucose monitoring machines, and
other diagnostic agents used in diagnosing, monitoring, or
treating diabetes. Nonprescription analgesics consisting
principally (determined by the weight of all ingredients) of
acetaminophen, acetylsalicylic acid, ibuprofen, or a combination
thereof are exempt.
Sec. 15. Minnesota Statutes 1996, section 297A.25,
subdivision 6, is amended to read:
Subd. 6. [PACKING MATERIALS.] The gross receipts from the
sale of and storage, use, or consumption of packing materials
used to pack and ship household goods, the ultimate destination
of which is outside the state of Minnesota and which are not
thereafter returned to a point within Minnesota, except in the
course of interstate commerce, are exempt.
Sec. 16. Minnesota Statutes 1996, section 297A.25,
subdivision 8, is amended to read:
Subd. 8. [CLOTHING.] The gross receipts from the sale
of and storage, use, or consumption of clothing and wearing
apparel are exempt, except the following:
(1) all articles commonly or commercially known as jewelry,
whether real or imitation; pearls, precious and semiprecious
stones, and imitations thereof; articles made of, or ornamented,
mounted or fitted with precious metals or imitations thereof;
watches; clocks; cases and movements for watches and clocks;
gold, gold-plated, silver, or sterling flatware or hollowware
and silver-plated hollowware; opera glasses; lorgnettes; marine
glasses; field glasses and binoculars;
(2) articles made of fur on the hide or pelt, and articles
of which such fur is the component material or chief value, but
only if such value is more than three times the value of the
next most valuable component material;
(3) perfume, essences, extracts, toilet waters, cosmetics,
petroleum jellies, hair oils, pomades, hair dressings, hair
restoratives, hair dyes, aromatic cachous and toilet powders.
The tax imposed by this chapter shall not apply to lotion, oil,
powder, or other articles intended to be used or applied only in
the case of babies;
(4) trunks, valises, traveling bags, suitcases, satchels,
overnight bags, hat boxes for use by travelers, beach bags,
bathing suit bags, brief cases made of leather or imitation
leather, salespeople's sample and display cases, purses,
handbags, pocketbooks, wallets, billfolds, card, pass, and key
cases and toilet cases.
Sec. 17. Minnesota Statutes 1996, section 297A.25,
subdivision 9, is amended to read:
Subd. 9. [MATERIALS CONSUMED IN PRODUCTION.] The gross
receipts from the sale of and the storage, use, or consumption
of all materials, including chemicals, fuels, petroleum
products, lubricants, packaging materials, including returnable
containers used in packaging food and beverage products, feeds,
seeds, fertilizers, electricity, gas and steam, used or consumed
in agricultural or industrial production of personal property
intended to be sold ultimately at retail, whether or not the
item so used becomes an ingredient or constituent part of the
property produced are exempt. Seeds, trees, fertilizers, and
herbicides purchased for use by farmers in the Conservation
Reserve Program under United States Code, title 16, section
590h, as amended through December 31, 1991, the Integrated Farm
Management Program under section 1627 of Public Law Number
101-624, the Wheat and Feed Grain Programs under sections 301 to
305 and 401 to 405 of Public Law Number 101-624, and the
conservation reserve program under sections 103F.505 to
103F.531, are included in this exemption. Sales to a
veterinarian of materials used or consumed in the care,
medication, and treatment of horses and agricultural production
animals and horses used in agricultural production are exempt
under this subdivision. Chemicals used for cleaning food
processing machinery and equipment are included in this
exemption. Materials, including chemicals, fuels, and
electricity purchased by persons engaged in agricultural or
industrial production to treat waste generated as a result of
the production process are included in this exemption. Such
production shall include, but is not limited to, research,
development, design or production of any tangible personal
property, manufacturing, processing (other than by restaurants
and consumers) of agricultural products whether vegetable or
animal, commercial fishing, refining, smelting, reducing,
brewing, distilling, printing, mining, quarrying, lumbering,
generating electricity and the production of road building
materials. Such production shall not include painting,
cleaning, repairing or similar processing of property except as
part of the original manufacturing process. Machinery,
equipment, implements, tools, accessories, appliances,
contrivances, furniture and fixtures, used in such production
and fuel, electricity, gas or steam used for space heating or
lighting, are not included within this exemption; however,
accessory tools, equipment and other short lived items, which
are separate detachable units used in producing a direct effect
upon the product, where such items have an ordinary useful life
of less than 12 months, are included within the exemption
provided herein. Electricity used to make snow for outdoor use
for ski hills, ski slopes, or ski trails is included in this
exemption.
Sec. 18. Minnesota Statutes 1996, section 297A.25,
subdivision 11, is amended to read:
Subd. 11. [SALES TO GOVERNMENT.] The gross receipts from
all sales, including sales in which title is retained by a
seller or a vendor or is assigned to a third party under an
installment sale or lease purchase agreement under section
465.71, of tangible personal property to, and all storage, use
or consumption of such property by, the United States and its
agencies and instrumentalities, the University of Minnesota,
state universities, community colleges, technical colleges,
state academies, the Lola and Rudy Perpich Minnesota center for
arts education, and school districts are exempt.
As used in this subdivision, "school districts" means
public school entities and districts of every kind and nature
organized under the laws of the state of Minnesota, including,
without limitation, school districts, intermediate school
districts, education districts, service cooperatives, secondary
vocational cooperative centers, special education cooperatives,
joint purchasing cooperatives, telecommunication cooperatives,
regional management information centers, and any instrumentality
of a school district, as defined in section 471.59.
Sales exempted by this subdivision include sales under
section 297A.01, subdivision 3, paragraph (f), but do not
include sales under section 297A.01, subdivision 3, paragraph
(j) (i), clause (vii).
Sales to hospitals and nursing homes owned and operated by
political subdivisions of the state are exempt under this
subdivision.
The sales to and exclusively for the use of libraries of
books, periodicals, audio-visual materials and equipment,
photocopiers for use by the public, and all cataloguing and
circulation equipment, and cataloguing and circulation software
for library use are exempt under this subdivision. For purposes
of this paragraph "libraries" means libraries as defined in
section 134.001, county law libraries under chapter 134A, the
state library under section 480.09, and the legislative
reference library.
Sales of supplies and equipment used in the operation of an
ambulance service owned and operated by a political subdivision
of the state are exempt under this subdivision provided that the
supplies and equipment are used in the course of providing
medical care. Sales to a political subdivision of repair and
replacement parts for emergency rescue vehicles and fire trucks
and apparatus are exempt under this subdivision.
Sales to a political subdivision of machinery and
equipment, except for motor vehicles, used directly for mixed
municipal solid waste management services at a solid waste
disposal facility as defined in section 115A.03, subdivision 10,
are exempt under this subdivision.
Sales to political subdivisions of chore and homemaking
services to be provided to elderly or disabled individuals are
exempt.
Sales of telephone services to the department of
administration that are used to provide telecommunications
services through the intertechnologies revolving fund are exempt
under this subdivision.
This exemption shall not apply to building, construction or
reconstruction materials purchased by a contractor or a
subcontractor as a part of a lump-sum contract or similar type
of contract with a guaranteed maximum price covering both labor
and materials for use in the construction, alteration, or repair
of a building or facility. This exemption does not apply to
construction materials purchased by tax exempt entities or their
contractors to be used in constructing buildings or facilities
which will not be used principally by the tax exempt entities.
This exemption does not apply to the leasing of a motor
vehicle as defined in section 297B.01, subdivision 5, except for
leases entered into by the United States or its agencies or
instrumentalities.
The tax imposed on sales to political subdivisions of the
state under this section applies to all political subdivisions
other than those explicitly exempted under this subdivision,
notwithstanding section 115A.69, subdivision 6, 116A.25,
360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2,
469.127, 473.448, 473.545, or 473.608 or any other law to the
contrary enacted before 1992.
Sales exempted by this subdivision include sales made to
other states or political subdivisions of other states, if the
sale would be exempt from taxation if it occurred in that state,
but do not include sales under section 297A.01, subdivision 3,
paragraphs (c) and (e).
Sec. 19. Minnesota Statutes 1996, section 297A.25,
subdivision 16, is amended to read:
Subd. 16. [SALES TO NONPROFIT GROUPS.] The gross receipts
from the sale of tangible personal property to, and the storage,
use or other consumption of such property by, any corporation,
society, association, foundation, or institution organized and
operated exclusively for charitable, religious, or educational
purposes if the property purchased is to be used in the
performance of charitable, religious, or educational functions,
or any senior citizen group or association of groups that in
general limits membership to persons who are either (1) age 55
or older, or (2) physically disabled, and is organized and
operated exclusively for pleasure, recreation, and other
nonprofit purposes, no part of the net earnings of which inures
to the benefit of any private shareholders, are exempt. For
purposes of this subdivision, charitable purpose includes the
maintenance of a cemetery owned by a religious organization.
Sales exempted by this subdivision include sales pursuant to
section 297A.01, subdivision 3, paragraphs (d) and (f), but do
not include sales under section 297A.01, subdivision 3,
paragraph (j) (i), clause (vii). This exemption shall not apply
to building, construction, or reconstruction materials purchased
by a contractor or a subcontractor as a part of a lump-sum
contract or similar type of contract with a guaranteed maximum
price covering both labor and materials for use in the
construction, alteration, or repair of a building or facility.
This exemption does not apply to construction materials
purchased by tax exempt entities or their contractors to be used
in constructing buildings or facilities which will not be used
principally by the tax exempt entities. This exemption does not
apply to the leasing of a motor vehicle as defined in section
297B.01, subdivision 5.
Sec. 20. Minnesota Statutes 1996, section 297A.25,
subdivision 17, is amended to read:
Subd. 17. [CASKETS; VAULTS.] The gross receipts from the
sale of and storage, use, or consumption of caskets and burial
vaults are exempt.
Sec. 21. Minnesota Statutes 1996, section 297A.25,
subdivision 18, is amended to read:
Subd. 18. [AUTOMOBILES; DISABLED VETERANS.] The gross
receipts from the sale of and storage, use, or consumption of an
automobile or other conveyance are exempt if the purchaser is
assisted by a grant from the United States in accordance with
United States Code, title 38, section 1901 3901, as
amended through August 6, 1991.
Sec. 22. Minnesota Statutes 1996, section 297A.25,
subdivision 19, is amended to read:
Subd. 19. [AIRCRAFT.] The gross receipts from the sale
to and the storage, use, or consumption by a licensed aircraft
dealer of an aircraft for which a commercial use permit has been
issued pursuant to section 360.654 is exempt, if the aircraft is
resold while the permit is in effect.
Sec. 23. Minnesota Statutes 1996, section 297A.25,
subdivision 20, is amended to read:
Subd. 20. [BUILDING MATERIALS; DISABLED VETERANS.] The
gross receipts from the sale of and the storage, use, or
consumption of building materials to be used in the construction
or remodeling of a residence are exempt when the construction or
remodeling is financed in whole or in part by the United States
in accordance with United States Code, title 38, sections 801 to
805 2101 to 2105, as amended through August 6, 1991. This
exemption shall not be effective at time of sale of the
materials to contractors, subcontractors, builders or owners,
but shall be applicable only upon a claim for refund to the
commissioner of revenue filed by recipients of the benefits
provided in United States Code, title 38, chapter 21, as amended
through August 6, 1991. The commissioner shall provide by rule
for the refund of taxes paid on sales exempt in accordance with
this subdivision.
Sec. 24. Minnesota Statutes 1996, section 297A.25,
subdivision 21, is amended to read:
Subd. 21. [TEXTBOOKS.] The gross receipts from the sale of
and storage, use, or consumption of textbooks which are
prescribed for use in conjunction with a course of study in a
public or private school, college, university and business or
trade school to students who are regularly enrolled at such
institutions are exempt. For purposes of this subdivision a
"public school" is defined as one that furnishes course of
study, enrollment and staff that meets standards of the state
board of education and a "private school" is one which under the
standards of the state board of education, provides an education
substantially equivalent to that furnished at a public school.
"Business and trade schools" shall mean such schools licensed
pursuant to section 141.25.
Sec. 25. Minnesota Statutes 1996, section 297A.25,
subdivision 23, is amended to read:
Subd. 23. [RESIDENTIAL HEATING FUELS.] The gross receipts
from the sale of and the storage, use, or consumption of
residential heating fuels are exempt in the following manner:
(1) all fuel oil, coal, wood, steam, hot water, propane
gas, and L.P. gas sold to residential customers for residential
use;
(2) natural gas sold for residential use to customers who
are metered and billed as residential users and who use natural
gas for their primary source of residential heat, for the
billing months of November, December, January, February, March
and April;
(3) electricity sold for residential use to customers who
are metered and billed as residential users and who use
electricity for their primary source of residential heat, for
the billing months of November, December, January, February,
March and April.
Sec. 26. Minnesota Statutes 1996, section 297A.25,
subdivision 26, is amended to read:
Subd. 26. [FEMININE HYGIENE PRODUCTS.] The gross receipts
from the sale of and storage, use, or consumption of sanitary
napkins, tampons, or similar items used for feminine hygiene,
are exempt.
Sec. 27. Minnesota Statutes 1996, section 297A.25,
subdivision 27, is amended to read:
Subd. 27. [MANUFACTURED HOMES.] The gross receipts from
the sale of and the storage, use, or consumption of a
manufactured home, as defined in section 327.31, subdivision 6,
to be used by the purchaser for residential purposes are exempt,
unless the sale is the first retail sale of the manufactured
home in this state.
Sec. 28. Minnesota Statutes 1996, section 297A.25,
subdivision 28, is amended to read:
Subd. 28. [WASTE PROCESSING EQUIPMENT.] The gross receipts
from the sale of and storage, use, or consumption of equipment
used for processing solid or hazardous waste at a resource
recovery facility, as defined in section 115A.03, subdivision
28, are exempt, including pollution control equipment at a
resource recovery facility that burns refuse-derived fuel or
mixed municipal solid waste as its primary fuel.
Sec. 29. Minnesota Statutes 1996, section 297A.25,
subdivision 29, is amended to read:
Subd. 29. [FARM MACHINERY REPAIR PARTS.] The gross
receipts from the sale of and the storage, use, or consumption
of repair and replacement parts, except tires, used for
maintenance or repair of farm machinery are exempt, if the part
replaces a farm machinery part assigned a specific or generic
part number by the manufacturer of the farm machinery.
Sec. 30. Minnesota Statutes 1996, section 297A.25,
subdivision 30, is amended to read:
Subd. 30. [SCHOOL TICKETS OR ADMISSIONS.] The gross
receipts from sales and use of tickets or admissions to regular
season school games, events, and activities are exempt. For
purposes of this subdivision, "school" has the meaning given it
in section 120.101, subdivision 4.
Sec. 31. Minnesota Statutes 1996, section 297A.25,
subdivision 34, is amended to read:
Subd. 34. [MOTOR VEHICLES.] The gross receipts from the
sale or use of any motor vehicle taxable under the provisions of
the sales tax on motor vehicles laws of Minnesota shall be
exempt from taxation under this chapter. Notwithstanding
subdivision 11, the exemption provided under this subdivision
remains in effect for motor vehicles purchased or leased by
political subdivisions of the state if the vehicles are not
subject to taxation under chapter 297B exempt from registration
under section 168.012, subdivision 1, paragraph (b).
Sec. 32. Minnesota Statutes 1996, section 297A.25,
subdivision 35, is amended to read:
Subd. 35. [FOOD STAMPS.] The gross receipts from the
sale and the storage, use, or consumption of tangible personal
property purchased with food stamps, coupons, or vouchers issued
by the federal government under the Food Stamp Program are
exempt. This exemption also applies to food purchased under the
Special Supplemental Food Program for Women, Infants, and
Children. The exemption provided by this subdivision is
effective and applies only to the extent required by federal law.
Sec. 33. Minnesota Statutes 1996, section 297A.25,
subdivision 38, is amended to read:
Subd. 38. [USED MOTOR OILS.] The gross receipts from the
sale of and the storage, use, or consumption of used motor oils
are exempt.
Sec. 34. Minnesota Statutes 1996, section 297A.25,
subdivision 39, is amended to read:
Subd. 39. [CROSS-COUNTRY SKI PASSES.] The gross receipts
from the sale and use of cross-country ski passes issued under
sections 85.40 to 85.43 are exempt.
Sec. 35. Minnesota Statutes 1996, section 297A.25,
subdivision 40, is amended to read:
Subd. 40. [STATE FAIR ADMISSIONS.] The gross receipts from
the sale and use of tickets to the premises of or events
sponsored by the state agricultural society and conducted on the
state fairgrounds during the period of the annual state fair are
exempt, provided that:
(1) the tax foregone under this subdivision is used
exclusively for the purpose of making capital improvements to
state-owned buildings and facilities on the state fairgrounds;
and
(2) the tax foregone under this subdivision is matched in
equal amount by proceeds from special assessments levied against
commercial exhibits, concessions and rentals, and from other
special user fees specifically designated for capital
improvements.
Sec. 36. Minnesota Statutes 1996, section 297A.25,
subdivision 41, is amended to read:
Subd. 41. [BULLET-PROOF VESTS.] The gross receipts from
the sale of and storage, use, or consumption of bullet-resistant
soft body armor that is flexible, concealable, and custom-fitted
to provide 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. 37. Minnesota Statutes 1996, section 297A.25,
subdivision 42, is amended to read:
Subd. 42. [CAPITAL EQUIPMENT.] The gross receipts from the
sale of and storage, use, or consumption of capital equipment
are exempt.
Sec. 38. Minnesota Statutes 1996, section 297A.25,
subdivision 43, is amended to read:
Subd. 43. [CHAIR LIFTS, RAMPS, ELEVATORS.] The gross
receipts from the sale of and storage, use, or consumption of
chair lifts, ramps, and elevators and building materials used to
install or construct them are exempt, if they are authorized by
a physician and installed in or attached to the owner's
homestead.
Sec. 39. Minnesota Statutes 1996, section 297A.25,
subdivision 46, is amended to read:
Subd. 46. [SACRAMENTAL WINE.] The gross receipts from the
sale of and storage, use, or consumption of wine for sacramental
purposes in religious ceremonies, as described in section
340A.316, if the wine is purchased from a nonprofit religious
organization meeting the requirements of subdivision 16 or from
the holder of a sacramental wine license as provided in section
340A.316 are exempt.
Sec. 40. Minnesota Statutes 1996, section 297A.25,
subdivision 49, is amended to read:
Subd. 49. [AIR COOLING EQUIPMENT.] The gross receipts from
the sale of and storage, use, or consumption of equipment used
for air cooling are exempt, if the equipment is purchased for
conversion or replacement of an existing groundwater based
once-through cooling system as required under section 103G.271,
subdivision 5.
Sec. 41. Minnesota Statutes 1996, section 297A.25,
subdivision 51, is amended to read:
Subd. 51. [AUTOMATIC FIRE-SAFETY SPRINKLER SYSTEMS.] The
gross receipts from the sale of and storage, use, or consumption
of automatic fire-safety sprinkler systems described in section
273.11, subdivision 6a, are exempt.
Sec. 42. Minnesota Statutes 1996, section 297A.25,
subdivision 52, is amended to read:
Subd. 52. [PARTS AND ACCESSORIES USED TO MAKE A MOTOR
VEHICLE HANDICAPPED ACCESSIBLE.] The gross receipts from the
sale of and storage, use, or consumption of parts and
accessories that are used solely to modify a motor vehicle to
make it handicapped accessible are exempt. Labor charges for
modifying a motor vehicle to make it handicapped accessible are
included in this exemption.
Sec. 43. Minnesota Statutes 1996, section 297A.25,
subdivision 53, is amended to read:
Subd. 53. [SPECIAL TOOLING.] The gross receipts from the
sale of and storage, use, or consumption of special tooling are
exempt.
Sec. 44. Minnesota Statutes 1996, section 297A.25,
subdivision 57, is amended to read:
Subd. 57. [HORSES; RELATED MATERIALS.] (a) The gross
receipts from the sale of and storage or use of horses,
including racehorses, are exempt.
(b) Sales of and storage, use, or consumption of all
materials, including feed and bedding, used or consumed in the
breeding, raising, owning, boarding, and keeping of horses, are
exempt. Machinery, equipment, implements, tools, appliances,
furniture, and fixtures, used in the breeding, raising, owning,
boarding, and keeping of horses, are not included within this
exemption.
Sec. 45. Minnesota Statutes 1996, section 297A.25,
subdivision 61, is amended to read:
Subd. 61. [CONSTRUCTION MATERIALS FOR INDOOR ICE ARENAS.]
The gross receipts from the sale of and storage, use, or
consumption of construction materials and supplies are exempt if:
(1) the materials and supplies are to be used in
constructing an indoor ice arena intended to be used
predominantly for youth athletic activities; and
(2) the construction project is financed in whole or in
part from a grant under sections 240A.09 and 240A.10 or the
proceeds of obligations issued under section 373.43 or 475.58,
subdivision 3.
This exemption applies regardless of whether the purchases
are made by the owner of the facility or a contractor.
Sec. 46. Minnesota Statutes 1996, section 297A.256,
subdivision 1, is amended to read:
Subdivision 1. [FUNDRAISING SALES BY NONPROFIT GROUPS.]
Notwithstanding the provisions of this chapter, the following
sales made by a "nonprofit organization" are exempt from the
sales and use tax.
(a)(1) All sales made by an organization for fundraising
purposes if that organization exists solely for the purpose of
providing educational or social activities for young people
primarily age 18 and under. This exemption shall apply only if
the gross annual sales receipts of the organization from
fundraising do not exceed $10,000.
(2) A club, association, or other organization of
elementary or secondary school students organized for the
purpose of carrying on sports, educational, or other
extracurricular activities is a separate organization from the
school district or school for purposes of applying the $10,000
limit. This paragraph does not apply if the sales are derived
from admission charges or from activities for which the money
must be deposited with the school district treasurer under
section 123.38, subdivision 2, or be recorded in the same manner
as other revenues or expenditures of the school district under
section 123.38, subdivision 2b.
(b) All sales made by an organization for fundraising
purposes if that organization is a senior citizen group or
association of groups that in general limits membership to
persons age 55 or older and is organized and operated
exclusively for pleasure, recreation and other nonprofit
purposes and no part of the net earnings inure to the benefit of
any private shareholders. This exemption shall apply only if
the gross annual sales receipts of the organization from
fundraising do not exceed $10,000.
(c) The gross receipts from the sales of tangible personal
property at, admission charges for, and sales of food, meals, or
drinks at fundraising events sponsored by a nonprofit
organization when the entire proceeds, except for the necessary
expenses therewith, will be used solely and exclusively for
charitable, religious, or educational purposes. This exemption
does not apply to admission charges for events involving bingo
or other gambling activities or to charges for use of amusement
devices involving bingo or other gambling activities. For
purposes of this paragraph, a "nonprofit organization" means any
unit of government, corporation, society, association,
foundation, or institution organized and operated for
charitable, religious, educational, civic, fraternal, senior
citizens' or veterans' purposes, no part of the net earnings of
which inures to the benefit of a private individual.
If the profits are not used solely and exclusively for
charitable, religious, or educational purposes, the entire gross
receipts are subject to tax.
Each nonprofit organization shall keep a separate
accounting record, including receipts and disbursements from
each fundraising event. All deductions from gross receipts must
be documented with receipts and other records. If records are
not maintained as required, the entire gross receipts are
subject to tax.
The exemption provided by this paragraph does not apply to
any sale made by or in the name of a nonprofit corporation as
the active or passive agent of a person that is not a nonprofit
corporation.
The exemption for fundraising events under this paragraph
is limited to no more than 24 days a year. Fundraising events
conducted on premises leased for more than four days but less
than 30 days do not qualify for this exemption.
(d) The gross receipts from the sale or use of tickets or
admissions to a golf tournament held in Minnesota are exempt if
the beneficiary of the tournament's net proceeds qualifies as a
tax-exempt organization under section 501(c)(3) of the Internal
Revenue Code, as amended through December 31, 1994, including a
tournament conducted on premises leased or occupied for more
than four days.
Sec. 47. Minnesota Statutes 1996, section 297A.44,
subdivision 1, is amended to read:
Subdivision 1. (a) Except as provided in paragraphs (b),
(c), and (d), all revenues, including interest and penalties,
derived from the excise and use taxes imposed by sections
297A.01 to 297A.44 shall be deposited by the commissioner in the
state treasury and credited to the general fund.
(b) All excise and use taxes derived from sales and use of
property and services purchased for the construction and
operation of an agricultural resource project, from and after
the date on which a conditional commitment for a loan guaranty
for the project is made pursuant to section 41A.04, subdivision
3, shall be deposited in the Minnesota agricultural and economic
account in the special revenue fund. The commissioner of
finance shall certify to the commissioner the date on which the
project received the conditional commitment. The amount
deposited in the loan guaranty account shall be reduced by any
refunds and by the costs incurred by the department of revenue
to administer and enforce the assessment and collection of the
taxes.
(c) All revenues, including interest and penalties, derived
from the excise and use taxes imposed on sales and purchases
included in section 297A.01, subdivision 3, paragraphs (d) and
(l) (k), clauses (1) and (2), must be deposited by the
commissioner in the state treasury, and credited as follows:
(1) first to the general obligation special tax bond debt
service account in each fiscal year the amount required by
section 16A.661, subdivision 3, paragraph (b); and
(2) after the requirements of clause (1) have been met, the
balance must be credited to the general fund.
(d) The revenues, including interest and penalties, derived
from the taxes imposed on solid waste collection services as
described in section 297A.45, shall be deposited by the
commissioner in the state treasury and credited to the general
fund to be used for funding solid waste reduction and recycling
programs.
Sec. 48. Minnesota Statutes 1996, section 297B.03, is
amended to read:
297B.03 [EXEMPTIONS.]
There is specifically exempted from the provisions of this
chapter and from computation of the amount of tax imposed by it
the following:
(1) Purchase or use, including use under a lease purchase
agreement or installment sales contract made pursuant to section
465.71, of any motor vehicle by the United States and its
agencies and instrumentalities and by any person described in
and subject to the conditions provided in section 297A.25,
subdivision 18.
(2) Purchase or use of any motor vehicle by any person who
was a resident of another state at the time of the purchase and
who subsequently becomes a resident of Minnesota, provided the
purchase occurred more than 60 days prior to the date such
person began residing in the state of Minnesota.
(3) Purchase or use of any motor vehicle by any person
making a valid election to be taxed under the provisions of
section 297A.211.
(4) Purchase or use of any motor vehicle previously
registered in the state of Minnesota by any corporation or
partnership when such transfer constitutes a transfer within the
meaning of section 351 or 721 of the Internal Revenue Code of
1986, as amended through December 31, 1988.
(5) Purchase or use of any vehicle owned by a resident of
another state and leased to a Minnesota based private or for
hire carrier for regular use in the transportation of persons or
property in interstate commerce provided the vehicle is titled
in the state of the owner or secured party, and that state does
not impose a sales tax or sales tax on motor vehicles used in
interstate commerce.
(6) Purchase or use of a motor vehicle by a private
nonprofit or public educational institution for use as an
instructional aid in automotive training programs operated by
the institution. "Automotive training programs" includes motor
vehicle body and mechanical repair courses but does not include
driver education programs.
(7) Purchase of a motor vehicle for use as an ambulance by
an ambulance service licensed under section 144.802.
(8) Purchase of a motor vehicle by or for a public library,
as defined in section 134.001, subdivision 2, as a bookmobile or
library delivery vehicle.
Sec. 49. 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. 50. 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 issue refunds and to hear 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. 51. Minnesota Statutes 1996, section 299F.21,
subdivision 2, is amended to read:
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 1.
(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. 52. [EFFECTIVE DATE.]
Sections 1 to 51 are effective July 1, 1997.
ARTICLE 3
PROPERTY TAXES
Section 1. Minnesota Statutes 1996, section 272.02,
subdivision 4, is amended to read:
Subd. 4. [CONVERSION TO EXEMPT OR TAXABLE USES.] (a) Any
property exempt from taxation on January 2 of any year which,
due to sale or other reason, loses its exemption prior to July 1
of any year, shall be placed on the current assessment rolls for
that year.
The valuation shall be determined with respect to its value
on January 2 of such year. The classification shall be based
upon the use to which the property was put by the purchaser, or
in the event the purchaser has not utilized the property by July
1, the intended use of the property, determined by the county
assessor, based upon all relevant facts.
(b) Property subject to tax on January 2 that is acquired
by a governmental entity, institution of purely public charity,
church, or educational institution before July 1 of the year is
exempt for that assessment year if the property is to be used
for an exempt purpose under subdivision 1, clauses (1) to (7).
(c) Property which forfeits to the state for nonpayment of
real estate taxes on or before December 31 in an assessment
year, shall be removed from the assessment rolls for that
assessment year. Forfeited property that is repurchased, or
sold at a public or private sale, on or before December 31 of an
assessment year shall be placed on the assessment rolls for that
year's assessment.
Sec. 2. Minnesota Statutes 1996, section 272.04,
subdivision 1, is amended to read:
Subdivision 1. When any mineral, gas, coal, oil, or other
similar interests in real estate are owned separately and apart
from and independently of the rights and interests owned in the
surface of such real estate, such mineral, gas, coal, oil, or
other similar interests may be assessed and taxed separately
from such surface rights and interests in such real estate,
including but not limited to the taxation provided in section
273.165, subdivision 1, and may be sold for taxes in the same
manner and with the same effect as other interests in real
estate are sold for taxes. All laws for the enforcement of
taxes on real estate apply to such interest.
Sec. 3. Minnesota Statutes 1996, section 273.032, is
amended to read:
273.032 [MARKET VALUE DEFINITION.]
For the purpose of determining any property tax levy
limitation based on market value, any net debt limit based on
market value, any limit on the issuance of bonds, certificates
of indebtedness, or capital notes based on market value, any
qualification to receive state aid based on market value, or any
state aid amount based on market value, the terms "market
value," "taxable market value," and "market valuation," whether
equalized or unequalized, mean the total taxable market value of
property within the local unit of government before any
adjustments for tax increment, fiscal disparity, or powerline
credit, or wind energy values, but after the limited market
adjustments under section 273.11, subdivision 1a, and after the
market value exclusions of certain improvements to homestead
property under section 273.11, subdivision 16. Unless otherwise
provided, "market value," "taxable market value," and "market
valuation" refer to the taxable market value for the previous
assessment year.
Sec. 4. Minnesota Statutes 1996, section 273.124,
subdivision 1, is amended to read:
Subdivision 1. [GENERAL RULE.] (a) Residential real estate
that is occupied and used for the purposes of a homestead by its
owner, who must be a Minnesota resident, is a residential
homestead.
Agricultural land, as defined in section 273.13,
subdivision 23, that is occupied and used as a homestead by its
owner, who must be a Minnesota resident, is an agricultural
homestead.
Dates for establishment of a homestead and homestead
treatment provided to particular types of property are as
provided in this section.
Property of a trustee, beneficiary, or grantor of a trust
is not disqualified from receiving homestead benefits if the
homestead requirements under this chapter are satisfied.
The assessor shall require proof, as provided in
subdivision 13, of the facts upon which classification as a
homestead may be determined. Notwithstanding any other law, the
assessor may at any time require a homestead application to be
filed in order to verify that any property classified as a
homestead continues to be eligible for homestead status.
Notwithstanding any other law to the contrary, the department of
revenue may, upon request from an assessor, verify whether an
individual who is requesting or receiving homestead
classification has filed a Minnesota income tax return as a
resident for the most recent taxable year for which the
information is available.
When there is a name change or a transfer of homestead
property, the assessor may reclassify the property in the next
assessment unless a homestead application is filed to verify
that the property continues to qualify for homestead
classification.
(b) For purposes of this section, homestead property shall
include property which is used for purposes of the homestead but
is separated from the homestead by a road, street, lot,
waterway, or other similar intervening property. The term "used
for purposes of the homestead" shall include but not be limited
to uses for gardens, garages, or other outbuildings commonly
associated with a homestead, but shall not include vacant land
held primarily for future development. In order to receive
homestead treatment for the noncontiguous property, the owner
shall must use the property for the purposes of the homestead,
and must apply for it to the assessor, both by July 1 of the
year when the treatment is initially sought the deadlines given
in subdivision 9. After initial qualification for the homestead
treatment, additional applications for subsequent years are not
required.
(c) Residential real estate that is occupied and used for
purposes of a homestead by a relative of the owner is a
homestead but only to the extent of the homestead treatment that
would be provided if the related owner occupied the property.
For purposes of this paragraph and paragraph (f), "relative"
means a parent, stepparent, child, stepchild, grandparent,
grandchild, brother, sister, uncle, or aunt. This relationship
may be by blood or marriage. Property that has been classified
as seasonal recreational residential property at any time during
which it has been owned by the current owner or spouse of the
current owner will not be reclassified as a homestead unless it
is occupied as a homestead by the owner; this prohibition also
applies to property that, in the absence of this paragraph,
would have been classified as seasonal recreational residential
property at the time when the residence was constructed.
Neither the related occupant nor the owner of the property may
claim a property tax refund under chapter 290A for a homestead
occupied by a relative. In the case of a residence located on
agricultural land, only the house, garage, and immediately
surrounding one acre of land shall be classified as a homestead
under this paragraph, except as provided in paragraph (d).
(d) Agricultural property that is occupied and used for
purposes of a homestead by a relative of the owner, is a
homestead, only to the extent of the homestead treatment that
would be provided if the related owner occupied the property,
and only if all of the following criteria are met:
(1) the relative who is occupying the agricultural property
is a son, daughter, father, or mother of the owner of the
agricultural property or a son or daughter of the spouse of the
owner of the agricultural property,
(2) the owner of the agricultural property must be a
Minnesota resident,
(3) the owner of the agricultural property must not receive
homestead treatment on any other agricultural property in
Minnesota, and
(4) the owner of the agricultural property is limited to
only one agricultural homestead per family under this paragraph.
Neither the related occupant nor the owner of the property
may claim a property tax refund under chapter 290A for a
homestead occupied by a relative qualifying under this
paragraph. For purposes of this paragraph, "agricultural
property" means the house, garage, other farm buildings and
structures, and agricultural land.
Application must be made to the assessor by the owner of
the agricultural property to receive homestead benefits under
this paragraph. The assessor may require the necessary proof
that the requirements under this paragraph have been met.
(e) In the case of property owned by a property owner who
is married, the assessor must not deny homestead treatment in
whole or in part if only one of the spouses occupies the
property and the other spouse is absent due to: (1) marriage
dissolution proceedings, (2) legal separation, (3) employment or
self-employment in another location, (4) residence in a nursing
home or boarding care facility, or (5) other personal
circumstances causing the spouses to live separately, not
including an intent to obtain two homestead classifications for
property tax purposes. To qualify under clause (3), the
spouse's place of employment or self-employment must be at least
50 miles distant from the other spouse's place of employment,
and the homesteads must be at least 50 miles distant from each
other. Homestead treatment, in whole or in part, shall not be
denied to the owner's spouse who previously occupied the
residence with the owner if the absence of the owner is due to
one of the exceptions provided in this paragraph.
(f) If an individual is purchasing property with the intent
of claiming it as a homestead and is required by the terms of
the financing agreement to have a relative shown on the deed as
a coowner, the assessor shall allow a full homestead
classification. This provision only applies to first-time
purchasers, whether married or single, or to a person who had
previously been married and is purchasing as a single individual
for the first time. The application for homestead benefits must
be on a form prescribed by the commissioner and must contain the
data necessary for the assessor to determine if full homestead
benefits are warranted.
Sec. 5. Minnesota Statutes 1996, section 273.124,
subdivision 13, is amended to read:
Subd. 13. [HOMESTEAD APPLICATION.] (a) A person who meets
the homestead requirements under subdivision 1 must file a
homestead application with the county assessor to initially
obtain homestead classification.
(b) On or before January 2, 1993, each county assessor
shall mail a homestead application to the owner of each parcel
of property within the county which was classified as homestead
for the 1992 assessment year. The format and contents of a
uniform homestead application shall be prescribed by the
commissioner of revenue. The commissioner shall consult with
the chairs of the house and senate tax committees on the
contents of the homestead application form. The application
must clearly inform the taxpayer that this application must be
signed by all owners who occupy the property or by the
qualifying relative and returned to the county assessor in order
for the property to continue receiving homestead treatment. The
envelope containing the homestead application shall clearly
identify its contents and alert the taxpayer of its necessary
immediate response.
(c) Every property owner applying for homestead
classification must furnish to the county assessor the social
security number of each occupant who is listed as an owner of
the property on the deed of record, the name and address of each
owner who does not occupy the property, and the name and social
security number of each owner's spouse who occupies the
property. The application must be signed by each owner who
occupies the property and by each owner's spouse who occupies
the property, or, in the case of property that qualifies as a
homestead under subdivision 1, paragraph (c), by the qualifying
relative.
If a property owner occupies a homestead, the property
owner's spouse may not claim another property as a homestead
unless the property owner and the property owner's spouse file
with the assessor an affidavit or other proof required by the
assessor stating that the property qualifies as a homestead
under subdivision 1, paragraph (e).
Owners or spouses occupying residences owned by their
spouses and previously occupied with the other spouse, either of
whom fail to include the other spouse's name and social security
number on the homestead application or provide the affidavits or
other proof requested, will be deemed to have elected to receive
only partial homestead treatment of their residence. The
remainder of the residence will be classified as nonhomestead
residential. When an owner or spouse's name and social security
number appear on homestead applications for two separate
residences and only one application is signed, the owner or
spouse will be deemed to have elected to homestead the residence
for which the application was signed.
The social security numbers or affidavits or other proofs
of the property owners and spouses are private data on
individuals as defined by section 13.02, subdivision 12, but,
notwithstanding that section, the private data may be disclosed
to the commissioner of revenue, or, for purposes of proceeding
under the revenue recapture act to recover personal property
taxes owing, to the county treasurer.
(d) If residential real estate is occupied and used for
purposes of a homestead by a relative of the owner and qualifies
for a homestead under subdivision 1, paragraph (c), in order for
the property to receive homestead status, a homestead
application must be filed with the assessor. The social
security number of each relative occupying the property and the
social security number of each owner who is related to an
occupant of the property shall be required on the homestead
application filed under this subdivision. If a different
relative of the owner subsequently occupies the property, the
owner of the property must notify the assessor within 30 days of
the change in occupancy. The social security number of a
relative occupying the property is private data on individuals
as defined by section 13.02, subdivision 12, but may be
disclosed to the commissioner of revenue.
(e) The homestead application shall also notify the
property owners that the application filed under this section
will not be mailed annually and that if the property is granted
homestead status for the 1993 assessment, or any assessment year
thereafter, that same property shall remain classified as
homestead until the property is sold or transferred to another
person, or the owners, the spouse of the owner, or the relatives
no longer use the property as their homestead. Upon the sale or
transfer of the homestead property, a certificate of value must
be timely filed with the county auditor as provided under
section 272.115. Failure to notify the assessor within 30 days
that the property has been sold, transferred, or that the owner,
the spouse of the owner, or the relative is no longer occupying
the property as a homestead, shall result in the penalty
provided under this subdivision and the property will lose its
current homestead status.
(f) If the homestead application is not returned within 30
days, the county will send a second application to the present
owners of record. The notice of proposed property taxes
prepared under section 275.065, subdivision 3, shall reflect the
property's classification. Beginning with assessment year 1993
for all properties, if a homestead application has not been
filed with the county by December 15, the assessor shall
classify the property as nonhomestead for the current assessment
year for taxes payable in the following year, provided that the
owner may be entitled to receive the homestead classification by
proper application under section 375.192.
(g) At the request of the commissioner, each county must
give the commissioner a list that includes the name and social
security number of each property owner and the property owner's
spouse occupying the property, or relative of a property owner,
applying for homestead classification under this subdivision.
The commissioner shall use the information provided on the lists
as appropriate under the law, including for the detection of
improper claims by owners, or relatives of owners, under chapter
290A.
(h) If the commissioner finds that a property owner may be
claiming a fraudulent homestead, the commissioner shall notify
the appropriate counties. Within 90 days of the notification,
the county assessor shall investigate to determine if the
homestead classification was properly claimed. If the property
owner does not qualify, the county assessor shall notify the
county auditor who will determine the amount of homestead
benefits that had been improperly allowed. For the purpose of
this section, "homestead benefits" means the tax reduction
resulting from the classification as a homestead under section
273.13, the taconite homestead credit under section 273.135, and
the supplemental homestead credit under section 273.1391.
The county auditor shall send a notice to the person who
owned the affected property at the time the homestead
application related to the improper homestead was filed,
demanding reimbursement of the homestead benefits plus a penalty
equal to 100 percent of the homestead benefits. The person
notified may appeal the county's determination by serving copies
of a petition for review with county officials as provided in
section 278.01 and filing proof of service as provided in
section 278.01 with the Minnesota tax court within 60 days of
the date of the notice from the county. Procedurally, the
appeal is governed by the provisions in chapter 271 which apply
to the appeal of a property tax assessment or levy, but without
requiring any prepayment of the amount in controversy. If the
amount of homestead benefits and penalty is not paid within 60
days, and if no appeal has been filed, the county auditor shall
certify the amount of taxes and penalty to the county
treasurer. The county treasurer will add interest to the unpaid
homestead benefits and penalty amounts at the rate provided for
delinquent personal property taxes in section 279.03 for real
property taxes becoming delinquent in the calendar year during
which the amount remains unpaid. Interest may be assessed for
the period beginning 60 days after demand for payment was
made until payment.
If the person notified is the current owner of the
property, the treasurer may add the total amount of benefits,
penalty, interest, and costs to the real estate ad valorem taxes
otherwise payable on the property in the following year by
including the amounts on the property tax statements under
section 276.04, subdivision 3. The amounts added under this
paragraph to the ad valorem taxes shall include interest accrued
through December 31 of the year preceding the taxes payable year
for which the amounts are first added. These amounts, when
added to the property tax statement, become subject to all the
laws for the enforcement of real or personal property taxes for
that year, and for any subsequent year.
If the person notified is not the current owner of the
property, the treasurer may collect the amounts due under the
revenue recapture act in chapter 270A, or use any of the powers
granted in sections 277.20 and 277.21 without exclusion, to
enforce payment of the benefits, penalty, interest, and costs,
as if those amounts were delinquent tax obligations of the
person who owned the property at the time the application
related to the improperly allowed homestead was filed. The
treasurer may relieve a prior owner of personal liability for
the benefits, penalty, interest, and costs, and instead extend
those amounts on the tax lists against the property for taxes
payable in the following year as provided in this paragraph to
the extent that the current owner agrees in writing. On all
demands, billings, property tax statements, and related
correspondence, the county must list and state separately the
amounts of homestead benefits, penalty, interest and costs being
demanded, billed or assessed.
(i) Any amount of homestead benefits recovered by the
county from the property owner shall be distributed to the
county, city or town, and school district where the property is
located in the same proportion that each taxing district's levy
was to the total of the three taxing districts' levy for the
current year. Any amount recovered attributable to taconite
homestead credit shall be transmitted to the St. Louis county
auditor to be deposited in the taconite property tax relief
account. Any amount recovered that is attributable to
supplemental homestead credit is to be transmitted to the
commissioner of revenue for deposit in the general fund of the
state treasury. The total amount of penalty collected must be
deposited in the county general fund.
(j) If a property owner has applied for more than one
homestead and the county assessors cannot determine which
property should be classified as homestead, the county assessors
will refer the information to the commissioner. The
commissioner shall make the determination and notify the
counties within 60 days.
(k) In addition to lists of homestead properties, the
commissioner may ask the counties to furnish lists of all
properties and the record owners.
Sec. 6. Minnesota Statutes 1996, section 273.1392, is
amended to read:
273.1392 [PAYMENT; SCHOOL DISTRICTS.]
The amounts of conservation tax credits under section
273.119; disaster or emergency reimbursement under section
273.123; attached machinery aid under section 273.138; homestead
credit under section 273.13; aids and credits under section
273.1398; wetlands reimbursement under section 275.295;
enterprise zone property credit payments under section 469.171;
and metropolitan agricultural preserve reduction under section
473H.10 for school districts, shall be certified to the
department of children, families, and learning by the department
of revenue. The amounts so certified shall be paid according to
section 124.195, subdivisions 6 and 10.
Sec. 7. Minnesota Statutes 1996, section 273.1398,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] (a) In this section, the
terms defined in this subdivision have the meanings given them.
(b) "Unique taxing jurisdiction" means the geographic area
subject to the same set of local tax rates.
(c) "Previous net tax capacity" means the product of the
appropriate net class rates for the year previous to the year in
which the aid is payable, and estimated market values for the
assessment two years prior to that in which aid is payable.
"Total previous net tax capacity" means the previous net tax
capacities for all property within the unique taxing
jurisdiction. The total previous net tax capacity shall be
reduced by the sum of (1) the unique taxing jurisdiction's
previous net tax capacity of commercial-industrial property as
defined in section 473F.02, subdivision 3, or 276A.02,
subdivision 3, multiplied by the ratio determined pursuant to
section 473F.08, subdivision 6, or 276A.06, subdivision 7, for
the municipality, as defined in section 473F.02, subdivision 8,
or 276A.06, subdivision 7, in which the unique taxing
jurisdiction is located, (2) the previous net tax capacity of
the captured value of tax increment financing districts as
defined in section 469.177, subdivision 2, and (3) the previous
net tax capacity of transmission lines deducted from a local
government's total net tax capacity under section 273.425.
Previous net tax capacity cannot be less than zero.
(d) "Equalized market values" are market values that have
been equalized by dividing the assessor's estimated market value
for the second year prior to that in which the aid is payable by
the assessment sales ratios determined by class in the
assessment sales ratio study conducted by the department of
revenue pursuant to section 124.2131 in the second year prior to
that in which the aid is payable. The equalized market values
shall equal the unequalized market values divided by the
assessment sales ratio.
(e) "Equalized school levies" means the amounts levied for:
(1) general education under section 124A.23, subdivision 2;
(2) supplemental revenue under section 124A.22, subdivision
8a;
(3) transition revenue under section 124A.22, subdivision
13c;
(4) basic transportation under section 124.226, subdivision
1; and
(5) referendum revenue under section 124A.03.
(f) "Current local tax rate" means the quotient derived by
dividing the taxes levied within a unique taxing jurisdiction
for taxes payable in the year prior to that for which aids are
being calculated by the total previous net tax capacity of the
unique taxing jurisdiction.
(g) For purposes of calculating and allocating homestead
and agricultural credit aid authorized pursuant to subdivision 2
and the disparity reduction aid authorized in subdivision 3,
"gross taxes levied on all properties," "gross taxes," or "taxes
levied" means the total net tax capacity based taxes levied on
all properties except that levied on the captured value of tax
increment districts as defined in section 469.177, subdivision
2, and that levied on the portion of commercial industrial
properties' assessed value or gross tax capacity, as defined in
section 473F.02, subdivision 3, subject to the areawide tax as
provided in section 473F.08, subdivision 6, in a unique taxing
jurisdiction. "Gross taxes" are before any reduction for
disparity reduction aid but "taxes levied" are after any
reduction for disparity reduction aid. Gross taxes levied or
taxes levied cannot be less than zero.
"Taxes levied" excludes equalized school levies.
(h) "Household adjustment factor" means the number of
households for the second most recent year preceding that in
which the aids are payable, for the year most recently
determined as of July 1 in the aid calculation year, divided by
the number of households for the third most recent year
immediately preceding the year for which the number of
households has most recently been determined as of July 1. The
household adjustment factor cannot be less than one.
(i) "Growth adjustment factor" means the household
adjustment factor in the case of counties. In the case of
cities, towns, school districts, and special taxing districts,
the growth adjustment factor equals one. The growth adjustment
factor cannot be less than one.
(j) "Homestead and agricultural credit base" means the
previous year's certified homestead and agricultural credit aid
determined under subdivision 2 less any permanent aid reduction
in the previous year to homestead and agricultural credit aid.
(k) "Net tax capacity adjustment" means (1) the tax base
differential defined in subdivision 1a, multiplied by (2) the
unique taxing jurisdiction's current local tax rate. The net
tax capacity adjustment cannot be less than zero.
(l) "Fiscal disparity adjustment" means a taxing
jurisdiction's fiscal disparity distribution levy under section
473F.08, subdivision 3, clause (a), or 276A.06, subdivision 3,
clause (a), for taxes payable in the year prior to that for
which aids are being calculated, multiplied by the ratio of the
tax base differential percent referenced in subdivision 1a for
the highest class rate for class 3 property for taxes payable in
the year prior to that for which aids are being calculated to
the highest class rate for class 3 property for taxes payable in
the second prior year to that for which aids are being
calculated. In the case of school districts, the fiscal
disparity distribution levy shall exclude that part of the levy
attributable to equalized school levies.
Sec. 8. Minnesota Statutes 1996, section 275.011,
subdivision 1, is amended to read:
Subdivision 1. The property tax levied for any purpose
under a special law that is not codified in Minnesota Statutes
or a city charter provision and that is subject to a mill rate
limitation imposed by the special law or city charter provision,
excluding levies subject to mill rate limitations that use
adjusted assessed values determined by the commissioner of
revenue under section 124.2131, must not exceed the following
amount for the years specified:
(a) for taxes payable in 1988, the product of the
applicable mill rate limitation imposed by special law or city
charter provision multiplied by the total assessed valuation of
all taxable property subject to the tax as adjusted by the
provisions of Minnesota Statutes 1986, sections 272.64; 273.13,
subdivision 7a; and 275.49;
(b) for taxes payable in 1989, the product of (1) the
property tax levy limitation for the taxes payable year 1988
determined under clause (a) multiplied by (2) an index for
market valuation changes equal to the assessment year 1988 total
market valuation of all taxable property subject to the tax
divided by the assessment year 1987 total market valuation of
all taxable property subject to the tax; and
(c) for taxes payable in 1990 and subsequent years, the
product of (1) the property tax levy limitation for the previous
year determined pursuant to this subdivision multiplied by (2)
an index for market valuation changes equal to the total market
valuation of all taxable property subject to the tax for the
current assessment year divided by the total market valuation of
all taxable property subject to the tax for the previous
assessment year.
For the purpose of determining the property tax levy
limitation for the taxes payable year 1988 and subsequent years
under this subdivision, "total market valuation" means the total
market valuation of all taxable property subject to the tax
without valuation adjustments for fiscal disparities (chapter
chapters 276A and 473F), tax increment financing (sections
469.174 to 469.179), and high voltage transmission
lines powerline credit (section 273.425), or wind energy
(sections 276.20 to 276.21) values.
Sec. 9. Minnesota Statutes 1996, section 275.065,
subdivision 3, is amended to read:
Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The
county auditor shall prepare and the county treasurer shall
deliver after November 10 and on or before November 24 each
year, by first class mail to each taxpayer at the address listed
on the county's current year's assessment roll, a notice of
proposed property taxes and, in the case of a town, final
property taxes.
(b) The commissioner of revenue shall prescribe the form of
the notice.
(c) The notice must inform taxpayers that it contains the
amount of property taxes each taxing authority other than a town
proposes to collect for taxes payable the following year and,
for a town, the amount of its final levy. It must clearly state
that each taxing authority, including regional library districts
established under section 134.201, and including the
metropolitan taxing districts as defined in paragraph (i), but
excluding all other special taxing districts and towns, will
hold a public meeting to receive public testimony on the
proposed budget and proposed or final property tax levy, or, in
case of a school district, on the current budget and proposed
property tax levy. It must clearly state the time and place of
each taxing authority's meeting and an address where comments
will be received by mail.
(d) The notice must state for each parcel:
(1) the market value of the property as determined under
section 273.11, and used for computing property taxes payable in
the following year and for taxes payable in the current year as
each appears in the records of the county assessor on November 1
of the current year; and, in the case of residential property,
whether the property is classified as homestead or
nonhomestead. The notice must clearly inform taxpayers of the
years to which the market values apply and that the values are
final values;
(2) by county, city or town, school district excess
referenda levy, remaining school district levy, regional library
district, if in existence, the total of the metropolitan special
taxing districts as defined in paragraph (i) and the sum of the
remaining special taxing districts, and as a total of the taxing
authorities, including all special taxing districts, the
proposed or, for a town, final net tax on the property for taxes
payable the following year and the actual tax for taxes payable
the current year. If a school district has certified under
section 124A.03, subdivision 2, that a referendum will be held
in the school district at the November general election, the
county auditor must note next to the school district's proposed
amount that a referendum is pending and that, if approved by the
voters, the tax amount may be higher than shown on the notice.
For the purposes of this subdivision, "school district excess
referenda levy" means school district taxes for operating
purposes approved at referendums, including those taxes based on
net tax capacity as well as those based on market value.
"School district excess referenda levy" does not include school
district taxes for capital expenditures approved at referendums
or school district taxes to pay for the debt service on bonds
approved at referenda. In the case of the city of Minneapolis,
the levy for the Minneapolis library board and the levy for
Minneapolis park and recreation shall be listed separately from
the remaining amount of the city's levy. In the case of a
parcel where tax increment or the fiscal disparities areawide
tax under chapter 276A or 473F applies, the proposed tax levy on
the captured value or the proposed tax levy on the tax capacity
subject to the areawide tax must each be stated separately and
not included in the sum of the special taxing districts; and
(3) the increase or decrease in the amounts in clause (2)
from taxes payable in the current year to proposed or, for a
town, final taxes payable the following year, expressed as a
dollar amount and as a percentage.
(e) The notice must clearly state that the proposed or
final taxes do not include the following:
(1) special assessments;
(2) levies approved by the voters after the date the
proposed taxes are certified, including bond referenda, school
district levy referenda, and levy limit increase referenda;
(3) amounts necessary to pay cleanup or other costs due to
a natural disaster occurring after the date the proposed taxes
are certified;
(4) amounts necessary to pay tort judgments against the
taxing authority that become final after the date the proposed
taxes are certified; and
(5) the contamination tax imposed on properties which
received market value reductions for contamination.
(f) Except as provided in subdivision 7, failure of the
county auditor to prepare or the county treasurer to deliver the
notice as required in this section does not invalidate the
proposed or final tax levy or the taxes payable pursuant to the
tax levy.
(g) If the notice the taxpayer receives under this section
lists the property as nonhomestead, and the homeowner provides
satisfactory documentation is provided to the county assessor
that by the applicable deadline, and the property is owned and
used as the owner's qualifies for the homestead classification
in that assessment year, the assessor shall reclassify the
property to homestead for taxes payable in the following year.
(h) In the case of class 4 residential property used as a
residence for lease or rental periods of 30 days or more, the
taxpayer must either:
(1) mail or deliver a copy of the notice of proposed
property taxes to each tenant, renter, or lessee; or
(2) post a copy of the notice in a conspicuous place on the
premises of the property.
The notice must be mailed or posted by the taxpayer by
November 27 or within three days of receipt of the notice,
whichever is later. A taxpayer may notify the county treasurer
of the address of the taxpayer, agent, caretaker, or manager of
the premises to which the notice must be mailed in order to
fulfill the requirements of this paragraph.
(i) For purposes of this subdivision, subdivisions 5a and
6, "metropolitan special taxing districts" means the following
taxing districts in the seven-county metropolitan area that levy
a property tax for any of the specified purposes listed below:
(1) metropolitan council under section 473.132, 473.167,
473.249, 473.325, 473.446, 473.521, 473.547, or 473.834;
(2) metropolitan airports commission under section 473.667,
473.671, or 473.672; and
(3) metropolitan mosquito control commission under section
473.711.
For purposes of this section, any levies made by the
regional rail authorities in the county of Anoka, Carver,
Dakota, Hennepin, Ramsey, Scott, or Washington under chapter
398A shall be included with the appropriate county's levy and
shall be discussed at that county's public hearing.
(j) For taxes levied in 1996, payable in 1997 only, in the
case of a statutory or home rule charter city or town that
exercises the local levy option provided in section 473.388,
subdivision 7, the notice of its proposed taxes may include a
statement of the amount by which its proposed tax increase for
taxes payable in 1997 is attributable to its exercise of that
option, together with a statement that the levy of the
metropolitan council was decreased by a similar amount because
of the exercise of that option.
Sec. 10. Minnesota Statutes 1996, section 275.295,
subdivision 3, is amended to read:
Subd. 3. [APPROPRIATION.] There is appropriated from the
general fund to the commissioner of revenue the amount necessary
to make the payments required in subdivision 2. There is
appropriated from the general fund to the commissioner of
children, families, and learning the amount necessary to make
the payments determined under subdivisions 1 and 2 for school
districts.
Sec. 11. Minnesota Statutes 1996, section 276A.01,
subdivision 7, is amended to read:
Subd. 7. [POPULATION.] "Population" means the most recent
estimate of the population of a municipality made by the state
demographer and filed with the commissioner of revenue as of
July 1 of the year in which a municipality's distribution net
tax capacity is calculated. The state demographer shall
annually estimate the population of each municipality and, in
the case of a municipality which is located partly within and
partly without the area, the proportion of the total which
resides within the area, and shall file the estimates with the
commissioner of revenue.
Sec. 12. Minnesota Statutes 1996, section 277.21,
subdivision 3, is amended to read:
Subd. 3. [MANNER OF EXECUTION AND SALE.] In making the
execution of the levy and in collecting the taxes due in a
manner consistent with the provisions of this chapter, the
county treasurer has all of the powers in chapter 550 and in any
other law, and the powers given to the commissioner of revenue
in sections 270.7001, 270.7002, and 290.92, subdivision 23, for
purposes of effecting an execution against property in this
state. The sale of property levied upon, and the time and
manner of redemption therefrom, must be consistent with
authority granted to the commissioner of revenue to collect
state taxes under sections 270.70 to 270.709. The seal of the
court, subscribed by the court administrator, as provided in
section 550.04, is not required. The levy for collection of
taxes may be made, whether or not a legal action for collection
of the taxes has been commenced.
Sec. 13. Minnesota Statutes 1996, section 287.22, is
amended to read:
287.22 [EXCEPTIONS.]
The tax imposed by section 287.21 shall not apply to:
A. Any executory contract for the sale of land under which
the vendee is entitled to or does take possession thereof, or
any assignment or cancellation thereof.
B. Any mortgage or any assignment, extension, partial
release, or satisfaction thereof.
C. Any will.
D. Any plat.
E. Any lease.
F. Any deed, instrument, or writing in which the United
States or any agency or instrumentality thereof is the grantor,
assignor, transferor, conveyor, grantee or assignee.
G. Deeds for cemetery lots.
H. Deeds of distribution by personal representatives.
I. Deeds to or from coowners partitioning undivided
interests in the same piece of property.
J. Any deed or other instrument of conveyance issued
pursuant to a land exchange under section 92.121 and related
laws.
K. A referee's or sheriff's certificate of sale in a
mortgage or lien foreclosure sale.
L. A referee's or sheriff's certificate of redemption from
a mortgage or lien foreclosure sale issued to the redeeming
mortgagor or lienee.
M. Any deed, instrument, or writing which grants, creates,
modifies, or cancels an easement.
Sec. 14. Minnesota Statutes 1996, section 414.033,
subdivision 7, is amended to read:
Subd. 7. [FILING; EFFECTIVE DATE; COPY, LEVIES.] Any
annexation ordinance provided for in this section must be filed
with the board, the township, the county auditor and the
secretary of state and is final on the date the ordinance is
approved by the board. A copy of the annexation ordinance must
be delivered immediately by the governing body of the
municipality to the appropriate county auditor or auditors. For
the purposes of taxation, if the annexation becomes effective on
or before August 1 of a levy year, the municipality may levy on
the annexed area beginning with that same levy year. If the
annexation becomes effective after August 1 of a levy year, the
town may continue to levy on the annexed area for that levy
year, and the municipality may not levy on the annexed area
until the following levy year.
Sec. 15. Minnesota Statutes 1996, section 414.033,
subdivision 12, is amended to read:
Subd. 12. [PROPERTY TAXES.] When a municipality annexes
land under subdivision 2, clause (2), (3), or (4), or
subdivision 2a, property taxes payable on the annexed land shall
continue to be paid to the affected town or towns for the year
in which the annexation becomes effective. If the annexation
becomes effective on or before August 1 of a levy year, the
municipality may levy on the annexed area beginning with that
same levy year. If the annexation becomes effective after
August 1 of a levy year, the town may continue to levy on the
annexed area for that levy year, and the municipality may not
levy on the annexed area until the following levy year. In the
first year following the year when the municipality could first
levy on the annexed area under this subdivision, and thereafter,
property taxes on the annexed land shall be paid to the
municipality. In the first year following the year the land was
annexed municipality could first levy on the annexed area, the
municipality shall make a cash payment to the affected town or
towns in an amount equal to 90 percent of the property taxes
paid in the year the land was annexed distributed to the town in
regard to the annexed area in the last year the property taxes
from the annexed area were payable to the town; in the second
year, an amount equal to 70 percent of the property taxes paid
in the year the land was annexed; in the third year, an amount
equal to 50 percent of the property taxes paid in the year the
land was annexed; in the fourth year, an amount equal to 30
percent of the property taxes paid in the year the land was
annexed; and in the fifth year, an amount equal to ten
percent of the property taxes paid in the year the land was
annexed. The municipality and the affected township may agree
to a different payment.
Sec. 16. Minnesota Statutes 1996, section 469.177,
subdivision 9, is amended to read:
Subd. 9. [DISTRIBUTIONS OF EXCESS TAXES ON CAPTURED NET
TAX CAPACITY.] (a) If the amount of tax paid on captured net tax
capacity exceeds the amount of tax increment, the county auditor
shall distribute the excess to the municipality, county, and
school district as follows: each governmental unit's share of
the excess equals
(1) the total amount of the excess for the tax increment
financing district, multiplied by
(2) a fraction, the numerator of which is the current local
tax rate of the governmental unit less the governmental unit's
local tax rate for the year the original local tax rate for the
district was certified (in no case may this amount be less than
zero) and the denominator of which is the sum of the numerators
for the municipality, county, and school district.
If the entire increase in the local tax rate is attributable to
a taxing district, other than the municipality, county, or
school district, then the excess must be distributed to the
municipality, county, and school district in proportion to their
respective local tax rates.
The school district's tax rate must be divided into the
portion of the tax rate attributable (1) to state equalized
levies, and (2) unequalized levies. As used in this
subdivision, "equalized levies" means the sum of the maximum
amounts that may be levied for: (i) general education under
section 124A.23, subdivision 2; (ii) supplemental revenue under
section 124A.22, subdivision 8a; (iii) capital expenditure
facilities revenue under section 124.243, subdivision 3; (iv)
capital expenditure equipment revenue under section 124.244,
subdivision 2; and (v) basic transportation under section
124.226, subdivision 1. "equalized school levies" which are
defined in section 273.1398, subdivision 1, for aids payable in
the year following the year in which the excess taxes on
captured net tax capacity are due and payable. Unequalized
levies mean the rest of the school district's levies. The
calculations under clause (2) must determine the amount of
excess taxes attributable to each portion of the school
district's tax rate. If one of the portions of the change in
the school district tax rate is less than zero and the combined
change is greater than zero, the combined rate must be used and
all the school district's share of excess taxes allocated to
that portion of the tax rate.
(b) The amounts distributed shall be deducted in computing
the levy limits of the taxing district for the succeeding
taxable year. In the case of a school district, only the
proportion of the excess taxes attributable to unequalized
levies that are subject to a fixed dollar amount levy limit
shall be deducted from the levy limit.
(c) In the case of distributions to a school district that
are attributable to state equalized levies, the county auditor
shall report amounts distributed to the commissioner of
children, families, and learning in the same manner as provided
for excess increments under section 469.176, subdivision 2, and
the distribution shall be deducted from the school district's
state aid payments.
Sec. 17. Minnesota Statutes 1996, section 473.388,
subdivision 7, is amended to read:
Subd. 7. [LOCAL LEVY OPTION.] (a) A statutory or home rule
charter city or town that is eligible for assistance under this
section, in lieu of receiving the assistance, may levy a tax for
payment of the operating and capital expenditures for transit
and other related activities and to provide for payment of
obligations issued by the municipality for such purposes,
provided that the tax must be sufficient to maintain the level
of transit service provided in the municipality in the previous
year.
(b) The transit tax revenues derived by the municipality
may not exceed:
(1) for the first transit levy year and any subsequent
transit levy year immediately following a year in which the
municipality declines to make the levy, the maximum available
local transit funds for the municipality for taxes payable in
the current year under section 473.446, calculated as if the
percentage of transit tax revenues for the municipality were 88
percent instead of 90 percent, and multiplied by the
municipality's market value adjustment ratio; and
(2) for taxes levied in any year that immediately follows a
year in which the municipality elects to levy under this
subdivision, the maximum transit tax that the municipality may
have levied in the previous year under this subdivision,
multiplied by the municipality's market value adjustment ratio.
The commissioner of revenue shall certify the
municipality's levy limitation under this subdivision to the
municipality by June 1 of the levy year. The tax must be
accumulated and kept in a separate fund to be known as the
"replacement transit fund."
(c) To enable the municipality to receive revenues
described in clauses (2) and (3) of the definition of "tax
revenues" in subdivision 4, that would otherwise be lost if the
municipality's transit tax levy was not treated as a successor
levy to that made by the council under section 473.446:
(1) in the first transit levy year and any subsequent
transit levy year immediately following a year in which the
municipality declined to make the levy, 88 percent of the
council's nondebt spread levy for the current taxes payable year
shall be treated as levied by the municipality, and not the
council, for purposes of section 473F.08, subdivision 3, for the
purpose of determining its local tax rate for the preceding
year; and
(2) 88 percent of the revenues described in clause (3) of
the definition of "tax revenues" in subdivision 4, payable in
the first transit levy year, or payable in any subsequent
transit levy year following a year in which a municipality
declined to make the levy, shall be permanently transferred from
the council to the municipality. If a municipality levies a tax
under this subdivision in one year, but declines to levy in a
subsequent year, the aid transferred under this clause shall be
transferred back to the council.
(d) Any transit taxes levied under this subdivision are not
subject to, or counted towards, any limit hereafter imposed by
law on the levy of taxes upon taxable property within any
municipality unless the law specifically includes the transit
tax.
(e) This subdivision is consistent with the transit
redesign plan. Eligible municipalities opting to levy the
transit tax under this subdivision shall continue to meet the
regional performance standards established by the council.
(f) Within the designated Americans with Disabilities Act
area, metro mobility remains the obligation of the state.
(g) For purposes of this subdivision, "transit levy year"
is any year in which the municipality elects to levy under this
subdivision.
(h) A municipality may not levy taxes under this
subdivision in any year unless it notifies the council and the
commissioner of revenue of its intent to levy before July 1 of
the levy year. The notification must include the amount of the
municipality's proposed transit tax for the current levy
year. After June 30 in the levy year, a municipality's decision
to levy or not levy taxes under this subdivision is irrevocable
for that levy year.
Sec. 18. Minnesota Statutes 1996, section 473F.02,
subdivision 7, is amended to read:
Subd. 7. [POPULATION.] "Population" means the most recent
estimate of the population of a municipality made by the
metropolitan council and filed with the commissioner of
revenue as of July 1 of the year in which a municipality's
distribution net tax capacity is calculated. The council shall
annually estimate the population of each municipality as of a
date which it determines and, in the case of a municipality
which is located partly within and partly without the area, the
proportion of the total which resides within the area, and shall
promptly thereafter file its estimates with the commissioner of
revenue.
Sec. 19. [EFFECTIVE DATE.]
Sections 1, 2, 4 to 7, 9 to 13, and 16 to 18 are effective
the day following final enactment. Sections 3 and 8 are
effective for determinations made in regard to taxes payable in
1996 and thereafter. Sections 14 and 15 are effective beginning
with annexations that become effective in 1996 and thereafter.
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 in 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 medical supplies distributor for sale, rent,
lease, or repair of medical supplies, appliances, and equipment.
Sec. 2. Minnesota Statutes 1996, section 295.50,
subdivision 4, is amended to read:
Subd. 4. [HEALTH CARE PROVIDER.] (a) "Health care
provider" means:
(1) a person whose health care occupation is required to be
licensed or registered by the state of Minnesota furnishing any
or all of the following goods or services directly to a patient
or consumer: medical, surgical, optical, visual, dental,
hearing, nursing services, drugs, medical supplies, medical
appliances, laboratory, diagnostic or therapeutic services, or
any goods and services not listed above that qualify for
reimbursement under the medical assistance program provided
under chapter 256B. For purposes of this clause, "directly to a
patient or consumer" includes goods and services provided in
connection with independent medical examinations under section
65B.56 or other examinations for purposes of litigation or
insurance claims;
(2) a staff model health plan company; or
(3) an ambulance service required to be licensed.
(b) Health care provider does not include
hospitals, medical supplies distributors, nursing homes licensed
under chapter 144A or licensed in any other jurisdiction,
pharmacies, surgical centers, bus and taxicab transportation, or
any other providers of transportation services other than
ambulance services required to be licensed, supervised living
facilities for persons with mental retardation or related
conditions, licensed under Minnesota Rules, parts 4665.0100 to
4665.9900, residential care homes licensed under chapter 144B,
board and lodging establishments providing only custodial
services that are licensed under chapter 157 and registered
under section 157.17 to provide supportive services or health
supervision services, adult foster homes as defined in Minnesota
Rules, part 9555.5105, day training and habilitation services
for adults with mental retardation and related conditions as
defined in section 252.41, subdivision 3, and boarding care
homes, as defined in Minnesota Rules, part 4655.0100.
Sec. 3. Minnesota Statutes 1996, section 295.50,
subdivision 7, is amended to read:
Subd. 7. [HOSPITAL.] "Hospital" means a hospital licensed
under chapter 144, or a hospital licensed by any other state or
province or territory of Canada jurisdiction.
Sec. 4. Minnesota Statutes 1996, section 295.50, is
amended by adding a subdivision to read:
Subd. 7a. [MEDICAL SUPPLIES DISTRIBUTOR.] A medical
supplies distributor is a person who sells, rents, leases, or
repairs medical supplies, appliances, and equipment.
Sec. 5. Minnesota Statutes 1996, section 295.50,
subdivision 13, is amended to read:
Subd. 13. [SURGICAL CENTER.] "Surgical center" is an
outpatient surgical center as defined in Minnesota Rules,
chapter 4675 or a similar facility located in any other state or
province or territory of Canada jurisdiction.
Sec. 6. Minnesota Statutes 1996, section 295.51,
subdivision 1, is amended to read:
Subdivision 1. [BUSINESS TRANSACTIONS IN MINNESOTA.] A
hospital, surgical center, pharmacy medical supplies
distributor, or health care provider is subject to tax under
sections 295.50 to 295.59 if it is "transacting business in
Minnesota." A hospital, surgical center, pharmacy medical
supplies distributor, or health care provider is transacting
business in Minnesota if it maintains contacts with or presence
in the state of Minnesota sufficient to permit taxation of gross
revenues received for patient services under the United States
Constitution.
Sec. 7. Minnesota Statutes 1996, section 295.52,
subdivision 1b, is amended to read:
Subd. 1b. [PHARMACY MEDICAL SUPPLIES DISTRIBUTOR TAX.] A
tax is imposed on each pharmacy medical supplies distributor
equal to two percent of its gross revenues.
Sec. 8. Minnesota Statutes 1996, section 295.53,
subdivision 1, is amended to read:
Subdivision 1. [EXEMPTIONS.] (a) The following payments
are excluded from the gross revenues subject to the hospital,
surgical center, or health care provider taxes under sections
295.50 to 295.57:
(1) payments received for services provided under the
Medicare program, including payments received from the
government, and organizations governed by sections 1833 and 1876
of title XVIII of the federal Social Security Act, United States
Code, title 42, section 1395, and enrollee deductibles,
coinsurance, and copayments, whether paid by the Medicare
enrollee or by a Medicare supplemental coverage as defined in
section 62A.011, subdivision 3, clause (10). Payments for
services not covered by Medicare are taxable;
(2) medical assistance payments including payments received
directly from the government or from a prepaid plan;
(3) payments received for home health care services;
(4) payments received from hospitals or surgical centers
for goods and services on which liability for tax is imposed
under section 295.52 or the source of funds for the payment is
exempt under clause (1), (2), (7), (8), or (10);
(5) payments received from health care providers for goods
and services on which liability for tax is imposed under this
chapter or the source of funds for the payment is exempt under
clause (1), (2), (7), (8), or (10);
(6) amounts paid for legend drugs, other than nutritional
products, to a wholesale drug distributor who is subject to tax
under section 295.52, subdivision 3, reduced by reimbursements
received for legend drugs under clauses (1), (2), (7), and (8);
(7) payments received under the general assistance medical
care program including payments received directly from the
government or from a prepaid plan;
(8) payments received for providing services under the
MinnesotaCare program including payments received directly from
the government or from a prepaid plan and enrollee deductibles,
coinsurance, and copayments. For purposes of this clause,
coinsurance means the portion of payment that the enrollee is
required to pay for the covered service;
(9) payments received by a health care provider or the
wholly owned subsidiary of a health care provider for care
provided outside Minnesota to a patient who is not domiciled in
Minnesota;
(10) payments received from the chemical dependency fund
under chapter 254B;
(11) payments received in the nature of charitable
donations that are not designated for providing patient services
to a specific individual or group;
(12) payments received for providing patient services
incurred through a formal program of health care research
conducted in conformity with federal regulations governing
research on human subjects. Payments received from patients or
from other persons paying on behalf of the patients are subject
to tax;
(13) payments received from any governmental agency for
services benefiting the public, not including payments made by
the government in its capacity as an employer or insurer;
(14) payments received for services provided by community
residential mental health facilities licensed under Minnesota
Rules, parts 9520.0500 to 9520.0690, community support programs
and family community support programs approved under Minnesota
Rules, parts 9535.1700 to 9535.1760, and community mental health
centers as defined in section 245.62, subdivision 2;
(15) government payments received by a regional treatment
center;
(16) payments received for hospice care services;
(17) payments received by a health care provider for
medical supplies, appliances, and equipment delivered outside of
Minnesota;
(18) payments received by a post-secondary educational
institution from student tuition, student activity fees, health
care service fees, government appropriations, donations, or
grants. Fee for service payments and payments for extended
coverage are taxable; and
(19) payments received for services provided by: assisted
living programs and congregate housing programs.
(b) Payments received by wholesale drug distributors for
prescription legend drugs sold directly to veterinarians or
veterinary bulk purchasing organizations are excluded from the
gross revenues subject to the wholesale drug distributor tax
under sections 295.50 to 295.59.
Sec. 9. Minnesota Statutes 1996, section 295.53,
subdivision 3, is amended to read:
Subd. 3. [SEPARATE STATEMENT OF TAX.] A hospital, surgical
center, pharmacy medical supplies distributor, or health care
provider must not state the tax obligation under section 295.52
in a deceptive or misleading manner. It must not separately
state tax obligations on bills provided to patients, consumers,
or other payers when the amount received for the services or
goods is not subject to tax.
Pharmacies that separately state the tax obligations on
bills provided to consumers or to other payers who purchase
legend drugs may state the tax obligation as two percent of the
wholesale price of the legend drugs. Pharmacies must not state
the tax obligation as two percent of the retail price.
Whenever the commissioner determines that a person has
engaged in any act or practice constituting a violation of this
subdivision, the commissioner may bring an action in the name of
the state in the district court of the appropriate county to
enjoin the act or practice and to enforce compliance with this
subdivision, or the commissioner may refer the matter to the
attorney general or the county attorney of the appropriate
county. Upon a proper showing, a permanent or temporary
injunction, restraining order, or other appropriate relief must
be granted.
Sec. 10. Minnesota Statutes 1996, section 295.53,
subdivision 5, is amended to read:
Subd. 5. [EXEMPTIONS FOR PHARMACIES MEDICAL SUPPLIES
DISTRIBUTORS.] (a) Pharmacies Medical supplies distributors may
exclude from their gross revenues subject to tax payments for
medical supplies, appliances, and devices equipment that are
exempt under subdivision 1, clauses (1), (2), (4), (5), (7),
(8), and (13).
(b) Pharmacies Medical supplies distributors may exclude
from their gross revenues subject to tax payments received for
medical supplies, appliances, and equipment delivered outside of
Minnesota.
Sec. 11. Minnesota Statutes 1996, section 295.54,
subdivision 1, is amended to read:
Subdivision 1. [TAXES PAID TO ANOTHER STATE.] A hospital,
surgical center, pharmacy medical supplies distributor, or
health care provider that has paid taxes to another state or
province or territory of Canada jurisdiction measured by gross
revenues and is subject to tax under sections 295.52 to 295.59
on the same gross revenues is entitled to a credit for the tax
legally due and paid to another state or province or territory
of Canada jurisdiction to the extent of the lesser of (1) the
tax actually paid to the other state or province or territory of
Canada jurisdiction, or (2) the amount of tax imposed by
Minnesota on the gross revenues subject to tax in the other
taxing jurisdictions.
Sec. 12. Minnesota Statutes 1996, section 295.582, is
amended to read:
295.582 [AUTHORITY.]
(a) A hospital, surgical center, pharmacy medical supplies
distributor, or health care provider that is subject to a tax
under section 295.52, or a pharmacy that has paid additional
expense transferred under this section by a wholesale drug
distributor, may transfer additional expense generated by
section 295.52 obligations on to all third-party contracts for
the purchase of health care services on behalf of a patient or
consumer. The additional expense transferred to the third-party
purchaser must not exceed two percent of the gross revenues
received under the third-party contract, and two percent of
copayments and deductibles paid by the individual patient or
consumer. The expense must not be generated on revenues derived
from payments that are excluded from the tax under section
295.53. All third-party purchasers of health care services
including, but not limited to, third-party purchasers regulated
under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79,
or 79A, or under section 471.61 or 471.617, must pay the
transferred expense in addition to any payments due under
existing contracts with the hospital, surgical center, pharmacy
medical supplies distributor, or health care provider, to the
extent allowed under federal law. A third-party purchaser of
health care services includes, but is not limited to, a health
carrier, integrated service network, or community integrated
service network that pays for health care services on behalf of
patients or that reimburses, indemnifies, compensates, or
otherwise insures patients for health care services. A
third-party purchaser shall comply with this section regardless
of whether the third-party purchaser is a for-profit,
not-for-profit, or nonprofit entity. A wholesale drug
distributor may transfer additional expense generated by section
295.52 obligations to entities that purchase from the
wholesaler, and the entities must pay the additional expense.
Nothing in this section limits the ability of a hospital,
surgical center, pharmacy medical supplies distributor,
wholesale drug distributor, or health care provider to recover
all or part of the section 295.52 obligation by other methods,
including increasing fees or charges.
(b) Each third-party purchaser regulated under any chapter
cited in paragraph (a) shall include with its annual renewal for
certification of authority or licensure documentation indicating
compliance with paragraph (a). If the commissioner responsible
for regulating the third-party purchaser finds at any time that
the third-party purchaser has not complied with paragraph (a),
the commissioner may by order fine or censure the third-party
purchaser or revoke or suspend the certificate of authority or
license of the third-party purchaser to do business in this
state. The third-party purchaser may appeal the commissioner's
order through a contested case hearing in accordance with
chapter 14.
Sec. 13. [EFFECTIVE DATE.]
Sections 1 to 12 are effective the day following final
enactment.
Presented to the governor April 14, 1997
Signed by the governor April 15, 1997, 2:05 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes