Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 2005, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 151-H.F.No. 2228
An act relating to financing and operation of
government in this state; recodifying and clarifying
the powers of the commissioner of revenue; changing
income, corporate franchise, withholding, estate,
property, sales and use, mortgage registry, motor
fuels, gambling, cigarette and tobacco products,
liquor, insurance, and other taxes and tax-related
provisions; making technical, clarifying, collection,
enforcement, refund, and administrative changes to
certain taxes and tax-related provisions,
tax-forfeited lands, revenue recapture, unfair
cigarette sales, state debt collection, sustainable
forest incentive programs, border city development,
property tax refund, and metropolitan solid waste
landfill fee; changing local government aids and
credits; providing for determination of population for
certain purposes; changing property tax exemptions,
homesteads, assessment, valuation, classification,
levies, deferral, review and equalization, appeals,
notices and statements, allocation, and distribution
provisions; changing provisions relating to
manufactured home certificates of title; providing for
compliance with streamlined sales tax agreement;
authorizing charges for certain emergency services;
regulating tax preparers; prohibiting purchases of
tax-forfeited lands by certain local officials;
providing for data classification and exchange of
data; providing and imposing powers and duties on the
commissioner of revenue and on certain political
subdivisions and officials; changing town spending and
taxing provisions; changing and imposing penalties;
reducing certain court appropriations; transferring
funds; recodifying a criminal penalty; appropriating
money; amending Minnesota Statutes 2004, sections
4A.02; 16D.08, subdivision 2; 16D.10; 115B.49,
subdivision 4; 168A.05, subdivision 1a; 239.785,
subdivision 4; 256.9657, subdivision 7; 256.9792,
subdivision 8; 270.11, subdivision 2; 270.16,
subdivision 2; 270.30, subdivisions 1, 5, 6, 8, by
adding subdivisions; 270.65; 270.67, subdivision 4;
270.69, subdivision 4; 270A.03, subdivision 5; 272.01,
subdivision 2; 272.02, subdivisions 1a, 47, 53, 56, by
adding subdivisions; 272.0211, subdivisions 1, 2;
272.029, subdivisions 4, 6; 273.11, subdivisions 5, 8;
273.124, subdivisions 3, 6, 8, 13, 14, 21; 273.13,
subdivision 25; 273.1315; 273.1384, subdivision 1;
273.19, subdivision 1a; 273.372; 274.014, subdivisions
2, 3; 274.14; 275.07, subdivisions 1, 4; 276.112;
276A.01, subdivision 7; 282.016; 282.08; 282.15;
282.21; 282.224; 282.301; 287.04; 287.37; 289A.08,
subdivisions 3, 16; 289A.18, subdivision 1; 289A.19,
subdivision 4; 289A.31, subdivision 2; 289A.35;
289A.37, subdivision 5; 289A.38, subdivisions 6, 7, by
adding a subdivision; 289A.39, subdivision 1; 289A.40,
subdivision 2, by adding subdivisions; 289A.42,
subdivision 1; 289A.50, subdivision 1a; 289A.60,
subdivisions 2a, 6, 11, 12, 13; 290.01, subdivisions
7b, 19a, 19b, 19c; 290.06, subdivision 22; 290.0671,
subdivision 1a; 290.0674, subdivision 1; 290.92,
subdivisions 1, 4b; 290A.07, by adding a subdivision;
290B.05, subdivision 3; 290C.05; 290C.10; 291.005,
subdivision 1; 291.03, subdivision 1; 295.57,
subdivision 1; 295.60, subdivisions 3, 7; 296A.22, by
adding a subdivision; 297A.61, subdivisions 3, 4;
297A.64, subdivisions 3, 4; 297A.668, subdivisions 1,
5; 297A.67, subdivisions 2, 7, 9; 297A.68,
subdivisions 2, 5, 28, 39; 297A.71, subdivision 12;
297A.75, subdivision 1; 297A.87, subdivisions 2, 3;
297A.99, subdivision 4; 297B.11; 297E.01, subdivisions
5, 7, by adding subdivisions; 297E.06, subdivision 2;
297E.07; 297F.08, subdivision 12, by adding a
subdivision; 297F.09, subdivisions 1, 2; 297F.14,
subdivision 4; 297G.09, by adding a subdivision;
297H.10, subdivision 1; 297I.01, by adding a
subdivision; 297I.05, subdivision 5; 297I.10, by
adding a subdivision; 298.24, subdivision 1; 325D.33,
subdivision 6; 365.43, subdivision 1; 365.431;
366.011; 366.012; 373.45, subdivision 7; 469.1735,
subdivision 3; 473.843, subdivision 5; 473F.02,
subdivision 7; 477A.011, subdivisions 3, 34, 36, as
amended, 38; 477A.0124, subdivisions 2, 4; 477A.03,
subdivision 2b; Laws 1998, chapter 389, article 3,
section 42, subdivision 2, as amended; Laws 2001 First
Special Session chapter 5, article 3, section 8; Laws
2003, chapter 127, article 5, sections 27; 28; Laws
2003 First Special Session chapter 21, article 5,
section 13; Laws 2003 First Special Session, chapter
21, article 6, section 9; Laws 2005, chapter 43,
section 1; proposing coding for new law in Minnesota
Statutes, chapters 270; 290C; 473; proposing coding
for new law as Minnesota Statutes, chapter 270C;
repealing Minnesota Statutes 2004, sections 270.01;
270.02; 270.021; 270.022; 270.04; 270.05; 270.052;
270.058; 270.059; 270.06; 270.0601; 270.0602;
270.0603; 270.0604; 270.0605; 270.061; 270.062;
270.063; 270.064; 270.065; 270.066; 270.0665; 270.067;
270.068; 270.0681; 270.0682; 270.069; 270.07; 270.084;
270.09; 270.10; 270.101; 270.102; 270.11, subdivisions
2, 3, 4, 5, 6, 7; 270.13; 270.14; 270.15; 270.16;
270.17; 270.18; 270.19; 270.20; 270.21; 270.22;
270.23; 270.24; 270.25; 270.26; 270.27; 270.271;
270.272; 270.273; 270.274; 270.275; 270.276; 270.277;
270.278; 270.30; 270.485; 270.494; 270.60; 270.65;
270.652; 270.66; 270.67; 270.68; 270.69; 270.691;
270.70; 270.7001; 270.7002; 270.701; 270.702; 270.703;
270.704; 270.705; 270.706; 270.707; 270.708; 270.709;
270.71; 270.72; 270.721; 270.73; 270.74; 270.75;
270.76; 270.771; 270.78; 270.79; 270.85; 270.88;
273.19, subdivision 5; 273.37, subdivision 3; 274.05;
275.15; 275.61, subdivision 2; 283.07; 287.39;
289A.07; 289A.13; 289A.31, subdivisions 3, 4, 6;
289A.36; 289A.37, subdivisions 1, 3, 4, 5; 289A.38,
subdivision 13; 289A.43; 289A.65; 290.48, subdivisions
3, 4; 290.92, subdivisions 6b, 22, 23; 290.97;
296A.20; 296A.201; 296A.25; 297A.86; 297A.93; 297D.14;
297E.08; 297E.09; 297E.12, subdivision 10; 297E.15;
297F.15, subdivisions 1, 2, 3, 4, 5, 6, 7, 8; 297F.16;
297F.22; 297G.14, subdivisions 1, 2, 3, 4, 5, 6, 7, 8;
297G.15; 297G.21; 297I.45; 297I.50; 297I.55; 297I.95;
Laws 1975, chapter 287, section 5; Laws 1998, chapter
389, article 3, section 41; Laws 2003, chapter 127,
article 9, section 9, subdivision 4; Minnesota Rules,
parts 8093.2000; 8093.3000; 8130.0110, subpart 4;
8130.0200, subparts 5, 6; 8130.0400, subpart 9;
8130.1200, subparts 5, 6; 8130.2900; 8130.3100,
subpart 1; 8130.4000, subparts 1, 2; 8130.4200,
subpart 1; 8130.4400, subpart 3; 8130.5200; 8130.5600,
subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 5;
8130.8800, subpart 4.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
RECODIFICATION
COMMISSIONER GENERAL POWERS
Section 1. [270C.01] [DEFINITIONS.]
Subdivision 1. [APPLICABILITY.] For purposes of this
chapter only, the following words, terms, and phrases have the
meanings given them in this section unless the language or
context clearly indicates that a different meaning is intended.
Subd. 2. [COMMISSIONER.] "Commissioner" means the
commissioner of revenue or a person to whom the commissioner has
delegated functions.
Subd. 3. [DEPARTMENT.] "Department" means the Department
of Revenue.
Subd. 4. [ELECTRONIC MEANS; ELECTRONICALLY.] "Electronic
means" and "electronically" mean a method that is electronic, as
defined in section 325L.02, paragraph (e), and that is
prescribed by the commissioner.
Subd. 5. [LAW ADMINISTERED BY THE COMMISSIONER.] "Law
administered by the commissioner" means a law or rule that vests
or imposes a power, duty, responsibility, or authority in the
commissioner, except the following laws: (1) the property tax
laws, and (2) Minnesota Statutes, chapter 16D.
Subd. 6. [PERSON.] "Person" means an individual, trust,
estate, fiduciary, partnership, company, corporation, limited
liability company, association, governmental unit or agency,
public or private organization of any kind, or other legal
entity.
Subd. 7. [PROPERTY TAX LAWS.] "Property tax laws" means
all laws and rules related to the administration of the tax on
property referred to in section 272.01, subdivision 1, and all
laws related to the administration of the tax on wind energy
production imposed under section 272.029, subdivision 1.
Subd. 8. [RETURN.] "Return" means a return, information
return, or report, required by a law administered by the
commissioner.
Subd. 9. [STATE REVENUE LAWS.] "State revenue laws" means
all laws administered by the commissioner and the property tax
laws.
Subd. 10. [TAX.] "Tax" means a tax or fee imposed by a law
administered by the commissioner.
Subd. 11. [TAXPAYER.] "Taxpayer" means a person subject
to, or liable for, a tax or fee imposed by a law administered by
the commissioner; a person required to file a return,
information return, or report, with respect to, or to pay, or
withhold or collect and remit, a tax or fee imposed by a law
administered by the commissioner; a person required to obtain a
license or a permit under a law administered by the
commissioner; or a person required to keep records regarding a
tax or fee imposed by a law administered by the commissioner.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 2. [270C.02] [DEPARTMENT OF REVENUE; COMMISSIONER.]
Subdivision 1. [COMMISSIONER; SUPERVISION OF DEPARTMENT
AND APPOINTMENT.] The Department of Revenue is under the
supervision and control of the commissioner. The commissioner
shall be appointed by the governor under the provisions of
section 15.06. The commissioner shall be selected on the basis
of ability and experience in the field of tax administration and
without regard to political affiliations. [270.01; 270.02,
subd. 8]
Subd. 2. [POWER TO APPOINT STAFF.] (a) The commissioner
may organize the department as the commissioner deems necessary,
and appoint one deputy commissioner, a department secretary,
directors of divisions, and such other officers, employees, and
agents, as the commissioner deems necessary to carry out the
duties, responsibilities, and authority entrusted to the
commissioner. The commissioner may define the duties of such
officers, employees, and agents, and delegate to them any of the
commissioner's powers or duties, subject to the commissioner's
control and under such conditions as the commissioner may
prescribe. Appointments to exercise delegated power to sign
documents which require the signature of the commissioner or a
delegate by law shall be by written order filed with the
secretary of state. [270.02, subd. 3]
(b) The commissioner may appoint agents as the commissioner
considers necessary to make examinations and determinations.
The agents have the rights and powers conferred on the
commissioner to subpoena, examine, and copy books, records,
papers, or memoranda, subpoena witnesses, administer oaths and
affirmations, and take testimony. [270.06, clause (17)]
Subd. 3. [SALARIES.] The commissioner shall appoint and
employ additional employees and other agents, purchase supplies
or materials, or incur other expenditures in the administration
and enforcement of state revenue laws as considered necessary.
The salaries of all agents and employees provided for in this
chapter shall be fixed by the appointing authority, subject to
the approval of the commissioner of employee relations.
[270.06, clause (18)]
Subd. 4. [OFFICE AND SUPPLIES FURNISHED; EXPENSES.] The
commissioner shall be provided with suitable and necessary
office furniture, supplies, stationery, books, periodicals,
newspapers, maps, and financial and commercial reports; and all
necessary expenses therefor shall be audited and paid as other
expenses are audited and paid. The actual necessary expenses of
the commissioner, the commissioner's employees and agents, and
such experts and assistants as may be employed by the
commissioner while traveling on the business of the department,
shall be paid by the state. The expenditures must be sworn to
by the party who incurred the expense and approved by the
commissioner. [270.04]
Subd. 5. [FILING OFFICERS.] The commissioner is the filing
officer and custodian of the books, files, and records of the
department. The commissioner may certify copies of the books,
files, and records in the custody of the commissioner for all
purposes in the same manner as other custodians of public
records. The commissioner may authorize other employees of the
department to certify books, files, and records in the custody
of the commissioner. The authorization must be made by a
written order stating the documents that may be certified and
must be filed with the secretary of state. [270.022]
Subd. 6. [DEPARTMENT SEAL.] The department shall have a
seal engraved with the words, "State of Minnesota, Department of
Revenue." Such seal may be used to authenticate the official
acts of the commissioner or any other employees of the
department, but the failure to use the seal shall not invalidate
any such acts. Duplicate seals may be provided for the use of
directors of divisions or other employees of the department.
[270.02, subd. 4]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 3. [270C.03] [POWERS AND DUTIES.]
Subdivision 1. [POWERS AND DUTIES.] The commissioner shall
have and exercise the following powers and duties:
(1) administer and enforce the assessment and collection of
taxes; [270.06, clause (14)]
(2) make determinations, corrections, and assessments with
respect to taxes, including interest, additions to taxes, and
assessable penalties; [289A.35, first sentence]
(3) use statistical or other sampling techniques consistent
with generally accepted auditing standards in examining returns
or records and making assessments; [289A.35, last sentence]
(4) investigate the tax laws of other states and countries,
and formulate and submit to the legislature such legislation as
the commissioner may deem expedient to prevent evasions of state
revenue laws and to secure just and equal taxation and
improvement in the system of state revenue laws; [270.06, clause
(10)]
(5) consult and confer with the governor upon the subject
of taxation, the administration of the laws in regard thereto,
and the progress of the work of the department, and furnish the
governor, from time to time, such assistance and information as
the governor may require relating to tax matters; [270.06,
clause (11)]
(6) execute and administer any agreement with the secretary
of the treasury of the United States or a representative of
another state regarding the exchange of information and
administration of the state revenue laws; [270.06, clause (19)]
(7) require town, city, county, and other public officers
to report information as to the collection of taxes received
from licenses and other sources, and such other information as
may be needful in the work of the commissioner, in such form as
the commissioner may prescribe; [270.06, clause (5)]
(8) authorize the use of unmarked motor vehicles to conduct
seizures or criminal investigations pursuant to the
commissioner's authority; and [270.06, clause (20)]
(9) exercise other powers and authority and perform other
duties required of or imposed upon the commissioner by law.
[270.06, clause (21)]
Subd. 2. [MISSION; EFFICIENCY.] It is part of the
department's mission that within the department's resources the
commissioner shall endeavor to:
(1) prevent the waste or unnecessary spending of public
money;
(2) use innovative fiscal and human resource practices to
manage the state's resources and operate the department as
efficiently as possible;
(3) coordinate the department's activities wherever
appropriate with the activities of other governmental agencies;
(4) use technology where appropriate to increase agency
productivity, improve customer service, increase public access
to information about government, and increase public
participation in the business of government;
(5) utilize constructive and cooperative labor-management
practices to the extent otherwise required by chapters 43A and
179A;
(6) report to the legislature on the performance of agency
operations and the accomplishment of agency goals in the
agency's biennial budget according to section 16A.10,
subdivision 1; and
(7) recommend to the legislature appropriate changes in law
necessary to carry out the mission and improve the performance
of the department. [270.02, subd. 3a]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 4. [270C.04] [USE OF INFORMATION.]
Notwithstanding the provisions of any other law, the
commissioner may use any and all information in the
commissioner's possession, or to which the commissioner has
access, to insure equal and consistent application and
enforcement of all state revenue laws. This section shall not
be construed as granting to the commissioner any power to
release any information outside the department. [270.065]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 5. [270C.05] [ACCESS TO CRIMINAL JUSTICE DATA.]
The commissioner may enter into an agreement with the
commissioner of public safety to allow designated employees of
the Department of Revenue to have access to the criminal justice
data communications network provided in section 299C.46. For
purposes of that section, the criminal investigation unit of the
Department of Revenue is considered a criminal justice agency.
[270.062]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 6. [270C.055] [CRIMINAL INVESTIGATIONS, REFERRAL, AND
INFORMATION DISCLOSURE.]
Subdivision 1. [REQUESTING ASSISTANCE.] If the
commissioner has reason to believe that a criminal violation of
the state revenue laws or chapter 349 has occurred, the
commissioner may request the attorney general or the prosecuting
authority of any county to assist in a criminal investigation.
[270.064]
Subd. 2. [REFERRAL FOR PROSECUTION.] If a proceeding is
referred to a prosecuting authority, and the prosecuting
authority fails to issue or cause to be issued an indictment or
criminal complaint within 30 days after the referral by the
commissioner, the attorney general may conduct the proceeding.
[270.68, subd. 1, paragraph (c)]
Subd. 3. [AUTHORITY TO DISCLOSE INFORMATION.] The
commissioner may disclose information to the prosecuting
authority and attorney general pursuant to section 270B.05,
subdivision 2, clause (1). [270.0647]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 7. [270C.06] [RULEMAKING AUTHORITY.]
The commissioner shall, from time to time, make, publish,
and distribute rules for the administration and enforcement of
state revenue laws. The rules have the force of law. [270.06,
clause (14)]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 8. [270C.07] [REVENUE NOTICES.]
Subdivision 1. [AUTHORITY.] The commissioner may make,
adopt, and publish interpretive revenue notices. A "revenue
notice" is a policy statement that has been published pursuant
to subdivision 5 and that provides interpretation, details, or
supplementary information concerning the application of state
revenue laws or rules promulgated by the commissioner. Revenue
notices are published for the information and guidance of
taxpayers, local government officials, the department, and
others concerned.
Subd. 2. [EFFECT.] Revenue notices do not have the force
and effect of law and have no precedential effect, but may be
relied on by taxpayers until revoked or modified. A notice may
be expressly revoked or modified by the commissioner, by the
issuance of a revenue notice, but may not be revoked or modified
retroactively to the detriment of the taxpayers. A change in
the law or an interpretation of the law occurring after the
revenue notice is issued, whether in the form of a statute,
court decision, administrative rule, or revenue notice, results
in revocation or modification of the notice to the extent that
the change affects the notice.
Subd. 3. [RETROACTIVITY.] Revenue notices are generally
interpretive of existing law and therefore are retroactive to
the effective date of the applicable law provision unless
otherwise stated in the notice.
Subd. 4. [ISSUANCE.] The issuance of revenue notices is at
the discretion of the commissioner. The commissioner shall
establish procedures governing the issuance of revenue notices
and tax information bulletins. At least one week before
publication of a revenue notice in the State Register, the
commissioner shall provide a copy of the notice to the chairs of
the Taxes Committee of the house of representatives and the
Taxes and Tax Laws Committee of the senate.
Subd. 5. [PUBLICATION.] The commissioner shall publish the
revenue notices in the State Register and in any other manner
that makes them accessible to the general public. The
commissioner may charge a reasonable fee for publications.
[270.0604]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 9. [270C.08] [TAX INFORMATION BULLETINS.]
The commissioner may issue tax information bulletins. "Tax
information bulletins" are informational guides to enable
taxpayers and local governmental officials to become more
familiar with state revenue laws and their rights and
responsibilities under these laws. Nothing contained in the tax
information bulletins supersedes, alters, or otherwise changes
any provisions of the state revenue laws, administrative rules,
court decisions, or revenue notices. [270.0605]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 10. [270C.09] [OPINION OF ATTORNEY GENERAL; EFFECT.]
The commissioner may in writing request the opinion of the
attorney general upon any matter regarding the state revenue
laws. Any written opinion of the attorney general upon any such
matter rendered in response to such request shall have the force
and effect of law unless and until overruled by a decision of
the Tax Court or a court of competent jurisdiction. [270.09]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 11. [270C.10] [EX-EMPLOYEES NOT TO REPRESENT
TAXPAYERS; PENALTY.]
An employee of the department may not, for a period of one
year after the employee's employment has terminated, act as
counsel, attorney, or agent for a taxpayer in connection with a
claim or proceeding pending in the department. An employee of
the department may not act as counsel, attorney, or agent for a
taxpayer at any time after termination of employment in
connection with a claim or proceeding of which the person has
knowledge that was acquired during the term of employment. A
violation of this section is a gross misdemeanor. [270.021]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 12. [270C.105] [BASIS FOR EVALUATION OF DEPARTMENT OF
REVENUE EMPLOYEES.]
The department must not use tax enforcement results to
impose individual revenue quotas with respect to employees or
their immediate supervisors who are directly involved in
assessment or collection activities. The department may,
however, use individual performance with regard to number of
cases completed and, in the case of collections employees,
dollars collected, as factors in evaluating an employee and not
be considered as failing to comply with this section.
[270.0602]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 13. [270C.11] [TAX EXPENDITURE BUDGET.]
Subdivision 1. [STATEMENT OF PURPOSE.] State governmental
policy objectives are sought to be achieved both by direct
expenditure of governmental funds and by the granting of special
and selective tax relief or tax expenditures. Both direct
expenditures of governmental funds and tax expenditures have an
effect on the ability of the state and local governments to
lower tax rates or to increase expenditures. As a result, tax
expenditures should receive a regular and comprehensive review
by the legislature as to (1) their total cost, (2) their
effectiveness in achieving their objectives, (3) their effect on
the fairness and equity of the distribution of the tax burden,
and (4) the public and private cost of administering tax
expenditure financed programs. This section is intended to
facilitate a regular review of the state and local tax
expenditure budget by the legislature by providing for the
preparation of a regular biennial tax expenditure budget.
Subd. 2. [PREPARATION; SUBMISSION.] The commissioner shall
prepare a tax expenditure budget for the state. The tax
expenditure budget report shall be submitted to the legislature
by February 1 of each even-numbered year.
Subd. 3. [PERIOD COVERED.] The report shall include
estimates of annual tax expenditures for, at a minimum, a
three-year period including the two-year period covered in the
governor's budget submitted in the preceding January pursuant to
section 16A.11.
Subd. 4. [CONTENTS.] The report shall detail for each tax
expenditure item the amount of tax revenue foregone, a citation
of the statutory or other legal authority for the expenditure,
and the year in which it was enacted or the tax year in which it
became effective. The report may contain additional information
which the commissioner considers relevant to the legislature's
consideration and review of individual tax expenditure items.
This may include, but is not limited to, statements of the
intended purpose of the tax expenditure, analysis of whether the
expenditure is achieving that objective, and the effect of the
expenditure device on the distribution of the tax burden and
administration of the tax system.
Subd. 5. [REVENUE ESTIMATES; LEGISLATIVE BILLS.] Upon
reasonable notice from the chair of the house or senate tax
committee that a bill is scheduled for hearing, the commissioner
shall prepare an estimate of the effect on the state's tax
revenues which would result from the passage of a legislative
bill establishing, extending, or restricting a tax expenditure.
These revenue estimates shall contain the same information as
provided in subdivision 4 for expenditure items contained in the
tax expenditure budget, as appropriate.
Subd. 6. [DEFINITIONS.] For purposes of this section, the
following terms have the meanings given:
(1) "tax expenditure" means a tax provision which provides
a gross income definition, deduction, exemption, credit, or rate
for certain persons, types of income, transactions, or property
that results in reduced tax revenue; and
(2) "tax" means any tax of statewide application or any tax
authorized by state law to be levied by local governments
generally. It does not include a special local tax levied
pursuant to special law or to a special local tax levied
pursuant to general authority that is no longer applicable to
local governments generally. [270.067]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 14. [270C.12] [TAX INFORMATION SAMPLE DATA.]
Subdivision 1. [PREPARATION OF SAMPLES.] The commissioner
shall prepare microdata samples of income tax returns and other
information useful for purposes of:
(1) estimating state revenues;
(2) simulating the effect of changes or proposed changes in
state and federal tax law on the amount of state revenues; and
(3) analyzing the incidence of present or proposed taxes.
Subd. 2. [COORDINATING COMMITTEE.] A coordinating
committee is established to oversee and coordinate preparation
of the microdata samples. The committee consists of:
(1) the director of the Research Division of the department
who shall serve as chair of the committee;
(2) the state economist;
(3) the chair of the Committee on Taxes of the house of
representatives or the chair's designee; and
(4) the chair of the Committee on Taxes and Tax Laws of the
senate or the chair's designee. The committee shall consider
the analysis needs and use of the microdata samples by the
finance and revenue departments and the legislature in designing
and preparing the samples, including the type of data to be
included, the structure of the samples, size of the samples, and
other relevant factors.
Subd. 3. [CONTENTS OF SAMPLES.] The samples must consist
of information derived from a random sample of federal and
Minnesota individual income tax returns. The samples prepared
in odd numbered years must be augmented by additional
information from other sources as the coordinating committee
determines is feasible and appropriate. The coordinating
committee shall consider inclusion of:
(1) information derived from property tax refund returns;
(2) the estimated market value of the taxpayer's home from
the homestead declaration; and
(3) information from other sources, such as the surveys
conducted by the United States Departments of Commerce and Labor.
Subd. 4. [CONSULTATION ON ANALYSIS MODELS.] The
coordinating committee shall facilitate regular consultation
among the Department of Revenue, the Department of Finance, and
house and senate staffs in development and maintenance of their
respective computer models used to analyze the microdata
samples. The committee shall encourage efforts to attain more
commonality in the models, greater sharing of program
development efforts and programming tasks, and more consistency
in the resulting analyses. [270.0681]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 15. [270C.13] [TAX INCIDENCE REPORTS.]
Subdivision 1. [BIENNIAL REPORT.] The commissioner shall
report to the legislature by March 1 of each odd-numbered year
on the overall incidence of the income tax, sales and excise
taxes, and property tax. The report shall present information
on the distribution of the tax burden as follows: (1) for the
overall income distribution, using a systemwide incidence
measure such as the Suits index or other appropriate measures of
equality and inequality; (2) by income classes, including at a
minimum deciles of the income distribution; and (3) by other
appropriate taxpayer characteristics.
Subd. 2. [BILL ANALYSES.] At the request of the chair of
the house Tax Committee or the senate Committee on Taxes and Tax
Laws, the commissioner shall prepare an incidence impact
analysis of a bill or a proposal to change the tax system which
increases, decreases, or redistributes taxes by more than
$20,000,000. To the extent data is available on the changes in
the distribution of the tax burden that are affected by the bill
or proposal, the analysis shall report on the incidence effects
that would result if the bill were enacted. The report may
present information using systemwide measures, such as Suits or
other similar indexes, by income classes, taxpayer
characteristics, or other relevant categories. The report may
include analyses of the effect of the bill or proposal on
representative taxpayers. The analysis must include a statement
of the incidence assumptions that were used in computing the
burdens.
Subd. 3. [INCOME MEASURE.] The incidence analyses shall
use the broadest measure of economic income for which reliable
data is available. [270.0682]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 16. [270C.14] [AUTHORITY TO PAY LOCAL TAXES;
APPROPRIATION.]
The commissioner may pay to any local government unit, any
locally imposed sales taxes that may be assessed against the
department. There is appropriated to the commissioner from the
general fund the amount needed to make the payments. [270.058]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 17. [270C.15] [REVENUE DEPARTMENT SERVICE AND
RECOVERY SPECIAL REVENUE FUND.]
A Revenue Department service and recovery special revenue
fund is created for the purpose of recovering the costs of
furnishing government data and related services or products, as
well as recovering costs associated with collecting local taxes
on sales. All money collected under this section is deposited
in the Revenue Department service and recovery special revenue
fund. Money in the fund is appropriated to the commissioner to
reimburse the department for the costs incurred in administering
the tax law or providing the data, service, or product. Any
money paid to the department as a criminal fine for a violation
of state revenue law that is designated by the court to fund
enforcement of state revenue law is appropriated to this fund.
[270.059]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 18. [270C.16] [COLLECTION OF DELINQUENT LIABILITIES;
COSTS.]
Subdivision 1. [APPROPRIATION.] For the purpose of
collecting delinquent tax liabilities or debts as defined in
section 16D.02, subdivision 3, there is appropriated to the
commissioner an amount representing the cost of collection by
contract with collection agencies, revenue departments of other
states, or attorneys to enable the commissioner to reimburse
these agencies, departments, or attorneys for this service. The
commissioner shall report quarterly on the status of this
program to the chair of the house Tax and Appropriation
Committees and senate Tax and Finance Committees. [270.063,
subd. 1]
Subd. 2. [PREPAYMENT.] Notwithstanding section 16A.15,
subdivision 3, the commissioner may authorize the prepayment of
sheriff's fees, attorney fees, fees charged by revenue
departments of other states, or court costs to be incurred in
connection with the collection of delinquent tax liabilities
owed to the commissioner. [270.063, subd. 2]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 19. [270C.17] [COMMISSIONER TO COLLECT CERTAIN LOCAL
TAXES.]
Subdivision 1. [COSTS DEDUCTED; APPROPRIATION.] If the
commissioner agrees to collect a local tax, the local unit of
government must agree that all the direct and indirect costs of
the department for collecting the tax and any other statewide
indirect costs will be deducted from the amounts collected and
paid to the local unit of government.
Subd. 2. [DEVELOPMENT COSTS.] If the commissioner
determines that a new computer system will be required to
collect the local taxes, the costs of development of the system
will be charged to the first local units of government to be
included in the system. Any additional local units of
government that by agreement are added to the system will be
charged for a share of the development costs. The charge will
be determined by the commissioner who shall then refund to the
original local units of government their portion of the
development costs recovered from the additional users.
[270.069]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 20. [270C.18] [SETOFF OF POLITICAL SUBDIVISION
DEBTS.]
(a) As used in this section, "political subdivision" means
counties and home rule charter or statutory cities, and "debts"
means a legal obligation to pay a fixed amount of money, which
equals or exceeds $100 and which is due and payable to the
claimant political subdivision.
(b) If one political subdivision owes a debt to another
political subdivision, and the debt has not been paid within six
months of the date when payment was due, the creditor political
subdivision may notify the commissioner of the debt, and shall
provide the commissioner with information sufficient to verify
the claim. If the commissioner has reason to believe that the
claim is valid, and the debt has not been paid, the commissioner
shall initiate setoff procedures under this section.
(c) Within ten days of receipt of the notification from the
creditor political subdivision, the commissioner shall send a
written notice to the debtor political subdivision, advising it
of the nature and amount of the claim. This written notice
shall advise the debtor of the creditor political subdivision's
intention to request setoff of the refund against the debt.
The notice will also advise the debtor that the debt can be
setoff against a state aid payment, and will advise the debtor
of the right to contest the validity of the claim at a hearing.
The debtor must assert this right by written request to the
commissioner, which request the commissioner must receive within
45 days of the mailing date of the notice.
(d) If the commissioner receives written notice of a debtor
political subdivision's intention to contest at hearing the
claim upon which the intended setoff is based, the commissioner
shall initiate a hearing according to contested case procedures
established in the state Administrative Procedure Act not later
than 30 days after receipt of the debtor's request for a
hearing. The costs of the hearing shall be paid equally by the
political subdivisions that are parties to the hearing. The
Office of Administrative Hearings shall separately bill each
political subdivision for one-half of the costs.
(e) If the debtor political subdivision does not object to
the claim, or does not prevail in an objection to the claim or
at a hearing on the claim, the commissioner shall deduct the
amount of the debt from the next payment scheduled to be made to
the debtor under section 273.1398 or chapter 477A. The
commissioner shall remit the amount deducted to the claimant
political subdivision. [270.66, subd. 4]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 21. [270C.19] [TAXES AND FEES; REFUND AND SHARING
AGREEMENTS WITH INDIANS.]
Subdivision 1. [TAXES PAID BY INDIANS.] The commissioner
is authorized to enter into a tax refund agreement with the
governing body of any federally recognized Indian reservation in
Minnesota. The agreement may provide for a mutually agreed upon
amount as a refund to the governing body of any sales or excise
tax paid by the total resident Indian population on or adjacent
to a reservation into the state treasury, or for an amount which
measures the economic value of an agreement by the tribal
government to pay the equivalent of the state sales tax on items
included in the sales tax base but exempt on the reservation,
notwithstanding any other law which limits the refundment of
taxes. The total resident Indian population on or adjacent to a
reservation shall be defined according to the United States
Department of the Interior, Bureau of Indian Affairs, as
determined and stated in its Report on Service Population and
Labor Force.
Subd. 2. [SALES, USE, AND EXCISE TAXES.] (a) The
commissioner is authorized to enter into a tax agreement with
the governing body of any federally recognized Indian
reservation in Minnesota, that provides for the state and the
tribal government to share sales, use, and excise tax revenues
generated from on reservation activities of non-Indians and off
reservation activities of members of the reservation. Every
agreement entered into pursuant to this subdivision must require
the commissioner to collect all state and tribal taxes covered
by the agreement.
(b) The commissioner is authorized to collect any tribal
taxes imposed pursuant to any agreement entered into pursuant to
this subdivision and to make payments authorized by the
agreement to the tribal government from the funds collected.
(c) The commissioner shall pay to the tribal government its
share of the taxes collected pursuant to the agreement, as
indicated in the agreement, and grant the taxpayer a credit for
the taxpayer's share of the amount paid to the tribal government
against the taxpayer's Minnesota tax.
Subd. 3. [APPROPRIATION.] There is annually appropriated
from the general fund to the commissioner the amounts necessary
to make the refunds provided in this section.
Subd. 4. [PAYMENTS TO COUNTIES.] (a) The commissioner
shall pay to a county in which an Indian gaming casino is
located:
(1) ten percent of the state share of all taxes generated
from activities on reservations and collected under a tax
agreement under this section with the tribal government for the
reservation located in the county; or
(2) five percent of excise taxes collected by the state
that are determined by the department to have been generated
from activities on a reservation located in the county, the
tribal government of which does not have a tax agreement under
this section and did not have a tax agreement on June 30, 2003.
If the tribe has casinos located in more than one county,
the payment must be divided equally among the counties in which
the casinos are located.
(b) The commissioner shall make the payments required under
this subdivision by February 28 of the year following the year
the taxes are collected.
(c) An amount sufficient to make the payments authorized by
this subdivision is annually appropriated from the general fund
to the commissioner.
Subd. 5. [FEES; APPROPRIATION.] (a) The commissioner may
enter into an agreement with the governing body of any federally
recognized Indian reservation in Minnesota concerning fees
administered by the commissioner that are paid by the tribe,
members of the tribe, or persons who conduct business with the
tribe, or otherwise imposed on on-reservation activities. The
agreement may provide for the refund or sharing of the fee. The
commissioner may make any payments required by the agreement
from the fees collected.
(b) Each head of an agency, board, or other governmental
entity that administers a program that is funded by fees
administered by the commissioner may sign an agreement entered
into by the commissioner under this subdivision. An agreement
is not valid until signed by the head of each agency, board, or
other governmental entity that administers a program funded by
the particular fee covered in an agreement and by the
commissioner.
(c) There is annually appropriated to the commissioner from
the funds for which the fees are collected the amounts necessary
to make payments as provided in this subdivision. [270.60]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
TAX ADMINISTRATION
Sec. 22. [270C.25] [PROHIBITION OF SUITS TO RESTRAIN
ASSESSMENT OR COLLECTION.]
Subdivision 1. [GENERAL RULE.] No suit to restrain
assessment or collection of a tax, fee, penalty, or interest,
imposed by a law administered by the commissioner, including a
declaratory judgment action, can be maintained in any court by
any person except pursuant to the express procedures in (1) this
chapter, (2) chapter 271, (3) chapter 289A, and (4) any other
law administered by the commissioner for contesting the
assessment or collection of taxes, fees, penalties, or interest.
Subd. 2. [FACIAL CHALLENGE TO CONSTITUTIONALITY.] An
action, otherwise prohibited under subdivision 1, that asserts a
facial challenge to the constitutionality of a tax or fee
imposed by a law administered by the commissioner may be
maintained only if it is demonstrated to the court by clear and
convincing evidence that under no circumstances could the
commissioner ultimately prevail and that the taxpayer or fee
payer will suffer irreparable harm if the relief sought is not
granted. [289A.43]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 23. [270C.26] [PENALTY FOR FILING CERTAIN DOCUMENTS
AGAINST DEPARTMENT OF REVENUE EMPLOYEES.]
Subdivision 1. [DEFINITIONS.] (a) "Recording office" means
a county recorder, registrar of titles, or secretary of state in
this state or another state.
(b) "Filing party" means the person or persons requesting
or causing another person to request that the recording office
accept documents or instruments for recording or filing.
Subd. 2. [INVALID DOCUMENTS NAMING COMMISSIONER OR
DEPARTMENT EMPLOYEES.] Filing a document, including a
nonconsensual common law lien under section 514.99, that
purports to create a claim against the commissioner or an
employee of the department based on performance or
nonperformance of duties by the commissioner or employee is
invalid unless accompanied by a specific order from a court of
competent jurisdiction authorizing the filing of the document or
unless a specific statute authorizes the filing of the document.
Subd. 3. [CIVIL PENALTY.] If a filing party causes a
document described in subdivision 2 to be recorded in a
recording office, the commissioner may assess a penalty against
the filing party of $1,000 per document filed, payable to the
general fund. An order assessing a penalty under this section
is reviewable administratively under section 270C.35 and is
appealable to Tax Court under chapter 271. The penalty is
collected and paid in the same manner as a tax collected by the
commissioner. The penalty is in addition to any other remedy
available to the commissioner or to an employee of the
department against whom the document has been filed. [270.278]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 24. [270C.27] [CIVIL DAMAGES FOR FAILURE TO RELEASE
LIEN.]
Subdivision 1. [IN GENERAL.] (a) A taxpayer may bring a
civil action for damages against the commissioner in district
court when an employee or the department has knowingly or
negligently:
(1) failed to release a lien as required by section
270C.63, subdivision 11; or
(2) failed to release a lien within 30 days after
satisfaction of the liability on which the lien is based.
(b) An action under paragraph (a), clause (2), must be
preceded by 30 days' written notice by the taxpayer to the
commissioner and the taxpayer's rights advocate that the lien
has not been released. An action under paragraph (a) must be
commenced within two years after the date the right of action
accrued.
Subd. 2. [DAMAGES.] On a finding of liability on the part
of the defendant in an action brought under subdivision 1, the
defendant is liable to the plaintiff in an amount equal to the
sum of actual, direct economic damages sustained by the
plaintiff due to the actions of the defendant, plus the costs of
the action. Damages must be paid in accordance with section
3.736, subdivision 7.
Subd. 3. [MITIGATION OF DAMAGES.] Damages awarded must be
reduced by the amount of the damages that could reasonably have
been mitigated by the plaintiff. [270.275]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 25. [270C.275] [CIVIL DAMAGES FOR CERTAIN
UNAUTHORIZED COLLECTION ACTIONS.]
Subdivision 1. [IN GENERAL.] If in connection with the
collection of delinquent taxes, an employee of the department
recklessly or intentionally disregards a law administered by the
commissioner, the taxpayer may bring a civil action for damages
against the commissioner in district court within two years
after the date the right of action accrues.
Subd. 2. [DAMAGES.] On a finding of liability on the part
of the defendant in an action brought under subdivision 1, the
defendant is liable to the plaintiff in an amount equal to the
lesser of $200,000, or the sum of (1) actual, direct economic
damages sustained by the plaintiff as a proximate result of the
reckless or intentional actions of the employee and (2) the
costs of the action. Damages must be paid in accordance with
section 3.736, subdivision 7.
Subd. 3. [LIMITATIONS.] A judgment for damages must not be
awarded under subdivision 2 unless the court determines that the
plaintiff has exhausted the administrative remedies available to
the plaintiff within the department. Damages awarded must be
reduced by the amount of the damages that could reasonably have
been mitigated by the plaintiff.
Subd. 4. [PENALTIES FOR PROCEDURES INSTITUTED PRIMARILY
FOR DELAY.] When it appears to the district court that:
(1) proceedings before it under this section have been
instituted or maintained by the taxpayer primarily for delay;
(2) the taxpayer's position in such proceeding is frivolous
or groundless; or
(3) the taxpayer unreasonably failed to pursue available
administrative remedies,
the district court, in its decision, may require the taxpayer to
pay to the department a penalty not in excess of $25,000. The
penalty may be collected and paid in the same manner as a tax
collected by the commissioner. [270.276]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 26. [270C.28] [DISCLOSURE OF RIGHTS OF TAXPAYERS.]
Subdivision 1. [IN GENERAL.] The commissioner shall
prepare statements that set forth in simple and nontechnical
terms:
(1) the rights and obligations of the department and the
taxpayer during an audit;
(2) the procedures by which a taxpayer may appeal an
adverse decision of the department, including administrative and
judicial appeals;
(3) the procedures for filing refund claims and filing of
taxpayer complaints; and
(4) the procedures that the department may use in enforcing
a law administered by the commissioner, including assessment,
jeopardy assessment, levy and distraint, and the filing of liens.
Subd. 2. [DISTRIBUTION.] The appropriate statement
prepared in accordance with subdivision 1 must be distributed by
the commissioner to all taxpayers contacted with respect to the
determination or collection of a tax, other than the providing
of tax forms. Failure to receive the statement does not
invalidate the determination or collection action. [270.0603]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 27. [270C.285] [PROCEDURES INVOLVING IN-PERSON
TAXPAYER INTERVIEWS.]
Subdivision 1. [RECORDING OF INTERVIEWS.] (a) Upon
reasonable advance notice from the taxpayer, a taxpayer shall be
allowed to make an audio recording, with the taxpayer's
equipment and at the taxpayer's expense, of an interview of the
taxpayer by the department regarding the audit or collection of
a tax.
(b) An employee of the department may record an interview
described in paragraph (a) if the taxpayer is informed of the
recording before the interview and a transcript or copy of the
recording is made available to the taxpayer on the taxpayer's
request, provided the department is reimbursed by the taxpayer
for the cost of transcribing or copying the recording.
Subd. 2. [SAFEGUARDS.] (a) Before or at the start of an
initial interview, an employee of the department shall provide
to the taxpayer in the case of an audit interview an explanation
of the audit process and the taxpayer's rights under that
process and, in the case of a collection interview, an
explanation of the collection process and the taxpayer's rights
under that process.
(b) If a taxpayer requests to consult with an attorney,
accountant, agent, preparer, or any other person permitted to
represent the taxpayer before the department at any time during
an interview, except an interview initiated by an administrative
subpoena, the interview must be suspended for no more than 30
days.
Subd. 3. [REPRESENTATIVES HOLDING POWER OF ATTORNEY.] An
attorney, accountant, agent, preparer, or any other person
permitted to represent the taxpayer before the department who
has a written power of attorney executed by the taxpayer may
represent the taxpayer in an interview described in subdivision
1. The taxpayer may be required to accompany the representative
only if a subpoena is issued. In this instance, with the
consent of an immediate supervisor and after ten days' notice to
the representative, the department employee may notify the
taxpayer directly that the employee believes the representative
is unreasonably delaying the examination or investigation
process.
Subd. 4. [NOT TO APPLY TO CERTAIN INVESTIGATIONS.] This
section does not apply to criminal investigations or
investigations relating to the conduct of an employee of the
department. [270.272]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 28. [270C.29] [NOTICES TO HOLDERS OF POWERS OF
ATTORNEY.]
If a taxpayer has executed a written power of attorney, in
a form prescribed by the commissioner, the commissioner shall
allow the taxpayer to elect, in writing, that all notices and
correspondence between the department and the taxpayer will be
sent to the holder of the power of attorney. [270.277]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 29. [270C.30] [RETURNS; FORMAT; FURNISHING.]
The commissioner shall prescribe the content and format of
all returns, and may furnish them subject to charge on
application. [270.07, subd. 1, paragraph (a); 270.06, clause
(15)]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 30. [270C.302] [RETURNS, OTHER FORMS; WHERE FILED.]
Returns and other forms required to be filed under a law
administered by the commissioner must be filed at the
commissioner's office in St. Paul, or such other place as the
commissioner may designate. [289A.13]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 31. [270C.304] [ELECTRONICALLY FILED RETURNS;
SIGNATURES.]
For purposes of a law administered by the commissioner, the
name of the taxpayer, the name of the taxpayer's authorized
agent, or the taxpayer's identification number, will constitute
a signature when transmitted as part of the return information
on returns filed by electronic means by the taxpayer or at the
taxpayer's direction. "Electronic means" includes, but is not
limited to, the use of a touch-tone telephone to transmit return
information in a manner prescribed by the commissioner.
[289A.07]
[EFFECTIVE DATE.] This section is effective for returns
filed on or after August 1, 2005.
Sec. 32. [270C.306] [COMMISSIONER MAY REQUIRE SOCIAL
SECURITY OR IDENTIFYING NUMBERS ON FORMS.]
Notwithstanding the provisions of any other law, the
commissioner may require that a form required to be filed with
the commissioner include the Social Security number, federal
employer identification number, or Minnesota taxpayer
identification number of the taxpayer or applicant. [270.066]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 33. [270C.308] [PROHIBITION OF DISPLAY OF SOCIAL
SECURITY NUMBERS.]
No label, envelope, or other material printed by the
department may include the Social Security number of the
taxpayer in a place that will be visible to a third party when
delivered or mailed to the taxpayer. [270.0665]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 34. [270C.31] [EXAMINATIONS AND INVESTIGATIONS.]
Subdivision 1. [SCOPE.] To determine the accuracy of a
return, to fix liability under state revenue law, to administer
state revenue law, when conducting an investigation or an audit
of a taxpayer, for the purpose of collection, and in any matter
which the commissioner has the power to investigate or
determine, the commissioner has authority to take the actions
allowed in this section. [270.06, clauses (6) and (9); 289A.36,
subd. 1]
Subd. 2. [REASONABLE EXAMINATIONS OR INVESTIGATIONS OF
TAXPAYER.] The commissioner may make reasonable examinations or
investigations of a taxpayer's place of business, tangible
personal property, equipment, computer systems, and facilities.
The commissioner may inspect and copy the taxpayer's relevant
books, records, papers, documents, and other data, in whatever
form. [289A.36, subds. 1 and 3, clause (1), regarding
taxpayers]
Subd. 3. [ACCESS TO RECORDS.] The commissioner may
examine, except where privileged by law, the relevant records
and files of any person, business, institution, financial
institution, state agency, agency of the United States
government, or agency of any other state where permitted by
statute, agreement, or reciprocity. [289A.36, subd. 2]
Subd. 4. [EXAMINATIONS UNDER OATH.] The commissioner may
administer oaths and affirmations and examine taxpayers and
other persons under oath or affirmation. [270.15; 289A.36,
subd. 3, clauses (1) and (2)]
Subd. 5. [DEPOSITIONS.] The commissioner may depose
witnesses who reside inside or outside the state, or who are
absent from the state. Depositions are to be taken, upon notice
to the interested party, if any, in the same manner that
depositions of witnesses are taken in civil actions in the
district court. [270.06, clause (9)]
Subd. 6. [WITNESS FEES.] The fees of witnesses required by
the commissioner to appear are equal to those allowed to
witnesses appearing before courts of this state. The fees must
be paid in the manner provided for the payment of other expenses
incident to the administration of state revenue law. [289A.36,
subd. 3, clause (2)]
Subd. 7. [LIMITATION OF AUTHORITY.] The authority granted
in this section to the commissioner does not apply to a matter
that has been appealed to Tax Court. [270.0601]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 35. [270C.32] [SUBPOENAS.]
Subdivision 1. [AUTHORITY TO ISSUE SUBPOENAS.] In addition
to the authority to examine and investigate granted under
section 270C.31, and to carry out that authority, the
commissioner may issue subpoenas to compel a person, at a time
and place reasonable under the circumstances, to appear and give
testimony, and to produce relevant books, records, papers,
documents, and other data, in whatever form, for inspection and
copying. [289A.36, subds. 2 and 3, clause (1); 270.06, clause
(7)]
Subd. 2. [REQUEST BY TAXPAYER FOR SUBPOENA.] When the
commissioner has the authority to issue a subpoena, the
commissioner shall honor a reasonable request by a taxpayer to
issue a subpoena. [289A.36, subd. 6]
Subd. 3. [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY
IS KNOWN.] (a) An examination or investigation may extend to a
person that the commissioner determines has access to
information that may be relevant to the examination or
investigation. When a subpoena requiring the production of
records as described in subdivision 1 is served on a third-party
record keeper, written notice of the subpoena must be mailed to
the taxpayer and to any other person who is identified in the
subpoena. The notices must be given within three days of the
day on which the subpoena is served. The notice required by
this subdivision is sufficient if it is mailed to the last known
address of the addressee.
(b) The provisions of this subdivision regarding notice to
the taxpayer or other parties identified in the subpoena do not
apply if there is reasonable cause to believe that the giving of
notice may lead to attempts to conceal, destroy, or alter
records or assets relevant to the examination, to prevent the
communication of information from other persons through
intimidation, bribery, or collusion, or to flee to avoid
prosecution, testifying, or production of records. [289A.36,
subd. 4]
Subd. 4. [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY
IS NOT KNOWN.] (a) The commissioner may issue a subpoena that
does not identify the person or persons with respect to whose
liability the subpoena is issued, but only if:
(1) the subpoena relates to the investigation of a
particular person or ascertainable group or class of persons;
(2) there is a reasonable basis to believe that the person
or group or class of persons may fail or may have failed to
comply with a state revenue law;
(3) the information sought to be obtained from the
examination of the records, and the identity of the person or
persons with respect to whose liability the subpoena is issued,
is not readily available from other sources;
(4) the subpoena is clear and specific as to the
information sought to be obtained; and
(5) the information sought to be obtained is limited solely
to the scope of the investigation.
(b) The party served with a subpoena that does not identify
the person or persons with respect to whose tax liability the
subpoena is issued shall, within 20 days after service of the
subpoena, petition the district court for the judicial district
of the county in which that party is located for a determination
as to whether the commissioner has complied with all the
requirements in paragraph (a), clauses (1) to (5), and thus,
whether the subpoena is enforceable. If no petition is made by
the party served within the time prescribed, the subpoena shall
have the force and effect of a court order. [270.06, clause
(8); 289A.36, subd. 5]
Subd. 5. [ACCESS TO RECORDS IN CONNECTION WITH EXAMINATION
OF BUSINESSES LOCATED OUTSIDE THE STATE.] (a) In order to
determine whether a business located outside the state of
Minnesota is required to file a return under a law administered
by the commissioner, the commissioner may examine the relevant
records and files of the business. To the full extent permitted
by the Minnesota and United States Constitutions, the
commissioner may compel production of those relevant records and
files by subpoena. The subpoena may be served on the secretary
of state along with the address to which service of the subpoena
is to be sent and a fee of $50. The secretary of state shall
forward a copy of the subpoena to the business using the
procedures for service of process in section 5.25, subdivision 6.
(b) The commissioner shall pay the reasonable cost of
producing records subject to subpoena under this subdivision if:
(1) the subpoenaed party cannot produce the records without
undue burden; and
(2) the examination made pursuant to paragraph (a) shows
that the subpoenaed party is not required to file a return under
a law administered by the commissioner. [289A.36, subd. 9]
Subd. 6. [DEMAND FOR COURT ADMINISTRATOR'S SUBPOENA.] In
addition to administrative subpoenas of the commissioner, upon
demand of the commissioner or an agent of the commissioner, the
court administrator of any district court shall issue a subpoena
for a witness to appear before the agent, or for the production
of relevant books, records, papers, documents, and other data,
in whatever form, to the agent for inspection and copying.
[270.06, clause (17)]
Subd. 7. [ENFORCEMENT OF SUBPOENAS.] Failure to comply
with a subpoena shall be punished in the same manner as contempt
of the district court in the following venues:
(1) the district court of the district in which a court
administrator's subpoena is issued under subdivision 6; [270.06,
clause (17)]
(2) the district court of the district in which the party
served with a subpoena is located, when the subpoena is issued
by the commissioner or the commissioner's agent; and [270.06,
clause (17); 289A.36, subd. 7, paragraph (a)]
(3) the District Court for Ramsey County, when a subpoena
is issued under subdivision 5. In addition to contempt
remedies, the court may issue any order it deems reasonable to
enforce compliance with a subpoena issued under subdivision 5.
[289A.36, subd. 7, paragraph (b)]
Subd. 8. [PENALTY FOR VIOLATING COURT ORDER TO COMPLY WITH
SUBPOENA.] In addition to sanctions imposed under subdivision 7,
a penalty of $250 per day is imposed on any business that is in
violation of a court order to comply with a subpoena that is
seeking information necessary for the commissioner to be able to
determine whether the business is required to file a return or
pay a tax. The maximum penalty is $25,000. Upon the request of
the commissioner, the court shall determine the amount of the
penalty and enter it as a judgment in favor of the
commissioner. The penalty is not payable until the judgment is
entered. [289A.36, subd. 10]
Subd. 9. [COST OF PRODUCTION OF RECORDS.] The cost of
producing records of a third party required by a subpoena must
be paid by the taxpayer, if the taxpayer requests the subpoena
to be issued, or if the taxpayer has the records available but
has refused to provide them to the commissioner. In other cases
where the taxpayer cannot produce records and the commissioner
then issues a subpoena for third-party records, the commissioner
shall pay the reasonable cost of producing the records. The
commissioner may later assess the reasonable costs against the
taxpayer if the records contribute to the determination of an
assessment of tax against the taxpayer. [289A.36, subd. 8]
Subd. 10. [LIMITATION OF AUTHORITY.] The authority granted
in this section to the commissioner and the commissioner's
agents does not apply to a matter that has been appealed to Tax
Court. [270.0601]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 36. [270C.33] [COMMISSIONER ASSESSMENT PROCEDURES.]
Subdivision 1. [ORDERS AND DECISIONS.] All orders and
decisions of the commissioner, or any subordinates, respecting
any tax, assessment, or other obligation, must be in writing and
entered into the records of the commissioner. [270.10, subd. 1]
Subd. 2. [NOTICES.] (a) At the same time that notice of an
assessment, determination, or order, of the commissioner is
given to a taxpayer, the taxpayer must be given a written notice
that:
(1) describes the taxpayer's appeal rights;
(2) lists the amounts of tax, interest, additions to tax,
and penalties due; and
(3) explains the basis for the assessment.
(b) Failure to provide all the required information does
not invalidate the assessment, determination, or order for
purposes of satisfying statutory notice requirements if the
assessment, determination, or order contains sufficient
information to advise the taxpayer that an assessment has been
made. [270.10, subd. 1a; 289A.37, subd. 1, paragraph (a)]
Subd. 3. [COMMISSIONER FILED RETURNS.] If a taxpayer fails
to file a return, the commissioner, from information in the
commissioner's possession or obtainable by the commissioner, may
make and file a return for the taxpayer, or may issue an order
of assessment under subdivision 4. [289A.35]
Subd. 4. [ORDERS OF ASSESSMENT.] (a) The commissioner may
issue an order of assessment in any of the following
circumstances:
(1) the commissioner determines that the correct amount of
tax is different than that assessed on a return filed with the
commissioner; [289A.37, subd. 1]
(2) no return has been filed and the commissioner
determines the amount of tax that should have been assessed;
[289A.37, subd. 1]
(3) the commissioner determines that the correct amount of
a refundable credit is different than the amount claimed by a
taxpayer. For purposes of this subdivision, "refundable credit"
means a refund benefit or credit due a person that is unrelated
to the person's liability for a tax. "Refundable credit" does
not include estimated tax payments or withholding taxes. An
assessment for an overpayment of a refundable credit may be
collected in the same manner as a tax collected by the
commissioner; and
(4) the commissioner determines the correct amount of a tax
that the taxpayer is not required to assess by a return filed
with the commissioner.
(b) An order of assessment must be in writing. [270.10,
subd. 1]
(c) An order of assessment must be signed by the
commissioner or a delegate, or have their facsimile signature,
if the change in tax, excluding penalties and interest, exceeds
$1,000. [270.10, subd. 1]
(d) An order of assessment is final when made but, as
applicable, is reviewable administratively under section
270C.35, or appealable to Tax Court under chapter 271. [289A.37,
subd. 1, paragraph (a)]
Subd. 5. [PROHIBITION AGAINST COLLECTION DURING APPEAL
PERIOD OF AN ORDER.] No collection action can be taken on an
order of assessment, including the filing of liens under section
270C.63, and no late payment penalties may be imposed when a
return has been filed for the tax type and period upon which the
order is based, during the appeal period of an order. The
appeal period of an order ends: (1) 60 days after the order has
been mailed to the taxpayer by the commissioner; (2) if an
administrative appeal is filed under section 270C.35, 60 days
after determination of the administrative appeal; (3) if an
appeal to Tax Court is filed under chapter 271, when the
decision of the Tax Court is made; or (4) if an appeal to Tax
Court is filed and the appeal is based upon a constitutional
challenge to the tax, 60 days after final determination of the
appeal. This subdivision does not apply to a jeopardy
assessment under section 270C.36, or a jeopardy collection under
section 270C.36. [289A.37, subd. 1, paragraph (b); 270.10,
subd. 5]
Subd. 6. [ASSESSMENT PRESUMED VALID.] A return or
assessment of tax made by the commissioner is prima facie
correct and valid. The taxpayer has the burden of establishing
its incorrectness or invalidity in any related action or
proceeding. [289A.37, subd. 3]
Subd. 7. [AGGREGATE REFUND OR ASSESSMENT.] The
commissioner, on examining returns for more than one year or
period, may issue one order covering the period under
examination that reflects the aggregate refund or additional tax
due. [289A.37, subd. 4]
Subd. 8. [SUFFICIENCY OF NOTICE.] An assessment of tax
made by the commissioner, sent postage prepaid by United States
mail to the taxpayer at the taxpayer's last known address, is
sufficient even if the taxpayer is deceased or is under a legal
disability, or, in the case of a corporation, has terminated its
existence, unless the commissioner has been provided with a new
address by a party authorized to receive notices of assessment.
[289A.37, subd. 5]
Subd. 9. [CONSENT AGREEMENT.] A taxpayer shall have the
right at any time, whether or not an order has been issued, to
sign and deliver to the commissioner a written consent to a
change in tax liability that waives the requirement of any
additional notice and all rights to an administrative appeal and
appeal to Tax Court concerning the assessment and collection of
any part or all of the tax liability. [270.67, subd. 3]
[EFFECTIVE DATE.] This section is effective for assessments
made on or after August 1, 2005.
Sec. 37. [270C.34] [ABATEMENT OF PENALTY, INTEREST, AND
ADDITIONAL TAX CHARGE.]
Subdivision 1. [AUTHORITY.] (a) The commissioner may
abate, reduce, or refund any penalty or interest that is imposed
by a law administered by the commissioner as a result of the
late payment of tax or late filing of a return, if the failure
to timely pay the tax or failure to timely file the return is
due to reasonable cause, or if the taxpayer is located in a
presidentially declared disaster area. [270.07, subd. 1,
paragraph (e)]
(b) The commissioner shall abate any part of a penalty or
additional tax charge under section 289A.25, subdivision 2, or
289A.26, subdivision 4, attributable to erroneous advice given
to the taxpayer in writing by an employee of the department
acting in an official capacity, if the advice:
(1) was reasonably relied on and was in response to a
specific written request of the taxpayer; and
(2) was not the result of failure by the taxpayer to
provide adequate or accurate information. [270.07, subd. 6,
paragraph (c)]
Subd. 2. [PROCEDURE.] (a) A request for abatement of
penalty under subdivision 1 or section 289A.60, subdivision 4,
must be filed with the commissioner within 60 days of the date
the notice was mailed to the taxpayer's last known address,
stating that a penalty has been imposed.
(b) If the commissioner issues an order denying a request
for abatement of penalty, the taxpayer may file an
administrative appeal as provided in section 270C.35 or appeal
to Tax Court as provided in section 271.06.
(c) If the commissioner does not issue an order on the
abatement request within 60 days from the date the request is
received, the taxpayer may appeal to Tax Court as provided in
section 271.06. [270.07, subd. 6, paragraphs (a) and (b)]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 38. [270C.345] [DETERMINATION OF MINIMUMS AND
CANCELLATION; ADDITIONAL TAX, COLLECTION, REFUNDS.]
Notwithstanding any other provision of law, the
commissioner may:
(1) based upon the administrative costs of processing,
determine minimum standards for the determination of additional
tax for which an order shall be issued;
(2) based upon collection costs as compared to the amount
of tax involved, determine minimum standards of collection;
(3) based upon the administrative costs of processing,
determine the minimum amount of a refund to be made where no
claim has been filed; and
(4) cancel any amounts below these minimum standards
determined under clauses (1) and (2). [270.07, subd. 3]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 39. [270C.346] [ERRONEOUS REMITTANCES.]
If a remittance is erroneously made payable to the
commissioner and the commissioner had knowledge that the proper
payee is a state or local official of this state, the
commissioner may endorse such remittance to the proper state or
local official. The commissioner is also authorized to return a
remittance if the records indicate that it has been erroneously
submitted. [270.07, subd. 4]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 40. [270C.347] [REBATE CHECKS AND WARRANTS; AUTHORITY
TO REISSUE; APPROPRIATION.]
Subdivision 1. [CHECKS AND WARRANTS, AUTHORITY TO
REISSUE.] Notwithstanding any other provision of law, the
commissioner may, based on a showing of reasonable cause,
reissue an uncashed rebate or property tax refund warrant or
check that has lapsed under any provision of law relating to
rebates or under section 290A.18, subdivision 2. The authority
to reissue warrants or checks under this paragraph is limited to
five years after the date of issuance of the original warrant or
check. [270.07, subd. 3, paragraph (f)]
Subd. 2. [APPROPRIATION.] An amount sufficient for the
reissuance of rebate warrants authorized under subdivision 1 is
appropriated to the commissioner from the general fund.
[270.07, subd. 3a]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 41. [270C.35] [ADMINISTRATIVE REVIEW.]
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 imposed by a law administered by the
commissioner, 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.
Subd. 2. [APPEAL BY TAXPAYER.] A taxpayer who wishes to
seek administrative review must follow the procedures in
subdivision 4.
Subd. 3. [NOTICE DATE.] For purposes of this section, the
term "notice date" means the date of the order adjusting the tax
or order denying a request for abatement, or, in the case of a
denied refund, the date of the notice of denial.
Subd. 4. [TIME AND CONTENT FOR ADMINISTRATIVE APPEAL.]
Within 60 days after the notice date, the taxpayer must file a
written appeal with the commissioner. The appeal need not be in
any particular form but must contain the following information:
(1) name and address of the taxpayer;
(2) if a corporation, the state of incorporation of the
taxpayer, and the principal place of business of the
corporation;
(3) the Minnesota identification number or Social Security
number of the taxpayer;
(4) the type of tax involved;
(5) the date;
(6) the tax years or periods involved and the amount of tax
involved for each year or period;
(7) the findings in the notice that the taxpayer disputes;
(8) a summary statement that the taxpayer relies on for
each exception; and
(9) the taxpayer's signature or signature of the taxpayer's
duly authorized agent.
Subd. 5. [EXTENSIONS.] When requested in writing and
within the time allowed for filing an administrative appeal, the
commissioner may extend the time for filing an appeal for a
period not more than 30 days from the expiration of the 60 days
from the notice date.
Subd. 6. [DETERMINATION OF APPEAL.] On the basis of
applicable law and available information, the commissioner shall
determine the validity, if any, in whole or part of the appeal
and notify the taxpayer of the decision. This notice must be in
writing and contain the basis for the determination.
Subd. 7. [AGREEMENT DETERMINING TAX LIABILITY.] When it
appears to be in the best interests of the state, the
commissioner may settle any taxes, penalties, or interest that
the commissioner has under consideration by virtue of an appeal
filed under this section. An agreement must be in writing and
signed by the commissioner and the taxpayer, or the taxpayer's
representative authorized by the taxpayer to enter into an
agreement. The agreement shall be final and conclusive and,
except upon a showing of fraud or malfeasance, or
misrepresentation of a material fact, the case shall not be
reopened as to the matters agreed upon.
Subd. 8. [ORDER AND APPEAL OF AN ADMINISTRATIVE
DETERMINATION.] Following the determination of an appeal and
notwithstanding any period of limitations for making assessments
or other determinations to the contrary, the commissioner must
issue an order reflecting that disposition. If the statute of
limitations for making assessments or other determinations would
have expired before the issuance of this order, except for this
section, the order is limited to issues or matters contained in
the appealed determination. The order is appealable to the
Minnesota Tax Court under section 271.06.
Subd. 9. [APPEAL WHERE NO DETERMINATION.] If the
commissioner does not make a determination within six months of
the filing of an administrative appeal, the taxpayer may elect
to appeal to Tax Court.
Subd. 10. [EXEMPTION FROM ADMINISTRATIVE PROCEDURE ACT.]
This section is not subject to chapter 14. [289A.65]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 42. [270C.36] [JEOPARDY ASSESSMENT AND COLLECTION.]
Subdivision 1. [ASSESSMENT.] If the commissioner has
reasonable grounds to believe that a taxpayer is about to leave,
or take property from, this state with the purpose of evading a
tax, or that the collection of the tax will be jeopardized by
delays incident to other methods of collection, the commissioner
may immediately declare the taxpayer's reporting period to be at
an end and assess the tax due by issuing an order under section
270C.33, subdivision 4. The commissioner may make the
assessment on the basis of knowledge or information available to
the commissioner, and notwithstanding the prohibition against
collection under section 270C.33, subdivision 5, demand
immediate payment of the amount due shown in the assessment.
[290.48, subd. 4; 290.92, subd. 6b; 297A.93, paragraph (a)]
Subd. 2. [COLLECTION.] Notwithstanding the prohibition
against collection in section 270C.33, subdivision 5, and the
notice provisions in section 270C.67, subdivision 3, if the
commissioner has reason to believe that collection of a tax is
in jeopardy, notice and demand for immediate payment of the tax
may be made. If the tax is not paid, the commissioner may
proceed to collect by levy or by filing a lien under section
270C.63. For this purpose, "tax" includes any penalty,
interest, and costs, properly payable. [270.70, subds. 1 and 2,
paragraph (b)]
Subd. 3. [ADMINISTRATIVE REVIEW.] Within five days after a
jeopardy assessment or jeopardy collection is made to assess or
collect a tax, the commissioner shall provide the taxpayer with
a written statement of the information relied on in making the
assessment or levy. Within 30 days after the written statement
is provided or, if not provided, within 35 days after the
assessment or levy, the taxpayer may request the commissioner to
review the action taken. After a request for review, the
commissioner shall determine whether the assessment or levy is
reasonable and whether the amount assessed or demanded as a
result of the action is appropriate under the circumstances.
Subd. 4. [JUDICIAL REVIEW.] A determination by the
commissioner under subdivision 3 is appealable to the Tax Court
in the manner provided by law, and the appeal must be
expeditiously heard by the court. If the court determines that
the making of the assessment or levy is unreasonable, or that
the amount assessed or demanded is inappropriate, the court may
order the commissioner to release the levy, abate the
assessment, redetermine in whole or in part the amount assessed
or demanded, or take other action. A determination by the court
under this subdivision is final and may not be appealed by
either party.
Subd. 5. [BURDEN OF PROOF.] In a proceeding under
subdivision 4, the burden of proving that the assessment or
collection of the tax was jeopardized by delay is on the
commissioner. Regarding the issue of whether the amount
assessed or demanded as a result of the action is appropriate,
the commissioner shall provide a written statement explaining
the basis for determining the amount, and the burden is on the
taxpayer to show that the statement is incorrect or invalid.
[270.274]
Subd. 6. [DEFENSES.] It is not a defense to an assessment
or demand made under this section that the tax period has not
terminated, that the time otherwise allowed by law to file a
return has not expired, that the notices otherwise required by
law for making an assessment or demand have not been given, or
that the time otherwise allowed by law to appeal or pay the tax
has not expired. [297A.93, paragraph (b)]
[EFFECTIVE DATE.] This section is effective for assessments
made and collection action taken on or after August 1, 2005.
Sec. 43. [270C.37] [TAXPAYER ASSISTANCE ORDERS; TAXPAYER'S
RIGHTS ADVOCATE.]
Subdivision 1. [AUTHORITY TO ISSUE.] On application filed
by a taxpayer with the Department of Revenue taxpayer's rights
advocate, in the form, manner, and in the time prescribed by the
commissioner, and after thorough investigation, the taxpayer's
rights advocate may issue a taxpayer assistance order if, in the
determination of the taxpayer's rights advocate, the manner in
which a law administered by the commissioner is being carried
out is creating or will create an unjust and inequitable result
for the taxpayer.
Subd. 2. [TERMS OF A TAXPAYER ASSISTANCE ORDER.] A
taxpayer assistance order may require the department within a
specified time period to release property of the taxpayer levied
on, cease any action, take any action as permitted by law, or
refrain from taking any action to enforce a law administered by
the commissioner against the taxpayer, until the issue or issues
giving rise to the order have been resolved.
Subd. 3. [AUTHORITY TO MODIFY OR RESCIND.] A taxpayer
assistance order issued by the taxpayer's rights advocate under
this section may be modified or rescinded by the commissioner.
Subd. 4. [SUSPENSION OF RUNNING OF PERIOD OF LIMITATION.]
The running of the period of limitation with respect to an
action described in subdivision 2 is suspended from the date of
the taxpayer assistance order until the expiration date of the
order or, if modified, the expiration date of the modified order
or, if rescinded, the date of the rescission.
Subd. 5. [INDEPENDENT ACTION OF TAXPAYER'S RIGHTS
ADVOCATE.] This section does not prevent the taxpayer's rights
advocate from taking action in the absence of an application
under subdivision 1.
Subd. 6. [TAXPAYER'S RIGHTS ADVOCATE.] For purposes of
this section, the term "taxpayer's rights advocate" includes a
designee of the taxpayer's rights advocate. The taxpayer's
rights advocate shall represent the interests of taxpayers who
have grievances against the department in connection with an
audit or collection activity, and shall report directly to the
commissioner. A determination of the taxpayer's rights advocate
under this section to issue or to not issue a taxpayer
assistance order is final and cannot be appealed to the Tax
Court or any other court. [270.273]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 44. [270C.38] [NOTICE OF DETERMINATION OR ACTION OF
THE COMMISSIONER.]
Subdivision 1. [SUFFICIENT NOTICE.] If no method of
notification of a written determination or action of the
commissioner is otherwise specifically provided for by law,
notice of the determination or action sent postage prepaid by
United States mail to the taxpayer or other person affected by
the determination or action at the taxpayer's or person's last
known address, is sufficient. If the taxpayer or person being
notified is deceased or is under a legal disability, or, in the
case of a corporation being notified that has terminated its
existence, notice to the last known address of the taxpayer,
person, or corporation is sufficient, unless the department has
been provided with a new address by a party authorized to
receive notices from the commissioner.
Subd. 2. [SERVICE OF NOTICE BY MAIL.] Notwithstanding any
other law to the contrary, the commissioner, if required to
serve notices by registered or certified mail, may choose to
make such service by regular mail, retaining a record of
adequate proof of such service. [270.061]
[EFFECTIVE DATE.] This section is effective for notices
issued on or after August 1, 2005.
Sec. 45. [270C.39] [DUE DATE ON SATURDAY, SUNDAY, OR
HOLIDAY.]
When the last day prescribed by law for the payment of any
tax to or the filing of any return, statement, or document with
the commissioner or the department falls on Saturday, Sunday, or
a legal holiday, the performance of such act shall be considered
timely if it is performed on the next succeeding day which is
not a Saturday, Sunday, or legal holiday. For purposes of this
section, the last day for the performance of the prescribed act
shall be determined by including any authorized extension of
time; the term "legal holiday" shall mean any day made a holiday
in Minnesota by section 645.44, subdivision 5, or by the laws of
the United States. [270.27]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 46. [270C.395] [TIMELY MAILING TREATED AS TIMELY
FILING AND PAYING.]
Subdivision 1. [DATE OF DELIVERY.] When a document,
including a return, claim, or statement, is required to be
filed, or a payment is required to be made to the commissioner
within a prescribed period, or on or before a prescribed date,
and if the document or payment is delivered by electronic means
or by United States mail after the period or the date to the
place prescribed for filing or payment, then the date of
delivery or of payment is the date of the confirmation
time-and-date stamp of the transaction, if delivered by
electronic means, or the date of the United States postmark
stamped on the cover in which the document or payment is mailed,
if delivered by United States mail, as the case may be.
Subd. 2. [MAILING REQUIREMENTS.] Subdivision 1 applies
only if:
(1) the postmark date falls within the prescribed period or
on or before the prescribed date,
(i) for filing (including any extension granted for the
filing) of the document, or
(ii) for making the payment (including any extension
granted for making the payment); and
(2) the document or payment was within the time prescribed
in clause (1), deposited in the mail in the United States in an
envelope or other appropriate wrapper, postage prepaid, properly
addressed to the office of the Department of Revenue with which
the document is required to be filed or to which payment is
required to be made.
Subd. 3. [CONFIRMATION OF ELECTRONIC FILING AND PAYMENT
AND UNITED STATES POSTAL SERVICE POSTMARK.] The confirmation
numbers and confirmation time-and-date stamps received by the
taxpayer following electronic payment or filing are proof of the
payment authorization and filing dates. Only the postmark of
the United States Postal Service, rather than those of private
postage meters, qualifies as proof of timely mailing under this
section. If the document or payment is sent by United States
registered mail, the date of registration shall be treated as
the postmark date. If the document or payment is sent by United
States certified mail and the sender's receipt is postmarked by
the postal employee to whom the envelope containing such
document or payment is presented, the date of the United States
postmark on the receipt shall be treated as the postmark date of
the document or payment.
Subd. 4. [RECEIPT DATE OTHERWISE GOVERNS.] In any case in
which the document or payment is not treated as timely filed or
paid under this section, the date of receipt by the
commissioner, and not the postmark date, shall govern for
purposes of determining the amount of any penalties for late
filing or payment.
Subd. 5. [PRIVATE DELIVERY SERVICES.] A reference in this
section to the United States mail shall be treated as including
a reference to any designated delivery service, and any
reference in this section to a postmark by the United States
Postal Service shall be treated as including a reference to any
date recorded or marked by any designated delivery service in
accordance with section 7502(f) of the Internal Revenue Code.
[270.271]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 47. [270C.40] [INTEREST PAYABLE TO COMMISSIONER.]
Subdivision 1. [INTEREST; RATE.] If any tax payable to the
commissioner or to the department is not paid within the time
specified by law for payment, the unpaid tax shall bear interest
at the rate for each year determined in subdivision 5 from the
date such tax should have been paid until the date that the tax
was paid, unless otherwise provided by law.
Subd. 2. [EXTENSION OF TIME.] When an extension of time
has been granted by the commissioner, interest shall be paid at
the rate for each year determined in subdivision 5 from the date
such payment should have been made, if no extension had been
granted, until the date of payment of such tax.
Subd. 3. [PENALTY.] If any penalty payable to the
commissioner shall by law bear interest, such penalty shall bear
interest at the rate for each year determined in subdivision 5
from the date the penalty was assessable until the date that
such penalty was paid, unless a different rate of interest is
otherwise provided by law.
Subd. 4. [UNDERPAYMENT OF ESTIMATED TAX.] There shall be
added to the amount of any underpayment of estimated tax,
computed pursuant to chapter 289A, an amount in lieu of
interest. The amount in lieu of interest for that taxable year
shall be the amount determined in subdivision 5 for January 1 on
which begins the taxable year or precedes the beginning of the
taxable year. The amount in lieu of interest does not bear
interest after the due date of the return for that taxable year.
Subd. 5. [ANNUAL INTEREST RATE.] The rate of interest or
amount in lieu of interest contained in subdivisions 1 to 4
shall be determined by the commissioner not later than October
15 of each year and shall be equal to the prime rate charged by
banks during the six-month period ending on September 30 of that
year, rounded to the nearest full percent. The rate of interest
or amount in lieu of interest becomes effective on January 1 of
the immediately succeeding year except as provided in
subdivision 4. For purposes of this subdivision, the term
"prime rate charged by banks" means the average predominant
prime rate quoted by commercial banks to large businesses, as
determined by the Board of Governors of the Federal Reserve
System. The determination of the commissioner pursuant to this
subdivision shall not be considered a "rule" and shall not be
subject to the Administrative Procedure Act contained in chapter
14.
Subd. 6. [UNPAID JUDGMENT.] Notwithstanding section
549.09, if judgment is entered upon any tax payable to the
commissioner which has not been paid within the time specified
by law for payment, the unpaid judgment shall bear interest at
the rate specified in this section from the date judgment is
entered until the date of payment. [270.75]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 48. [270C.405] [INTEREST ON REFUNDS.]
When any tax payable to the commissioner or to the
department is overpaid and an amount is due the taxpayer as a
refund of the overpayment, the overpayment shall bear interest
from the date of payment of the tax until the date the refund is
paid or credit is made, unless another period for computing
interest is provided by law. The interest rate per annum on
overpayments shall be the interest rate contained in section
270C.40, subdivision 5; the rate shall be adjusted annually and
become effective as provided in section 270C.40, subdivision 5.
The determination of the commissioner pursuant to this
subdivision is not a "rule" and is not subject to the
Administrative Procedure Act contained in chapter 14. [270.76]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 49. [270C.41] [AGREEMENT WITH INTERNAL REVENUE
SERVICE.]
Pursuant to section 270B.12, the commissioner may enter
into an agreement with the Internal Revenue Service to identify
taxpayers who have refunds due from the department and
liabilities owing to the Internal Revenue Service. In
accordance with the procedures established in the agreement, the
Internal Revenue Service may levy against the refunds to be paid
by the department. For each refund levied upon, the
commissioner shall first deduct from the refund a fee of $20,
and then remit the refund or the amount of the levy, whichever
is less, to the Internal Revenue Service. The proceeds of fees
shall be deposited into the Department of Revenue recapture
revolving fund under section 270A.07, subdivision 1. [270.052]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 50. [270C.42] [ELECTRONIC PAYMENTS; PENALTY.]
Subdivision 1. [PAYMENTS REQUIRED TO BE MADE
ELECTRONICALLY.] (a) If a taxpayer is required to make payment
of a tax to the commissioner by electronic means, the taxpayer
shall make all payments of all taxes and fees paid to the
commissioner by electronic means.
(b) Paragraph (a) does not apply to payments required to be
made for individual income taxes under section 289A.20,
subdivision 1, paragraph (a), or 289A.25. [270.771]
Subd. 2. [PENALTY FOR FAILURE TO PAY ELECTRONICALLY.] In
addition to other applicable penalties imposed by law, after
notification from the commissioner to the taxpayer that payments
for a tax payable to the commissioner are required to be made by
electronic means, and the payments are remitted by some other
means, there is a penalty in the amount of five percent of each
payment that should have been remitted electronically. After
the commissioner's initial notification to the taxpayer that
payments are required to be made by electronic means, the
commissioner is not required to notify the taxpayer in
subsequent periods if the initial notification specified the
amount of tax liability at which a taxpayer is required to remit
payments by electronic means. The penalty can be abated under
the abatement procedures prescribed in section 270C.34 if the
failure to remit the payment electronically is due to reasonable
cause. The penalty bears interest at the rate specified in
section 270C.40 from the due date of the payment of the tax to
the date of payment of the penalty. [270.78]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 51. [270C.425] [FINANCIAL TRANSACTION CARDS; PAYMENT
OF TAXES; APPROPRIATION.]
(a) The commissioner may allow taxpayers to use financial
transaction cards, as defined in section 325G.02, subdivision 2,
to pay any of the following which are payable to the
commissioner:
(1) taxes;
(2) estimated tax deposits;
(3) penalties;
(4) interest;
(5) additions to taxes; and
(6) fees.
(b) The commissioner may impose a fee on each transaction
under paragraph (a). The fee is equal to the fee the
commissioner is required to pay for the taxpayer's use of the
financial transaction card. This fee must be deposited in the
general fund and is appropriated to the commissioner for the
purpose of paying the transaction card fee.
(c) The types of financial transaction cards that will be
accepted shall be determined solely by the commissioner. The
selection of transaction card vendors shall be made through a
request for proposals process. Before issuing a request for
proposals, the commissioner shall review the request for
proposals and any specifications with the commissioner of
finance. The commissioner shall select the transaction card
vendors from among those which meet the operational and cost
requirements of the department. The commissioner may limit the
number of different types of financial transaction cards that
will be accepted.
(d) If the commissioner allows taxpayers to pay taxes with
financial transaction cards, the commissioner shall report
quarterly on the status of this program to the chairs of the
house tax and appropriations committees and the chairs of the
senate tax and finance committees. [270.74]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 52. [270C.43] [REFUNDS PAYABLE IN INSTALLMENTS.]
Subdivision 1. [LAW HELD UNCONSTITUTIONAL.] Where there is
(1) a final judicial determination that a law administered by
the commissioner is unconstitutional, is in violation of state
or federal law, or that a regulation or statute has been
misinterpreted by the department; and (2) the determination is
not limited to prospective application, the procedures in this
section relating to refunds attributable to that determination
apply.
Subd. 2. [ESTIMATE OF CUMULATIVE REFUNDS.] The
commissioner shall estimate the cumulative refunds due resulting
from the judicial determination.
Subd. 3. [GENERAL REFUND PROVISIONS.] If the commissioner
determines that the cumulative refunds due all affected
taxpayers will not exceed $50,000,000, the general provisions
for refunding for the particular tax type apply.
Subd. 4. [REFUND PROCEDURES.] (a) If the commissioner
determines that the cumulative refunds due all affected
taxpayers will exceed $50,000,000, the refund procedures in this
subdivision apply.
(b) The refunds due shall be paid in five installments.
The first installment will be paid during the calendar year
following the later of the filing of the refund claim or the
final judicial determination and subsequent installments will be
paid at any time during each of the four succeeding calendar
years.
(c) The commissioner shall compute the annual refund
installment due under this subdivision, and notify the taxpayer
of the total amount of the claim for refund which has been
allowed.
(d) The installment paid each year equals 20 percent of the
refund allowed unless the commissioner determines that the
cumulative refunds due for a particular year under this section
will exceed $150,000,000. If the refunds payable will exceed
that amount, they will be reduced pro rata with any balance
remaining due payable with the final refund installment.
(e) Unless contrary to the provisions in this section, the
provisions for refunds in the various tax types, including
provisions related to the payment of interest, apply to the
refunds subject to these provisions.
(f) The commissioner may establish a de minimis individual
refund amount below which the installment provisions do not
apply. The amount established under this paragraph is not
subject to the provisions of chapter 14.
(g) If the commissioner of finance determines that it is in
the best interest of the state, refunds payable under this
section may be paid in fewer than five installments. [270.79]
[EFFECTIVE DATE.] This section is effective for refunds
payable on or after August 1, 2005.
Sec. 53. [270C.44] [PRACTICE BEFORE THE COMMISSIONER.]
The commissioner shall prescribe rules governing the
qualification and practice of agents, attorneys, or other
persons representing taxpayers before the commissioner. The
rules may require that those persons, agents, and attorneys show
that they are of good character and in good repute, have the
necessary qualifications to give taxpayers valuable services,
and are otherwise competent to advise and assist taxpayers in
the presentation of their case before being recognized as
representatives of taxpayers. After due notice and opportunity
for hearing, the commissioner may suspend and bar from further
practice before the commissioner any person, agent, or attorney
who is shown to be incompetent or disreputable, who refuses to
comply with the rules, or who with intent to defraud, willfully
or knowingly deceives, misleads, or threatens a taxpayer or
prospective taxpayer, by words, circular, letter, or by
advertisement. This section does not curtail the rights of
individuals to appear in their own behalf or partners or
corporations' officers to appear in behalf of their respective
partnerships or corporations. [270.06, clause (16)]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 54. [270C.445] [TAX PREPARATION SERVICES.]
Subdivision 1. [SCOPE.] (a) This section applies to a
person who offers, provides, or facilitates the provision of
refund anticipation loans, as part of or in connection with the
provision of tax preparation services.
(b) This section does not apply to:
(1) a tax preparer who provides tax preparation services
for fewer than six clients in a calendar year;
(2) the provision by a person of tax preparation services
to a spouse, parent, grandparent, child, or sibling; and
(3) the provision of services by an employee for an
employer.
Subd. 2. [DEFINITIONS.] (a) For purposes of this section,
the following terms have the meanings given.
(b) "Client" means an individual for whom a tax preparer
performs or agrees to perform tax preparation services.
(c) "Person" means an individual, corporation, partnership,
limited liability company, association, trustee, or other legal
entity.
(d) "Refund anticipation loan" means a loan, whether
provided by the tax preparer or another entity such as a
financial institution, in anticipation of, and whose payment is
secured by, a client's federal or state income tax refund or
both.
(e) "Tax preparation services" means services provided for
a fee or other consideration to a client to:
(1) assist with preparing or filing state or federal
individual income tax returns;
(2) assume final responsibility for completed work on an
individual income tax return on which preliminary work has been
done by another; or
(3) offer or facilitate the provision of refund
anticipation loans.
(f) "Tax preparer" or "preparer" means a person providing
tax preparation services subject to this section.
Subd. 3. [STANDARDS OF CONDUCT.] No tax preparer shall:
(1) without good cause fail to promptly, diligently, and
without unreasonable delay complete a client's tax return;
(2) obtain the signature of a client to a tax return or
authorizing document that contains blank spaces to be filled in
after it has been signed;
(3) fail to sign a client's tax return when payment for
services rendered has been made;
(4) fail or refuse to give a client a copy of any document
requiring the client's signature within a reasonable time after
the client signs the document;
(5) fail to retain for at least four years a copy of
individual income tax returns;
(6) fail to maintain a confidential relationship between
themselves and their clients or former clients;
(7) fail to take commercially reasonable measures to
safeguard a client's nonpublic personal information;
(8) make, authorize, publish, disseminate, circulate, or
cause to make, either directly or indirectly, any false,
deceptive, or misleading statement or representation relating to
or in connection with the offering or provision of tax
preparation services;
(9) require a client to enter into a loan arrangement in
order to complete a tax return;
(10) claim credits or deductions on a client's tax return
for which the tax preparer knows or reasonably should know the
taxpayer does not qualify;
(11) charge, offer to accept, or accept a fee based upon a
percentage of an anticipated refund for tax preparation
services;
(12) under any circumstances, withhold or fail to return to
a client a document provided by the client for use in preparing
the client's tax return.
Subd. 4. [REQUIRED DISCLOSURES; REFUND ANTICIPATION
LOANS.] (a) If a tax preparer offers to make or facilitate a
refund anticipation loan to the client, the preparer must make
the disclosures in this subdivision. The disclosures must be
made before or at the same time the preparer offers the refund
anticipation loan to the client.
(b) The tax preparer must provide to a client a written
notice on a single sheet of paper, separate from any other
document or writing, containing:
(1) a legend, centered at the top on the single sheet of
paper, in bold, capital letters, and in 28-point type stating
"NOTICE";
(2) the following verbatim statements:
(i) "This is a loan. The annual percentage rate (APR),
based on the estimated payment period, is (fill in the estimated
APR)."
(ii) "Your refund will be used to repay the loan. As a
result, the amount of your refund will be reduced by (fill in
appropriate dollar amount) for fees, interest, and other
charges."
(iii) "You can get your refund in about two weeks if you
file your return electronically and have the Internal Revenue
Service send your refund to your own bank account." and
(3) if the client is subject to additional interest when a
refund is delayed, the following verbatim statement must also be
included in the notice: "If you choose to take this loan and
your refund is delayed, you may have to pay additional interest."
(c) All required statements must be in capital and small
font type fonts, in a minimum of 14-point type, with at least a
double space between each line in the statement and four spaces
between each statement.
(d) The notice must be signed and dated by the tax preparer
and the client.
Subd. 5. [ITEMIZED BILL REQUIRED.] A tax preparer must
provide an itemized statement of the charges for services, at
least separately stating the charges for:
(1) return preparation;
(2) electronic filing; and
(3) providing or facilitating a refund anticipation loan.
Subd. 6. [ENFORCEMENT; PENALTIES.] The commissioner may
impose an administrative penalty of not more than $1,000 per
violation of subdivision 3, 4, or 5. The commissioner may
terminate a tax preparer's authority to transmit returns
electronically to the state, if the commissioner determines the
tax preparer engaged in a pattern and practice of violating this
section. Imposition of a penalty under this subdivision is
subject to the contested case procedure under chapter 14. The
commissioner shall collect the penalty in the same manner as a
tax collected by the commissioner.
Subd. 7. [ENFORCEMENT; CIVIL ACTIONS.] (a) Any violation
of this section is an unfair, deceptive, and unlawful trade
practice within the meaning of section 8.31.
(b) A client may bring a civil action seeking redress for a
violation of this section in the conciliation or the district
court of the county in which unlawful action is alleged to have
been committed or where the respondent resides or has a
principal place of business.
(c) A district court finding for the plaintiff must award
actual damages, including incidental and consequential damages,
reasonable attorney fees, court costs, and any other equitable
relief as the court considers appropriate.
Subd. 8. [EXEMPTIONS; ENFORCEMENT PROVISIONS.] The
provisions of subdivisions 6 and 7 do not apply to:
(1) an attorney admitted to practice under section 481.01;
(2) a certified public accountant holding a certificate
under section 326A.04 or a person issued a permit to practice
under section 326A.05;
(3) a person designated as a registered accounting
practitioner under Minnesota Rules, part 1105.6600, or a
registered accounting practitioner firm issued a permit under
Minnesota Rules, part 1105.7100;
(4) an enrolled agent who has passed the special enrollment
examination administered by the Internal Revenue Service; and
(5) any fiduciary, or the regular employees of a fiduciary,
while acting on behalf of the fiduciary estate, the testator,
trustor, grantor, or beneficiaries of them. [270.30]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 55. [270C.447] [LEGAL ACTION TO ENJOIN TAX RETURN
PREPARER.]
Subdivision 1. [COMMENCEMENT OF ACTION.] A civil action in
the name of the state of Minnesota may be commenced to enjoin
any person who is a tax return preparer doing business in this
state from further engaging in any conduct described in
subdivision 2. An action under this subdivision must be brought
by the attorney general in the district court for the judicial
district of the tax return preparer's residence or principal
place of business, or in which the taxpayer with respect to
whose tax return the action is brought resides. The court may
exercise its jurisdiction over the action separate and apart
from any other action brought by the state of Minnesota against
the tax return preparer or any taxpayer.
Subd. 2. [INJUNCTION PROHIBITING SPECIFIC CONDUCT.] In an
action under subdivision 1, if the court finds that a tax return
preparer has:
(1) engaged in any conduct subject to a civil penalty under
section 289A.60 or a criminal penalty under section 289A.63;
(2) misrepresented the preparer's eligibility to practice
before the Department of Revenue, or otherwise misrepresented
the preparer's experience or education as a tax return preparer;
(3) guaranteed the payment of any tax refund or the
allowance of any tax credit; or
(4) engaged in any other fraudulent or deceptive conduct
that substantially interferes with the proper administration of
a law administered by the commissioner, and injunctive relief is
appropriate to prevent the recurrence of that conduct,
the court may enjoin the person from further engaging in that
conduct.
Subd. 3. [INJUNCTION PROHIBITING ALL BUSINESS ACTIVITIES.]
If the court finds that a tax return preparer has continually or
repeatedly engaged in conduct described in subdivision 2, and
that an injunction prohibiting that conduct would not be
sufficient to prevent the person's interference with the proper
administration of a law administered by the commissioner, the
court may enjoin the person from acting as a tax return
preparer. The court may not enjoin the employer of a tax return
preparer for conduct described in subdivision 2 engaged in by
one or more of the employer's employees unless the employer was
also actively involved in that conduct. [289A.60, subd. 13,
paragraphs (b), (c), and (d)]
Subd. 4. [TAX RETURN PREPARER.] For purposes of this
section, the term "tax return preparer" means an individual who
prepares for compensation, or who employs one or more
individuals to prepare for compensation, a return of tax or a
claim for refund of tax. The preparation of a substantial part
of a return or claim for refund is treated as if it were the
preparation of the entire return or claim for refund. An
individual is not considered a tax return preparer merely
because the individual:
(1) gives typing, reproducing, or other mechanical
assistance;
(2) prepares a return or claim for refund of the employer,
or an officer or employee of the employer, by whom the
individual is regularly and continuously employed;
(3) prepares a return or claim for refund of any person as
a fiduciary for that person; or
(4) prepares a claim for refund for a taxpayer in response
to a tax order issued to the taxpayer.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
COLLECTION
Sec. 56. [270C.50] [USE OF COLLECTION REMEDIES.]
In addition to the remedies provided in the state revenue
laws, the commissioner may use any remedy available to
nongovernmental creditors to collect taxes. [270.06, clause
(14)]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 57. [270C.51] [ALLOCATION OF PAYMENT.]
In the discretion of the commissioner, payments received
for taxes may be credited first to the oldest liability not
secured by a judgment or lien. For liabilities to which
payments are applied, the commissioner may credit payments first
to penalties, next to interest, and then to the tax due.
[270.652; 297E.12, subd. 10]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 58. [270C.52] [SETTLEMENT AGREEMENTS, PAYMENT
AGREEMENTS, AND OFFERS IN COMPROMISE.]
Subdivision 1. [LIABILITY AGREEMENTS.] The commissioner,
or any employee of the department authorized in writing by the
commissioner, is authorized to enter into an agreement in
writing with any taxpayer, or duly authorized agent or
representative of the taxpayer, relating to the liability of the
taxpayer in respect of any tax for any tax period ending prior
to the date of the agreement. The agreement shall be final and
conclusive and, except upon a showing of fraud or malfeasance,
or misrepresentation of a material fact, the case shall not be
reopened as to the matters agreed upon, or the agreement
modified, by any employee or agent of the state; and, in any
suit, action, or proceeding, the agreement, or any
determination, assessment, collection, payment, abatement,
refund, or credit, made in accordance with the agreement, shall
not be annulled, modified, set aside, or disregarded. [270.67,
subd. 1]
Subd. 2. [PAYMENT AGREEMENTS.] (a) When any portion of any
tax payable to the commissioner together with interest and
penalty thereon, if any, has not been paid, the commissioner may
extend the time for payment for a further period. When the
authority of this section is invoked, the extension shall be
evidenced by written agreement signed by the taxpayer and the
commissioner, stating the amount of the tax with penalty and
interest, if any, and providing for the payment of the amount in
installments.
(b) The agreement may contain a confession of judgment for
the amount and for any unpaid portion thereof. If the agreement
contains a confession of judgment, the confession of judgment
must provide that the commissioner may enter judgment against
the taxpayer in the district court of the county of residence as
shown upon the taxpayer's tax return for the unpaid portion of
the amount specified in the extension agreement.
(c) The agreement shall provide that it can be terminated,
after notice by the commissioner, if information provided by the
taxpayer prior to the agreement was inaccurate or incomplete,
collection of the tax covered by the agreement is in jeopardy,
there is a subsequent change in the taxpayer's financial
condition, the taxpayer has failed to make a payment due under
the agreement, or the taxpayer has failed to pay any other tax
or file a tax return coming due after the agreement.
(d) The notice must be given at least 14 calendar days
prior to termination, and shall advise the taxpayer of the right
to request a reconsideration from the commissioner of whether
termination is reasonable and appropriate under the
circumstances. A request for reconsideration does not stay
collection action beyond the 14-day notice period. If the
commissioner has reason to believe that collection of the tax
covered by the agreement is in jeopardy, the commissioner may
proceed under section 270C.36 and terminate the agreement
without regard to the 14-day period.
(e) The commissioner may accept other collateral the
commissioner considers appropriate to secure satisfaction of the
tax liability. The principal sum specified in the agreement
shall bear interest at the rate specified in section 270C.40 on
all unpaid portions thereof until the same has been fully paid
or the unpaid portion thereof has been entered as a judgment.
The judgment shall bear interest at the rate specified in
section 270C.40.
(f) If it appears to the commissioner that the tax reported
by the taxpayer is in excess of the amount actually owing by the
taxpayer, the extension agreement or the judgment entered
pursuant thereto shall be corrected. If after making the
extension agreement or entering judgment with respect thereto,
the commissioner determines that the tax as reported by the
taxpayer is less than the amount actually due, the commissioner
shall assess a further tax in accordance with the provisions of
law applicable to the tax.
(g) The authority granted to the commissioner by this
section is in addition to any other authority granted to the
commissioner by law to extend the time of payment or the time
for filing a return and shall not be construed in limitation
thereof. [270.67, subd. 2]
Subd. 3. [OFFER-IN-COMPROMISE AND INSTALLMENT PAYMENT
PROGRAM.] (a) In implementing the authority provided in
subdivision 2 or in sections 8.30 and 16D.15 to accept offers of
installment payments or offers-in-compromise of tax liabilities,
the commissioner shall prescribe guidelines for employees of the
department to determine whether an offer-in-compromise or an
offer to make installment payments is adequate and should be
accepted to resolve a dispute. In prescribing the guidelines,
the commissioner shall develop and publish schedules of national
and local allowances designed to provide that taxpayers entering
into a compromise or payment agreement have an adequate means to
provide for basic living expenses. The guidelines must provide
that the taxpayer's ownership interest in a motor vehicle, to
the extent of the value allowed in section 550.37, will not be
considered as an asset; in the case of an offer related to a
joint tax liability of spouses, that value of two motor vehicles
must be excluded. The guidelines must provide that employees of
the department shall determine, on the basis of the facts and
circumstances of each taxpayer, whether the use of the schedules
is appropriate and that employees must not use the schedules to
the extent the use would result in the taxpayer not having
adequate means to provide for basic living expenses. The
guidelines must provide that:
(1) an employee of the department shall not reject an
offer-in-compromise or an offer to make installment payments
from a low-income taxpayer solely on the basis of the amount of
the offer; and
(2) in the case of an offer-in-compromise which relates
only to issues of liability of the taxpayer:
(i) the offer must not be rejected solely because the
commissioner is unable to locate the taxpayer's return or return
information for verification of the liability; and
(ii) the taxpayer shall not be required to provide an
audited, reviewed, or compiled financial statement.
(b) The commissioner shall establish procedures:
(1) that require presentation of a counteroffer or a
written rejection of the offer by the commissioner if the amount
offered by the taxpayer in an offer-in-compromise or an offer to
make installment payments is not accepted by the commissioner;
(2) for an administrative review of any written rejection
of a proposed offer-in-compromise or installment agreement made
by a taxpayer under this section before the rejection is
communicated to the taxpayer;
(3) that allow a taxpayer to request reconsideration of any
written rejection of the offer or agreement to the commissioner
to determine whether the rejection is reasonable and appropriate
under the circumstances; and
(4) that provide for notification to the taxpayer when an
offer-in-compromise has been accepted, and issuance of
certificates of release of any liens imposed under section
270C.63 related to the liability which is the subject of the
compromise. [270.67, subd. 4]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 59. [270C.53] [COLLECTION; TAXPAYER INABILITY TO
PAY.]
Notwithstanding any other provision of law, the
commissioner may, 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. [270.07, subd. 3, clause (e)]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 60. [270C.54] [COLLECTION OF FINANCIAL INSTITUTION
FEES.]
The commissioner shall collect from a taxpayer any
collection fees or costs charged by financial institutions and
incurred by the commissioner. [270.063, subd. 3]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 61. [270C.545] [FEDERAL TAX REFUND OFFSET FEES; TIME
LIMIT FOR SUBMITTING CLAIMS FOR OFFSET.]
For fees charged by the Department of the Treasury of the
United States for the offset of federal tax refunds that are
deducted from the refund amounts remitted to the commissioner,
the unpaid debts of the taxpayers whose refunds are being offset
to satisfy the debts are reduced only by the actual amount of
the refund payments received by the commissioner.
Notwithstanding any other provision of law to the contrary, a
claim for the offset of a federal tax refund must be submitted
to the Department of the Treasury of the United States within
ten years after the date of the assessment of the tax owed by
the taxpayer whose refund is to be offset to satisfy the debt.
[270.063, subd. 4]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 62. [270C.56] [PERSONAL LIABILITY.]
Subdivision 1. [LIABILITY IMPOSED.] A person who, either
singly or jointly with others, has the control of, supervision
of, or responsibility for filing returns or reports, paying
taxes, or collecting or withholding and remitting taxes and who
fails to do so, or a person who is liable under any other law,
is liable for the payment of taxes, penalties, and interest
arising under chapters 295, 296A, 297F, 297A, and 297G, or
sections 290.92 and 297E.02.
Subd. 2. [PERSON DEFINED.] The term "person" includes, but
is not limited to, a corporation, estate, trust, organization,
or association, whether organized for profit or not, an officer
or director of a corporation, a member of a partnership, an
employee, a third party (including, but not limited to, a
financial institution, lender, or surety), and any other
individual or entity. "Person" does not include an unpaid,
volunteer member of a board of trustees or directors of an
organization exempt from taxation under section 290.05, if the
member is solely serving in an honorary capacity, does not
participate in the day-to-day or financial operations of the
organization, and has no actual knowledge of the failure to file
returns or remit taxes.
Subd. 3. [PROCEDURE FOR ASSESSMENT.] The commissioner may
assess liability for the taxes described in subdivision 1
against a person liable under this section. The assessment may
be based upon information available to the commissioner. It
must be made within the prescribed period of limitations for
assessing the underlying tax, or within one year after the date
of an order assessing underlying tax, whichever period expires
later. An order assessing personal liability under this section
is reviewable under section 270C.35 and is appealable to Tax
Court.
If a person has been assessed under this section for an
amount for a given period and the time for appeal has expired or
there has been a final determination that the person is liable,
collection action is not stayed pursuant to section 270C.33,
subdivision 5, for subsequent assessments of additional amounts
for the same person for the same period and tax type.
Subd. 4. [RIGHT OF CONTRIBUTION.] A person who has paid
all or part of a liability assessed under this section has a
cause of action against other liable persons to recover the
amount paid in excess of that person's share of the liability.
A claim for recovery of contribution may be made only in a
proceeding which is separate from, and cannot be joined or
consolidated with, an administrative or judicial proceeding or
investigation involving the commissioner's administration or
enforcement of this section. An order assessing liability under
this section against the person from whom contribution is being
sought is not a prerequisite for bringing an action for recovery
of contribution, nor is the issuance of an order binding on the
court in which the proceeding is brought. The court can
determine whether each person would be liable under this section
and the share of liability. The commissioner cannot be made a
party to any proceeding for recovery of contribution, nor is a
determination in such a proceeding binding on the commissioner
for the purpose of administering or enforcing this section. An
action for contribution arises when the liability under this
section is paid in full, or the liability of the person seeking
contribution has been determined by agreement between the
commissioner and such person and paid, and must be brought
within the time period prescribed in section 541.05. [270.101]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 63. [270C.57] [SUCCESSOR LIABILITY OF BUSINESSES.]
Subdivision 1. [DEFINITIONS.] (a) The following terms used
in this section have the following meanings.
(b) "Successor" means a person who directly or indirectly
purchases, acquires, is gifted, or succeeds to the business or
stock of goods of any person quitting, selling, or otherwise
disposing of a business or stock of goods. Successor does not
include a personal representative or beneficiary of an estate, a
trustee in bankruptcy, a debtor in possession, a receiver, a
secured party, a mortgagee, an assignee of rents, or any other
lienholder.
(c) "Person" means an individual, partnership, corporation,
sole proprietorship, joint venture, limited liability company,
or any other type of business entity or association.
(d) "Withhold" means setting aside money or dealing with
the payment of consideration in a manner that denies a
transferring business the benefit of the transfer in an amount
equal to the sales and withholding tax liability of the
transferring business.
(e) "Purchase price" means the consideration paid or to be
paid for the transfer by the successor to the transferring
business, and includes amounts paid for tangible property or
intangibles such as leases, licenses, or goodwill. Purchase
price also includes debts assumed or forgiven by the successor,
or real or personal property conveyed or to be conveyed by the
successor to the transferring business.
(f) "Arm's-length transaction" means a transfer for
adequate consideration between independent parties both acting
in their own best interests. If the parties are related to each
other, a rebuttable presumption arises that the transaction is
not at arm's length.
(g) "Transfer" means every mode, direct or indirect,
absolute or conditional, voluntary or involuntary, of disposing
of or parting with a business or an interest in a business, or a
stock of goods, whether by gift or for consideration. Transfer
includes a change in the type of business entity or the name of
the business, where one business is discontinued and a new one
started. Transfer also includes the acquisition by a new
corporation of the assets of a prior business in exchange for
the stock of the new corporation. Transfer does not include an
assignment for the benefit of creditors, foreclosure or
enforcement of a mortgage, assignment of rents, security
interest or lien, sale or disposition in a bankruptcy
proceeding, or sale or disposition by a receiver.
(h) "Transfer in bulk" means a transfer, other than in the
ordinary course of the transferor's trade or business, of more
than one-half of all the property of a business at all locations
combined, as measured by the value of the property at the time
of the transfer.
Subd. 2. [BULK TRANSFERS; LIABILITY OF SUCCESSOR; LIEN.]
(a) Whenever a business transfers in bulk to a successor the
business assets, and an enforceable lien for unpaid sales and
withholding taxes has been filed against the business by the
commissioner under section 270C.63, at least 20 days before
taking possession of the assets or paying the purchase price,
the successor shall notify the commissioner of the transfer and
the terms and conditions related to it. The notice must include
the tax identification number of the transferring business. If
an agreement to transfer has been entered into, this notice
requirement only applies: (1) if a lien described under this
paragraph has been filed prior to the date of the agreement; or
(2) if the date of the transfer is more than 30 days after the
date of the agreement, and a lien described under this paragraph
is filed at least 30 days prior to the date of transfer.
(b) If the successor fails to give the notice required in
paragraph (a), the successor is liable for any unpaid sales and
withholding taxes, interest, and penalties due from the
transferring business to the extent of the purchase price. If
the successor provides the notice required in paragraph (a) and,
within 20 days after receipt of the notice, the commissioner
notifies the successor that tax liabilities exist in addition to
those included on the lien or there are sales and withholding
tax returns due but not filed, the successor is, in addition to
being liable for the amounts included on the lien, liable for
all other uncontested sales and withholding taxes, interest, and
penalties as stated in the commissioner's notice from the
transferring business to the extent of the purchase price if the
successor pays the purchase price or takes possession of the
assets without withholding and remitting the liability to the
commissioner. The successor is liable whether the purchase
price is paid or the assets are transferred prior to or after
notification from the commissioner. The commissioner may also
notify the successor that there are no sales or withholding tax
liabilities or returns due from the transferring business other
than the liabilities included on the lien, and of the current
balance due to satisfy the lien.
(c) If, based upon the information available, the
commissioner determines that a transfer was not at arm's length
or was a gift, the successor's liability under this section
equals the value of the assets transferred. For purposes of
imposing the liability, the value of the property transferred is
presumed, subject to rebuttal, to equal the unpaid sales and
withholding taxes, interest, and penalties of the transferring
business.
(d) In the case of a gift resulting in successor liability
under this section, return of the gifted property by the donee
to the donor releases the donee's successor liability.
(e) A successor who complies with the requirements of
paragraphs (a) and (b) is not liable for any assessments of
sales and withholding taxes of the transferring business made
after the commissioner provides notice to the successor under
paragraph (b), except for taxes assessed on returns filed to
comply with the notice. If the commissioner fails to provide
the notice and the 20-day period expires, the successor is not
liable for any sales and withholding taxes of the transferring
business other than those included on the lien.
Subd. 3. [ASSESSMENT ABATEMENT; REVIEW.] The commissioner
may assess liability under this section within the time
prescribed for collecting the underlying sales and withholding
taxes, interest, and penalties. The assessment is presumed to
be valid, and the burden is upon the successor to show it is
incorrect or invalid. An order assessing successor liability is
reviewable administratively under section 270C.35 and is
appealable to Tax Court under chapter 271. The commissioner may
abate an assessment if the successor's failure to give the
notice required under this section is due to reasonable cause.
The procedural and appeal provisions under section 270C.34 apply
to abatement requests under this subdivision. Collection
remedies available against the transferring business are
available against the successor from the date of assessment of
successor liability.
Subd. 4. [DISCLOSURE.] Notification by the commissioner to
the successor under subdivision 2, paragraph (b), that the
transferring business owes sales and withholding taxes,
interest, and penalties or has returns that are due, or that
there are no outstanding liabilities or returns other than the
liabilities included on the lien, or of the current balance due
to satisfy the lien, is not a disclosure violation under chapter
270B. [270.102]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 64. [270C.58] [LIABILITY OF TRANSFEREES AND
FIDUCIARIES.]
Subdivision 1. [TRANSFEREES AND FIDUCIARIES.] The amounts
of the following liabilities are, except as otherwise provided
in subdivision 3, assessed, collected, and paid in the same
manner and subject to the same provisions and limitations as a
deficiency in a tax imposed by chapter 290, including any
provisions of law for the collection of taxes:
(1) the liability, at law or in equity, of a transferee of
property of a taxpayer for tax or overpayment of a refund,
including interest, additional amounts, and additions to the tax
or overpayment provided by law, imposed upon the taxpayer by
chapter 290 or provided for in chapter 290A; and
(2) the liability of a fiduciary under subdivision 2, for
the payment of tax from the estate of the taxpayer. The
liability may reflect the amount of tax shown on the return or
any deficiency in tax. [289A.31, subd. 3]
Subd. 2. [TAX AS A PERSONAL DEBT OF A FIDUCIARY.] A tax
imposed by chapter 290 and an overpayment of a refund provided
for in chapter 290A, and interest and penalties, is a personal
debt of the taxpayer from the time the liability arises,
regardless of when the time for discharging the liability by
payment occurs. The debt is, in the case of the personal
representative of the estate of a decedent and in the case of
any fiduciary, that of the individual in the individual's
official or fiduciary capacity only, unless the individual has
voluntarily distributed the assets held in that capacity without
reserving sufficient assets to pay the tax, interest, and
penalties, in which event the individual is personally liable
for the deficiency. [289A.31, subd. 4]
Subd. 3. [TIME LIMIT FOR ASSESSMENT AND COLLECTION FOR
TRANSFEREE OR FIDUCIARY.] The period of limitation for
assessment and collection of any liability of a transferee or
fiduciary is as follows:
(1) In the case of the liability of an initial transferee
of the property of the taxpayer, the tax may be assessed within
one year after the expiration of the period of limitation of
assessment against the taxpayer. The tax may be collected by
action brought within one year after the expiration of the
period of limitation for the starting of an action against the
taxpayer.
(2) In the case of the liability of the transferee of a
transferee of the property of the taxpayer, the tax may be
assessed within one year after the expiration of the period of
limitation for assessment against the preceding transferee, but
only if within 3-1/2 years after the expiration of the period of
limitation for assessment against the taxpayer. The tax may be
collected by action brought within one year after the expiration
of the period of limitation for the starting of an action
against the preceding transferee, but only if within four years
after the expiration of the period of limitation for bringing an
action against the taxpayer; except that if before the
expiration of the period of limitation for the assessment of the
liability of the transferee a court proceeding for the
collection of the tax or liability has been begun against the
taxpayer or last preceding transferee, liability of the
transferee expires one year after the return of execution in the
court proceeding and the period of limitation for collection by
action will expire one year after the liability is assessed.
(3) In the case of the liability of a fiduciary, the tax
may be assessed up to one year after the liability arises or not
later than the expiration of the period for collection of the
tax for which the liability arises, whichever is later, and may
be collected by action brought within one year after assessment.
(4) For the purposes of this subdivision, if the taxpayer
is deceased, or in the case of a corporation, has ended its
existence, the period of limitation for assessment against the
taxpayer will be the period that would be in effect had death or
termination of existence not occurred.
As used in this subdivision, the term "transferee" includes
heir, legatee, devisee, and distributee. [289A.38, subd. 13]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 65. [270C.585] [TRANSFEREE LIABILITY FOR ESTATE TAX.]
The personal representative and person to whom property
that is subject to taxation under chapter 291 is transferred,
other than a bona fide purchaser, mortgagee, or lessee, is
personally liable for that tax, until its payment, to the extent
of the value of the property at the time of the transfer.
Personal liability also does not extend to subsequent
transferees from bona fide purchasers, mortgagees, and lessees.
[289A.31, subd. 6]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 66. [270C.59] [LIABILITY OF THIRD PARTIES PAYING OR
PROVIDING FOR WAGES.]
(a) For purposes of section 290.92, if a lender, surety, or
other person, who is not an employer with respect to an employee
or group of employees, pays wages directly to such an employee
or group of employees, employed by one or more employers, or to
an agent on behalf of such employee or employees, such lender,
surety, or other person shall be liable to the commissioner in a
sum equal to the taxes required to be deducted and withheld from
such wages by such employer.
(b) If a lender, surety, or other person supplies funds to
or for the account of an employer for the specific purpose of
paying wages of the employees of such employer, with actual
notice or knowledge that such employer does not intend to or
will not be able to make timely payment or deposit of the
amounts of tax required by section 290.92 to be deducted and
withheld by such employer from such wages, such lender, surety,
or other person shall be liable personally to the commissioner
in a sum equal to the taxes which are not paid over to the
commissioner by such employer with respect to such wages.
(c) For purposes of this section, a person shall be deemed
for purposes of a particular transaction to have actual notice
or knowledge of any fact from the time such fact is brought to
the attention of the individual conducting such transaction, and
in any event from the time such fact would have been brought to
such individual's attention if the person had exercised due
diligence. A person exercises due diligence by maintaining
reasonable routines for communicating significant information to
the person conducting the transaction and there is reasonable
compliance with the routines. Due diligence does not require an
individual acting for the person to communicate information
unless such communication is part of the individual's regular
duties or unless the individual has reason to know of the
transaction and that the transaction would be materially
affected by the information.
(d) Any amounts paid to the commissioner pursuant to this
section shall be credited to the liability of the employer.
[290.92, subd. 22]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 67. [270C.61] [LEGAL ACTION; CONFESSION OF JUDGMENT.]
Subdivision 1. [LEGAL ACTION.] (a) In addition to all
other methods authorized by law for the collection of tax, if
any tax payable to the commissioner or to the department,
including penalties and interest thereon, is not paid within 60
days after it is required by law to be paid, the commissioner
may proceed under this subdivision. Within five years after the
date of assessment of the tax or at any time a lien filed under
section 270C.63 is enforceable, or, if the action is to renew or
enforce a judgment, at any time before the judgment's
expiration, the commissioner may bring an action in court
against the person liable for the payment or collection of the
tax, in the name of the state, for the recovery of the tax and
interest and penalties due in respect thereof. The action may
be commenced by the commissioner in the same manner as any other
civil action.
(b) The commissioner may also serve the summons and
complaint by mailing a copy to the taxpayer's last known address
by certified mail. Service by certified mail is complete when
mailed in acceptable form with the United States Postal Service
or with the central mail system of the state of Minnesota.
[270.68, subd. 1]
Subd. 2. [COURT-ORDERED RETURNS.] In addition to other
remedies that may be available, the commissioner may bring an
action in equity by the state against a taxpayer for an
injunction ordering the taxpayer to file a complete and proper
return or amended return. The district courts of this state
have jurisdiction over the action and disobedience of an
injunction issued under this subdivision will be punished as a
contempt of district court. The action may be commenced by the
commissioner in the same manner as any other civil action.
[289A.36, subd. 3, clause (3)]
Subd. 3. [PROSECUTING AUTHORITY.] The commissioner may
request the county attorney or the attorney general to conduct
the proceedings on behalf of the state. [270.68, subd. 1,
paragraph (c)]
Subd. 4. [APPEALS.] Either party to an action or a
judgment for the recovery of any taxes, interest, or penalties
under subdivision 1 may appeal the judgment as in other civil
cases. [270.68, subd. 2]
Subd. 5. [TAX PRESUMED VALID.] The tax, as assessed by the
commissioner, with any penalties included therein, shall be
presumed to be valid and correctly determined and assessed, and
the burden shall be upon the taxpayer to show its incorrectness
or invalidity. A statement filed by the commissioner showing
the amount of the tax and penalties as determined or assessed by
the commissioner, is admissible in evidence and shall establish
prima facie the facts set forth therein. [270.68, subd. 3]
Subd. 6. [CONFESSION OF JUDGMENT.] (a) The commissioner
may, within 3-1/2 years after any return is filed,
notwithstanding section 541.09, enter judgment on any confession
of judgment contained in the return after ten days' notice
served upon the taxpayer by mail at the address shown in the
return. The judgment shall be entered by the court
administrator of district court upon the filing of a photocopy
or similar reproduction of that part of the return containing
the confession of judgment along with a statement of the
commissioner or an agent that the tax has not been paid. The
commissioner may prescribe the words for the confession of
judgment statement contained on the return.
(b) Notwithstanding any other provision of the law to the
contrary, the commissioner may, within five years after a
written agreement is signed by the taxpayer and the commissioner
under the provisions of section 270C.52, subdivision 2, enter
judgment on the confession of judgment contained within the
agreement after ten days' notice served upon the taxpayer at the
address shown in the agreement. Such judgment shall be entered
by the court administrator of district court upon the filing of
the agreement or a certified copy thereof along with a statement
of the commissioner or an agent that the tax has not been paid.
[270.68, subd. 4]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 68. [270C.62] [DATE OF ASSESSMENT; DEFINITION.]
For purposes of taxes, the term "date of assessment" means
the date a liability reported on a return was entered into the
records of the commissioner or the date a return should have
been filed, whichever is later; or, in the case of taxes
assessed by the commissioner, "date of assessment" means the
date of the order assessing taxes or date of the return made by
the commissioner; or, in the case of an amended return filed by
the taxpayer, the assessment date is the date additional
liability reported on the return, if any, was entered into the
records of the commissioner; or, in the case of a check from a
taxpayer that is dishonored and results in an erroneous refund
being given to the taxpayer, remittance of the check is deemed
to be an assessment and the "date of assessment" is the date the
check was received by the commissioner. [270.65]
[EFFECTIVE DATE.] This section is effective for assessments
made on or after August 1, 2005.
Sec. 69. [270C.63] [LIEN FOR TAXES.]
Subdivision 1. [CREATION OF LIEN.] Tax, and interest and
penalties imposed with respect thereto, including any recording
fees, sheriff fees, or court costs that may accrue, shall become
a lien upon all the property within this state, both real and
personal, of the person liable for the payment or collection of
the tax, except property exempt under subdivision 8, from and
after the date of assessment of the tax.
Subd. 2. [FILING OF LIENS NECESSARY FOR ENFORCEABILITY
AGAINST CERTAIN PERSONS.] The lien imposed by subdivision 1 is
not enforceable against any purchaser, mortgagee, pledgee,
holder of a Uniform Commercial Code security interest,
mechanic's lienor, or judgment lien creditor whose interest has
been duly perfected or is a conveyance or interest entitled to
protection against judgments and attachments under section
507.34 or under any other applicable provisions of state law,
until a notice of lien has been filed by the commissioner in the
office of the county recorder of the county in which real
property is situated, or in the case of personal property in the
Office of the Secretary of State.
Subd. 3. [METHOD OF FILING.] Notices of liens, and lien
releases, transcriptions, and renewals, in a form prescribed by
the commissioner, may be filed with the county recorder or the
secretary of state by mail, personal delivery, or by electronic
transmission by the commissioner or an agent of the department
into the computerized filing system of the secretary of state.
The secretary of state shall transmit the notice electronically
to the office of the county recorder, if that is the place of
filing, in the county or counties shown on the computer entry.
The filing officer, whether the county recorder or the secretary
of state, shall endorse and index a printout of the notice in
the same manner as if the notice had been mailed or delivered.
Subd. 4. [ENTRY OF INFORMATION INTO CENTRAL
DATABASE.] County recorders and the secretary of state shall
enter information relative to lien notices, transcriptions,
renewals, and releases filed in their offices into the central
database of the secretary of state. For notices filed
electronically with the county recorders, the date and time of
receipt of the notice and county recorder's file number, and for
notices filed electronically with the secretary of state, the
secretary of state's recording information, must be entered by
the filing officer into the central database before the close of
the working day following the day of the original data entry by
the department.
Subd. 5. [CONFORMITY WITH FEDERAL LIEN REGISTRATION
ACT.] The filing and indexing of all notices must be in
accordance with the filing and indexing of notices of federal
liens, certificates of release, and refiled notices under
section 272.483.
Subd. 6. [PAYMENT OF RECORDING FEES.] Notwithstanding any
other law to the contrary, the department is exempt from payment
of fees when a lien, lien renewal, or lien transcription is
offered for recording. The recording fees must be paid along
with the release fee at the end of the month in which the
release of lien is recorded, after receipt of a monthly
statement from a county recorder or the secretary of state. The
department shall add the recording fees to the delinquent tax
liability of the taxpayer. Notwithstanding any other law to the
contrary, the fee for filing or recording a notice of lien, or
lien release, transcription, or renewal is $15.
Subd. 7. [APPROPRIATION.] There is appropriated to the
commissioner an amount representing the cost of payment of
recording fees to the county recorders and the secretary of
state. The commissioner shall keep a separate accounting of the
costs and of payments for recording fees remitted by taxpayers,
and make the records available to the legislature upon request.
Subd. 8. [EXEMPT PROPERTY.] The lien imposed on personal
property by this section, even though properly filed, is not
enforceable: (1) against a purchaser with respect to tangible
personal property purchased at retail in the ordinary course of
the seller's trade or business, unless at the time of purchase
the purchaser intends the purchase to or knows the purchase will
hinder, evade, or defeat the collection of a tax; or (2) against
the personal property listed as exempt in sections 550.37,
550.38, and 550.39.
Subd. 9. [PERIOD OF LIMITATIONS.] The lien imposed by this
section shall, notwithstanding any other provision of law to the
contrary, be enforceable from the time the lien arises and for
ten years from the date of filing the notice of lien, which must
be filed by the commissioner within five years after the date of
assessment of the tax or final administrative or judicial
determination of the assessment. A notice of lien filed in one
county may be transcribed to any other county within ten years
after the date of its filing, but the transcription shall not
extend the period during which the lien is enforceable. A
notice of lien may be renewed by the commissioner before the
expiration of the ten-year period for an additional ten years.
The taxpayer must receive written notice of the renewal.
Subd. 10. [ENFORCEABILITY OF LIEN.] The lien imposed by
this section shall be enforceable by levy as authorized in
section 270C.67, or by judgment lien foreclosure as authorized
in chapter 550.
Subd. 11. [NOTICE OF MORTGAGE FORECLOSURE OR CONTRACT
TERMINATION.] In the case of a mortgage foreclosure upon real
property commenced under chapter 580, or a termination of
contract of sale of real property commenced under section
559.21, if the commissioner has filed a lien under this section
before the foreclosure sale or date of termination, notice of
the mortgage foreclosure or termination of contract of sale
shall be mailed to the commissioner not less than 25 days prior
to the foreclosure sale or date of termination. Provided,
notice need not be given pursuant to this subdivision if the
lien of the commissioner has been filed within 30 days or less
prior to the foreclosure sale or date of termination. The
notice must contain the following information: (1) the name and
address of the taxpayer; (2) a copy of the notice of mortgage
foreclosure or contract for deed cancellation; (3) a copy of the
lien filed by the commissioner; (4) the total unpaid balance of
the mortgage or contract for deed; (5) a legal description of
the property; and (6) the fair market value of the property.
Subd. 12. [FILING ENTITLEMENT.] Execution of notices of
liens or of other notices affecting state tax liens by the
original or facsimile signature of the commissioner entitles
them to be filed, and no other attestation, certification, or
acknowledgment is necessary. For purposes of this subdivision,
transmission of notices under subdivision 3 constitutes
execution.
Subd. 13. [LIEN SEARCH FEES.] Upon request of any person,
the filing officer shall issue a certificate showing whether
there is recorded in that filing office, on the date and hour
stated in the certificate, any notice of lien or certificate or
notice affecting any lien filed on or after ten years before the
date of the search certificate, naming a particular person, and
giving the date and hour of filing of each notice or certificate
naming the person. The fee for a certificate shall be as
provided by section 336.9-525 or 357.18, subdivision 1, clause
(3). Upon request, the filing officer shall furnish a copy of
any notice of state lien, or notice or certificate affecting a
state lien, for a fee of 50 cents per page.
Subd. 14. [LIMITATION FOR HOMESTEAD PROPERTY.] A lien
imposed under this section upon property defined as homestead
property in sections 510.01 and 510.02 may not be enforced
against homestead property by levy under section 270C.67, or by
judgment lien foreclosure under chapter 550, but notwithstanding
section 510.07, is enforceable against the proceeds from the
sale, conveyance, or transfer of the homestead.
Subd. 15. [ERRONEOUS LIENS.] After the filing of a notice
of lien under this section on the property or rights to property
of a person, the person may appeal to the commissioner, in the
form and at the time prescribed by the commissioner, alleging an
error in the filing of the lien and requesting its release. If
the commissioner determines that the filing of the notice of any
lien was erroneous, within 14 days after the determination, the
commissioner must issue a certificate of release of the lien.
The certificate must include a statement that the filing of the
lien was erroneous. In the event that the lien is erroneous and
is not released within the 14-day period, reasonable attorney
fees shall be paid. Damages must be paid in accordance with
section 3.736, subdivision 7. Even if a lien is not erroneous,
the commissioner may withdraw the lien if the filing of the lien
was premature or not in accordance with administrative
procedures of the commissioner, or withdrawal of the lien will
facilitate the collection of the tax liability.
Subd. 16. [LIEN RELEASE FEE.] A fee of $25 must be paid to
the commissioner for each duplicate of an original release of
lien.
Subd. 17. [FORTY-FIVE DAY RULE.] A notice of tax lien
filed under this section has priority over a security interest
arising under article 9 of the Uniform Commercial Code that is
perfected before the date of filing of the lien imposed by this
section, but only if:
(1) the perfected security interest secures property
acquired by the taxpayer or advances made by the secured party
after the notice of tax lien is filed; and
(2) the property is acquired or the advance is made after
the 45th day following the day on which the notice of tax lien
is filed, or after the secured party has actual notice or
knowledge of the tax lien filing, whichever is earlier.
Subd. 18. [REGISTERED LAND.] When a lien is filed with a
county recorder under subdivisions 2 to 5, the county recorder
shall search the registered land records in that county and
cause the lien to be memorialized on every certificate of title
or certificate of possessory title of registered land in that
county which can be reasonably identified as owned by the
taxpayer who is named on the lien. The fees for memorializing
the lien shall be paid in the manner prescribed by subdivision
6. The county recorders, and their employees and agents, shall
not be liable for any loss or damages arising from failure to
identify a parcel of registered land owned by the taxpayer who
is named on the lien.
Subd. 19. [ASSIGNMENT OF LIENS.] The commissioner may sell
and assign to a third party the right of redemption in specific
real property for liens filed under this section. The
redemption in the hands of the assignee shall not be enforceable
by any of the collection remedies provided to the commissioner
by law. The assignee is limited to the same rights of
redemption the commissioner would have in any mortgage
foreclosure proceeding, but in any bankruptcy proceeding does
not obtain the priority of the commissioner as a tax claimant.
Should the taxpayer or its assigns exercise the right of
redemption the assignment by the commissioner is extinguished.
Subd. 20. [ATTACHMENT TO PROCEEDS OF PROPERTY.] Any lien
imposed under this section attaches to the proceeds of property
with the same priority that the lien has with respect to the
property itself. "Proceeds of property" means proceeds from the
sale, lease, license, exchange, or other disposition of the
property, including insurance proceeds arising from the loss or
destruction of the property. [270.69]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 70. [270C.64] [CREDIT OF OVERPAYMENT TO DELINQUENT
TAX LIABILITIES.]
Notwithstanding any other provision of law to the contrary,
in the case of an overpayment of any tax collected by the
commissioner, the commissioner may credit the amount of such
overpayment against any uncontested delinquent tax liability on
the part of the taxpayer who made the overpayment. An
overpayment may be credited under this subdivision only if the
uncontested delinquent liability has been assessed within ten
years of the date on which the overpayment is credited.
However, this limitation shall not be applicable if the
delinquent liability has been entered into judgment or if legal
action is pending for collection of the liability or for renewal
of the judgment. An amount paid as tax shall constitute an
overpayment even if in fact there was no tax liability with
respect to which such amount was paid. [270.07, subd. 5]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 71. [270C.65] [RIGHT OF SETOFF.]
Subdivision 1. [CERTIFICATION BY COMMISSIONER.] The
commissioner of revenue is authorized to certify to the
commissioner of finance, or to any state agency described in
subdivision 3 which disburses its own funds, that a taxpayer has
an uncontested delinquent tax liability owed to the commissioner
of revenue. The certification must be made within ten years
after the date of assessment of the tax. Once certification is
made, the commissioner of finance or the state agency shall
apply to the delinquent tax liability funds sufficient to
satisfy the unpaid tax liability from funds appropriated for
payment of an obligation of the state or any of its agencies
that are due and owing the taxpayer. No setoff shall be made
against any funds exempt under section 550.37 or those funds
owed an individual taxpayer who receives assistance under the
provisions of chapter 256.
Subd. 2. [SETOFF SATISFIES STATE OBLIGATION.] All funds,
whether general or dedicated, shall be subject to setoff in the
manner herein provided. Transfer of funds as herein provided is
payment of the obligation of the state or any of its agencies to
such taxpayer and any actions for said funds, if any, shall be
had against the Department of Revenue on the issue of such tax
liability. Nothing in this section shall be construed to limit
the previously existing right of the state or any of its
agencies to setoff.
Subd. 3. [AGENCIES SHALL MAINTAIN RECORDS.]
Notwithstanding any provision to the contrary, every person,
organization, or corporation doing business (hereafter called
vendor) with the state of Minnesota or any of its departments,
agencies, or educational institutions including the University
of Minnesota (all hereafter called agency) shall provide that
agency with either their Social Security number, federal
taxpayer identification number, or Minnesota tax identification
number. The commissioner may verify to the agency the
identifying information provided by a vendor. The agency shall
maintain records of this information, and shall make these
records available, on request, to the commissioner for the sole
purpose of identifying people who have not filed state tax
returns or who have not paid uncontested tax liabilities
(hereafter called delinquent taxpayer). When an agency is
notified by the commissioner that a vendor is a delinquent
taxpayer, payments shall not be made by the agency to the vendor
until the commissioner notifies the agency that the vendor no
longer is a delinquent taxpayer. Furthermore, if the vendor has
an uncontested delinquent tax liability, the setoff provided in
subdivision 1 may be implemented. The commissioner shall
determine that a vendor no longer is a delinquent taxpayer when
the vendor has filed all delinquent returns and (1) paid all
uncontested tax liabilities or (2) entered into an agreement
with the commissioner which provides for the payment of these
liabilities. [270.66]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 72. [270C.66] [CONTRACTS WITH STATE; WITHHOLDING.]
No department of the state of Minnesota, nor any political
or governmental subdivision of the state shall make final
settlement with any contractor under a contract requiring the
employment of employees for wages by said contractor and by
subcontractors until satisfactory showing is made that said
contractor or subcontractor has complied with the provisions of
section 290.92. A certificate by the commissioner shall satisfy
this requirement with respect to the contractor or
subcontractor. If, at the time of final settlement, there are
any unpaid withholding taxes, penalties, or interest arising
from the government contract, the commissioner shall issue a
certification to the contractor or subcontractor upon payment,
with certified funds, of any unpaid withholding taxes,
penalties, and interest. Payment is received by the
commissioner upon delivery of the certified funds to the central
office located in St. Paul, or any district or subdistrict
office located throughout the state. [290.97]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 73. [270C.67] [LEVY AND DISTRAINT.]
Subdivision 1. [AUTHORITY.] If any tax payable to the
commissioner or to the department is not paid when due, such tax
may be collected by the commissioner within five years after the
date of assessment of the tax, or if a lien has been filed,
during the period the lien is enforceable, or if the tax
judgment has been filed, within the statutory period of
enforcement of a valid tax judgment, by a levy upon all property
and rights to property, including any property in the possession
of law enforcement officials, of the person liable for the
payment or collection of such tax (except that which is exempt
from execution pursuant to section 550.37) or property on which
there is a lien provided in section 270C.63. For this purpose,
"tax" includes any penalty, interest, and costs, properly
payable.
Subd. 2. [WRIT OF ENTRY.] The term "levy" includes the
power of distraint and seizure by any means; provided, no entry
can be made upon the business premises or residence of a
taxpayer in order to seize property without first obtaining a
writ of entry listing the property to be seized and signed by a
judge of the district court of the district in which the
business premises or residence is located.
Subd. 3. [NOTICE AND DEMAND; COLLECTION BY LEVY.] Before a
levy is made, notice and demand for payment of the amount due
must be given to the person liable for the payment or collection
of the tax at least 30 days prior to the levy. The notice
required under this subdivision must be sent to the taxpayer's
last known address and must include a brief statement that sets
forth in simple and nontechnical terms:
(1) the administrative appeals available to the taxpayer
with respect to the levy and sale; and
(2) the alternatives available to the taxpayer that can
prevent a levy, including installment payment agreements under
section 270C.52, subdivision 2.
Subd. 4. [MANNER OF EXECUTION AND SALE.] In making the
execution of the levy and in collecting the taxes due, the
commissioner shall have all of the powers provided in chapter
550 and in any other law 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, shall, to
the extent not provided in sections 270C.7101 to 270C.7109, be
governed by chapter 550. The seal of the court, subscribed by
the court administrator, as provided in section 550.04, shall
not be required. The levy for collection of taxes may be made
whether or not the commissioner has commenced a legal action for
collection of such taxes.
Subd. 5. [STAY OF SALE.] (a) Where a jeopardy assessment
or any other assessment has been made by the commissioner, the
property seized for collection of the tax shall not be sold
until the time has expired for filing an appeal of the
assessment with the Tax Court pursuant to chapter 271. If an
appeal has been filed, no sale shall be made unless the taxes
remain unpaid for a period of more than 30 days after final
determination of the appeal by the Tax Court or by the
appropriate judicial forum.
(b) Notwithstanding paragraph (a), seized property may be
sold if:
(1) the taxpayer consents in writing to the sale; or
(2) the commissioner determines that the property is
perishable or may become greatly reduced in price or value by
keeping, or that such property cannot be kept without great
expense.
(c) The Tax Court has jurisdiction to review a
determination made under paragraph (b), clause (2). Review is
commenced by motion of the commissioner or the taxpayer. The
order of the court in response to the motion is reviewable in
the same manner as any other decision of the Tax Court.
Subd. 6. [PROBATE PROCEEDINGS.] Where a levy has been made
to collect taxes pursuant to this section and the property
seized is properly included in a formal proceeding commenced
under sections 524.3-401 to 524.3-505 and maintained under full
supervision of the court, such property shall not be sold until
the probate proceedings are completed or until the court so
orders.
Subd. 7. [BOND OR SECURITY TO RELEASE SEIZURE.] The
property seized shall be returned by the commissioner if the
owner gives a surety bond equal to the appraised value of the
owner's interest in the property, as determined by the
commissioner, or deposits with the commissioner security in such
form and amount as the commissioner deems necessary to insure
payment of the liability, but not more than twice the liability.
Subd. 8. [INJUNCTION.] Notwithstanding any other provision
to the contrary, if a levy or sale pursuant to this section
would irreparably injure rights in property which the court
determines to be superior to rights of the state in such
property, the district court may grant an injunction to prohibit
the enforcement of such levy or to prohibit such sale.
Subd. 9. [OPTIONAL REMEDY.] Any action taken by the
commissioner pursuant to this section shall not constitute an
election by the state to pursue a remedy to the exclusion of any
other remedy.
Subd. 10. [EQUITABLE RELIEF.] After the commissioner has
seized the property of any person, that person may, upon giving
48 hours notice to the commissioner and to the court, bring a
claim for equitable relief before the district court for the
release of the property to the taxpayer upon such terms and
conditions as the court may deem equitable.
Subd. 11. [LEVY AND SALE BY SHERIFF.] If any tax payable
to the commissioner or to the department is not paid as provided
in subdivision 3, the commissioner may, within the time periods
provided in subdivision 1 for collection of taxes, delegate the
authority granted by subdivision 1, by means of issuing a
warrant to the sheriff of any county of the state commanding the
sheriff, as agent for the commissioner, to levy upon and sell
the real and personal property of the person liable for the
payment or collection of the tax and to levy upon the rights to
property of that person within the county, or to levy upon and
seize any property within the county on which there is a lien
provided in section 270C.63, and to return the warrant to the
commissioner and pay to the commissioner the money collected by
virtue thereof by a time to be therein specified not less than
60 days from the date of the warrant. The sheriff shall proceed
thereunder to levy upon and seize any property of the person and
to levy upon the rights to property of the person within the
county (except the person's homestead or that property which is
exempt from execution pursuant to section 550.37), or to levy
upon and seize any property within the county on which there is
a lien provided in section 270C.63. For purposes of the
preceding sentence, "tax" includes any penalty, interest, and
costs, properly payable. The sheriff shall then sell so much of
the property levied upon as is required to satisfy the taxes,
interest, and penalties, together with the sheriff's costs; but
the sales, and the time and manner of redemption therefrom,
shall, to the extent not provided in sections 270C.7101 to
270C.7109, be governed by chapter 550. The proceeds of the
sales, less the sheriff's costs, shall be turned over to the
commissioner, who shall then apply the proceeds as provided in
section 270C.7108.
Subd. 12. [PRIORITY OF LEVY.] Notwithstanding section
52.12, a levy by the commissioner made pursuant to the
provisions of this section upon a taxpayer's funds on deposit in
a financial institution located in this state, shall have
priority over any unexercised right of setoff of the financial
institution to apply the levied funds toward the balance of an
outstanding loan or loans owed by the taxpayer to the financial
institution. A claim by the financial institution that it
exercised its right to setoff prior to the levy by the
commissioner must be substantiated by evidence of the date of
the setoff, and shall be verified by the sworn statement of a
responsible corporate officer of the financial institution.
Furthermore, for purposes of determining the priority of any
levy made under this section, the levy shall be treated as if it
were an execution made pursuant to chapter 550.
Subd. 13. [EFFECT OF HONORING LEVY.] Any person in
possession of (or obligated with respect to) property or rights
to property subject to levy upon which a levy has been made who,
upon demand by the commissioner, surrenders the property or
rights to property (or who pays a liability under section
270C.70, subdivision 1) shall be discharged from any obligation
or liability to the person liable for the payment or collection
of the delinquent tax with respect to the property or rights to
property so surrendered or paid.
Subd. 14. [NOTICE OF LEVY.] Notwithstanding any other
provision of law to the contrary, the notice of any levy
authorized by this section may be served by mail or by delivery
by an agent of the department.
Subd. 15. [UNECONOMICAL LEVY.] No levy may be made on
property if the amount of the expenses that the commissioner
estimates would be incurred by the department with respect to
the levy and sale of the property exceeds the fair market value
of the property at the anticipated time of levy.
Subd. 16. [LEVY ON APPEARANCE DATE OF SUBPOENA.] No levy
may be made on the property of a person on the day on which the
person, or an officer or employee of the person, is required to
appear in response to a subpoena issued by the commissioner to
collect unpaid taxes, unless the commissioner determines that
the collection of the tax is in jeopardy. [270.70]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 74. [270C.68] [CONTINUOUS LEVY.]
Subdivision 1. [AUTHORITY.] The commissioner may, within
five years after the date of assessment of the tax, or if a lien
has been filed under section 270C.63, within the statutory
period for enforcement of the lien, give notice to a person to
withhold the amount of any tax, interest, or penalties, due from
a taxpayer. The amounts withheld shall be transmitted to the
commissioner at the times the commissioner designates.
Subd. 2. [LEVY CONTINUOUS.] The levy made under
subdivision 1 is continuous from the date the notice is received
until the amount due stated on the notice has been withheld or
the notice has been released by the commissioner under section
270C.7109, whichever occurs first.
Subd. 3. [AMOUNT TO BE WITHHELD.] The amount required to
be withheld under this section is the least of:
(1) the amount stated on the notice;
(2) if the taxpayer is not a natural person, 100 percent of
the payment; or
(3) if the taxpayer is an individual, 25 percent of the
payment.
Subd. 4. [PAYMENTS COVERED.] For purposes of this section,
the term "payments" does not include wages as defined in section
290.92 or funds in a deposit account as defined in section
336.9-102(a)(29). The term payments does include the following:
(1) payments due for services of independent contractors,
dividends, rents, royalties, residuals, patent rights, and
mineral or other natural resource rights;
(2) payments or credits under written or oral contracts for
services or sales whether denominated as wages, salary,
commission, bonus, or otherwise, if the payments are not covered
by section 270C.69; and
(3) any other periodic payments or credits resulting from
an enforceable obligation to the taxpayer.
Subd. 5. [DETERMINATION OF STATUS; EFFECT.] A
determination of a taxpayer's status as an independent
contractor under this section does not affect the determination
of the taxpayer's status for the purposes of any other law or
rule. [270.7001]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 75. [270C.69] [WITHHOLDING BY EMPLOYER OF DELINQUENT
TAXES.]
Subdivision 1. [NOTICE AND PROCEDURES.] (a) The
commissioner may, within five years after the date of assessment
of the tax, or if a lien has been filed under section 270C.63,
within the statutory period for enforcement of the lien, give
notice to any employer deriving income which has a taxable situs
in this state regardless of whether the income is exempt from
taxation, that an employee of that employer is delinquent in a
certain amount with respect to any taxes, including penalties,
interest, and costs. The commissioner can proceed under this
section only if the tax is uncontested or if the time for appeal
of the tax has expired. The commissioner shall not proceed
under this section until the expiration of 30 days after mailing
to the taxpayer, at the taxpayer's last known address, a written
notice of (1) the amount of taxes, interest, and penalties due
from the taxpayer and demand for their payment, and (2) the
commissioner's intention to require additional withholding by
the taxpayer's employer pursuant to this section. The effect of
the notice shall expire one year after it has been mailed to the
taxpayer provided that the notice may be renewed by mailing a
new notice which is in accordance with this section. The
renewed notice shall have the effect of reinstating the priority
of the original claim. The notice to the taxpayer shall be in
substantially the same form as that provided in section 571.72.
The notice shall further inform the taxpayer of the wage
exemptions contained in section 550.37, subdivision 14. If no
statement of exemption is received by the commissioner within 30
days from the mailing of the notice, the commissioner may
proceed under this section. The notice to the taxpayer's
employer may be served by mail or by delivery by an agent of the
department and shall be in substantially the same form as
provided in section 571.75. Upon receipt of notice, the
employer shall withhold from compensation due or to become due
to the employee, the total amount shown by the notice, subject
to the provisions of section 571.922. The employer shall
continue to withhold each pay period until the notice is
released by the commissioner under section 270C.7109. Upon
receipt of notice by the employer, the claim of the state of
Minnesota shall have priority over any subsequent garnishments
or wage assignments. The commissioner may arrange between the
employer and the employee for withholding a portion of the total
amount due the employee each pay period, until the total amount
shown by the notice plus accrued interest has been withheld.
(b) The "compensation due" any employee is defined in
accordance with the provisions of section 571.921. The maximum
withholding allowed under this section for any one pay period
shall be decreased by any amounts payable pursuant to a
garnishment action with respect to which the employer was served
prior to being served with the notice of delinquency and any
amounts covered by any irrevocable and previously effective
assignment of wages; the employer shall give notice to the
commissioner of the amounts and the facts relating to such
assignments within ten days after the service of the notice of
delinquency on the form provided by the commissioner as noted in
this section.
(c) Within ten days after the expiration of such pay
period, the employer shall remit to the commissioner, on a form
and in the manner prescribed by the commissioner, the amount
withheld during each pay period under this section.
Subd. 2. [TERMINATION OF EMPLOYMENT.] If the employee
ceases to be employed by the employer before the full amount set
forth in a notice of delinquency plus accrued interest has been
withheld, the employer shall immediately notify the commissioner
in writing of the termination date of the employee and the total
amount withheld. No employer may discharge any employee by
reason of the fact that the commissioner has proceeded under
subdivision 1. If an employer discharges an employee in
violation of this provision, the employee shall have the same
remedy as provided in section 571.927, subdivision 2.
Subd. 3. [APPLICATION TO GOVERNMENT
EMPLOYER.] Subdivisions 1 and 2 apply to cases in which the
employer is the United States or any instrumentality thereof or
this state or any municipality or other subordinate unit
thereof. The provisions imposing liability on the employer for
failure to withhold or remit under section 270C.70 do not apply
to such government employers.
Subd. 4. [REFUND TO EMPLOYEE.] The commissioner shall
refund to the employee excess amounts withheld from the employee
under this section. If any excess results from payments by the
employer because of payments made under section 270C.70, the
excess attributable to the employer's payment shall be refunded
to the employer.
Subd. 5. [ADDITIONAL INTEREST, COSTS, CHARGES.] Employers
required to withhold delinquent taxes, penalties, interest, and
costs under this section shall not be required to compute any
additional interest, costs or other charges to be withheld.
Subd. 6. [LEGAL EFFECT.] The collection remedy provided to
the commissioner by this section shall have the same legal
effect as if it were a levy made pursuant to section 270C.67.
[290.92, subd. 23]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 76. [270C.70] [PERSONAL LIABILITY FOR FAILURE TO
HONOR A LEVY.]
Subdivision 1. [SURRENDER OF PROPERTY SUBJECT TO LEVY.] A
person who fails or refuses to surrender property or rights to
property subject to a levy served on the person under section
270C.67, 270C.68, or 270C.69 is liable in an amount equal to the
value of the property or rights not surrendered, or the amount
of taxes, penalties, and interest for the collection of which
the levy was made, whichever is less. A financial institution
need not surrender funds on deposit until ten days after service
of the levy.
Subd. 2. [PENALTY.] In addition to the personal liability
imposed by subdivision 1, if a person required to surrender
property or rights to property fails to do so without reasonable
cause, the person is liable for a penalty equal to 25 percent of
the amount under subdivision 1.
Subd. 3. [PERSON DEFINED.] The term "person" as used in
this section includes an officer or employee of a corporation,
or a member or employee of a partnership, who as such officer,
employee, or member is under a duty to surrender the property or
rights to property or to respond to the levy.
Subd. 4. [ORDER ASSESSING LIABILITY.] The liability
imposed by this section may, after demand to honor a levy has
been made, be assessed by the commissioner within 60 days after
service of the demand. The assessment may be based on
information available to the commissioner. The assessment is
presumed to be valid, and the burden is on the person assessed
to show it is incorrect or invalid. An order assessing
liability for failure to honor a levy is reviewable
administratively under section 270C.35, and is appealable to Tax
Court under chapter 271. The amount assessed, plus interest at
the rate specified in section 270C.40, may be collected by any
remedy available to the commissioner for the collection of
taxes. The proceeds collected are applied first to the
liability of the original taxpayer to the extent of the
liability under subdivision 1 plus interest, and then to the
penalty under subdivision 2. [270.7002]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 77. [270C.7101] [SALE OF SEIZED PROPERTY.]
Subdivision 1. [NOTICE OF SEIZURE.] As soon as practicable
after seizure of property, notice in writing shall be given by
the commissioner to the owner of the property (or, in the case
of personal property, the possessor thereof), and shall be
served in like manner as a summons in a civil action in the
district court. If the owner cannot be readily located, or has
no dwelling or place of business within this state, the notice
may be mailed to the last known address. The notice shall
specify the sum demanded and shall contain, in the case of
personal property, an account of the property seized and, in the
case of real property, a description with reasonable certainty
of the property seized.
Subd. 2. [NOTICE OF SALE.] The commissioner shall as soon
as practicable after the seizure of the property give notice of
sale of the property to the owner, in the manner of service
prescribed in subdivision 1. In the case of personal property,
the notice shall be served at least ten days prior to the sale.
In the case of real property, the notice shall be served at
least four weeks prior to the sale. The commissioner shall also
cause public notice of each sale to be made. In the case of
personal property, notice shall be posted at least ten days
prior to the sale at the county courthouse for the county where
the seizure is made, and in not less than two other public
places. For purposes of this requirement, the Internet is a
public place for posting the information. In the case of real
property, six weeks' published notice shall be given prior to
the sale, in a newspaper published or generally circulated in
the county. The notice of sale provided in this subdivision
shall specify the property to be sold, and the time, place,
manner, and conditions of the sale. Whenever levy is made
without regard to the 30-day period provided in section 270C.67,
subdivision 3, public notice of sale of the property seized
shall not be made within the 30-day period unless section
270C.7102 (relating to sale of perishable goods) is applicable.
Subd. 3. [SALE OF INDIVISIBLE PROPERTY.] If any property
liable to levy is not divisible, so as to enable the
commissioner by sale of a part thereof to raise the whole amount
of the tax and expenses, the whole of the property shall be sold.
Subd. 4. [TIME AND PLACE OF SALE.] The time of sale shall
be after the expiration of the notice periods prescribed in
subdivision 2. The place of sale shall be within the county in
which the property is seized, except by special order of the
commissioner.
Subd. 5. [MANNER AND CONDITIONS OF SALE.] (a) Before the
sale the commissioner shall determine a minimum price for which
the property shall be sold, and if no person offers for the
property at the sale the amount of the minimum price, the
property shall be declared to be purchased at the minimum price
for the state of Minnesota; otherwise the property shall be
declared to be sold to the highest bidder. In determining the
minimum price, the commissioner shall take into account the
expense of making the levy and sale. The announcement of the
minimum price determined by the commissioner may be delayed
until the receipt of the highest bid.
(b) The sale shall not be conducted in any manner other
than:
(1) by public auction;
(2) by public sale under sealed bids; or
(3) in the case of items which individually or in usually
marketable units have a value of $50 or less, by public or
private proceedings as a unit or in parcels at any time and
place and on any terms, but every aspect of the disposition
including the method, manner, time, place, and terms must be
commercially reasonable.
(c) In the case of seizure of several items of property,
the items may be offered separately, in groups, or in the
aggregate, and shall be sold under whichever method produces the
highest aggregate amount, except that sales under paragraph (b),
clause (3), must produce a reasonable amount under the
circumstances.
(d) Payment in full shall be required at the time of
acceptance of a bid, except that a part of the payment may be
deferred by the commissioner for a period not to exceed 30 days.
(e) Other methods (including advertising) in addition to
those prescribed in subdivision 2 may be used in giving notice
of the sale.
(f) The commissioner may adjourn the sale from time to time
for a period not to exceed 30 days.
(g) If payment in full is required at the time of
acceptance of a bid and is not then and there paid, the
commissioner shall forthwith proceed to again sell the property
in the manner provided in this section. If the conditions of
the sale permit part of the payment to be deferred, and if the
part is not paid within the prescribed period, suit may be
instituted against the purchaser for the purchase price or that
part thereof as has not been paid, together with interest at the
rate specified in section 549.09 from the date of the sale; or,
in the discretion of the commissioner, the sale may be declared
by the commissioner to be null and void for failure to make full
payment of the purchase price and the property may again be
advertised and sold as provided in this section. In the event
of a readvertisement and sale, any new purchaser shall receive
the property or rights to property free and clear of any claim
or right of the former defaulting purchaser, of any nature
whatsoever, and the amount paid upon the bid price by the
defaulting purchaser shall be forfeited.
Subd. 6. [RIGHT TO REQUEST SALE OF SEIZED PROPERTY WITHIN
60 DAYS.] The owner of property seized by levy may request that
the commissioner offer to sell the property within 60 days after
the request, or within a longer period requested by the owner.
The request must be complied with unless the commissioner
determines and notifies the owner within that period that
compliance is not in the best interests of the state of
Minnesota. A determination by the commissioner not to comply
with the request is appealable to the Tax Court in the manner
provided by law.
Subd. 7. [SALE OF SEIZED SECURITIES.] (a) At the time of
levy on securities, the commissioner shall provide notice to the
taxpayer that the securities may be sold after ten days from the
date of seizure.
(b) If the commissioner levies upon nonexempt publicly
traded securities and the value of the securities is less than
or equal to the total obligation for which the levy is done,
after ten days the person who possesses or controls the
securities shall liquidate the securities in a commercially
reasonable manner. After liquidation, the person shall transfer
the proceeds to the commissioner, less any applicable
commissions or fees, or both, which are charged in the normal
course of business.
(c) If the commissioner levies upon nonexempt publicly
traded securities and the value of the securities exceeds the
total amount of the levy, the owner of the securities may,
within seven days after receipt of the commissioner's notice of
levy given pursuant to subdivision 1, instruct the person who
possesses or controls the securities which securities are to be
sold to satisfy the obligation. If the owner does not provide
instructions for liquidation, the person who possesses or
controls the securities shall liquidate the securities in an
amount sufficient to pay the obligation, plus any applicable
commissions or fees, or both, which are charged in the normal
course of business, beginning with the nonexempt securities
purchased most recently. After liquidation, the person who
possesses or controls the securities shall transfer to the
commissioner the amount of money needed to satisfy the levy.
[270.701]
[EFFECTIVE DATE.] This section is effective for levies made
on or after August 1, 2005.
Sec. 78. [270C.7102] [SALE OF PERISHABLE GOODS.]
If the commissioner determines that any property seized is
liable to perish or become greatly reduced in price or value by
keeping, or that the property cannot be kept without great
expense, the commissioner shall appraise the value of the
property, and if the owner of the property can be readily found,
the commissioner shall give the owner notice of the
determination of the appraised value of the property. The
property shall be returned to the owner if, within the time
specified in the notice, the owner (a) pays to the commissioner
an amount equal to the appraised value, or (b) gives bond in the
form, with the sureties, and in the amount as the commissioner
prescribes to pay the appraised amount at the time the
commissioner determines to be appropriate in the circumstances.
If the owner does not pay the amount or furnish the bond in
accordance with this section, the commissioner shall as soon as
practicable make public sale of the property in accordance with
section 270C.7101. [270.702]
[EFFECTIVE DATE.] This section is effective for levies made
on or after August 1, 2005.
Sec. 79. [270C.7103] [REDEMPTION OF PROPERTY.]
Subdivision 1. [BEFORE SALE.] Any person whose property
has been levied upon shall have the right to pay the amount due,
together with the expenses of the proceeding, if any, to the
commissioner at any time prior to the sale thereof, and upon
payment the commissioner shall restore the property to the
person, and all further proceedings in connection with the levy
on the property shall cease from the time of payment.
Subd. 2. [REDEMPTION OF REAL ESTATE AFTER SALE.] The
owners of any real property sold as provided in this section,
their heirs, executors, or administrators, or any person having
any interest therein, or a lien thereon, or any person in their
behalf, shall be permitted to redeem the property sold, or any
particular tract of the property, at any time within six months,
or in case the real property sold exceeds ten acres in size, at
any time within 12 months, after the sale thereof. The property
or tract of property shall be permitted to be redeemed upon
payment to the purchaser (or if not found in the county in which
the property to be redeemed is situated, then to the
commissioner, for the use of the purchaser, or the purchaser's
heirs or assigns) of the amount paid by the purchaser together
with interest at the rate of 20 percent per annum.
Subd. 3. [RECORD.] When any lands sold are redeemed as
provided in this section, the commissioner shall cause entry of
the fact to be made upon the record required by section
270C.7106 and the entry shall be evidence of the redemption.
[270.703]
[EFFECTIVE DATE.] This section is effective for levies made
on or after August 1, 2005.
Sec. 80. [270C.7104] [CERTIFICATE OF SALE.]
In the case of property sold as provided in section
270C.7101, the commissioner shall give to the purchaser a
certificate of sale upon payment in full of the purchase price.
In the case of real property the certificate shall set forth the
real property purchased, for whose taxes the property was sold,
the name of the purchaser, and the price paid. If real property
is declared purchased by the state of Minnesota, the
commissioner shall within ten days from the sale cause the
certificate of sale to be duly recorded by the county recorder
of the county in which the real property is located. [270.704]
[EFFECTIVE DATE.] This section is effective for levies made
on or after August 1, 2005.
Sec. 81. [270C.7105] [EFFECT OF CERTIFICATE OF SALE.]
Subdivision 1. [PERSONAL PROPERTY.] (a) In all cases of
sale pursuant to section 270C.7101 of personal property, the
certificate of sale given pursuant to section 270C.7104 shall be
prima facie evidence of the right of the commissioner to make
the sale, and conclusive evidence of the regularity of the
proceedings in making the sale. The certificate shall transfer
to the purchaser all right, title, and interest of the party
delinquent in and to the property sold.
(b) If the property consists of stocks, the certificate of
sale shall be notice, when received, to any corporation,
company, or association of the transfer, and shall be authority
to the corporation, company, or association to record the
transfer on its books and records in the same manner as if the
stocks were transferred or assigned by the party holding the
same, in lieu of any original or prior certificate, which shall
be void, whether canceled or not.
(c) If the subject of sale is securities or other evidences
of debt, the certificate of sale shall be a good and valid
receipt to the person holding the same, as against any person
holding or claiming to hold possession of the securities or
other evidences of debt.
(d) If the property consists of a motor vehicle, the
certificate of sale shall be notice, when received, to the
registrar of motor vehicles of this state of the transfer, and
shall be authority to the registrar to record the transfer on
the books and records in the same manner as if the certificate
of title to the motor vehicle were transferred or assigned by
the party holding the same, in lieu of any original or prior
certificate, which shall be void, whether canceled or not.
Subd. 2. [REAL PROPERTY.] In the case of the sale of real
property pursuant to section 270C.7101, the certificate of sale
given pursuant to section 270C.7104 shall be prima facie
evidence of the facts therein stated, and shall be considered
and operate as a conveyance of all the right, title, and
interest the party delinquent had in and to the real property
thus sold at the time the lien of the state of Minnesota
attached thereto.
Subd. 3. [JUNIOR ENCUMBRANCES.] A certificate of sale of
personal property or real property given pursuant to section
270C.7104 shall discharge the property from all liens,
encumbrances, and titles over which the lien of the state of
Minnesota with respect to which the levy was made had priority.
[270.705]
[EFFECTIVE DATE.] This section is effective for levies made
on or after August 1, 2005.
Sec. 82. [270C.7106] [RECORDS OF SALE.]
The commissioner shall maintain a record of all sales of
property under section 270C.7101 and of redemptions of real
property. The record shall set forth the tax for which the sale
was made, the dates of seizure and sale, the name of the party
assessed and all proceedings in making the sale, the amount of
expenses, the names of the purchasers, and the date of the
certificate of sale. A copy of the record, or any part thereof,
certified by the commissioner shall be evidence in any court of
the truth of the facts therein stated. [270.706]
[EFFECTIVE DATE.] This section is effective for levies made
on or after August 1, 2005.
Sec. 83. [270C.7107] [EXPENSE OF LEVY AND SALE.]
The commissioner shall determine the expenses to be allowed
in all cases of levy and sale. [270.707]
[EFFECTIVE DATE.] This section is effective for levies made
on or after August 1, 2005.
Sec. 84. [270C.7108] [APPLICATION OF PROCEEDS OF LEVY.]
Subdivision 1. [COLLECTION OF LIABILITY.] Any money
realized by proceedings under this chapter, whether by seizure,
by surrender under section 270C.67, by sale of seized property,
by sale of property redeemed by the state of Minnesota (if the
interest of the state of Minnesota in the property was a lien
arising under the provisions of section 270C.63), or by
agreement, arrangement, or any other means shall be applied as
follows:
(a) First, against the expenses of the proceedings; then
(b) If the property seized and sold is subject to a tax
that has not been paid, the amount remaining after applying
clause (a) shall next be applied against the tax liability (and,
if the tax was not previously assessed, it shall then be
assessed); and
(c) The amount, if any, remaining after applying clauses
(a) and (b) shall be applied against the tax liability in
respect of which the levy was made or the sale was conducted.
Subd. 2. [SURPLUS PROCEEDS.] Any surplus proceeds
remaining after the application of subdivision 1 shall, upon
application and satisfactory proof in support thereof, be
credited or refunded by the commissioner to the person or
persons legally entitled thereto. [270.708]
[EFFECTIVE DATE.] This section is effective for levies made
on or after August 1, 2005.
Sec. 85. [270C.7109] [AUTHORITY TO RELEASE LEVY AND RETURN
PROPERTY.]
Subdivision 1. [RELEASE OF LEVY.] The commissioner shall
release a levy on all or part of the property or rights to
property levied on and shall promptly notify the person on whom
the levy was made that the levy has been released if: (1) the
liability for which the levy was made is satisfied or has become
unenforceable by lapse of time; (2) release of the levy will
facilitate collection of the liability; (3) the taxpayer has
entered into an installment payment agreement under section
270C.52, subdivision 2, unless the agreement provides otherwise,
or unless release of the levy will jeopardize the status of the
department as a secured creditor; or (4) the fair market value
of the property exceeds the liability, and release of the levy
on a part of the property can be made without hindering
collection. In the case of tangible personal property essential
in carrying on the trade or business of the taxpayer, the
commissioner shall provide for an expedited determination under
this subdivision. A release of levy under this subdivision does
not prevent a subsequent levy on the property released.
Subd. 2. [RETURN OF PROPERTY.] If the commissioner
determines that property has been wrongfully levied upon, it
shall be lawful for the commissioner to return:
(a) The specific property levied upon, at any time;
(b) An amount of money equal to the amount of money levied
upon, at any time before the expiration of nine months from the
date of the levy; or
(c) An amount of money equal to the amount of money
received by the state of Minnesota from a sale of the property,
at any time before the expiration of nine months from the date
of the sale.
For purposes of clause (c), if property is declared
purchased by the state of Minnesota at a sale pursuant to
section 270C.7101, subdivision 5 (relating to manner and
conditions of sale), the state of Minnesota shall be treated as
having received an amount of money equal to the minimum price
determined pursuant to section 270C.7101, subdivision 5, or, if
larger, the amount received by the state of Minnesota from the
resale of the property. [270.709]
[EFFECTIVE DATE.] This section is effective for levies made
on or after August 1, 2005.
Sec. 86. [270C.711] [ACQUISITION AND RESALE OF SEIZED
PROPERTY.]
For the purpose of enabling the commissioner to purchase or
redeem seized property in which the state of Minnesota has an
interest arising from a lien for unpaid taxes, or to provide for
the operating costs of collection activities of the department,
there is appropriated to the commissioner an amount representing
the cost of such purchases, redemptions, or collection
activities. Seized property acquired by the state of Minnesota
to satisfy unpaid taxes shall be resold by the commissioner.
The commissioner shall preserve the value of seized property
while controlling it, including but not limited to the
procurement of insurance. For the purpose of refunding the
proceeds from the sale of levied or redeemed property which are
in excess of the actual tax liability plus costs of acquiring
the property, there is hereby created a levied and redeemed
property refund account in the agency fund. All amounts
deposited into this account are appropriated to the
commissioner. The commissioner shall report quarterly on the
status of this program to the chairs of the house Taxes and Ways
and Means Committees and senate Taxes and Tax Laws and Finance
Committees. [270.71]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 87. [270C.72] [TAX CLEARANCE; ISSUANCE OF LICENSES.]
Subdivision 1. [TAX CLEARANCE REQUIRED.] The state or a
political subdivision of the state may not issue, transfer, or
renew, and must revoke, a license for the conduct of a
profession, occupation, trade, or business, if the commissioner
notifies the licensing authority that the applicant owes the
state delinquent taxes payable to the commissioner, penalties,
or interest. The commissioner may not notify the licensing
authority unless the applicant taxpayer owes $500 or more in
delinquent taxes, penalties, or interest, or has not filed
returns. If the applicant taxpayer does not owe delinquent
taxes, penalties, or interest, but has not filed returns, the
commissioner may not notify the licensing authority unless the
taxpayer has been given 90 days' written notice to file the
returns or show that the returns are not required to be filed.
A licensing authority that has received a notice from the
commissioner may issue, transfer, renew, or not revoke the
applicant's license only if (a) the commissioner issues a tax
clearance certificate and (b) the commissioner or the applicant
forwards a copy of the clearance to the authority. The
commissioner may issue a clearance certificate only if the
applicant does not owe the state any uncontested delinquent
taxes, penalties, or interest and has filed all required returns.
Subd. 2. [DEFINITIONS.] For purposes of this section, the
following terms have the meanings given.
(a) "Delinquent taxes" do not include a tax liability if
(i) an administrative or court action which contests the amount
or validity of the liability has been filed or served, (ii) the
appeal period to contest the tax liability has not expired, or
(iii) the applicant has entered into a payment agreement and is
current with the payments.
(b) "Applicant" means an individual, if the license is
issued to or in the name of an individual, or the corporation or
partnership, if the license is issued to or in the name of a
corporation or partnership. "Applicant" also means an officer
of a corporation, a member of a partnership, or an individual
who is liable for delinquent taxes, either for the entity for
which the license is at issue or for another entity for which
the liability was incurred, or personally as a licensee. In the
case of a license transfer, "applicant" also means both the
transferor and the transferee of the license. "Applicant" also
means any holder of a license.
(c) "License" means any permit, registration,
certification, or other form of approval authorized by statute
or rule to be issued by the state or a political subdivision of
the state as a condition of doing business or conducting a
trade, profession, or occupation in Minnesota, specifically
including, but not limited to, a contract for space rental at
the Minnesota state fair and authorization to operate
concessions or rides at county and local fairs, festivals, or
events.
(d) "Licensing authority" includes the Minnesota State Fair
Board and county and local boards or governing bodies.
Subd. 3. [NOTICE AND HEARING.] (a) The commissioner, on
notifying a licensing authority pursuant to subdivision 1 not to
issue, transfer, or renew a license, must send a copy of the
notice to the applicant. If the applicant requests, in writing,
within 30 days of the date of the notice a hearing, a contested
case hearing must be held. The hearing must be held within 45
days of the date the commissioner refers the case to the Office
of Administrative Hearings. Notwithstanding any law to the
contrary, the applicant must be served with 20 days' notice in
writing specifying the time and place of the hearing and the
allegations against the applicant. The notice may be served
personally or by mail.
(b) Prior to notifying a licensing authority pursuant to
subdivision 1 to revoke a license, the commissioner must send a
notice to the applicant of the commissioner's intent to require
revocation of the license and of the applicant's right to a
hearing under paragraph (a). A license is subject to revocation
when 30 days have passed following the date of the notice in
this paragraph without the applicant requesting a hearing, or,
if a hearing is timely requested, upon final determination of
the hearing under section 14.62, subdivision 1. A license shall
be revoked by the licensing authority within 30 days after
receiving notice from the commissioner to revoke.
(c) A hearing under this subdivision is in lieu of any
other hearing or proceeding provided by law arising from any
action taken under subdivision 1.
Subd. 4. [LICENSING AUTHORITY; DUTIES.] All licensing
authorities must require the applicant to provide the
applicant's Social Security number and Minnesota business
identification number on all license applications. Upon request
of the commissioner, the licensing authority must provide the
commissioner with a list of all applicants, including the name,
address, business name and address, Social Security number, and
business identification number of each applicant. The
commissioner may request from a licensing authority a list of
the applicants no more than once each calendar year. [270.72]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 88. [270C.721] [REVOCATION OF CERTIFICATES OF
AUTHORITY TO DO BUSINESS IN THIS STATE.]
When a foreign corporation authorized to do business in
this state under chapter 303, or a foreign limited liability
company or partnership authorized to do business in this state
under chapter 322B, fails to comply with a law administered by
the commissioner that imposes a tax, the commissioner may serve
the secretary of state with a certified copy of an order finding
such failure to comply. The secretary of state, upon receipt of
the order, shall revoke the certificate of authority to do
business in this state, and shall reinstate the certificate
under section 303.19 or 322B.960, subdivision 6, only when the
corporation or limited liability company or partnership has
obtained from the commissioner an order finding that the
corporation or limited liability company or partnership is in
compliance with such law. An order requiring revocation of a
certificate shall not be issued unless the commissioner gives
the corporation or limited liability company or partnership 30
days' written notice of the proposed order, specifying the
violations of law, and affording an opportunity to request a
contested case hearing under chapter 14. [270.721]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 89. [270C.722] [REVOCATION OF SALES TAX PERMITS.]
Subdivision 1. [NOTICE OF REVOCATION; HEARINGS.] (a) If:
(1) a person fails to comply with chapter 297A or the sales and
use tax provisions of chapter 289A or the rules related to sales
tax, or (2) any retailer purchases for resale from an unlicensed
seller more than 20,000 cigarettes or $500 or more worth of
tobacco products, without reasonable cause, the commissioner may
give the person 30 days' notice in writing, specifying the
violations, and stating that based on the violations the
commissioner intends to revoke the person's permit issued under
section 297A.84. The notice must also advise the person of the
right to contest the revocation under this subdivision. It must
also explain the general procedures for a contested case hearing
under chapter 14. The notice may be served personally or by
mail in the manner prescribed for service of an order of
assessment.
(b) If the person does not request a hearing within 30 days
after the date of the notice of intent, the commissioner may
serve a notice of revocation of permit upon the person, and the
permit is revoked. If a hearing is timely requested, and held,
the permit is revoked after the commissioner serves an order of
revocation of permit under section 14.62, subdivision 1.
Subd. 2. [NEW PERMITS AFTER REVOCATION.] (a) The
commissioner shall not issue a new permit after revocation or
reinstate a revoked permit unless the taxpayer applies for a
permit and provides reasonable evidence of intention to comply
with the sales and use tax laws and rules. The commissioner may
require the applicant to provide security, in addition to that
authorized by section 297A.92, in an amount reasonably necessary
to ensure compliance with the sales and use tax laws and rules.
If the commissioner issues or reinstates a permit not in
conformance with the requirements of this subdivision or
applicable rules, the commissioner may cancel the permit upon
notice to the permit holder. The notice must be served by first
class and certified mail at the permit holder's last known
address. The cancellation shall be effective immediately,
subject to the right of the permit holder to show that the
permit was issued in conformance with the requirements of this
subdivision and applicable rules. Upon such showing, the permit
must be reissued.
(b) If a taxpayer has had a permit or permits revoked three
times in a five-year period, the commissioner shall not issue a
new permit or reinstate the revoked permit until 24 months have
elapsed after revocation and the taxpayer has satisfied the
conditions for reinstatement of a revoked permit or issuance of
a new permit imposed by this section and rules adopted under
this section.
(c) For purposes of this subdivision, "taxpayer" means:
(1) an individual, if a revoked permit was issued to or in
the name of an individual, or a corporation or partnership, if a
revoked permit was issued to or in the name of a corporation or
partnership; and
(2) an officer of a corporation, a member of a partnership,
or an individual who is liable for delinquent sales taxes,
either for the entity for which the new or reinstated permit is
at issue, or for another entity for which a permit was
previously revoked, or personally as a permit holder. [297A.86]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 90. [270C.725] [POSTING OF TAX DELINQUENCY; SALE OF
LIQUOR OR BEER.]
Subdivision 1. [POSTING, NOTICE.] Pursuant to the
authority to disclose under section 270B.12, subdivision 4, the
commissioner shall, by the 15th of each month, submit to the
commissioner of public safety a list of all taxpayers who are
required to pay, withhold, or collect the tax imposed by section
290.02, 290.0922, 290.92, 290.9727, 290.9728, 290.9729, or
297A.62, or local sales and use tax payable to the commissioner,
or a local option tax administered and collected by the
commissioner, and who are ten days or more delinquent in either
filing a tax return or paying the tax.
The commissioner is under no obligation to list a taxpayer
whose business is inactive. At least ten days before notifying
the commissioner of public safety, the commissioner shall notify
the taxpayer of the intended action.
The commissioner of public safety shall post the list in
the same manner as provided in section 340A.318, subdivision 3.
The list will prominently show the date of posting. If a
taxpayer previously listed files all returns and pays all taxes
specified in this subdivision then due, the commissioner shall
notify the commissioner of public safety within two business
days.
Subd. 2. [SALES PROHIBITED.] Beginning the third business
day after the list is posted, no wholesaler, manufacturer, or
brewer may sell or deliver any product to a taxpayer included on
the posted list.
Subd. 3. [PENALTY.] A wholesaler, manufacturer, or brewer
of intoxicating liquor or 3.2 percent malt liquor who violates
subdivision 2 is subject to the penalties provided in section
340A.304. [270.73]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 91. [270C.728] [PUBLICATION OF NAMES OF DELINQUENT
TAXPAYERS.]
Subdivision 1. [COMMISSIONER MAY PUBLISH.] (a)
Notwithstanding any other law, the commissioner may publish a
list or lists of taxpayers who owe delinquent taxes, and who
meet the requirements of paragraph (b).
(b) For purposes of this section, a taxpayer may be
included on a list if:
(1) the taxes owed remain unpaid at least 180 days after
the dates they were due;
(2) the taxpayer's total liability for the taxes, including
penalties, interest, and other charges, is at least $5,000; and
(3) a tax lien has been filed or a judgment for the
liability has been entered against the taxpayer before notice is
given under subdivision 3.
(c) In the case of listed taxpayers that are business
entities, the commissioner may also list the names of
responsible persons assessed pursuant to section 270C.56 for
listed liabilities, who are not protected from publication by
subdivision 2, and for whom the requirements of paragraph (b)
are satisfied with regard to the personal assessment.
(d) Before any list is published under this section, the
commissioner must certify in writing that each of the conditions
for publication as provided in this section has been satisfied,
and that procedures were followed to ensure the accuracy of the
list and notice was given to the affected taxpayers.
Subd. 2. [REQUIRED AND EXCLUDED TAXPAYERS.] (a) The
commissioner may publish lists of some or all of the taxpayers
described in subdivision 1. A list must include the taxpayers
with the largest unpaid liabilities of the kind used to define
the list, subject to the limitations of paragraphs (b) and (c).
(b) For the purposes of this section, a tax is not
delinquent if:
(1) an administrative or court action contesting the amount
or validity of the taxpayer's liability has been filed or served
and is unresolved at the time when notice would be given under
subdivision 3;
(2) an appeal period to contest the liability has not
expired; or
(3) the liability is subject to a payment agreement and
there is no delinquency in the payments required under the
agreement.
(c) Unpaid liabilities are not subject to publication if:
(1) the commissioner is in the process of reviewing or
adjusting the liability;
(2) the taxpayer is a debtor in a bankruptcy proceeding and
the automatic stay is in effect;
(3) the commissioner has been notified that the taxpayer is
deceased; or
(4) the time period for collecting the taxes has expired.
Subd. 3. [NOTICE TO TAXPAYER.] (a) At least 30 days before
publishing the name of a delinquent taxpayer, the commissioner
shall mail a written notice to the taxpayer, detailing the
amount and nature of each liability and the intended publication
of the information listed in subdivision 4 related to the
liability. The notice must be mailed by first class and
certified mail addressed to the last known address of the
taxpayer. The notice must include information regarding the
exceptions listed in subdivision 2 and must state that the
taxpayer's information will not be published if the taxpayer
pays the delinquent obligation, enters into an agreement to pay,
or provides information establishing that subdivision 2
prohibits publication of the taxpayer's name.
(b) After at least 30 days has elapsed since the notice was
mailed and the delinquent tax has not been paid and the taxpayer
has not proved to the commissioner that subdivision 2 prohibits
publication, the commissioner may publish in a list of
delinquent taxpayers the information about the taxpayer that is
listed in subdivision 4.
Subd. 4. [FORM OF LIST.] The list may be published by any
medium or method. The list must contain the name, address, type
of tax, and period for which payment is due for each liability,
including penalties, interest, and other charges owed by each
listed delinquent taxpayer.
Subd. 5. [REMOVAL FROM LIST.] The commissioner shall
remove the name of a taxpayer from the list of delinquent
taxpayers after the commissioner receives written notice of and
verifies any of the following facts about the liability in
question:
(1) the taxpayer has contacted the commissioner and
arranged resolution of the liability;
(2) an active bankruptcy proceeding has been initiated for
the liability;
(3) a bankruptcy proceeding concerning the liability has
resulted in discharge of the liability; or
(4) the commissioner has written off the liability.
Subd. 6. [NAMES PUBLISHED IN ERROR.] If the commissioner
publishes a name under subdivision 1 in error, the taxpayer
whose name was erroneously published has a right to request a
retraction and apology. If the taxpayer so requests, the
commissioner shall publish a retraction and apology
acknowledging that the taxpayer's name was published in error.
The retraction and apology must appear in the same medium and
the same format as the original list that contained the name
listed in error.
Subd. 7. [PAYMENT OF DAMAGES.] Actions against the
commissioner or the state of Minnesota arising out of the
implementation of this program must be brought under section
270C.275. If an action results in damages awarded to a
taxpayer, the damages must be paid out of the department's
operating budget rather than in accordance with section 3.736,
subdivision 7. [270.691]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
OVERSIGHT AND ADMINISTRATION OF PROPERTY TAX SYSTEM
Sec. 92. [270C.85] [ADMINISTRATION OF PROPERTY TAX LAWS;
POWERS AND DUTIES.]
Subdivision 1. [GENERAL SUPERVISION.] The commissioner
shall have and exercise general supervision over the
administration of the property tax laws, assessors, town,
county, and city boards of review and equalization, and all
other assessing officers in the performance of their duties, to
the end that all assessments of property be made relatively just
and equal in compliance with the laws of the state. [270.06(1)]
Subd. 2. [POWERS AND DUTIES.] The commissioner shall have
and exercise the following powers and duties in administering
the property tax laws.
(a) Confer with, advise, and give the necessary
instructions and directions to local assessors and local boards
of review throughout the state as to their duties under the laws
of the state. [270.06(2)]
(b) Direct proceedings, actions, and prosecutions to be
instituted to enforce the laws relating to the liability and
punishment of public officers and officers and agents of
corporations for failure or negligence to comply with the
provisions of the property tax laws, and cause complaints to be
made against local assessors, members of boards of equalization,
members of boards of review, or any other assessing or taxing
officer, to the proper authority, for their removal from office
for misconduct or negligence of duty. [270.06(3)]
(c) Require county attorneys to assist in the commencement
of prosecutions in actions or proceedings for removal,
forfeiture, and punishment, for violation of the property tax
laws in their respective districts or counties. [270.06(4)]
(d) Require town, city, county, and other public officers
to report information as to the assessment of property, and such
other information as may be needful in the work of the
commissioner, in such form as the commissioner may prescribe.
[270.06(5)]
(e) Transmit to the governor, on or before the third Monday
in December of each even-numbered year, and to each member of
the legislature, on or before November 15 of each even-numbered
year, the report of the department for the preceding years,
showing all the taxable property subject to the property tax
laws and the value of the same, in tabulated form. [270.06(12)]
(f) Inquire into the methods of assessment and taxation and
ascertain whether the assessors faithfully discharge their
duties. [270.06(13)]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 93. [270C.86] [POWER TO ABATE; CORRECTION OF ERRORS.]
Subdivision 1. [POWERS OF COMMISSIONER; APPLICATION FOR
ABATEMENT; ORDERS.] (a) Except for matters delegated to the
various boards of county commissioners under section 375.192,
and except as otherwise provided by law, the commissioner shall
have power to grant such reduction or abatement of net tax
capacities, taxes imposed by the property tax laws, or special
assessments, and of any costs, penalties, or interest thereon as
the commissioner may deem just and equitable, and to order the
refundment, in whole or in part, of any taxes or special
assessments, and costs, penalties, or interest thereon which
have been erroneously or unjustly paid. Application therefor
shall be submitted with a statement of facts in the case and the
favorable recommendation of the county board or of the board of
abatement of any city where any such board exists, and the
county auditor of the county wherein such tax was levied or
paid. No reduction, abatement, or refundment of any special
assessments made or levied by any municipality for local
improvements shall be made unless it is also approved by the
board of review or similar taxing authority of such municipality.
(b) The commissioner shall forward to the county auditor a
copy of the order made by the commissioner in all cases in which
the approval of the county board is required. [270.07, subd.
1(c)]
(c) An appeal may not be taken to the Tax Court from any
order of the commissioner made in the exercise of the
discretionary authority granted in paragraph (a) with respect to
the reduction or abatement of real or personal property taxes in
response to an application for an abatement, reduction, or
refund of taxes, net tax capacities, costs, penalties, or
interest. [270.07, subd. 1(f)]
Subd. 2. [EXAMINATION OF APPLICATION; REDUCTIONS;
APPEALS.] (a) The commissioner shall examine all applications
submitted by a county board pursuant to section 375.192,
subdivision 3. If the applicant has previously submitted a
claim for property tax relief pursuant to chapter 290A based on
the property taxes payable prior to receiving the abatement, the
commissioner may approve the application in an amount reduced by
the relief provided pursuant to chapter 290A.
(b) An appeal may be taken to the Tax Court from an order
of the commissioner made pursuant to this subdivision. [270.07,
subd. 1a]
Subd. 3. [CORRECTION OF ERRORS.] On application of the
county auditor with the approval of the county board, the
commissioner may order the correction of any administrative and
clerical errors in the assessment, levy, and extension of taxes
under the property tax laws, other than valuation. [270.07,
subd. 2]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 94. [270C.87] [REVISION OF MINNESOTA ASSESSORS'
MANUAL.]
In accordance with the provisions of section 270C.06, the
commissioner shall periodically revise the Minnesota assessors'
manual. [270.068]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 95. [270C.88] [ORDERS; DECISIONS.]
Subdivision 1. [IN WRITING.] Any order or decision of the
commissioner increasing or decreasing any tax, assessment, or
other obligation by a sum exceeding $1,000 on real or personal
property, or the net tax capacity thereof, or other obligation
relating thereto, the result of which is to increase or decrease
the total amount payable under the property tax laws, including
penalties and interest, by a sum exceeding $1,000, must bear the
written signature or facsimile signature of the commissioner or
the commissioner's delegate. Written approval of the
commissioner or a delegate shall not be required with respect to
orders reducing net tax capacity of property by reason of its
classification as a homestead.
Subd. 2. [ONLY OFFICIAL ACTIONS OF COUNTY BOARD OR OTHER
AGENCY ACTED UPON.] No action requiring the recommendation or
approval of any county board or other public agency shall be
taken by the commissioner, or any other employees or agents of
the department, unless such recommendation or approval shall
have been made upon official action by such county board or
other agency, entered upon the minutes or record of its
proceedings as a public record, showing the names of the
taxpayers and other persons concerned and the amounts involved,
and so certified by the recording officer of such board or
agency. [270.10]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 96. [270C.89] [COUNTY ASSESSOR'S REPORTS OF
ASSESSMENT FILED WITH COMMISSIONER.]
Subdivision 1. [INITIAL REPORT.] Each county assessor
shall file by April 1 with the commissioner a copy of the
abstract that will be acted upon by the local and county boards
of review. The abstract must list the real and personal property
in the county itemized by assessment districts. The assessor of
each county in the state shall file with the commissioner,
within ten working days following final action of the local
board of review or equalization and within five days following
final action of the county board of equalization, any changes
made by the local or county board. The information must be
filed in the manner prescribed by the commissioner. It must be
accompanied by a printed or typewritten copy of the proceedings
of the appropriate board. [270.11, subd. 2]
Subd. 2. [FINAL REPORT.] The final abstract of assessments
after adjustments by the State Board of Equalization and
inclusion of any omitted property shall be submitted to the
commissioner on or before September 1 of each calendar year.
The final abstract must separately report the captured tax
capacity of tax increment financing districts under section
469.177, subdivision 2, the metropolitan revenue contribution
value under section 473F.07, and the value subject to the power
line credit under section 273.42. [270.11, subd. 2]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 97. [270C.90] [COUNTY AUDITOR TO CALCULATE TAX RATE.]
The county auditor shall calculate the tax rate necessary
to raise the required amount of the various taxes on the net tax
capacity of all property as returned by the commissioner and the
State Board of Equalization. [270.14]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 98. [270C.91] [RECORD OF PROCEEDINGS CHANGING NET TAX
CAPACITY; DUTIES OF COUNTY AUDITOR.]
A record of all proceedings of the commissioner affecting
any change in the net tax capacity of any property, as revised
by the State Board of Equalization, shall be kept by the
commissioner and a copy thereof, duly certified, shall be mailed
each year to the auditor of each county wherein such property is
situated, on or before June 30 or 30 days after submission of
the abstract required by section 270C.89, whichever is later.
This record shall specify the amounts or amount, or both, added
to or deducted from the net tax capacity of the real property of
each of the several towns and cities, and of the real property
not in towns or cities, also the percent or amount of both,
added to or deducted from the several classes of personal
property in each of the towns and cities, and also the amount
added to or deducted from the assessment of any person. The
county auditor shall add to or deduct from such tract or lot, or
portion thereof, of any real property in the county the required
percent or amount, or both, on the net tax capacity thereof as
it stood after equalized by the county board, adding in each
case a fractional sum of 50 cents or more, and deducting in each
case any fractional sum of less than 50 cents, so that no net
tax capacity of any separate tract or lot shall contain any
fraction of a dollar; and add to, or deduct from, the several
classes of personal property in the county the required percent
or amount, or both, on the net tax capacity thereof as it stood
after equalized by the county board, adding or deducting in
manner aforesaid any fractional sum so that no net tax capacity
of any separate class of personal property shall contain a
fraction of a dollar, and add to or deduct from assessment of
any person, as they stood after equalization by the county
board, the required amounts to agree with the assessments as
returned by the commissioner. [270.13]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 99. [270C.92] [IMPROPER OR NEGLIGENT ADMINISTRATION
OF PROPERTY TAX LAWS.]
Subdivision 1. [EXAMINATION OF COMPLAINTS;
PROCEEDINGS.] The commissioner shall receive complaints and
examine all cases where it is alleged that property subject to
taxation has not been assessed or has been fraudulently or for
any reason improperly or unequally assessed, or the law in any
manner evaded or violated, and cause to be instituted such
proceedings as will remedy improper or negligent administration
of the property tax laws. [270.11, subd. 5]
Subd. 2. [CHANGE OF MARKET VALUES.] In administering the
property tax laws, the commissioner shall raise or lower the
market value of any real or personal property, including the
power to raise or lower the market value of the real or personal
property of any person; provided, that before any such
assessment against the property of any person is so raised,
notice of an intention to raise such market value and of the
time and place at which a hearing thereon will be held shall be
given to such person, by mail, addressed to the person at the
place of residence listed upon the assessment book, at least
five days before the day of such hearing.
All relevant and material evidence concerning the market
value of the real or personal property shall be submitted at the
hearing, and the hearing shall not be a "contested case" within
the meaning of section 14.02, subdivision 3. The person
notified of the hearing, or any other person having an interest
in the property, may present evidence and argument bearing upon
the market value of the property. [270.11, subd. 6]
Subd. 3. [APPEARANCES BEFORE THE COMMISSIONER.] A property
owner, other than a public utility or mining company, for which
the original assessments are determined by the commissioner, may
not appear before the commissioner for the purposes provided in
subdivision 1 or 2 unless a timely appearance in person, by
counsel, or by written communication has been made before the
county board of equalization as provided in section 274.13, to
appeal the assessment of the property, or that the property
owner can establish not receiving notice of market value at
least five days before the local board of review meeting.
The commissioner may refuse to hear an appeal that is
within the jurisdiction of the Small Claims Division of the Tax
Court as stated in section 271.21, subdivision 2. The property
owner shall be notified by the commissioner of the right to
appeal to the Small Claims Division whenever an appeal to the
commissioner is denied. [270.11, subd. 7]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 100. [270C.921] [MUNICIPALITY MAY BE PARTY TO TAX
HEARING.]
Any city, town, school district, or county (all of which
governmental subdivisions shall be embraced in the word
"municipality" as used in sections 270C.921 to 270C.928) may
appear at and become a party to any proceedings before the
commissioner under section 270C.92 held for the purpose of
equalizing or assessing any real or personal property in the
municipality, or reducing the net tax capacity of any such
property. For that purpose the municipality may employ counsel
and disburse money for other expenses in connection with the
proceedings, on duly itemized, verified claims, which shall be
audited and allowed as now provided by law for the allowance of
claims against a municipality. It shall be the duty of the
commissioner, at the time of a hearing, to grant the
municipality, at its request, any further reasonable time as may
be necessary for the municipality to prepare for further
hearing. Before granting any reduction in net tax capacity
exceeding $100,000, it shall be the duty of the commissioner,
when any taxpayer or property owner has applied to the
commissioner after June 30, 1983, for a reduction of the net tax
capacity of any real or personal property in an amount exceeding
$100,000, to give written notice to the officials of the
municipality where the property is located and to permit the
municipality to have reasonable opportunity to be heard at any
proceedings concerning such reduction. [270.19]
Sec. 101. [270C.922] [MUNICIPALITY MAY REQUEST TAX
HEARING.]
Any municipality may, at any time within ten days after the
final adjournment of the county board of equalization of the
county in which the municipality is located or within ten days
after the filing with the auditor of such county of any order of
the commissioner reducing the net tax capacity of any property
in the municipality, file a written request with the
commissioner for a hearing under section 270C.92 upon the
equalization or assessment of any property within the
municipality, specifying the property and the name and address
of the owner thereof, as they appear from the assessment books.
The commissioner shall then order a hearing and mail a notice
stating the time and place of the hearing to the municipality
and to the owner of the property. It shall be the duty of the
commissioner, at the time of a hearing, to grant the
municipality, at its request, such further reasonable time as
may be necessary for the municipality to prepare for further
hearing. [270.20]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 102. [270C.923] [WITNESSES SUMMONED.]
In any hearing before the commissioner under section
270C.92, the commissioner shall, upon the request of a
municipality or any other party to the proceedings, issue
subpoenas and summon witnesses to appear and give testimony, and
to produce books, records, papers, and documents. For the
purpose of preparing for and participating in a hearing the
municipality shall have access to, and use of, all the data,
records, and files of the commissioner pertaining to the
property in question. Upon demand of any party a record shall
be kept by the commissioner of all evidence offered or received
at a hearing, the cost thereof to be paid by the party making
such demand. [270.21]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 103. [270C.924] [FINDINGS OF FACT AND ORDER;
APPEALS.]
Subdivision 1. [FINDINGS OF FACT.] For hearings held under
section 270C.92, the commissioner shall determine the
controversy upon the evidence produced at the hearing and shall
make and file written findings of fact and an order determining
the controversy. In the equalization and determination of net
tax capacities, the findings and net tax capacities as given by
the assessor of the local assessment district shall be
considered as prima facie correct. Copies of the order and
findings shall be mailed to all parties appearing at the hearing
and to the auditor of the county in which the property is
located.
Subd. 2. [APPEAL BY MUNICIPALITY.] Any municipality which
has appeared in the proceedings, and which is aggrieved by the
order of the commissioner reducing the net tax capacity of any
of the property, or failing to increase the net tax capacity,
may have the order of the commissioner reviewed by appeal to the
Court of Appeals, on either of the following grounds: (1) that
the determination of the commissioner was not in accordance with
the property tax laws, or that the commissioner committed any
other error of law; or (2) that the findings of fact and
determination of net tax capacity were unwarranted by or were
contrary to the weight of the evidence.
Subd. 3. [APPEAL BY PROPERTY OWNER.] Any owner of property
who has appeared in the proceedings and who is aggrieved by the
order of the commissioner raising the net tax capacity of the
property, or failing to reduce the net tax capacity, may have
the order of the commissioner reviewed on appeal to the Court of
Appeals in like manner and upon the same grounds as provided for
review on the appeal of any municipality. [270.22]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 104. [270C.925] [NOTICE OF APPEAL.]
To secure review of a determination made by the
commissioner under section 270C.924, the municipality shall,
within 30 days after mailing of notice of the determination,
serve upon the commissioner a notice of appeal to the Court of
Appeals from the order of the commissioner and file the
original, with proof of service, with the clerk of the appellate
courts, paying the filing fee provided by law for appeals in
civil actions. The filing of the notice of appeal shall vest
the court with jurisdiction and the appeal shall be heard and
disposed of as in other civil cases.
The court shall reverse or affirm the order of the
commissioner or remand the cause to the commissioner for a new
hearing or further proceedings or for other disposition, with
further directions as the court deems proper. [270.23]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 105. [270C.926] [APPEAL DOES NOT STAY COLLECTION.]
The institution of any appeal under sections 270C.924 and
270C.925 from the order of the commissioner does not stay any
proceedings for the assessment or collection of taxes against
the property involved therein. Notwithstanding such appeal, the
commissioner shall file with the auditor of the county in which
such property is situated an order confirming, increasing,
decreasing, or determining the net tax capacity thereof, and the
county auditor shall extend and levy against such property, or
the owner thereof, the taxes thereupon for such year according
to such assessment, and all subsequent proceedings for the
determination of the taxes and the collection thereof shall be
taken as if no appeal from such order were pending. When the
matter is finally determined on review a properly authenticated
copy of the findings, order, or judgment shall be filed with the
auditor of the county in which the land or property referred to
in the proceedings is situated. If such order or judgment
lowers the net tax capacity of the land or property referred to
in the proceedings, the commissioner, upon petition of the
owner, approved by the county board, shall abate so much of the
taxes against such property as is attributable to the excessive
net tax capacity thereof. If such tax has been paid, the county
auditor, upon petition of the owner, approved by the county
board and the commissioner, shall refund so much of such payment
as is attributable to such excess net tax capacity. Upon such
refund being made the county auditor shall charge the same to
the state and the various governmental subdivisions thereof that
participated in such excessive payment, in proportion to their
respective shares therein, and deduct the same in the next tax
apportionment. [270.24]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 106. [270C.927] [INCREASE IN NET TAX CAPACITY;
ADDITIONAL TAXES.]
If the final order and judgment in a hearing before the
commissioner under section 270C.92, or any appeal thereof,
result in raising the net tax capacity of the property affected
by the proceedings, the county officers shall, for the next
ensuing year, in addition to the regular taxes levied for such
ensuing year, levy, extend, and spread against such property, if
real property, or against the owner thereof, if personal
property, a tax equal to the difference between the taxes
actually levied and extended against such property, or owner,
for the year in question and the taxes which should have been
levied or extended against such property, or owner, at the
increased net tax capacity as finally determined. [270.25]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 107. [270C.928] [PROCEEDINGS TO DETERMINE NET TAX
CAPACITY.]
The proceedings provided in sections 270C.92 to 270C.927
are for determining the net tax capacity upon the basis of which
taxes are spread against property, or its owner, in the first
instance. The order of the commissioner, or the final order for
judgment of the Court of Appeals on it, shall not be a bar to
any defense against the taxes interposed at the time of the
proceedings for judgment on them. All defenses which may be set
up against the proceedings for judgment upon the taxes may be
asserted notwithstanding the determination of the commissioner
or the court. If the taxes are levied or extended pending
review of the order of the commissioner by the court, a judgment
entered upon the taxes in the tax delinquency proceedings shall
not be a bar to the spreading of further taxes against the
property for that year, in the event the net tax capacity of the
property is raised as herein provided. In the proceedings for
the collection of any taxes which include an additional levy
because of the raising of the net tax capacity of any property,
the owner may answer separately to the proceedings to obtain
judgment for the excess levy. [270.26]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
REASSESSMENT OF OMITTED OR UNDERVALUED PROPERTIES
Sec. 108. [270C.94] [PROPERTY OMITTED OR UNDERVALUED;
REASSESSMENT; APPOINTMENT OF SPECIAL ASSESSOR.]
Subdivision 1. [PROPERTY OMITTED OR UNDERVALUED.] When it
shall be made to appear to the commissioner, by complaint or by
the finding of a court or of the legislature, or either body of
the legislature, or any committee of the legislature, or any
city council or county board, that any considerable amount of
property has been improperly omitted from the tax list or
assessment roll of any district or county for any year, or, if
assessed, that the same has been undervalued or overvalued, as
compared with like property in the same county or in the state
so that the assessment for such year in such district or county
is grossly unfair and inequitable, whether or not the same has
been equalized by the county board of equalization or the
commissioner, the commissioner shall examine into the facts in
the matter and, if satisfied that it would be for the best
interests of the state that a reassessment of such property be
made, the commissioner shall appoint a special assessor and such
deputy assessors as may be necessary and cause a reassessment to
be made of all or any of the real and personal property, or
either, in any such district or county as the commissioner may
deem best, to the end that all property in such district or
county shall be assessed equitably as compared with like
property in such district or county. [270.16, subd. 1]
Subd. 2. [SPECIAL ASSESSORS, DEPUTIES; REASSESSMENTS.] The
commissioner shall appoint a special assessor and deputies and
cause to be made, in any year, a reassessment of all or any real
and personal property, or either, in any assessment district,
when in the commissioner's judgment such reassessment is
desirable or necessary, to the end that any and all property in
such district shall be assessed equitably as compared with like
property in the county wherein such district is situated.
[270.11, subd. 3]
Subd. 3. [FAILURE TO APPRAISE.] When an assessor has
failed to properly appraise at least one-quarter of the parcels
of property in a district or county as provided in section
273.01, the commissioner shall appoint a special assessor and
deputy assessor as necessary and cause a reappraisal to be made
of the property due for reassessment in accordance with law.
[270.16, subd. 2]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 109. [270C.95] [QUALIFICATION OF ASSESSORS;
REASSESSMENT, HOW MADE.]
Every special assessor and deputy appointed under the
provisions of section 270C.94 shall subscribe and file with the
commissioner an oath to faithfully and fairly perform the duties
of office. Such special assessor, assisted by deputies, shall
thereupon proceed to carefully examine and reassess the property
so to be reassessed and prepare duplicate lists of such
reassessment in such form as the commissioner may prescribe,
showing the property or person so reassessed, the amount of the
original assessment thereof made in such year, and opposite the
same the reassessment so made by such special assessor. The
special assessor shall file both copies of such list with the
commissioner; and the commissioner shall thereupon examine,
equalize, and correct such reassessment so as to substantially
conform with the assessment of like property throughout the
state and transmit to the auditor of the county wherein such
reassessment was so made one copy of such reassessment by the
commissioner so corrected and equalized. Such list shall for
all purposes supersede and be in place of the original
assessment made for such year upon such property and the county
auditor, upon receipt thereof, shall extend and levy against
such property so reassessed the taxes thereon for such year
according to such reassessment in the same manner as though such
list was the original assessment list of such property. Any
person feeling aggrieved by an assessment so made against the
person, or upon any property at that time owned by the person,
may appeal therefrom to the district court of the county in
which such assessment is made. To render the appeal effective
for any purpose, the appellant shall file a notice of the appeal
with the auditor of such county within 30 days after the making
of the assessment, which notice shall specify the ground upon
which the appeal was taken, and no other or different service
shall be required to perfect it. Upon the filing of the notice
the county auditor shall make and file in the office of the
court administrator of the district court a certified copy of
the notice and of the particular assessment appealed from and
notify the county attorney of such county of the pendency of the
appeal. Thereupon the district court shall be deemed to have
acquired jurisdiction of the matter and proceed to hear and
determine it in like manner as other tax matters are tried and
determined in the district courts of this state. The county
attorney of such county shall appear for and defend the
interests of the state in such matter. [270.17]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 110. [270C.96] [REASSESSMENT; COMPENSATION;
REIMBURSEMENT BY COUNTIES.]
The compensation of each special assessor and deputies,
appointed under the provisions of section 270C.94 and the
expenses as such, shall be fixed by the commissioner and paid
out of money appropriated for operation of the department. The
commissioner on August 1 shall notify the auditor of each
affected county of the amount thereof paid on behalf of such
county since August 1 of the preceding year, whereupon the
county auditor shall levy a tax upon the taxable property in the
assessment district or districts wherein such reassessment was
made sufficient to pay the same. One-half of such tax shall be
levied in the year in which the commissioner so notifies the
county auditor and the remaining one-half shall be levied in the
following year. The respective counties shall reimburse the
state by paying one-half of the tax so assessed on or before
July 1 and the remaining one-half on or before December 1 in the
year in which the tax is payable by owner, whether or not the
tax was collected by the county. The reimbursement shall be
credited to the general fund. If any county fails to reimburse
the state within the time specified herein, the commissioner is
empowered to order withholding of state aids or distributions to
such county equal to the amount delinquent. [270.18]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 111. [270C.97] [OMITTED PROPERTY.]
The commissioner shall require the county auditor to place
upon the assessment rolls omitted property which may be
discovered to have escaped assessment and taxation in previous
years. [270.11, subd. 4]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 112. [270C.98] [SENIOR ACCREDITATION.]
The legislature finds that the property tax system would be
enhanced by requiring that every senior appraiser in the
Property Tax Division of the department obtain senior
accreditation from the State Board of Assessors. Every senior
appraiser, including the department's regional representatives,
and every county assessor within two years of the first
appointment under section 273.061, must obtain senior
accreditation from the state Board of Assessors. The board
shall provide the necessary courses or training. If a
department senior appraiser or regional representative fails to
obtain or maintain senior accreditation, the failure shall be
grounds for dismissal, disciplinary action, or corrective
action. Except as provided in section 273.061, subdivision 2,
paragraph (c), the commissioner must not approve the appointment
of a county assessor who is not senior accredited by the State
Board of Assessors. No employee hired by the commissioner as a
senior appraiser or regional representative shall attain
permanent status until the employee obtains senior accreditation.
[270.485]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 113. [270C.99] [CERTAIN TOWNSHIPS AND CITIES OPTION
TO ELECT TO REINSTATE THE OFFICE OF ASSESSOR.]
Notwithstanding the provisions of section 273.05,
subdivision 1, a city or township in which the office of
assessor has been eliminated because of failure to fill a
vacancy in the office within 90 days pursuant to section 273.05,
subdivision 1, may elect, with the approval of the commissioner,
to have the office of assessor reinstated by hiring a certified
or accredited assessor. This section shall not apply to Ramsey
county or to cities and townships located in counties which have
elected a county assessment system in accordance with section
273.055. [270.494]
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 114. [RULES; EFFECT OF RECODIFICATION.]
Notwithstanding Minnesota Statutes, section 14.05,
subdivision 1, Minnesota Rules, chapters 8001, 8002, 8007, 8009,
8017, 8019, 8020, 8031, 8034, 8038, 8043, 8050, 8052, 8092,
8093, 8100, 8106, 8110, 8120, 8121, 8122, 8125, 8130, 8160,
8165, 8170, and 8175, shall continue under the authority granted
in Minnesota Statutes, section 270C.06. Furthermore, Minnesota
Statutes, section 14.125, does not apply, and the Department of
Revenue may subsequently amend or repeal these rules from time
to time without additional legislative authorization.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 115. [PURPOSE AND EFFECT.]
Subdivision 1. [PURPOSE.] It is the intent of the
legislature to simplify Minnesota's tax laws by consolidating
and recodifying tax administration and compliance provisions now
contained in Minnesota Statutes, chapter 270, and several other
chapters of Minnesota Statutes. The provisions of this act may
not be used to determine the law in effect prior to the
effective dates in this act.
Subd. 2. [EFFECT.] Due to the complexity of the
recodification, prior provisions are repealed on the effective
date of the new provisions. The repealed provisions, however,
continue to remain in effect until superseded by the analogous
provision in the new law.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 116. [REVISOR INSTRUCTION.]
(a) To the extent practicable, the revisor shall publish
the statutory derivations of the laws repealed and recodified in
this article in Laws of Minnesota.
(b) The revisor shall correct cross-references in Minnesota
Statutes and Minnesota Rules to sections that are repealed and
recodified by this article.
(c) Notwithstanding any law to the contrary, if a provision
of a section of Minnesota Statutes repealed by this article is
amended or repealed during the same legislative session, the
amendment or repealer shall supersede the provisions of this
article, and the revisor shall codify the amendment or repealer
consistent with the recodification of the affected section by
this article. In addition, the revisor shall code new sections
or subdivisions enacted during the legislative session
consistent with the recodification.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 117. [REPEALER.]
Minnesota Statutes 2004, sections 270.01; 270.02; 270.021;
270.022; 270.04; 270.05; 270.052; 270.058; 270.059; 270.06;
270.0601; 270.0602; 270.0603; 270.0604; 270.0605; 270.061;
270.062; 270.063; 270.064; 270.065; 270.066; 270.0665; 270.067;
270.068; 270.0681; 270.0682; 270.069; 270.07; 270.084; 270.09;
270.10; 270.101; 270.102; 270.11, subdivisions 2, 3, 4, 5, 6,
and 7; 270.13; 270.14; 270.15; 270.16; 270.17; 270.18; 270.19;
270.20; 270.21; 270.22; 270.23; 270.24; 270.25; 270.26; 270.27;
270.271; 270.272; 270.273; 270.274; 270.275; 270.276; 270.277;
270.278; 270.30; 270.485; 270.494; 270.60; 270.65; 270.652;
270.66; 270.67; 270.68; 270.69; 270.691; 270.70; 270.7001;
270.7002; 270.701; 270.702; 270.703; 270.704; 270.705; 270.706;
270.707; 270.708; 270.709; 270.71; 270.72; 270.721; 270.73;
270.74; 270.75; 270.76; 270.771; 270.78; 270.79; 287.39;
289A.07; 289A.13; 289A.31, subdivisions 3, 4, and 6; 289A.36;
289A.37, subdivisions 1, 3, 4, and 5; 289A.38, subdivision 13;
289A.43; 289A.65; 290.48, subdivisions 3 and 4; 290.92,
subdivisions 6b, 22, and 23; 290.97; 296A.20; 296A.201; 296A.25;
297A.86; 297A.93; 297D.14; 297E.08; 297E.09; 297E.12,
subdivision 10; 297E.15; 297F.15, subdivisions 1, 2, 3, 4, 5, 6,
7, and 8; 297F.16; 297F.22; 297G.14, subdivisions 1, 2, 3, 4, 5,
6, 7, and 8; 297G.15; 297G.21; 297I.45; 297I.50; 297I.55; and
297I.95, are repealed.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
ARTICLE 2
CONFORMING PROVISIONS
Section 1. Minnesota Statutes 2004, section 16D.08,
subdivision 2, is amended to read:
Subd. 2. [POWERS.] (a) In addition to the collection
remedies available to private collection agencies in this state,
the commissioner, with legal assistance from the attorney
general, may utilize any statutory authority granted to a
referring agency for purposes of collecting debt owed to that
referring agency. The commissioner may also use the tax
collection remedies in sections 270.06, 270.66, 270.67,
subdivisions 2 and 4, 270.69, 270.70, 270.7001 to 270.72, and
290.92, subdivision 23 270C.03, subdivision 1, clause (8),
270C.31, 270C.32, 270C.52, subdivisions 2 and 3, 270C.63,
270C.65, and 270C.67 to 270C.72. A debtor may take advantage of
any administrative or appeal rights contained in the listed
sections. For administrative and appeal rights for nontax
debts, references to administrative appeals or to the taxpayer
rights advocate shall be construed to be references to the case
reviewer, references to Tax Court shall be construed to mean
district court, and offers in compromise shall be submitted to
the referring agency. A debtor who qualifies for cancellation
of collection costs under section 16D.11, subdivision 3, clause
(1), can apply to the commissioner for reduction or release of a
continuous wage levy, if the debtor establishes that the debtor
needs all or a portion of the wages being levied upon to pay for
essential living expenses, such as food, clothing, shelter,
medical care, or expenses necessary for maintaining employment.
The commissioner's determination not to reduce or release a
continuous wage levy is appealable to district court. The word
"tax" or "taxes" when used in the tax collection statutes listed
in this subdivision also means debts referred under this chapter.
(b) Before using the tax collection remedies listed in this
subdivision, notice and demand for payment of the amount due
must be given to the person liable for the payment or collection
of the debt at least 30 days prior to the use of the remedies.
The notice must be sent to the person's last known address and
must include a brief statement that sets forth in simple and
nontechnical terms the amount and source of the debt, the nature
of the available collection remedies, and remedies available to
the debtor.
Sec. 2. Minnesota Statutes 2004, section 115B.49,
subdivision 4, is amended to read:
Subd. 4. [REGISTRATION; FEES.] (a) The owner or operator
of a dry cleaning facility shall register on or before October 1
of each year with the commissioner of revenue in a manner
prescribed by the commissioner of revenue and pay a registration
fee for the facility. The amount of the fee is:
(1) $500, for facilities with a full-time equivalence of
fewer than five;
(2) $1,000, for facilities with a full-time equivalence of
five to ten; and
(3) $1,500, for facilities with a full-time equivalence of
more than ten.
(b) A person who sells dry cleaning solvents for use by dry
cleaning facilities in the state shall collect and remit to the
commissioner of revenue in a manner prescribed by the
commissioner of revenue, on or before the 20th day of the month
following the month in which the sales of dry cleaning solvents
are made, a fee of:
(1) $3.50 for each gallon of perchloroethylene sold for use
by dry cleaning facilities in the state;
(2) 70 cents for each gallon of hydrocarbon-based dry
cleaning solvent sold for use by dry cleaning facilities in the
state; and
(3) 35 cents for each gallon of other nonaqueous solvents
sold for use by dry cleaning facilities in the state.
(c) The audit, assessment, appeal, collection, enforcement,
and administrative provisions of chapters 270C and 289A apply to
the fee imposed by this subdivision. To enforce this
subdivision, the commissioner of revenue may examine documents,
assess and collect fees, conduct investigations, issue
subpoenas, grant extensions to file returns and pay fees, impose
penalties and interest on the annual registration fee under
paragraph (a) and the monthly fee under paragraph (b), and abate
penalties and interest, and administer appeals, in the manner
provided in chapters 270 270C and 289A. The penalties and
interest imposed on taxes under chapter 297A apply to the fees
imposed under this subdivision. Disclosure of data collected by
the commissioner of revenue under this subdivision is governed
by chapter 270B.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 3. Minnesota Statutes 2004, section 239.785,
subdivision 4, is amended to read:
Subd. 4. [COMMISSIONER'S AUTHORITY ADMINISTRATION AND
ENFORCEMENT.] The provisions of chapter 296A relating to the
commissioner's authority to audit, assess, and collect the tax
imposed by that chapter assessment, appeal, collection, and
administrative provisions of chapters 270C and 296A, that apply
to the taxes imposed by chapter 296A, apply to the fee imposed
by this section.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 4. Minnesota Statutes 2004, section 256.9657,
subdivision 7, is amended to read:
Subd. 7. [COLLECTION; CIVIL PENALTIES.] The provisions of
sections 270C.31, except subdivisions 5 and 7; 270C.32, except
subdivisions 6 and 10; 270C.33; 270C.61, subdivision 2; and
289A.35 to 289A.50 relating to the authority to audit, assess,
collect, and pay refunds of other state taxes may be implemented
by the commissioner of human services with respect to the tax,
penalty, and interest imposed by this section. The commissioner
of human services shall impose civil penalties for violation of
this section as provided in section 289A.60, and the tax and
penalties are subject to interest at the rate provided in
section 270.75 270C.40. The commissioner of human services
shall have the power to abate penalties and interest when
discrepancies occur resulting from, but not limited to,
circumstances of error and mail delivery. The commissioner of
human services shall bring appropriate civil actions to collect
provider payments due under this section.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 5. Minnesota Statutes 2004, section 256.9792,
subdivision 8, is amended to read:
Subd. 8. [REMEDIES.] (a) The commissioner of revenue is
authorized to use the tax collection remedies in sections
270.06, clause (7), 270.69 to 270.72, and 290.92, subdivision 23
270C.32, subdivision 1, 270C.63, 270C.67, 270C.68, 270C.69,
270C.70 to 270C.72, and 270C.728, and tax return information to
collect arrearages.
(b) Liens arising under paragraph (a) shall be perfected
under the provisions of section 270.69 270C.63. The lien may be
filed as long as the time period allowed by law for collecting
the arrearages has not expired. The lien shall attach to all
property of the debtor within the state, both real and personal
under the provisions of section 270.69 270C.63. The lien shall
be enforced under the provisions in section 270.69 270C.63
relating to state tax liens.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 6. Minnesota Statutes 2004, section 273.11,
subdivision 5, is amended to read:
Subd. 5. [BOARDS OF REVIEW AND EQUALIZATION.]
Notwithstanding any other provision of law to the contrary, the
limitation contained in subdivisions 1 and 1a shall also apply
to the authority of the local board of review as provided in
section 274.01, the county board of equalization as provided in
section 274.13, the State Board of Equalization and the
commissioner of revenue as provided in sections
270.11, subdivision 1, 270.12, 270C.92, and 270.16 270C.94.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 7. Minnesota Statutes 2004, section 287.37, is
amended to read:
287.37 [INVESTIGATIONS AND ASSESSMENTS.]
The commissioner of revenue may investigate and examine
persons and transactions that are subject to this chapter using
the powers and authorities granted in chapters 270 270C and 289A.
The commissioner may issue orders of assessment under chapter
289A, and enforce collection of unpaid tax or penalty amounts,
including interest, under the authority of chapter 270. The
audit, assessment, appeal, collection, enforcement, and
administrative provisions of chapters 270C and 289A apply to the
taxes imposed by this chapter. All tax amounts collected by the
commissioner must be apportioned under section 287.12. The
commissioner's expenses under this section are not expenses of
administration under section 287.33. All data and information
made available to the commissioner under this section is public
except for investigative data covered by section 270B.03,
subdivision 6.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 8. Minnesota Statutes 2004, section 289A.35, is
amended to read:
289A.35 [ASSESSMENTS; COMMISSIONER FILED ON RETURNS.]
The commissioner has the authority to 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 enter the liability reported
on the return and may make any audit or investigation that is
considered necessary. The commissioner may use statistical or
other sampling techniques consistent with generally accepted
auditing standards in examining returns or records and making
assessments.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 9. Minnesota Statutes 2004, section 289A.42,
subdivision 1, is amended to read:
Subdivision 1. [EXTENSION AGREEMENT.] If before the
expiration of time prescribed in sections 270C.58, subdivision
13, 289A.38, and 289A.40 for the assessment of tax or the filing
of a claim for refund, both the commissioner and the taxpayer
have consented in writing to the assessment or filing of a claim
for refund after that time, the tax may be assessed or the claim
for refund filed at any time before the expiration of the agreed
upon period. The period may be extended by later agreements in
writing before the expiration of the period previously agreed
upon. The taxpayer and the commissioner may also agree to
extend the period for collection of the tax.
Sec. 10. Minnesota Statutes 2004, section 289A.60,
subdivision 13, is amended to read:
Subd. 13. [PENALTIES FOR TAX RETURN PREPARERS.] (a) If an
understatement of liability with respect to a return or claim
for refund is due to a willful attempt in any manner to
understate the liability for a tax by a person who is a tax
return preparer with respect to the return or claim, the person
shall pay to the commissioner a penalty of $500. If a part of a
property tax refund claim is excessive due to a willful attempt
in any manner to overstate the claim for relief allowed under
chapter 290A by a person who is a tax refund or return preparer,
the person shall pay to the commissioner a penalty of $500 with
respect to the claim. These penalties may not be assessed
against the employer of a tax return preparer unless the
employer was actively involved in the willful attempt to
understate the liability for a tax or to overstate the claim for
refund. These penalties are income tax liabilities and may be
assessed at any time as provided in section 289A.38, subdivision
5.
(b) A civil action in the name of the state of Minnesota
may be commenced to enjoin any person who is a tax return
preparer doing business in this state from further engaging in
any conduct described in paragraph (c). An action under this
paragraph must be brought by the attorney general in the
district court for the judicial district of the tax return
preparer's residence or principal place of business, or in which
the taxpayer with respect to whose tax return the action is
brought resides. The court may exercise its jurisdiction over
the action separate and apart from any other action brought by
the state of Minnesota against the tax return preparer or any
taxpayer as provided in section 270C.447.
(c) In an action under paragraph (b), if the court finds
that a tax return preparer has:
(1) engaged in any conduct subject to a civil penalty under
section 289A.60 or a criminal penalty under section 289A.63;
(2) misrepresented the preparer's eligibility to practice
before the Department of Revenue, or otherwise misrepresented
the preparer's experience or education as a tax return preparer;
(3) guaranteed the payment of any tax refund or the
allowance of any tax credit; or
(4) engaged in any other fraudulent or deceptive conduct
that substantially interferes with the proper administration of
state tax law, and injunctive relief is appropriate to prevent
the recurrence of that conduct,
the court may enjoin the person from further engaging in that
conduct.
(d) If the court finds that a tax return preparer has
continually or repeatedly engaged in conduct described in
paragraph (c), and that an injunction prohibiting that conduct
would not be sufficient to prevent the person's interference
with the proper administration of state tax laws, the court may
enjoin the person from acting as a tax return preparer. The
court may not enjoin the employer of a tax return preparer for
conduct described in paragraph (c) engaged in by one or more of
the employer's employees unless the employer was also actively
involved in that conduct.
(e) For purposes of this subdivision, the term
"understatement of liability" means an understatement of the net
amount payable with respect to a tax imposed by state tax law,
or an overstatement of the net amount creditable or refundable
with respect to a tax. The determination of whether or not
there is an understatement of liability must be made without
regard to any administrative or judicial action involving the
taxpayer. For purposes of this subdivision, the amount
determined for underpayment of estimated tax under either
section 289A.25 or 289A.26 is not considered an understatement
of liability.
(f) (d) For purposes of this subdivision, the term
"overstatement of claim" means an overstatement of the net
amount refundable with respect to a claim for property tax
relief provided by chapter 290A. The determination of whether
or not there is an overstatement of a claim must be made without
regard to administrative or judicial action involving the
claimant.
(g) (e) For purposes of this section, the term "tax refund
or return preparer" means an individual who prepares for
compensation, or who employs one or more individuals to prepare
for compensation, a return of tax, or a claim for refund of
tax. The preparation of a substantial part of a return or claim
for refund is treated as if it were the preparation of the
entire return or claim for refund. An individual is not
considered a tax return preparer merely because the individual:
(1) gives typing, reproducing, or other mechanical
assistance;
(2) prepares a return or claim for refund of the employer,
or an officer or employee of the employer, by whom the
individual is regularly and continuously employed;
(3) prepares a return or claim for refund of any person as
a fiduciary for that person; or
(4) prepares a claim for refund for a taxpayer in response
to a tax order issued to the taxpayer.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 11. Minnesota Statutes 2004, section 295.57,
subdivision 1, is amended to read:
Subdivision 1. [APPLICATION OF OTHER CHAPTERS.] Unless
specifically provided otherwise by sections 295.50 to 295.59,
the enforcement, interest, appeal, criminal penalties, and
refunds provisions in chapter 289A, the civil penalty provisions
applicable to withholding and sales taxes under section 289A.60,
and collection and rulemaking provisions under chapter 270 the
audit, assessment, appeal, collection, enforcement, and
administrative provisions of chapters 270C and 289A, apply to
taxes imposed under sections 295.50 to 295.59.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 12. Minnesota Statutes 2004, section 295.60,
subdivision 7, is amended to read:
Subd. 7. [APPLICATION OF OTHER CHAPTERS.] Unless
specifically provided otherwise by this section, the
enforcement, interest, appeal, criminal penalties, and refunds
provisions in chapter 289A, the civil penalty provisions
applicable to withholding and sales taxes under section 289A.60,
and collection and rulemaking provisions under chapter 270 the
audit, assessment, appeal, collection, enforcement, and
administrative provisions of chapters 270C and 289A, apply to
taxes imposed under this section.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 13. Minnesota Statutes 2004, section 297A.64,
subdivision 3, is amended to read:
Subd. 3. [ADMINISTRATION.] The retailer shall report and
pay the tax imposed in subdivision 1 to the commissioner of
revenue with the taxes imposed in this chapter. The tax imposed
in subdivision 1 and the fee imposed in subdivision 2 are
subject to the same interest, penalty, and other provisions
provided for sales and use taxes under this chapter and chapter
289A and this chapter. The commissioner has the same powers to
assess and collect the tax and fee that are given the
commissioner in chapters 270 and 289A and this chapter to assess
and collect sales and use tax. The audit, assessment, appeal,
collection, enforcement, and administrative provisions of this
chapter and chapters 270C and 289A, that apply to sales and use
taxes, apply to the tax and fee.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 14. Minnesota Statutes 2004, 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 270C, 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 270C.40.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 15. Minnesota Statutes 2004, section 297H.10,
subdivision 1, is amended to read:
Subdivision 1. [ADMINISTRATION AND ENFORCEMENT.] The
audit, assessment, appeal, collection, refund, penalty,
interest, enforcement, collection remedies, appeal, and
administrative provisions of chapters 270 270C and 289A that are
applicable to taxes imposed under by chapter 297A apply to this
chapter.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 16. Minnesota Statutes 2004, section 297I.10, is
amended by adding a subdivision to read:
Subd. 4. [COLLECTION AND ADMINISTRATION.] The commissioner
shall administer the surcharge imposed by this section in the
same manner as the taxes imposed by this chapter.
[EFFECTIVE DATE.] This section is effective August 1, 2005.
Sec. 17. [REVISOR'S INSTRUCTION.]
In each section of Minnesota Statutes referred to in column
A, the revisor of statutes shall delete the reference in column
B and insert the reference in column C.
Column A Column B Column C
13.4961, subd 2 270.062 270C.05
270.064 270C.055, subd 1
270.21 270C.923
16D.11, subd 2 270.06, clause (7) 270C.32
270.66 270C.65
16D.13, subd 2 270.75 270C.40
115C.09, subd 1 270.75 270C.40
126C.46 270.07 270C.86
126C.65, subd 4 270.13 270C.91
127A.49, subd 2 270.07 270C.86
144.1501, subd 5 270.75 270C.40
144.1502, subd 5 270.75 270C.40
239.785, subd 5 270.75 270C.40
256.9657, subd 7 270.75 270C.40
256B.064, subd 1c 270.75 270C.40
256B.431, subd 2d 270.75 270C.40
270.072, subd 6 270.65 270C.62
270.69 270C.63
270.075, subd 2 270.75 270C.40
270A.07, subd 5 270.76 270C.405
270B.03, subd 1 270.102 (twice) 270C.57 (twice)
289A.31, subd 3 270C.58, subd 1
270B.08 297A.86 270C.722
270B.085, subd 1 270.70 270C.67
270B.085, subd 2 270.69 270C.63
270B.07, subd 1 270.72 270C.72
270B.09 270.66 (twice) 270C.65 (twice)
290.97 270C.66
270B.12, subd 4 270.73 270C.725
270B.12, subd 7 270.72 270C.72
270B.12, subd 10 270.60 270C.19
271.06, subd 1 270.07, subd 1, 270C.86
para (a)
271.09, subd 1 270.07, subd 1 270C.86
271.12 270.76 270C.405
272.115, subd 1 270.066 270C.306
273.124, subd 13 270.0681 270C.12
273.16 270.19 to 270.26 270C.921 to 270C.928
273.372 270.11, subd 6 270C.92, subd 2
273.41 270.75 270C.40
274.13, subd 1a 270.11, subds 5 270C.92, subds 1
and 6 and 2
274.16 270.11, subd 2 270C.89
275.025, subd 1 270.11, subd 2 270C.89
275.48 270.07 270C.86
277.20, subd 2 270.69 270C.63
277.21, subd 3 270.7001, 270.7002, 270C.68, 270C.69,
and 290.92, subd 23 and 270C.70
270.70 to 270.709 270C.67 to 270C.72
277.21, subd 13 270.701 to 270.709 270C.7101 to
270C.7109
270.708 270C.7108
279.01, subd 2 270.07 270C.86
279.03, subd 1a 270.75 (twice) 270C.40 (twice)
279.34 270.07 270C.86
287.12 270.771 270C.42
287.29, subd 1 270.771 270C.42
287.385, subd 1 270.75 270C.40
287.385, subd 5 270.75 270C.40
287.385, subd 6 270.75 270C.40
289A.08, subd 1 289A.38, subd 13 270C.58, subd 3
289A.19, subd 2 270.75 270C.40
289A.25, subd 2 270.75 270C.40
289A.26, subd 4 270.75 270C.40
289A.31, subd 1 289A.38, subd 13 270C.58, subd 3
289A.31, subd 3 289A.38, subd 13 270C.58, subd 3
289A.31, subd 5 270.101 270C.56
290.92, subd 22 270C.59
289A.31, subd. 7 270.101 270C.56
289A.38, subd 12 289A.31, subd 4 270C.58, subd 2
(twice) (twice)
289A.40, subd 1 289A.37, subd 1 270C.33
289A.65 270C.35
289A.35 270C.33, subd 3
289A.50, subd 1 270.10, subd 1 270C.33
289A.50, subd 7 289A.65 270C.35
289A.50, subd 8 270.07, subd 5 270C.64
289A.55, subd 1 270.75 270C.40
289A.55, subd 7 270.75 270C.40
289A.55, subd 8 270.75 270C.40
289A.56, subd 1 270.76 270C.405
289A.60, subd 4 270.75 270C.40
289A.60, subd 5a 270.07, subds 1,
para (e), and 6 270C.34
289A.60, subd 16 297A.86 270C.722
289A.60, subd 21 270.07, subd 6 270C.34, subd 2
289A.63, subd 3 297A.86 270C.722
290.05, subd 8 289A.65 270C.35
290.06, subd 23 270.76 270C.405
290.30 289A.31, subd 3 270C.58, subd 1
290.92, subd 4b 270.69 270C.63
270.70 270C.67
290.92, subd 30 289A.37 (twice) 270C.33 (twice)
289A.65 (twice) 270C.35 (twice)
290.9201, subd 7 270.06, para (16) 270C.02, subd 2,
para (b)
290B.04, subd 5 289A (twice) 270C (twice)
290B.07 270.75 270C.40
290C.08, subd 1 270.75 270C.40
295.55, subd 2 270.75 270C.40
295.55, subd 3 270.75 270C.40
295.57, subd 1 270 270C
295.60, subd 3 270.75 270C.40
295.60, subd 7 270 270C
296A.02, subd 2 section 270.06 chapter 270C
section chapter
296A.13 270.101 270C.56
296A.21, subd 2 270.68 270C.61
296A.22, subd 1 270.75 270C.40
296A.22, subd 2 270 270C
296A.22, subd 3 270.75 270C.40
297A.72, subd 2 289A.07 270C.304
297A.75, subd 4 270.76 270C.405
297A.85 297A.86 270C.722
297A.92, subd 2 289A.37, subd 5 270C.33, subd 8
297D.12, subd 1 270.70 270C.36
270 (twice) 270C (twice)
297E.02, subd 4 270.76 270C.405
297E.02, subd 7 270.70 270C.36
270 (twice) 270C (twice)
297E.03, subd 7 270.70 270C.36
270 (twice) 270C (twice)
297E.03, subd 8 270.064 270C.055, subd 1
297E.11, subd 4 270.76 270C.405
297E.12, subd 6 270.07, subds 1,
para (e), and 6 270C.34
297E.14, subd 1 270.75 270C.40
297E.14, subd 6 270.75 270C.40
297F.02, subd 2 section 270.06 chapter 270C
section chapter
297F.04, subd 2 270.72 270C.72
297F.08, subd 4 270.60 270C.19
297F.09, subd 5 270.75 270C.40
297F.09, subd 9 270.75 270C.40
297F.18, subd 1 270.75 270C.40
297F.18, subd 6 270.75 270C.40
297F.185 297A.86 270C.722
297F.19, subd 6 270.07, subds 1,
para (e), and 6 270C.34
297G.02, subd 3 section 270.06 chapter 270C
section chapter
297G.09, subd 8 270.75 270C.40
297G.17, subd 1 270.75 270C.40
297G.17, subd 6 270.75 270C.40
297G.18, subd 6 270.07, subds 1,
para (e), and 6 270C.34
297I.40, subd 4 270.75 270C.40
297I.60, subd 2 297I.95 270C.35
297I.80, subd 1 270.75 270C.40
297I.80, subd 2 270.76 270C.405
297I.85, subd 7 270.07, subd 6 270C.34, subd 2
299L.07, subd 8 270.72 270C.72
325D.33, subd 8 270 (three times) 270C (three times)
270.75 (three 270C.40 (three
times) times)
336.9-531 270.69, subd 2, para
(b), clause (2) 270C.63, subd 4
349.155, subd 3 270.72 270C.72
349A.06, subd 2 270.72 270C.72
357.18, subd 2 270.69, subd 2,
para (c) 270C.63, subd 6
559.21, subd 5 270.69, subd 7 270C.63, subd 11
469.171, subd 10 270.76 270C.405
469.1734, subd 6 270.76 270C.405
469.178, subd 7 270.75 (twice) 270C.40 (twice)
469.319, subd 4 270 270C
270.75 270C.40
469.340, subd 4 270 270C
270.75 270C.40
580.15 270.69, subd 7 270C.63, subd 11
588.21 289A.36, subd 3 270C.61, subd 2
ARTICLE 3
PROPERTY TAXES
Section 1. Minnesota Statutes 2004, section 272.02,
subdivision 47, is amended to read:
Subd. 47. [POULTRY LITTER BIOMASS GENERATION FACILITY;
PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a),
attached machinery and other personal property which is part of
an electrical generating facility that meets the requirements of
this subdivision is exempt. At the time of construction, the
facility must:
(1) be designed to utilize poultry litter as a primary fuel
source; and
(2) be constructed for the purpose of generating power at
the facility that will be sold pursuant to a contract approved
by the Public Utilities Commission in accordance with the
biomass mandate imposed under section 216B.2424.
Construction of the facility must be commenced after
January 1, 2003, and before December 31, 2003 2005. Property
eligible for this exemption does not include electric
transmission lines and interconnections or gas pipelines and
interconnections appurtenant to the property or the facility.
[EFFECTIVE DATE.] This section is effective for taxes
levied in 2005, payable in 2006, and thereafter.
Sec. 2. Minnesota Statutes 2004, section 272.02,
subdivision 53, is amended to read:
Subd. 53. [ELECTRIC GENERATION FACILITY; PERSONAL
PROPERTY.] Notwithstanding subdivision 9, clause (a), attached
machinery and other personal property which is part of a 3.2
megawatt run-of-the-river hydroelectric generation facility and
that meets the requirements of this subdivision is exempt. At
the time of construction, the facility must:
(1) utilize two turbine generators at a dam site existing
on March 31, 1994;
(2) be located on publicly owned land and within 1,500 feet
of a 13.8 kilovolt distribution substation; and
(3) be eligible to receive a renewable energy production
incentive payment under section 216C.41.
Construction of the facility must be commenced after
January 1, 2002 December 31, 2004, and before January 1, 2005
2007. Property eligible for this exemption does not include
electric transmission lines and interconnections or gas
pipelines and interconnections appurtenant to the property or
the facility.
[EFFECTIVE DATE.] This section is effective for taxes
levied in 2005, payable in 2006 and thereafter.
Sec. 3. Minnesota Statutes 2004, section 272.02,
subdivision 56, is amended to read:
Subd. 56. [ELECTRIC GENERATION FACILITY; PERSONAL
PROPERTY.] (a) Notwithstanding subdivision 9, clause (a),
attached machinery and other personal property which is part of
a combined-cycle combustion-turbine electric generation facility
that exceeds 550 300 megawatts of installed capacity and that
meets the requirements of this subdivision is exempt. At the
time of construction, the facility must:
(1) be designed to utilize natural gas as a primary fuel;
(2) not be owned by a public utility as defined in section
216B.02, subdivision 4;
(3) be located within five miles of an existing natural gas
pipeline and within four miles of an existing electrical
transmission substation;
(4) be located outside the metropolitan area as defined
under section 473.121, subdivision 2; and
(5) be designed to provide energy and ancillary services
and have received a certificate of need under section 216B.243.
(b) Construction of the facility must be commenced after
January 1, 2004, and before January 1, 2007, except that
property eligible for this exemption includes any expansion of
the facility that also meets the requirements of paragraph (a),
clauses (1) to (5), without regard to the date that construction
of the expansion commences. Property eligible for this
exemption does not include electric transmission lines and
interconnections or gas pipelines and interconnections
appurtenant to the property or the facility.
[EFFECTIVE DATE.] This section is effective for taxes
levied in 2005, payable in 2006, and thereafter.
Sec. 4. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:
Subd. 68. [ELECTRIC GENERATION FACILITY; PERSONAL
PROPERTY.] (a) Notwithstanding subdivision 9, clause (a),
attached machinery and other personal property which is part of
a simple-cycle combustion-turbine electric generation facility
that exceeds 290 megawatts of installed capacity and that meets
the requirements of this subdivision is exempt. At the time of
construction, the facility must:
(1) be designed to utilize natural gas as a primary fuel;
(2) not be owned by a public utility as defined in section
216B.02, subdivision 4;
(3) be located within 15 miles of an existing natural gas
pipeline and within five miles of an existing electrical
transmission substation;
(4) be located outside the metropolitan area as defined
under section 473.121, subdivision 2;
(5) be designed to provide peaking capacity energy and
ancillary services and have satisfied all of the requirements
under section 216B.243; and
(6) have received, by resolution, the approval from the
governing body of the county, city, and school district in which
the proposed facility is to be located for the exemption of
personal property under this subdivision.
(b) Construction of the facility must be commenced after
January 1, 2005, and before January 1, 2009. Property eligible
for this exemption does not include electric transmission lines
and interconnections or gas pipelines and interconnections
appurtenant to the property or the facility.
[EFFECTIVE DATE.] This section is effective for assessment
year 2006, taxes payable in 2007, and thereafter.
Sec. 5. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:
Subd. 69. [ELECTRIC GENERATION FACILITY PERSONAL
PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), and
section 453.54, subdivision 20, attached machinery and other
personal property which is part of an electric generation
facility that exceeds 150 megawatts of installed capacity and
meets the requirements of this subdivision is exempt. At the
time of construction, the facility must:
(1) be designed to utilize natural gas as a primary fuel;
(2) be owned and operated by a municipal power agency as
defined in section 453.52, subdivision 8;
(3) have received the certificate of need under section
216B.243;
(4) be located outside the metropolitan area as defined
under section 473.121, subdivision 2; and
(5) be designed to be a combined-cycle facility, although
initially the facility will be operated as a simple-cycle
combustion turbine.
(b) To qualify under this subdivision, an agreement must be
negotiated between the municipal power agency and the host city,
for a payment in lieu of property taxes to the host city.
(c) Construction of the facility must be commenced after
January 1, 2004, and before January 1, 2006. Property eligible
for this exemption does not include electric transmission lines
and interconnections or gas pipelines and interconnections
appurtenant to the property or the facility.
[EFFECTIVE DATE.] This section is effective for assessment
year 2005, taxes payable in 2006, and thereafter.
Sec. 6. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:
Subd. 70. [ELECTRIC GENERATION FACILITY; PERSONAL
PROPERTY.] Notwithstanding subdivision 9, clause (a), attached
machinery and other personal property which is part of an
existing simple-cycle, combustion-turbine electric generation
facility that exceeds 300 megawatts of installed capacity and
that meets the requirements of this subdivision is exempt. At
the time of the construction, the facility must:
(1) be designed to utilize natural gas as a primary fuel;
(2) be owned by a public utility as defined in section
216B.02, subdivision 4, and be located at or interconnected with
an existing generating plant of the utility;
(3) be designed to provide peaking, emergency backup, or
contingency services;
(4) satisfy a resource need identified in an approved
integrated resource plan filed under section 216B.2422; and
(5) have received, by resolution, the approval from the
governing body of the county and the city for the exemption of
personal property under this subdivision.
Construction of the facility expansion must be commenced
after January 1, 2004, and before January 1, 2005. Property
eligible for this exemption does not include electric
transmission lines and interconnections or gas pipelines and
interconnections appurtenant to the property or the facility.
[EFFECTIVE DATE.] This section is effective beginning with
assessment year 2005, for taxes payable in 2006 and thereafter.
Sec. 7. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:
Subd. 71. [ELECTRIC GENERATION FACILITY; PERSONAL
PROPERTY.] (a) Notwithstanding subdivision 9, clause (a),
attached machinery and other personal property which is part of
a simple-cycle combustion-turbine electric generation facility
that exceeds 150 megawatts of installed capacity and that meets
the requirements of this subdivision is exempt. At the time of
construction, the facility must:
(1) utilize natural gas as a primary fuel;
(2) be owned by an electric generation and transmission
cooperative;
(3) be located within five miles of parallel existing
12-inch and 16-inch natural gas pipelines and a 69-kilovolt
high-voltage electric transmission line;
(4) be designed to provide peaking, emergency backup, or
contingency services;
(5) have received a certificate of need under section
216B.243 demonstrating demand for its capacity; and
(6) have received by resolution the approval from the
governing body of the county and township in which the proposed
facility is to be located for the exemption of personal property
under this subdivision.
(b) Construction of the facility must be commenced after
July 1, 2005, and before January 1, 2009. Property eligible for
this exemption does not include electric transmission lines and
interconnections or gas pipelines and interconnections
appurtenant to the property or the facility.
[EFFECTIVE DATE.] This section is effective for assessment
year 2006 and thereafter, for taxes payable in 2007 and
thereafter.
Sec. 8. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:
Subd. 72. [ELECTRIC GENERATION FACILITY PERSONAL
PROPERTY.] (a) Notwithstanding subdivision 9, clause (a),
attached machinery and other personal property which is part of
either a simple-cycle, combustion-turbine electric generation
facility, or a combined-cycle, combustion-turbine electric
generation facility that does not exceed 325 megawatts of
installed capacity and that meets the requirements of this
subdivision is exempt. At the time of construction, the
facility must:
(1) utilize either a simple-cycle or a combined-cycle
combustion-turbine generator fueled by natural gas;
(2) be connected to an existing 115-kilovolt high-voltage
electric transmission line that is within two miles of the
facility;
(3) be located on an underground natural gas storage
aquifer;
(4) be designed as either a peaking or intermediate load
facility; and
(5) have received, by resolution, the approval from the
governing body of the county for the exemption of personal
property under this subdivision.
(b) Construction of the facility must be commenced after
January 1, 2006, and before January 1, 2008. Property eligible
for this exemption does not include electric transmission lines
and interconnections or gas pipelines and interconnections
appurtenant to the property or the facility.
[EFFECTIVE DATE.] This section is effective for assessment
year 2005, taxes payable in 2006, and thereafter.
Sec. 9. Minnesota Statutes 2004, section 272.0211,
subdivision 1, is amended to read:
Subdivision 1. [EFFICIENCY DETERMINATION AND
CERTIFICATION.] An owner or operator of a new or existing
electric power generation facility, excluding wind energy
conversion systems, may apply to the commissioner of revenue for
a market value exclusion on the property as provided for in this
section. This exclusion shall apply only to the market value of
the equipment of the facility, and shall not apply to the
structures and the land upon which the facility is located. The
commissioner of revenue shall prescribe the forms and procedures
for this application. Upon receiving the application, the
commissioner of revenue shall request the commissioner of
commerce to make a determination of the efficiency of the
applicant's electric power generation facility. In calculating
the efficiency of a facility, The commissioner of commerce shall
use a definition of calculate efficiency which calculates
efficiency as the sum of:
(1) the useful electrical power output; plus
(2) the useful thermal energy output; plus
(3) the fuel energy of the useful chemical products,
all divided by the total energy input to the facility, expressed
as a percentage as the ratio of useful energy outputs to energy
inputs, expressed as a percentage, based on the performance of
the facility's equipment during normal full load operation. The
commissioner must include in this formula the energy used in any
on-site preparation of materials necessary to convert the
materials into the fuel used to generate electricity, such as a
process to gasify petroleum coke. The commissioner shall use
the high Higher Heating Value (HHV) for all substances in the
commissioner's efficiency calculations, except for wood for fuel
in a biomass-eligible project under section 216B.2424; for these
instances, the commissioner shall adjust the heating value to
allow for energy consumed for evaporation of the moisture in the
wood. The applicant shall provide the commissioner of commerce
with whatever information the commissioner deems necessary to
make the determination. Within 30 days of the receipt of the
necessary information, the commissioner of commerce shall
certify the findings of the efficiency determination to the
commissioner of revenue and to the applicant. The commissioner
of commerce shall determine the efficiency of the facility and
certify the findings of that determination to the commissioner
of revenue every two years thereafter from the date of the
original certification.
[EFFECTIVE DATE.] This section is effective for assessment
year 2005 and thereafter, for taxes payable in 2006 and
thereafter.
Sec. 10. Minnesota Statutes 2004, section 272.0211,
subdivision 2, is amended to read:
Subd. 2. [SLIDING SCALE EXCLUSION.] Based upon the
efficiency determination provided by the commissioner of
commerce as described in subdivision 1, the commissioner of
revenue shall subtract five eight percent of the taxable market
value of the qualifying property for each percentage point that
the efficiency of the specific facility, as determined by the
commissioner of commerce, is above 35 40 percent. The reduction
in taxable market value shall be reflected in the taxable market
value of the facility beginning with the assessment year
immediately following the determination. For a facility that is
assessed by the county in which the facility is located, the
commissioner of revenue shall certify to the assessor of that
county the percentage of the taxable market value of the
facility to be excluded.
[EFFECTIVE DATE.] This section is effective for assessment
year 2005 and thereafter, for taxes payable in 2006 and
thereafter.
Sec. 11. Minnesota Statutes 2004, section 273.124,
subdivision 14, is amended to read:
Subd. 14. [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.]
(a) Real estate of less than ten acres that is the homestead of
its owner must be classified as class 2a under section 273.13,
subdivision 23, paragraph (a), if:
(1) the parcel on which the house is located is contiguous
on at least two sides to (i) agricultural land, (ii) land owned
or administered by the United States Fish and Wildlife Service,
or (iii) land administered by the Department of Natural
Resources on which in lieu taxes are paid under sections 477A.11
to 477A.14;
(2) its owner also owns a noncontiguous parcel of
agricultural land that is at least 20 acres;
(3) the noncontiguous land is located not farther than four
townships or cities, or a combination of townships or cities
from the homestead; and
(4) the agricultural use value of the noncontiguous land
and farm buildings is equal to at least 50 percent of the market
value of the house, garage, and one acre of land.
Homesteads initially classified as class 2a under the
provisions of this paragraph shall remain classified as class
2a, irrespective of subsequent changes in the use of adjoining
properties, as long as the homestead remains under the same
ownership, the owner owns a noncontiguous parcel of agricultural
land that is at least 20 acres, and the agricultural use value
qualifies under clause (4). Homestead classification under this
paragraph is limited to property that qualified under this
paragraph for the 1998 assessment.
(b)(i) Agricultural property consisting of at least 40
acres shall be classified as the owner's homestead, to the same
extent as other agricultural homestead property, if all of the
following criteria are met:
(1) the owner, the owner's spouse, or the son or daughter
of the owner or owner's spouse, or the grandson or granddaughter
of the owner or the owner's spouse, is actively farming the
agricultural property, either on the person's own behalf as an
individual or on behalf of a partnership operating a family
farm, family farm corporation, joint family farm venture, or
limited liability company of which the person is a partner,
shareholder, or member;
(2) both the owner of the agricultural property and the
person who is actively farming the agricultural property under
clause (1), are Minnesota residents;
(3) neither the owner nor the spouse of the owner claims
another agricultural homestead in Minnesota; and
(4) neither the owner nor the person actively farming the
property lives farther than four townships or cities, or a
combination of four townships or cities, from the agricultural
property, except that if the owner or the owner's spouse is
required to live in employer-provided housing, the owner or
owner's spouse, whichever is actively farming the agricultural
property, may live more than four townships or cities, or
combination of four townships or cities from the agricultural
property.
The relationship under this paragraph may be either by
blood or marriage.
(ii) Real property held by a trustee under a trust is
eligible for agricultural homestead classification under this
paragraph if the qualifications in clause (i) are met, except
that "owner" means the grantor of the trust.
(iii) Property containing the residence of an owner who
owns qualified property under clause (i) shall be classified as
part of the owner's agricultural homestead, if that property is
also used for noncommercial storage or drying of agricultural
crops.
(c) Noncontiguous land shall be included as part of a
homestead under section 273.13, subdivision 23, paragraph (a),
only if the homestead is classified as class 2a and the detached
land is located in the same township or city, or not farther
than four townships or cities or combination thereof from the
homestead. Any taxpayer of these noncontiguous lands must
notify the county assessor that the noncontiguous land is part
of the taxpayer's homestead, and, if the homestead is located in
another county, the taxpayer must also notify the assessor of
the other county.
(d) Agricultural land used for purposes of a homestead and
actively farmed by a person holding a vested remainder interest
in it must be classified as a homestead under section 273.13,
subdivision 23, paragraph (a). If agricultural land is
classified class 2a, any other dwellings on the land used for
purposes of a homestead by persons holding vested remainder
interests who are actively engaged in farming the property, and
up to one acre of the land surrounding each homestead and
reasonably necessary for the use of the dwelling as a home, must
also be assessed class 2a.
(e) Agricultural land and buildings that were class 2a
homestead property under section 273.13, subdivision 23,
paragraph (a), for the 1997 assessment shall remain classified
as agricultural homesteads for subsequent assessments if:
(1) the property owner abandoned the homestead dwelling
located on the agricultural homestead as a result of the April
1997 floods;
(2) the property is located in the county of Polk, Clay,
Kittson, Marshall, Norman, or Wilkin;
(3) the agricultural land and buildings remain under the
same ownership for the current assessment year as existed for
the 1997 assessment year and continue to be used for
agricultural purposes;
(4) the dwelling occupied by the owner is located in
Minnesota and is within 30 miles of one of the parcels of
agricultural land that is owned by the taxpayer; and
(5) the owner notifies the county assessor that the
relocation was due to the 1997 floods, and the owner furnishes
the assessor any information deemed necessary by the assessor in
verifying the change in dwelling. Further notifications to the
assessor are not required if the property continues to meet all
the requirements in this paragraph and any dwellings on the
agricultural land remain uninhabited.
(f) Agricultural land and buildings that were class 2a
homestead property under section 273.13, subdivision 23,
paragraph (a), for the 1998 assessment shall remain classified
agricultural homesteads for subsequent assessments if:
(1) the property owner abandoned the homestead dwelling
located on the agricultural homestead as a result of damage
caused by a March 29, 1998, tornado;
(2) the property is located in the county of Blue Earth,
Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice;
(3) the agricultural land and buildings remain under the
same ownership for the current assessment year as existed for
the 1998 assessment year;
(4) the dwelling occupied by the owner is located in this
state and is within 50 miles of one of the parcels of
agricultural land that is owned by the taxpayer; and
(5) the owner notifies the county assessor that the
relocation was due to a March 29, 1998, tornado, and the owner
furnishes the assessor any information deemed necessary by the
assessor in verifying the change in homestead dwelling. For
taxes payable in 1999, the owner must notify the assessor by
December 1, 1998. Further notifications to the assessor are not
required if the property continues to meet all the requirements
in this paragraph and any dwellings on the agricultural land
remain uninhabited.
(g) Agricultural property consisting of at least 40 acres
of a family farm corporation, joint family farm venture, family
farm limited liability company, or partnership operating a
family farm as described under subdivision 8 shall be classified
homestead, to the same extent as other agricultural homestead
property, if all of the following criteria are met:
(1) a shareholder, member, or partner of that entity is
actively farming the agricultural property;
(2) that shareholder, member, or partner who is actively
farming the agricultural property is a Minnesota resident;
(3) neither that shareholder, member, or partner, nor the
spouse of that shareholder, member, or partner claims another
agricultural homestead in Minnesota; and
(4) that shareholder, member, or partner does not live
farther than four townships or cities, or a combination of four
townships or cities, from the agricultural property.
Homestead treatment applies under this paragraph for
property leased to a family farm corporation, joint farm
venture, limited liability company, or partnership operating a
family farm if legal title to the property is in the name of an
individual who is a member, shareholder, or partner in the
entity.
(h) To be eligible for the special agricultural homestead
under this subdivision, an initial full application must be
submitted to the county assessor where the property is located.
Owners and the persons who are actively farming the property
shall be required to complete only a one-page abbreviated
version of the application in each subsequent year provided that
none of the following items have changed since the initial
application:
(1) the day-to-day operation, administration, and financial
risks remain the same;
(2) the owners and the persons actively farming the
property continue to live within the four townships or city
criteria and are Minnesota residents;
(3) the same operator of the agricultural property is
listed with the Farm Service Agency;
(4) a Schedule F or equivalent income tax form was filed
for the most recent year;
(5) the property's acreage is unchanged; and
(6) none of the property's acres have been enrolled in a
federal or state farm program since the initial application.
The owners and any persons who are actively farming the
property must include the appropriate Social Security numbers,
and sign and date the application. If any of the specified
information has changed since the full application was filed,
the owner must notify the assessor, and must complete a new
application to determine if the property continues to qualify
for the special agricultural homestead. The commissioner of
revenue shall prepare a standard reapplication form for use by
the assessors.
[EFFECTIVE DATE.] This section is effective for assessment
year 2005 and thereafter, for taxes payable in 2006 and
thereafter.
Sec. 12. Minnesota Statutes 2004, section 273.13,
subdivision 25, is amended to read:
Subd. 25. [CLASS 4.] (a) Class 4a is residential real
estate containing four or more units and used or held for use by
the owner or by the tenants or lessees of the owner as a
residence for rental periods of 30 days or more. Class 4a also
includes hospitals licensed under sections 144.50 to 144.56,
other than hospitals exempt under section 272.02, and contiguous
property used for hospital purposes, without regard to whether
the property has been platted or subdivided. The market value
of class 4a property has a class rate of 1.8 percent for taxes
payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25
percent for taxes payable in 2004 and thereafter, except that
class 4a property consisting of a structure for which
construction commenced after June 30, 2001, has a class rate of
1.25 percent of market value for taxes payable in 2003 and
subsequent years.
(b) Class 4b includes:
(1) residential real estate containing less than four units
that does not qualify as class 4bb, other than seasonal
residential recreational property;
(2) manufactured homes not classified under any other
provision;
(3) a dwelling, garage, and surrounding one acre of
property on a nonhomestead farm classified under subdivision 23,
paragraph (b) containing two or three units; and
(4) unimproved property that is classified residential as
determined under subdivision 33.
The market value of class 4b property has a class rate of
1.5 percent for taxes payable in 2002, and 1.25 percent for
taxes payable in 2003 and thereafter.
(c) Class 4bb includes:
(1) nonhomestead residential real estate containing one
unit, other than seasonal residential recreational property; and
(2) a single family dwelling, garage, and surrounding one
acre of property on a nonhomestead farm classified under
subdivision 23, paragraph (b).
Class 4bb property has the same class rates as class 1a
property under subdivision 22.
Property that has been classified as seasonal residential
recreational property at any time during which it has been owned
by the current owner or spouse of the current owner does not
qualify for class 4bb.
(d) Class 4c property includes:
(1) except as provided in subdivision 22, paragraph (c),
real property devoted to temporary and seasonal residential
occupancy for recreation purposes, including real property
devoted to temporary and seasonal residential occupancy for
recreation purposes and not devoted to commercial purposes for
more than 250 days in the year preceding the year of
assessment. For purposes of this clause, property is devoted to
a commercial purpose on a specific day if any portion of the
property is used for residential occupancy, and a fee is charged
for residential occupancy. In order for a property to be
classified as class 4c, seasonal residential recreational for
commercial purposes, at least 40 percent of the annual gross
lodging receipts related to the property must be from business
conducted during 90 consecutive days and either (i) at least 60
percent of all paid bookings by lodging guests during the year
must be for periods of at least two consecutive nights; or (ii)
at least 20 percent of the annual gross receipts must be from
charges for rental of fish houses, boats and motors,
snowmobiles, downhill or cross-country ski equipment, or charges
for marina services, launch services, and guide services, or the
sale of bait and fishing tackle. For purposes of this
determination, a paid booking of five or more nights shall be
counted as two bookings. Class 4c also includes commercial use
real property used exclusively for recreational purposes in
conjunction with class 4c property devoted to temporary and
seasonal residential occupancy for recreational purposes, up to
a total of two acres, provided the property is not devoted to
commercial recreational use for more than 250 days in the year
preceding the year of assessment and is located within two miles
of the class 4c property with which it is used. Class 4c
property classified in this clause also includes the remainder
of class 1c resorts provided that the entire property including
that portion of the property classified as class 1c also meets
the requirements for class 4c under this clause; otherwise the
entire property is classified as class 3. Owners of real
property devoted to temporary and seasonal residential occupancy
for recreation purposes and all or a portion of which was
devoted to commercial purposes for not more than 250 days in the
year preceding the year of assessment desiring classification as
class 1c or 4c, must submit a declaration to the assessor
designating the cabins or units occupied for 250 days or less in
the year preceding the year of assessment by January 15 of the
assessment year. Those cabins or units and a proportionate
share of the land on which they are located will be designated
class 1c or 4c as otherwise provided. The remainder of the
cabins or units and a proportionate share of the land on which
they are located will be designated as class 3a. The owner of
property desiring designation as class 1c or 4c property must
provide guest registers or other records demonstrating that the
units for which class 1c or 4c designation is sought were not
occupied for more than 250 days in the year preceding the
assessment if so requested. The portion of a property operated
as a (1) restaurant, (2) bar, (3) gift shop, and (4) other
nonresidential facility operated on a commercial basis not
directly related to temporary and seasonal residential occupancy
for recreation purposes shall not qualify for class 1c or 4c;
(2) qualified property used as a golf course if:
(i) it is open to the public on a daily fee basis. It may
charge membership fees or dues, but a membership fee may not be
required in order to use the property for golfing, and its green
fees for golfing must be comparable to green fees typically
charged by municipal courses; and
(ii) it meets the requirements of section 273.112,
subdivision 3, paragraph (d).
A structure used as a clubhouse, restaurant, or place of
refreshment in conjunction with the golf course is classified as
class 3a property;
(3) real property up to a maximum of one acre of land owned
by a nonprofit community service oriented organization; provided
that the property is not used for a revenue-producing activity
for more than six days in the calendar year preceding the year
of assessment and the property is not used for residential
purposes on either a temporary or permanent basis. For purposes
of this clause, a "nonprofit community service oriented
organization" means any corporation, society, association,
foundation, or institution organized and operated exclusively
for charitable, religious, fraternal, civic, or educational
purposes, and which is exempt from federal income taxation
pursuant to section 501(c)(3), (10), or (19) of the Internal
Revenue Code of 1986, as amended through December 31, 1990. For
purposes of this clause, "revenue-producing activities" shall
include but not be limited to property or that portion of the
property that is used as an on-sale intoxicating liquor or 3.2
percent malt liquor establishment licensed under chapter 340A, a
restaurant open to the public, bowling alley, a retail store,
gambling conducted by organizations licensed under chapter 349,
an insurance business, or office or other space leased or rented
to a lessee who conducts a for-profit enterprise on the
premises. Any portion of the property which is used for
revenue-producing activities for more than six days in the
calendar year preceding the year of assessment shall be assessed
as class 3a. The use of the property for social events open
exclusively to members and their guests for periods of less than
24 hours, when an admission is not charged nor any revenues are
received by the organization shall not be considered a
revenue-producing activity;
(4) postsecondary student housing of not more than one acre
of land that is owned by a nonprofit corporation organized under
chapter 317A and is used exclusively by a student cooperative,
sorority, or fraternity for on-campus housing or housing located
within two miles of the border of a college campus;
(5) manufactured home parks as defined in section 327.14,
subdivision 3;
(6) real property that is actively and exclusively devoted
to indoor fitness, health, social, recreational, and related
uses, is owned and operated by a not-for-profit corporation, and
is located within the metropolitan area as defined in section
473.121, subdivision 2;
(7) a leased or privately owned noncommercial aircraft
storage hangar not exempt under section 272.01, subdivision 2,
and the land on which it is located, provided that:
(i) the land is on an airport owned or operated by a city,
town, county, Metropolitan Airports Commission, or group
thereof; and
(ii) the land lease, or any ordinance or signed agreement
restricting the use of the leased premise, prohibits commercial
activity performed at the hangar.
If a hangar classified under this clause is sold after June
30, 2000, a bill of sale must be filed by the new owner with the
assessor of the county where the property is located within 60
days of the sale; and
(8) a privately owned noncommercial aircraft storage hangar
not exempt under section 272.01, subdivision 2, and the land on
which it is located, provided that:
(i) the land abuts a public airport; and
(ii) the owner of the aircraft storage hangar provides the
assessor with a signed agreement restricting the use of the
premises, prohibiting commercial use or activity performed at
the hangar; and
(9) residential real estate, a portion of which is used by
the owner for homestead purposes, and that is also a place of
lodging, if all of the following criteria are met:
(i) rooms are provided for rent to transient guests that
generally stay for periods of 14 or fewer days;
(ii) meals are provided to persons who rent rooms, the cost
of which is incorporated in the basic room rate;
(iii) meals are not provided to the general public except
for special events on fewer than seven days in the calendar year
preceding the year of the assessment; and
(iv) the owner is the operator of the property.
The market value subject to the 4c classification under this
clause is limited to five rental units. Any rental units on the
property in excess of five, must be valued and assessed as class
3a. The portion of the property used for purposes of a
homestead by the owner must be classified as class 1a property
under subdivision 22.
Class 4c property has a class rate of 1.5 percent of market
value, except that (i) each parcel of seasonal residential
recreational property not used for commercial purposes has the
same class rates as class 4bb property, (ii) manufactured home
parks assessed under clause (5) have the same class rate as
class 4b property, (iii) commercial-use seasonal residential
recreational property has a class rate of one percent for the
first $500,000 of market value, which includes any market value
receiving the one percent rate under subdivision 22, and 1.25
percent for the remaining market value, (iv) the market value of
property described in clause (4) has a class rate of one
percent, (v) the market value of property described in clauses
(2) and (6) has a class rate of 1.25 percent, and (vi) that
portion of the market value of property in clause (8) qualifying
for class 4c property has a class rate of 1.25 percent.
[EFFECTIVE DATE.] This section is effective for taxes
payable in 2006 and subsequent years.
Sec. 13. Minnesota Statutes 2004, section 290A.07, is
amended by adding a subdivision to read:
Subd. 5. [EARLY PAYMENT; E-FILE CLAIMS.] The commissioner
may pay a claim up to 30 days earlier than the first permitted
date under subdivision 2a or 3 if the claim is submitted by
electronic means.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 14. Minnesota Statutes 2004, section 365.43,
subdivision 1, is amended to read:
Subdivision 1. [LEVIED AMOUNT IS SPENDING LIMIT TOTAL
REVENUE DEFINED.] A town must not contract debts or spend more
money in a year than the taxes levied for the year its total
revenue without a favorable vote of a majority of the town's
electors. In this section, "total revenue" means property taxes
payable in that year as well as amounts received from all other
sources and amounts carried forward from the last year.
Sec. 15. Minnesota Statutes 2004, section 365.431, is
amended to read:
365.431 [AMOUNT VOTED AT MEETING IS TAX LIMIT.]
Except as otherwise authorized by law, the tax for town
purposes must not be more than the amount voted to be raised at
the annual town meeting.
Sec. 16. Minnesota Statutes 2004, section 366.011, is
amended to read:
366.011 [CHARGES FOR EMERGENCY SERVICES; COLLECTION.]
A town may impose a reasonable service charge for emergency
services, including fire, rescue, medical, and related services
provided by the town or contracted for by the town. If the
service charge remains unpaid 30 days after a notice of
delinquency is sent to the recipient of the service or the
recipient's representative or estate, the town or its contractor
on behalf of the town may use any lawful means allowed to a
private party for the collection of an unsecured delinquent
debt. The town may also use the authority of section 366.012 to
collect unpaid service charges of this kind from delinquent
recipients of services who are owners of taxable real property
in the town state.
The powers conferred by this section are in addition and
supplemental to the powers conferred by any other law for a town
to impose a service charge or assessment for a service provided
by the town or contracted for by the town.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 17. Minnesota Statutes 2004, section 366.012, is
amended to read:
366.012 [COLLECTION OF UNPAID SERVICE CHARGES.]
If a town is authorized to impose a service charge on the
owner, lessee, or occupant of property, or any of them, for a
governmental service provided by the town, the town board may
certify to the county auditor of the county in which the
recipient of the services owns real property, on or before
October 15 for each year, any unpaid service charges which shall
then be collected together with property taxes levied against
the property. The county auditor shall remit to the town all
service charges collected by the auditor on behalf of the town.
A charge may be certified to the auditor only if, on or before
September 15, the town has given written notice to the property
owner of its intention to certify the charge to the auditor.
The service charges shall be subject to the same penalties,
interest, and other conditions provided for the collection of
property taxes. This section is in addition to other law
authorizing the collection of unpaid costs and service charges.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 18. Laws 1998, chapter 389, article 3, section 42,
subdivision 2, as amended by Laws 2002, chapter 377, article 4,
section 24, is amended to read:
Subd. 2. [RECAPTURE.] (a) Property or any portion thereof
qualifying under section 38 is subject to additional taxes if:
(1) ownership of the property is transferred to anyone
other than the spouse or child of the current owner;
(2) the current owner or the spouse or child of the current
owner has not conveyed or entered into a contract before July 1,
2007, to convey for ownership or public easement rights, (i) a
portion of the property to a one or more nonprofit foundation
foundations or corporation operating corporations; and (ii) a
portion of the property to one or more local governments; and
those entities shall separately or jointly operate the property
as an art park providing the services included in section 38,
clauses (2) to (5), and may also use some of the property for
other public purposes as determined by the local governments; or
(3) the nonprofit foundation or corporation to which a
portion of the property was transferred ceases to provide the
services included in section 38, clauses (2) to (5), earlier
than ten years following the effective date of the conveyance
conveyances or of the execution of the contract contracts to
convey.
(b) The additional taxes are imposed at the earlier of (1)
the year following transfer of ownership to anyone other than
the spouse or child of the current owner or a nonprofit
foundation or corporation or local government operating the
property as an art park and used for other public purposes, or
(2) for taxes payable in 2008, or (3) in the event the nonprofit
foundation or corporation to which a portion of the property was
conveyed ceases to provide the required services within ten
years after the conveyance, for taxes payable in the year
following the year when it ceased to do so.
The county board, with the approval of the city council,
shall determine the amount of the additional taxes due on the
portion of property which is no longer utilized as an art park;
provided, however, that the additional taxes are equal to must
not be greater than the difference between the taxes determined
on that portion of the property utilized as an art park under
sections 39 and 40 and the amount determined under subdivision 1
for all years that the property qualified under section 38. The
additional taxes must be extended against the property on the
tax list for the current year; provided, however, that No
interest or penalties may be levied on the additional taxes if
timely paid amount provided that it is paid within 30 days of
the county's notice.
[EFFECTIVE DATE.] This section is effective March 1, 2005.
Sec. 19. Laws 2001, First Special Session chapter 5,
article 3, section 8, the effective date, is amended to read:
[EFFECTIVE DATE.] This section is effective for taxes
levied in 2002, payable in 2003, through taxes levied in 2007
2009, payable in 2008 2010.
Sec. 20. Laws 2005, chapter 43, section 1, the effective
date, is amended to read:
[EFFECTIVE DATE.] This section is effective for taxes
levied in 2005 2004, payable in 2006 2005, and thereafter.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 21. [SCHOOL PROPERTY; EXEMPTION 2005 ONLY.]
Notwithstanding Minnesota Statutes, section 272.02,
subdivision 38, paragraph (b), the following property is exempt
from taxation for assessment year 2004, for taxes payable in
2005, if it meets all the following criteria:
(1) is used to provide direct educational instruction for
grades 7 through 10;
(2) is located in a city of the first class that has a
population greater than 250,000 and less than 350,000;
(3) was purchased after July 1, 2004, by a nonprofit that
is exempt from federal income tax under section 501(c)(3) of the
Internal Revenue Code; and
(4) is leased and operated by two nonprofit corporations
organized under Minnesota Statutes, chapter 317A.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 22. [REPEALER.]
Laws 1998, chapter 389, article 3, section 41, is repealed.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
ARTICLE 4
PROPERTY TAX AIDS AND CREDITS
Section 1. Minnesota Statutes 2004, section 4A.02, is
amended to read:
4A.02 [STATE DEMOGRAPHER.]
(a) The director shall appoint a state demographer. The
demographer must be professionally competent in demography and
must possess demonstrated ability based upon past performance.
(b) The demographer shall:
(1) continuously gather and develop demographic data
relevant to the state;
(2) design and test methods of research and data
collection;
(3) periodically prepare population projections for the
state and designated regions and periodically prepare
projections for each county or other political subdivision of
the state as necessary to carry out the purposes of this
section;
(4) review, comment on, and prepare analysis of population
estimates and projections made by state agencies, political
subdivisions, other states, federal agencies, or nongovernmental
persons, institutions, or commissions;
(5) serve as the state liaison with the United States
Bureau of the Census, coordinate state and federal demographic
activities to the fullest extent possible, and aid the
legislature in preparing a census data plan and form for each
decennial census;
(6) compile an annual study of population estimates on the
basis of county, regional, or other political or geographical
subdivisions as necessary to carry out the purposes of this
section and section 4A.03;
(7) by January 1 of each year, issue a report to the
legislature containing an analysis of the demographic
implications of the annual population study and population
projections;
(8) prepare maps for all counties in the state, all
municipalities with a population of 10,000 or more, and other
municipalities as needed for census purposes, according to scale
and detail recommended by the United States Bureau of the
Census, with the maps of cities showing precinct boundaries;
(9) prepare an estimate of population and of the number of
households for each governmental subdivision for which the
Metropolitan Council does not prepare an annual estimate, and
convey the estimates to the governing body of each political
subdivision by May June 1 of each year;
(10) direct, under section 414.01, subdivision 14, and
certify population and household estimates of annexed or
detached areas of municipalities or towns after being notified
of the order or letter of approval by the director;
(11) prepare, for any purpose for which a population
estimate is required by law or needed to implement a law, a
population estimate of a municipality or town whose population
is affected by action under section 379.02 or 414.01,
subdivision 14; and
(12) prepare an estimate of average household size for each
statutory or home rule charter city with a population of 2,500
or more by May June 1 of each year.
(c) A governing body may challenge an estimate made under
paragraph (b) by filing their specific objections in writing
with the state demographer by June 10 24. If the challenge does
not result in an acceptable estimate by June 24, the governing
body may have a special census conducted by the United States
Bureau of the Census. The political subdivision must notify the
state demographer by July 1 of its intent to have the special
census conducted. The political subdivision must bear all costs
of the special census. Results of the special census must be
received by the state demographer by the next April 15 to be
used in that year's May June 1 estimate to the political
subdivision under paragraph (b).
(d) The state demographer shall certify the estimates of
population and household size to the commissioner of revenue by
July 15 each year, including any estimates still under objection.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 2. Minnesota Statutes 2004, section 273.1384,
subdivision 1, is amended to read:
Subdivision 1. [RESIDENTIAL HOMESTEAD MARKET VALUE
CREDIT.] Each county auditor shall determine a homestead credit
for each class 1a, 1b, 1c, and 2a homestead property within the
county equal to 0.4 percent of the first $76,000 of market value
of the property. The amount of homestead credit for a homestead
may not exceed $304 and is reduced by minus .09 percent of the
market value in excess of $76,000. The credit amount may not be
less than zero. In the case of an agricultural or resort
homestead, only the market value of the house, garage, and
immediately surrounding one acre of land is eligible in
determining the property's homestead credit. In the case of a
property which is classified as part homestead and part
nonhomestead, (i) the credit shall apply only to the homestead
portion of the property., but (ii) if a portion of a property is
classified as nonhomestead solely because not all the owners
occupy the property, or solely because both spouses do not
occupy the property, the credit amount shall be initially
computed as if that nonhomestead portion were also in the
homestead class and then prorated to the owner-occupant's
percentage of ownership or prorated to one-half if both spouses
do not occupy the property.
[EFFECTIVE DATE.] This section is effective for taxes
payable in 2006 and thereafter.
Sec. 3. Minnesota Statutes 2004, 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 15 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.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 4. [473.24] [POPULATION ESTIMATES.]
(a) The Metropolitan Council shall annually prepare an
estimate of population for each county, city, and town in the
metropolitan area and an estimate of the number of households
and average household size for each city in the metropolitan
area with a population of 2,500 or more, and an estimate of
population over age 65 for each county in the metropolitan area,
and convey the estimates to the governing body of each county,
city, or town by June 1 each year. In the case of a city or
town that is located partly within and partly without the
metropolitan area, the Metropolitan Council shall estimate the
proportion of the total population and the average size of
households that reside within the area. The Metropolitan
Council may prepare an estimate of the population and of the
average household size for any other political subdivision
located in the metropolitan area.
(b) A governing body may challenge an estimate made under
this section by filing its specific objections in writing with
the Metropolitan Council by June 24. If the challenge does not
result in an acceptable estimate, the governing body may have a
special census conducted by the United States Bureau of the
Census. The political subdivision must notify the Metropolitan
Council on or before July 1 of its intent to have the special
census conducted. The political subdivision must bear all costs
of the special census. Results of the special census must be
received by the Metropolitan Council by the next April 15 to be
used in that year's June 1 estimate under this section. The
Metropolitan Council shall certify the estimates of population
and the average household size to the state demographer and to
the commissioner of revenue by July 15 each year, including any
estimates still under objection.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 5. Minnesota Statutes 2004, 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 under section 473.24 and filed with the
commissioner of revenue as of July 1 15 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.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 6. Minnesota Statutes 2004, section 477A.011,
subdivision 3, is amended to read:
Subd. 3. [POPULATION.] "Population" means the
population estimated or established as of July 1 15 in an aid
calculation year by the most recent federal census, by a special
census conducted under contract with the United States Bureau of
the Census, by a population estimate made by the Metropolitan
Council pursuant to section 473.24, or by a population estimate
of the state demographer made pursuant to section 4A.02,
whichever is the most recent as to the stated date of the count
or estimate for the preceding calendar year, and which has been
certified to the commissioner of revenue on or before July 15 of
the aid calculation year. The term "per capita" refers to
population as defined by this subdivision. A revision of an
estimate or count is effective for these purposes only if it is
certified to the commissioner on or before July 15 of the aid
calculation year. Clerical errors in the certification or use
of the estimates and counts established as of July 15 in the aid
calculation year are subject to correction within the time
periods allowed under section 477A.014.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 7. Minnesota Statutes 2004, section 477A.011,
subdivision 34, is amended to read:
Subd. 34. [CITY REVENUE NEED.] (a) For a city with a
population equal to or greater than 2,500, "city revenue need"
is the sum of (1) 5.0734098 times the pre-1940 housing
percentage; plus (2) 19.141678 times the population decline
percentage; plus (3) 2504.06334 times the road accidents factor;
plus (4) 355.0547; minus (5) the metropolitan area factor; minus
(6) 49.10638 times the household size.
(b) For a city with a population less than 2,500, "city
revenue need" is the sum of (1) 2.387 times the pre-1940 housing
percentage; plus (2) 2.67591 times the commercial industrial
percentage; plus (3) 3.16042 times the population decline
percentage; plus (4) 1.206 times the transformed population;
minus (5) 62.772.
(c) For a city with a population of 2,500 or more and a
population in one of the most recently available five years that
was less than 2,500, "city revenue need" is the sum of (1) its
city revenue need calculated under paragraph (a) multiplied by
its transition factor; plus (2) its city revenue need calculated
under the formula in paragraph (b) multiplied by the difference
between one and its transition factor. For purposes of this
paragraph, a city's "transition factor" is equal to 0.2
multiplied by the number of years that the city's population
estimate has been 2,500 or more. This provision only applies
for aids payable in calendar years 2006 to 2008 to cities with a
2002 population of less than 2,500. It applies to any city for
aids payable in 2009 and thereafter.
(d) The city revenue need cannot be less than zero.
(d) (e) For calendar year 2005 and subsequent years, the
city revenue need for a city, as determined in paragraphs (a)
to (c) (d), is multiplied by the ratio of the annual implicit
price deflator for government consumption expenditures and gross
investment for state and local governments as prepared by the
United States Department of Commerce, for the most recently
available year to the 2003 implicit price deflator for state and
local government purchases.
[EFFECTIVE DATE.] This section is effective beginning with
aids payable in 2006.
Sec. 8. Minnesota Statutes 2004, section 477A.011,
subdivision 36, as amended by Laws 2005, chapter 38, section 1,
is amended to read:
Subd. 36. [CITY AID BASE.] (a) Except as otherwise
provided in this subdivision, "city aid base" is zero.
(b) The city aid base for any city with a population less
than 500 is increased by $40,000 for aids payable in calendar
year 1995 and thereafter, and the maximum amount of total aid it
may receive under section 477A.013, subdivision 9, paragraph
(c), is also increased by $40,000 for aids payable in calendar
year 1995 only, provided that:
(i) the average total tax capacity rate for taxes payable
in 1995 exceeds 200 percent;
(ii) the city portion of the tax capacity rate exceeds 100
percent; and
(iii) its city aid base is less than $60 per capita.
(c) The city aid base for a city is increased by $20,000 in
1998 and thereafter and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $20,000 in calendar year 1998 only, provided
that:
(i) the city has a population in 1994 of 2,500 or more;
(ii) the city is located in a county, outside of the
metropolitan area, which contains a city of the first class;
(iii) the city's net tax capacity used in calculating its
1996 aid under section 477A.013 is less than $400 per capita;
and
(iv) at least four percent of the total net tax capacity,
for taxes payable in 1996, of property located in the city is
classified as railroad property.
(d) The city aid base for a city is increased by $200,000
in 1999 and thereafter and the maximum amount of total aid it
may receive under section 477A.013, subdivision 9, paragraph
(c), is also increased by $200,000 in calendar year 1999 only,
provided that:
(i) the city was incorporated as a statutory city after
December 1, 1993;
(ii) its city aid base does not exceed $5,600; and
(iii) the city had a population in 1996 of 5,000 or more.
(e) The city aid base for a city is increased by $450,000
in 1999 to 2008 and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $450,000 in calendar year 1999 only, provided
that:
(i) the city had a population in 1996 of at least 50,000;
(ii) its population had increased by at least 40 percent in
the ten-year period ending in 1996; and
(iii) its city's net tax capacity for aids payable in 1998
is less than $700 per capita.
(f) The city aid base for a city is increased by $150,000
for aids payable in 2000 and thereafter, and the maximum amount
of total aid it may receive under section 477A.013, subdivision
9, paragraph (c), is also increased by $150,000 in calendar year
2000 only, provided that:
(1) the city has a population that is greater than 1,000
and less than 2,500;
(2) its commercial and industrial percentage for aids
payable in 1999 is greater than 45 percent; and
(3) the total market value of all commercial and industrial
property in the city for assessment year 1999 is at least 15
percent less than the total market value of all commercial and
industrial property in the city for assessment year 1998.
(g) The city aid base for a city is increased by $200,000
in 2000 and thereafter, and the maximum amount of total aid it
may receive under section 477A.013, subdivision 9, paragraph
(c), is also increased by $200,000 in calendar year 2000 only,
provided that:
(1) the city had a population in 1997 of 2,500 or more;
(2) the net tax capacity of the city used in calculating
its 1999 aid under section 477A.013 is less than $650 per
capita;
(3) the pre-1940 housing percentage of the city used in
calculating 1999 aid under section 477A.013 is greater than 12
percent;
(4) the 1999 local government aid of the city under section
477A.013 is less than 20 percent of the amount that the formula
aid of the city would have been if the need increase percentage
was 100 percent; and
(5) the city aid base of the city used in calculating aid
under section 477A.013 is less than $7 per capita.
(h) The city aid base for a city is increased by $102,000
in 2000 and thereafter, and the maximum amount of total aid it
may receive under section 477A.013, subdivision 9, paragraph
(c), is also increased by $102,000 in calendar year 2000 only,
provided that:
(1) the city has a population in 1997 of 2,000 or more;
(2) the net tax capacity of the city used in calculating
its 1999 aid under section 477A.013 is less than $455 per
capita;
(3) the net levy of the city used in calculating 1999 aid
under section 477A.013 is greater than $195 per capita; and
(4) the 1999 local government aid of the city under section
477A.013 is less than 38 percent of the amount that the formula
aid of the city would have been if the need increase percentage
was 100 percent.
(i) The city aid base for a city is increased by $32,000 in
2001 and thereafter, and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $32,000 in calendar year 2001 only, provided
that:
(1) the city has a population in 1998 that is greater than
200 but less than 500;
(2) the city's revenue need used in calculating aids
payable in 2000 was greater than $200 per capita;
(3) the city net tax capacity for the city used in
calculating aids available in 2000 was equal to or less than
$200 per capita;
(4) the city aid base of the city used in calculating aid
under section 477A.013 is less than $65 per capita; and
(5) the city's formula aid for aids payable in 2000 was
greater than zero.
(j) The city aid base for a city is increased by $7,200 in
2001 and thereafter, and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $7,200 in calendar year 2001 only, provided
that:
(1) the city had a population in 1998 that is greater than
200 but less than 500;
(2) the city's commercial industrial percentage used in
calculating aids payable in 2000 was less than ten percent;
(3) more than 25 percent of the city's population was 60
years old or older according to the 1990 census;
(4) the city aid base of the city used in calculating aid
under section 477A.013 is less than $15 per capita; and
(5) the city's formula aid for aids payable in 2000 was
greater than zero.
(k) The city aid base for a city is increased by $45,000 in
2001 and thereafter and by an additional $50,000 in calendar
years 2002 to 2011, and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $45,000 in calendar year 2001 only, and by
$50,000 in calendar year 2002 only, provided that:
(1) the net tax capacity of the city used in calculating
its 2000 aid under section 477A.013 is less than $810 per
capita;
(2) the population of the city declined more than two
percent between 1988 and 1998;
(3) the net levy of the city used in calculating 2000 aid
under section 477A.013 is greater than $240 per capita; and
(4) the city received less than $36 per capita in aid under
section 477A.013, subdivision 9, for aids payable in 2000.
(l) The city aid base for a city with a population of
10,000 or more which is located outside of the seven-county
metropolitan area is increased in 2002 and thereafter, and the
maximum amount of total aid it may receive under section
477A.013, subdivision 9, paragraph (b) or (c), is also increased
in calendar year 2002 only, by an amount equal to the lesser of:
(1)(i) the total population of the city, as determined by
the United States Bureau of the Census, in the 2000 census, (ii)
minus 5,000, (iii) times 60; or
(2) $2,500,000.
(m) The city aid base is increased by $50,000 in 2002 and
thereafter, and the maximum amount of total aid it may receive
under section 477A.013, subdivision 9, paragraph (c), is also
increased by $50,000 in calendar year 2002 only, provided that:
(1) the city is located in the seven-county metropolitan
area;
(2) its population in 2000 is between 10,000 and 20,000;
and
(3) its commercial industrial percentage, as calculated for
city aid payable in 2001, was greater than 25 percent.
(n) The city aid base for a city is increased by $150,000
in calendar years 2002 to 2011 and the maximum amount of total
aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $150,000 in calendar year
2002 only, provided that:
(1) the city had a population of at least 3,000 but no more
than 4,000 in 1999;
(2) its home county is located within the seven-county
metropolitan area;
(3) its pre-1940 housing percentage is less than 15
percent; and
(4) its city net tax capacity per capita for taxes payable
in 2000 is less than $900 per capita.
(o) The city aid base for a city is increased by $200,000
beginning in calendar year 2003 and the maximum amount of total
aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $200,000 in calendar year
2003 only, provided that the city qualified for an increase in
homestead and agricultural credit aid under Laws 1995, chapter
264, article 8, section 18.
(p) The city aid base for a city is increased by $200,000
in 2004 only and the maximum amount of total aid it may receive
under section 477A.013, subdivision 9, is also increased by
$200,000 in calendar year 2004 only, if the city is the site of
a nuclear dry cask storage facility.
(q) The city aid base for a city is increased by $10,000 in
2004 and thereafter and the maximum total aid it may receive
under section 477A.013, subdivision 9, is also increased by
$10,000 in calendar year 2004 only, if the city was included in
a federal major disaster designation issued on April 1, 1998,
and its pre-1940 housing stock was decreased by more than 40
percent between 1990 and 2000.
(r) The city aid base for a city is increased by $25,000 in
2006 only and the maximum total aid it may receive under section
477A.013, subdivision 9, is also increased by $25,000 in
calendar year 2006 only if the city had a population in 2003 of
at least 1,000 and has a state park for which the city provides
rescue services and which comprised at least 14 percent of the
total geographic area included within the city boundaries in
2000.
[EFFECTIVE DATE.] This section is effective for aids
payable in 2006 and thereafter.
Sec. 9. Minnesota Statutes 2004, section 477A.011,
subdivision 38, is amended to read:
Subd. 38. [HOUSEHOLD SIZE.] "Household size" means the
average number of persons per household in the jurisdiction as
most recently estimated and reported by the state
demographer and Metropolitan Council as of July 1 15 of the aid
calculation year. A revision to an estimate or enumeration is
effective for these purposes only if it is certified to the
commissioner on or before July 15 of the aid calculation year.
Clerical errors in the certification or use of estimates and
counts established as of July 15 in the aid calculation year are
subject to correction within the time periods allowed under
section 477A.014.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 10. Minnesota Statutes 2004, section 477A.0124,
subdivision 2, is amended to read:
Subd. 2. [DEFINITIONS.] (a) For the purposes of this
section, the following terms have the meanings given them.
(b) "County program aid" means the sum of "county need aid,"
"county tax base equalization aid," and "county transition aid."
(c) "Age-adjusted population" means a county's population
multiplied by the county age index.
(d) "County age index" means the percentage of the
population over age 65 within the county divided by the
percentage of the population over age 65 within the state,
except that the age index for any county may not be greater than
1.8 nor less than 0.8.
(e) "Population over age 65" means the population over age
65 established as of July 1 15 in an aid calculation year by the
most recent federal census, by a special census conducted under
contract with the United States Bureau of the Census, by a
population estimate made by the Metropolitan Council, or by a
population estimate of the state demographer made pursuant to
section 4A.02, whichever is the most recent as to the stated
date of the count or estimate for the preceding calendar
year and which has been certified to the commissioner of revenue
on or before July 15 of the aid calculation year. A revision to
an estimate or count is effective for these purposes only if
certified to the commissioner on or before July 15 of the aid
calculation year. Clerical errors in the certification or use
of estimates and counts established as of July 15 in the aid
calculation year are subject to correction within the time
periods allowed under section 477A.014.
(f) "Part I crimes" means the three-year average annual
number of Part I crimes reported for each county by the
Department of Public Safety for the most recent years available.
By July 1 of each year, the commissioner of public safety shall
certify to the commissioner of revenue the number of Part I
crimes reported for each county for the three most recent
calendar years available.
(g) "Households receiving food stamps" means the average
monthly number of households receiving food stamps for the three
most recent years for which data is available. By July 1 of
each year, the commissioner of human services must certify to
the commissioner of revenue the average monthly number of
households in the state and in each county that receive food
stamps, for the three most recent calendar years available.
(h) "County net tax capacity" means the net tax capacity of
the county, computed analogously to city net tax capacity under
section 477A.011, subdivision 20.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 11. Minnesota Statutes 2004, section 477A.0124,
subdivision 4, is amended to read:
Subd. 4. [COUNTY TAX-BASE EQUALIZATION AID.] (a) For
2005 2006 and subsequent years, the money appropriated to county
tax-base equalization aid each calendar year, after the payment
under paragraph (f), shall be apportioned among the counties
according to each county's tax-base equalization aid factor.
(b) A county's tax-base equalization aid factor is equal to
the amount by which (i) $185 times the county's population,
exceeds (ii) 9.45 percent of the county's net tax capacity.
(c) In the case of a county with a population less than
10,000, the factor determined in paragraph (b) shall be
multiplied by a factor of three.
(d) In the case of a county with a population greater than
or equal to 10,000, but less than 12,500, the factor determined
in paragraph (b) shall be multiplied by a factor of two.
(e) In the case of a county with a population greater than
500,000, the factor determined in paragraph (b) shall be
multiplied by a factor of 0.25.
(f) Before the money appropriated to county base
equalization aid is apportioned among the counties as provided
in paragraph (a), an amount up to $73,259 is allocated annually
to Anoka County and up to $59,664 is annually allocated to
Washington County for the county to pay postretirement costs of
health insurance premiums for court employees. The allocation
under this paragraph is in addition to the allocations under
paragraphs (a) to (e).
[EFFECTIVE DATE.] This section is effective for aids
payable in 2006 and thereafter.
Sec. 12. Minnesota Statutes 2004, section 477A.03,
subdivision 2b, is amended to read:
Subd. 2b. [COUNTIES.] (a) For aids payable in calendar
year 2005 and thereafter, the total aids paid to counties under
section 477A.0124, subdivision 3, are limited to $100,500,000.
Each calendar year, $500,000 shall be retained by the
commissioner of revenue to make reimbursements to the
commissioner of finance for payments made under section 611.27.
For calendar year 2004, the amount shall be in addition to the
payments authorized under section 477A.0124, subdivision 1. For
calendar year 2005 and subsequent years, the amount shall be
deducted from the appropriation under this paragraph. The
reimbursements shall be to defray the additional costs
associated with court-ordered counsel under section 611.27. Any
retained amounts not used for reimbursement in a year shall be
included in the next distribution of county need aid that is
certified to the county auditors for the purpose of property tax
reduction for the next taxes payable year.
(b) For aids payable in 2005 and thereafter 2006, the total
aids under section 477A.0124, subdivision 4, are limited to
$105,000,000. For aids payable in 2007 and thereafter, the
total aid under section 477A.0124, subdivision 4, is limited to
$105,132,923. The commissioner of finance shall bill the
commissioner of revenue for the cost of preparation of local
impact notes as required by section 3.987, not to exceed
$207,000 in fiscal year 2004 and thereafter. The commissioner
of education shall bill the commissioner of revenue for the cost
of preparation of local impact notes for school districts as
required by section 3.987, not to exceed $7,000 in fiscal year
2004 and thereafter. The commissioner of revenue shall deduct
the amounts billed under this paragraph from the appropriation
under this paragraph. The amounts deducted are appropriated to
the commissioner of finance and the commissioner of education
for the preparation of local impact notes.
[EFFECTIVE DATE.] This section is effective for aids
payable in 2007 and thereafter.
Sec. 13. Laws 2003, First Special Session chapter 21,
article 5, section 13, is amended to read:
Sec. 13. [2004 CITY AID REDUCTIONS.]
The commissioner of revenue shall compute an aid reduction
amount for 2004 for each city as provided in this section.
The initial aid reduction amount for each city is the
amount by which the city's aid distribution under Minnesota
Statutes, section 477A.013, and related provisions payable in
2003 exceeds the city's 2004 distribution under those provisions.
The minimum aid reduction amount for a city is the amount
of its reduction in 2003 under section 12. If a city receives
an increase to its city aid base under Minnesota Statutes,
section 477A.011, subdivision 36, its minimum aid reduction is
reduced by an equal amount.
The maximum aid reduction amount for a city is an amount
equal to 14 percent of the city's total 2004 levy plus aid
revenue base, except that if the city has a city net tax
capacity for aids payable in 2004, as defined in Minnesota
Statutes, section 477A.011, subdivision 20, of $700 per capita
or less, the maximum aid reduction shall not exceed an amount
equal to 13 percent of the city's total 2004 levy plus aid
revenue base.
If the initial aid reduction amount for a city is less than
the minimum aid reduction amount for that city, the final aid
reduction amount for the city is the sum of the initial aid
reduction amount and the lesser of the amount of the city's
payable 2004 reimbursement under Minnesota Statutes, section
273.1384, or the difference between the minimum and initial aid
reduction amounts for the city, and the amount of the final aid
reduction in excess of the initial aid reduction is deducted
from the city's reimbursements pursuant to Minnesota Statutes,
section 273.1384.
If the initial aid reduction amount for a city is greater
than the maximum aid reduction amount for the city, the city
receives an additional distribution under this section equal to
the result of subtracting the maximum aid reduction amount from
the initial aid reduction amount. This distribution shall be
paid in equal installments in 2004 on the dates specified in
Minnesota Statutes, section 477A.015. The amount necessary for
these additional distributions is appropriated to the
commissioner of revenue from the general fund in fiscal year
2005.
The initial aid reduction is applied to the city's
distribution pursuant to Minnesota Statutes, section 477A.013,
and any aid reduction in excess of the initial aid reduction is
applied to the city's reimbursements pursuant to Minnesota
Statutes, section 273.1384.
To the extent that sufficient information is available on
each payment date in 2004, the commissioner of revenue shall pay
the reimbursements reduced under this section in equal
installments on the payment dates provided in law.
[EFFECTIVE DATE.] This section is effective for aids
payable in 2004.
Sec. 14. Laws 2003, First Special Session chapter 21,
article 6, section 9, is amended to read:
Sec. 9. [DEFINITIONS.]
(a) For purposes of sections 9 to 15, the following terms
have the meanings given them in this section.
(b) The 2003 and 2004 "levy plus aid revenue base" for a
county is the sum of that county's certified property tax levy
for taxes payable in 2003, plus the sum of the amounts the
county was certified to receive in the designated calendar year
as:
(1) homestead and agricultural credit aid under Minnesota
Statutes, section 273.1398, subdivision 2, plus any additional
aid under section 16, minus the amount calculated under section
273.1398, subdivision 4a, paragraph (b), for counties in
judicial districts one, three, six, and ten, and 25 percent of
the amount calculated under section 273.1398, subdivision 4a,
paragraph (b), for counties in judicial districts two and four;
(2) the amount of county manufactured home homestead and
agricultural credit aid computed for the county for payment in
2003 under section 273.166;
(3) criminal justice aid under Minnesota Statutes, section
477A.0121;
(4) family preservation aid under Minnesota Statutes,
section 477A.0122;
(5) taconite aids under Minnesota Statutes, sections 298.28
and 298.282, including any aid which was required to be placed
in a special fund for expenditure in the next succeeding year;
and
(6) county program aid under section 477A.0124, exclusive
of the attached machinery aid component.
[EFFECTIVE DATE.] This section is effective for aids
payable in 2004.
Sec. 15. [COURT AID ADJUSTMENT.]
For aids payable in 2005 only, the amount of court aid paid
to Anoka County under Minnesota Statutes, section 273.1398,
subdivision 4a, is increased by $36,630 for aids payable in 2005
only and the amount paid to Washington County under Minnesota
Statutes, section 273.1398, subdivision 4a, is increased by
$29,832 for aids payable in 2005 only.
[EFFECTIVE DATE.] This section is effective for aids
payable in 2005 only.
Sec. 16. [DISTRICT COURTS BUDGET.]
The district courts general fund appropriation is reduced
by $66,462 in fiscal year 2006 and $132,923 beginning in fiscal
year 2007 to fund the amount transferred to county tax base
equalization aid to fund the payments under Minnesota Statutes,
section 477A.0124, subdivision 4, paragraph (f), and section 15.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
ARTICLE 5
DEPARTMENT OF REVENUE PROPERTY TAXES
Section 1. Minnesota Statutes 2004, section 168A.05,
subdivision 1a, is amended to read:
Subd. 1a. [MANUFACTURED HOME; STATEMENT OF PROPERTY TAX
PAYMENT.] In the case of a manufactured home as defined in
section 327.31, subdivision 6, the department shall not issue a
certificate of title unless the application under section
168A.04 is accompanied with a statement from the county auditor
or county treasurer where the manufactured home is presently
located, stating that all manufactured home personal property
taxes levied on the unit in the name of the current owner at the
time of transfer have been paid. For this purpose, manufactured
home personal property taxes are treated as levied on January 1
of the payable year.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 2. Minnesota Statutes 2004, section 270.11,
subdivision 2, is amended to read:
Subd. 2. [COUNTY ASSESSOR'S REPORTS OF ASSESSMENT FILED
WITH COMMISSIONER.] Each county assessor shall file by April 1
with the commissioner of revenue a copy of the abstract that
will be acted upon by the local and county boards of review.
The abstract must list the real and personal property in the
county itemized by assessment districts. The assessor of each
county in the state shall file with the commissioner, within ten
working days following final action of the local board of review
or equalization and within five days following final action of
the county board of equalization, any changes made by the local
or county board. The information must be filed in the manner
prescribed by the commissioner. It must be accompanied by a
printed or typewritten copy of the proceedings of the
appropriate board.
The final abstract of assessments after adjustments by the
State Board of Equalization and inclusion of any omitted
property shall be submitted to the commissioner of revenue on or
before September 1 of each calendar year. The final abstract
must separately report the captured tax capacity of tax
increment financing districts under section 469.177, subdivision
2, the metropolitan revenue areawide net tax capacity
contribution value values determined under section sections
276A.05, subdivision 1, and 473F.07, subdivision 1, and the
value subject to the power line credit under section 273.42.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 3. Minnesota Statutes 2004, section 270.16,
subdivision 2, is amended to read:
Subd. 2. [FAILURE TO APPRAISE.] When an assessor has
failed to properly appraise at least one-quarter one-fifth of
the parcels of property in a district or county as provided in
section 273.01, the commissioner of revenue shall appoint a
special assessor and deputy assessor as necessary and cause a
reappraisal to be made of the property due for reassessment in
accordance with law.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 4. Minnesota Statutes 2004, section 272.01,
subdivision 2, is amended to read:
Subd. 2. [EXEMPT PROPERTY USED BY PRIVATE ENTITY FOR
PROFIT.] (a) When any real or personal property which is exempt
from ad valorem taxes, and taxes in lieu thereof, is leased,
loaned, or otherwise made available and used by a private
individual, association, or corporation in connection with a
business conducted for profit, there shall be imposed a tax, for
the privilege of so using or possessing such real or personal
property, in the same amount and to the same extent as though
the lessee or user was the owner of such property.
(b) The tax imposed by this subdivision shall not apply to:
(1) property leased or used as a concession in or relative
to the use in whole or part of a public park, market,
fairgrounds, port authority, economic development authority
established under chapter 469, municipal auditorium, municipal
parking facility, municipal museum, or municipal stadium;
(2) property of an airport owned by a city, town, county,
or group thereof which is:
(i) leased to or used by any person or entity including a
fixed base operator; and
(ii) used as a hangar for the storage or repair of aircraft
or to provide aviation goods, services, or facilities to the
airport or general public;
the exception from taxation provided in this clause does not
apply to:
(i) property located at an airport owned or operated by the
Metropolitan Airports Commission or by a city of over 50,000
population according to the most recent federal census or such a
city's airport authority;
(ii) hangars leased by a private individual, association,
or corporation in connection with a business conducted for
profit other than an aviation-related business; or
(iii) facilities leased by a private individual,
association, or corporation in connection with a business for
profit, that consists of a major jet engine repair facility
financed, in whole or part, with the proceeds of state bonds and
located in a tax increment financing district;
(3) property constituting or used as a public pedestrian
ramp or concourse in connection with a public airport; or
(4) property constituting or used as a passenger check-in
area or ticket sale counter, boarding area, or luggage claim
area in connection with a public airport but not the airports
owned or operated by the Metropolitan Airports Commission or
cities of over 50,000 population or an airport authority
therein. Real estate owned by a municipality in connection with
the operation of a public airport and leased or used for
agricultural purposes is not exempt;
(5) property leased, loaned, or otherwise made available to
a private individual, corporation, or association under a
cooperative farming agreement made pursuant to section 97A.135;
or
(6) property leased, loaned, or otherwise made available to
a private individual, corporation, or association under section
272.68, subdivision 4.
(c) Taxes imposed by this subdivision are payable as in the
case of personal property taxes and shall be assessed to the
lessees or users of real or personal property in the same manner
as taxes assessed to owners of real or personal property, except
that such taxes shall not become a lien against the property.
When due, the taxes shall constitute a debt due from the lessee
or user to the state, township, city, county, and school
district for which the taxes were assessed and shall be
collected in the same manner as personal property taxes. If
property subject to the tax imposed by this subdivision is
leased or used jointly by two or more persons, each lessee or
user shall be jointly and severally liable for payment of the
tax.
(d) The tax on real property of the state or any of its
political subdivisions that is leased by a private individual,
association, or corporation and becomes taxable under this
subdivision or other provision of law must be assessed and
collected as a personal property assessment. The taxes do not
become a lien against the real property.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 5. Minnesota Statutes 2004, section 272.02,
subdivision 1a, is amended to read:
Subd. 1a. [LIMITATIONS ON EXEMPTIONS.] The exemptions
granted by subdivision 1 are subject to the limits contained in
the other subdivisions of this section, section 272.025, or
273.13, subdivision 25, paragraph (c), clause (1) or (2), or
paragraph (d), clause (2) and all other provisions of applicable
law.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 6. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:
Subd. 73. [PROPERTY SUBJECT TO TACONITE PRODUCTION TAX OR
NET PROCEEDS TAX.] (a) Real and personal property described in
section 298.25 is exempt to the extent the tax on taconite and
iron sulphides under section 298.24 is described in section
298.25 as being in lieu of other taxes on such property. This
exemption applies for taxes payable in each year that the tax
under section 298.24 is payable with respect to such property.
(b) Deposits of mineral, metal, or energy resources the
mining of which is subject to taxation under section 298.015 are
exempt. This exemption applies for taxes payable in each year
that the tax under section 298.015 is payable with respect to
such property.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 7. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:
Subd. 74. [RELIGIOUS CORPORATIONS.] Personal and real
property that a religious corporation, formed under section
317A.909, necessarily uses for a religious purpose is exempt to
the extent provided in section 317A.909, subdivision 3.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 8. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:
Subd. 75. [CHILDREN'S HOMES.] Personal and real property
owned by a corporation formed under section 317A.907 is exempt
to the extent provided in section 317A.907, subdivision 7.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 9. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:
Subd. 76. [HOUSING AND REDEVELOPMENT AUTHORITY AND TRIBAL
HOUSING AUTHORITY PROPERTY.] Property owned by a housing and
redevelopment authority described in chapter 469, or by a
designated housing authority described in section 469.040,
subdivision 5, is exempt to the extent provided in chapter 469.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 10. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:
Subd. 77. [PROPERTY OF HOUSING AND REDEVELOPMENT
AUTHORITIES.] Property of projects of housing and redevelopment
authorities are exempt to the extent permitted by sections
469.042, subdivision 1, and 469.043, subdivisions 2 and 5.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 11. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:
Subd. 78. [PROPERTY OF REGIONAL RAIL AUTHORITY.] Property
of a regional rail authority as defined in chapter 398A is
exempt to the extent permitted by section 398A.05.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 12. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:
Subd. 79. [SPIRIT MOUNTAIN RECREATION AREA
AUTHORITY.] Property owned by the Spirit Mountain Recreation
Area Authority is exempt from taxation to the extent provided in
Laws 1973, chapter 327, section 6.
Sec. 13. Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:
Subd. 80. [INSTALLED CAPACITY DEFINED.] For purposes of
this section, the term "installed capacity" means generator
nameplate capacity.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 14. Minnesota Statutes 2004, section 272.029,
subdivision 4, is amended to read:
Subd. 4. [REPORTS.] (a) An owner of a wind energy
conversion system subject to tax under subdivision 3 shall file
a report with the commissioner of revenue annually on or before
March February 1 detailing the amount of electricity in
kilowatt-hours that was produced by the wind energy conversion
system for the previous calendar year. The commissioner shall
prescribe the form of the report. The report must contain the
information required by the commissioner to determine the tax
due to each county under this section for the current year. If
an owner of a wind energy conversion system subject to taxation
under this section fails to file the report by the due date, the
commissioner of revenue shall determine the tax based upon the
nameplate capacity of the system multiplied by a capacity factor
of 40 percent.
(b) On or before March 31 February 28, the commissioner of
revenue shall notify the owner of the wind energy conversion
systems of the tax due to each county for the current year and
shall certify to the county auditor of each county in which the
systems are located the tax due from each owner for the current
year.
[EFFECTIVE DATE.] This section is effective for reports and
certifications due in 2006 and thereafter.
Sec. 15. Minnesota Statutes 2004, section 272.029,
subdivision 6, is amended to read:
Subd. 6. [DISTRIBUTION OF REVENUES.] Revenues from the
taxes imposed under subdivision 5 must be part of the settlement
between the county treasurer and the county auditor under
section 276.09. The revenue must be distributed by the county
auditor or the county treasurer to all local taxing
jurisdictions in which the wind energy conversion system is
located, as follows: beginning with distributions in 2006, 80
percent to counties; 14 percent to cities and townships; and six
percent to school districts; and for distributions occurring in
2004 and 2005 in the same proportion that each of the local
taxing jurisdiction's current year's net tax capacity based tax
rate is to the current year's total local net tax capacity based
rate.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 16. Minnesota Statutes 2004, section 273.11,
subdivision 8, is amended to read:
Subd. 8. [LIMITED EQUITY COOPERATIVE APARTMENTS.] For the
purposes of this subdivision, the terms defined in this
subdivision have the meanings given them.
A "limited equity cooperative" is a corporation organized
under chapter 308A or 308B, which has as its primary purpose the
provision of housing and related services to its members which
meets one of the following criteria with respect to the income
of its members: (1) a minimum of 75 percent of members must
have incomes at or less than 90 percent of area median income,
(2) a minimum of 40 percent of members must have incomes at or
less than 60 percent of area median income, or (3) a minimum of
20 percent of members must have incomes at or less than 50
percent of area median income. For purposes of this clause,
"member income" shall mean the income of a member existing at
the time the member acquires cooperative membership, and median
income shall mean the St. Paul-Minneapolis metropolitan area
median income as determined by the United States Department of
Housing and Urban Development. It must also meet the following
requirements:
(a) The articles of incorporation set the sale price of
occupancy entitling cooperative shares or memberships at no more
than a transfer value determined as provided in the articles.
That value may not exceed the sum of the following:
(1) the consideration paid for the membership or shares by
the first occupant of the unit, as shown in the records of the
corporation;
(2) the fair market value, as shown in the records of the
corporation, of any improvements to the real property that were
installed at the sole expense of the member with the prior
approval of the board of directors;
(3) accumulated interest, or an inflation allowance not to
exceed the greater of a ten percent annual noncompounded
increase on the consideration paid for the membership or share
by the first occupant of the unit, or the amount that would have
been paid on that consideration if interest had been paid on it
at the rate of the percentage increase in the revised Consumer
Price Index for All Urban Consumers for the Minneapolis-St. Paul
metropolitan area prepared by the United States Department of
Labor, provided that the amount determined pursuant to this
clause may not exceed $500 for each year or fraction of a year
the membership or share was owned; plus
(4) real property capital contributions shown in the
records of the corporation to have been paid by the transferor
member and previous holders of the same membership, or of
separate memberships that had entitled occupancy to the unit of
the member involved. These contributions include contributions
to a corporate reserve account the use of which is restricted to
real property improvements or acquisitions, contributions to the
corporation which are used for real property improvements or
acquisitions, and the amount of principal amortized by the
corporation on its indebtedness due to the financing of real
property acquisition or improvement or the averaging of
principal paid by the corporation over the term of its real
property-related indebtedness.
(b) The articles of incorporation require that the board of
directors limit the purchase price of stock or membership
interests for new member-occupants or resident shareholders to
an amount which does not exceed the transfer value for the
membership or stock as defined in clause (a).
(c) The articles of incorporation require that the total
distribution out of capital to a member shall not exceed that
transfer value.
(d) The articles of incorporation require that upon
liquidation of the corporation any assets remaining after
retirement of corporate debts and distribution to members will
be conveyed to a charitable organization described in section
501(c)(3) of the Internal Revenue Code of 1986, as amended
through December 31, 1992, or a public agency.
A "limited equity cooperative apartment" is a dwelling unit
owned by a limited equity cooperative.
"Occupancy entitling cooperative share or membership" is
the ownership interest in a cooperative organization which
entitles the holder to an exclusive right to occupy a dwelling
unit owned or leased by the cooperative.
For purposes of taxation, the assessor shall value a unit
owned by a limited equity cooperative at the lesser of its
market value or the value determined by capitalizing the net
operating income of a comparable apartment operated on a rental
basis at the capitalization rate used in valuing comparable
buildings that are not limited equity cooperatives. If a
cooperative fails to operate in accordance with the provisions
of clauses (a) to (d), the property shall be subject to
additional property taxes in the amount of the difference
between the taxes determined in accordance with this subdivision
for the last ten years that the property had been assessed
pursuant to this subdivision and the amount that would have been
paid if the provisions of this subdivision had not applied to
it. The additional taxes, plus interest at the rate specified
in section 549.09, shall be extended against the property on the
tax list for the current year.
[EFFECTIVE DATE.] This section is effective for taxes
payable in 2004 and thereafter.
Sec. 17. Minnesota Statutes 2004, section 273.124,
subdivision 3, is amended to read:
Subd. 3. [COOPERATIVES AND CHARITABLE CORPORATIONS;
HOMESTEAD AND OTHER PROPERTY.] (a) When property is owned by a
corporation or association organized under chapter 308A or 308B,
and each person who owns a share or shares in the corporation or
association is entitled to occupy a building on the property, or
a unit within a building on the property, the corporation or
association may claim homestead treatment for each dwelling, or
for each unit in the case of a building containing several
dwelling units, or for the part of the value of the building
occupied by a shareholder. Each building or unit must be
designated by legal description or number. The net tax capacity
of each building or unit that qualifies for assessment as a
homestead under this subdivision must include not more than
one-half acre of land, if platted, nor more than 80 acres if
unplatted. The net tax capacity of the property is the sum of
the net tax capacities of each of the respective buildings or
units comprising the property, including the net tax capacity of
each unit's or building's proportionate share of the land and
any common buildings. To qualify for the treatment provided by
this subdivision, the corporation or association must be wholly
owned by persons having a right to occupy a building or unit
owned by the corporation or association. A charitable
corporation organized under the laws of Minnesota and not
otherwise exempt thereunder with no outstanding stock qualifies
for homestead treatment with respect to member residents of the
dwelling units who have purchased and hold residential
participation warrants entitling them to occupy the units.
(b) To the extent provided in paragraph (a), a cooperative
or corporation organized under chapter 308A may obtain separate
assessment and valuation, and separate property tax statements
for each residential homestead, residential nonhomestead, or for
each seasonal residential recreational building or unit not used
for commercial purposes. The appropriate class rates under
section 273.13 shall be applicable as if each building or unit
were a separate tax parcel; provided, however, that the tax
parcel which exists at the time the cooperative or corporation
makes application under this subdivision shall be a single
parcel for purposes of property taxes or the enforcement and
collection thereof, other than as provided in paragraph (a) or
this paragraph.
(c) A member of a corporation or association may initially
obtain the separate assessment and valuation and separate
property tax statements, as provided in paragraph (b), by
applying to the assessor by June 30 of the assessment year.
(d) When a building, or dwelling units within a building,
no longer qualify under paragraph (a) or (b), the current owner
must notify the assessor within 30 days. Failure to notify the
assessor within 30 days shall result in the loss of benefits
under paragraph (a) or (b) for taxes payable in the year that
the failure is discovered. For these purposes, "benefits under
paragraph (a) or (b)" means the difference in the net tax
capacity of the building or units which no longer qualify as
computed under paragraph (a) or (b) and as computed under the
otherwise applicable law, times the local tax rate applicable to
the building for that taxes payable year. Upon discovery of a
failure to notify, the assessor shall inform the auditor of the
difference in net tax capacity for the building or buildings in
which units no longer qualify, and the auditor shall calculate
the benefits under paragraph (a) or (b). Such amount, plus a
penalty equal to 100 percent of that amount, shall then be
demanded of the building's owner. The property owner 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 a 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. The appeal shall be governed by the Tax Court
procedures provided in chapter 271, for cases relating to the
tax laws as defined in section 271.01, subdivision 5;
disregarding sections 273.125, subdivision 5, and 278.03, but
including section 278.05, subdivision 2. If the amount of the
benefits under paragraph (a) or (b) and penalty are not paid
within 60 days, and if no appeal has been filed, the county
auditor shall certify the amount of the benefit and penalty to
the succeeding year's tax list to be collected as part of the
property taxes on the affected property.
[EFFECTIVE DATE.] This section is effective for taxes
payable in 2004 and thereafter.
Sec. 18. Minnesota Statutes 2004, section 273.124,
subdivision 6, is amended to read:
Subd. 6. [LEASEHOLD COOPERATIVES.] When one or more
dwellings or one or more buildings which each contain several
dwelling units is owned by a nonprofit corporation subject to
the provisions of chapter 317A and qualifying under section
501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as
amended through December 31, 1990, or a limited partnership
which corporation or partnership operates the property in
conjunction with a cooperative association, and has received
public financing, homestead treatment may be claimed by the
cooperative association on behalf of the members of the
cooperative for each dwelling unit occupied by a member of the
cooperative. The cooperative association must provide the
assessor with the Social Security numbers of those members. To
qualify for the treatment provided by this subdivision, the
following conditions must be met:
(a) the cooperative association must be organized under
chapter 308A or 308B and all voting members of the board of
directors must be resident tenants of the cooperative and must
be elected by the resident tenants of the cooperative;
(b) the cooperative association must have a lease for
occupancy of the property for a term of at least 20 years, which
permits the cooperative association, while not in default on the
lease, to participate materially in the management of the
property, including material participation in establishing
budgets, setting rent levels, and hiring and supervising a
management agent;
(c) to the extent permitted under state or federal law, the
cooperative association must have a right under a written
agreement with the owner to purchase the property if the owner
proposes to sell it; if the cooperative association does not
purchase the property it is offered for sale, the owner may not
subsequently sell the property to another purchaser at a price
lower than the price at which it was offered for sale to the
cooperative association unless the cooperative association
approves the sale;
(d) a minimum of 40 percent of the cooperative
association's members must have incomes at or less than 60
percent of area median gross income as determined by the United
States Secretary of Housing and Urban Development under section
142(d)(2)(B) of the Internal Revenue Code of 1986, as amended
through December 31, 1991. For purposes of this clause, "member
income" means the income of a member existing at the time the
member acquires cooperative membership;
(e) if a limited partnership owns the property, it must
include as the managing general partner a nonprofit organization
operating under the provisions of chapter 317A and qualifying
under section 501(c)(3) or 501(c)(4) of the Internal Revenue
Code of 1986, as amended through December 31, 1990, and the
limited partnership agreement must provide that the managing
general partner have sufficient powers so that it materially
participates in the management and control of the limited
partnership;
(f) prior to becoming a member of a leasehold cooperative
described in this subdivision, a person must have received
notice that (1) describes leasehold cooperative property in
plain language, including but not limited to the effects of
classification under this subdivision on rents, property taxes
and tax credits or refunds, and operating expenses, and (2)
states that copies of the articles of incorporation and bylaws
of the cooperative association, the lease between the owner and
the cooperative association, a sample sublease between the
cooperative association and a tenant, and, if the owner is a
partnership, a copy of the limited partnership agreement, can be
obtained upon written request at no charge from the owner, and
the owner must send or deliver the materials within seven days
after receiving any request;
(g) if a dwelling unit of a building was occupied on the
60th day prior to the date on which the unit became leasehold
cooperative property described in this subdivision, the notice
described in paragraph (f) must have been sent by first class
mail to the occupant of the unit at least 60 days prior to the
date on which the unit became leasehold cooperative property.
For purposes of the notice under this paragraph, the copies of
the documents referred to in paragraph (f) may be in proposed
version, provided that any subsequent material alteration of
those documents made after the occupant has requested a copy
shall be disclosed to any occupant who has requested a copy of
the document. Copies of the articles of incorporation and
certificate of limited partnership shall be filed with the
secretary of state after the expiration of the 60-day period
unless the change to leasehold cooperative status does not
proceed;
(h) the county attorney of the county in which the property
is located must certify to the assessor that the property meets
the requirements of this subdivision;
(i) the public financing received must be from at least one
of the following sources:
(1) tax increment financing proceeds used for the
acquisition or rehabilitation of the building or interest rate
write-downs relating to the acquisition of the building;
(2) government issued bonds exempt from taxes under section
103 of the Internal Revenue Code of 1986, as amended through
December 31, 1991, the proceeds of which are used for the
acquisition or rehabilitation of the building;
(3) programs under section 221(d)(3), 202, or 236, of Title
II of the National Housing Act;
(4) rental housing program funds under Section 8 of the
United States Housing Act of 1937 or the market rate family
graduated payment mortgage program funds administered by the
Minnesota Housing Finance Agency that are used for the
acquisition or rehabilitation of the building;
(5) low-income housing credit under section 42 of the
Internal Revenue Code of 1986, as amended through December 31,
1991;
(6) public financing provided by a local government used
for the acquisition or rehabilitation of the building, including
grants or loans from (i) federal community development block
grants; (ii) HOME block grants; or (iii) residential rental
bonds issued under chapter 474A; or
(7) other rental housing program funds provided by the
Minnesota Housing Finance Agency for the acquisition or
rehabilitation of the building;
(j) at the time of the initial request for homestead
classification or of any transfer of ownership of the property,
the governing body of the municipality in which the property is
located must hold a public hearing and make the following
findings:
(1) that the granting of the homestead treatment of the
apartment's units will facilitate safe, clean, affordable
housing for the cooperative members that would otherwise not be
available absent the homestead designation;
(2) that the owner has presented information satisfactory
to the governing body showing that the savings garnered from the
homestead designation of the units will be used to reduce
tenant's rents or provide a level of furnishing or maintenance
not possible absent the designation; and
(3) that the requirements of paragraphs (b), (d), and (i)
have been met.
Homestead treatment must be afforded to units occupied by
members of the cooperative association and the units must be
assessed as provided in subdivision 3, provided that any unit
not so occupied shall be classified and assessed pursuant to the
appropriate class. No more than three acres of land may, for
assessment purposes, be included with each dwelling unit that
qualifies for homestead treatment under this subdivision.
When dwelling units no longer qualify under this
subdivision, the current owner must notify the assessor within
60 days. Failure to notify the assessor within 60 days shall
result in the loss of benefits under this subdivision for taxes
payable in the year that the failure is discovered. For these
purposes, "benefits under this subdivision" means the difference
in the net tax capacity of the units which no longer qualify as
computed under this subdivision and as computed under the
otherwise applicable law, times the local tax rate applicable to
the building for that taxes payable year. Upon discovery of a
failure to notify, the assessor shall inform the auditor of the
difference in net tax capacity for the building or buildings in
which units no longer qualify, and the auditor shall calculate
the benefits under this subdivision. Such amount, plus a
penalty equal to 100 percent of that amount, shall then be
demanded of the building's owner. The property owner 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 a 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. The appeal shall be governed by the Tax Court
procedures provided in chapter 271, for cases relating to the
tax laws as defined in section 271.01, subdivision 5;
disregarding sections 273.125, subdivision 5, and 278.03, but
including section 278.05, subdivision 2. If the amount of the
benefits under this subdivision and penalty are not paid within
60 days, and if no appeal has been filed, the county auditor
shall certify the amount of the benefit and penalty to the
succeeding year's tax list to be collected as part of the
property taxes on the affected buildings.
[EFFECTIVE DATE.] This section is effective for taxes
payable in 2004 and thereafter.
Sec. 19. Minnesota Statutes 2004, section 273.124,
subdivision 8, is amended to read:
Subd. 8. [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM
CORPORATION, JOINT FARM VENTURE, LIMITED LIABILITY COMPANY, OR
PARTNERSHIP.] (a) Each family farm corporation, each; each joint
family farm venture,; and each limited liability company, and
each or partnership operating which operates a family farm; is
entitled to class 1b under section 273.13, subdivision 22,
paragraph (b), or class 2a assessment for one homestead occupied
by a shareholder, member, or partner thereof who is residing on
the land, and actively engaged in farming of the land owned by
the family farm corporation, joint family farm venture, limited
liability company, or partnership operating a family farm.
Homestead treatment applies even if legal title to the property
is in the name of the family farm corporation, joint family farm
venture, limited liability company, or partnership operating the
family farm, and not in the name of the person residing on it.
"Family farm corporation," "family farm," and "partnership
operating a family farm" have the meanings given in section
500.24, except that the number of allowable shareholders,
members, or partners under this subdivision shall not exceed
12. "Limited liability company" has the meaning contained in
sections 322B.03, subdivision 28, and 500.24, subdivision 2,
paragraphs (l) and (m). "Joint family farm venture" means a
cooperative agreement among two or more farm enterprises
authorized to operate a family farm under section 500.24.
(b) In addition to property specified in paragraph (a), any
other residences owned by family farm corporations, joint family
farm ventures, limited liability companies, or partnerships
operating a family farm described in paragraph (a) which are
located on agricultural land and occupied as homesteads by its
shareholders, members, or partners who are actively engaged in
farming on behalf of that corporation, joint farm venture,
limited liability company, or partnership must also be assessed
as class 2a property or as class 1b property under section
273.13.
(c) Agricultural property that is owned by a member,
partner, or shareholder of a family farm corporation or joint
family farm venture, limited liability company operating a
family farm, or by a partnership operating a family farm and
leased to the family farm corporation, limited liability
company, or partnership operating a family farm, or joint farm
venture, as defined in paragraph (a), is eligible for
classification as class 1b or class 2a under section 273.13, if
the owner is actually residing on the property, and is actually
engaged in farming the land on behalf of that corporation, joint
farm venture, limited liability company, or partnership. This
paragraph applies without regard to any legal possession rights
of the family farm corporation, joint family farm venture,
limited liability company, or partnership operating a family
farm under the lease.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 20. Minnesota Statutes 2004, 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, the
residential homestead and agricultural homestead credits under
section 273.1384, 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 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.
If the person notified is the current owner of the
property, the treasurer may add the total amount of homestead
benefits, penalty, interest, and costs to the ad valorem taxes
otherwise payable on the property 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 homestead 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 homestead benefits, penalty, interest, and costs, and
instead extend those amounts on the tax lists against the
property 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. The Social Security numbers
and federal identification numbers that are maintained by a
county or city assessor for property tax administration
purposes, and that may appear on the lists retain their
classification as private or nonpublic data; but may be viewed,
accessed, and used by the county auditor or treasurer of the
same county for the limited purpose of assisting the
commissioner in the preparation of microdata samples under
section 270.0681.
(l) On or before April 30 each year beginning in 2007, each
county must provide the commissioner with the following data for
each parcel of homestead property by electronic means as defined
in section 289A.02, subdivision 8:
(i) the property identification number assigned to the
parcel for purposes of taxes payable in the current year;
(ii) the name and Social Security number of each property
owner and property owner's spouse, as shown on the tax rolls for
the current and the prior assessment year;
(iii) the classification of the property under section
273.13 for taxes payable in the current year and in the prior
year;
(iv) an indication of whether the property was classified
as a homestead for taxes payable in the current year or for
taxes payable in the prior year because of occupancy by a
relative of the owner or by a spouse of a relative;
(v) the property taxes payable as defined in section
290A.03, subdivision 13, for the current year and the prior
year;
(vi) the market value of improvements to the property first
assessed for tax purposes for taxes payable in the current year;
(vii) the assessor's estimated market value assigned to the
property for taxes payable in the current year and the prior
year;
(viii) the taxable market value assigned to the property
for taxes payable in the current year and the prior year;
(ix) whether there are delinquent property taxes owing on
the homestead;
(x) the unique taxing district in which the property is
located; and
(xi) such other information as the commissioner decides is
necessary.
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.
Sec. 21. Minnesota Statutes 2004, section 273.124,
subdivision 21, is amended to read:
Subd. 21. [TRUST PROPERTY; HOMESTEAD.] Real property held
by a trustee under a trust is eligible for classification as
homestead property if:
(1) the grantor or surviving spouse of the grantor of the
trust occupies and uses the property as a homestead;
(2) a relative or surviving relative of the grantor who
meets the requirements of subdivision 1, paragraph (c), in the
case of residential real estate; or subdivision 1, paragraph
(d), in the case of agricultural property, occupies and uses the
property as a homestead;
(3) a family farm corporation, joint farm venture, limited
liability company, or partnership operating a family farm rents
the property held by a trustee under a trust, and the grantor,
the spouse of the grantor, or the son or daughter of the
grantor, who is also a shareholder, member, or partner of the
corporation, joint farm venture, limited liability company, or
partnership occupies and uses the property as a homestead, and
or is actively farming the property on behalf of the
corporation, joint farm venture, limited liability company, or
partnership; or
(4) a person who has received homestead classification for
property taxes payable in 2000 on the basis of an unqualified
legal right under the terms of the trust agreement to occupy the
property as that person's homestead and who continues to use the
property as a homestead or a person who received the homestead
classification for taxes payable in 2005 under clause (3) who
does not qualify under clause (3) for taxes payable in 2006 or
thereafter but who continues to qualify under clause (3) as it
existed for taxes payable in 2005.
For purposes of this subdivision, "grantor" is defined as
the person creating or establishing a testamentary, inter Vivos,
revocable or irrevocable trust by written instrument or through
the exercise of a power of appointment.
[EFFECTIVE DATE.] This section is effective for taxes
payable in 2006 and thereafter.
Sec. 22. Minnesota Statutes 2004, section 273.1315, is
amended to read:
273.1315 [CERTIFICATION OF 1B PROPERTY.]
Any property owner seeking classification and assessment of
the owner's homestead as class 1b property pursuant to section
273.13, subdivision 22, paragraph (b), shall file with the
commissioner of revenue a 1b homestead declaration, on a form
prescribed by the commissioner. The declaration shall contain
the following information:
(a) the information necessary to verify that on or before
June 30 of the filing year, the property owner or the owner's
spouse satisfies the requirements of section 273.13, subdivision
22, paragraph (b), for 1b classification; and
(b) any additional information prescribed by the
commissioner.
The declaration must be filed on or before October 1 to be
effective for property taxes payable during the succeeding
calendar year. The declaration and any supplementary
information received from the property owner pursuant to this
section shall be subject to chapter 270B. If approved by the
commissioner, the declaration remains in effect until the
property no longer qualifies under section 273.13, subdivision
22, paragraph (b). Failure to notify the commissioner within 30
days that the property no longer qualifies under that paragraph
because of a sale, change in occupancy, or change in the status
or condition of an occupant shall result in the penalty provided
in section 273.124, subdivision 13, computed on the basis of the
class 1b benefits for the property, and the property shall lose
its current class 1b classification.
The commissioner shall provide to the assessor on or before
November 1 a listing of the parcels of property qualifying for
1b classification.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 23. Minnesota Statutes 2004, section 273.19,
subdivision 1a, is amended to read:
Subd. 1a. For purposes of this section, a lease includes
any agreement, except a cooperative farming agreement pursuant
to section 97A.135, subdivision 3, or a lease executed pursuant
to section 272.68, subdivision 4, permitting a nonexempt person
or entity to use the property, regardless of whether the
agreement is characterized as a lease. A lease has a "term of
at least one year" if the term is for a period of less than one
year and the lease permits the parties to renew the lease
without requiring that similar terms for leasing the property
will be offered to other applicants or bidders through a
competitive bidding or other form of offer to potential lessees
or users.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 24. Minnesota Statutes 2004, section 273.372, is
amended to read:
273.372 [PROCEEDINGS AND APPEALS; UTILITY OR RAILROAD
VALUATIONS.]
Subdivision 1. [SCOPE.] (a) As provided in this section,
an appeal by a utility or railroad company concerning the
exemption, valuation, or classification of property for which
the commissioner of revenue has provided the city or county
assessor with valuations by order, or for which the commissioner
has recommended values to the city or county assessor, must be
brought against the commissioner in Tax Court or in district
court of the county where the property is located, and not
against the county or taxing district where the property is
located.
(b) This section governs administrative appeals and appeals
to court of a claim that utility or railroad operating property
has been partially, unfairly, or unequally assessed, or assessed
at a valuation greater than its real or actual value,
misclassified, or that the property is exempt. This section
applies only to property described in sections 270.81,
subdivision 1, 273.33, 273.35, 273.36, and 273.37, and only with
regard to taxable net tax capacities that have been provided to
the city or county by the commissioner and which have not been
changed by city or county. If the taxable net tax capacity
being appealed is not the taxable net tax capacity established
by the commissioner, or if the appeal claims that the tax rate
applied against the parcel is incorrect, or that the tax has
been paid, this section does not apply.
Subd. 2. [CONTENTS AND FILING OF PETITION.] (a) In all
appeals to court that are required to be brought against the
commissioner under this section, the petition initiating the
appeal must be served on the commissioner and must be filed with
the Tax Court in Ramsey County, as provided in paragraph (b) or
(c).
(b) If the appeal to court is from an order of the
commissioner, it must be brought under chapter 271, except that
when the provisions of this section conflict with chapter 271,
this section prevails. In addition, the petition must include
all the parcels encompassed by that order which the petitioner
claims have been partially, unfairly, or unequally assessed,
assessed at a valuation greater than their real or actual value,
misclassified, or are exempt. For this purpose, an order of the
commissioner is either (1) a certification or notice of value by
the commissioner for property described in subdivision 1, or (2)
the final determination by the commissioner of either an
administrative appeal conference or informal administrative
appeal described in subdivision 4.
(c) If the appeal is from the exemption, valuation,
classification, or tax that results from implementation of the
commissioner's order, certification, or recommendation, it must
be brought under chapter 278, and the provisions in that chapter
apply, except that service shall be on the commissioner only and
not on the county local officials specified in section 278.01,
subdivision 1, and if any other provision of this section
conflicts with chapter 278, this section prevails. In addition,
the petition must include either all the utility parcels or all
the railroad parcels in the state in which the petitioner claims
an interest and which the petitioner claims have been partially,
unfairly, or unequally assessed, assessed at a valuation greater
than their real or actual value, misclassified, or are
exempt. This provision applies to the property described in
sections 273.33, 273.35, 273.36, and 273.37, but only if the
appealed values have remained unchanged from those provided to
the city or county by the commissioner. If the exemption,
valuation, or classification being appealed has been changed by
the city or county, then the action must be brought under
chapter 278 in the county where the property is located and
proper service must be made upon the county officials as
specified in section 278.01, subdivision 1.
Subd. 3. [NOTICE.] Upon filing of any appeal in court by a
utility company or railroad against the commissioner pursuant to
this section, the commissioner shall give notice by first class
mail to the county auditor of each county which would be
affected by the appeal where property included in the petition
is located.
Subd. 4. [ADMINISTRATIVE APPEALS.] (a) Companies that
submit the reports under section 270.82 or 273.371 by the date
specified in that section, or by the date specified by the
commissioner in an extension, may appeal administratively to the
commissioner under the procedures in section 270.11, subdivision
6, prior to bringing an action in Tax Court or in district court
, however, instituting an administrative appeal by submitting a
written request with the commissioner does not change or
modify for a conference within ten days after the date of the
commissioner's valuation certification or notice to the company,
or by May 15, whichever is earlier. The commissioner shall
conduct the conference upon the commissioner's entire files and
records and such further information as may be offered. The
conference must be held no later than 20 days after the date of
the commissioner's valuation certification or notice to the
company, or by the date specified by the commissioner in an
extension. Within 60 days after the conference the commissioner
shall make a final determination of the matter and shall notify
the company promptly of the determination. The conference is
not a contested case hearing.
(b) In addition to the opportunity for a conference under
paragraph (a), the commissioner shall also provide the railroad
and utility companies the opportunity to discuss any questions
or concerns relating to the values established by the
commissioner through certification or notice in a less formal
manner. This does not change or modify the deadline for
requesting a conference under paragraph (a), the deadline in
section 271.06 for appealing an order of the commissioner in Tax
Court, or the deadline in section 278.01 for filing a property
tax claim or objection in Tax Court or district appealing
property taxes in court.
[EFFECTIVE DATE.] This section is effective September 1,
2005, and thereafter.
Sec. 25. Minnesota Statutes 2004, section 274.014,
subdivision 2, is amended to read:
Subd. 2. [APPEALS AND EQUALIZATION COURSE.] By no later
than January 1, Beginning in 2006, and each year thereafter,
there must be at least one member at each meeting of a local
board of appeal and equalization who has attended an appeals and
equalization course developed or approved by the commissioner
within the last four years, as certified by the commissioner.
The course may be offered in conjunction with a meeting of the
Minnesota League of Cities or the Minnesota Association of
Townships. The course content must include, but need not be
limited to, a review of the handbook developed by the
commissioner under subdivision 1.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 26. Minnesota Statutes 2004, section 274.014,
subdivision 3, is amended to read:
Subd. 3. [PROOF OF COMPLIANCE; TRANSFER OF DUTIES.] (a)
Any city or town that does not conducts local boards of appeal
and equalization meetings must provide proof to the county
assessor by December 1, 2006, and each year thereafter, that it
is in compliance with the requirements of subdivision 2, and
that it had. Beginning in 2006, this notice must also verify
that there was a quorum of voting members at each meeting of the
board of appeal and equalization in the prior current year,. A
city or town that does not comply with these requirements is
deemed to have transferred its board of appeal and equalization
powers to the county under section 274.01, subdivision 3,
for beginning with the following year's assessment and
continuing unless the powers are reinstated under paragraph (c).
(b) The county shall notify the taxpayers when the board of
appeal and equalization for a city or town has been transferred
to the county under this subdivision and, prior to the meeting
time of the county board of equalization, the county shall make
available to those taxpayers a procedure for a review of the
assessments, including, but not limited to, open book meetings.
This alternate review process shall take place in April and May.
(c) A local board whose powers are transferred to the
county under this subdivision may be reinstated by resolution of
the governing body of the city or town and upon proof of
compliance with the requirements of subdivision 2. The
resolution and proofs must be provided to the county assessor by
December 1 in order to be effective for the following year's
assessment.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 27. Minnesota Statutes 2004, section 274.14, is
amended to read:
274.14 [LENGTH OF SESSION; RECORD.]
The county board of equalization or the special board of
equalization appointed by it shall meet during the last ten
meeting days in June. For this purpose, "meeting days" are
defined as any day of the week excluding Saturday and Sunday.
The board may meet on any ten consecutive meeting days in June,
after the second Friday in June, if. The actual meeting dates
are must be contained on the valuation notices mailed to each
property owner in the county under as provided in section
273.121. For this purpose, "meeting days" is defined as any day
of the week excluding Saturday and Sunday. No action taken by
the county board of review after June 30 is valid, except for
corrections permitted in sections 273.01 and 274.01. The county
auditor shall keep an accurate record of the proceedings and
orders of the board. The record must be published like other
proceedings of county commissioners. A copy of the published
record must be sent to the commissioner of revenue, with the
abstract of assessment required by section 274.16.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 28. Minnesota Statutes 2004, section 275.07,
subdivision 1, is amended to read:
Subdivision 1. [CERTIFICATION OF LEVY.] (a) Except as
provided under paragraph (b), the taxes voted by cities,
counties, school districts, and special districts shall be
certified by the proper authorities to the county auditor on or
before five working days after December 20 in each year. A town
must certify the levy adopted by the town board to the county
auditor by September 15 each year. If the town board modifies
the levy at a special town meeting after September 15, the town
board must recertify its levy to the county auditor on or before
five working days after December 20. The taxes certified shall
be reduced by the county auditor by the aid received under
section 273.1398, subdivision 3. If a city, town, county,
school district, or special district fails to certify its levy
by that date, its levy shall be the amount levied by it for the
preceding year.
(b)(i) The taxes voted by counties under sections 103B.241,
103B.245, and 103B.251 shall be separately certified by the
county to the county auditor on or before five working days
after December 20 in each year. The taxes certified shall not
be reduced by the county auditor by the aid received under
section 273.1398, subdivision 3. If a county fails to certify
its levy by that date, its levy shall be the amount levied by it
for the preceding year.
(ii) For purposes of the proposed property tax notice under
section 275.065 and the property tax statement under section
276.04, for the first year in which the county implements the
provisions of this paragraph, the county auditor shall reduce
the county's levy for the preceding year to reflect any amount
levied for water management purposes under clause (i) included
in the county's levy.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 29. Minnesota Statutes 2004, section 275.07,
subdivision 4, is amended to read:
Subd. 4. [REPORT TO COMMISSIONER.] (a) On or before
October 8 of each year, the county auditor shall report to the
commissioner of revenue the proposed levy certified by local
units of government under section 275.065, subdivision 1. If
any taxing authorities have notified the county auditor that
they are in the process of negotiating an agreement for sharing,
merging, or consolidating services but that when the proposed
levy was certified under section 275.065, subdivision 1c, the
agreement was not yet finalized, the county auditor shall supply
that information to the commissioner when filing the report
under this section and shall recertify the affected levies as
soon as practical after October 10.
(b) On or before January 15 of each year, the county
auditor shall report to the commissioner of revenue the final
levy certified by local units of government under subdivision 1.
(c) The levies must be reported in the manner prescribed by
the commissioner. The reports must show a total levy and the
amount of each special levy.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 30. Minnesota Statutes 2004, section 276.112, is
amended to read:
276.112 [STATE PROPERTY TAXES; COUNTY TREASURER.]
On or before January 25 each year, for the period ending
December 31 of the prior year, and on or before June 29 28 each
year, for the period ending on the most recent settlement day
determined in section 276.09, and on or before December 2 each
year, for the period ending November 20, the county treasurer
must make full settlement with the county auditor according to
sections 276.09, 276.10, and 276.111 for all receipts of state
property taxes levied under section 275.025, and must transmit
those receipts to the commissioner of revenue by electronic
means.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 31. Minnesota Statutes 2004, section 282.016, is
amended to read:
282.016 [PROHIBITED PURCHASERS.]
No (a) A county auditor, county treasurer, county attorney,
court administrator of the district court, or county assessor
or, supervisor of assessments, or deputy or clerk or an employee
of such officer, and no a commissioner for tax-forfeited lands
or an assistant to such commissioner may, must not become a
purchaser, either personally or as an agent or attorney for
another person, of the properties offered for sale under the
provisions of this chapter, either personally, or as agent or
attorney for any other person, except that in the county for
which the person performs duties. A person prohibited from
purchasing property under this section must not directly or
indirectly have another person purchase it on behalf of the
prohibited purchaser for the prohibited purchaser's benefit or
gain.
(b) Notwithstanding paragraph (a), such officer, deputy,
court administrator clerk, or employee or commissioner for
tax-forfeited lands or assistant to such commissioner may (1)
purchase lands owned by that official at the time the state
became the absolute owner thereof or (2) bid upon and purchase
forfeited property offered for sale under the alternate sale
procedure described in section 282.01, subdivision 7a.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 32. Minnesota Statutes 2004, section 282.08, is
amended to read:
282.08 [APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.]
The net proceeds from the sale or rental of any parcel of
forfeited land, or from the sale of products from the forfeited
land, must be apportioned by the county auditor to the taxing
districts interested in the land, as follows:
(1) the amounts necessary to pay the state general tax levy
against the parcel for taxes payable in the year for which the
tax judgment was entered, and for each subsequent payable year
up to and including the year of forfeiture, must be apportioned
to the state;
(2) the portion required to pay any amounts included in the
appraised value under section 282.01, subdivision 3, as
representing increased value due to any public improvement made
after forfeiture of the parcel to the state, but not exceeding
the amount certified by the clerk of the municipality must be
apportioned to the municipal subdivision entitled to it;
(3) (2) the portion required to pay any amount included in
the appraised value under section 282.019, subdivision 5,
representing increased value due to response actions taken after
forfeiture of the parcel to the state, but not exceeding the
amount of expenses certified by the Pollution Control Agency or
the commissioner of agriculture, must be apportioned to the
agency or the commissioner of agriculture and deposited in the
fund from which the expenses were paid;
(4) (3) the portion of the remainder required to discharge
any special assessment chargeable against the parcel for
drainage or other purpose whether due or deferred at the time of
forfeiture, must be apportioned to the municipal subdivision
entitled to it; and
(5) (4) any balance must be apportioned as follows:
(i) The county board may annually by resolution set aside
no more than 30 percent of the receipts remaining to be used for
timber development on tax-forfeited land and dedicated memorial
forests, to be expended under the supervision of the county
board. It must be expended only on projects approved by the
commissioner of natural resources.
(ii) The county board may annually by resolution set aside
no more than 20 percent of the receipts remaining to be used for
the acquisition and maintenance of county parks or recreational
areas as defined in sections 398.31 to 398.36, to be expended
under the supervision of the county board.
(iii) Any balance remaining must be apportioned as
follows: county, 40 percent; town or city, 20 percent; and
school district, 40 percent, provided, however, that in
unorganized territory that portion which would have accrued to
the township must be administered by the county board of
commissioners.
[EFFECTIVE DATE.] This section is effective the day
following final enactment for state general tax levy amounts
payable in 2004 and thereafter.
Sec. 33. Minnesota Statutes 2004, section 282.15, is
amended to read:
282.15 [SALES OF FORFEITED AGRICULTURAL LANDS.]
The sale shall be conducted by the auditor of the county in
which the parcels lie. The parcels shall be sold to the highest
bidder but not for less than the appraised value. The sales
shall be for cash or on the following terms: The appraised
value of all merchantable timber on agricultural lands shall be
paid for in full at the date of sale. At least 15 percent of
the purchase price of the land shall be paid in cash at the time
of purchase. The balance shall be paid in not more than 20
equal annual installments, with interest at a rate equal to the
rate in effect at the time under section 549.09 on the unpaid
balance each year. Both principal and interest are due and
payable on December 31 each year following that in which the
purchase was made. The purchaser may pay any number of
installments of principal and interest on or before their due
date. When the sale is on terms other than for cash in full,
the purchaser shall receive from the county auditor a contract
for deed, in a form prescribed by the attorney general. The
county auditor shall make a report to the commissioner of
natural resources not more than 30 days after each public sale
showing the lands sold at the sales, and submit a copy of each
contract of sale.
All lands sold pursuant to this section shall, on the
second day of January following the date of the sale, must be
restored to the tax rolls and become subject to taxation in the
same manner as they were assessed and taxed before becoming the
absolute property of the state for the assessment year
determined under section 272.02, subdivision 38, paragraph (c).
[EFFECTIVE DATE.] This section is effective for sales
occurring on or after July 1, 2005.
Sec. 34. Minnesota Statutes 2004, section 282.21, is
amended to read:
282.21 [FORM OF CONVEYANCE.]
When any sale has been made under sections 282.14 to
282.22, upon payment in full of the purchase price, appropriate
conveyance in fee in such form as may be prescribed by the
attorney general shall be issued by the commissioner of finance
natural resources to the purchaser or the purchaser's assigns
and this conveyance shall have the force and effect of a patent
from the state.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 35. Minnesota Statutes 2004, section 282.224, is
amended to read:
282.224 [FORM OF CONVEYANCE.]
When any sale has been made under sections 282.221 to
282.226, upon payment in full of the purchase price, appropriate
conveyance in fee, in such form as may be prescribed by the
attorney general, shall be issued by the commissioner of natural
resources to the purchaser or the purchaser's assignee, and the
conveyance shall have the force and effect of a patent from the
state.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 36. Minnesota Statutes 2004, section 282.301, is
amended to read:
282.301 [RECEIPTS FOR PAYMENTS.]
When any sale has been made under sections 282.012 and
282.241 to 282.324, the purchaser shall receive from the county
auditor at the time of repurchase a receipt, in such form as may
be prescribed by the attorney general. When the purchase price
of a parcel of land shall be paid in full, the following facts
shall be certified by the county auditor to the commissioner of
revenue of the state of Minnesota: the description of land, the
date of sale, the name of the purchaser or the purchaser's
assignee, and the date when the final installment of the
purchase price was paid. Upon payment in full of the purchase
price, the purchaser or the assignee shall receive a quitclaim
deed from the state, to be executed by the commissioner of
revenue. The deed must be sent to the county auditor who shall
have it recorded before it is forwarded to the purchaser.
Failure to make any payment herein required shall constitute
default and upon such default and cancellation in accord with
section 282.40, the right, title and interest of the purchaser
or the purchaser's heirs, representatives, or assigns in such
parcel shall terminate.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 37. Minnesota Statutes 2004, section 290B.05,
subdivision 3, is amended to read:
Subd. 3. [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.]
When final property tax amounts for the following year have been
determined, the county auditor shall calculate the "deferred
property tax amount." The deferred property tax amount is equal
to the lesser of (1) the maximum allowable deferral for the
year; or (2) the difference between (i) the total amount of
property taxes and special assessments levied upon the
qualifying homestead by all taxing jurisdictions and (ii) the
maximum property tax amount. Any special assessments levied by
any local unit of government must not be included in the total
tax used to calculate the deferred tax amount. For this purpose
"special assessments" includes any assessment, fee, or other
charge that may by law, and which does, appear on the property
tax statement for the property for collection under the laws
applicable to the enforcement of real estate taxes. Any tax
attributable to new improvements made to the property after the
initial application has been approved under section 290B.04,
subdivision 2, must be excluded when determining any subsequent
deferred property tax amount. The county auditor shall
annually, on or before April 15, certify to the commissioner of
revenue the property tax deferral amounts determined under this
subdivision by property and by owner.
[EFFECTIVE DATE.] This section is effective for amounts
deferred in 2006 and thereafter.
Sec. 38. Minnesota Statutes 2004, section 290C.05, is
amended to read:
290C.05 [ANNUAL CERTIFICATION.]
On or before July 1 of each year, beginning with the year
after the claimant has received an approved application, the
commissioner shall send each claimant enrolled under the
sustainable forest incentive program a certification form. The
claimant must sign the certification, attesting that the
requirements and conditions for continued enrollment in the
program are currently being met, and must return the signed
certification form to the commissioner by August 15 of that same
year. Failure to If the claimant does not return an annual
certification form by the due date shall result in removal of
the lands from the provisions of the sustainable forest
incentive program, and the imposition of any applicable removal
penalty, the provisions in section 290C.11 apply. The claimant
may appeal the removal and any associated penalty according to
the procedures and within the time allowed under this chapter.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 39. [290C.055] [LENGTH OF COVENANT.]
The covenant remains in effect for a minimum of eight
years. If land is removed from the program before it has been
enrolled for four years, the covenant remains in effect for
eight years from the date recorded.
If land that has been enrolled for four years or more is
removed from the program for any reason, there is a waiting
period before the covenant terminates. The covenant terminates
on January 1 of the fifth calendar year that begins after the
date that:
(1) the commissioner receives notification from the
claimant that the claimant wishes to remove the land from the
program under section 290C.10; or
(2) the date that the land is removed from the program
under section 290C.11.
Notwithstanding the other provisions of this section, the
covenant is terminated at the same time that the land is removed
from the program due to acquisition of title or possession for a
public purpose under section 290C.10.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 40. Minnesota Statutes 2004, section 290C.10, is
amended to read:
290C.10 [WITHDRAWAL PROCEDURES.]
An approved claimant under the sustainable forest incentive
program for a minimum of four years may notify the commissioner
of the intent to terminate enrollment. Within 90 days of
receipt of notice to terminate enrollment, the commissioner
shall inform the claimant in writing, acknowledging receipt of
this notice and indicating the effective date of termination
from the sustainable forest incentive program. Termination of
enrollment in the sustainable forest incentive program occurs on
January 1 of the fifth calendar year that begins after receipt
by the commissioner of the termination notice. After the
commissioner issues an effective date of termination, a claimant
wishing to continue the land's enrollment in the sustainable
forest incentive program beyond the termination date must apply
for enrollment as prescribed in section 290C.04. A claimant who
withdraws a parcel of land from this program may not reenroll
the parcel for a period of three years. Within 90 days after
the termination date, the commissioner shall execute and
acknowledge a document releasing the land from the covenant
required under this chapter. The document must be mailed to the
claimant and is entitled to be recorded. The commissioner may
allow early withdrawal from the Sustainable Forest Incentive Act
without penalty in cases of condemnation when the state of
Minnesota, any local government unit, or any other entity which
has the right of eminent domain acquires title or possession to
the land for a public purpose notwithstanding the provisions of
this section. In the case of such acquisition, the commissioner
shall execute and acknowledge a document releasing the land
acquired by the state, local government unit, or other entity
from the covenant. All other enrolled land must remain in the
program.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 41. Minnesota Statutes 2004, section 373.45,
subdivision 7, is amended to read:
Subd. 7. [AID REDUCTION FOR REPAYMENT.] (a) Except as
provided in paragraph (b), the commissioner may reduce, by the
amount paid by the state under this section on behalf of the
county, plus the interest due on the state payments, the
following aids payable to the county:
(1) homestead and agricultural credit aid and disparity
reduction aid payable under section 273.1398;
(2) county criminal justice aid payable under section
477A.0121; and
(3) family preservation aid payable under section 477A.0122
county program aid under section 477A.0124.
The amount of any aid reduction reverts from the appropriate
account to the state general fund.
(b) If, after review of the financial situation of the
county, the authority advises the commissioner that a total
reduction of the aids would cause an undue hardship on the
county, the authority, with the approval of the commissioner,
may establish a different schedule for reduction of aids to
repay the state. The amount of aids to be reduced are decreased
by any amounts repaid to the state by the county from other
revenue sources.
[EFFECTIVE DATE.] This section is effective for aid payable
in 2005 and thereafter.
Sec. 42. Minnesota Statutes 2004, section 469.1735,
subdivision 3, is amended to read:
Subd. 3. [TRANSFER AUTHORITY FOR PROPERTY TAX.] (a) A city
may elect to use all or part of its allocation under subdivision
2 to reimburse the city or county or both for property tax
reductions under section 272.0212. To elect this option, the
city must notify the commissioner of revenue by October 1 of
each calendar year of the amount of the property tax
reductions for which it seeks reimbursements for taxes payable
during the following current year and the governmental units to
which the amounts will be paid. The commissioner may require
the city to provide information substantiating the amount of the
reductions granted or any other information necessary to
administer this provision. The commissioner shall pay the
reimbursements by December 26 of the taxes payable year. Any
amount transferred under this authority reduces the amount of
tax credit certificates available under subdivisions 1 and 2.
(b) The amount elected by the city under paragraph (a) is
appropriated to the commissioner of revenue from the general
fund to reimburse the city or county for tax reductions under
section 272.0212. The amount appropriated may not exceed the
maximum amounts allocated to a city under subdivision 2,
paragraph (b), less the amount of certificates issued by the
city under subdivision 1, and is available until expended.
[EFFECTIVE DATE.] This section is effective for
reimbursements of taxes payable in 2005 and thereafter.
Sec. 43. Laws 2003, chapter 127, article 5, section 27,
the effective date, is amended to read:
[EFFECTIVE DATE.] This section is effective for taxes
payable in 2004 and thereafter distributions occurring on or
after June 10, 2003.
Sec. 44. Laws 2003, chapter 127, article 5, section 28,
the effective date, is amended to read:
[EFFECTIVE DATE.] This section is effective for taxes
payable in 2004 and thereafter distributions occurring on or
after June 10, 2003.
Sec. 45. [LINCOLN AND PIPESTONE COUNTIES; TOWN LEVY
ADJUSTMENT FOR WIND ENERGY PRODUCTION TAX.]
Notwithstanding the deadlines in Minnesota Statutes,
section 275.07, towns located in Lincoln or Pipestone County are
authorized to adjust their payable 2004 levy for all or a
portion of their estimated wind energy production tax amounts
for 2004, as computed by the commissioner of revenue from
reports filed under Minnesota Statutes, section 272.029,
subdivision 4. The Lincoln and Pipestone County auditors may
adjust the payable 2004 levy certifications under Minnesota
Statutes, section 275.07, subdivision 1, based upon the towns
that have recertified their levies under this section by March
15, 2004.
[EFFECTIVE DATE.] This section is effective for taxes
payable in 2004.
Sec. 46. [REPEALER.]
(a) Minnesota Statutes 2004, sections 273.19, subdivision
5; 274.05; 275.15; 275.61, subdivision 2; and 283.07, are
repealed effective the day following final enactment.
(b) Laws 1975, chapter 287, section 5, and Laws 2003,
chapter 127, article 9, section 9, subdivision 4, are repealed
effective without local approval for taxes payable in 2006 and
thereafter.
(c) Minnesota Statutes 2004, sections 270.85; 270.88; and
273.37, subdivision 3, are repealed effective September 1, 2005.
ARTICLE 6
INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES
Section 1. Minnesota Statutes 2004, section 289A.08,
subdivision 3, is amended to read:
Subd. 3. [CORPORATIONS.] A corporation that is subject to
the state's jurisdiction to tax under section 290.014,
subdivision 5, must file a return, except that a foreign
operating corporation as defined in section 290.01, subdivision
6b, is not required to file a return. The commissioner shall
adopt rules for the filing of one return on behalf of the
members of an affiliated group of corporations that are required
to file a combined report. All members of an affiliated group
that are required to file a combined report must file one return
on behalf of the members of the group under rules adopted by the
commissioner. If a corporation claims on a return that it has
paid tax in excess of the amount of taxes lawfully due, that
corporation must include on that return information necessary
for payment of the tax in excess of the amount lawfully due by
electronic means.
[EFFECTIVE DATE.] This section is effective for returns
filed after December 31, 2005.
Sec. 2. Minnesota Statutes 2004, section 289A.18,
subdivision 1, is amended to read:
Subdivision 1. [INDIVIDUAL INCOME, FIDUCIARY INCOME,
CORPORATE FRANCHISE, AND ENTERTAINMENT TAXES; PARTNERSHIP AND S
CORPORATION RETURNS; INFORMATION RETURNS; MINING COMPANY
RETURNS.] The returns required to be made under sections 289A.08
and 289A.12 must be filed at the following times:
(1) returns made on the basis of the calendar year must be
filed on April 15 following the close of the calendar year,
except that returns of corporations must be filed on March 15
following the close of the calendar year;
(2) returns made on the basis of the fiscal year must be
filed on the 15th day of the fourth month following the close of
the fiscal year, except that returns of corporations must be
filed on the 15th day of the third month following the close of
the fiscal year;
(3) returns for a fractional part of a year must be filed
on the 15th day of the fourth month following the end of the
month in which falls the last day of the period for which the
return is made, except that the returns of corporations must be
filed on the 15th day of the third month following the end of
the month tax year of the unitary group in which falls the last
day of the period for which the return is made;
(4) in the case of a final return of a decedent for a
fractional part of a year, the return must be filed on the 15th
day of the fourth month following the close of the 12-month
period that began with the first day of that fractional part of
a year;
(5) in the case of the return of a cooperative association,
returns must be filed on or before the 15th day of the ninth
month following the close of the taxable year;
(6) if a corporation has been divested from a unitary group
and files a return for a fractional part of a year in which it
was a member of a unitary business that files a combined report
under section 290.34, subdivision 2, the divested corporation's
return must be filed on the 15th day of the third month
following the close of the common accounting period that
includes the fractional year;
(7) returns of entertainment entities must be filed on
April 15 following the close of the calendar year;
(8) returns required to be filed under section 289A.08,
subdivision 4, must be filed on the 15th day of the fifth month
following the close of the taxable year;
(9) returns of mining companies must be filed on May 1
following the close of the calendar year; and
(10) returns required to be filed with the commissioner
under section 289A.12, subdivision 2, 4 to 10, or 14, must be
filed within 30 days after being demanded by the commissioner.
[EFFECTIVE DATE.] This section is effective for fractional
years closing after December 31, 2004.
Sec. 3. Minnesota Statutes 2004, section 289A.19,
subdivision 4, is amended to read:
Subd. 4. [ESTATE TAX RETURNS.] When in the commissioner's
judgment 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. If the estate requests an extension to file an estate
tax return within the time provided in section 289A.18,
subdivision 3, the commissioner shall extend the time for filing
the estate tax return for six months.
[EFFECTIVE DATE.] This section is effective for estates of
decedents dying after December 31, 2004.
Sec. 4. Minnesota Statutes 2004, section 289A.31,
subdivision 2, is amended to read:
Subd. 2. [JOINT INCOME TAX RETURNS.] (a) If a joint income
tax return is made by a husband and wife, the liability for the
tax is joint and several. A spouse who qualifies for relief
from a liability attributable to an underpayment under section
6015(b) of the Internal Revenue Code is relieved of the state
income tax liability on the underpayment.
(b) In the case of individuals who were a husband and wife
prior to the dissolution of their marriage or their legal
separation, or prior to the death of one of the individuals, for
tax liabilities reported on a joint or combined return, the
liability of each person is limited to the proportion of the tax
due on the return that equals that person's proportion of the
total tax due if the husband and wife filed separate returns for
the taxable year. This provision is effective only when the
commissioner receives written notice of the marriage
dissolution, legal separation, or death of a spouse from the
husband or wife. No refund may be claimed by an ex-spouse,
legally separated or widowed spouse for any taxes paid more than
60 days before receipt by the commissioner of the written notice.
(c) A request for calculation of separate liability
pursuant to paragraph (b) for taxes reported on a return must be
made within six years after the due date of the return. For
calculation of separate liability for taxes assessed by the
commissioner under section 289A.35 or 289A.37, the request must
be made within six years after the date of assessment. The
commissioner is not required to calculate separate liability if
the remaining unpaid liability for which recalculation is
requested is $100 or less.
[EFFECTIVE DATE.] This section is effective for requests
for relief made on or after the day following final enactment.
Sec. 5. Minnesota Statutes 2004, 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, 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 estate, withholding tax, corporate franchise tax, or
income tax 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. An amended Minnesota income tax return must be accompanied
by an amended property tax refund return, if necessary. 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.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 6. Minnesota Statutes 2004, section 289A.39,
subdivision 1, is amended to read:
Subdivision 1. [EXTENSIONS FOR SERVICE MEMBERS.] (a) The
limitations of time provided by this chapter, chapter 290
relating to income taxes, chapter 271 relating to the Tax Court
for filing returns, paying taxes, claiming refunds, commencing
action thereon, appealing to the Tax Court from orders relating
to income taxes, and the filing of petitions under chapter 278
that would otherwise be due May 15, 1996 prior to May 1 of the
year in which the taxes are payable, and appealing to the
Supreme Court from decisions of the Tax Court relating to income
taxes are extended, as provided in section 7508 of the Internal
Revenue Code.
(b) If a member of the National Guard or reserves is called
to active duty in the armed forces, the limitations of time
provided by this chapter and chapters 290 and 290A relating to
income taxes and claims for property tax refunds are extended by
the following period of time:
(1) in the case of an individual whose active service is in
the United States, six months; or
(2) in the case of an individual whose active service
includes service abroad, the period of initial service plus six
months.
Nothing in this paragraph reduces the time within which an
act is required or permitted under paragraph (a).
(c) If an individual entitled to the benefit of paragraph
(a) files a return during the period disregarded under paragraph
(a), interest must be paid on an overpayment or refundable
credit from the due date of the return, notwithstanding section
289A.56, subdivision 2.
(d) The provisions of this subdivision apply to the spouse
of an individual entitled to the benefits of this subdivision
with respect to a joint return filed by the spouses.
[EFFECTIVE DATE.] This section is effective for taxable
years beginning after December 31, 2002, and for property taxes
payable after 2003.
Sec. 7. Minnesota Statutes 2004, section 289A.50,
subdivision 1a, is amended to read:
Subd. 1a. [REFUND FORM.] On or before January 1, 2000, the
commissioner of revenue shall prepare and make available to
taxpayers a form for filing claims for refund of taxes paid in
excess of the amount due. If the commissioner fails to prepare
a form under this subdivision by January 1, 2000, any claims for
refund made after January 1, 2000, and up to ten days after the
form is made available to taxpayers are deemed to be made in
compliance with the requirement of the form. The commissioner
may require corporate franchise taxpayers claiming a refund of
corporate franchise taxes paid in excess of the amount lawfully
due to include on the claim for refund or amended return
information necessary for payment of the taxes paid in excess of
taxes lawfully due by electronic means.
[EFFECTIVE DATE.] This section is effective for claims for
refund filed after December 31, 2005.
Sec. 8. Minnesota Statutes 2004, section 289A.60,
subdivision 6, is amended to read:
Subd. 6. [PENALTY FOR FALSE OR FRAUDULENT RETURN,
EVASION.] (a) If a person files a false or fraudulent return, or
attempts in any manner to evade or defeat a tax or payment of
tax, there is imposed on the person a penalty equal to 50
percent of the tax, less amounts paid by the person on the basis
of the false or fraudulent return, due for the period to which
the return related.
(b) If a person files a false or fraudulent return that
includes a claim for refund, there is imposed on the person a
penalty equal to 50 percent of the portion of any refund claimed
that is attributable to fraud. The penalty under this paragraph
is in addition to any penalty imposed under paragraph (a).
[EFFECTIVE DATE.] This section is effective for returns
filed after December 31, 2005.
Sec. 9. Minnesota Statutes 2004, section 289A.60,
subdivision 12, is amended to read:
Subd. 12. [PENALTIES RELATING TO PROPERTY TAX REFUNDS.]
(a) If the commissioner determines that a property tax refund
claim is or was excessive and was filed with fraudulent intent,
the claim must be disallowed in full. If the claim has been
paid, the amount disallowed may be recovered by assessment and
collection.
(b) If it is determined that a property tax refund claim is
excessive and was negligently prepared, ten percent of the
corrected claim must be disallowed. If the claim has been paid,
the amount disallowed must be recovered by assessment and
collection.
(c) (b) An owner who without reasonable cause fails to give
a certificate of rent constituting property tax to a renter, as
required by section 290A.19, paragraph (a), is liable to the
commissioner for a penalty of $100 for each failure.
(d) (c) If the owner or managing agent knowingly gives rent
certificates that report total rent constituting property taxes
in excess of the amount of actual rent constituting property
taxes paid on the rented part of a property, the owner or
managing agent is liable for a penalty equal to the greater of
(1) $100 or (2) 50 percent of the excess that is reported. An
overstatement of rent constituting property taxes is presumed to
be knowingly made if it exceeds by ten percent or more the
actual rent constituting property taxes.
[EFFECTIVE DATE.] This section is effective for returns
filed after December 31, 2005.
Sec. 10. Minnesota Statutes 2004, section 289A.60,
subdivision 13, is amended to read:
Subd. 13. [PENALTIES FOR TAX RETURN PREPARERS.] (a) If an
understatement of liability with respect to a return or claim
for refund is due to a reckless disregard of laws and rules or
willful attempt in any manner to understate the liability for a
tax by a person who is a tax return preparer with respect to the
return or claim, the person shall pay to the commissioner a
penalty of $500. If a part of a property tax refund claim is
excessive due to a reckless disregard or willful attempt in any
manner to overstate the claim for relief allowed under chapter
290A by a person who is a tax refund or return preparer, the
person shall pay to the commissioner a penalty of $500 with
respect to the claim. These penalties may not be assessed
against the employer of a tax return preparer unless the
employer was actively involved in the reckless disregard or
willful attempt to understate the liability for a tax or to
overstate the claim for refund. These penalties are income tax
liabilities and may be assessed at any time as provided in
section 289A.38, subdivision 5.
(b) A civil action in the name of the state of Minnesota
may be commenced to enjoin any person who is a tax return
preparer doing business in this state from further engaging in
any conduct described in paragraph (c). An action under this
paragraph must be brought by the attorney general in the
district court for the judicial district of the tax return
preparer's residence or principal place of business, or in which
the taxpayer with respect to whose tax return the action is
brought resides. The court may exercise its jurisdiction over
the action separate and apart from any other action brought by
the state of Minnesota against the tax return preparer or any
taxpayer.
(c) In an action under paragraph (b), if the court finds
that a tax return preparer has:
(1) engaged in any conduct subject to a civil penalty under
section 289A.60 or a criminal penalty under section 289A.63;
(2) misrepresented the preparer's eligibility to practice
before the Department of Revenue, or otherwise misrepresented
the preparer's experience or education as a tax return preparer;
(3) guaranteed the payment of any tax refund or the
allowance of any tax credit; or
(4) engaged in any other fraudulent or deceptive conduct
that substantially interferes with the proper administration of
state tax law, and injunctive relief is appropriate to prevent
the recurrence of that conduct,
the court may enjoin the person from further engaging in that
conduct.
(d) If the court finds that a tax return preparer has
continually or repeatedly engaged in conduct described in
paragraph (c), and that an injunction prohibiting that conduct
would not be sufficient to prevent the person's interference
with the proper administration of state tax laws, the court may
enjoin the person from acting as a tax return preparer. The
court may not enjoin the employer of a tax return preparer for
conduct described in paragraph (c) engaged in by one or more of
the employer's employees unless the employer was also actively
involved in that conduct.
(e) For purposes of this subdivision, the term
"understatement of liability" means an understatement of the net
amount payable with respect to a tax imposed by state tax law,
or an overstatement of the net amount creditable or refundable
with respect to a tax. The determination of whether or not
there is an understatement of liability must be made without
regard to any administrative or judicial action involving the
taxpayer. For purposes of this subdivision, the amount
determined for underpayment of estimated tax under either
section 289A.25 or 289A.26 is not considered an understatement
of liability.
(f) For purposes of this subdivision, the term
"overstatement of claim" means an overstatement of the net
amount refundable with respect to a claim for property tax
relief provided by chapter 290A. The determination of whether
or not there is an overstatement of a claim must be made without
regard to administrative or judicial action involving the
claimant.
(g) For purposes of this section, the term "tax refund or
return preparer" means an individual who prepares for
compensation, or who employs one or more individuals to prepare
for compensation, a return of tax, or a claim for refund of
tax. The preparation of a substantial part of a return or claim
for refund is treated as if it were the preparation of the
entire return or claim for refund. An individual is not
considered a tax return preparer merely because the individual:
(1) gives typing, reproducing, or other mechanical
assistance;
(2) prepares a return or claim for refund of the employer,
or an officer or employee of the employer, by whom the
individual is regularly and continuously employed;
(3) prepares a return or claim for refund of any person as
a fiduciary for that person; or
(4) prepares a claim for refund for a taxpayer in response
to a tax order issued to the taxpayer.
[EFFECTIVE DATE.] This section is effective for returns
filed after December 31, 2005.
Sec. 11. Minnesota Statutes 2004, section 290.01,
subdivision 7b, is amended to read:
Subd. 7b. [RESIDENT TRUST.] (a) Resident trust means a
trust, except a grantor type trust, which either (1) was created
by a will of a decedent who at death was domiciled in this state
or (2) is an irrevocable trust, the grantor of which was
domiciled in this state at the time the trust became
irrevocable. For the purpose of this subdivision, a trust is
considered irrevocable to the extent the grantor is not treated
as the owner thereof under sections 671 to 678 of the Internal
Revenue Code. The term "grantor type trust" means a trust where
the income or gains of the trust are taxable to the grantor or
others treated as substantial owners under sections 671 to 678
of the Internal Revenue Code. This paragraph applies to trusts,
except grantor type trusts, that became irrevocable after
December 31, 1995, or are first administered in Minnesota after
December 31, 1995.
(b) This paragraph applies to trusts, except grantor type
trusts, that are not governed under paragraph (a). A trust,
except a grantor type trust, is a resident trust only if two or
more of the following conditions are satisfied:
(i) a majority of the discretionary decisions of the
trustees relative to the investment of trust assets are made in
Minnesota;
(ii) a majority of the discretionary decisions of the
trustees relative to the distributions of trust income and
principal are made in Minnesota;
(iii) the official books and records of the trust,
consisting of the original minutes of trustee meetings and the
original trust instruments, are located in Minnesota.
(c) For purposes of paragraph (b), if the trustees delegate
decisions and actions to an agent or custodian, the actions and
decisions of the agent or custodian must not be taken into
account in determining whether the trust is administered in
Minnesota, if:
(i) the delegation was permitted under the trust agreement;
(ii) the trustees retain the power to revoke the delegation
on reasonable notice; and
(iii) the trustees monitor and evaluate the performance of
the agent or custodian on a regular basis as is reasonably
determined by the trustees.
[EFFECTIVE DATE.] This section is effective for taxable
years beginning after December 31, 2004.
Sec. 12. Minnesota Statutes 2004, section 290.01,
subdivision 19a, is amended to read:
Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For
individuals, estates, and trusts, there shall be added to
federal taxable income:
(1)(i) interest income on obligations of any state other
than Minnesota or a political or governmental subdivision,
municipality, or governmental agency or instrumentality of any
state other than Minnesota exempt from federal income taxes
under the Internal Revenue Code or any other federal statute;
and
(ii) exempt-interest dividends as defined in section
852(b)(5) of the Internal Revenue Code, except the portion of
the exempt-interest dividends derived from interest income on
obligations of the state of Minnesota or its political or
governmental subdivisions, municipalities, governmental agencies
or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to
all shareholders represents 95 percent or more of the
exempt-interest dividends that are paid by the regulated
investment company as defined in section 851(a) of the Internal
Revenue Code, or the fund of the regulated investment company as
defined in section 851(g) of the Internal Revenue Code, making
the payment; and
(iii) for the purposes of items (i) and (ii), interest on
obligations of an Indian tribal government described in section
7871(c) of the Internal Revenue Code shall be treated as
interest income on obligations of the state in which the tribe
is located;
(2) the amount of income taxes paid or accrued within the
taxable year under this chapter and income the amount of taxes
based on net income paid to any other state or to any province
or territory of Canada, to the extent allowed as a deduction
under section 63(d) of the Internal Revenue Code, but the
addition may not be more than the amount by which the itemized
deductions as allowed under section 63(d) of the Internal
Revenue Code exceeds the amount of the standard deduction as
defined in section 63(c) of the Internal Revenue Code. For the
purpose of this paragraph, the disallowance of itemized
deductions under section 68 of the Internal Revenue Code of
1986, income tax is the last itemized deduction disallowed;
(3) the capital gain amount of a lump sum distribution to
which the special tax under section 1122(h)(3)(B)(ii) of the Tax
Reform Act of 1986, Public Law 99-514, applies;
(4) the amount of income taxes paid or accrued within the
taxable year under this chapter and income taxes based on net
income paid to any other state or any province or territory of
Canada, to the extent allowed as a deduction in determining
federal adjusted gross income. For the purpose of this
paragraph, income taxes do not include the taxes imposed by
sections 290.0922, subdivision 1, paragraph (b), 290.9727,
290.9728, and 290.9729;
(5) the amount of expense, interest, or taxes disallowed
pursuant to section 290.10 other than expenses or interest used
in computing net interest income for the subtraction allowed
under subdivision 19b, clause (1);
(6) the amount of a partner's pro rata share of net income
which does not flow through to the partner because the
partnership elected to pay the tax on the income under section
6242(a)(2) of the Internal Revenue Code; and
(7) 80 percent of the depreciation deduction allowed under
section 168(k) of the Internal Revenue Code. For purposes of
this clause, if the taxpayer has an activity that in the taxable
year generates a deduction for depreciation under section 168(k)
and the activity generates a loss for the taxable year that the
taxpayer is not allowed to claim for the taxable year, "the
depreciation allowed under section 168(k)" for the taxable year
is limited to excess of the depreciation claimed by the activity
under section 168(k) over the amount of the loss from the
activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year
are allowed, the depreciation under section 168(k) is allowed.
[EFFECTIVE DATE.] This section is effective for tax years
beginning after December 31, 2004.
Sec. 13. Minnesota Statutes 2004, section 290.01,
subdivision 19b, is amended to read:
Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For
individuals, estates, and trusts, there shall be subtracted from
federal taxable income:
(1) net interest income on obligations of any authority,
commission, or instrumentality of the United States to the
extent includable in taxable income for federal income tax
purposes but exempt from state income tax under the laws of the
United States;
(2) if included in federal taxable income, the amount of
any overpayment of income tax to Minnesota or to any other
state, for any previous taxable year, whether the amount is
received as a refund or as a credit to another taxable year's
income tax liability;
(3) the amount paid to others, less the amount used to
claim the credit allowed under section 290.0674, not to exceed
$1,625 for each qualifying child in grades kindergarten to 6 and
$2,500 for each qualifying child in grades 7 to 12, for tuition,
textbooks, and transportation of each qualifying child in
attending an elementary or secondary school situated in
Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
wherein a resident of this state may legally fulfill the state's
compulsory attendance laws, which is not operated for profit,
and which adheres to the provisions of the Civil Rights Act of
1964 and chapter 363A. For the purposes of this clause,
"tuition" includes fees or tuition as defined in section
290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and
equipment purchased or leased for use in elementary and
secondary schools in teaching only those subjects legally and
commonly taught in public elementary and secondary schools in
this state. Equipment expenses qualifying for deduction
includes expenses as defined and limited in section 290.0674,
subdivision 1, clause (3). "Textbooks" does not include
instructional books and materials used in the teaching of
religious tenets, doctrines, or worship, the purpose of which is
to instill such tenets, doctrines, or worship, nor does it
include books or materials for, or transportation to,
extracurricular activities including sporting events, musical or
dramatic events, speech activities, driver's education, or
similar programs. For purposes of the subtraction provided by
this clause, "qualifying child" has the meaning given in section
32(c)(3) of the Internal Revenue Code;
(4) income as provided under section 290.0802;
(5) to the extent included in federal adjusted gross
income, income realized on disposition of property exempt from
tax under section 290.491;
(6) to the extent included in federal taxable income,
postservice benefits for youth community service under section
124D.42 for volunteer service under United States Code, title
42, sections 12601 to 12604;
(7) to the extent not deducted in determining federal
taxable income by an individual who does not itemize deductions
for federal income tax purposes for the taxable year, an amount
equal to 50 percent of the excess of charitable contributions
allowable as a deduction for the taxable year under section
170(a) of the Internal Revenue Code over $500 ;
(8) (7) for taxable years beginning before January 1, 2008,
the amount of the federal small ethanol producer credit allowed
under section 40(a)(3) of the Internal Revenue Code which is
included in gross income under section 87 of the Internal
Revenue Code;
(9) (8) for individuals who are allowed a federal foreign
tax credit for taxes that do not qualify for a credit under
section 290.06, subdivision 22, an amount equal to the carryover
of subnational foreign taxes for the taxable year, but not to
exceed the total subnational foreign taxes reported in claiming
the foreign tax credit. For purposes of this clause, "federal
foreign tax credit" means the credit allowed under section 27 of
the Internal Revenue Code, and "carryover of subnational foreign
taxes" equals the carryover allowed under section 904(c) of the
Internal Revenue Code minus national level foreign taxes to the
extent they exceed the federal foreign tax credit;
(10) (9) in each of the five tax years immediately
following the tax year in which an addition is required under
subdivision 19a, clause (7), or 19c, clause (15), in the case of
a shareholder of a corporation that is an S corporation, an
amount equal to one-fifth of the delayed depreciation. For
purposes of this clause, "delayed depreciation" means the amount
of the addition made by the taxpayer under subdivision 19a,
clause (7), or subdivision 19c, clause (15), in the case of a
shareholder of an S corporation, minus the positive value of any
net operating loss under section 172 of the Internal Revenue
Code generated for the tax year of the addition. The resulting
delayed depreciation cannot be less than zero; and
(11) (10) job opportunity building zone income as provided
under section 469.316.
[EFFECTIVE DATE.] The amendment to clause (9) is effective
retroactively for tax years beginning after December 31, 2001.
The rest of this section is effective for the tax years
beginning after December 31, 2004.
Sec. 14. Minnesota Statutes 2004, section 290.01,
subdivision 19c, is amended to read:
Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE
INCOME.] For corporations, there shall be added to federal
taxable income:
(1) the amount of any deduction taken for federal income
tax purposes for income, excise, or franchise taxes based on net
income or related minimum taxes, including but not limited to
the tax imposed under section 290.0922, paid by the corporation
to Minnesota, another state, a political subdivision of another
state, the District of Columbia, or any foreign country or
possession of the United States;
(2) interest not subject to federal tax upon obligations
of: the United States, its possessions, its agencies, or its
instrumentalities; the state of Minnesota or any other state,
any of its political or governmental subdivisions, any of its
municipalities, or any of its governmental agencies or
instrumentalities; the District of Columbia; or Indian tribal
governments;
(3) exempt-interest dividends received as defined in
section 852(b)(5) of the Internal Revenue Code;
(4) the amount of any net operating loss deduction taken
for federal income tax purposes under section 172 or 832(c)(10)
of the Internal Revenue Code or operations loss deduction under
section 810 of the Internal Revenue Code;
(5) the amount of any special deductions taken for federal
income tax purposes under sections 241 to 247 of the Internal
Revenue Code;
(6) losses from the business of mining, as defined in
section 290.05, subdivision 1, clause (a), that are not subject
to Minnesota income tax;
(7) the amount of any capital losses deducted for federal
income tax purposes under sections 1211 and 1212 of the Internal
Revenue Code;
(8) the exempt foreign trade income of a foreign sales
corporation under sections 921(a) and 291 of the Internal
Revenue Code;
(9) the amount of percentage depletion deducted under
sections 611 through 614 and 291 of the Internal Revenue Code;
(10) for certified pollution control facilities placed in
service in a taxable year beginning before December 31, 1986,
and for which amortization deductions were elected under section
169 of the Internal Revenue Code of 1954, as amended through
December 31, 1985, the amount of the amortization deduction
allowed in computing federal taxable income for those
facilities;
(11) the amount of any deemed dividend from a foreign
operating corporation determined pursuant to section 290.17,
subdivision 4, paragraph (g);
(12) the amount of any environmental tax paid under section
59(a) of the Internal Revenue Code;
(13) the amount of a partner's pro rata share of net income
which does not flow through to the partner because the
partnership elected to pay the tax on the income under section
6242(a)(2) of the Internal Revenue Code;
(14) (13) the amount of net income excluded under section
114 of the Internal Revenue Code;
(15) (14) any increase in subpart F income, as defined in
section 952(a) of the Internal Revenue Code, for the taxable
year when subpart F income is calculated without regard to the
provisions of section 614 of Public Law 107-147; and
(16) (15) 80 percent of the depreciation deduction allowed
under section 168(k)(1)(A) and (k)(4)(A) of the Internal Revenue
Code. For purposes of this clause, if the taxpayer has an
activity that in the taxable year generates a deduction for
depreciation under section 168(k)(1)(A) and (k)(4)(A) and the
activity generates a loss for the taxable year that the taxpayer
is not allowed to claim for the taxable year, "the depreciation
allowed under section 168(k)(1)(A) and (k)(4)(A)" for the
taxable year is limited to excess of the depreciation claimed by
the activity under section 168(k)(1)(A) and (k)(4)(A) over the
amount of the loss from the activity that is not allowed in the
taxable year. In succeeding taxable years when the losses not
allowed in the taxable year are allowed, the depreciation under
section 168(k)(1)(A) and (k)(4)(A) is allowed.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 15. Minnesota Statutes 2004, 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 based on or measured by net
income to another state, 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 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) paragraph (b), 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 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, 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 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 on the
gross income earned within the other state 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 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 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. 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 treated as an "S" corporation under
section 290.9725, 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
partner of an entity taxed as a partnership under the Internal
Revenue Code must be considered to have paid a tax imposed on
the partner in an amount equal to the partner's pro rata share
of any net income tax paid by the partnership to another state.
For purposes of the preceding sentence, the term "net income"
tax means any tax imposed on or measured by a partnership's net
income.
(i) For the purposes of this subdivision, "another state":
(1) includes:
(i) the District of Columbia; and
(ii) a province or territory of Canada; but
(2) excludes Puerto Rico and 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.
(k) For a tax imposed by a province or territory of Canada,
the tax for purposes of this subdivision is the excess of the
tax over the amount of the foreign tax credit allowed under
section 27 of the Internal Revenue Code. In determining the
amount of the foreign tax credit allowed, the net income taxes
imposed by Canada on the income are deducted first. Any
remaining amount of the allowable foreign tax credit reduces the
provincial or territorial tax that qualifies for the credit
under this subdivision.
[EFFECTIVE DATE.] This section is effective for tax years
beginning after December 31, 2004.
Sec. 16. Minnesota Statutes 2004, section 290.0671,
subdivision 1a, is amended to read:
Subd. 1a. [DEFINITIONS.] For purposes of this section, the
terms "qualifying child," and "earned income," and "adjusted
gross income" have the meanings given in section 32(c) of the
Internal Revenue Code, and the term "adjusted gross income" has
the meaning given in section 62 of the Internal Revenue Code.
"Earned income of the lesser-earning spouse" has the
meaning given in section 290.0675, subdivision 1, paragraph (d).
[EFFECTIVE DATE.] This section is effective for taxable
years beginning after December 31, 2004.
Sec. 17. Minnesota Statutes 2004, section 290.0674,
subdivision 1, is amended to read:
Subdivision 1. [CREDIT ALLOWED.] An individual is allowed
a credit against the tax imposed by this chapter in an amount
equal to 75 percent of the amount paid for education-related
expenses for a qualifying child in kindergarten through grade
12. For purposes of this section, "education-related expenses"
means:
(1) fees or tuition for instruction by an instructor under
section 120A.22, subdivision 10, clause (1), (2), (3), (4), or
(5), or a member of the Minnesota Music Teachers Association,
and who is not a lineal ancestor or sibling of the dependent for
instruction outside the regular school day or school year,
including tutoring, driver's education offered as part of school
curriculum, regardless of whether it is taken from a public or
private entity or summer camps, in grade or age appropriate
curricula that supplement curricula and instruction available
during the regular school year, that assists a dependent to
improve knowledge of core curriculum areas or to expand
knowledge and skills under the graduation rule under section
120B.02, paragraph (e), clauses (1) to (7), (9), and (10)
required academic standards under section 120B.021, subdivision
1, and the elective standard under section 120B.022, subdivision
1, clause (2), and that do not include the teaching of religious
tenets, doctrines, or worship, the purpose of which is to
instill such tenets, doctrines, or worship;
(2) expenses for textbooks, including books and other
instructional materials and equipment purchased or leased for
use in elementary and secondary schools in teaching only those
subjects legally and commonly taught in public elementary and
secondary schools in this state. "Textbooks" does not include
instructional books and materials used in the teaching of
religious tenets, doctrines, or worship, the purpose of which is
to instill such tenets, doctrines, or worship, nor does it
include books or materials for extracurricular activities
including sporting events, musical or dramatic events, speech
activities, driver's education, or similar programs;
(3) a maximum expense of $200 per family for personal
computer hardware, excluding single purpose processors, and
educational software that assists a dependent to improve
knowledge of core curriculum areas or to expand knowledge and
skills under the graduation rule under section 120B.02 required
academic standards under section 120B.021, subdivision 1, and
the elective standard under section 120B.022, subdivision 1,
clause (2), purchased for use in the taxpayer's home and not
used in a trade or business regardless of whether the computer
is required by the dependent's school; and
(4) the amount paid to others for transportation of a
qualifying child attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or
Wisconsin, wherein a resident of this state may legally fulfill
the state's compulsory attendance laws, which is not operated
for profit, and which adheres to the provisions of the Civil
Rights Act of 1964 and chapter 363A.
For purposes of this section, "qualifying child" has the
meaning given in section 32(c)(3) of the Internal Revenue Code.
[EFFECTIVE DATE.] This section is effective for tax years
beginning after December 31, 2004.
Sec. 18. Minnesota Statutes 2004, section 290.92,
subdivision 4b, is amended to read:
Subd. 4b. [WITHHOLDING BY PARTNERSHIPS.] (a) A partnership
shall deduct and withhold a tax as provided in paragraph (b) for
nonresident individual partners based on their distributive
shares of partnership income for a taxable year of the
partnership.
(b) The amount of tax withheld is determined by multiplying
the partner's distributive share allocable to Minnesota under
section 290.17, paid or credited during the taxable year by the
highest rate used to determine the income tax liability for an
individual under section 290.06, subdivision 2c, except that the
amount of tax withheld may be determined by the commissioner if
the partner submits a withholding exemption certificate under
subdivision 5.
(c) The commissioner may reduce or abate the tax withheld
under this subdivision if the partnership had reasonable cause
to believe that no tax was due under this section.
(d) Notwithstanding paragraph (a), a partnership is not
required to deduct and withhold tax for a nonresident partner if:
(1) the partner elects to have the tax due paid as part of
the partnership's composite return under section 289A.08,
subdivision 7;
(2) the partner has Minnesota assignable federal adjusted
gross income from the partnership of less than $1,000; or
(3) the partnership is liquidated or terminated, the income
was generated by a transaction related to the termination or
liquidation, and no cash or other property was distributed in
the current or prior taxable year; or
(4) the distributive shares of partnership income are
attributable to:
(i) income required to be recognized because of discharge
of indebtedness;
(ii) income recognized because of a sale, exchange, or
other disposition of real estate, depreciable property, or
property described in section 179 of the Internal Revenue Code;
or
(iii) income recognized on the sale, exchange, or other
disposition of any property that has been the subject of a basis
reduction pursuant to section 108, 734, 743, 754, or 1017 of the
Internal Revenue Code
to the extent that the income does not include cash received or
receivable or, if there is cash received or receivable, to the
extent that the cash is required to be used to pay indebtedness
by the partnership or a secured debt on partnership property; or
(5) the partnership is a publicly traded partnership, as
defined in section 7704(b) of the Internal Revenue Code.
(e) For purposes of subdivision 6a, and sections 289A.09,
subdivision 2, 289A.20, subdivision 2, paragraph (c), 289A.50,
289A.56, 289A.60, and 289A.63, a partnership is considered an
employer.
(f) To the extent that income is exempt from withholding
under paragraph (d), clause (4), the commissioner has a lien in
an amount up to the amount that would be required to be withheld
with respect to the income of the partner attributable to the
partnership interest, but for the application of paragraph (d),
clause (4). The lien arises under section 270.69 from the date
of assessment of the tax against the partner, and attaches to
that partner's share of the profits and any other money due or
to become due to that partner in respect of the partnership.
Notice of the lien may be sent by mail to the partnership,
without the necessity for recording the lien. The notice has
the force and effect of a levy under section 270.70, and is
enforceable against the partnership in the manner provided by
that section. Upon payment in full of the liability subsequent
to the notice of lien, the partnership must be notified that the
lien has been satisfied.
[EFFECTIVE DATE.] This section is effective for taxable
years beginning after December 31, 2004.
Sec. 19. Minnesota Statutes 2004, section 291.005,
subdivision 1, is amended to read:
Subdivision 1. [SCOPE.] Unless the context otherwise
clearly requires, the following terms used in this chapter shall
have the following meanings:
(1) "Federal gross estate" means the gross estate of a
decedent as valued and otherwise determined for federal estate
tax purposes by federal taxing authorities pursuant to the
provisions of the Internal Revenue Code.
(2) "Minnesota gross estate" means the federal gross estate
of a decedent after (a) excluding therefrom any property
included therein which has its situs outside Minnesota, and (b)
including therein any property omitted from the federal gross
estate which is includable therein, has its situs in Minnesota,
and was not disclosed to federal taxing authorities.
(3) "Personal representative" means the executor,
administrator or other person appointed by the court to
administer and dispose of the property of the decedent. If
there is no executor, administrator or other person appointed,
qualified, and acting within this state, then any person in
actual or constructive possession of any property having a situs
in this state which is included in the federal gross estate of
the decedent shall be deemed to be a personal representative to
the extent of the property and the Minnesota estate tax due with
respect to the property.
(4) "Resident decedent" means an individual whose domicile
at the time of death was in Minnesota.
(5) "Nonresident decedent" means an individual whose
domicile at the time of death was not in Minnesota.
(6) "Situs of property" means, with respect to real
property, the state or country in which it is located; with
respect to tangible personal property, the state or country in
which it was normally kept or located at the time of the
decedent's death; and with respect to intangible personal
property, the state or country in which the decedent was
domiciled at death.
(7) "Commissioner" means the commissioner of revenue or any
person to whom the commissioner has delegated functions under
this chapter.
(8) "Internal Revenue Code" means the United States
Internal Revenue Code of 1986, as amended through December 31,
2002 April 15, 2005.
(9) "Minnesota adjusted taxable estate" means federal
adjusted taxable estate as defined by section 2011(b)(3) of the
Internal Revenue Code, increased by the amount of deduction for
state death taxes allowed under section 2058 of the Internal
Revenue Code.
[EFFECTIVE DATE.] The change to clause (8) is effective for
estates of decedents dying after January 31, 2003, and the new
clause (9) is effective for estates of decedents dying after
December 31, 2004.
Sec. 20. Minnesota Statutes 2004, section 291.03,
subdivision 1, is amended to read:
Subdivision 1. [TAX AMOUNT.] The tax imposed shall be an
amount equal to the proportion of the maximum credit for state
death taxes computed under section 2011 of the Internal Revenue
Code, as amended through December 31, 2000, for state death
taxes but using Minnesota adjusted taxable estate instead of
federal adjusted taxable estate, as the Minnesota gross estate
bears to the value of the federal gross estate. The tax
determined under this paragraph shall not be greater than the
federal estate tax amount computed by applying the rates and
brackets under section 2001(c) of the Internal Revenue Code
after the allowance of to the Minnesota adjusted gross estate
and subtracting the federal credits credit allowed under section
2010 of the Internal Revenue Code of 1986, as amended through
December 31, 2000. For the purposes of this section, expenses
which are deducted for federal income tax purposes under section
642(g) of the Internal Revenue Code as amended through December
31, 2002, are not allowable in computing the tax under this
chapter.
[EFFECTIVE DATE.] This section is effective for estates of
decedents dying after December 31, 2004.
Sec. 21. [REPEALER.]
Minnesota Rules, parts 8093.2000; and 8093.3000, are
repealed effective the day following final enactment.
ARTICLE 7
SALES AND USE TAXES
Section 1. Minnesota Statutes 2004, section 289A.38,
subdivision 6, is amended to read:
Subd. 6. [OMISSION IN EXCESS OF 25 PERCENT.] Additional
taxes may be assessed within 6-1/2 years after the due date of
the return or the date the return was filed, whichever is later,
if:
(1) the taxpayer omits from gross income an amount properly
includable in it that is in excess of 25 percent of the amount
of gross income stated in the return;
(2) the taxpayer omits from a sales, use, or withholding
tax return an amount of taxes in excess of 25 percent of the
taxes reported in the return; or
(3) the taxpayer omits from the gross estate assets in
excess of 25 percent of the gross estate reported in the return.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 2. Minnesota Statutes 2004, section 289A.38, is
amended by adding a subdivision to read:
Subd. 15. [PURCHASER FILED REFUND CLAIMS.] If a purchaser
refund claim is filed under section 289A.50, subdivision 2a, and
the basis for the claim is that the purchaser was improperly
charged tax on an improvement to real property or on the
purchase of nontaxable services, sales or use tax may be
assessed for the cost of materials used to make the real
property improvement or to perform the nontaxable service. The
assessment may be made against the person making the improvement
to real property or the sale of nontaxable services, within the
period prescribed in subdivision 1, or within one year after the
date of the refund order, whichever is later.
[EFFECTIVE DATE.] This section is effective for purchaser
refund claims filed on or after July 1, 2005.
Sec. 3. Minnesota Statutes 2004, section 289A.40,
subdivision 2, is amended to read:
Subd. 2. [BAD DEBT LOSS.] If a claim relates to an
overpayment because of a failure to deduct a loss due to a bad
debt or to a security becoming worthless, the claim is
considered timely if filed within seven years from the date
prescribed for the filing of the return. A claim relating to an
overpayment of taxes under chapter 297A must be filed within
3-1/2 years from the date prescribed for filing the return, plus
any extensions granted for filing the return, but only if filed
within the extended time. The refund or credit is limited to
the amount of overpayment attributable to the loss. "Bad debt"
for purposes of this subdivision, has the same meaning as that
term is used in United States Code, title 26, section 166,
except that for a claim relating to an overpayment of taxes
under chapter 297A the following are excluded from the
calculation of bad debt: financing charges or interest; sales
or use taxes charged on the purchase price; uncollectible
amounts on property that remain in the possession of the seller
until the full purchase price is paid; expenses incurred in
attempting to collect any debt; and repossessed property.
[EFFECTIVE DATE.] For claims relating to an overpayment of
taxes under chapter 297A, this section is effective for sales
and purchases made on or after January 1, 2004; for all other
bad debts or claims, this section is effective on or after July
1, 2003.
Sec. 4. Minnesota Statutes 2004, section 289A.40, is
amended by adding a subdivision to read:
Subd. 5. [PURCHASER FILED REFUND CLAIMS.] A claim for
refund of taxes paid on a transaction not subject to tax under
chapter 297A, where the purchaser may apply directly to the
commissioner under section 289A.50, subdivision 2a, must be
filed within 3-1/2 years from the 20th day of the month
following the month of the invoice date for the purchase.
[EFFECTIVE DATE.] This section is effective for claims
filed on or after the day following final enactment.
Sec. 5. Minnesota Statutes 2004, section 289A.40, is
amended by adding a subdivision to read:
Subd. 6. [CAPITAL EQUIPMENT REFUND CLAIMS.] A claim for
refund for taxes paid under chapter 297A on capital equipment
must be filed within 3-1/2 years from the 20th day of the month
following the month of the invoice date for the purchase of the
capital equipment. A claim for refund for taxes imposed on
capital equipment under section 297A.63 must be filed within
3-1/2 years from the date prescribed for filing the return, or
one year from the date of an order assessing tax under section
289A.37, subdivision 1, upon payment in full of the tax,
penalties, and interest shown on the order, whichever period
expires later.
[EFFECTIVE DATE.] This section is effective for claims
filed on or after the day following final enactment.
Sec. 6. Minnesota Statutes 2004, section 297A.61,
subdivision 3, is amended to read:
Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase"
include, but are not limited to, each of the transactions listed
in this subdivision.
(b) Sale and purchase include:
(1) any transfer of title or possession, or both, of
tangible personal property, whether absolutely or conditionally,
for a consideration in money or by exchange or barter; and
(2) the leasing of or the granting of a license to use or
consume, for a consideration in money or by exchange or barter,
tangible personal property, other than a manufactured home used
for residential purposes for a continuous period of 30 days or
more.
(c) Sale and purchase include the production, fabrication,
printing, or processing of tangible personal property for a
consideration for consumers who furnish either directly or
indirectly the materials used in the production, fabrication,
printing, or processing.
(d) Sale and purchase include the preparing for a
consideration of food. Notwithstanding section 297A.67,
subdivision 2, taxable food includes, but is not limited to, the
following:
(1) prepared food sold by the retailer;
(2) soft drinks;
(3) candy; and
(4) dietary supplements; and
(5) all food sold through vending machines.
(e) A sale and a purchase includes the furnishing for a
consideration of electricity, gas, water, or steam for use or
consumption within this state.
(f) A sale and a purchase includes the transfer for a
consideration of prewritten computer software whether delivered
electronically, by load and leave, or otherwise.
(g) A sale and a purchase includes the furnishing for a
consideration of the following services:
(1) the privilege of admission to places of amusement,
recreational areas, or athletic events, and the making available
of amusement devices, tanning facilities, reducing salons, steam
baths, turkish baths, health clubs, and spas or athletic
facilities;
(2) lodging and related services by a hotel, rooming house,
resort, campground, motel, or trailer camp and the granting of
any similar license to use real property in a specific facility,
other than the renting or leasing of it for a continuous period
of 30 days or more under an enforceable written agreement that
may not be terminated without prior notice;
(3) nonresidential parking services, whether on a
contractual, hourly, or other periodic basis, except for parking
at a meter;
(4) the granting of membership in a club, association, or
other organization if:
(i) the club, association, or other organization makes
available for the use of its members sports and athletic
facilities, without regard to whether a separate charge is
assessed for use of the facilities; and
(ii) use of the sports and athletic facility is not made
available to the general public on the same basis as it is made
available to members.
Granting of membership means both onetime initiation fees and
periodic membership dues. Sports and athletic facilities
include golf courses; tennis, racquetball, handball, and squash
courts; basketball and volleyball facilities; running tracks;
exercise equipment; swimming pools; and other similar athletic
or sports facilities;
(5) delivery of aggregate materials and concrete block by a
third party if the delivery would be subject to the sales tax if
provided by the seller of the aggregate material or concrete
block; and
(6) services as provided in this clause:
(i) laundry and dry cleaning services including cleaning,
pressing, repairing, altering, and storing clothes, linen
services and supply, cleaning and blocking hats, and carpet,
drapery, upholstery, and industrial cleaning. Laundry and dry
cleaning services do not include services provided by coin
operated facilities operated by the customer;
(ii) motor vehicle washing, waxing, and cleaning services,
including services provided by coin operated facilities operated
by the customer, and rustproofing, undercoating, and towing of
motor vehicles;
(iii) building and residential cleaning, maintenance, and
disinfecting and exterminating services;
(iv) detective, security, burglar, fire alarm, and armored
car services; but not including services performed within the
jurisdiction they serve by off-duty licensed peace officers as
defined in section 626.84, subdivision 1, or services provided
by a nonprofit organization for monitoring and electronic
surveillance of persons placed on in-home detention pursuant to
court order or under the direction of the Minnesota Department
of Corrections;
(v) pet grooming services;
(vi) lawn care, fertilizing, mowing, spraying and sprigging
services; garden planting and maintenance; tree, bush, and shrub
pruning, bracing, spraying, and surgery; indoor plant care;
tree, bush, shrub, and stump removal; and tree trimming for
public utility lines. Services performed under a construction
contract for the installation of shrubbery, plants, sod, trees,
bushes, and similar items are not taxable;
(vii) massages, except when provided by a licensed health
care facility or professional or upon written referral from a
licensed health care facility or professional for treatment of
illness, injury, or disease; and
(viii) the furnishing of lodging, board, and care services
for animals in kennels and other similar arrangements, but
excluding veterinary and horse boarding services.
In applying the provisions of this chapter, the terms
"tangible personal property" and "sales at retail" include
taxable services listed in clause (6), items (i) to (vi) and
(viii), and the provision of these taxable services, unless
specifically provided otherwise. Services performed by an
employee for an employer are not taxable. Services performed by
a partnership or association for another partnership or
association are not taxable if one of the entities owns or
controls more than 80 percent of the voting power of the equity
interest in the other entity. Services performed between
members of an affiliated group of corporations are not taxable.
For purposes of the preceding sentence, "affiliated group of
corporations" includes those entities that would be classified
as members of an affiliated group under United States Code,
title 26, section 1504, and that are eligible to file a
consolidated tax return for federal income tax purposes.
(h) A sale and a purchase includes the furnishing for a
consideration of tangible personal property or taxable services
by the United States or any of its agencies or
instrumentalities, or the state of Minnesota, its agencies,
instrumentalities, or political subdivisions.
(i) A sale and a purchase includes the furnishing for a
consideration of telecommunications services, including cable
television services and direct satellite services.
Telecommunications services are taxed to the extent allowed
under federal law.
(j) A sale and a purchase includes the furnishing for a
consideration of installation if the installation charges would
be subject to the sales tax if the installation were provided by
the seller of the item being installed.
(k) A sale and a purchase includes the rental of a vehicle
by a motor vehicle dealer to a customer when (1) the vehicle is
rented by the customer for a consideration, or (2) the motor
vehicle dealer is reimbursed pursuant to a service contract as
defined in section 65B.29, subdivision 1, clause (1).
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 7. Minnesota Statutes 2004, section 297A.61,
subdivision 4, is amended to read:
Subd. 4. [RETAIL SALE.] (a) A "retail sale" means any
sale, lease, or rental for any purpose, other than resale,
sublease, or subrent of items by the purchaser in the normal
course of business as defined in subdivision 21.
(b) A sale of property used by the owner only by leasing it
to others or by holding it in an effort to lease it, and put to
no use by the owner other than resale after the lease or effort
to lease, is a sale of property for resale.
(c) A sale of master computer software that is purchased
and used to make copies for sale or lease is a sale of property
for resale.
(d) A sale of building materials, supplies, and equipment
to owners, contractors, subcontractors, or builders for the
erection of buildings or the alteration, repair, or improvement
of real property is a retail sale in whatever quantity sold,
whether the sale is for purposes of resale in the form of real
property or otherwise.
(e) A sale of carpeting, linoleum, or similar floor
covering to a person who provides for installation of the floor
covering is a retail sale and not a sale for resale since a sale
of floor covering which includes installation is a contract for
the improvement of real property.
(f) A sale of shrubbery, plants, sod, trees, and similar
items to a person who provides for installation of the items is
a retail sale and not a sale for resale since a sale of
shrubbery, plants, sod, trees, and similar items that includes
installation is a contract for the improvement of real property.
(g) A sale of tangible personal property that is awarded as
prizes is a retail sale and is not considered a sale of property
for resale.
(h) A sale of tangible personal property utilized or
employed in the furnishing or providing of services under
subdivision 3, paragraph (g), clause (1), including, but not
limited to, property given as promotional items, is a retail
sale and is not considered a sale of property for resale.
(i) A sale of tangible personal property used in conducting
lawful gambling under chapter 349 or the state lottery under
chapter 349A, including, but not limited to, property given as
promotional items, is a retail sale and is not considered a sale
of property for resale.
(j) A sale of machines, equipment, or devices that are used
to furnish, provide, or dispense goods or services, including,
but not limited to, coin-operated devices, is a retail sale and
is not considered a sale of property for resale.
(k) In the case of a lease, a retail sale occurs when an
obligation to make a lease payment becomes due under the terms
of the agreement or the trade practices of the lessor.
(l) In the case of a conditional sales contract, a retail
sale occurs upon the transfer of title or possession of the
tangible personal property.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 8. Minnesota Statutes 2004, section 297A.64,
subdivision 4, is amended to read:
Subd. 4. [EXEMPTIONS.] (a) The tax and the fee imposed by
this section do not apply to a lease or rental of (1) a vehicle
to be used by the lessee to provide a licensed taxi service; (2)
a hearse or limousine used in connection with a burial or
funeral service; or (3) a van designed or adapted primarily for
transporting property rather than passengers. The tax and the
fee imposed under this section do not apply when the lease or
rental of a vehicle is exempt from the tax imposed under section
297A.62, subdivision 1.
(b) The lessor may elect not to charge the fee imposed in
subdivision 2 if in the previous calendar year the lessor had no
more than 20 vehicles available for lease that would have been
subject to tax under this section, or no more than $50,000 in
gross receipts that would have been subject to tax under this
section.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 9. Minnesota Statutes 2004, section 297A.668,
subdivision 1, is amended to read:
Subdivision 1. [ APPLICABILITY.] The provisions of this
section apply regardless of the characterization of a product as
tangible personal property, a digital good, or a service; but do
not apply to telecommunications services, or the sales of motor
vehicles, watercraft, aircraft, modular homes, manufactured
homes, or mobile homes. These provisions only apply to
determine a seller's obligation to pay or collect and remit a
sales or use tax with respect to the seller's sale of a
product. These provisions do not affect the obligation of a
seller as purchaser to remit tax on the use of the product.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 10. Minnesota Statutes 2004, section 297A.668,
subdivision 5, is amended to read:
Subd. 5. [TRANSPORTATION EQUIPMENT.] (a) The retail sale,
including lease or rental, of transportation equipment shall be
sourced the same as a retail sale in accordance with the
provisions of subdivision 2, notwithstanding the exclusion of
lease or rental in subdivision 2.
(b) "Transportation equipment" means any of the following:
(1) locomotives and railcars that are utilized for the
carriage of persons or property in interstate commerce; and/or
(2) trucks and truck-tractors with a gross vehicle weight
rating (GVWR) of 10,001 pounds or greater, trailers,
semitrailers, or passenger buses that are:
(i) registered through the international registration plan;
and
(ii) operated under authority of a carrier authorized and
certified by the United States Department of Transportation or
another federal authority to engage in the carriage of persons
or property in interstate commerce;
(3) aircraft that are operated by air carriers authorized
and certificated by the United States Department of
Transportation or another federal or a foreign authority to
engage in the carriage of persons or property in interstate
commerce; or
(4) containers designed for use on and component parts
attached or secured on the transportation equipment described in
items (1) through (3).
[EFFECTIVE DATE.] This section is effective for sales and
purchases made on or after January 1, 2004.
Sec. 11. Minnesota Statutes 2004, section 297A.67,
subdivision 2, is amended to read:
Subd. 2. [FOOD AND FOOD INGREDIENTS.] Except as otherwise
provided in this subdivision, food and food ingredients are
exempt. For purposes of this subdivision, "food" and "food
ingredients" mean substances, whether in liquid, concentrated,
solid, frozen, dried, or dehydrated form, that are sold for
ingestion or chewing by humans and are consumed for their taste
or nutritional value. Food and food ingredients exempt under
this subdivision do not include candy, soft drinks, food sold
through vending machines, dietary supplements, and prepared
foods. Food and food ingredients do not include alcoholic
beverages, dietary supplements, and tobacco. For purposes of
this subdivision, "alcoholic beverages" means beverages that are
suitable for human consumption and contain one-half of one
percent or more of alcohol by volume. For purposes of this
subdivision, "tobacco" means cigarettes, cigars, chewing or pipe
tobacco, or any other item that contains tobacco. For purposes
of this subdivision, "dietary supplements" means any product,
other than tobacco, intended to supplement the diet that:
(1) contains one or more of the following dietary
ingredients:
(i) a vitamin;
(ii) a mineral;
(iii) an herb or other botanical;
(iv) an amino acid;
(v) a dietary substance for use by humans to supplement the
diet by increasing the total dietary intake; and
(vi) a concentrate, metabolite, constituent, extract, or
combination of any ingredient described in items (i) to (v);
(2) is intended for ingestion in tablet, capsule, powder,
softgel, gelcap, or liquid form, or if not intended for
ingestion in such form, is not represented as conventional food
and is not represented for use as a sole item of a meal or of
the diet; and
(3) is required to be labeled as a dietary supplement,
identifiable by the supplement facts box found on the label and
as required pursuant to Code of Federal Regulations, title 21,
section 101.36.
[EFFECTIVE DATE.] This section is effective for sales made
on or after the day following final enactment.
Sec. 12. Minnesota Statutes 2004, section 297A.67,
subdivision 7, is amended to read:
Subd. 7. [MEDICINES DRUGS; MEDICAL DEVICES.]
(a) Prescribed Sales of the following drugs and medical devices
are exempt:
(1) drugs and medicine, and insulin, intended for internal
or external use, in the cure, mitigation, treatment, or
prevention of illness or disease in human beings are exempt.
"Prescribed drugs and medicine" includes use, including
over-the-counter drugs or medicine prescribed by a licensed
health care professional.
(b) Nonprescription medicines consisting principally
(determined by the weight of all ingredients) of analgesics that
are approved by the United States Food and Drug Administration
for internal use by human beings are exempt. For purposes of
this subdivision, "principally" means greater than 50 percent
analgesics by weight.
(c) Prescription glasses, hospital beds, fever
thermometers, reusable;
(2) single-use finger-pricking devices for the extraction
of blood, blood glucose monitoring machines, and
other single-use devices and single-use diagnostic agents used
in diagnosing, monitoring, or treating diabetes, and therapeutic
and;
(3) insulin and medical oxygen for human use, regardless of
whether prescribed or sold over the counter;
(4) prosthetic devices are exempt. "Therapeutic devices"
means devices that are attached or applied to the human body to
cure, heal, or alleviate injury, illness, or disease, either
directly or by administering a curative agent. "Prosthetic
devices" means devices that replace injured, diseased, or
missing parts of the human body, either temporarily or
permanently;
(5) durable medical equipment for home use only;
(6) mobility enhancing equipment; and
(7) prescription corrective eyeglasses.
(b) For purposes of this subdivision:
(1) "Drug" means a compound, substance, or preparation, and
any component of a compound, substance, or preparation, other
than food and food ingredients, dietary supplements, or
alcoholic beverages that is:
(i) recognized in the official United States Pharmacopoeia,
official Homeopathic Pharmacopoeia of the United States, or
official National Formulary, and supplement to any of them;
(ii) intended for use in the diagnosis, cure, mitigation,
treatment, or prevention of disease; or
(iii) intended to affect the structure or any function of
the body.
(2) "Durable medical equipment" means equipment, including
repair and replacement parts, but not including mobility
enhancing equipment, that:
(i) can withstand repeated use;
(ii) is primarily and customarily used to serve a medical
purpose;
(iii) generally is not useful to a person in the absence of
illness or injury; and
(iv) is not worn in or on the body.
(3) "Mobility enhancing equipment" means equipment,
including repair and replacement parts, but not including
durable medical equipment, that:
(i) is primarily and customarily used to provide or
increase the ability to move from one place to another and that
is appropriate for use either in a home or a motor vehicle;
(ii) is not generally used by persons with normal mobility;
and
(iii) does not include any motor vehicle or equipment on a
motor vehicle normally provided by a motor vehicle manufacturer.
(4) "Over-the-counter drug" means a drug that contains a
label that identifies the product as a drug as required by Code
of Federal Regulations, title 21, section 201.66. The label
must include a "drug facts" panel or a statement of the active
ingredients with a list of those ingredients contained in the
compound, substance, or preparation. Over-the-counter drugs do
not include grooming and hygiene products, regardless of whether
they otherwise meet the definition. "Grooming and hygiene
products" are soaps, cleaning solutions, shampoo, toothpaste,
mouthwash, antiperspirants, and suntan lotions and sunscreens.
(5) "Prescribed" and "prescription" means a direction in
the form of an order, formula, or recipe issued in any form of
oral, written, electronic, or other means of transmission by a
duly licensed health care professional.
(6) "Prosthetic device" means a replacement, corrective, or
supportive device, including repair and replacement parts, worn
on or in the body to:
(i) artificially replace a missing portion of the body;
(ii) prevent or correct physical deformity or malfunction;
or
(iii) support a weak or deformed portion of the body.
Prosthetic device does not include corrective eyeglasses.
[EFFECTIVE DATE.] This section is effective for sales and
purchases made after June 30, 2005.
Sec. 13. Minnesota Statutes 2004, section 297A.67,
subdivision 9, is amended to read:
Subd. 9. [BABY PRODUCTS.] (a) Products such as lotion,
creams, ointments, oil, powder, or shampoo, and other articles
designed for application to the hair or skin of babies are
exempt.
(b) Baby bottles and nipples, pacifiers, teething rings,
thumb sucking preventatives, and infant syringes are exempt.
[EFFECTIVE DATE.] This section is effective for sales and
purchases made after June 30, 2005.
Sec. 14. Minnesota Statutes 2004, section 297A.68,
subdivision 2, is amended to read:
Subd. 2. [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.]
(a) Materials stored, used, or consumed in industrial production
of personal property intended to be sold ultimately at retail
are exempt, whether or not the item so used becomes an
ingredient or constituent part of the property produced.
Materials that qualify for this exemption include, but are not
limited to, the following:
(1) chemicals, including chemicals used for cleaning food
processing machinery and equipment;
(2) materials, including chemicals, fuels, and electricity
purchased by persons engaged in industrial production to treat
waste generated as a result of the production process;
(3) fuels, electricity, gas, and steam used or consumed in
the production process, except that electricity, gas, or steam
used for space heating, cooling, or lighting is exempt if (i) it
is in excess of the average climate control or lighting for the
production area, and (ii) it is necessary to produce that
particular product;
(4) petroleum products and lubricants;
(5) packaging materials, including returnable containers
used in packaging food and beverage products;
(6) accessory tools, equipment, and other items that are
separate detachable units with an ordinary useful life of less
than 12 months used in producing a direct effect upon the
product; and
(7) the following materials, tools, and equipment used in
metalcasting: crucibles, thermocouple protection sheaths and
tubes, stalk tubes, refractory materials, molten metal filters
and filter boxes, degassing lances, and base blocks.
(b) This exemption does not include:
(1) machinery, equipment, implements, tools, accessories,
appliances, contrivances and furniture and fixtures, except
those listed in paragraph (a), clause (6); and
(2) petroleum and special fuels used in producing or
generating power for propelling ready-mixed concrete trucks on
the public highways of this state.
(c) Industrial production includes, 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, the production of road
building materials, and the research, development, design, or
production of computer software. Industrial production does not
include painting, cleaning, repairing or similar processing of
property except as part of the original manufacturing process.
(d) Industrial production does not include the furnishing
of services listed in section 297A.61, subdivision 3, paragraph
(g), clause (6), items (i) to (vi) and (viii).
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 15. Minnesota Statutes 2004, section 297A.68,
subdivision 5, is amended to read:
Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is
exempt. The tax must be imposed and collected as if the rate
under section 297A.62, subdivision 1, applied, and then refunded
in the manner provided in section 297A.75.
"Capital equipment" means machinery and equipment purchased
or leased, and used in this state by the purchaser or lessee
primarily for manufacturing, fabricating, mining, or refining
tangible personal property to be sold ultimately at retail if
the machinery and equipment are essential to the integrated
production process of manufacturing, fabricating, mining, or
refining. Capital equipment also includes machinery and
equipment used primarily to electronically transmit results
retrieved by a customer of an on-line computerized data
retrieval system.
(b) Capital equipment includes, but is not limited to:
(1) machinery and equipment used to operate, control, or
regulate the production equipment;
(2) machinery and equipment used for research and
development, design, quality control, and testing activities;
(3) environmental control devices that are used to maintain
conditions such as temperature, humidity, light, or air pressure
when those conditions are essential to and are part of the
production process;
(4) materials and supplies used to construct and install
machinery or equipment;
(5) repair and replacement parts, including accessories,
whether purchased as spare parts, repair parts, or as upgrades
or modifications to machinery or equipment;
(6) materials used for foundations that support machinery
or equipment;
(7) materials used to construct and install special purpose
buildings used in the production process;
(8) ready-mixed concrete equipment in which the ready-mixed
concrete is mixed as part of the delivery process regardless if
mounted on a chassis, repair parts for ready-mixed concrete
trucks, and leases of ready-mixed concrete trucks; and
(9) machinery or equipment used for research, development,
design, or production of computer software.
(c) Capital equipment does not include the following:
(1) motor vehicles taxed under chapter 297B;
(2) machinery or equipment used to receive or store raw
materials;
(3) building materials, except for materials included in
paragraph (b), clauses (6) and (7);
(4) machinery or equipment used for nonproduction purposes,
including, but not limited to, the following: plant security,
fire prevention, first aid, and hospital stations; support
operations or administration; pollution control; and plant
cleaning, disposal of scrap and waste, plant communications,
space heating, cooling, lighting, or safety;
(5) farm machinery and aquaculture production equipment as
defined by section 297A.61, subdivisions 12 and 13;
(6) machinery or equipment purchased and installed by a
contractor as part of an improvement to real property; or
(7) machinery and equipment used by restaurants in the
furnishing, preparing, or serving of prepared foods as defined
in section 297A.61, subdivision 31;
(8) machinery and equipment used to furnish the services
listed in section 297A.61, subdivision 3, paragraph (g), clause
(6), items (i) to (vi) and (viii); or
(9) any other item that is not essential to the integrated
process of manufacturing, fabricating, mining, or refining.
(d) For purposes of this subdivision:
(1) "Equipment" means independent devices or tools separate
from machinery but essential to an integrated production
process, including computers and computer software, used in
operating, controlling, or regulating machinery and equipment;
and any subunit or assembly comprising a component of any
machinery or accessory or attachment parts of machinery, such as
tools, dies, jigs, patterns, and molds.
(2) "Fabricating" means to make, build, create, produce, or
assemble components or property to work in a new or different
manner.
(3) "Integrated production process" means a process or
series of operations through which tangible personal property is
manufactured, fabricated, mined, or refined. For purposes of
this clause, (i) manufacturing begins with the removal of raw
materials from inventory and ends when the last process prior to
loading for shipment has been completed; (ii) fabricating begins
with the removal from storage or inventory of the property to be
assembled, processed, altered, or modified and ends with the
creation or production of the new or changed product; (iii)
mining begins with the removal of overburden from the site of
the ores, minerals, stone, peat deposit, or surface materials
and ends when the last process before stockpiling is completed;
and (iv) refining begins with the removal from inventory or
storage of a natural resource and ends with the conversion of
the item to its completed form.
(4) "Machinery" means mechanical, electronic, or electrical
devices, including computers and computer software, that are
purchased or constructed to be used for the activities set forth
in paragraph (a), beginning with the removal of raw materials
from inventory through completion of the product, including
packaging of the product.
(5) "Machinery and equipment used for pollution control"
means machinery and equipment used solely to eliminate, prevent,
or reduce pollution resulting from an activity described in
paragraph (a).
(6) "Manufacturing" means an operation or series of
operations where raw materials are changed in form, composition,
or condition by machinery and equipment and which results in the
production of a new article of tangible personal property. For
purposes of this subdivision, "manufacturing" includes the
generation of electricity or steam to be sold at retail.
(7) "Mining" means the extraction of minerals, ores, stone,
or peat.
(8) "On-line data retrieval system" means a system whose
cumulation of information is equally available and accessible to
all its customers.
(9) "Primarily" means machinery and equipment used 50
percent or more of the time in an activity described in
paragraph (a).
(10) "Refining" means the process of converting a natural
resource to an intermediate or finished product, including the
treatment of water to be sold at retail.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 16. Minnesota Statutes 2004, section 297A.68,
subdivision 28, is amended to read:
Subd. 28. [MEDICAL SUPPLIES.] Medical supplies purchased
by a licensed health care facility or licensed health care
professional to provide medical treatment to residents or
patients are exempt. The exemption does not apply to durable
medical equipment or components of durable medical equipment,
laboratory supplies, radiological supplies, and other items used
in providing medical services. For purposes of this
subdivision, "medical supplies" means adhesive and nonadhesive
bandages, gauze pads and strips, cotton applicators,
antiseptics, nonprescription drugs, eye solution, and other
similar supplies used directly on the resident or patient in
providing medical services.
[EFFECTIVE DATE.] This section is effective for sales and
purchases made after June 30, 2005.
Sec. 17. Minnesota Statutes 2004, section 297A.68,
subdivision 39, is amended to read:
Subd. 39. [PREEXISTING BIDS OR CONTRACTS.] (a) The sale of
tangible personal property or services is exempt from tax or a
tax rate increase for a period of six months from the effective
date of the law change that results in the imposition of the tax
or the tax rate increase under this chapter if:
(1) the act imposing the tax or increasing the tax rate
does not have transitional effective date language for existing
construction contracts and construction bids; and
(2) the requirements of paragraph (b) are met.
(b) A sale is tax exempt under paragraph (a) if it meets
the requirements of either clause (1) or (2):
(1) For a construction contract:
(i) the goods or services sold must be used for the
performance of a bona fide written lump sum or fixed price
construction contract;
(ii) the contract must be entered into before the date the
goods or services become subject to the sales tax or the tax
rate was increased;
(iii) the contract must not provide for allocation of
future taxes; and
(iv) for each qualifying contract the contractor must give
the seller documentation of the contract on which an exemption
is to be claimed.
(2) For a construction bid:
(i) the goods or services sold must be used pursuant to an
obligation of a bid or bids;
(ii) the bid or bids must be submitted and accepted before
the date the goods or services became subject to the sales
tax or the tax rate was increased;
(iii) the bid or bids must not be able to be withdrawn,
modified, or changed without forfeiting a bond; and
(iv) for each qualifying bid, the contractor must give the
seller documentation of the bid on which an exemption is to be
claimed.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 18. Minnesota Statutes 2004, section 297A.71,
subdivision 12, is amended to read:
Subd. 12. [CHAIR LIFTS, RAMPS, ELEVATORS.] Chair lifts,
ramps, and Elevators and building materials used to install or
construct them chair lifts, ramps, and elevators are exempt, if
they are authorized by a physician and installed in or attached
to the owner's homestead. The tax must be imposed and collected
as if the rate under section 297A.62, subdivision 1, applied and
then refunded in the manner provided in section 297A.75.
[EFFECTIVE DATE.] This section is effective for sales and
purchases made after June 30, 2005.
Sec. 19. Minnesota Statutes 2004, section 297A.75,
subdivision 1, is amended to read:
Subdivision 1. [TAX COLLECTED.] The tax on the gross
receipts from the sale of the following exempt items must be
imposed and collected as if the sale were taxable and the rate
under section 297A.62, subdivision 1, applied. The exempt items
include:
(1) capital equipment exempt under section 297A.68,
subdivision 5;
(2) building materials for an agricultural processing
facility exempt under section 297A.71, subdivision 13;
(3) building materials for mineral production facilities
exempt under section 297A.71, subdivision 14;
(4) building materials for correctional facilities under
section 297A.71, subdivision 3;
(5) building materials used in a residence for disabled
veterans exempt under section 297A.71, subdivision 11;
(6) chair lifts, ramps, elevators, and associated building
materials exempt under section 297A.71, subdivision 12;
(7) building materials for the Long Lake Conservation
Center exempt under section 297A.71, subdivision 17;
(8) materials, supplies, fixtures, furnishings, and
equipment for a county law enforcement and family service center
under section 297A.71, subdivision 26; and
(9) materials and supplies for qualified low-income housing
under section 297A.71, subdivision 23.
[EFFECTIVE DATE.] This section is effective for sales and
purchases made after June 30, 2005.
Sec. 20. Minnesota Statutes 2004, section 297A.87,
subdivision 2, is amended to read:
Subd. 2. [SELLER'S PERMIT OR ALTERNATE STATEMENT.] (a) The
operator of an event under subdivision 1 shall obtain one of the
following from a person who wishes to do business as a seller at
the event:
(1) evidence that the person holds a valid seller's permit
under section 297A.84; or
(2) a written statement that the person is not offering for
sale any item that is taxable under this chapter; or
(3) a written statement that this is the only selling event
that the person will be participating in for that calendar year,
that the person will be participating for three or fewer days,
and that the person will make less than $500 in total sales in
the calendar year. The written statement shall include the
person's name, address, and telephone number.
(b) The operator shall require the evidence or statement as
a prerequisite to participating in the event as a seller.
[EFFECTIVE DATE.] This section is effective for selling
events occurring after June 15, 2005.
Sec. 21. Minnesota Statutes 2004, section 297A.87,
subdivision 3, is amended to read:
Subd. 3. [OCCASIONAL SALE PROVISIONS NOT APPLICABLE UNDER
LIMITED CIRCUMSTANCES.] The isolated and occasional
sale provisions provision under section 297A.67, subdivision 23,
or applies, provided that the seller only participates for three
or fewer days in one event per calendar year, makes $500 or less
in sales in the calendar year, and provides the written
statement required in subdivision 2, paragraph (a), clause (3).
The isolated and occasional sales provision under section
297A.68, subdivision 25, do does not apply to a seller at an
event under this section.
[EFFECTIVE DATE.] This section is effective for selling
events occurring after June 15, 2005.
Sec. 22. Minnesota Statutes 2004, section 297A.99,
subdivision 4, is amended to read:
Subd. 4. [TAX BASE.] (a) The tax applies to sales taxable
under this chapter that occur within the political subdivision.
(b) Taxable goods or services are subject to a political
subdivision's sales tax, if they are performed either:
(1) within the political subdivision, or
(2) partly within and partly without the political
subdivision and more of the service is performed within the
political subdivision, based on the cost of performance sourced
to the political subdivision pursuant to section 297A.668.
[EFFECTIVE DATE.] This section is effective for sales made
on or after January 1, 2004.
Sec. 23. [REPEALER.]
Minnesota Rules, parts 8130.0110, subpart 4; 8130.0200,
subparts 5 and 6; 8130.0400, subpart 9; 8130.1200, subparts 5
and 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1
and 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 8130.5200;
8130.5600, subpart 3; 8130.5800, subpart 5; 8130.7300, subpart
5; and 8130.8800, subpart 4, are repealed.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
ARTICLE 8
SPECIAL TAXES
Section 1. Minnesota Statutes 2004, section 287.04, is
amended to read:
287.04 [EXEMPTIONS.]
The tax imposed by section 287.035 does not apply to:
(a) A decree of marriage dissolution or an instrument made
pursuant to it.
(b) A mortgage given to correct a misdescription of the
mortgaged property.
(c) A mortgage or other instrument that adds additional
security for the same debt for which mortgage registry tax has
been paid.
(d) A contract for the conveyance of any interest in real
property, including a contract for deed.
(e) A mortgage secured by real property subject to the
minerals production tax of sections 298.24 to 298.28.
(f) The principal amount of a mortgage loan made under a
low and moderate income or other affordable housing program, if
the mortgagee is a federal, state, or local government agency.
(g) Mortgages granted by fraternal benefit societies
subject to section 64B.24.
(h) A mortgage amendment or extension, as defined in
section 287.01.
(i) An agricultural mortgage if the proceeds of the loan
secured by the mortgage are used to acquire or improve real
property classified under section 273.13, subdivision 23,
paragraph (a), or (b), clause (1), (2), or (3).
(j) A mortgage on an armory building as set forth in
section 193.147.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 2. Minnesota Statutes 2004, section 295.60,
subdivision 3, is amended to read:
Subd. 3. [PAYMENT.] (a) Each furrier shall make estimated
payments of the taxes for the calendar year in quarterly
installments to the commissioner by April 15, July 15, October
15, and January 15 of the following calendar year.
(b) Estimated tax payments are not required if:
(1) the tax for the current calendar year is less than
$500; or
(2) the tax for the previous calendar year is less than
$500, if the taxpayer had a tax liability and was doing business
the entire year.
(c) Underpayment of estimated installments bear interest at
the rate specified in section 270.75, from the due date of the
payment until paid or until the due date of the annual return,
whichever comes first. An underpayment of an estimated
installment is the difference between the amount paid and the
lesser of (1) 90 percent of one-quarter of the tax for the
calendar year the tax for the actual gross revenues received
during the quarter, or (2) one-quarter of the total tax for the
previous calendar year if the taxpayer had a tax liability and
was doing business the entire year.
[EFFECTIVE DATE.] This section is effective for gross
revenues received after December 31, 2004.
Sec. 3. Minnesota Statutes 2004, section 296A.22, is
amended by adding a subdivision to read:
Subd. 9. [ABATEMENT OF PENALTY.] (a) The commissioner may
by written order abate any penalty imposed under this section,
if in the commissioner's opinion there is reasonable cause to do
so.
(b) A request for abatement of penalty must be filed with
the commissioner within 60 days of the date the notice stating
that a penalty has been imposed was mailed to the taxpayer's
last known address.
(c) If the commissioner issues an order denying a request
for abatement of penalty, the taxpayer may file an
administrative appeal as provided in section 296A.25 or appeal
to Tax Court as provided in section 271.06. If the commissioner
does not issue an order on the abatement request within 60 days
from the date the request is received, the taxpayer may appeal
to Tax Court as provided in section 271.06.
[EFFECTIVE DATE.] This section is effective for penalties
imposed on or after the day following final enactment.
Sec. 4. Minnesota Statutes 2004, section 297E.01,
subdivision 5, is amended to read:
Subd. 5. [DISTRIBUTOR.] "Distributor" means a distributor
as defined in section 349.12, subdivision 11, or a person or
linked bingo game provider who markets, sells, or provides
gambling product to a person or entity for resale or use at the
retail level.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 5. Minnesota Statutes 2004, section 297E.01,
subdivision 7, is amended to read:
Subd. 7. [GAMBLING PRODUCT.] "Gambling product" means
bingo hard cards, bingo paper, or sheets, or linked bingo paper
sheets; pull-tabs; tipboards; paddletickets and paddleticket
cards; raffle tickets; or any other ticket, card, board,
placard, device, or token that represents a chance, for which
consideration is paid, to win a prize.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 6. Minnesota Statutes 2004, section 297E.01, is
amended by adding a subdivision to read:
Subd. 9a. [LINKED BINGO GAME.] "Linked bingo game" means a
bingo game played at two or more locations where licensed
organizations are authorized to conduct bingo, when there is a
common prize pool and a common selection of numbers or symbols
conducted at one location, and when the results of the selection
are transmitted to all participating locations by satellite,
telephone, or other means by a linked bingo game provider.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 7. Minnesota Statutes 2004, section 297E.01, is
amended by adding a subdivision to read:
Subd. 9b. [LINKED BINGO GAME PROVIDER.] "Linked bingo game
provider" means any person who provides the means to link bingo
prizes in a linked bingo game, who provides linked bingo paper
sheets to the participating organizations, who provides linked
bingo prize management, and who provides the linked bingo game
system.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 8. Minnesota Statutes 2004, section 297E.06,
subdivision 2, is amended to read:
Subd. 2. [BUSINESS RECORDS.] An organization shall
maintain records supporting the gambling activity reported to
the commissioner. Records include, but are not limited to, the
following items:
(1) all winning and unsold tickets, cards, or stubs for
pull-tab, tipboard, paddlewheel, and raffle games;
(2) all reports and statements, including checker's
records, for each bingo occasion;
(3) all cash journals and ledgers, deposit slips, register
tapes, and bank statements supporting gambling activity
receipts;
(4) all invoices that represent purchases of gambling
product;
(5) all canceled checks or copies of substitute checks as
defined in Public Law 108-100, section 3, check recorders,
journals and ledgers, vouchers, invoices, bank statements, and
other documents supporting gambling activity expenditures; and
(6) all organizational meeting minutes.
All records required to be kept by this section must be
preserved by the organization for at least 3-1/2 years and may
be inspected by the commissioner of revenue at any reasonable
time without notice or a search warrant.
[EFFECTIVE DATE.] This section is effective July 1, 2005.
Sec. 9. Minnesota Statutes 2004, section 297E.07, is
amended to read:
297E.07 [INSPECTION RIGHTS.]
At any reasonable time, without notice and without a search
warrant, the commissioner may enter a place of business of a
manufacturer, distributor, or organization, or linked bingo game
provider; any site from which pull-tabs or tipboards or other
gambling equipment or gambling product are being manufactured,
stored, or sold; or any site at which lawful gambling is being
conducted, and inspect the premises, books, records, and other
documents required to be kept under this chapter to determine
whether or not this chapter is being fully complied with. If
the commissioner is denied free access to or is hindered or
interfered with in making an inspection of the place of
business, books, or records, the permit of the distributor may
be revoked by the commissioner, and the license of the
manufacturer, the distributor, or the organization, or linked
bingo game provider may be revoked by the board.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 10. Minnesota Statutes 2004, section 297F.08,
subdivision 12, is amended to read:
Subd. 12. [CIGARETTES IN INTERSTATE COMMERCE.] (a) A
person may not transport or cause to be transported from this
state cigarettes for sale in another state without first
affixing to the cigarettes the stamp required by the state in
which the cigarettes are to be sold or paying any other excise
tax on the cigarettes imposed by the state in which the
cigarettes are to be sold.
(b) A person may not affix to cigarettes the stamp required
by another state or pay any other excise tax on the cigarettes
imposed by another state if the other state prohibits stamps
from being affixed to the cigarettes, prohibits the payment of
any other excise tax on the cigarettes, or prohibits the sale of
the cigarettes.
(c) Not later than 15 days after the end of each calendar
quarter, a person who transports or causes to be transported
from this state cigarettes for sale in another state shall
submit to the commissioner a report identifying the quantity and
style of each brand of the cigarettes transported or caused to
be transported in the preceding calendar quarter, and the name
and address of each recipient of the cigarettes. This reporting
requirement only applies to cigarettes manufactured by companies
that are not original or subsequent participating manufacturers
in the Master Settlement Agreement with other states.
(d) For purposes of this section, "person" has the meaning
given in section 297F.01, subdivision 12. Person does not
include any common or contract carrier, or public warehouse that
is not owned, in whole or in part, directly or indirectly by
such person, and does not include a manufacturer that has
entered into is an original or subsequent participating
manufacturer in the Master Settlement Agreement with other
states.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 11. Minnesota Statutes 2004, section 297F.08, is
amended by adding a subdivision to read:
Subd. 13. [BOND.] The commissioner may require the
furnishing of a corporate surety bond or a certified check in an
amount suitable to guarantee payment of the tax stamps purchased
by a distributor. The bond or certified check may be required
when the commissioner determines that a distributor is (1)
delinquent in the filing of any return required under this
chapter, or (2) delinquent in the payment of any uncontested tax
liability under this chapter. The distributor shall furnish the
bond or certified check for a period of two years, after which,
if the distributor has not been delinquent in the filing of any
returns required under this chapter, or delinquent in the paying
of any tax under this chapter, a bond or certified check is no
longer required. The commissioner at any time may apply the
bond or certified check to any unpaid taxes or fees, including
interest and penalties, owed to the department by the
distributor.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 12. Minnesota Statutes 2004, section 297F.09,
subdivision 1, is amended to read:
Subdivision 1. [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On
or before the 18th day of each calendar month, a distributor
with a place of business in this state shall file a return with
the commissioner showing the quantity of cigarettes manufactured
or brought in from outside the state or purchased during the
preceding calendar month and the quantity of cigarettes sold or
otherwise disposed of in this state and outside this state
during that month. A licensed distributor outside this state
shall in like manner file a return showing the quantity of
cigarettes shipped or transported into this state during the
preceding calendar month. Returns must be made in the form and
manner prescribed by the commissioner and must contain any other
information required by the commissioner. The return must be
accompanied by a remittance for the full unpaid tax liability
shown by it. The return for the May liability and 85 percent of
the estimated June liability is due on the date payment of the
tax is due. For distributors subject to the accelerated tax
payment requirements in subdivision 10, the return for the May
liability is due two business days before June 30th of the year
and the return for the June liability is due on or before August
18th of the year.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 13. Minnesota Statutes 2004, section 297F.09,
subdivision 2, is amended to read:
Subd. 2. [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.]
On or before the 18th day of each calendar month, a distributor
with a place of business in this state shall file a return with
the commissioner showing the quantity and wholesale sales price
of each tobacco product:
(1) brought, or caused to be brought, into this state for
sale; and
(2) made, manufactured, or fabricated in this state for
sale in this state, during the preceding calendar month.
Every licensed distributor outside this state shall in like
manner file a return showing the quantity and wholesale sales
price of each tobacco product shipped or transported to
retailers in this state to be sold by those retailers, during
the preceding calendar month. Returns must be made in the form
and manner prescribed by the commissioner and must contain any
other information required by the commissioner. The return must
be accompanied by a remittance for the full tax liability
shown. The return for the May liability and 85 percent of the
estimated June liability is due on the date payment of the tax
is due. For distributors subject to the accelerated tax payment
requirements in subdivision 10, the return for the May liability
is due two business days before June 30th of the year and the
return for the June liability is due on or before August 18th of
the year.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 14. Minnesota Statutes 2004, section 297F.14,
subdivision 4, is amended to read:
Subd. 4. [BAD DEBT.] The commissioner may adopt rules
providing a refund of the tax paid under this chapter if the tax
paid qualifies as a bad debt under section 166(a) of the
Internal Revenue Code. For any reporting period, a taxpayer may
offset against taxes payable under this chapter the amount of
taxes previously paid under this chapter that is attributable to
a bad debt. The taxes must have been included in a transaction
the consideration for which was a debt owed to the taxpayer and
which became uncollectible, but only in proportion to the
portion of debt that became uncollectible. To qualify for
offset under this subdivision, the debt must have qualified as a
bad debt under section 166(a) of the Internal Revenue Code. The
taxpayer may claim the offset within the time period prescribed
in section 297F.17, subdivision 6. If the taxpayer is no longer
liable for taxes imposed under this chapter, the commissioner
shall refund to the taxpayer the amount of the taxes
attributable to the bad debt. Any recovery of the tax claimed
as a refund or credit must be reported to the commissioner on
the tax return for the month in which the recovery is made. If
the taxpayer is no longer required to file returns under this
chapter, the taxpayer must reimburse the commissioner for tax
recovered in the month following the recovery.
[EFFECTIVE DATE.] This section is effective for claims
filed on or after July 1, 2005.
Sec. 15. Minnesota Statutes 2004, section 297G.09, is
amended by adding a subdivision to read:
Subd. 10. [QUARTERLY AND ANNUAL PAYMENTS AND RETURNS.] (a)
If a manufacturer, wholesaler, brewer, or importer has an
average liquor tax liability equal to or less than $500 per
month in any quarter of a calendar year, and has substantially
complied with the state tax laws during the preceding four
calendar quarters, the manufacturer, wholesaler, brewer, or
importer may request authorization to file and pay the taxes
quarterly in subsequent calendar quarters. The authorization
remains in effect during the period in which the manufacturer's,
wholesaler's, brewer's, or importer's quarterly returns reflect
liquor tax liabilities of less than $1,500 and there is
continued compliance with state tax laws.
(b) If a manufacturer, wholesaler, brewer, or importer has
an average liquor tax liability equal to or less than $100 per
month during a calendar year, and has substantially complied
with the state tax laws during that period, the manufacturer,
wholesaler, brewer, or importer may request authorization to
file and pay the taxes annually in subsequent years. The
authorization remains in effect during the period in which the
manufacturer's, wholesaler's, brewer's, or importer's annual
returns reflect liquor tax liabilities of less than $1,200 and
there is continued compliance with state tax laws.
(c) The commissioner may also grant quarterly or annual
filing and payment authorizations to manufacturers, wholesalers,
brewers, or importers if the commissioner concludes that the
manufacturer's, wholesaler's, brewer's, or importer's future tax
liabilities will be less than the monthly totals identified in
paragraphs (a) and (b). An authorization granted under this
paragraph is subject to the same conditions as an authorization
granted under paragraphs (a) and (b).
(d) The annual tax return and payments must be filed and
paid on or before the 18th day of January following the calendar
year. The quarterly returns and payments must be filed and paid
on or before April 18 for the quarter ending March 31, on or
before July 18 for the quarter ending June 30, on or before
October 18 for the quarter ending September 30, and on or before
January 18 for the quarter ending December 31.
[EFFECTIVE DATE.] This section is effective for tax returns
and payments due on or after January 1, 2006.
Sec. 16. Minnesota Statutes 2004, section 297I.01, is
amended by adding a subdivision to read:
Subd. 13a. [REINSURANCE.] "Reinsurance" is insurance
whereby an insurance company, for a consideration, agrees to
indemnify another insurance company against all or part of the
loss which the latter may sustain under the policy or policies
which it has issued.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 17. Minnesota Statutes 2004, section 297I.05,
subdivision 5, is amended to read:
Subd. 5. [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT
HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED
SERVICE NETWORKS.] (a) Health maintenance organizations,
community integrated service networks, and nonprofit health care
service plan corporations are exempt from the tax imposed under
this section for premiums received in calendar years 2001 to
2003.
(b) For calendar years after 2003, A tax is imposed on
health maintenance organizations, community integrated service
networks, and nonprofit health care service plan corporations.
The rate of tax is equal to one percent of gross premiums less
return premiums on all direct business received by the
organization, network, or corporation or its agents in
Minnesota, in cash or otherwise, in the calendar year.
(c) In approving the premium rates as required in sections
62L.08, subdivision 8, and 62A.65, subdivision 3, the
commissioners of health and commerce shall ensure that any
exemption from tax as described in paragraph (a) is reflected in
the premium rate.
(d) (b) The commissioner shall deposit all revenues,
including penalties and interest, collected under this chapter
from health maintenance organizations, community integrated
service networks, and nonprofit health service plan corporations
in the health care access fund. Refunds of overpayments of tax
imposed by this subdivision must be paid from the health care
access fund. There is annually appropriated from the health
care access fund to the commissioner the amount necessary to
make any refunds of the tax imposed under this subdivision.
[EFFECTIVE DATE.] This section is effective January 1, 2005.
Sec. 18. Minnesota Statutes 2004, section 298.24,
subdivision 1, is amended to read:
Subdivision 1. (a) For concentrate produced in 2001, 2002,
and 2003, there is imposed upon taconite and iron sulphides, and
upon the mining and quarrying thereof, and upon the production
of iron ore concentrate therefrom, and upon the concentrate so
produced, a tax of $2.103 per gross ton of merchantable iron ore
concentrate produced therefrom.
(b) For concentrates produced in 2004 and subsequent years,
the tax rate shall be equal to the preceding year's tax rate
plus an amount equal to the preceding year's tax rate multiplied
by the percentage increase in the implicit price deflator from
the fourth quarter of the second preceding year to the fourth
quarter of the preceding year. "Implicit price deflator" means
the implicit price deflator for the gross domestic product
prepared by the Bureau of Economic Analysis of the United States
Department of Commerce.
(c) On concentrates produced in 1997 and thereafter, an
additional tax is imposed equal to three cents per gross ton of
merchantable iron ore concentrate for each one percent that the
iron content of the product exceeds 72 percent, when dried at
212 degrees Fahrenheit.
(d) The tax shall be imposed on the average of the
production for the current year and the previous two years. The
rate of the tax imposed will be the current year's tax rate.
This clause shall not apply in the case of the closing of a
taconite facility if the property taxes on the facility would be
higher if this clause and section 298.25 were not applicable.
(e) If the tax or any part of the tax imposed by this
subdivision is held to be unconstitutional, a tax of $2.103 per
gross ton of merchantable iron ore concentrate produced shall be
imposed.
(f) Consistent with the intent of this subdivision to
impose a tax based upon the weight of merchantable iron ore
concentrate, the commissioner of revenue may indirectly
determine the weight of merchantable iron ore concentrate
included in fluxed pellets by subtracting the weight of the
limestone, dolomite, or olivine derivatives or other basic flux
additives included in the pellets from the weight of the
pellets. For purposes of this paragraph, "fluxed pellets" are
pellets produced in a process in which limestone, dolomite,
olivine, or other basic flux additives are combined with
merchantable iron ore concentrate. No subtraction from the
weight of the pellets shall be allowed for binders, mineral and
chemical additives other than basic flux additives, or moisture.
(g)(1) Notwithstanding any other provision of this
subdivision, for the first two years of a plant's commercial
production of direct reduced ore, no tax is imposed under this
section. As used in this paragraph, "commercial production" is
production of more than 50,000 tons of direct reduced ore in the
current year or in any prior year, "noncommercial production" is
production of 50,000 tons or less of direct reduced ore in any
year, and "direct reduced ore" is ore that results in a product
that has an iron content of at least 75 percent. For the third
year of a plant's commercial production of direct reduced ore,
the rate to be applied to direct reduced ore is 25 percent of
the rate otherwise determined under this subdivision. For the
fourth such commercial production year, the rate is 50 percent
of the rate otherwise determined under this subdivision; for the
fifth such commercial production year, the rate is 75 percent of
the rate otherwise determined under this subdivision; and for
all subsequent commercial production years, the full rate is
imposed.
(2) Subject to clause (1), production of direct reduced ore
in this state is subject to the tax imposed by this section, but
if that production is not produced by a producer of taconite or
iron sulfides, the production of taconite or iron sulfides
consumed in the production of direct reduced iron in this state
is not subject to the tax imposed by this section on taconite or
iron sulfides.
(3) Notwithstanding any other provision of this
subdivision, no tax is imposed on direct reduced ore under this
section during the facility's noncommercial production of direct
reduced ore. The taconite or iron sulphides consumed in the
noncommercial production of direct reduced ore is subject to the
tax imposed by this section on taconite and iron sulphides.
Three-year average production of direct reduced ore does not
include production of direct reduced ore in any noncommercial
year. Three-year average production for a direct reduced ore
facility that has noncommercial production is the average of the
commercial production of direct reduced ore for the current year
and the previous two commercial years.
[EFFECTIVE DATE.] This section is effective for direct
reduced ore produced after the day following final enactment.
Sec. 19. Minnesota Statutes 2004, section 473.843,
subdivision 5, is amended to read:
Subd. 5. [PENALTIES; ENFORCEMENT.] The audit, penalty, and
enforcement provisions applicable to corporate franchise taxes
imposed under chapter 290 apply to the fees imposed under this
section. The commissioner of revenue shall administer the
provisions.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 20. [REPEALER.]
Minnesota Statutes 2004, section 297E.12, subdivision 10,
is repealed effective the day following final enactment.
ARTICLE 9
MISCELLANEOUS
Section 1. Minnesota Statutes 2004, section 16D.10, is
amended to read:
16D.10 [CASE REVIEWER.]
Subdivision 1. [DUTIES.] The commissioner shall make a
case reviewer available to debtors. The reviewer must be
available to answer a debtor's questions concerning the
collection process and to review the collection activity taken.
If the reviewer reasonably believes that the particular action
being taken is unreasonable or unfair, the reviewer may make
recommendations to the commissioner in regard to the collection
action.
Subd. 2. [AUTHORITY TO ISSUE DEBTOR ASSISTANCE ORDER.] On
application filed by a debtor with the case reviewer, in the
form, manner, and in the time prescribed by the commissioner,
and after thorough investigation, the case reviewer may issue a
debtor assistance order if, in the determination of the case
reviewer, the manner in which the state debt collection laws are
being administered is creating or will create an unjust and
inequitable result for the debtor. Debtor assistance orders are
governed by the provisions relating to taxpayer assistance
orders under section 270.273.
Subd. 3. [TRANSFER OF DUTIES TO TAXPAYER RIGHTS ADVOCATE.]
All duties and authority of the case reviewer under subdivisions
1 and 2 are transferred to the taxpayer rights advocate.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 2. Minnesota Statutes 2004, section 270.30,
subdivision 1, is amended to read:
Subdivision 1. [SCOPE.] (a) This section applies to a
person who offers, provides, or facilitates the provision of
refund anticipation loans, as part of or in connection with the
provision of tax preparation services.
(b) This section does not apply to:
(1) a tax preparer who provides tax preparation services
for fewer than six clients in a calendar year;
(2) the provision by a person of tax preparation services
to a spouse, parent, grandparent, child, or sibling; and
(3) the provision of services by an employee for an
employer.
Sec. 3. Minnesota Statutes 2004, section 270.30,
subdivision 5, is amended to read:
Subd. 5. [ITEMIZED BILL REQUIRED.] A tax preparer must
provide an itemized statement of the charges for services, at
least separately stating the charges for:
(1) return preparation; and
(2) electronic filing; and
(3) providing or facilitating a refund anticipation loan.
Sec. 4. Minnesota Statutes 2004, section 270.30,
subdivision 6, is amended to read:
Subd. 6. [ENFORCEMENT; PENALTIES.] The commissioner may
impose an administrative penalty of not more than $1,000 per
violation of subdivision 3, 4, or 5. The commissioner may
terminate a tax preparer's authority to transmit returns
electronically to the state, if the commissioner determines the
tax preparer engaged in a pattern and practice of violating this
section. Imposition of a penalty under this subdivision is
subject to the contested case procedure under chapter 14. The
commissioner shall collect the penalty in the same manner as the
income tax. Penalties imposed under this subdivision are public
data.
Sec. 5. Minnesota Statutes 2004, section 270.30, is
amended by adding a subdivision to read:
Subd. 6a. [EXCHANGE OF DATA; STATE BOARD OF
ACCOUNTANCY.] The State Board of Accountancy shall refer to the
commissioner complaints it receives about tax preparers who are
not subject to the jurisdiction of the State Board of
Accountancy and who are alleged to have violated the provisions
of subdivisions 3 to 5.
Sec. 6. Minnesota Statutes 2004, section 270.30, is
amended by adding a subdivision to read:
Subd. 6b. [EXCHANGE OF DATA; LAWYERS BOARD OF PROFESSIONAL
RESPONSIBILITY.] The Lawyers Board of Professional
Responsibility may refer to the commissioner complaints it
receives about tax preparers who are not subject to its
jurisdiction and who are alleged to have violated the provisions
of subdivisions 3 to 5.
Sec. 7. Minnesota Statutes 2004, section 270.30, is
amended by adding a subdivision to read:
Subd. 6c. [EXCHANGE OF DATA; COMMISSIONER.] The
commissioner shall refer complaints about tax preparers who are
alleged to have violated the provisions of subdivisions 3 to 5
to:
(1) the State Board of Accountancy, if the tax preparer is
under its jurisdiction; and
(2) the Lawyers Board of Professional Responsibility, if
the tax preparer is under its jurisdiction.
Sec. 8. Minnesota Statutes 2004, section 270.30, is
amended by adding a subdivision to read:
Subd. 6d. [DATA PRIVATE.] Information exchanged on
individuals under subdivisions 6a to 6c are private data under
section 13.02, subdivision 12, until such time as a penalty is
imposed as provided in section 326A.08 or by the Lawyers Board
of Professional Responsibility.
Sec. 9. Minnesota Statutes 2004, section 270.30,
subdivision 8, is amended to read:
Subd. 8. [EXEMPTIONS; ENFORCEMENT PROVISIONS.] (a) The
provisions of subdivisions 6 and 7 this section, except for
subdivision 4, do not apply to:
(1) an attorney admitted to practice under section 481.01;
(2) a certified public accountant holding a certificate
under section 326A.04 or a person issued a permit to practice
under section 326A.05 or other person who is subject to the
jurisdiction of the State Board of Accountancy;
(3) a person designated as a registered accounting
practitioner under Minnesota Rules, part 1105.6600, or a
registered accounting practitioner firm issued a permit under
Minnesota Rules, part 1105.7100;
(4) an enrolled agent who has passed the special enrollment
examination administered by the Internal Revenue Service; and
(5) (4) any fiduciary, or the regular employees of a
fiduciary, while acting on behalf of the fiduciary estate, the
testator, trustor, grantor, or beneficiaries of them;
(5) a tax preparer who provides tax preparation services
for fewer than six clients in a calendar year;
(6) tax preparation services to a spouse, parent,
grandparent, child, or sibling of the tax preparer; and
(7) the preparation by an employee of the tax return of the
employee's employer.
Sec. 10. [270.301] [PUBLICATION OF NAMES OF TAX PREPARERS
SUBJECT TO PENALTIES.]
Subdivision 1. [PUBLICATION OF LIST.] Notwithstanding any
other law, the commissioner must publish as provided in this
section a list or lists of tax preparers subject to penalties.
Subd. 2. [REQUIRED AND EXCLUDED TAX PREPARERS.] (a)
Subject to the limitations of paragraph (b), the commissioner
must publish lists of tax preparers who have been convicted
under section 289A.63.
(b) For the purposes of this section, tax preparers are not
subject to publication if:
(1) an administrative or court action contesting the
penalty has been filed or served and is unresolved at the time
when notice would be given under subdivision 3;
(2) an appeal period to contest the penalty has not
expired; or
(3) the commissioner has been notified that the tax
preparer is deceased.
Subd. 3. [NOTICE TO TAX PREPARER.] (a) At least 30 days
before publishing the name of a tax preparer subject to penalty,
the commissioner shall mail a written notice to the tax
preparer, detailing the amount and nature of each penalty and
the intended publication of the information listed in
subdivision 4 related to the penalty. The notice must be mailed
by first class and certified mail addressed to the last known
address of the tax preparer. The notice must include
information regarding the exceptions listed in subdivision 2,
paragraph (b), and must state that the tax preparer's
information will not be published if the tax preparer provides
information establishing that subdivision 2, paragraph (b),
prohibits publication of the tax preparer's name.
(b) Thirty days after the notice is mailed and if the tax
preparer has not proved to the commissioner that subdivision 2,
paragraph (b), prohibits publication, the commissioner may
publish in a list of tax preparers subject to penalty the
information about the tax preparer that is listed in subdivision
4.
Subd. 4. [FORM OF LIST.] The list may be published by any
medium or method. The list must contain the name, associated
business name or names, address or addresses, and violation or
violations for which a penalty was imposed of each tax preparer
subject to penalty.
Subd. 5. [REMOVAL FROM LIST.] The commissioner shall
remove the name of a tax preparer from the list of tax preparers
published under this section:
(1) when the commissioner determines that the name was
included on the list in error;
(2) within 90 days after the preparer has fully paid all
fines imposed, served any suspension, and demonstrated to the
satisfaction of the commissioner that the preparer has
successfully completed any remedial actions required by the
commissioner, the State Board of Accountancy, or the Lawyers
Board of Professional Responsibility; or
(3) when the commissioner has been notified that the tax
preparer is deceased.
Subd. 6. [NAMES PUBLISHED IN ERROR.] If the commissioner
publishes a name under subdivision 1 in error, the tax preparer
whose name was erroneously published has a right to request a
retraction and apology. If the tax preparer so requests, the
commissioner shall publish a retraction and apology
acknowledging that the tax preparer's name was published in
error. The retraction and apology must appear in the same
medium and the same format as the original list that contained
the name listed in error.
Subd. 7. [PAYMENT OF DAMAGES.] Actions against the
commissioner of revenue or the state of Minnesota arising out of
the implementation of this program must be brought under section
270.276.
[EFFECTIVE DATE.] The provision of this section requiring
the commissioner to publish the names of tax preparers applies
only to publishing the names of those tax preparers who commit a
crime under section 289A.63 on or after August 1, 2005.
Sec. 11. Minnesota Statutes 2004, section 270.65, is
amended to read:
270.65 [DATE OF ASSESSMENT; DEFINITION.]
For purposes of taxes administered by the commissioner, the
term "date of assessment" means the date a liability reported on
a return was entered into the records of the commissioner or the
date a return should have been filed, whichever is later; or, in
the case of taxes determined by the commissioner, "date of
assessment" means the date of the order assessing taxes or date
of the return made by the commissioner; or, in the case of an
amended return filed by the taxpayer, the assessment date is the
date additional liability reported on the return, if any, was
entered into the records of the commissioner; or, in the case of
a consent agreement signed by the taxpayer under section 270.67,
subdivision 3, the assessment date is the notice date shown on
the agreement; or, in the case of a check from a taxpayer that
is dishonored and results in an erroneous refund being given to
the taxpayer, remittance of the check is deemed to be an
assessment and the "date of assessment" is the date the check
was received by the commissioner.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 12. Minnesota Statutes 2004, section 270.67,
subdivision 4, is amended to read:
Subd. 4. [OFFER-IN-COMPROMISE AND INSTALLMENT PAYMENT
PROGRAM.] (a) In implementing the authority provided in
subdivision 2 or in sections 8.30 and 16D.15 to accept offers of
installment payments or offers-in-compromise of tax liabilities,
the commissioner of revenue shall prescribe guidelines for
employees of the Department of Revenue to determine whether an
offer-in-compromise or an offer to make installment payments is
adequate and should be accepted to resolve a dispute. In
prescribing the guidelines, the commissioner shall develop and
publish schedules of national and local allowances designed to
provide that taxpayers entering into a compromise or payment
agreement have an adequate means to provide for basic living
expenses. The guidelines must provide that the taxpayer's
ownership interest in a motor vehicle, to the extent of the
value allowed in section 550.37, will not be considered as an
asset; in the case of an offer related to a joint tax liability
of spouses, that value of two motor vehicles must be excluded.
The guidelines must provide that employees of the department
shall determine, on the basis of the facts and circumstances of
each taxpayer, whether the use of the schedules is appropriate
and that employees must not use the schedules to the extent the
use would result in the taxpayer not having adequate means to
provide for basic living expenses. The guidelines must provide
that:
(1) an employee of the department shall not reject an
offer-in-compromise or an offer to make installment payments
from a low-income taxpayer solely on the basis of the amount of
the offer; and
(2) in the case of an offer-in-compromise which relates
only to issues of liability of the taxpayer:
(i) the offer must not be rejected solely because the
commissioner is unable to locate the taxpayer's return or return
information for verification of the liability; and
(ii) the taxpayer shall not be required to provide an
audited, reviewed, or compiled financial statement.
(b) The commissioner shall establish procedures:
(1) that require presentation of a counteroffer or a
written rejection of the offer by the commissioner if the amount
offered by the taxpayer in an offer-in-compromise or an offer to
make installment payments is not accepted by the commissioner;
(2) for an administrative review of any written rejection
of a proposed offer-in-compromise or installment agreement made
by a taxpayer under this section before the rejection is
communicated to the taxpayer;
(3) that allow a taxpayer to request reconsideration of any
written rejection of the offer or agreement to the commissioner
of revenue to determine whether the rejection is reasonable and
appropriate under the circumstances; and
(4) that provide for notification to the taxpayer when an
offer-in-compromise has been accepted, and issuance of
certificates of release of any liens imposed under section
270.69 related to the liability which is the subject of the
compromise.
(c) Each compromise proposal must be accompanied by a
nonrefundable payment of $250. If the compromise proposal is
accepted, the payment must be applied to the accepted compromise
amount. If the compromise is rejected, the payment must be
applied to the outstanding tax debts of the taxpayer pursuant to
section 270.652. In cases of financial hardship, upon
presentation of information establishing an inability to make
the $250 payment, the commissioner may waive this requirement.
[EFFECTIVE DATE.] This section is effective for offers in
compromise submitted after August 31, 2005.
Sec. 13. Minnesota Statutes 2004, section 270.69,
subdivision 4, is amended to read:
Subd. 4. [PERIOD OF LIMITATIONS.] The lien imposed by this
section shall, notwithstanding any other provision of law to the
contrary, be enforceable from the time the lien arises and for
ten years from the date of filing the notice of lien, which must
be filed by the commissioner within five years after the date of
assessment of the tax or final administrative or judicial
determination of the assessment. A notice of lien filed in one
county may be transcribed to the secretary of state or to any
other county within ten years after the date of its filing, but
the transcription shall not extend the period during which the
lien is enforceable. A notice of lien may be renewed by the
commissioner before the expiration of the ten-year period for an
additional ten years. The taxpayer must receive written notice
of the renewal.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 14. Minnesota Statutes 2004, section 270A.03,
subdivision 5, is amended to read:
Subd. 5. [DEBT.] "Debt" means a legal obligation of a
natural person to pay a fixed and certain amount of money, which
equals or exceeds $25 and which is due and payable to a claimant
agency. The term includes criminal fines imposed under section
609.10 or 609.125, fines imposed for petty misdemeanors as
defined in section 609.02, subdivision 4a, and restitution. The
term also includes the co-payment for the appointment of a
district public defender imposed under section 611.17, paragraph
(c). A debt may arise under a contractual or statutory
obligation, a court order, or other legal obligation, but need
not have been reduced to judgment.
A debt includes any legal obligation of a current recipient
of assistance which is based on overpayment of an assistance
grant where that payment is based on a client waiver or an
administrative or judicial finding of an intentional program
violation; or where the debt is owed to a program wherein the
debtor is not a client at the time notification is provided to
initiate recovery under this chapter and the debtor is not a
current recipient of food support, transitional child care, or
transitional medical assistance.
A debt does not include any legal obligation to pay a
claimant agency for medical care, including hospitalization if
the income of the debtor at the time when the medical care was
rendered does not exceed the following amount:
(1) for an unmarried debtor, an income of $8,800 or less;
(2) for a debtor with one dependent, an income of $11,270
or less;
(3) for a debtor with two dependents, an income of $13,330
or less;
(4) for a debtor with three dependents, an income of
$15,120 or less;
(5) for a debtor with four dependents, an income of $15,950
or less; and
(6) for a debtor with five or more dependents, an income of
$16,630 or less.
The income amounts in this subdivision shall be adjusted
for inflation for debts incurred in calendar years 2001 and
thereafter. The dollar amount of each income level that applied
to debts incurred in the prior year shall be increased in the
same manner as provided in section 1(f) of the Internal Revenue
Code of 1986, as amended through December 31, 2000, except that
for the purposes of this subdivision the percentage increase
shall be determined from the year starting September 1, 1999,
and ending August 31, 2000, as the base year for adjusting for
inflation for debts incurred after December 31, 2000.
Debt also includes an agreement to pay a MinnesotaCare
premium, regardless of the dollar amount of the premium
authorized under section 256L.15, subdivision 1a.
Sec. 15. Minnesota Statutes 2004, section 289A.08,
subdivision 16, is amended to read:
Subd. 16. [TAX REFUND OR RETURN PREPARERS; ELECTRONIC
FILING; PAPER FILING FEE IMPOSED.] (a) A "tax refund or return
preparer," as defined in section 289A.60, subdivision 13,
paragraph (g) (h), who prepared more than 500 100 Minnesota
individual income tax returns for the prior calendar year must
file all Minnesota individual income tax returns prepared for
the current calendar year by electronic means.
(b) For tax returns prepared for the tax year beginning in
2001, the "500" in paragraph (a) is reduced to 250.
(c) For tax returns prepared for tax years beginning after
December 31, 2001, the "500" in paragraph (a) is reduced to 100.
(d) Paragraph (a) does not apply to a return if the
taxpayer has indicated on the return that the taxpayer did not
want the return filed by electronic means.
(e) (c) For each return that is not filed electronically by
a tax refund or return preparer under this subdivision,
including returns filed under paragraph (d) (b), a paper filing
fee of $5 is imposed upon the preparer. The fee is collected
from the preparer in the same manner as income tax. The fee
does not apply to returns that the commissioner requires to be
filed in paper form.
Sec. 16. Minnesota Statutes 2004, section 289A.37,
subdivision 5, is amended to read:
Subd. 5. [SUFFICIENCY OF NOTICE.] An order of assessment,
sent postage prepaid by United States mail to the taxpayer at
the taxpayer's last known address, or sent by electronic mail to
the taxpayer's last known electronic mailing address as provided
for in section 325L.08, is sufficient even if the taxpayer is
deceased or is under a legal disability, or, in the case of a
corporation, has terminated its existence, unless the department
has been provided with a new address by a party authorized to
receive notices of assessment.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 17. Minnesota Statutes 2004, section 289A.60,
subdivision 2a, is amended to read:
Subd. 2a. [PENALTIES FOR EXTENDED DELINQUENCY.] (a) If an
individual income tax is not paid within 180 days after the date
of filing of a return or, in the case of taxes assessed by the
commissioner, within 180 days after the assessment date or, if
appealed, within 180 days after final resolution of the appeal,
an extended delinquency penalty of five percent of the tax
remaining unpaid is added to the amount due.
(b) If a corporate franchise, fiduciary income, mining
company, estate, partnership, S corporation, or nonresident
entertainer tax return is not filed within 30 days after written
demand for the filing of a delinquent return, an extended
delinquency penalty of five percent of the tax not paid prior to
the demand is added to the tax, or in the case of an individual
income tax return, a minimum penalty of $100 or the five percent
penalty is imposed, whichever amount is greater.
[EFFECTIVE DATE.] This section is effective for returns
originally due on or after August 1, 2005.
Sec. 18. Minnesota Statutes 2004, section 289A.60,
subdivision 11, is amended to read:
Subd. 11. [PENALTIES RELATING TO INFORMATION REPORTS,
WITHHOLDING.] (a) When a person required under section 289A.09,
subdivision 2, to give a statement to an employee or payee and a
duplicate statement to the commissioner, or to give a
reconciliation of the statements and quarterly returns to the
commissioner, gives a false or fraudulent statement to an
employee or payee or a false or fraudulent duplicate statement
or reconciliation of statements and quarterly returns to the
commissioner, or fails to give a statement or the reconciliation
in the manner, when due, and showing the information required by
section 289A.09, subdivision 2, or rules prescribed by the
commissioner under that section, that person is liable for a
penalty of $50 for an act or failure to act. The total amount
imposed on the delinquent person for failures during a calendar
year must not exceed $25,000.
(b) In addition to any other penalty provided by law, an
employee who gives a withholding exemption certificate or a
residency affidavit to an employer that the employee has reason
to know contains a materially incorrect statement decreases the
amount withheld under section 290.92 and as of the time the
certificate or affidavit was given to the employer there was no
reasonable basis for the statements in the certificate or
affidavit is liable to the commissioner of revenue for a penalty
of $500 for each instance.
(c) In addition to any other penalty provided by law, an
employer who fails to submit a copy of a withholding exemption
certificate or a residency affidavit required by section 290.92,
subdivision 5a, clause (1)(a), (1)(b), or (2) is liable to the
commissioner of revenue for a penalty of $50 for each instance.
(d) An employer or payor who fails to file an application
for a withholding account number, as required by section 290.92,
subdivision 24, is liable to the commissioner for a penalty of
$100.
[EFFECTIVE DATE.] This section is effective for
certificates and affidavits given to employers after December
31, 2005.
Sec. 19. Minnesota Statutes 2004, section 289A.60,
subdivision 13, is amended to read:
Subd. 13. [PENALTIES FOR TAX RETURN PREPARERS.] (a) If an
understatement of liability with respect to a return or claim
for refund is due to a willful attempt in any manner to
understate the liability for a tax by a person who is a tax
return preparer with respect to the return or claim, the person
shall pay to the commissioner a penalty of $500. If a part of a
property tax refund claim is excessive due to a willful attempt
in any manner to overstate the claim for relief allowed under
chapter 290A by a person who is a tax refund or return preparer,
the person shall pay to the commissioner a penalty of $500 with
respect to the claim. These penalties may not be assessed
against the employer of a tax return preparer unless the
employer was actively involved in the willful attempt to
understate the liability for a tax or to overstate the claim for
refund. These penalties are income tax liabilities and may be
assessed at any time as provided in section 289A.38, subdivision
5.
(b) A civil action in the name of the state of Minnesota
may be commenced to enjoin any person who is a tax return
preparer doing business in this state from further engaging in
any conduct described in paragraph (c). An action under this
paragraph must be brought by the attorney general in the
district court for the judicial district of the tax return
preparer's residence or principal place of business, or in which
the taxpayer with respect to whose tax return the action is
brought resides. The court may exercise its jurisdiction over
the action separate and apart from any other action brought by
the state of Minnesota against the tax return preparer or any
taxpayer.
(c) In an action under paragraph (b), if the court finds
that a tax return preparer has:
(1) engaged in any conduct subject to a civil penalty under
section 289A.60 or a criminal penalty under section 289A.63;
(2) misrepresented the preparer's eligibility to practice
before the Department of Revenue, or otherwise misrepresented
the preparer's experience or education as a tax return preparer;
(3) guaranteed the payment of any tax refund or the
allowance of any tax credit; or
(4) engaged in any other fraudulent or deceptive conduct
that substantially interferes with the proper administration of
state tax law, and injunctive relief is appropriate to prevent
the recurrence of that conduct,
the court may enjoin the person from further engaging in that
conduct.
(d) If the court finds that a tax return preparer has
continually or repeatedly engaged in conduct described in
paragraph (c), and that an injunction prohibiting that conduct
would not be sufficient to prevent the person's interference
with the proper administration of state tax laws, the court may
enjoin the person from acting as a tax return preparer. The
court may not enjoin the employer of a tax return preparer for
conduct described in paragraph (c) engaged in by one or more of
the employer's employees unless the employer was also actively
involved in that conduct.
(e) The commissioner may terminate or suspend a tax
preparer's authority to transmit returns electronically to the
state, if the commissioner determines that the tax preparer has
engaged in a pattern and practice of conduct in violation of
paragraph (a) of this subdivision or has been convicted under
section 289A.63.
(f) For purposes of this subdivision, the term
"understatement of liability" means an understatement of the net
amount payable with respect to a tax imposed by state tax law,
or an overstatement of the net amount creditable or refundable
with respect to a tax. The determination of whether or not
there is an understatement of liability must be made without
regard to any administrative or judicial action involving the
taxpayer. For purposes of this subdivision, the amount
determined for underpayment of estimated tax under either
section 289A.25 or 289A.26 is not considered an understatement
of liability.
(f) (g) For purposes of this subdivision, the term
"overstatement of claim" means an overstatement of the net
amount refundable with respect to a claim for property tax
relief provided by chapter 290A. The determination of whether
or not there is an overstatement of a claim must be made without
regard to administrative or judicial action involving the
claimant.
(g) (h) For purposes of this section, the term "tax refund
or return preparer" means an individual who prepares for
compensation, or who employs one or more individuals to prepare
for compensation, a return of tax, or a claim for refund of
tax. The preparation of a substantial part of a return or claim
for refund is treated as if it were the preparation of the
entire return or claim for refund. An individual is not
considered a tax return preparer merely because the individual:
(1) gives typing, reproducing, or other mechanical
assistance;
(2) prepares a return or claim for refund of the employer,
or an officer or employee of the employer, by whom the
individual is regularly and continuously employed;
(3) prepares a return or claim for refund of any person as
a fiduciary for that person; or
(4) prepares a claim for refund for a taxpayer in response
to a tax order issued to the taxpayer.
Sec. 20. Minnesota Statutes 2004, section 290.92,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] (1) [WAGES.] For purposes
of this section, the term "wages" means the same as that term is
defined in section 3401(a) and (f) of the Internal Revenue Code.
(2) [PAYROLL PERIOD.] For purposes of this section the
term "payroll period" means a period for which a payment of
wages is ordinarily made to the employee by the employee's
employer, and the term "miscellaneous payroll period" means a
payroll period other than a daily, weekly, biweekly,
semimonthly, monthly, quarterly, semiannual, or annual payroll
period.
(3) [EMPLOYEE.] For purposes of this section the term
"employee" means any resident individual performing services for
an employer, either within or without, or both within and
without the state of Minnesota, and every nonresident individual
performing services within the state of Minnesota, the
performance of which services constitute, establish, and
determine the relationship between the parties as that of
employer and employee. As used in the preceding sentence, the
term "employee" includes an officer of a corporation, and an
officer, employee, or elected official of the United States, a
state, or any political subdivision thereof, or the District of
Columbia, or any agency or instrumentality of any one or more of
the foregoing.
(4) [EMPLOYER.] For purposes of this section the term
"employer" means any person, including individuals, fiduciaries,
estates, trusts, partnerships, limited liability companies, and
corporations transacting business in or deriving any income from
sources within the state of Minnesota for whom an individual
performs or performed any service, of whatever nature, as the
employee of such person, except that if the person for whom the
individual performs or performed the services does not have
legal control of the payment of the wages for such services, the
term "employer," except for purposes of paragraph (1), means the
person having legal control of the payment of such wages. As
used in the preceding sentence, the term "employer" includes any
corporation, individual, estate, trust, or organization which is
exempt from taxation under section 290.05 and further includes,
but is not limited to, officers of corporations who have legal
control, either individually or jointly with another or others,
of the payment of the wages.
(5) [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For
purposes of this section, the term "number of withholding
exemptions claimed" means the number of withholding exemptions
claimed in a withholding exemption certificate in effect under
subdivision 5, except that if no such certificate is in effect,
the number of withholding exemptions claimed shall be considered
to be zero.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 21. Minnesota Statutes 2004, section 325D.33,
subdivision 6, is amended to read:
Subd. 6. [VIOLATIONS.] If the commissioner determines that
a distributor is violating any provision of this chapter, the
commissioner must give the distributor a written warning
explaining the violation and an explanation of what must be done
to comply with this chapter. Within ten days of issuance of the
warning, the distributor must notify the commissioner that the
distributor has complied with the commissioner's recommendation
or request that the commissioner set the issue for a hearing
pursuant to chapter 14. If a hearing is requested, the hearing
shall be scheduled within 20 days of the request and the
recommendation of the administrative law judge shall be issued
within five working days of the close of the hearing. The
commissioner's final determination shall be issued within five
working days of the receipt of the administrative law judge's
recommendation. If the commissioner's final determination is
adverse to the distributor and the distributor does not comply
within ten days of receipt of the commissioner's final
determination, the commissioner may order the distributor to
immediately cease the stamping of cigarettes. As soon as
practicable after the order, the commissioner must remove the
meter and any unapplied cigarette stamps from the premises of
the distributor.
If within ten days of issuance of the written warning the
distributor has not complied with the commissioner's
recommendation or requested a hearing, the commissioner may
order the distributor to immediately cease the stamping of
cigarettes and remove the meter and unapplied stamps from the
distributor's premises.
If, within any 12-month period, the commissioner has issued
three written warnings to any distributor, even if the
distributor has complied within ten days, the commissioner shall
notify the distributor of the commissioner's intent to revoke
the distributor's license for a continuing course of conduct
contrary to this chapter. For purposes of this paragraph, a
written warning that was ultimately resolved by removal of the
warning by the commissioner is not deemed to be a warning. The
commissioner must notify the distributor of the date and time of
a hearing pursuant to chapter 14 at least 20 days before the
hearing is held. The hearing must provide an opportunity for
the distributor to show cause why the license should not be
revoked. If the commissioner revokes a distributor's license,
the commissioner shall not issue a new license to that
distributor for 180 days.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Presented to the governor May 31, 2005
Signed by the governor June 2, 2005, 11:50 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes