1.1 	A bill for an act
1.2 	relating to taxation; providing for tax reductions to middle class families; closing 
1.3 	loopholes; providing tax fairness; appropriating money;amending Minnesota 
1.4 	Statutes 2014, sections 16D.08, subdivision 2; 270.80, subdivisions 2, 3, 4, by 
1.5 	adding subdivisions; 270.81, subdivision 3, by adding a subdivision; 270.82; 
1.6 	270.83, subdivisions 1, 2; 270.84; 270.86; 270.87; 270C.03, subdivision 1; 
1.7 	270C.33, subdivision 6; 270C.722, subdivision 1; 270C.728, by adding a 
1.8 	subdivision; 272.02, subdivision 9; 275.025, subdivisions 1, 4; 289A.60, by 
1.9 	adding a subdivision; 290.01, subdivisions 4a, 19a, 19b, 19c, by adding a 
1.10 	subdivision; 290.067, subdivisions 1, 2, 2b, 3; 290.0671, subdivisions 6, 7; 
1.11 	290.0674, subdivision 2, by adding subdivisions; 290.068, subdivision 2; 
1.12 	290.091, subdivision 2; 290.17, subdivision 4; 290.191, subdivision 5; 290.21, 
1.13 	subdivision 4; 290A.03, subdivision 13; 290B.03, subdivision 1; 290B.04, 
1.14 	subdivision 1; 291.03, subdivision 11; 296A.01, subdivision 12; 296A.08, 
1.15 	subdivision 2; 297A.815, subdivision 3; 297A.94; 297F.01, subdivision 14; 
1.16 	297F.03, subdivisions 5, 6; 297F.04, subdivision 1; 297F.13, subdivision 4; 
1.17 	297F.19, by adding a subdivision; 297F.20, by adding subdivisions; 297F.21, 
1.18 	subdivision 1; 297H.04, subdivision 2; 461.12, subdivision 8; Minnesota Statutes 
1.19 	2015 Supplement, sections 289A.02, subdivision 7; 290.01, subdivisions 19, 
1.20 	31; 290.0671, subdivision 1; 290A.03, subdivision 15; 291.005, subdivision 
1.21 	1; proposing coding for new law in Minnesota Statutes, chapters 270C; 
1.22 	297F; repealing Minnesota Statutes 2014, sections 270.81, subdivision 4; 
1.23 	270.83, subdivision 3; 290.067, subdivision 2a; 297F.185; Minnesota Statutes 
1.24 	2015 Supplement, section 290.0671, subdivision 6a; Minnesota Rules, parts 
1.25 	8106.0100, subparts 1, 2, 3, 4, 5, 6, 7, 8, 10, 12, 13, 14, 17, 17a, 18, 19, 20, 
1.26 	21; 8106.0300, subparts 1, 3; 8106.0400; 8106.0500; 8106.0600; 8106.0700; 
1.27 	8106.0800; 8106.9900.
1.28 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.29 	ARTICLE 1
1.30 	FEDERAL UPDATE

1.31 	Section 1. Minnesota Statutes 2015 Supplement, section 289A.02, subdivision 7, 
1.32 	is amended to read:
2.1 		Subd. 7.Internal Revenue Code. Unless specifically defined otherwise, "Internal 
2.2 	Revenue Code" means the Internal Revenue Code of 1986, as amended through December 
2.3 	31, ~~2014~~ 2015.

2.4 	EFFECTIVE DATE. This section is effective the day following final enactment.

2.5 	Sec. 2. Minnesota Statutes 2015 Supplement, section 290.01, subdivision 19, is 
2.6 	amended to read:
2.7 		Subd. 19.Net income. The term "net income" means the federal taxable income, 
2.8 	as defined in section 63 of the Internal Revenue Code of 1986, as amended through the 
2.9 	date named in this subdivision, incorporating the federal effective dates of changes to the 
2.10 	Internal Revenue Code and any elections made by the taxpayer in accordance with the 
2.11 	Internal Revenue Code in determining federal taxable income for federal income tax 
2.12 	purposes, and with the modifications provided in subdivisions 19a to 19f.
2.13 	In the case of a regulated investment company or a fund thereof, as defined in section 
2.14 	851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment 
2.15 	company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, 
2.16 	except that:
2.17 	(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal 
2.18 	Revenue Code does not apply;
2.19 	(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal 
2.20 	Revenue Code must be applied by allowing a deduction for capital gain dividends and 
2.21 	exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal 
2.22 	Revenue Code; and
2.23 	(3) the deduction for dividends paid must also be applied in the amount of any 
2.24 	undistributed capital gains which the regulated investment company elects to have treated 
2.25 	as provided in section 852(b)(3)(D) of the Internal Revenue Code.
2.26 	The net income of a real estate investment trust as defined and limited by section 
2.27 	856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust 
2.28 	taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
2.29 	The net income of a designated settlement fund as defined in section 468B(d) of 
2.30 	the Internal Revenue Code means the gross income as defined in section 468B(b) of the 
2.31 	Internal Revenue Code.
2.32 	The Internal Revenue Code of 1986, as amended through December 31, ~~2014~~ 2015, 
2.33 	shall be in effect for taxable years beginning after December 31, 1996.
3.1 	Except as otherwise provided, references to the Internal Revenue Code in 
3.2 	subdivisions 19 to 19f mean the code in effect for purposes of determining net income for 
3.3 	the applicable year.

3.4 	EFFECTIVE DATE. This section is effective the day following final enactment, 
3.5 	except the changes incorporated by federal changes are effective retroactively at the same 
3.6 	time as the changes were effective for federal purposes.

3.7 	Sec. 3. Minnesota Statutes 2014, section 290.01, subdivision 19a, is amended to read:
3.8 		Subd. 19a.Additions to federal taxable income. For individuals, estates, and 
3.9 	trusts, there shall be added to federal taxable income:
3.10 	(1)(i) interest income on obligations of any state other than Minnesota or a political 
3.11 	or governmental subdivision, municipality, or governmental agency or instrumentality 
3.12 	of any state other than Minnesota exempt from federal income taxes under the Internal 
3.13 	Revenue Code or any other federal statute; and
3.14 	(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 
3.15 	Code, except:
3.16 	(A) the portion of the exempt-interest dividends exempt from state taxation under 
3.17 	the laws of the United States; and
3.18 	(B) the portion of the exempt-interest dividends derived from interest income 
3.19 	on obligations of the state of Minnesota or its political or governmental subdivisions, 
3.20 	municipalities, governmental agencies or instrumentalities, but only if the portion of the 
3.21 	exempt-interest dividends from such Minnesota sources paid to all shareholders represents 
3.22 	95 percent or more of the exempt-interest dividends, including any dividends exempt 
3.23 	under subitem (A), that are paid by the regulated investment company as defined in section 
3.24 	851(a) of the Internal Revenue Code, or the fund of the regulated investment company as 
3.25 	defined in section 851(g) of the Internal Revenue Code, making the payment; and
3.26 	(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 
3.27 	government described in section 7871(c) of the Internal Revenue Code shall be treated as 
3.28 	interest income on obligations of the state in which the tribe is located;
3.29 	(2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or 
3.30 	accrued within the taxable year under this chapter and the amount of taxes based on net 
3.31 	income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state or 
3.32 	to any province or territory of Canada, to the extent allowed as a deduction under section 
3.33 	63(d) of the Internal Revenue Code, but the addition may not be more than the amount 
3.34 	by which the state itemized deduction exceeds the amount of the standard deduction as 
3.35 	defined in section 63(c) of the Internal Revenue Code, minus any addition that would have 
4.1 	been required under clause (17) if the taxpayer had claimed the standard deduction. For 
4.2 	the purpose of this clause, income, sales and use, motor vehicle sales, or excise taxes are 
4.3 	the last itemized deductions disallowed under clause (15);
4.4 	(3) the capital gain amount of a lump-sum distribution to which the special tax under 
4.5 	section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
4.6 	(4) the amount of income taxes paid or accrued within the taxable year under this 
4.7 	chapter and taxes based on net income paid to any other state or any province or territory 
4.8 	of Canada, to the extent allowed as a deduction in determining federal adjusted gross 
4.9 	income. For the purpose of this paragraph, income taxes do not include the taxes imposed 
4.10 	by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
4.11 	(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10 
4.12 	other than expenses or interest used in computing net interest income for the subtraction 
4.13 	allowed under subdivision 19b, clause (1);
4.14 	(6) the amount of a partner's pro rata share of net income which does not flow 
4.15 	through to the partner because the partnership elected to pay the tax on the income under 
4.16 	section 6242(a)(2) of the Internal Revenue Code;
4.17 	(7) 80 percent of the depreciation deduction allowed under section 168(k) of the 
4.18 	Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that 
4.19 	in the taxable year generates a deduction for depreciation under section 168(k) and the 
4.20 	activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 
4.21 	the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 
4.22 	limited to excess of the depreciation claimed by the activity under section 168(k) over the 
4.23 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
4.24 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
4.25 	under section 168(k) is allowed;
4.26 	(8) 80 percent of the amount by which the deduction allowed by section 179 of the 
4.27 	Internal Revenue Code exceeds the deduction allowable ~~by~~ under the dollar limits of
4.28 	section 179 of the Internal Revenue Code of 1986, as amended through December 31, 2003;
4.29 	(9) to the extent deducted in computing federal taxable income, the amount of the 
4.30 	deduction allowable under section 199 of the Internal Revenue Code;
4.31 	(10) the amount of expenses disallowed under section 290.10, subdivision 2;
4.32 	(11) for taxable years beginning before January 1, 2010, the amount deducted for 
4.33 	qualified tuition and related expenses under section 222 of the Internal Revenue Code, to 
4.34 	the extent deducted from gross income;
5.1 	(12) for taxable years beginning before January 1, 2010, the amount deducted for 
5.2 	certain expenses of elementary and secondary school teachers under section 62(a)(2)(D) 
5.3 	of the Internal Revenue Code, to the extent deducted from gross income;
5.4 	(13) discharge of indebtedness income resulting from reacquisition of business 
5.5 	indebtedness and deferred under section 108(i) of the Internal Revenue Code;
5.6 	(14) changes to federal taxable income attributable to a net operating loss that the 
5.7 	taxpayer elected to carry back for more than two years for federal purposes but for which 
5.8 	the losses can be carried back for only two years under section 290.095, subdivision 
5.9 	11, paragraph (c);
5.10 	(15) the amount of disallowed itemized deductions, but the amount of disallowed 
5.11 	itemized deductions plus the addition required under clause (2) may not be more than the 
5.12 	amount by which the itemized deductions as allowed under section 63(d) of the Internal 
5.13 	Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of 
5.14 	the Internal Revenue Code, and reduced by any addition that would have been required 
5.15 	under clause (17) if the taxpayer had claimed the standard deduction:
5.16 	(i) the amount of disallowed itemized deductions is equal to the lesser of:
5.17 	(A) three percent of the excess of the taxpayer's federal adjusted gross income 
5.18 	over the applicable amount; or
5.19 	(B) 80 percent of the amount of the itemized deductions otherwise allowable to the 
5.20 	taxpayer under the Internal Revenue Code for the taxable year;
5.21 	(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a 
5.22 	married individual filing a separate return. Each dollar amount shall be increased by 
5.23 	an amount equal to:
5.24 	(A) such dollar amount, multiplied by
5.25 	(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal 
5.26 	Revenue Code for the calendar year in which the taxable year begins, by substituting 
5.27 	"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
5.28 	(iii) the term "itemized deductions" does not include:
5.29 	(A) the deduction for medical expenses under section 213 of the Internal Revenue 
5.30 	Code;
5.31 	(B) any deduction for investment interest as defined in section 163(d) of the Internal 
5.32 	Revenue Code; and
5.33 	(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or 
5.34 	theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue 
5.35 	Code or for losses described in section 165(d) of the Internal Revenue Code;
6.1 	(16) the amount of disallowed personal exemptions for taxpayers with federal 
6.2 	adjusted gross income over the threshold amount:
6.3 	(i) the disallowed personal exemption amount is equal to the number of personal 
6.4 	exemptions allowed under section 151(b) and (c) of the Internal Revenue Code multiplied 
6.5 	by the dollar amount for personal exemptions under section 151(d)(1) and (2) of the 
6.6 	Internal Revenue Code, as adjusted for inflation by section 151(d)(4) of the Internal 
6.7 	Revenue Code, and by the applicable percentage;
6.8 	(ii) "applicable percentage" means two percentage points for each $2,500 (or 
6.9 	fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable 
6.10 	year exceeds the threshold amount. In the case of a married individual filing a separate 
6.11 	return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In 
6.12 	no event shall the applicable percentage exceed 100 percent;
6.13 	(iii) the term "threshold amount" means:
6.14 	(A) $150,000 in the case of a joint return or a surviving spouse;
6.15 	(B) $125,000 in the case of a head of a household;
6.16 	(C) $100,000 in the case of an individual who is not married and who is not a 
6.17 	surviving spouse or head of a household; and
6.18 	(D) $75,000 in the case of a married individual filing a separate return; and
6.19 	(iv) the thresholds shall be increased by an amount equal to:
6.20 	(A) such dollar amount, multiplied by
6.21 	(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal 
6.22 	Revenue Code for the calendar year in which the taxable year begins, by substituting 
6.23 	"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
6.24 	(17) to the extent deducted in the computation of federal taxable income, for taxable 
6.25 	years beginning after December 31, 2010, and before January 1, 2014, the difference 
6.26 	between the standard deduction allowed under section 63(c) of the Internal Revenue Code 
6.27 	and the standard deduction allowed for 2011, 2012, and 2013 under the Internal Revenue 
6.28 	Code as amended through December 1, 2010.

6.29 	EFFECTIVE DATE. This section is effective the day following final enactment, 
6.30 	except the changes incorporated by federal changes are effective retroactively at the same 
6.31 	time as the changes were effective for federal purposes.

6.32 	Sec. 4. Minnesota Statutes 2014, section 290.01, subdivision 19b, is amended to read:
6.33 		Subd. 19b.Subtractions from federal taxable income. For individuals, estates, 
6.34 	and trusts, there shall be subtracted from federal taxable income:
7.1 	(1) net interest income on obligations of any authority, commission, or 
7.2 	instrumentality of the United States to the extent includable in taxable income for federal 
7.3 	income tax purposes but exempt from state income tax under the laws of the United States;
7.4 	(2) if included in federal taxable income, the amount of any overpayment of income 
7.5 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
7.6 	is received as a refund or as a credit to another taxable year's income tax liability;
7.7 	(3) the amount paid to others, less the amount used to claim the credit allowed under 
7.8 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
7.9 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
7.10 	transportation of each qualifying child in attending an elementary or secondary school 
7.11 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
7.12 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
7.13 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
7.14 	of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 
7.15 	tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, 
7.16 	"textbooks" includes books and other instructional materials and equipment purchased 
7.17 	or leased for use in elementary and secondary schools in teaching only those subjects 
7.18 	legally and commonly taught in public elementary and secondary schools in this state. 
7.19 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
7.20 	section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 
7.21 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
7.22 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
7.23 	or materials for, or transportation to, extracurricular activities including sporting events, 
7.24 	musical or dramatic events, speech activities, driver's education, or similar programs. No 
7.25 	deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or 
7.26 	the qualifying child's vehicle to provide such transportation for a qualifying child. For 
7.27 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
7.28 	given in section 32(c)(3) of the Internal Revenue Code;
7.29 	(4) income as provided under section 290.0802;
7.30 	(5) to the extent included in federal adjusted gross income, income realized on 
7.31 	disposition of property exempt from tax under section 290.491;
7.32 	(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) 
7.33 	of the Internal Revenue Code in determining federal taxable income by an individual 
7.34 	who does not itemize deductions for federal income tax purposes for the taxable year, an 
7.35 	amount equal to 50 percent of the excess of charitable contributions over $500 allowable 
8.1 	as a deduction for the taxable year under section 170(a) of the Internal Revenue Code, 
8.2 	under the provisions of Public Law 109-1 and Public Law 111-126;
8.3 	(7) for individuals who are allowed a federal foreign tax credit for taxes that do not 
8.4 	qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
8.5 	of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
8.6 	foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 
8.7 	"federal foreign tax credit" means the credit allowed under section 27 of the Internal 
8.8 	Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
8.9 	under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
8.10 	the extent they exceed the federal foreign tax credit;
8.11 	(8) in each of the five tax years immediately following the tax year in which an 
8.12 	addition is required under subdivision 19a, clause (7), or 19c, clause (12), in the case of a 
8.13 	shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 
8.14 	delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount 
8.15 	of the addition made by the taxpayer under subdivision 19a, clause (7), or subdivision 19c, 
8.16 	clause (12), in the case of a shareholder of an S corporation, minus the positive value of 
8.17 	any net operating loss under section 172 of the Internal Revenue Code generated for the 
8.18 	tax year of the addition. The resulting delayed depreciation cannot be less than zero;
8.19 	(9) job opportunity building zone income as provided under section 469.316;
8.20 	(10) to the extent included in federal taxable income, the amount of compensation 
8.21 	paid to members of the Minnesota National Guard or other reserve components of the 
8.22 	United States military for active service, including compensation for services performed 
8.23 	under the Active Guard Reserve (AGR) program. For purposes of this clause, "active 
8.24 	service" means (i) state active service as defined in section 190.05, subdivision 5a, clause 
8.25 	(1); or (ii) federally funded state active service as defined in section 190.05, subdivision 
8.26 	5b, and "active service" includes service performed in accordance with section 190.08, 
8.27 	subdivision 3;
8.28 	(11) to the extent included in federal taxable income, the amount of compensation 
8.29 	paid to Minnesota residents who are members of the armed forces of the United States 
8.30 	or United Nations for active duty performed under United States Code, title 10; or the 
8.31 	authority of the United Nations;
8.32 	(12) an amount, not to exceed $10,000, equal to qualified expenses related to a 
8.33 	qualified donor's donation, while living, of one or more of the qualified donor's organs 
8.34 	to another person for human organ transplantation. For purposes of this clause, "organ" 
8.35 	means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 
8.36 	"human organ transplantation" means the medical procedure by which transfer of a human 
9.1 	organ is made from the body of one person to the body of another person; "qualified 
9.2 	expenses" means unreimbursed expenses for both the individual and the qualified donor 
9.3 	for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 
9.4 	may be subtracted under this clause only once; and "qualified donor" means the individual 
9.5 	or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 
9.6 	individual may claim the subtraction in this clause for each instance of organ donation for 
9.7 	transplantation during the taxable year in which the qualified expenses occur;
9.8 	(13) in each of the five tax years immediately following the tax year in which an 
9.9 	addition is required under subdivision 19a, clause (8), or 19c, clause (13), in the case of a 
9.10 	shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 
9.11 	addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (13), in the 
9.12 	case of a shareholder of a corporation that is an S corporation, minus the positive value of 
9.13 	any net operating loss under section 172 of the Internal Revenue Code generated for the 
9.14 	tax year of the addition. If the net operating loss exceeds the addition for the tax year, a 
9.15 	subtraction is not allowed under this clause;
9.16 	(14) to the extent included in the federal taxable income of a nonresident of 
9.17 	Minnesota, compensation paid to a service member as defined in United States Code, title 
9.18 	10, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief 
9.19 	Act, Public Law 108-189, section 101(2);
9.20 	(15) to the extent included in federal taxable income, the amount of national service 
9.21 	educational awards received from the National Service Trust under United States Code, 
9.22 	title 42, sections 12601 to 12604, for service in an approved Americorps National Service 
9.23 	program;
9.24 	(16) to the extent included in federal taxable income, discharge of indebtedness 
9.25 	income resulting from reacquisition of business indebtedness included in federal taxable 
9.26 	income under section 108(i) of the Internal Revenue Code. This subtraction applies only 
9.27 	to the extent that the income was included in net income in a prior year as a result of the 
9.28 	addition under subdivision 19a, clause (13);
9.29 	(17) the amount of the net operating loss allowed under section 290.095, subdivision 
9.30 	11, paragraph (c);
9.31 	(18) the amount of expenses not allowed for federal income tax purposes due 
9.32 	to claiming the railroad track maintenance credit under section 45G(a) of the Internal 
9.33 	Revenue Code;
9.34 	(19) the amount of the limitation on itemized deductions under section 68(b) of 
9.35 	the Internal Revenue Code; and
10.1 	(20) the amount of the phaseout of personal exemptions under section 151(d) of 
10.2 	the Internal Revenue Code~~; and~~.
10.3 	~~(21) to the extent included in federal taxable income, the amount of qualified~~ 
10.4 	~~transportation fringe benefits described in section 132(f)(1)(A) and (B) of the Internal~~ 
10.5 	~~Revenue Code. The subtraction is limited to the lesser of the amount of qualified~~ 
10.6 	~~transportation fringe benefits received in excess of the limitations under section~~ 
10.7 	~~132(f)(2)(A) of the Internal Revenue Code for the year or the difference between the~~ 
10.8 	~~maximum qualified parking benefits excludable under section 132(f)(2)(B) of the Internal~~ 
10.9 	~~Revenue Code minus the amount of transit benefits excludable under section 132(f)(2)(A)~~ 
10.10 	~~of the Internal Revenue Code.~~

10.11 	EFFECTIVE DATE. This section is effective the day following final enactment, 
10.12 	except the changes incorporated by federal changes are effective retroactively at the same 
10.13 	time as the changes were effective for federal purposes.

10.14 	Sec. 5. Minnesota Statutes 2014, section 290.01, subdivision 19c, is amended to read:
10.15 		Subd. 19c.Corporations; additions to federal taxable income. For corporations, 
10.16 	there shall be added to federal taxable income:
10.17 	(1) the amount of any deduction taken for federal income tax purposes for income, 
10.18 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
10.19 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
10.20 	another state, a political subdivision of another state, the District of Columbia, or any 
10.21 	foreign country or possession of the United States;
10.22 	(2) interest not subject to federal tax upon obligations of: the United States, its 
10.23 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
10.24 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
10.25 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
10.26 	tribal governments;
10.27 	(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
10.28 	Revenue Code;
10.29 	(4) the amount of any net operating loss deduction taken for federal income tax 
10.30 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
10.31 	deduction under section 810 of the Internal Revenue Code;
10.32 	(5) the amount of any special deductions taken for federal income tax purposes 
10.33 	under sections 241 to 247 and 965 of the Internal Revenue Code;
10.34 	(6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
10.35 	clause (a), that are not subject to Minnesota income tax;
11.1 	(7) the amount of any capital losses deducted for federal income tax purposes under 
11.2 	sections 1211 and 1212 of the Internal Revenue Code;
11.3 	(8) the amount of percentage depletion deducted under sections 611 through 614 and 
11.4 	291 of the Internal Revenue Code;
11.5 	(9) for certified pollution control facilities placed in service in a taxable year 
11.6 	beginning before December 31, 1986, and for which amortization deductions were elected 
11.7 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
11.8 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
11.9 	income for those facilities;
11.10 	(10) the amount of a partner's pro rata share of net income which does not flow 
11.11 	through to the partner because the partnership elected to pay the tax on the income under 
11.12 	section 6242(a)(2) of the Internal Revenue Code;
11.13 	(11) any increase in subpart F income, as defined in section 952(a) of the Internal 
11.14 	Revenue Code, for the taxable year when subpart F income is calculated without regard to 
11.15 	the provisions of Division C, title III, section 303(b) of Public Law 110-343;
11.16 	(12) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) 
11.17 	and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer 
11.18 	has an activity that in the taxable year generates a deduction for depreciation under 
11.19 	section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year 
11.20 	that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed 
11.21 	under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the 
11.22 	depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the 
11.23 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
11.24 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
11.25 	under section 168(k)(1)(A) and (k)(4)(A) is allowed;
11.26 	(13) 80 percent of the amount by which the deduction allowed by section 179 of 
11.27 	the Internal Revenue Code exceeds the deduction allowable ~~by~~ under the dollar limits of
11.28 	section 179 of the Internal Revenue Code of 1986, as amended through December 31, 2003;
11.29 	(14) to the extent deducted in computing federal taxable income, the amount of the 
11.30 	deduction allowable under section 199 of the Internal Revenue Code;
11.31 	(15) the amount of expenses disallowed under section 290.10, subdivision 2; and
11.32 	(16) discharge of indebtedness income resulting from reacquisition of business 
11.33 	indebtedness and deferred under section 108(i) of the Internal Revenue Code.

11.34 	EFFECTIVE DATE. This section is effective the day following final enactment, 
11.35 	except the changes incorporated by federal changes are effective retroactively at the same 
11.36 	time as the changes were effective for federal purposes.

12.1 	Sec. 6. Minnesota Statutes 2015 Supplement, section 290.01, subdivision 31, is 
12.2 	amended to read:
12.3 		Subd. 31.Internal Revenue Code. Unless specifically defined otherwise, "Internal 
12.4 	Revenue Code" means the Internal Revenue Code of 1986, as amended through December 
12.5 	31, ~~2014~~ 2015. Internal Revenue Code also includes any uncodified provision in federal 
12.6 	law that relates to provisions of the Internal Revenue Code that are incorporated into 
12.7 	Minnesota law. When used in this chapter, the reference to "subtitle A, chapter 1, 
12.8 	subchapter N, part 1, of the Internal Revenue Code" is to the Internal Revenue Code as 
12.9 	amended through March 18, 2010.

12.10 	EFFECTIVE DATE. This section is effective the day following final enactment, 
12.11 	except the changes incorporated by federal changes are effective retroactively at the same 
12.12 	time as the changes were effective for federal purposes.

12.13 	Sec. 7. Minnesota Statutes 2015 Supplement, section 290.0671, subdivision 1, is 
12.14 	amended to read:
12.15 		Subdivision 1.Credit allowed. (a) An individual who is a resident of Minnesota is 
12.16 	allowed a credit against the tax imposed by this chapter equal to a percentage of earned 
12.17 	income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the 
12.18 	Internal Revenue Code.
12.19 	(b) For individuals with no qualifying children, the credit equals 2.10 percent of the 
12.20 	first $6,180 of earned income. The credit is reduced by 2.01 percent of earned income 
12.21 	or adjusted gross income, whichever is greater, in excess of $8,130, but in no case is 
12.22 	the credit less than zero.
12.23 	(c) For individuals with one qualifying child, the credit equals 9.35 percent of the 
12.24 	first $11,120 of earned income. The credit is reduced by 6.02 percent of earned income 
12.25 	or adjusted gross income, whichever is greater, in excess of $21,190 , but in no case is 
12.26 	the credit less than zero.
12.27 	(d) For individuals with two or more qualifying children, the credit equals 11percent 
12.28 	of the first $18,240 of earned income. The credit is reduced by 10.82 percent of earned 
12.29 	income or adjusted gross income, whichever is greater, in excess of $25,130, but in no 
12.30 	case is the credit less than zero.
12.31 	(e) For a part-year resident, the credit must be allocated based on the percentage 
12.32 	calculated under section 290.06, subdivision 2c, paragraph (e).
12.33 	(f) For a person who was a resident for the entire tax year and has earned income 
12.34 	not subject to tax under this chapter, including income excluded under section 290.01, 
12.35 	subdivision 19b, clause (9), the credit must be allocated based on the ratio of federal 
13.1 	adjusted gross income reduced by the earned income not subject to tax under this chapter 
13.2 	over federal adjusted gross income. For purposes of this paragraph, the subtractions 
13.3 	for military pay under section 290.01, subdivision 19b, clauses (10) and (11), are not 
13.4 	considered "earned income not subject to tax under this chapter."
13.5 	For the purposes of this paragraph, the exclusion of combat pay under section 112 
13.6 	of the Internal Revenue Code is not considered "earned income not subject to tax under 
13.7 	this chapter."
13.8 	~~(g) For tax years beginning after December 31, 2007, and before December 31,~~ 
13.9 	~~2010, and for tax years beginning after December 31, 2017, the $8,130 in paragraph (b),~~ 
13.10 	~~the $21,190 in paragraph (c), and the $25,130 in paragraph (d), after being adjusted for~~ 
13.11 	~~inflation under subdivision 7, are each increased by $3,000 for married taxpayers filing joint~~ 
13.12 	~~returns. For tax years beginning after December 31, 2008, the commissioner shall annually~~ 
13.13 	~~adjust the $3,000 by the percentage determined pursuant to the provisions of section 1(f)~~ 
13.14 	~~of the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2007" shall be~~ 
13.15 	~~substituted for the word "1992." For 2009, the commissioner shall then determine the~~ 
13.16 	~~percent change from the 12 months ending on August 31, 2007, to the 12 months ending on~~ 
13.17 	~~August 31, 2008, and in each subsequent year, from the 12 months ending on August 31,~~ 
13.18 	~~2007, to the 12 months ending on August 31 of the year preceding the taxable year. The~~ 
13.19 	~~earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the~~ 
13.20 	~~amount ends in $5, the amount is rounded up to the nearest $10. The determination of the~~ 
13.21 	~~commissioner under this subdivision is not a rule under the Administrative Procedure Act.~~
13.22 	(g) ~~(h)(1) For tax years beginning after December 31, 2012, and before January~~ 
13.23 	~~1, 2014, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in~~ 
13.24 	~~paragraph (d), after being adjusted for inflation under subdivision 7, are increased by~~ 
13.25 	~~$5,340 for married taxpayers filing joint returns; and (2)~~ For tax years beginning after 
13.26 	December 31, 2013, ~~and before January 1, 2018,~~ the $8,130 in paragraph (b), the $21,190 
13.27 	in paragraph (c), and the $25,130 in paragraph (d), after being adjusted for inflation under 
13.28 	subdivision 7, are each increased by $5,000 for married taxpayers filing joint returns. ~~For~~ 
13.29 	~~tax years beginning after December 31, 2010, and before January 1, 2012, and~~ For tax 
13.30 	years beginning after December 31, 2013, ~~and before January 1, 2018,~~ the commissioner 
13.31 	shall annually adjust the $5,000 by the percentage determined pursuant to the provisions 
13.32 	of section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B), the word 
13.33 	"2008" shall be substituted for the word "1992." ~~For 2011,~~ The commissioner shall then 
13.34 	determine the percent change from the 12 months ending on August 31, 2008, to the 12 
13.35 	months ending on ~~August 31, 2010 , and in each subsequent year, from the 12 months~~ 
13.36 	~~ending on August 31, 2008, to the 12 months ending on~~ August 31 of the year preceding 
14.1 	the taxable year. The earned income thresholds as adjusted for inflation must be rounded 
14.2 	to the nearest $10. If the amount ends in $5, the amount is rounded up to the nearest $10. 
14.3 	The determination of the commissioner under this subdivision is not a rule under the 
14.4 	Administrative Procedure Act.
14.5 	~~(i)~~ (h) The commissioner shall construct tables showing the amount of the credit 
14.6 	at various income levels and make them available to taxpayers. The tables shall follow 
14.7 	the schedule contained in this subdivision, except that the commissioner may graduate 
14.8 	the transition between income brackets.

14.9 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
14.10 	December 31, 2015.

14.11 	Sec. 8. Minnesota Statutes 2014, section 290.091, subdivision 2, is amended to read:
14.12 		Subd. 2.Definitions. For purposes of the tax imposed by this section, the following 
14.13 	terms have the meanings given:
14.14 	(a) "Alternative minimum taxable income" means the sum of the following for 
14.15 	the taxable year:
14.16 	(1) the taxpayer's federal alternative minimum taxable income as defined in section 
14.17 	55(b)(2) of the Internal Revenue Code;
14.18 	(2) the taxpayer's itemized deductions allowed in computing federal alternative 
14.19 	minimum taxable income, but excluding:
14.20 	(i) the charitable contribution deduction under section 170 of the Internal Revenue 
14.21 	Code;
14.22 	(ii) the medical expense deduction;
14.23 	(iii) the casualty, theft, and disaster loss deduction; and
14.24 	(iv) the impairment-related work expenses of a disabled person;
14.25 	(3) for depletion allowances computed under section 613A(c) of the Internal 
14.26 	Revenue Code, with respect to each property (as defined in section 614 of the Internal 
14.27 	Revenue Code), to the extent not included in federal alternative minimum taxable income, 
14.28 	the excess of the deduction for depletion allowable under section 611 of the Internal 
14.29 	Revenue Code for the taxable year over the adjusted basis of the property at the end of the 
14.30 	taxable year (determined without regard to the depletion deduction for the taxable year);
14.31 	(4) to the extent not included in federal alternative minimum taxable income, the 
14.32 	amount of the tax preference for intangible drilling cost under section 57(a)(2) of the 
14.33 	Internal Revenue Code determined without regard to subparagraph (E);
14.34 	(5) to the extent not included in federal alternative minimum taxable income, the 
14.35 	amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
15.1 	(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7) 
15.2 	to (9), and (11) to (14);
15.3 	less the sum of the amounts determined under the following:
15.4 	(1) interest income as defined in section 290.01, subdivision 19b, clause (1);
15.5 	(2) an overpayment of state income tax as provided by section 290.01, subdivision 
15.6 	19b, clause (2), to the extent included in federal alternative minimum taxable income;
15.7 	(3) the amount of investment interest paid or accrued within the taxable year on 
15.8 	indebtedness to the extent that the amount does not exceed net investment income, as 
15.9 	defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include 
15.10 	amounts deducted in computing federal adjusted gross income;
15.11 	(4) amounts subtracted from federal taxable income as provided by section 290.01, 
15.12 	subdivision 19b, clauses (6), (8) to (14), and (16)~~, and (21)~~; and
15.13 	(5) the amount of the net operating loss allowed under section 290.095, subdivision 
15.14 	11, paragraph (c).
15.15 	In the case of an estate or trust, alternative minimum taxable income must be 
15.16 	computed as provided in section 59(c) of the Internal Revenue Code.
15.17 	(b) "Investment interest" means investment interest as defined in section 163(d)(3) 
15.18 	of the Internal Revenue Code.
15.19 	(c) "Net minimum tax" means the minimum tax imposed by this section.
15.20 	(d) "Regular tax" means the tax that would be imposed under this chapter (without 
15.21 	regard to this section and section 290.032), reduced by the sum of the nonrefundable 
15.22 	credits allowed under this chapter.
15.23 	(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable 
15.24 	income after subtracting the exemption amount determined under subdivision 3.

15.25 	EFFECTIVE DATE. This section is effective the day following final enactment, 
15.26 	except the changes incorporated by federal changes are effective retroactively at the same 
15.27 	time as the changes were effective for federal purposes.

15.28 	Sec. 9. Minnesota Statutes 2015 Supplement, section 290A.03, subdivision 15, is 
15.29 	amended to read:
15.30 		Subd. 15.Internal Revenue Code.  "Internal Revenue Code" means the Internal 
15.31 	Revenue Code of 1986, as amended through December 31, ~~2014~~ 2015.

15.32 	EFFECTIVE DATE. This section is effective retroactively for property tax refunds 
15.33 	based on property taxes payable after December 31, 2015, and rent paid after December 
15.34 	31, 2014.

16.1 	Sec. 10. Minnesota Statutes 2015 Supplement, section 291.005, subdivision 1, is 
16.2 	amended to read:
16.3 		Subdivision 1.Scope. Unless the context otherwise clearly requires, the following 
16.4 	terms used in this chapter shall have the following meanings:
16.5 	(1) "Commissioner" means the commissioner of revenue or any person to whom the 
16.6 	commissioner has delegated functions under this chapter.
16.7 	(2) "Federal gross estate" means the gross estate of a decedent as required to be valued 
16.8 	and otherwise determined for federal estate tax purposes under the Internal Revenue Code, 
16.9 	increased by the value of any property in which the decedent had a qualifying income 
16.10 	interest for life and for which an election was made under section 291.03, subdivision 1d, 
16.11 	for Minnesota estate tax purposes, but was not made for federal estate tax purposes.
16.12 	(3) "Internal Revenue Code" means the United States Internal Revenue Code of 
16.13 	1986, as amended through December 31, ~~2014~~ 2015.
16.14 	(4) "Minnesota gross estate" means the federal gross estate of a decedent after 
16.15 	(a) excluding therefrom any property included in the estate which has its situs outside 
16.16 	Minnesota, and (b) including any property omitted from the federal gross estate which 
16.17 	is includable in the estate, has its situs in Minnesota, and was not disclosed to federal 
16.18 	taxing authorities.
16.19 	(5) "Nonresident decedent" means an individual whose domicile at the time of 
16.20 	death was not in Minnesota.
16.21 	(6) "Personal representative" means the executor, administrator or other person 
16.22 	appointed by the court to administer and dispose of the property of the decedent. If there 
16.23 	is no executor, administrator or other person appointed, qualified, and acting within this 
16.24 	state, then any person in actual or constructive possession of any property having a situs in 
16.25 	this state which is included in the federal gross estate of the decedent shall be deemed 
16.26 	to be a personal representative to the extent of the property and the Minnesota estate tax 
16.27 	due with respect to the property.
16.28 	(7) "Resident decedent" means an individual whose domicile at the time of death 
16.29 	was in Minnesota.
16.30 	(8) "Situs of property" means, with respect to:
16.31 	(i) real property, the state or country in which it is located;
16.32 	(ii) tangible personal property, the state or country in which it was normally kept 
16.33 	or located at the time of the decedent's death or for a gift of tangible personal property 
16.34 	within three years of death, the state or country in which it was normally kept or located 
16.35 	when the gift was executed;
17.1 	(iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue 
17.2 	Code, owned by a nonresident decedent and that is normally kept or located in this state 
17.3 	because it is on loan to an organization, qualifying as exempt from taxation under section 
17.4 	501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is 
17.5 	deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and
17.6 	(iv) intangible personal property, the state or country in which the decedent was 
17.7 	domiciled at death or for a gift of intangible personal property within three years of death, 
17.8 	the state or country in which the decedent was domiciled when the gift was executed.
17.9 	For a nonresident decedent with an ownership interest in a pass-through entity with 
17.10 	assets that include real or tangible personal property, situs of the real or tangible personal 
17.11 	property, including qualified works of art, is determined as if the pass-through entity does 
17.12 	not exist and the real or tangible personal property is personally owned by the decedent. 
17.13 	If the pass-through entity is owned by a person or persons in addition to the decedent, 
17.14 	ownership of the property is attributed to the decedent in proportion to the decedent's 
17.15 	capital ownership share of the pass-through entity.
17.16 	(9) "Pass-through entity" includes the following:
17.17 	(i) an entity electing S corporation status under section 1362 of the Internal Revenue 
17.18 	Code;
17.19 	(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;
17.20 	(iii) a single-member limited liability company or similar entity, regardless of 
17.21 	whether it is taxed as an association or is disregarded for federal income tax purposes 
17.22 	under Code of Federal Regulations, title 26, section 301.7701-3; or
17.23 	(iv) a trust to the extent the property is includible in the decedent's federal gross 
17.24 	estate; but excludes
17.25 	(v) an entity whose ownership interest securities are traded on an exchange regulated 
17.26 	by the Securities and Exchange Commission as a national securities exchange under 
17.27 	section 6 of the Securities Exchange Act, United States Code, title 15, section 78f.

17.28 	EFFECTIVE DATE. This section is effective the day following final enactment.

17.29 	Sec. 11. AMENDED RETURNS.
 17.30 		Subdivision 1.Certain IRA rollovers. An individual who excludes an amount 
17.31 	from net income in a prior taxable year through rollover of an airline payment amount to 
17.32 	a traditional IRA, as authorized under Public Law 114-113, division Q, title III, section 
17.33 	307, may file an amended individual income tax return and claim for refund of state taxes 
17.34 	as provided under Minnesota Statutes, section 289A.40, subdivision 1, or, if later, by 
17.35 	September 1, 2016.
18.1 		Subd. 2.Exclusion for certain incarcerated individuals. An individual who 
18.2 	excludes from net income in a prior taxable year civil damages, restitution, or other 
18.3 	monetary award received as compensation for a wrongful incarceration, as authorized 
18.4 	under Public Law 114-113, division Q, title III, section 304, may file an amended 
18.5 	individual income tax return and claim for refund of state taxes as provided under 
18.6 	Minnesota Statutes, section 289A.40, subdivision 1, or, if later, by September 1, 2016.

18.7 	EFFECTIVE DATE. This section is effective the day following final enactment.

18.8 	Sec. 12. APPROPRIATION.
 18.9 	$1,612,000 is appropriated in fiscal year 2016 from the general fund to the 
18.10 	commissioner of revenue to administer the provisions of this article. $35,000 of this 
18.11 	amount is added to the agency's budget base to administer the provisions of this article.

18.12 	ARTICLE 2
18.13 	INDIVIDUAL INCOME TAX CREDITS

18.14 	Section 1. Minnesota Statutes 2014, section 290.067, subdivision 1, is amended to read:
18.15 		Subdivision 1.Amount of credit. (a) A taxpayer may take as a credit against the tax 
18.16 	~~due from the taxpayer and a spouse, if any,~~ imposed under this chapter an amount equal 
18.17 	to the sum of dependent care ~~credit for which the taxpayer is eligible pursuant to the~~ 
18.18 	~~provisions of section 21 of the Internal Revenue Code subject to the limitations provided~~ 
18.19 	~~in subdivision 2 except that~~ credits calculated under this paragraph and paragraphs (b), 
18.20 	(d), and (e). In determining whether ~~the child qualified as a dependent~~ expenses were paid 
18.21 	to care for a qualifying individual, income received as a Minnesota family investment 
18.22 	program grant or allowance to or on behalf of the ~~child~~ qualifying individual must not be 
18.23 	taken into account in determining whether the ~~child~~ qualifying individual received more 
18.24 	than half of the ~~child's~~ individual's support from the taxpayer~~, and the provisions of section~~ 
18.25 	~~32(b)(1)(D) of the Internal Revenue Code do not apply~~.
18.26 	(b) A taxpayer who incurs actual employment-related expenses may take as a credit 
18.27 	against the tax imposed under this chapter an amount equal to the dependent care credit 
18.28 	for which the taxpayer is eligible under section 21 of the Internal Revenue Code.
18.29 	(c) A taxpayer who elects to claim a credit under paragraph (d) or (e) may claim 
18.30 	a credit under paragraph (b) only for employment-related expenses paid to care for 
18.31 	qualifying individuals other than a child for whom deemed expenses were used to claim 
18.32 	the credit under paragraph (d) or (e).
19.1 	(d) ~~(b) If a child who has not attained the age of six years at the close of the taxable~~ 
19.2 	~~year is cared for at a licensed family day care home operated by the child's parent, the~~ 
19.3 	~~taxpayer is deemed to have paid employment-related expenses.~~ In lieu of the credit under 
19.4 	paragraph (b), a taxpayer who operates a licensed family day care home may elect to 
19.5 	claim as a credit against the tax imposed under this chapter an amount equal to the 
19.6 	dependent care credit for which the taxpayer is eligible under section 21 of the Internal 
19.7 	Revenue Code, calculated using deemed expenses rather than actual expenses paid. If the 
19.8 	child is 16 months old or younger at the close of the taxable year, ~~the amount of~~deemed 
19.9 	expenses ~~deemed to have been paid equals~~ are equal to the maximum ~~limit~~amount of 
19.10 	employment-related expenses incurred during the taxable year that may be taken into 
19.11 	account for one ~~qualified~~ qualifying individual under section 21(c) and (d) of the Internal 
19.12 	Revenue Code. If the child is older than 16 months of age but has not attained the age of 
19.13 	six years at the close of the taxable year, ~~the amount of expenses deemed to have been paid~~ 
19.14 	~~equals~~ deemed expenses are equal to the amount the licensee would charge for the care of 
19.15 	a child of the same age for the same number of hours of care. If the child has attained the 
19.16 	age of six at the close of the taxable year, deemed expenses are zero.
19.17 	~~(c) If a~~ (e) In lieu of the credit under paragraph (b), a married couple may elect to 
19.18 	claim a credit against the tax imposed under this chapter as computed under paragraph 
19.19 	(f), if the married couple:
19.20 	(1) has a child who has not attained the age of one year at the close of the taxable year;
19.21 	(2) files a joint tax return for the taxable year; ~~and~~
19.22 	(3) does not participate in a dependent care assistance program as defined in section 
19.23 	129 of the Internal Revenue Code~~, in lieu of the actual employment related expenses paid~~ 
19.24 	~~for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of~~ 
19.25 	~~(i) the combined earned income of the couple or (ii) the amount of the maximum limit for~~ 
19.26 	~~one qualified individual under section 21(c) and (d) of the Internal Revenue Code will~~ 
19.27 	~~be deemed to be the employment related expense paid for that child. The earned income~~ 
19.28 	~~limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed~~ 
19.29 	~~amount. These deemed amounts apply regardless of whether any employment-related~~ 
19.30 	~~expenses have been paid.~~; and
19.31 	(4) does not operate a licensed family day care center home.
19.32 	(f) A married couple meeting the requirements of paragraph (e) is allowed a credit 
19.33 	against the tax due under this chapter equal to the dependent care credit for which the 
19.34 	couple is eligible under section 21 of the Internal Revenue Code, calculated using deemed 
19.35 	expenses rather than actual employment-related expenses paid. For purposes of this 
19.36 	paragraph, deemed expenses are the lesser of (1) the combined earned income of the 
20.1 	couple, or (2) the maximum amount of employment-related expenses incurred during 
20.2 	the taxable year that may be taken into account for one qualifying individual under 
20.3 	section 21(c) and (d) of the Internal Revenue Code, or for two qualifying individuals for 
20.4 	a taxpayer with two children who have not attained the age of one. The earned income 
20.5 	limitation in section 21(d) of the Internal Revenue Code does not apply to this deemed 
20.6 	amount. These deemed amounts apply regardless of whether the taxpayer has paid any 
20.7 	employment-related expenses.
20.8 	~~(d)~~ (g) If the taxpayer is not required and does not file a federal individual income 
20.9 	tax return for the tax year, or if the taxpayer does file a federal return but does not claim a 
20.10 	federal dependent care credit, no credit is allowed for any amount paid to any person unless:
20.11 	(1) the name, address, and taxpayer identification number of the person are included 
20.12 	on the return claiming the credit; or
20.13 	(2) if the person is an organization described in section 501(c)(3) of the Internal 
20.14 	Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, 
20.15 	the name and address of the person are included on the return claiming the credit.
20.16 	In the case of a failure to provide the information required under the preceding sentence, 
20.17 	the preceding sentence does not apply if it is shown that the taxpayer exercised due 
20.18 	diligence in attempting to provide the information required.
20.19 	~~(e)~~ (h) In the case of a nonresident, part-year resident, or a person who has earned 
20.20 	income not subject to tax under this chapter including earned income excluded pursuant to 
20.21 	section 290.01, subdivision 19b, clause (9), the credit determined under this section ~~21~~ 
20.22 	~~of the Internal Revenue Code~~ must be allocated based on the ratio by which the earned 
20.23 	income of the claimant and the claimant's spouse from Minnesota sources bears to the 
20.24 	total earned income of the claimant and the claimant's spouse.
20.25 	~~(f)~~ (i) For residents of Minnesota, the subtractions for military pay under section 
20.26 	290.01, subdivision 19b, clauses (10) and (11), are not considered "earned income not 
20.27 	subject to tax under this chapter."
20.28 	~~(g)~~ (j) For residents of Minnesota, the exclusion of combat pay under section 112 
20.29 	of the Internal Revenue Code is not considered "earned income not subject to tax under 
20.30 	this chapter."
20.31 	(k) For purposes of this section, the terms "qualifying individual" and 
20.32 	"employment-related expenses" have the meanings given in section 21 of the Internal 
20.33 	Revenue Code.

20.34 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
20.35 	December 31, 2015.

21.1 	Sec. 2. Minnesota Statutes 2014, section 290.067, subdivision 2, is amended to read:
21.2 		Subd. 2.Limitations. ~~The credit for expenses incurred for the care of each~~ 
21.3 	~~dependent shall not exceed $720 in any taxable year, and the total credit for all dependents~~ 
21.4 	~~of a claimant shall not exceed $1,440 in a taxable year. The maximum total credit shall~~ 
21.5 	~~be reduced according to the amount of the income of the claimant and a spouse, if any,~~ 
21.6 	~~as follows:~~
21.7 	~~income up to $18,040, $720 maximum for one dependent, $1,440 for all dependents;~~
21.8 	~~income over $18,040, the maximum credit for one dependent shall be reduced by~~ 
21.9 	~~$18 for every $350 of additional income, $36 for all dependents.~~
21.10 	~~The commissioner shall construct and make available to taxpayers tables showing~~ 
21.11 	~~the amount of the credit at various levels of income and expenses. The tables shall follow~~ 
21.12 	~~the schedule contained in this subdivision, except that the commissioner may graduate~~ 
21.13 	~~the transitions between expenses and income brackets.~~ (a) The maximum credit under 
21.14 	subdivision 1, paragraph (b), is:
21.15 	(1) $1,050 for a taxpayer with employment-related expenses for one qualifying 
21.16 	individual;
21.17 	(2) $2,100 for a taxpayer with employment-related expenses for two or more 
21.18 	qualifying individuals;
21.19 	(3) $1,050 for a taxpayer who elects to claim a credit under subdivision 1, paragraph 
21.20 	(d) or (e), if that credit is based on deemed expenses for one child; and
21.21 	(4) $0 for a taxpayer who elects to claim a credit under subdivision 1, paragraph (d) 
21.22 	or (e), if that credit is based on deemed expenses for two or more children.
21.23 	(b) The maximum credit under subdivision 1, paragraphs (d) and (e), is:
21.24 	(1) $720 for a taxpayer with deemed expenses for one child; and
21.25 	(2) $1,440 for a taxpayer with deemed expenses for two or more children.
21.26 	(c) For a taxpayer who claims a credit under subdivision 1, paragraph (b), who has 
21.27 	federal adjusted gross income, as defined in the Internal Revenue Code, in excess of 
21.28 	$100,000, the credit under subdivision 1, paragraph (b), is equal to the lesser of:
21.29 	(1) the credit calculated under subdivision 1, paragraph (b); or
21.30 	(2) $600 minus five percent of federal adjusted gross income in excess of $100,000 
21.31 	for a taxpayer with one qualifying individual, or $1,200 minus five percent of federal 
21.32 	adjusted gross income in excess of $100,000 for a taxpayer with two or more qualifying 
21.33 	individuals, but in no case is the credit less than zero.
21.34 	(d) For a taxpayer who elects to claim the credit under subdivision 1, paragraph (d) 
21.35 	or (e), with federal adjusted gross income, as defined in the Internal Revenue Code, in 
21.36 	excess of $25,000, the credit is equal to the lesser of:
22.1 	(1) the credit calculated under subdivision 1, paragraph (d) or (e); or
22.2 	(2) $720 minus five percent of federal adjusted gross income in excess of $25,000 
22.3 	for a taxpayer with one qualifying individual, or $1,440 minus five percent of federal 
22.4 	adjusted gross income in excess of $25,000 for a taxpayer with two or more qualifying 
22.5 	individuals, but in no case is the credit less than zero.

22.6 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
22.7 	December 31, 2015.

22.8 	Sec. 3. Minnesota Statutes 2014, section 290.067, subdivision 2b, is amended to read:
22.9 		Subd. 2b.Inflation adjustment. The commissioner shall adjust the dollar amount 
22.10 	of the income threshold at which the ~~maximum~~ credit begins to be reduced under 
22.11 	subdivision 2 by the percentage determined pursuant to the provisions of section 1(f) of 
22.12 	the Internal Revenue Code, except that in section 1(f)(3)(B) the word ~~"1999"~~ "2015" shall 
22.13 	be substituted for the word "1992." For ~~2001~~ 2017, the commissioner shall then determine 
22.14 	the percent change from the 12 months ending on August 31, ~~1999~~ 2015, to the 12 months 
22.15 	ending on August 31, ~~2000~~ 2016, and in each subsequent year, from the 12 months ending 
22.16 	on August 31, ~~1999~~ 2015, to the 12 months ending on August 31 of the year preceding the 
22.17 	taxable year. The determination of the commissioner pursuant to this subdivision must not 
22.18 	be considered a "rule" and is not subject to the Administrative Procedure Act contained in 
22.19 	chapter 14. The threshold amount as adjusted must be rounded to the nearest $10 amount. 
22.20 	If the amount ends in $5, the amount is rounded up to the nearest $10 amount.

22.21 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
22.22 	December 31, 2015.

22.23 	Sec. 4. Minnesota Statutes 2014, section 290.067, subdivision 3, is amended to read:
22.24 		Subd. 3.Credit to be refundable. If the amount of credit which a claimant 
22.25 	would be eligible to receive pursuant to this ~~subdivision~~ section exceeds the claimant's 
22.26 	tax liability under chapter 290, the excess amount of the credit shall be refunded to the 
22.27 	claimant by the commissioner ~~of revenue~~.

22.28 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
22.29 	December 31, 2015.

22.30 	Sec. 5. Minnesota Statutes 2015 Supplement, section 290.0671, subdivision 1, is 
22.31 	amended to read:
23.1 		Subdivision 1.Credit allowed. (a) An individual who is a resident of Minnesota is 
23.2 	allowed a credit against the tax imposed by this chapter equal to a percentage of earned 
23.3 	income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of 
23.4 	the Internal Revenue Code, except that a taxpayer remains eligible for this credit even if 
23.5 	the taxpayer's earned income or adjusted gross income exceeds the amount for which a 
23.6 	credit is available under section 32.
23.7 	(b) For individuals with no qualifying children, the credit equals ~~2.10~~ 2.65 percent of 
23.8 	the first ~~$6,180~~ $5,000 of earned income. The credit is reduced by ~~2.01~~ 2.62 percent of 
23.9 	earned income or adjusted gross income, whichever is greater, in excess of ~~$8,130~~ $9,830, 
23.10 	but in no case is the credit less than zero.
23.11 	(c) For individuals with one qualifying child, the credit equals ~~9.35~~ 12.71 percent 
23.12 	of the first ~~$11,120~~ $8,350 of earned income. The credit is reduced by ~~6.02~~ 4.65 percent 
23.13 	of earned income or adjusted gross income, whichever is greater, in excess of ~~$21,190~~ 
23.14 	$21,620, but in no case is the credit less than zero.
23.15 	(d) For individuals with two or more qualifying children, the credit equals ~~11~~ 14.94 
23.16 	percent of the first ~~$18,240~~ $13,700 of earned income. The credit is reduced by ~~10.82~~ 
23.17 	8.59 percent of earned income or adjusted gross income, whichever is greater, in excess of 
23.18 	~~$25,130~~ $25,640, but in no case is the credit less than zero.
23.19 	(e) For a part-year resident, the credit must be allocated based on the percentage 
23.20 	calculated under section 290.06, subdivision 2c, paragraph (e).
23.21 	(f) For a person who was a resident for the entire tax year and has earned income 
23.22 	not subject to tax under this chapter, including income excluded under section 290.01, 
23.23 	subdivision 19b, clause (9), the credit must be allocated based on the ratio of federal 
23.24 	adjusted gross income reduced by the earned income not subject to tax under this chapter 
23.25 	over federal adjusted gross income. For purposes of this paragraph, the subtractions 
23.26 	for military pay under section 290.01, subdivision 19b, clauses (10) and (11), are not 
23.27 	considered "earned income not subject to tax under this chapter."
23.28 	For the purposes of this paragraph, the exclusion of combat pay under section 112 
23.29 	of the Internal Revenue Code is not considered "earned income not subject to tax under 
23.30 	this chapter."
23.31 	~~(g) For tax years beginning after December 31, 2007, and before December 31,~~ 
23.32 	~~2010, and for tax years beginning after December 31, 2017, the $8,130 in paragraph (b),~~ 
23.33 	~~the $21,190 in paragraph (c), and the $25,130 in paragraph (d), after being adjusted for~~ 
23.34 	~~inflation under subdivision 7, are each increased by $3,000 for married taxpayers filing joint~~ 
23.35 	~~returns. For tax years beginning after December 31, 2008, the commissioner shall annually~~ 
23.36 	~~adjust the $3,000 by the percentage determined pursuant to the provisions of section 1(f)~~ 
24.1 	~~of the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2007" shall be~~ 
24.2 	~~substituted for the word "1992." For 2009, the commissioner shall then determine the~~ 
24.3 	~~percent change from the 12 months ending on August 31, 2007, to the 12 months ending on~~ 
24.4 	~~August 31, 2008, and in each subsequent year, from the 12 months ending on August 31,~~ 
24.5 	~~2007, to the 12 months ending on August 31 of the year preceding the taxable year. The~~ 
24.6 	~~earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the~~ 
24.7 	~~amount ends in $5, the amount is rounded up to the nearest $10. The determination of the~~ 
24.8 	~~commissioner under this subdivision is not a rule under the Administrative Procedure Act.~~
24.9 	(g) ~~(h)(1) For tax years beginning after December 31, 2012, and before January~~ 
24.10 	~~1, 2014, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in~~ 
24.11 	~~paragraph (d), after being adjusted for inflation under subdivision 7, are increased by~~ 
24.12 	~~$5,340 for married taxpayers filing joint returns; and (2)~~ For tax years beginning after 
24.13 	December 31, 2013, ~~and before January 1, 2018,~~ the ~~$8,130~~ $9,830 in paragraph (b), 
24.14 	the ~~$21,190~~ $21,620 in paragraph (c), and the ~~$25,130~~ $25,640 in paragraph (d), after 
24.15 	being adjusted for inflation under subdivision 7, are each increased by $5,000 for married 
24.16 	taxpayers filing joint returns. ~~For tax years beginning after December 31, 2010, and~~ 
24.17 	~~before January 1, 2012, and~~ For tax years beginning after December 31, 2013, ~~and before~~ 
24.18 	~~January 1, 2018,~~ the commissioner shall annually adjust the $5,000 by the percentage 
24.19 	determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except 
24.20 	that in section 1(f)(3)(B), the word "2008" shall be substituted for the word "1992." ~~For~~ 
24.21 	~~2011,~~ The commissioner shall then determine the percent change from the 12 months 
24.22 	ending on August 31, 2008, to the 12 months ending on ~~August 31, 2010 , and in each~~ 
24.23 	~~subsequent year, from the 12 months ending on August 31, 2008, to the 12 months ending~~ 
24.24 	~~on~~ August 31 of the year preceding the taxable year. The earned income thresholds as 
24.25 	adjusted for inflation must be rounded to the nearest $10. If the amount ends in $5, the 
24.26 	amount is rounded up to the nearest $10. The determination of the commissioner under 
24.27 	this subdivision is not a rule under the Administrative Procedure Act.
24.28 	~~(i)~~ (h) The commissioner shall construct tables showing the amount of the credit 
24.29 	at various income levels and make them available to taxpayers. The tables shall follow 
24.30 	the schedule contained in this subdivision, except that the commissioner may graduate 
24.31 	the transition between income brackets.

24.32 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
24.33 	December 31, 2015.

24.34 	Sec. 6. Minnesota Statutes 2014, section 290.0671, subdivision 6, is amended to read:
25.1 		Subd. 6.Appropriation. An amount sufficient to pay the refunds required by 
25.2 	this section is appropriated to the commissioner from the general fund. ~~This amount~~ 
25.3 	~~includes any amounts appropriated to the commissioner of human services from the~~ 
25.4 	~~federal Temporary Assistance for Needy Families (TANF) block grant funds for transfer~~ 
25.5 	~~to the commissioner of revenue.~~

25.6 	EFFECTIVE DATE. This section is effective July 1, 2016.

25.7 	Sec. 7. Minnesota Statutes 2014, section 290.0671, subdivision 7, is amended to read:
25.8 		Subd. 7.Inflation adjustment. The earned income amounts used to calculate 
25.9 	the credit and the income thresholds at which the maximum credit begins to be reduced 
25.10 	in subdivision 1 must be adjusted for inflation. The commissioner shall adjust by the 
25.11 	percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue 
25.12 	Code, except that in section 1(f)(3)(B) the word ~~"2013"~~ "2015" shall be substituted for 
25.13 	the word "1992." For ~~2015~~ 2017, the commissioner shall then determine the percent 
25.14 	change from the 12 months ending on August 31, ~~2013~~ 2015, to the 12 months ending 
25.15 	on August 31, ~~2014~~2016, and in each subsequent year, from the 12 months ending on 
25.16 	August 31, ~~2013~~2015, to the 12 months ending on August 31 of the year preceding the 
25.17 	taxable year. The earned income thresholds as adjusted for inflation must be rounded to 
25.18 	the nearest $10 amount. If the amount ends in $5, the amount is rounded up to the nearest 
25.19 	$10 amount. The determination of the commissioner under this subdivision is not a rule 
25.20 	under the Administrative Procedure Act.

25.21 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
25.22 	December 31, 2015.

25.23 	Sec. 8. Minnesota Statutes 2014, section 290.0674, subdivision 2, is amended to read:
25.24 		Subd. 2.Limitations. (a) For claimants with income not greater than ~~$33,500~~ 
25.25 	$45,000, the maximum credit allowed for a family is $1,000 multiplied by the number 
25.26 	of qualifying children in kindergarten through grade 12 in the family. The maximum 
25.27 	credit for families with one qualifying child in kindergarten through grade 12 is reduced 
25.28 	by $1 for each $4 of household income over ~~$33,500~~ $45,000, and the maximum credit 
25.29 	for families with two or more qualifying children in kindergarten through grade 12 is 
25.30 	reduced by $2 for each $4 of household income over ~~$33,500~~ $45,000, but in no case is 
25.31 	the credit less than zero.
26.1 	~~For purposes of this section "income" has the meaning given in section 290.067,~~ 
26.2 	~~subdivision 2a.~~ In the case of a married claimant, a credit is not allowed unless a joint 
26.3 	income tax return is filed.
26.4 	(b) For a nonresident or part-year resident, the credit determined under subdivision 1 
26.5 	and the maximum credit amount in paragraph (a) must be allocated using the percentage 
26.6 	calculated in section 290.06, subdivision 2c, paragraph (e).

26.7 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
26.8 	December 31, 2015.

26.9 	Sec. 9. Minnesota Statutes 2014, section 290.0674, is amended by adding a subdivision 
26.10 	to read:
26.11 		Subd. 2a.Income. (a) For purposes of this section, "income" means the sum of 
26.12 	the following:
26.13 	(1) federal adjusted gross income as defined in section 62 of the Internal Revenue 
26.14 	Code; and
26.15 	(2) the sum of the following amounts to the extent not included in clause (1):
26.16 	(i) all nontaxable income;
26.17 	(ii) the amount of a passive activity loss that is not disallowed as a result of section 
26.18 	469, paragraph (i) or (m), of the Internal Revenue Code, and the amount of passive activity 
26.19 	loss carryover allowed under section 469(b) of the Internal Revenue Code;
26.20 	(iii) an amount equal to the total of any discharge of qualified farm indebtedness 
26.21 	of a solvent individual excluded from gross income under section 108(g) of the Internal 
26.22 	Revenue Code;
26.23 	(iv) cash public assistance and relief;
26.24 	(v) a pension or annuity (including railroad retirement benefits, all payments, 
26.25 	received under the federal Social Security Act, Supplemental Security Income, and 
26.26 	veterans' benefits), that was:
26.27 	(A) not exclusively funded by the claimant or spouse;
26.28 	(B) funded exclusively by the claimant or spouse; or
26.29 	(C) funded exclusively by the claimant or spouse and which funding payments were 
26.30 	excluded from federal adjusted gross income in the years when the payments were made;
26.31 	(vi) interest received from the federal or a state government or any instrumentality 
26.32 	or political subdivision thereof;
26.33 	(vii) workers' compensation;
26.34 	(viii) nontaxable strike benefits;
27.1 	(ix) the gross amounts of payments received in the nature of disability income or 
27.2 	sick pay as a result of accident, sickness, or other disability, whether funded through 
27.3 	insurance or otherwise;
27.4 	(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of 
27.5 	1986, as amended through December 31, 1995;
27.6 	(xi) contributions made by the claimant to an individual retirement account, 
27.7 	including a qualified voluntary employee contribution, simplified employee pension plan, 
27.8 	self-employed retirement plan, cash or deferred arrangement plan under section 401(k) 
27.9 	of the Internal Revenue Code, or deferred compensation plan under section 457 of the 
27.10 	Internal Revenue Code;
27.11 	(xii) nontaxable scholarship or fellowship grants;
27.12 	(xiii) the amount of deduction allowed under section 199 of the Internal Revenue 
27.13 	Code;
27.14 	(xiv) the amount of deduction allowed under section 220 or 223 of the Internal 
27.15 	Revenue Code;
27.16 	(xv) the amount deducted for tuition expenses under section 222 of the Internal 
27.17 	Revenue Code; and
27.18 	(xvi) the amount deducted for certain expenses of elementary and secondary school 
27.19 	teachers under section 62(a)(2)(D) of the Internal Revenue Code.
27.20 	In the case of an individual who files an income tax return on a fiscal year basis, the 
27.21 	term "federal adjusted gross income" means federal adjusted gross income reflected in the 
27.22 	fiscal year ending in the next calendar year. Federal adjusted gross income may not be 
27.23 	reduced by the amount of a net operating loss carryback or carryforward or a capital loss 
27.24 	carryback or carryforward allowed for the year.
27.25 	(b) "Income" does not include:
27.26 	(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
27.27 	(2) amounts of any pension or annuity that were exclusively funded by the claimant 
27.28 	or spouse if the funding payments were not excluded from federal adjusted gross income 
27.29 	in the years when the payments were made;
27.30 	(3) surplus food or other relief in kind supplied by a governmental agency;
27.31 	(4) relief granted under chapter 290A;
27.32 	(5) child support payments received under a temporary or final decree of dissolution 
27.33 	or legal separation; and
27.34 	(6) restitution payments received by eligible individuals and excludable interest as 
27.35 	defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 
27.36 	2001, Public Law 107-16.

28.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
28.2 	December 31, 2015.

28.3 	Sec. 10. Minnesota Statutes 2014, section 290.0674, is amended by adding a 
28.4 	subdivision to read:
28.5 		Subd. 6.Inflation adjustment. The commissioner shall adjust the dollar amount of 
28.6 	the income threshold at which the credit begins to be reduced under subdivision 2 by the 
28.7 	percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue 
28.8 	Code, except that in section 1(f)(3)(B) the word "2015" shall be substituted for the word 
28.9 	"1992." For 2017, the commissioner shall then determine the percent change from the 
28.10 	12 months ending on August 31, 2015, to the 12 months ending on August 31, 2016, 
28.11 	and in each subsequent year, from the 12 months ending on August 31, 2015, to the 12 
28.12 	months ending on August 31 of the year preceding the taxable year. The determination 
28.13 	of the commissioner pursuant to this subdivision must not be considered a "rule" and is 
28.14 	not subject to the Administrative Procedure Act contained in chapter 14. The threshold 
28.15 	amount as adjusted must be rounded to the nearest $10 amount. If the amount ends in 
28.16 	$5, the amount is rounded up to the nearest $10 amount.

28.17 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
28.18 	December 31, 2016.

28.19 	Sec. 11. APPROPRIATION.
 28.20 	$400,000 is appropriated in fiscal year 2017 from the general fund to the 
28.21 	commissioner of revenue to administer the expansion of the K-12 credit under sections 7 
28.22 	and 8 of this article. This amount is added to the agency's budget base for administering 
28.23 	the expansion of the K-12 credit under sections 7 and 8 of this article.

28.24 	Sec. 12.  REPEALER.
 28.25 	(a) Minnesota Statutes 2015 Supplement, section 290.0671, subdivision 6a, is 
28.26 	repealed.
28.27 	(b) Minnesota Statutes 2014, section 290.067, subdivision 2a, is repealed.

28.28 	EFFECTIVE DATE. Paragraph (a) is effective July 1, 2016. Paragraph (b) is 
28.29 	effective for taxable years beginning after December 31, 2015.

29.1 	ARTICLE 3
29.2 	RAILROAD RECODIFICATION

29.3 	Section 1. Minnesota Statutes 2014, section 270.80, subdivision 2, is amended to read:
29.4 		Subd. 2.Railroad company. "Railroad company" means:
29.5 	(1) any company which as a common carrier operates a railroad or a line or lines of 
29.6 	~~railway~~ railroads situated within or partly within Minnesota; or
29.7 	(2) any company owning or operating, other than as a common carrier, a ~~railway~~
29.8 	railroad principally used for transportation of taconite concentrates from the plant at 
29.9 	which the taconite concentrates are produced in shipping form to a point of consumption 
29.10 	or port for shipment beyond the state; or
29.11 	(3) any company that produces concentrates from taconite and transports that 
29.12 	taconite in the course of the concentrating process and before the concentrating process is 
29.13 	completed to a concentrating plant located within the state over a railroad that is not a 
29.14 	common carrier and ~~shall~~ does not use a common carrier or taconite railroad company as 
29.15 	defined in clause (2) for the movement of the concentrate to a point of consumption or 
29.16 	port for shipment beyond the state.

29.17 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

29.18 	Sec. 2. Minnesota Statutes 2014, section 270.80, subdivision 3, is amended to read:
29.19 		Subd. 3.Operating property. "Operating property" means all property owned 
29.20 	or used by a railroad company in the performance of railroad transportation services, 
29.21 	including ~~without limitation franchises, rights-of-way, bridges, trestles, shops, docks,~~ 
29.22 	~~wharves, buildings and structures.~~ but not limited to roads, locomotives, freight cars, 
29.23 	and improvements to leased property. Operating property is listed and assessed by the 
29.24 	commissioner where the property is located.

29.25 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

29.26 	Sec. 3. Minnesota Statutes 2014, section 270.80, subdivision 4, is amended to read:
29.27 		Subd. 4.Nonoperating property. "Nonoperating property" means ~~and includes~~ 
29.28 	all property other than property defined in subdivision 3. Nonoperating property ~~shall~~ 
29.29 	~~include~~ includes real property ~~which~~ that is leased or rented or available for lease or rent 
29.30 	to any person ~~which~~ that is not a railroad company. Vacant land ~~shall be~~ is presumed to 
29.31 	be available for lease or rent if it has not been used as operating property for a period of 
29.32 	one year immediately preceding the valuation date. Nonoperating property also includes 
30.1 	land ~~which~~ that is not necessary and integral to the performance of railroad transportation 
30.2 	services and ~~which~~ that is not used on a regular and continual basis in the performance of 
30.3 	these services. Nonoperating property also includes that portion of a ~~general corporation~~ 
30.4 	office building and its proportionate share of land ~~which~~ that  is not used for ~~railway~~
30.5 	railroad operation or purpose.

30.6 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

30.7 	Sec. 4. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
30.8 	to read:
30.9 		Subd. 6.Company. "Company" means any corporation, limited liability company, 
30.10 	association, partnership, trust, estate, fiduciary, public or private organization of any 
30.11 	kind, or other legal entity.

30.12 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

30.13 	Sec. 5. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
30.14 	to read:
30.15 		Subd. 7.Unit value. "Unit value" means the value of the system of a railroad 
30.16 	company taken as a whole, without regard to the value of its component parts.

30.17 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

30.18 	Sec. 6. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
30.19 	to read:
30.20 		Subd. 8.Book depreciation. "Book depreciation" means the depreciation shown by 
30.21 	a railroad company on its accounting records and allowed the company by the Surface 
30.22 	Transportation Board.

30.23 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

30.24 	Sec. 7. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
30.25 	to read:
30.26 		Subd. 9.Equalization. "Equalization" means the adjustment of the estimated 
30.27 	market value of railroad operating property to the apparent sales ratio accepted by the 
30.28 	State Board of Equalization.

30.29 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

31.1 	Sec. 8. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
31.2 	to read:
31.3 		Subd. 10.Exempt property. "Exempt property" means property that is nontaxable 
31.4 	for ad valorem tax purposes under Minnesota Statutes, including personal property exempt 
31.5 	from taxation under chapter 272.

31.6 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

31.7 	Sec. 9. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
31.8 	to read:
31.9 		Subd. 11.Original cost. "Original cost" means the amount paid for an asset as 
31.10 	recorded on the railroad's accounting records in accordance with Surface Transportation 
31.11 	Board accounting rules and regulations.

31.12 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

31.13 	Sec. 10. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
31.14 	to read:
31.15 		Subd. 12.System. "System" means the total real and personal property of a railroad 
31.16 	that is used in its railroad operations in all states in which it operates.

31.17 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

31.18 	Sec. 11. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
31.19 	to read:
31.20 		Subd. 13.Minnesota allocated value. "Minnesota allocated value" means the value 
31.21 	of a railroad company's operating property that is assigned to Minnesota for tax purposes.

31.22 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

31.23 	Sec. 12. Minnesota Statutes 2014, section 270.81, subdivision 3, is amended to read:
31.24 		Subd. 3.Determination of type of property. (a) The commissioner ~~shall have~~ has 
31.25 	exclusive primary jurisdiction to determine ~~what~~ whether railroad property is operating 
31.26 	property ~~and what is~~ or nonoperating property. In making ~~such~~ this determination, the 
31.27 	commissioner ~~shall~~ may solicit information and opinions from outside the department 
31.28 	and afford all interested persons an opportunity to submit data or views on the subject 
31.29 	in writing or orally. 
32.1 	(b) Local and county assessors may submit written requests to the commissioner, 
32.2 	asking for a determination of ~~the nature of specific~~ whether property owned by a railroad 
32.3 	and located within their assessing jurisdiction is operating or nonoperating property. 
32.4 	~~Any determination made by the commissioner may be appealed by the assessor to the~~ 
32.5 	~~Tax Court pursuant to chapter 271.~~ The requests must be submitted by April 1 of the 
32.6 	assessing year. Following a request, the commissioner must send the assessor a written 
32.7 	determination by May 1. Assessors may appeal determinations made by the commissioner 
32.8 	to the Tax Court pursuant to chapter 271.

32.9 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

32.10 	Sec. 13. Minnesota Statutes 2014, section 270.81, is amended by adding a subdivision 
32.11 	to read:
32.12 		Subd. 6.Deduction for nonoperating and exempt property. Property located in 
32.13 	Minnesota that was part of the unit but is nonoperating property, or that is exempt from ad 
32.14 	valorem taxation, is deducted from the Minnesota allocated value under section 273.3718, 
32.15 	subdivision 1a. Only qualifying property located in Minnesota may be deducted from the 
32.16 	Minnesota allocated value. The railroad company has the burden of proof to establish 
32.17 	that the property should be deducted from the Minnesota allocated value. The railroad 
32.18 	company must submit schedules of exempt or nonoperating property as the commissioner 
32.19 	may require. The commissioner must determine if property claimed by the railroad as 
32.20 	nonoperating property or exempt property qualifies for deduction from the Minnesota 
32.21 	allocated value. The commissioner must determine the market value of the qualifying 
32.22 	property to be deducted by multiplying the book value of the qualifying property by 
32.23 	the market-to-book ratio of the unit. The remaining amount after this deduction is the 
32.24 	Minnesota apportionable market value.

32.25 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

32.26 	Sec. 14. Minnesota Statutes 2014, section 270.82, is amended to read:
32.27 	270.82 REPORTS OF RAILROAD COMPANIES.
32.28 		Subdivision 1.Annual report required. Before March 31, every railroad company 
32.29 	doing business in Minnesota ~~shall~~ must annually file with the commissioner ~~on or before~~ 
32.30 	~~March 31~~ a report under oath setting forth the information prescribed by the commissioner 
32.31 	to enable the commissioner to make the valuation and equalization required by sections 
32.32 	~~270.80 to 270.87.~~ 273.3712 to 273.3719. The commissioner shall prescribe the content, 
32.33 	format, and manner of the report pursuant to section 270C.30. If a report is made 
33.1 	electronically, the taxpayer's signature is defined pursuant to section 270C.304, except that 
33.2 	a "law administered by the commissioner" includes the property tax laws.
33.3 		Subd. 2.Extension of time. If the commissioner ~~for good~~ determines that there is 
33.4 	reasonable cause, the commissioner may extend the time for filing the report required by 
33.5 	subdivision 1 for up to 15 days ~~the time for filing the report required by subdivision 1~~.
33.6 		Subd. 3.Amended reports. A railroad company may file an amended report to 
33.7 	correct or add information to the original report. Amended reports must be filed with 
33.8 	the commissioner by April 30.
33.9 		Subd. 4.Failure to file reports. (a) The commissioner may make a valuation 
33.10 	pursuant to sections 273.3712 to 273.3719 according to the commissioner's best judgment 
33.11 	based on available information if any railroad company does not:
33.12 	(1) make the report required by this subdivision;
33.13 	(2) permit an inspection and examination of its property, records, books, accounts, 
33.14 	or other papers when requested by the commissioner; or
33.15 	(3) appear before the commissioner or a person appointed under section 273.3715 
33.16 	when required to do so.
33.17 	(b) If the commissioner makes a valuation pursuant to paragraph (a), the 
33.18 	commissioner's valuation is final. Notwithstanding any other law to the contrary, a 
33.19 	valuation made pursuant to this subdivision is not appealable administratively.

33.20 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

33.21 	Sec. 15. Minnesota Statutes 2014, section 270.83, subdivision 1, is amended to read:
33.22 		Subdivision 1.Powers of commissioner. The commissioner ~~shall have~~ has the 
33.23 	power to examine or cause to be examined any books, papers, records, or memoranda 
33.24 	relevant to the determination of the valuation of operating property ~~as herein provided~~. 
33.25 	The commissioner ~~shall have the further power to~~ may require the attendance of any 
33.26 	person having knowledge or information ~~in the premises~~ concerning the valuation of the 
33.27 	operating property, ~~to~~ compel the production of books, papers, records, or memoranda by 
33.28 	persons so required to attend, ~~to~~ take testimony on matters material to ~~such determination~~ 
33.29 	determining the valuation of operating property, and administer oaths or affirmations.

33.30 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

33.31 	Sec. 16. Minnesota Statutes 2014, section 270.83, subdivision 2, is amended to read:
33.32 		Subd. 2.Appointment of persons; subpoenas. ~~For the purpose of making such~~ 
33.33 	~~examinations,~~ The commissioner may appoint such persons as the commissioner ~~may~~ 
34.1 	~~deem~~ deems  necessary to make the examinations described in subdivision 1. ~~Such~~ 
34.2 	~~persons shall have the rights and powers of the examining of~~ Persons appointed may 
34.3 	examine books, papers, records, or memoranda, ~~and of subpoenaing~~ subpoena witnesses, 
34.4 	~~administering~~ administer oaths and affirmations, and ~~taking of~~ take testimony~~, which are~~ 
34.5 	~~conferred upon the commissioner hereby~~. The court administrator of any court of record, 
34.6 	upon demand of any ~~such~~ person appointed, shall issue a subpoena for the attendance of 
34.7 	any witness or the production of any books, papers, records, or memoranda before such 
34.8 	person. The commissioner may also issue subpoenas for the appearance of witnesses 
34.9 	~~before the commissioner or before such persons. Disobedience of subpoenas so issued~~ 
34.10 	~~shall be punished by the district court of the district in which the subpoena is issued for a~~ 
34.11 	~~contempt of the district court~~. Failure to comply with a subpoena shall be punished in the 
34.12 	same manner as contempt of the district court.

34.13 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

34.14 	Sec. 17. Minnesota Statutes 2014, section 270.84, is amended to read:
34.15 	270.84 ANNUAL VALUATION OF OPERATING PROPERTY.
34.16 		Subdivision 1.Annual valuation; rules. (a) Before July 1, the commissioner 
34.17 	~~shall annually between March 31 and May 31 make a determination of~~ must determine 
34.18 	the ~~fair~~ market value of the operating property of every railroad company doing business 
34.19 	in this state as of January 2 of the year in which the valuation is made. ~~In making~~ 
34.20 	~~this determination,~~ The commissioner ~~shall~~must employ generally accepted appraisal 
34.21 	principles and practices which may include the unit method of determining value, and 
34.22 	approaches developed by the Western States Association of Tax Administrators, National 
34.23 	Conference of Unit Valuation States, and the International Association of Assessing 
34.24 	Officers.
34.25 	(b) The unit value of railroad property is the reconciled value considering the 
34.26 	cost, income, and market approaches under subdivisions 1a, 1b, and 1c. Each approach 
34.27 	must be weighed in accordance with (1) the reliability of the information and (2) the 
34.28 	commissioner's judgment.
34.29 		Subd. 1a.Cost approach. (a) The commissioner may use the cost approach, 
34.30 	including but not limited to original cost less book depreciation and replacement cost 
34.31 	less depreciation.
34.32 	(b) Book depreciation is allowed as a deduction from original cost less book 
34.33 	depreciation. Book depreciation is assumed to include all forms of depreciation.
35.1 	(c) Explicitly calculated appraisal depreciation, including physical, functional, and 
35.2 	external obsolescence, is allowed as a deduction from the replacement cost model.
35.3 		Subd. 1b.Income approach. (a) The commissioner may use the income approach, 
35.4 	including but not limited to direct capitalization models and yield capitalization models.
35.5 	(b) The yield rate is calculated using market data on selected comparable companies 
35.6 	in the band of investment method.
35.7 	(1) Discounted cash flow is a yield capitalization model that calculates the present 
35.8 	value of explicit cash flow forecasts capitalized using the yield rate, plus reversion to 
35.9 	stable growth yield capitalization after the period of explicit forecasts.
35.10 	(2) Stable growth yield capitalization is a yield capitalization model that calculates 
35.11 	the present value of anticipated future cash flows, capitalized using the yield rate and 
35.12 	considering growth.
35.13 	(c) Direct capitalization is the expected net operating income for the following year, 
35.14 	divided by the direct capitalization rate. The direct capitalization rate is calculated by 
35.15 	using direct market observations from comparable sales or using market earning-to-price 
35.16 	information in the band of investment method.
35.17 		Subd. 1c.Market approach. The commissioner may use the market approach, 
35.18 	including but not limited to a sales comparison model, a stock and debt model, or other 
35.19 	market models that are available and reliable.
35.20 		Subd. 2.Notice. The commissioner, after determining the ~~fair~~ market value of the 
35.21 	operating property of each railroad company, ~~shall give notice to~~ must notify the railroad 
35.22 	company of the valuation ~~by first class mail, overnight delivery, or messenger service~~.

35.23 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

35.24 	Sec. 18. Minnesota Statutes 2014, section 270.86, is amended to read:
35.25 	270.86 APPORTIONMENT AND EQUALIZATION OF VALUATION.
35.26 		Subdivision 1.Apportionment of value. ~~Upon determining~~ (a) After allocating to 
35.27 	Minnesota the ~~fair~~ market value of the operating property of each railroad company, the 
35.28 	commissioner ~~shall~~must apportion ~~such~~the value to ~~the respective counties and to the~~ 
35.29 	~~taxing districts therein in conformity with fair and reasonable rules and standards to be~~ 
35.30 	~~established by the commissioner pursuant to notice and hearing, except as provided in~~ 
35.31 	~~section 270.81. In establishing such rules and standards the commissioner may consider~~ 
35.32 	~~(a) the physical situs of all station houses, depots, docks, wharves, and other buildings and~~ 
35.33 	~~structures with an original cost in excess of $10,000; (b) the proportion that the length and~~ 
35.34 	~~type of all the tracks used by the railroad in such county and taxing district bears to the~~ 
36.1 	~~length and type of all the track used in the state; and (c) other facts as will result in a fair~~ 
36.2 	~~and equitable apportionment of value~~ the operating parcels in Minnesota.
36.3 	(b) The apportioned market value of each company's operating parcel in Minnesota 
36.4 	is the current original cost of each parcel as of the last assessment date plus original cost 
36.5 	of new construction minus the original cost of property retired since the last assessment 
36.6 	date. The total Minnesota apportionable market value of the railroad is divided by the 
36.7 	total current original cost of the railroad in Minnesota to determine a percentage. The 
36.8 	resulting percentage is multiplied by the current original cost of each parcel to determine 
36.9 	the apportioned market value of each parcel.
36.10 		Subd. 1a.Allocation of value. After the market value of the operating property 
36.11 	has been estimated, the portion of the value that is attributable to Minnesota must be 
36.12 	determined by calculating an allocation percentage using factors relevant to the industry 
36.13 	segment of the railroad company. This allocation percentage must be multiplied by the 
36.14 	value of the operating property to determine the Minnesota allocated value.
36.15 	The Minnesota allocated value is determined by averaging the following factors:
36.16 	(1) the miles of railroad track operated in Minnesota divided by miles of railroad 
36.17 	track operated in all states;
36.18 	(2) the ton miles of revenue freight transported in Minnesota divided by ton miles of 
36.19 	revenue freight transported in all states;
36.20 	(3) the gross revenues from transportation operations within Minnesota divided by 
36.21 	gross revenues from transportation operations in all states; and
36.22 	(4) the cost of railroad property in Minnesota divided by the cost of railroad property 
36.23 	in all states.
36.24 	The average of the factors must be multiplied by the value of the railroad company's 
36.25 	operating property to calculate the Minnesota portion of the railroad's operating property.
36.26 		Subd. 2.Equalized valuation. After making the apportionment provided in 
36.27 	subdivision 1, the commissioner ~~shall determine the equalized valuation of the operating~~ 
36.28 	~~property in each county by applying to the apportioned value an estimated current~~ 
36.29 	~~year median sales ratio for all commercial and industrial property in that county~~ must 
36.30 	equalize the values of the operating property to the level accepted by the State Board of 
36.31 	Equalization if the appropriate assessment-to-sales ratio for each county as conducted by 
36.32 	the Department of Revenue in section 270.12, subdivision 2, clause 6, is outside the 
36.33 	range accepted by the State Board of Equalization. ~~If the commissioner decides there are~~ 
36.34 	~~insufficient sales to determine a median commercial-industrial sales ratio, an estimated~~ 
36.35 	~~current year countywide median sales ratio for all property shall be applied to the~~ 
36.36 	~~apportioned value. No equalization shall be made to~~The commissioner must not equalize 
37.1 	the market value of the operating property if the ~~median sales ratio~~ assessment-to-sales 
37.2 	ratio determined pursuant to this subdivision is within ~~five percent of the assessment ratio~~ 
37.3 	~~of the railroad operating property~~ the range accepted by the State Board of Equalization.

37.4 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

37.5 	Sec. 19. Minnesota Statutes 2014, section 270.87, is amended to read:
37.6 	270.87 CERTIFICATION TO COUNTY ASSESSORS.
37.7 	~~After making an annual determination of the equalized fair market value of the~~ 
37.8 	~~operating property of each company in each of the respective counties, and in the taxing~~ 
37.9 	~~districts therein,~~ The commissioner ~~shall~~must certify the equalized ~~fair~~ market value of 
37.10 	the operating property to the county assessor ~~on or~~ before ~~June 30~~ August 1. The equalized 
37.11 	~~fair~~ market value of the operating property of the railroad company in the county and the 
37.12 	taxing districts therein is the value on which taxes must be levied and collected in the same 
37.13 	manner as on the commercial and industrial property ~~of such county and the taxing districts~~ 
37.14 	~~therein~~ in the counties and taxing districts. If the commissioner determines that the 
37.15 	equalized ~~fair~~ market value certified ~~on or before June 30~~ before August 1 is in error, the 
37.16 	commissioner may issue a corrected certification ~~on or before August 31~~ before October 1. 
37.17 	The commissioner may correct errors that are merely clerical in nature until December 31.

37.18 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

37.19 	Sec. 20. Minnesota Statutes 2014, section 272.02, subdivision 9, is amended to read:
37.20 		Subd. 9.Personal property; exceptions. Except for the taxable personal property 
37.21 	enumerated below, all personal property and the property described in section 272.03, 
37.22 	subdivision 1, paragraphs (c) and (d), shall be exempt.
37.23 	The following personal property shall be taxable:
37.24 	(a) personal property which is part of an electric generating, transmission, or 
37.25 	distribution system or a pipeline system transporting or distributing water, gas, crude 
37.26 	oil, or petroleum products or mains and pipes used in the distribution of steam or hot or 
37.27 	chilled water for heating or cooling buildings and structures;
37.28 	(b) ~~railroad docks and wharves which are~~ personal property that is part of the 
37.29 	operating property of a railroad company as defined in section ~~270.80~~ 273.3712;
37.30 	(c) personal property defined in section 272.03, subdivision 2, clause (3);
37.31 	(d) leasehold or other personal property interests which are taxed pursuant to section 
37.32 	272.01, subdivision 2; 273.124, subdivision 7; or 273.19, subdivision 1; or any other law 
37.33 	providing the property is taxable as if the lessee or user were the fee owner;
38.1 	(e) manufactured homes and sectional structures, including storage sheds, decks, 
38.2 	and similar removable improvements constructed on the site of a manufactured home, 
38.3 	sectional structure, park trailer or travel trailer as provided in section 273.125, subdivision 
38.4 	8, paragraph (f); and
38.5 	(f) flight property as defined in section 270.071.

38.6 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

38.7 	Sec. 21. Minnesota Statutes 2014, section 275.025, subdivision 1, is amended to read:
38.8 		Subdivision 1.Levy amount. The state general levy is levied against 
38.9 	commercial-industrial property and seasonal residential recreational property, as defined 
38.10 	in this section. The state general levy base amount for commercial-industrial property 
38.11 	is ~~$592,000,000~~ $903,400,000 for taxes payable in ~~2002~~ 2018. For taxes payable in 
38.12 	subsequent years, the levy base amount is increased each year by multiplying the levy base 
38.13 	amount for the prior year by the sum of one plus the rate of increase, if any, in the implicit 
38.14 	price deflator for government consumption expenditures and gross investment for state 
38.15 	and local governments prepared by the Bureau of Economic Analysts of the United States 
38.16 	Department of Commerce for the 12-month period ending March 31 of the year prior to the 
38.17 	year the taxes are payable. The tax under this section is not treated as a local tax rate under 
38.18 	section 469.177 and is not the levy of a governmental unit under chapters 276A and 473F.
38.19 	The commissioner shall increase or decrease the preliminary or final rate for a year 
38.20 	as necessary to account for errors and tax base changes that affected a preliminary or final 
38.21 	rate for either of the two preceding years. Adjustments are allowed to the extent that the 
38.22 	necessary information is available to the commissioner at the time the rates for a year must 
38.23 	be certified, and for the following reasons:
38.24 	(1) an erroneous report of taxable value by a local official;
38.25 	(2) an erroneous calculation by the commissioner; and
38.26 	(3) an increase or decrease in taxable value for commercial-industrial or seasonal 
38.27 	residential recreational property reported on the abstracts of tax lists submitted under 
38.28 	section 275.29 that was not reported on the abstracts of assessment submitted under 
38.29 	section 270C.89 for the same year.
38.30 	The commissioner may, but need not, make adjustments if the total difference in the tax 
38.31 	levied for the year would be less than $100,000.

38.32 	EFFECTIVE DATE. This section is effective for taxes payable in 2018 and 
38.33 	thereafter.

39.1 	Sec. 22. Minnesota Statutes 2014, section 275.025, subdivision 4, is amended to read:
39.2 		Subd. 4.Apportionment and levy of state general tax. ~~Ninety-five~~ 95.1 percent of 
39.3 	the state general tax must be levied by applying a uniform rate to all commercial-industrial 
39.4 	tax capacity and ~~five~~ 4.9 percent of the state general tax must be levied by applying a 
39.5 	uniform rate to all seasonal residential recreational tax capacity. On or before October 1 
39.6 	each year, the commissioner of revenue shall certify the preliminary state general levy 
39.7 	rates to each county auditor that must be used to prepare the notices of proposed property 
39.8 	taxes for taxes payable in the following year. By January 1 of each year, the commissioner 
39.9 	shall certify the final state general levy rate to each county auditor that shall be used 
39.10 	in spreading taxes.

39.11 	EFFECTIVE DATE. This section is effective for taxes payable in 2018 and 
39.12 	thereafter.

39.13 	Sec. 23. APPROPRIATION.
 39.14 	$224,000 is appropriated in fiscal year 2017 from the general fund to the 
39.15 	commissioner of revenue to administer the provisions in this article. $56,000 of this 
39.16 	amount is added to the agency's budget base to administer the provisions of this article.

39.17 	Sec. 24. SEVERABILITY.
 39.18 	If any part of this article is found to be invalid because it is in conflict with a 
39.19 	provision of the Minnesota Constitution or for any other reason, all other provisions of this 
39.20 	act shall remain valid and any rights, remedies, and privileges that have been otherwise 
39.21 	accrued by this act shall remain in effect and may be proceeded with and concluded 
39.22 	under the provisions of this act.

39.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

39.24 	Sec. 25. REVISOR'S INSTRUCTION.
 39.25 	(a) The revisor of statutes shall renumber the statutory section in column A with 
39.26 	the section in column B. The revisor shall make necessary cross-reference changes in 
39.27 	Minnesota Statutes and Minnesota Rules.

39.28 | | Column A | Column B
39.29 | | 270.80 | 273.3712
39.30 | | 270.81 | 273.3713
39.31 | | 270.82 | 273.3714
39.32 | | 270.83 | 273.3715
39.33 | | 270.84 | 273.3716
40.1 | | 270.85 | 273.3717
40.2 | | 270.86 | 273.3718
40.3 | | 270.87 | 273.3719
40.4 	(b) The revisor shall make changes necessary to correct the punctuation, grammar, 
40.5 	or remaining text that result from implementing this instruction.

40.6 	Sec. 26.  REPEALER.
 40.7 	Minnesota Statutes 2014, sections 270.81, subdivision 4; and 270.83, subdivision 3, 
40.8 	and Minnesota Rules, parts 8106.0100, subparts 1, 2, 3, 4, 5, 6, 7, 8, 10, 12, 13, 14, 17, 
40.9 	17a, 18, 19, 20, and 21; 8106.0300, subparts 1 and 3; 8106.0400; 8106.0500; 8106.0600; 
40.10 	8106.0700; 8106.0800; and 8106.9900, are repealed.

40.11 	EFFECTIVE DATE. This section is effective beginning in assessment year 2017.

40.12 	ARTICLE 4
40.13 	SPECIAL TAXES

40.14 	Section 1. Minnesota Statutes 2014, section 296A.01, subdivision 12, is amended to 
40.15 	read:
40.16 		Subd. 12.Compressed natural gas or CNG. "Compressed natural gas" or "CNG" 
40.17 	means natural gas, primarily methane, condensed under high pressure and stored in 
40.18 	specially designed storage tanks at between 2,000 and 3,600 pounds per square inch. 
40.19 	For purposes of this chapter, the energy content of CNG is considered to be ~~1,000~~ 900 
40.20 	BTUs per cubic foot.

40.21 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
40.22 	June 30, 2016.

40.23 	Sec. 2. Minnesota Statutes 2014, section 296A.08, subdivision 2, is amended to read:
40.24 		Subd. 2.Rate of tax. The special fuel excise tax is imposed at the following rates:
40.25 	(a) Liquefied petroleum gas or propane is taxed at the rate of 18.75 cents per gallon.
40.26 	(b) Liquefied natural gas is taxed at the rate of 15 cents per gallon.
40.27 	(c) Compressed natural gas is taxed at the rate of ~~$2.174~~ $1.974 per thousand cubic 
40.28 	feet; or 25 cents per gasoline equivalent. For purposes of this paragraph, "gasoline 
40.29 	equivalent," as defined by the National Conference on Weights and Measures, is 5.66 
40.30 	pounds or 126.67 cubic feet of natural gas.
41.1 	(d) All other special fuel is taxed at the same rate as the gasoline excise tax as 
41.2 	specified in section 296A.07, subdivision 2. The tax is payable in the form and manner 
41.3 	prescribed by the commissioner.

41.4 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
41.5 	June 30, 2016.

41.6 	Sec. 3. Minnesota Statutes 2014, section 297H.04, subdivision 2, is amended to read:
41.7 		Subd. 2.Rate. (a) Commercial generators that generate nonmixed municipal 
41.8 	solid waste shall pay a solid waste management tax of 60 cents per noncompacted 
41.9 	cubic yard of periodic waste collection capacity purchased by the generator, based on 
41.10 	the size of the container for the nonmixed municipal solid waste, the actual volume, 
41.11 	or the weight-to-volume conversion schedule in paragraph (c). However, the tax must 
41.12 	be calculated by the waste management service provider using the same method for 
41.13 	calculating the waste management service fee so that both are calculated according to 
41.14 	container capacity, actual volume, or weight.
41.15 	(b) Notwithstanding section 297H.02, a residential generator that generates 
41.16 	nonmixed municipal solid waste shall pay a solid waste management tax in the same 
41.17 	manner as provided in paragraph (a).
41.18 	(c) The weight-to-volume conversion schedule for:
41.19 	(1) construction debris as defined in section 115A.03, subdivision 7, is ~~one ton~~ 
41.20 	~~equals 3.33 cubic yards, or $2 per ton~~ equal to 60 cents per cubic yard. The commissioner 
41.21 	of revenue, after consultation with the commissioner of the Pollution Control Agency, 
41.22 	shall determine and may publish by notice a conversion schedule for construction debris;
41.23 	(2) industrial waste as defined in section 115A.03, subdivision 13a, is equal to 
41.24 	60 cents per cubic yard. The commissioner of revenue after consultation with the 
41.25 	commissioner of the Pollution Control Agency, shall determine, and may publish by 
41.26 	notice, a conversion schedule for various industrial wastes; and
41.27 	(3) infectious waste as defined in section 116.76, subdivision 12, and pathological 
41.28 	waste as defined in section 116.76, subdivision 14, is 150 pounds equals one cubic yard, or 
41.29 	60 cents per 150 pounds.

41.30 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
41.31 	June 30, 2016.

42.1 	ARTICLE 5
42.2 	TOBACCO TAXES

42.3 	Section 1. Minnesota Statutes 2014, section 270C.722, subdivision 1, is amended to 
42.4 	read:
42.5 		Subdivision 1.Notice of revocation; hearings. (a) If~~: (1)~~ a person fails to comply 
42.6 	with chapter 297A or the sales and use tax provisions of chapter 289A or the rules related 
42.7 	to sales tax, ~~or (2) any retailer purchases for resale from an unlicensed seller more than~~ 
42.8 	~~20,000 cigarettes or $500 or more worth of tobacco products, without reasonable cause,~~ 
42.9 	the commissioner may give the person 30 days' notice in writing, specifying the violations, 
42.10 	and stating that based on the violations the commissioner intends to revoke the person's 
42.11 	permit issued under section 297A.84. The notice must also advise the person of the right to 
42.12 	contest the revocation under this subdivision. It must also explain the general procedures 
42.13 	for a contested case hearing under chapter 14. The notice may be served personally or by 
42.14 	mail in the manner prescribed for service of an order of assessment.
42.15 	(b) If the person does not request a hearing within 30 days after the date of the 
42.16 	notice of intent, the commissioner may serve a notice of revocation of permit upon the 
42.17 	person, and the permit is revoked. If a hearing is timely requested, and held, the permit 
42.18 	is revoked after the commissioner serves an order of revocation of permit under section 
42.19 	14.62, subdivision 1.

42.20 	EFFECTIVE DATE. This section is effective August 1, 2016.

42.21 	Sec. 2. Minnesota Statutes 2014, section 270C.728, is amended by adding a 
42.22 	subdivision to read:
42.23 		Subd. 8.Publication of revoked retail cigarette licenses. (a) Notwithstanding 
42.24 	any other law, the commissioner may publish a list of persons who have had their retail 
42.25 	licenses to sell cigarettes or tobacco products revoked under section 297F.186. In the case 
42.26 	of a license holder that is a business entity, the commissioner may also publish the name 
42.27 	of responsible persons of the license holder, as defined in section 297F.186, subdivision 1.
42.28 	(b) At least 30 days before publishing the name of a license holder or responsible 
42.29 	person, the commissioner shall mail a written notice to the license holder and to 
42.30 	responsible persons of the license holder of the commissioner's intent to publish. This 
42.31 	notice may be included as part of the notice of intent to revoke a license as required under 
42.32 	section 297F.186, subdivision 3.
43.1 	(c) The list may be published by any medium or method. The list must contain 
43.2 	the name and address of the license holder and the name of the responsible person and 
43.3 	the date the license was revoked.
43.4 	(d) The commissioner shall remove the name of a license holder or responsible 
43.5 	person from the list five years from the date of the license revocation or upon the license 
43.6 	holder or responsible person receiving a license clearance under section 297F.186.

43.7 	EFFECTIVE DATE. This section is effective August 1, 2016.

43.8 	Sec. 3. Minnesota Statutes 2014, section 297F.01, subdivision 14, is amended to read:
43.9 		Subd. 14.Retailer. "Retailer" means a person ~~required to be licensed under chapter~~ 
43.10 	~~461~~located in this state engaged ~~in this state~~ in the business of selling, or offering to sell, 
43.11 	cigarettes or tobacco products to consumers.

43.12 	EFFECTIVE DATE. This section is effective August 1, 2016.

43.13 	Sec. 4. Minnesota Statutes 2014, section 297F.03, subdivision 5, is amended to read:
43.14 		Subd. 5.License fees; cigarettes. Each application for a cigarette distributor's 
43.15 	license must be accompanied by a fee of ~~$300~~ $500. Each application for a cigarette 
43.16 	subjobber's license must be accompanied by a fee of ~~$24~~ $100. A distributor or subjobber 
43.17 	applying for a license during the second year of a two-year licensing period is required to 
43.18 	pay only one-half of the license fee.

43.19 	EFFECTIVE DATE. This section is effective for license periods beginning after 
43.20 	December 31, 2016.

43.21 	Sec. 5. Minnesota Statutes 2014, section 297F.03, subdivision 6, is amended to read:
43.22 		Subd. 6.License fees; tobacco products. Each application for a tobacco products 
43.23 	distributor's license must be accompanied by a fee of ~~$75~~ $500. Each application for 
43.24 	a tobacco products subjobber's license must be accompanied by a fee of ~~$20~~ $100. A 
43.25 	distributor or subjobber applying for a license during the second year of a two-year 
43.26 	licensing period is required to pay only one-half of the license fee.

43.27 	EFFECTIVE DATE. This section is effective for license periods beginning after 
43.28 	December 31, 2016.

43.29 	Sec. 6. Minnesota Statutes 2014, section 297F.04, subdivision 1, is amended to read:
44.1 		Subdivision 1.Powers of commissioner. The commissioner may revoke ~~or~~, 
44.2 	suspend, or refuse to renew the license or licenses of any distributor or subjobber, or 
44.3 	refuse to issue a license to an applicant for a distributor or subjobber license, for violation 
44.4 	of this chapter, any other act applicable to the sale of cigarettes or tobacco products, or any 
44.5 	rule promulgated by the commissioner, in furtherance of this chapter.

44.6 	EFFECTIVE DATE. This section is effective August 1, 2016.

44.7 	Sec. 7. Minnesota Statutes 2014, section 297F.13, subdivision 4, is amended to read:
44.8 		Subd. 4.Retailer and subjobber to preserve purchase invoices. Every retailer and 
44.9 	subjobber shall procure itemized invoices of all cigarettes or tobacco products purchased.
44.10 	The retailer and subjobber shall preserve a legible copy of each invoice for one 
44.11 	year from the date of the invoice or as long as the cigarette or tobacco product listed on 
44.12 	the invoice is available for sale or in their possession, whichever period is longer. The 
44.13 	retailer and subjobber shall preserve copies of the invoices at each retail location or at a 
44.14 	central location provided that the invoice must be produced and made available at a retail 
44.15 	location within one hour when requested by the commissioner or duly authorized agents 
44.16 	and employees. Copies should be numbered and kept in chronological order.
44.17 	To determine whether the business is in compliance with the provisions of this 
44.18 	chapter, at any time during usual business hours, the commissioner, or duly authorized 
44.19 	agents and employees, may enter any place of business of a retailer or subjobber without 
44.20 	a search warrant and inspect the premises, the records required to be kept under this 
44.21 	chapter, and the packages of cigarettes, tobacco products, and vending devices contained 
44.22 	on the premises.

44.23 	EFFECTIVE DATE. This section is effective for sales and purchases by subjobbers 
44.24 	and retailers made on or after August 1, 2016.

44.25 	Sec. 8. [297F.186] REVOCATION OF CIGARETTE AND TOBACCO RETAIL 
44.26 	LICENSE.
44.27 		Subdivision 1.Cigarette and tobacco retail revocation. (a) A licensing authority 
44.28 	must not issue, transfer, or renew, and must revoke, a license if the commissioner has 
44.29 	notified the licensing authority that the license holder or applicant has been in possession 
44.30 	of contraband cigarettes or tobacco products as defined under section 297F.21 at the 
44.31 	location covered by the license.
44.32 	(b) Within ten days after receipt of the notification from the commissioner under 
44.33 	paragraph (a), the licensing authority must notify the license holder by mail of the 
45.1 	revocation of the license or an applicant of the denial to issue a license. The notice must 
45.2 	include a copy of the commissioner's notice to the licensing authority and information, in 
45.3 	the form specified by the commissioner, on the licensee's option for receiving a license 
45.4 	clearance from the commissioner. The licensing authority must revoke the license within 
45.5 	30 days after receiving the notice from the commissioner, unless it receives a license 
45.6 	clearance from the commissioner as provided in subdivision 2, paragraph (b).
45.7 	(c) For purposes of this section, the following terms have the meanings given.
45.8 	(1) "License holder" means an individual or legal entity who has a license to sell 
45.9 	cigarettes or tobacco products issued under chapter 461.
45.10 	(2) "License" means a license to sell cigarettes or tobacco products under chapter 461.
45.11 	(3) "Licensing authority" means a town board, county board, governing body of a 
45.12 	home rule charter or statutory city, or state agricultural society authorized to issue licenses 
45.13 	under chapter 461.
45.14 	(4) "Applicant" means any individual, corporation, partnership, or any other legal 
45.15 	entity that is a holder of a license or that has filed an application to obtain a license.
45.16 	(5) "Responsible person" means any individual who, either singly or jointly with 
45.17 	others, has the control of, supervision of, or responsibility for filing tax returns or reports, 
45.18 	paying taxes, or collecting or withholding and remitting taxes to the commissioner for 
45.19 	a license holder, or who has authority to purchase cigarettes or tobacco products, or 
45.20 	supervises a person who has authority to purchase cigarettes or tobacco products for 
45.21 	the license holder.
45.22 		Subd. 2.New licenses after revocation. (a) An applicant who has had a 
45.23 	license revoked under this section, or an applicant with a responsible person who was 
45.24 	a responsible person for another entity for which a license was revoked under this 
45.25 	section, may not apply for a license or seek the reinstatement of a revoked license 
45.26 	unless the applicant presents to the licensing authority a license clearance issued by the 
45.27 	commissioner. A licensing authority must not issue a new license to an applicant with 
45.28 	such a responsible person or to an applicant who has had a license revoked under this 
45.29 	section or reinstate a revoked license unless the applicant presents to the authority a 
45.30 	license clearance issued by the commissioner.
45.31 	(b) Except as provided in paragraph (f), the commissioner may issue a license 
45.32 	clearance if the applicant and all responsible persons of the applicant:
45.33 	(1) sign an agreement that acknowledges that the applicant and the responsible 
45.34 	person will follow all laws related to the taxation of cigarettes and tobacco products, 
45.35 	including the requirements to:
46.1 	(i) purchase all cigarettes and tobacco products from distributors and subjobbers 
46.2 	licensed by the commissioner;
46.3 	(ii) maintain invoices of all cigarettes or tobacco products purchased as required 
46.4 	under section 297F.13, subdivision 4, and produce those invoices within one hour when 
46.5 	requested by the commissioner or duly authorized agents and employees; and
46.6 	(iii) timely file and pay to the commissioner all returns and all sales taxes related to 
46.7 	the sale of tobacco products; and
46.8 	(2) deposit with the commissioner security or a surety bond in an amount equal 
46.9 	to ten times the amount of tax on the contraband cigarettes or tobacco products. The 
46.10 	commissioner must hold the security deposit for two years.
46.11 	(c) The commissioner must pay interest on any money deposited as security. The 
46.12 	interest is calculated from the date of deposit to the date of refund, or date of application 
46.13 	to any outstanding tax liability, at a rate specified in section 270C.405. The commissioner 
46.14 	must refund the security deposit to the applicant at the end of the two-year period 
46.15 	unless the applicant has any unpaid tax liabilities payable to the commissioner. The 
46.16 	commissioner may apply the security deposit to unpaid tax liabilities of the applicant 
46.17 	owed to the commissioner and to the tax on contraband cigarettes or tobacco products 
46.18 	owned, possessed, sold, or offered for sale by the applicant after the license clearance 
46.19 	has been issued.
46.20 	(d) The commissioner may refund the security deposit before the end of the two-year 
46.21 	holding period if the license holder no longer has a license to sell cigarettes or tobacco 
46.22 	products issued by a licensing authority in the state.
46.23 	(e) If the commissioner determines that a licensing authority has issued a new license 
46.24 	or reinstated a revoked license without the applicant submitting a license clearance, the 
46.25 	commissioner may notify the licensing authority to revoke the license. Revocations under 
46.26 	this subdivision are controlled by the provisions of subdivisions 1, paragraph (b), and 3. 
46.27 	The commissioner must send notice of intent to require revocation to the license holder 
46.28 	and to the responsible person of the license holder.
46.29 	(f) If an applicant has had, or if a person has been a responsible person to, a 
46.30 	cumulative number of two or more licenses revoked under this subdivision in a five-year 
46.31 	period by licensing authorities within the state, the commissioner may refuse to issue a 
46.32 	license clearance until 24 months have elapsed after the last revocation and the applicant 
46.33 	has satisfied the conditions for reinstatement of a revoked license or issuance of a new 
46.34 	license imposed by this subdivision.
46.35 		Subd. 3.Notice and hearing. (a) Prior to notifying a licensing authority to revoke 
46.36 	a license pursuant to subdivision 1, the commissioner must send a notice to the license 
47.1 	holder and to any known responsible person of the license holder of the commissioner's 
47.2 	intent to require revocation of the license and of the license holder's or responsible person's 
47.3 	right to a hearing. If the license holder or responsible person requests a hearing in writing 
47.4 	within 30 days of the date of the notice, a contested case hearing must be held. The hearing 
47.5 	must be held within 45 days of the date the commissioner refers the case to the Office of 
47.6 	Administrative Hearings. Notwithstanding any law to the contrary, the license holder or 
47.7 	responsible person must be served in writing specifying the time and place of the hearing 
47.8 	and the allegations against the license holder or responsible person. The notice may be 
47.9 	served at least 20 days before the hearing personally or by mail. A license is subject to 
47.10 	revocation when 30 days have passed following the date of the notice in this paragraph 
47.11 	without the license holder requesting a hearing, or, if a hearing is timely requested, upon 
47.12 	adverse final determination of the case after the hearing under section 14.62, subdivision 1.
47.13 	(b) The commissioner may notify a licensing authority under subdivision 1 only 
47.14 	after the requirements of paragraph (a) have been satisfied.
47.15 	(c) A hearing under this subdivision is in lieu of any other hearing or proceeding 
47.16 	provided by law arising from any action taken under subdivision 1.

47.17 	EFFECTIVE DATE. This section is effective August 1, 2016, and applies to 
47.18 	revocations based on contraband seized on or after August 1, 2016.

47.19 	Sec. 9. Minnesota Statutes 2014, section 297F.19, is amended by adding a subdivision 
47.20 	to read:
47.21 		Subd. 10.Penalty for retailers who fail to comply. (a) A retailer who fails to 
47.22 	produce an itemized invoice from a licensed seller within one hour of being requested by 
47.23 	the commissioner to do so as required under section 297F.13, subdivision 4, or who offers 
47.24 	for sale or holds in inventory cigarettes or tobacco products without a license required 
47.25 	under chapter 461 is subject to a penalty of $1,000 for the first violation, $3,000 for the 
47.26 	second violation, and $5,000 for the third and each subsequent violation occurring during 
47.27 	any 36-month period.
47.28 	(b) A retailer who offers for sale or holds in inventory untaxed cigarettes or tobacco 
47.29 	products is subject to a penalty equal to the greater of $2,000, or 150 percent of the tax 
47.30 	due on the cigarettes or tobacco products.

47.31 	EFFECTIVE DATE. This section is effective for violations occurring on or after 
47.32 	August 1, 2016.

48.1 	Sec. 10. Minnesota Statutes 2014, section 297F.20, is amended by adding a subdivision 
48.2 	to read:
48.3 		Subd. 2a.Penalties for willful failure to file or pay. (a) A person or consumer 
48.4 	required to file a return, report, or other document with the commissioner who willfully 
48.5 	attempts in any manner to evade or defeat a tax under this chapter by failing to do so 
48.6 	when required is guilty of a felony.
48.7 	(b) A person or consumer required to pay or to collect and remit a tax under this 
48.8 	chapter, who willfully attempts to evade or defeat a tax by failing to do so when required, 
48.9 	is guilty of a felony.

48.10 	EFFECTIVE DATE. This section is effective for offenses committed on or after 
48.11 	August 1, 2016.

48.12 	Sec. 11. Minnesota Statutes 2014, section 297F.20, is amended by adding a subdivision 
48.13 	to read:
48.14 		Subd. 13.Aggregation and consolidation of venue. In any prosecution under this 
48.15 	section, the number of unstamped cigarettes or the value of the untaxed tobacco products 
48.16 	possessed, received, transported, sold, offered to be sold, or purchased in violation of 
48.17 	this section within any six-month period may be aggregated and the defendant charged 
48.18 	accordingly in applying the provisions of this section. When two or more offenses are 
48.19 	committed by the same individual in two or more counties, the accused may be prosecuted 
48.20 	in any county in which one of the offenses was committed.

48.21 	EFFECTIVE DATE. This section is effective for offenses committed on or after 
48.22 	August 1, 2016.

48.23 	Sec. 12. Minnesota Statutes 2014, section 297F.21, subdivision 1, is amended to read:
48.24 		Subdivision 1.Contraband defined. The following are declared to be contraband 
48.25 	and therefore subject to civil and criminal penalties under this chapter:
48.26 	(a) Cigarette packages which do not have stamps affixed to them as provided in this 
48.27 	chapter, including but not limited to (i) packages with illegible stamps and packages with 
48.28 	stamps that are not complete or whole even if the stamps are legible, and (ii) all devices 
48.29 	for the vending of cigarettes in which packages as defined in item (i) are found, including 
48.30 	all contents contained within the devices.
48.31 	(b) A device for the vending of cigarettes and all packages of cigarettes, where the 
48.32 	device does not afford at least partial visibility of contents. Where any package exposed 
49.1 	to view does not carry the stamp required by this chapter, it shall be presumed that all 
49.2 	packages contained in the device are unstamped and contraband.
49.3 	(c) A device for the vending of cigarettes to which the commissioner or authorized 
49.4 	agents have been denied access for the inspection of contents. In lieu of seizure, the 
49.5 	commissioner or an agent may seal the device to prevent its use until inspection of 
49.6 	contents is permitted.
49.7 	(d) A device for the vending of cigarettes which does not carry the name and address 
49.8 	of the owner, plainly marked and visible from the front of the machine.
49.9 	(e) A device including, but not limited to, motor vehicles, trailers, snowmobiles, 
49.10 	airplanes, and boats used with the knowledge of the owner or of a person operating with 
49.11 	the consent of the owner for the storage or transportation of more than 5,000 cigarettes 
49.12 	which are contraband under this subdivision. When cigarettes are being transported in 
49.13 	the course of interstate commerce, or are in movement from either a public warehouse to 
49.14 	a distributor upon orders from a manufacturer or distributor, or from one distributor to 
49.15 	another, the cigarettes are not contraband, notwithstanding the provisions of clause (a).
49.16 	(f) A device including, but not limited to, motor vehicles, trailers, snowmobiles, 
49.17 	airplanes, and boats used with the knowledge of the owner, or of a person operating with 
49.18 	the consent of the owner, for the storage or transportation of untaxed tobacco products 
49.19 	intended for sale in Minnesota other than those in the possession of a licensed distributor 
49.20 	on or before the due date for payment of the tax under section 297F.09, subdivision 2.
49.21 	(g) Cigarette packages or tobacco products obtained from an unlicensed seller.
49.22 	(h) Cigarette packages offered for sale or held as inventory in violation of section 
49.23 	297F.20, subdivision 7.
49.24 	(i) Tobacco products on which the tax has not been paid by a licensed distributor.
49.25 	(j) Any cigarette packages or tobacco products offered for sale or held as inventory 
49.26 	for which ~~there is not an invoice from a licensed seller~~ the retailer or subjobber does not 
49.27 	produce an itemized invoice from a licensed seller within one hour after being requested 
49.28 	by the commissioner to do so as required under section 297F.13, subdivision 4.
49.29 	(k) Cigarette packages which have been imported into the United States in violation 
49.30 	of United States Code, title 26, section 5754. All cigarettes held in violation of that section 
49.31 	shall be presumed to have entered the United States after December 31, 1999, in the 
49.32 	absence of proof to the contrary.
49.33 	(l) Cigarettes subject to forfeiture under section 299F.854, subdivision 5, and 
49.34 	cigarette packaging and markings, including the cigarettes contained therein, which do not 
49.35 	meet the requirements under section 299F.853, paragraph (a).
50.1 	(m) All cigarettes and tobacco products, including those for which the tax has 
50.2 	been paid, offered for sale, or held as inventory by a retailer operating without a license 
50.3 	required under chapter 461.

50.4 	EFFECTIVE DATE. This section is effective August 1, 2016.

50.5 	Sec. 13. Minnesota Statutes 2014, section 461.12, subdivision 8, is amended to read:
50.6 		Subd. 8.Notice to commissioner. The licensing authority under this section shall, 
50.7 	within 30 days of the issuance or renewal of a license, ~~inform~~ provide the commissioner of 
50.8 	revenue ~~of~~, on a form prescribed by the commissioner and completed by the applicant, 
50.9 	the licensee's name, address, trade name, Minnesota business identification number, the 
50.10 	name of the individual or individuals who will be responsible for purchasing cigarettes or 
50.11 	tobacco products for the licensee, and the effective and expiration dates of the license. 
50.12 	The commissioner of revenue must also be informed of a license ~~renewal,~~ transfer, 
50.13 	cancellation, suspension, or revocation during the license period.

50.14 	EFFECTIVE DATE. This section is effective for licenses issued, renewed, 
50.15 	transferred, canceled, suspended, or revoked after December 31, 2016.

50.16 	Sec. 14. APPROPRIATION.
 50.17 	$1,036,000 in fiscal year 2017, $1,036,000 in fiscal year 2018, and $1,036,000 in 
50.18 	fiscal year 2019 are appropriated from the general fund to the commissioner of revenue 
50.19 	to carry out the provisions of this article. This is an ongoing appropriation and shall be 
50.20 	added to the base.

50.21 	Sec. 15.  REPEALER.
 50.22 	Minnesota Statutes 2014, section 297F.185, is repealed.

50.23 	EFFECTIVE DATE. This section is effective August 1, 2016.

50.24 	ARTICLE 6
50.25 	CORPORATE TAX REFORM

50.26 	Section 1. Minnesota Statutes 2014, section 16D.08, subdivision 2, is amended to read:
50.27 		Subd. 2.Powers. (a) In addition to the collection remedies available to private 
50.28 	collection agencies in this state, the commissioner, with legal assistance from the attorney 
50.29 	general, may utilize any statutory authority granted to a referring agency for purposes of 
50.30 	collecting debt owed to that referring agency. The commissioner may also use the tax 
51.1 	collection remedies in sections 270C.03, subdivision 1, clause ~~(8)~~ (9), 270C.31, 270C.32, 
51.2 	270C.52, subdivisions 2 and 3, 270C.63, 270C.65, and 270C.67 to 270C.72. A debtor 
51.3 	may take advantage of any administrative or appeal rights contained in the listed sections. 
51.4 	For administrative and appeal rights for nontax debts, references to administrative 
51.5 	appeals or to the taxpayer rights advocate shall be construed to be references to the case 
51.6 	reviewer, references to Tax Court shall be construed to mean district court, and offers 
51.7 	in compromise shall be submitted to the referring agency. A debtor who qualifies for 
51.8 	cancellation of collection costs under section 16D.11, subdivision 3, clause (1), can apply 
51.9 	to the commissioner for reduction or release of a continuous wage levy, if the debtor 
51.10 	establishes that the debtor needs all or a portion of the wages being levied upon to pay 
51.11 	for essential living expenses, such as food, clothing, shelter, medical care, or expenses 
51.12 	necessary for maintaining employment. The commissioner's determination not to reduce 
51.13 	or release a continuous wage levy is appealable to district court. The word "tax" or "taxes" 
51.14 	when used in the tax collection statutes listed in this subdivision also means debts referred 
51.15 	under this chapter.
51.16 	(b) Before using the tax collection remedies listed in this subdivision, notice and 
51.17 	demand for payment of the amount due must be given to the person liable for the payment 
51.18 	or collection of the debt at least 30 days prior to the use of the remedies. The notice must 
51.19 	be sent to the person's last known address and must include a brief statement that sets forth 
51.20 	in simple and nontechnical terms the amount and source of the debt, the nature of the 
51.21 	available collection remedies, and remedies available to the debtor.

51.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

51.23 	Sec. 2. Minnesota Statutes 2014, section 270C.03, subdivision 1, is amended to read:
51.24 		Subdivision 1.Powers and duties. The commissioner shall have and exercise 
51.25 	the following powers and duties:
51.26 	(1) administer and enforce the assessment and collection of taxes;
51.27 	(2) make determinations, corrections, and assessments with respect to taxes, 
51.28 	including interest, additions to taxes, and assessable penalties;
51.29 	(3) disallow the tax effects of a transaction that does not have economic substance;
51.30 	~~(3)~~ (4) use statistical or other sampling techniques consistent with generally accepted 
51.31 	auditing standards in examining returns or records and making assessments;
51.32 	~~(4)~~ (5) investigate the tax laws of other states and countries, and formulate and 
51.33 	submit to the legislature such legislation as the commissioner may deem expedient 
51.34 	to prevent evasions of state revenue laws and to secure just and equal taxation and 
51.35 	improvement in the system of state revenue laws;
52.1 	~~(5)~~ (6) consult and confer with the governor upon the subject of taxation, the 
52.2 	administration of the laws in regard thereto, and the progress of the work of the 
52.3 	department, and furnish the governor, from time to time, such assistance and information 
52.4 	as the governor may require relating to tax matters;
52.5 	~~(6)~~ (7) execute and administer any agreement with the secretary of the treasury or the 
52.6 	Bureau of Alcohol, Tobacco, Firearms and Explosives in the Department of Justice of the 
52.7 	United States or a representative of another state regarding the exchange of information 
52.8 	and administration of the state revenue laws;
52.9 	~~(7)~~ (8) require town, city, county, and other public officers to report information 
52.10 	as to the collection of taxes received from licenses and other sources, and such other 
52.11 	information as may be needful in the work of the commissioner, in such form as the 
52.12 	commissioner may prescribe;
52.13 	~~(8)~~ (9) authorize the use of unmarked motor vehicles to conduct seizures or criminal 
52.14 	investigations pursuant to the commissioner's authority;
52.15 	~~(9)~~ (10) authorize the participation in audits performed by the Multistate Tax 
52.16 	Commission. For the purposes of chapter 270B, the Multistate Tax Commission will be 
52.17 	considered to be a state for the purposes of auditing corporate sales, excise, and income 
52.18 	tax returns;
52.19 	~~(10)~~ (11) maintain toll-free telephone access for taxpayer assistance for calls from 
52.20 	locations within the state; and
52.21 	~~(11)~~ (12) exercise other powers and authority and perform other duties required of or 
52.22 	imposed upon the commissioner by law.

52.23 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
52.24 	December 31, 2015.

52.25 	Sec. 3. Minnesota Statutes 2014, section 270C.33, subdivision 6, is amended to read:
52.26 		Subd. 6.Assessment presumed valid. (a) A return or assessment of tax made 
52.27 	by the commissioner is prima facie correct and valid. The taxpayer has the burden of 
52.28 	establishing its incorrectness or invalidity in any related action or proceeding.
52.29 	(b) To overcome the presumption that an order of the commissioner that disallows 
52.30 	the tax effects of a transaction because the commissioner determined the transaction does 
52.31 	not have economic substance pursuant to section 270C.03, subdivision 1, clause (3), 
52.32 	is prima facie correct and valid, the taxpayer must prove the transaction has economic 
52.33 	substance with clear and convincing evidence.

53.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
53.2 	December 31, 2015.

53.3 	Sec. 4. [270C.331] ECONOMIC SUBSTANCE.
53.4 		Subdivision 1.Economic substance. (a) For the purposes of disallowing the 
53.5 	tax effects of a transaction that does not have substance pursuant to section 270C.03, 
53.6 	subdivision 1, clause (3), a transaction shall be treated as having economic substance 
53.7 	only if:
53.8 	(1) the transaction changes in a meaningful way, apart from tax effects, the taxpayer's 
53.9 	economic position; and
53.10 	(2) the taxpayer has a substantial purpose, apart from tax effects, for entering into 
53.11 	the transaction.
53.12 	(b) In determining whether the requirements of paragraph (a), clauses (1) and (2), 
53.13 	are met, the potential for profit of a transaction shall be taken into account only if the 
53.14 	present value of the reasonable expected pretax profit from the transaction is substantial 
53.15 	in relation to the present value of the expected net tax benefits that would be allowed if 
53.16 	the transaction were respected. Fees and other transaction expenses shall be taken into 
53.17 	account as expenses in determining pretax profit.
53.18 	(c) For the purposes of paragraph (a), clause (2), achieving a financial accounting 
53.19 	benefit shall not be taken into account as a purpose for entering into a transaction if the 
53.20 	origin of such financial accounting benefit is a reduction of federal, state, or local tax.
53.21 		Subd. 2.Apart from tax effects. For purposes of this section, "apart from tax 
53.22 	effects" means without regard to the state and local tax effects arising from the application 
53.23 	of the laws of any state or local unit of government to the form of the transaction, the 
53.24 	federal tax effects, or both.
53.25 		Subd. 3.Transaction. For purposes of this section and section 270C.03, subdivision 
53.26 	1, clause (3), "transaction" includes a series of transactions.
53.27 		Subd. 4.Personal transactions of individuals. In the case of an individual, 
53.28 	subdivision 1 shall only apply to transactions entered into in connection with the trade or 
53.29 	business activity engaged in for the production of income.

53.30 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
53.31 	December 31, 2015.

53.32 	Sec. 5. Minnesota Statutes 2014, section 289A.60, is amended by adding a subdivision 
53.33 	to read:
54.1 		Subd. 27a.Noneconomic substance transaction understatement penalty. (a) If a 
54.2 	transaction is disallowed pursuant to section 270C.03, subdivision 1, clause (3), a penalty 
54.3 	equal to 20 percent of the amount of the disclosed noneconomic substance transaction 
54.4 	understatement must be added to the tax. This subdivision applies to any income or item 
54.5 	of income that is attributable to any transaction disallowed pursuant to section 270C.03, 
54.6 	subdivision 1, clause (3).
54.7 	(b) If a transaction is disallowed pursuant to section 270C.03, subdivision 1, clause 
54.8 	(3), a penalty equal to 40 percent of the amount of the undisclosed noneconomic substance 
54.9 	transaction understatement must be added to the tax. This subdivision applies to any 
54.10 	income or item of income that is attributable to any transaction disallowed pursuant to 
54.11 	section 270C.03, subdivision 1, clause (3).
54.12 	(c) For purposes of this subdivision, the term "disclosed noneconomic substance 
54.13 	transaction" means a transaction that fails to meet the criteria for having economic 
54.14 	substance as described in section 270C.03, subdivision 1, clause (3), with respect to which 
54.15 	the relevant facts affecting tax treatment are adequately disclosed in the return or in a 
54.16 	statement attached to the return.
54.17 	(d) For purposes of this subdivision, the term "undisclosed noneconomic substance 
54.18 	transaction" means a transaction that fails to meet the criteria for having economic 
54.19 	substance as described in section 270C.03, subdivision 1, clause (3), with respect to which 
54.20 	the relevant facts affecting tax treatment are not adequately disclosed in the return or in a 
54.21 	statement attached to the return.
54.22 	(e) For purposes of this subdivision, if amendments or supplements to a return of 
54.23 	tax are filed after the date the taxpayer is first contacted by the commissioner regarding 
54.24 	examination of the return, the amendments or supplements may not be taken into account 
54.25 	to reduce the noneconomic substance transaction understatement.
54.26 	(f) For purposes of this subdivision, "understatement" means the product of:
54.27 	(1) the amount of increase, if any, in taxable income that results from a difference 
54.28 	between the proper tax treatment of an item to which section 270C.03, subdivision 1, 
54.29 	clause (3), applies and the taxpayer's treatment of that item as shown on the taxpayer's 
54.30 	tax return. For the purposes of this paragraph, any reduction of the excess of deductions 
54.31 	allowed for the taxable year over gross income for that year, and any reduction in the 
54.32 	amount of capital losses that would, without regard to section 1211 of the Internal Revenue 
54.33 	Code, be allowed for that year, must be treated as an increase in taxable income; and
54.34 	(2) the highest rate of tax imposed on the taxpayer under section 290.06, determined 
54.35 	without regard to the understatement.
55.1 	(g) If the noneconomic substance transaction understatement penalty is imposed 
55.2 	under this subdivision, the penalties imposed under subdivision 27 do not apply.

55.3 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
55.4 	December 31, 2015.

55.5 	Sec. 6. Minnesota Statutes 2014, section 290.01, subdivision 4a, is amended to read:
55.6 		Subd. 4a.Financial institution. (a) "Financial institution" means:
55.7 	(1) ~~a holding company~~ any corporation or other business entity registered (i) under 
55.8 	state law as a bank holding company; (ii) under the federal Bank Holding Company Act 
55.9 	of 1956, as amended; or (iii) as a savings and loan holding company under the federal 
55.10 	National Housing Act, as amended;
55.11 	(2) ~~any regulated financial corporation; or~~ a national bank organized and existing 
55.12 	as a national bank association pursuant to the provisions of United States Code, title 
55.13 	12, chapter 2;
55.14 	(3) ~~any other corporation organized under the laws of the United States or organized~~ 
55.15 	~~under the laws of this state or any other state or country that is carrying on the business of~~ 
55.16 	~~a financial institution.~~ a savings association or federal savings bank as defined in United 
55.17 	States Code, title 12, section 1813(b)(1);
55.18 	(4) any bank or thrift institution incorporated or organized under the laws of any state;
55.19 	(5) any corporation organized under United States Code, title 12, sections 611 to 631;
55.20 	(6) any agency or branch of a foreign depository as defined under United States 
55.21 	Code, title 12, section 3101;
55.22 	(7) any corporation or other business entity that is more than 50 percent owned, 
55.23 	directly or indirectly, by any person or business entity described in clauses (1) to (6), other 
55.24 	than an insurance company taxable under chapter 297I;
55.25 	(8) a corporation or other business entity that derives more than 50 percent of its 
55.26 	total gross income for financial accounting purposes from finance leases. For the purposes 
55.27 	of this clause, "gross income" is the average from the current tax year and immediately 
55.28 	preceding two years and excludes gross income from incidental or occasional transactions. 
55.29 	For purposes of this clause, "finance lease" means any lease transaction that is the 
55.30 	functional equivalent of an extension of credit, and that transfers substantially all of the 
55.31 	benefits and risks incident to the ownership of property, including any direct financing 
55.32 	lease or leverage lease that meets the criteria of Financial Accounting Standards Board 
55.33 	Statement No. 13, accounting for leases, or any other lease that is accounted for as 
55.34 	financing by a lessor under generally accepted accounting principles; or
56.1 	(9) any other person or business entity, other than an insurance company taxable 
56.2 	under chapter 297I, that derives more than 50 percent of its gross income from activities that 
56.3 	an entity described in clauses (2) to (6) or (8), is authorized to transact. For the purposes of 
56.4 	this clause, gross income does not include income from nonrecurring, extraordinary items.
56.5 	(b) ~~"Holding company" means any corporation registered under the Federal Bank~~ 
56.6 	~~Holding Company Act of 1956, as amended, or registered as a savings and loan holding~~ 
56.7 	~~company under the Federal National Housing Act, as amended, or a federal savings~~ 
56.8 	~~bank holding company.~~ The commissioner is authorized to exclude any person from the 
56.9 	application of paragraph (a), clause (9), if the person proves by clear and convincing 
56.10 	evidence that the person's income-producing activity is not in substantial competition with 
56.11 	any person described in paragraph (a), clauses (2) to (6) or (8).
56.12 	~~(c) "Regulated financial corporation" means an institution, the deposits or accounts~~ 
56.13 	~~of which are insured under the Federal Deposit Insurance Act or by the Federal Savings~~ 
56.14 	~~and Loan Insurance Corporation, any institution which is a member of a Federal Home~~ 
56.15 	~~Loan Bank, any other bank or thrift institution incorporated or organized under the laws of~~ 
56.16 	~~any state or any foreign country which is engaged in the business of receiving deposits,~~ 
56.17 	~~any corporation organized under the provisions of United States Code, title 12, sections~~ 
56.18 	~~611 to 631 (Edge Act Corporations), and any agency of a foreign depository as defined in~~ 
56.19 	~~United States Code, title 12, section 3101.~~
56.20 	~~(d) "Business of a financial institution" means:~~
56.21 	~~(1) the business that any corporation organized under the authority of the United~~ 
56.22 	~~States or organized under the laws of this state or any other state or country does or has~~ 
56.23 	~~authority to do which is substantially similar to the business which a corporation may be~~ 
56.24 	~~created to do under chapters 46 to 55 or any business which a corporation is authorized~~ 
56.25 	~~to do by those laws; or~~
56.26 	~~(2) the business that any corporation organized under the authority of the United~~ 
56.27 	~~States or organized under the laws of this state or any other state or country does or has~~ 
56.28 	~~authority to do if the corporation derives more than 50 percent of its gross income from~~ 
56.29 	~~lending activities (including discounting obligations) in substantial competition with the~~ 
56.30 	~~businesses described in clause (1). For purposes of this clause, the computation of the gross~~ 
56.31 	~~income of a corporation does not include income from nonrecurring, extraordinary items.~~

56.32 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
56.33 	December 31, 2015.

56.34 	Sec. 7. Minnesota Statutes 2014, section 290.01, is amended by adding a subdivision 
56.35 	to read:
57.1 		Subd. 19i.Accelerated recognition of certain installment sale gains. (a) For the 
57.2 	purposes of this subdivision, the following definitions apply:
57.3 	(1) "realized" means realized as defined by section 1001(b) of the Internal Revenue 
57.4 	Code; and
57.5 	(2) "installment sale" means any installment sale under section 453 of the Internal 
57.6 	Revenue Code, and any other sale that is reported utilizing a method of accounting 
57.7 	authorized under subchapter E of the Internal Revenue Code, that allows taxpayers to 
57.8 	delay reporting or recognition of a realized gain until a future year.
57.9 	(b) In the case of a nonresident individual or a person who becomes a nonresident 
57.10 	individual during the tax year, net income includes the full amount realized upon a 
57.11 	sale of the assets of, or the sale of any interest in, an S corporation or partnership that 
57.12 	operated in Minnesota during the taxable year of sale, including any income or gain to be 
57.13 	recognized in future years pursuant to an installment sale method of reporting under the 
57.14 	Internal Revenue Code.
57.15 	(c) An individual who becomes a nonresident of Minnesota in any year after an 
57.16 	installment sale is required to recognize the full amount of any income or gain not 
57.17 	recognized in a prior year on the individual's final Minnesota resident tax return.
57.18 	(d) Notwithstanding paragraphs (b) and (c), taxpayers may elect to defer the 
57.19 	recognition of installment sale gains by making an election under this paragraph. The 
57.20 	election must be filed on a form prescribed by the commissioner and must be filed by 
57.21 	the due date of the individual tax return, including any extension. Electing taxpayers 
57.22 	are required to:
57.23 	(1) file Minnesota tax returns in all subsequent years when gains from the installment 
57.24 	sale are recognized and reported to the Internal Revenue Service;
57.25 	(2) allocate gains to the state of Minnesota as though the gains were incurred in the 
57.26 	year of sale under section 290.17 or 290.191; and
57.27 	(3) include all relevant federal tax documents reporting the installment sale with 
57.28 	subsequent Minnesota tax returns.
57.29 	(e) Income or gain recognized for Minnesota purposes under paragraphs (b) and (c) 
57.30 	and subjected to tax, is excluded from net income in future years.

57.31 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
57.32 	December 31, 2015.

57.33 	Sec. 8. Minnesota Statutes 2014, section 290.068, subdivision 2, is amended to read:
57.34 		Subd. 2.Definitions. For purposes of this section, the following terms have the 
57.35 	meanings given.
58.1 	(a) "Qualified research expenses" means (i) qualified research expenses and basic 
58.2 	research payments as defined in section 41(b) and (e) of the Internal Revenue Code, except 
58.3 	it does not include expenses incurred for qualified research or basic research conducted 
58.4 	outside the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue 
58.5 	Code; and (ii) contributions to a nonprofit corporation established and operated pursuant 
58.6 	to the provisions of chapter 317A for the purpose of promoting the establishment and 
58.7 	expansion of business in this state, provided the contributions are invested by the nonprofit 
58.8 	corporation for the purpose of providing funds for small, technologically innovative 
58.9 	enterprises in Minnesota during the early stages of their development.
58.10 	(b) "Qualified research" means qualified research as defined in section 41(d) of the 
58.11 	Internal Revenue Code, except that the term does not include qualified research conducted 
58.12 	outside the state of Minnesota.
58.13 	(c) "Base amount" means base amount as defined in section 41(c) of the Internal 
58.14 	Revenue Code, except that the average annual gross receipts must be calculated using 
58.15 	Minnesota sales or receipts under section 290.191 and the definitions contained in clauses 
58.16 	(a) and (b) shall apply. If there are inadequate records or the records are unavailable to 
58.17 	compute or verify the base percentage, a fixed base percentage of 16 percent must be used.

58.18 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
58.19 	December 31, 2015.

58.20 	Sec. 9. Minnesota Statutes 2014, section 290.17, subdivision 4, is amended to read:
58.21 		Subd. 4.Unitary business principle. (a) If a trade or business conducted wholly 
58.22 	within this state or partly within and partly without this state is part of a unitary business, 
58.23 	the entire income of the unitary business is subject to apportionment pursuant to section 
58.24 	290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary 
58.25 	business is considered to be derived from any particular source and none may be allocated 
58.26 	to a particular place except as provided by the applicable apportionment formula. The 
58.27 	provisions of this subdivision do not apply to business income subject to subdivision 5, 
58.28 	income of an insurance company, or income of an investment company determined under 
58.29 	section 290.36.
58.30 	(b) The term "unitary business" means business activities or operations which 
58.31 	result in a flow of value between them. The term may be applied within a single legal 
58.32 	entity or between multiple entities and without regard to whether each entity is a sole 
58.33 	proprietorship, a corporation, a partnership or a trust.
58.34 	(c) Unity is presumed whenever there is unity of ownership, operation, and use, 
58.35 	evidenced by centralized management or executive force, centralized purchasing, 
59.1 	advertising, accounting, or other controlled interaction, but the absence of these 
59.2 	centralized activities will not necessarily evidence a nonunitary business. Unity is also 
59.3 	presumed when business activities or operations are of mutual benefit, dependent upon or 
59.4 	contributory to one another, either individually or as a group.
59.5 	(d) Where a business operation conducted in Minnesota is owned by a business 
59.6 	entity that carries on business activity outside the state different in kind from that 
59.7 	conducted within this state, and the other business is conducted entirely outside the state, it 
59.8 	is presumed that the two business operations are unitary in nature, interrelated, connected, 
59.9 	and interdependent unless it can be shown to the contrary.
59.10 	(e) Unity of ownership does not exist when two or more corporations are involved 
59.11 	unless more than 50 percent of the voting stock of each corporation is directly or indirectly 
59.12 	owned by a common owner or by common owners, either corporate or noncorporate, or 
59.13 	by one or more of the member corporations of the group. For this purpose, the term 
59.14 	"voting stock" shall include membership interests of mutual insurance holding companies 
59.15 	formed under section 66A.40.
59.16 	(f) The net income and apportionment factors under section 290.191 or 290.20 of 
59.17 	foreign corporations and other foreign entities which are part of a unitary business shall 
59.18 	not be included in the net income or the apportionment factors of the unitary business; 
59.19 	except that the income and apportionment factors of a foreign entity, other than an entity 
59.20 	treated as a C corporation for federal income tax purposes, that are included in the federal 
59.21 	taxable income, as defined in section 63 of the Internal Revenue Code as amended through 
59.22 	the date named in section 290.01, subdivision 19, of a domestic corporation, domestic 
59.23 	entity, or individual must be included in determining net income and the factors to be used 
59.24 	in the apportionment of net income pursuant to section 290.191 or 290.20. A foreign 
59.25 	corporation or other foreign entity which is not included on a combined report and which 
59.26 	is required to file a return under this chapter shall file on a separate return basis.
59.27 	(g) For purposes of determining the net income of a unitary business and the factors 
59.28 	to be used in the apportionment of net income pursuant to section 290.191 or 290.20, there 
59.29 	must be included only the income and apportionment factors of domestic corporations 
59.30 	or other domestic entities that are determined to be part of the unitary business pursuant 
59.31 	to this subdivision, notwithstanding that foreign corporations or other foreign entities 
59.32 	might be included in the unitary business; except that the income and apportionment 
59.33 	factors of a foreign entity, other than an entity treated as a C corporation for federal 
59.34 	income tax purposes, that is included in the federal taxable income, as defined in section 
59.35 	63 of the Internal Revenue Code as amended through the date named in section 290.01, 
59.36 	subdivision 19, of a domestic corporation, domestic entity, or individual must be included 
60.1 	in determining net income and the factors to be used in the apportionment of net income 
60.2 	pursuant to section 290.191 or 290.20.
60.3 	(h) Each corporation or other entity, except a sole proprietorship, that is part of a 
60.4 	unitary business must file combined reports as the commissioner determines. On the 
60.5 	reports, all intercompany transactions between entities included pursuant to paragraph 
60.6 	(g) must be eliminated and the entire net income of the unitary business determined in 
60.7 	accordance with this subdivision is apportioned among the entities by using each entity's 
60.8 	Minnesota factors for apportionment purposes in the numerators of the apportionment 
60.9 	formula and the total factors for apportionment purposes of all entities included pursuant 
60.10 	to paragraph (g) in the denominators of the apportionment formula. Except as otherwise 
60.11 	provided by paragraph (f), all sales of the unitary business made within this state pursuant 
60.12 	to section 290.191 or 290.20 must be included on the combined report of a corporation or 
60.13 	other entity that is a member of the unitary business and is subject to the jurisdiction of 
60.14 	this state to impose tax under this chapter.
60.15 	(i) If a corporation has been divested from a unitary business and is included in a 
60.16 	combined report for a fractional part of the common accounting period of the combined 
60.17 	report:
60.18 	(1) its income includable in the combined report is its income incurred for that part 
60.19 	of the year determined by proration or separate accounting; and
60.20 	(2) its sales, property, and payroll included in the apportionment formula must 
60.21 	be prorated or accounted for separately.
60.22 	(j) For purposes of this subdivision, "insurance company" means any company that is:
60.23 	(1) licensed to engage in the business of insurance in Minnesota pursuant to chapter 
60.24 	60A; or
60.25 	(2) domiciled and licensed to engage in the business of insurance in another state 
60.26 	or country that imposes retaliatory taxes, and that does not grant, on a reciprocal basis, 
60.27 	exemption from such retaliatory taxes to insurance companies or their agents domiciled 
60.28 	in Minnesota.
60.29 	(k) For the purposes of this subdivision, "retaliatory taxes" means taxes imposed on 
60.30 	insurance companies organized in another state or country that result from the fact that an 
60.31 	insurance company organized in the taxing jurisdiction and doing business in the other 
60.32 	jurisdiction is subject to taxes, fines, deposits, penalties, licenses, or fees in an amount 
60.33 	exceeding that imposed by the taxing jurisdiction upon an insurance company organized in 
60.34 	the other state or country and doing business to the same extent in the taxing jurisdiction.

60.35 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
60.36 	December 31, 2015.

61.1 	Sec. 10. Minnesota Statutes 2014, section 290.191, subdivision 5, is amended to read:
61.2 		Subd. 5.Determination of sales factor. For purposes of this section, the following 
61.3 	rules apply in determining the sales factor.
61.4 	(a) The sales factor includes all sales, gross earnings, or receipts received in the 
61.5 	ordinary course of the business, except that the following types of income are not included 
61.6 	in the sales factor:
61.7 	(1) interest;
61.8 	(2) dividends;
61.9 	(3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
61.10 	(4) sales of property used in the trade or business, except sales of leased property of 
61.11 	a type which is regularly sold as well as leased; ~~and~~
61.12 	(5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue 
61.13 	Code or sales of stock~~.~~; and
61.14 	(6) sales of derivatives including but not limited to swaps, options, futures, and 
61.15 	forwards.
61.16 	(b) Sales of tangible personal property are made within this state if the property is 
61.17 	received by a purchaser at a point within this state, regardless of the f.o.b. point, other 
61.18 	conditions of the sale, or the ultimate destination of the property.
61.19 	(c) Tangible personal property delivered to a common or contract carrier or foreign 
61.20 	vessel for delivery to a purchaser in another state or nation is a sale in that state or nation, 
61.21 	regardless of f.o.b. point or other conditions of the sale.
61.22 	(d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine, 
61.23 	fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is 
61.24 	licensed by a state or political subdivision to resell this property only within the state of 
61.25 	ultimate destination, the sale is made in that state.
61.26 	(e) Sales made by or through a corporation that is qualified as a domestic 
61.27 	international sales corporation under section 992 of the Internal Revenue Code are not 
61.28 	considered to have been made within this state.
61.29 	(f) Sales, rents, royalties, and other income in connection with real property is 
61.30 	attributed to the state in which the property is located.
61.31 	(g) Receipts from the lease or rental of tangible personal property, including finance 
61.32 	leases and true leases, must be attributed to this state if the property is located in this 
61.33 	state and to other states if the property is not located in this state. Receipts from the 
61.34 	lease or rental of moving property including, but not limited to, motor vehicles, rolling 
61.35 	stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts 
62.1 	factor to the extent that the property is used in this state. The extent of the use of moving 
62.2 	property is determined as follows:
62.3 	(1) A motor vehicle is used wholly in the state in which it is registered.
62.4 	(2) The extent that rolling stock is used in this state is determined by multiplying 
62.5 	the receipts from the lease or rental of the rolling stock by a fraction, the numerator of 
62.6 	which is the miles traveled within this state by the leased or rented rolling stock and the 
62.7 	denominator of which is the total miles traveled by the leased or rented rolling stock.
62.8 	(3) The extent that an aircraft is used in this state is determined by multiplying the 
62.9 	receipts from the lease or rental of the aircraft by a fraction, the numerator of which is 
62.10 	the number of landings of the aircraft in this state and the denominator of which is the 
62.11 	total number of landings of the aircraft.
62.12 	(4) The extent that a vessel, mobile equipment, or other mobile property is used in 
62.13 	the state is determined by multiplying the receipts from the lease or rental of the property 
62.14 	by a fraction, the numerator of which is the number of days during the taxable year the 
62.15 	property was in this state and the denominator of which is the total days in the taxable year.
62.16 	(h) Royalties and other income received for the use of or for the privilege of using 
62.17 	intangible property, including patents, know-how, formulas, designs, processes, patterns, 
62.18 	copyrights, trade names, service names, franchises, licenses, contracts, customer lists, or 
62.19 	similar items, must be attributed to the state in which the property is used by the purchaser. 
62.20 	If the property is used in more than one state, the royalties or other income must be 
62.21 	apportioned to this state pro rata according to the portion of use in this state. If the portion 
62.22 	of use in this state cannot be determined, the royalties or other income must be excluded 
62.23 	from both the numerator and the denominator. Intangible property is used in this state if 
62.24 	the purchaser uses the intangible property or the rights therein in the regular course of its 
62.25 	business operations in this state, regardless of the location of the purchaser's customers.
62.26 	(i) Sales of intangible property are made within the state in which the property is 
62.27 	used by the purchaser. If the property is used in more than one state, the sales must be 
62.28 	apportioned to this state pro rata according to the portion of use in this state. If the 
62.29 	portion of use in this state cannot be determined, the sale must be excluded from both the 
62.30 	numerator and the denominator of the sales factor. Intangible property is used in this 
62.31 	state if the purchaser used the intangible property in the regular course of its business 
62.32 	operations in this state.
62.33 	(j) Receipts from the performance of services must be attributed to the state where 
62.34 	the services are received. For the purposes of this section, receipts from the performance 
62.35 	of services provided to a corporation, partnership, or trust may only be attributed to a state 
62.36 	where it has a fixed place of doing business. If the state where the services are received is 
63.1 	not readily determinable or is a state where the corporation, partnership, or trust receiving 
63.2 	the service does not have a fixed place of doing business, the services shall be deemed 
63.3 	to be received at the location of the office of the customer from which the services were 
63.4 	ordered in the regular course of the customer's trade or business. If the ordering office 
63.5 	cannot be determined, the services shall be deemed to be received at the office of the 
63.6 	customer to which the services are billed.
63.7 	(k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts 
63.8 	from management, distribution, or administrative services performed by a corporation 
63.9 	or trust for a fund of a corporation or trust regulated under United States Code, title 15, 
63.10 	sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of 
63.11 	the fund resides. Under this paragraph, receipts for services attributed to shareholders are 
63.12 	determined on the basis of the ratio of: (1) the average of the outstanding shares in the 
63.13 	fund owned by shareholders residing within Minnesota at the beginning and end of each 
63.14 	year; and (2) the average of the total number of outstanding shares in the fund at the 
63.15 	beginning and end of each year. Residence of the shareholder, in the case of an individual, 
63.16 	is determined by the mailing address furnished by the shareholder to the fund. Residence 
63.17 	of the shareholder, when the shares are held by an insurance company as a depositor for 
63.18 	the insurance company policyholders, is the mailing address of the policyholders. In 
63.19 	the case of an insurance company holding the shares as a depositor for the insurance 
63.20 	company policyholders, if the mailing address of the policyholders cannot be determined 
63.21 	by the taxpayer, the receipts must be excluded from both the numerator and denominator. 
63.22 	Residence of other shareholders is the mailing address of the shareholder.

63.23 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
63.24 	December 31, 2015.

63.25 	Sec. 11. Minnesota Statutes 2014, section 290.21, subdivision 4, is amended to read:
63.26 		Subd. 4.Dividends received from another corporation. (a)(1) Eighty percent 
63.27 	of dividends received by a corporation during the taxable year from another corporation, 
63.28 	in which the recipient owns 20 percent or more of the stock, by vote and value, not 
63.29 	including stock described in section 1504(a)(4) of the Internal Revenue Code when the 
63.30 	corporate stock with respect to which dividends are paid does not constitute the stock in 
63.31 	trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not 
63.32 	constitute property held by the taxpayer primarily for sale to customers in the ordinary 
63.33 	course of the taxpayer's trade or business, or when the trade or business of the taxpayer 
63.34 	does not consist principally of the holding of the stocks and the collection of the income 
63.35 	and gains therefrom; and
64.1 	(2)(i) the remaining 20 percent of dividends if the dividends received are the stock in 
64.2 	an affiliated company transferred in an overall plan of reorganization and the dividend 
64.3 	is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as 
64.4 	amended through December 31, 1989;
64.5 	(ii) the remaining 20 percent of dividends if the dividends are received from a 
64.6 	corporation which is subject to tax under section 290.36 and which is a member of an 
64.7 	affiliated group of corporations as defined by the Internal Revenue Code and the dividend 
64.8 	is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as 
64.9 	amended through December 31, 1989, or is deducted under an election under section 
64.10 	243(b) of the Internal Revenue Code; or
64.11 	(iii) the remaining 20 percent of the dividends if the dividends are received from a 
64.12 	property and casualty insurer as defined under section 60A.60, subdivision 8, which is a 
64.13 	member of an affiliated group of corporations as defined by the Internal Revenue Code 
64.14 	and either: (A) the dividend is eliminated in consolidation under Treasury Regulation 
64.15 	1.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted 
64.16 	under an election under section 243(b) of the Internal Revenue Code.
64.17 	(b) Seventy percent of dividends received by a corporation during the taxable year 
64.18 	from another corporation in which the recipient owns less than 20 percent of the stock, 
64.19 	by vote or value, not including stock described in section 1504(a)(4) of the Internal 
64.20 	Revenue Code when the corporate stock with respect to which dividends are paid does not 
64.21 	constitute the stock in trade of the taxpayer, or does not constitute property held by the 
64.22 	taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or 
64.23 	business, or when the trade or business of the taxpayer does not consist principally of the 
64.24 	holding of the stocks and the collection of income and gain therefrom.
64.25 	(c) The dividend deduction provided in this subdivision shall be allowed only with 
64.26 	respect to dividends that are included in a corporation's Minnesota taxable net income 
64.27 	for the taxable year.
64.28 	The dividend deduction provided in this subdivision does not apply to a dividend 
64.29 	from a corporation which, for the taxable year of the corporation in which the distribution 
64.30 	is made or for the next preceding taxable year of the corporation, is a corporation exempt 
64.31 	from tax under section 501 of the Internal Revenue Code.
64.32 	The dividend deduction provided in this subdivision does not apply to a dividend 
64.33 	received from a real estate investment trust as defined in section 856 of the Internal 
64.34 	Revenue Code.
65.1 	The dividend deduction provided in this subdivision applies to the amount of 
65.2 	regulated investment company dividends only to the extent determined under section 
65.3 	854(b) of the Internal Revenue Code.
65.4 	The dividend deduction provided in this subdivision shall not be allowed with 
65.5 	respect to any dividend for which a deduction is not allowed under the provisions of 
65.6 	section 246(c) or 246A of the Internal Revenue Code.
65.7 	(d) If dividends received by a corporation that does not have nexus with Minnesota 
65.8 	under the provisions of Public Law 86-272 are included as income on the return of 
65.9 	an affiliated corporation permitted or required to file a combined report under section 
65.10 	290.17, subdivision 4, or 290.34, subdivision 2, then for purposes of this subdivision the 
65.11 	determination as to whether the trade or business of the corporation consists principally 
65.12 	of the holding of stocks and the collection of income and gains therefrom shall be made 
65.13 	with reference to the trade or business of the affiliated corporation having a nexus with 
65.14 	Minnesota.
65.15 	(e) The deduction provided by this subdivision does not apply if the dividends are 
65.16 	paid by a FSC as defined in section 922 of the Internal Revenue Code.
65.17 	(f) If one or more of the members of the unitary group whose income is included on 
65.18 	the combined report received a dividend, the deduction under this subdivision for each 
65.19 	member of the unitary business required to file a return under this chapter is the product 
65.20 	of: (1) 100 percent of the dividends received by members of the group; (2) the percentage 
65.21 	allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business 
65.22 	income apportionable to this state for the taxable year under section 290.191 or 290.20.

65.23 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
65.24 	December 31, 2015.

65.25 	ARTICLE 7
65.26 	MISCELLANEOUS

65.27 	Section 1. Minnesota Statutes 2014, section 290A.03, subdivision 13, is amended to 
65.28 	read:
65.29 		Subd. 13.Property taxes payable. "Property taxes payable" means the property tax 
65.30 	exclusive of special assessments, penalties, and interest payable on a claimant's homestead 
65.31 	after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2, 
65.32 	and any other state paid property tax credits in any calendar year, and after any refund 
65.33 	claimed and allowable under section 290A.04, subdivision 2h, that is first payable in 
65.34 	the year that the property tax is payable. In the case of a claimant who makes ground 
66.1 	lease payments, "property taxes payable" includes the amount of the payments directly 
66.2 	attributable to the property taxes assessed against the parcel on which the house is located. 
66.3 	No apportionment or reduction of the "property taxes payable" shall be required for the 
66.4 	use of a portion of the claimant's homestead for a business purpose if the claimant does 
66.5 	not deduct any business depreciation expenses for the use of a portion of the homestead, 
66.6 	or does not deduct expenses under section 280A of the Internal Revenue Code for a 
66.7 	business operated in the home, in the determination of federal adjusted gross income. For 
66.8 	homesteads which are manufactured homes as defined in section 273.125, subdivision 8, 
66.9 	and for homesteads which are park trailers taxed as manufactured homes under section 
66.10 	168.012, subdivision 9, "property taxes payable" shall also include 17 percent of the gross 
66.11 	rent paid in the preceding year for the site on which the homestead is located. When 
66.12 	a homestead is owned by two or more persons as joint tenants or tenants in common, 
66.13 	such tenants shall determine between them which tenant may claim the property taxes 
66.14 	payable on the homestead. If they are unable to agree, the matter shall be referred to the 
66.15 	commissioner of revenue whose decision shall be final. Property taxes are considered 
66.16 	payable in the year prescribed by law for payment of the taxes.
66.17 	In the case of a claim relating to "property taxes payable," the claimant must have 
66.18 	owned and occupied the homestead on January 2 of the year in which the tax is payable 
66.19 	and (i) the property must have been classified as homestead property pursuant to section 
66.20 	273.124, on or before December 15 of the assessment year to which the "property taxes 
66.21 	payable" relate; or (ii) the claimant must provide documentation from the local assessor 
66.22 	that application for homestead classification has been made on or before December 15 
66.23 	of the year in which the "property taxes payable" were payable and that the assessor has 
66.24 	approved the application.

66.25 	EFFECTIVE DATE. This section is effective for refunds based on rent paid after 
66.26 	December 31, 2014, and property taxes payable after December 31, 2015.

66.27 	Sec. 2. Minnesota Statutes 2014, section 290B.03, subdivision 1, is amended to read:
66.28 		Subdivision 1.Program qualifications. The qualifications for the senior citizens' 
66.29 	property tax deferral program are as follows:
66.30 	(1) the property must be owned and occupied as a homestead by a person 65 years of 
66.31 	age or older. In the case of a married couple, at least one of the spouses must be at least 65 
66.32 	years old at the time the first property tax deferral is granted, regardless of whether the 
66.33 	property is titled in the name of one spouse or both spouses, or titled in another way that 
66.34 	permits the property to have homestead status, and the other spouse must be at least 62 
66.35 	years of age;
67.1 	(2) the total household income of the qualifying homeowners, as defined in section 
67.2 	290A.03, subdivision 5, for the calendar year preceding the year of the initial application 
67.3 	may not exceed $60,000;
67.4 	(3) the homestead must have been owned and occupied as the homestead of at least 
67.5 	one of the qualifying homeowners for at least ~~15~~ five years prior to the year the initial 
67.6 	application is filed;
67.7 	(4) there are no state or federal tax liens or judgment liens on the homesteaded 
67.8 	property;
67.9 	(5) there are no mortgages or other liens on the property that secure future advances, 
67.10 	except for those subject to credit limits that result in compliance with clause (6); and
67.11 	(6) the total unpaid balances of debts secured by mortgages and other liens on the 
67.12 	property, including unpaid and delinquent special assessments and interest and any 
67.13 	delinquent property taxes, penalties, and interest, but not including property taxes payable 
67.14 	during the year, does not exceed 75 percent of the assessor's estimated market value for 
67.15 	the year.

67.16 	EFFECTIVE DATE. This section is effective for application for deferral of taxes 
67.17 	payable in 2017 and thereafter.

67.18 	Sec. 3. Minnesota Statutes 2014, section 290B.04, subdivision 1, is amended to read:
67.19 		Subdivision 1.Initial application. (a) A taxpayer meeting the program 
67.20 	qualifications under section 290B.03 may apply to the commissioner of revenue for the 
67.21 	deferral of taxes. Applications are due on or before ~~July 1~~ November 1 for deferral of 
67.22 	any of the following year's property taxes. A taxpayer may apply in the year in which the 
67.23 	taxpayer becomes 65 years old, provided that no deferral of property taxes will be made 
67.24 	until the calendar year after the taxpayer becomes 65 years old. The application, which 
67.25 	shall be prescribed by the commissioner of revenue, shall include the following items and 
67.26 	any other information which the commissioner deems necessary:
67.27 	(1) the name, address, and Social Security number of the owner or owners;
67.28 	(2) a copy of the property tax statement for the current payable year for the 
67.29 	homesteaded property;
67.30 	(3) the initial year of ownership and occupancy as a homestead;
67.31 	(4) the owner's household income for the previous calendar year; and
67.32 	(5) information on any mortgage loans or other amounts secured by mortgages or 
67.33 	other liens against the property, for which purpose the commissioner may require the 
67.34 	applicant to provide a copy of the mortgage note, the mortgage, or a statement of the 
67.35 	balance owing on the mortgage loan provided by the mortgage holder. The commissioner 
68.1 	may require the appropriate documents in connection with obtaining and confirming 
68.2 	information on unpaid amounts secured by other liens.
68.3 	The application must state that program participation is voluntary. The application 
68.4 	must also state that the deferred amount depends directly on the applicant's household 
68.5 	income, and that program participation includes authorization for the annual deferred 
68.6 	amount, the cumulative deferral and interest that appear on each year's notice prepared by 
68.7 	the county under subdivision 6, is public data.
68.8 	The application must state that program participants may claim the property tax 
68.9 	refund based on the full amount of property taxes eligible for the refund, including any 
68.10 	deferred amounts. The application must also state that property tax refunds will be used to 
68.11 	offset any deferral and interest under this program, and that any other amounts subject to 
68.12 	revenue recapture under section 270A.03, subdivision 7, will also be used to offset any 
68.13 	deferral and interest under this program.
68.14 	(b) As part of the initial application process, the commissioner may require the 
68.15 	applicant to obtain at the applicant's own cost and submit:
68.16 	(1) if the property is registered property under chapter 508 or 508A, a copy of the 
68.17 	original certificate of title in the possession of the county registrar of titles (sometimes 
68.18 	referred to as "condition of register"); or
68.19 	(2) if the property is abstract property, a report prepared by a licensed abstracter 
68.20 	showing the last deed and any unsatisfied mortgages, liens, judgments, and state and 
68.21 	federal tax lien notices which were recorded on or after the date of that last deed with 
68.22 	respect to the property or to the applicant.
68.23 	The certificate or report under clauses (1) and (2) need not include references to 
68.24 	any documents filed or recorded more than 40 years prior to the date of the certification 
68.25 	or report. The certification or report must be as of a date not more than 30 days prior 
68.26 	to submission of the application.
68.27 	The commissioner may also require the county recorder or county registrar of the 
68.28 	county where the property is located to provide copies of recorded documents related to 
68.29 	the applicant or the property, for which the recorder or registrar shall not charge a fee. The 
68.30 	commissioner may use any information available to determine or verify eligibility under 
68.31 	this section. The household income from the application is private data on individuals as 
68.32 	defined in section 13.02, subdivision 12.

68.33 	EFFECTIVE DATE. This section is effective for applications for deferral of taxes 
68.34 	payable in 2017 and thereafter.

68.35 	Sec. 4. Minnesota Statutes 2014, section 291.03, subdivision 11, is amended to read:
69.1 		Subd. 11.Recapture tax. (a) If, within three years after the decedent's death and 
69.2 	before the death of the qualified heir, the qualified heir disposes of any interest in the 
69.3 	qualified property, other than by a disposition to a family member, or a family member 
69.4 	ceases to satisfy the requirement under subdivision 9, clause (7); or 10, clause (5), an 
69.5 	additional estate tax is imposed on the property. In the case of a sole proprietor, if the 
69.6 	qualified heir replaces qualified small business property excluded under subdivision 9 
69.7 	with similar property, then the qualified heir will not be treated as having disposed of an 
69.8 	interest in the qualified property.
69.9 	(b) The amount of the additional tax equals the amount of the exclusion claimed by 
69.10 	the estate under subdivision 8, paragraph (d), multiplied by 16 percent.
69.11 	(c) The additional tax under this subdivision is due on the day which is six months 
69.12 	after the date of the disposition or cessation in paragraph (a).
69.13 	(d) The tax under this subdivision does not apply to acquisitions of title or possession 
69.14 	of the qualified property for a public purpose as defined in section 117.025, subdivision 11, 
69.15 	by a federal, state, or local government unit, or any other entity with the power of eminent 
69.16 	domain within the three-year holding period.

69.17 	EFFECTIVE DATE. This section is effective retroactively for estates of decedents 
69.18 	dying after June 30, 2011.

69.19 	Sec. 5. Minnesota Statutes 2014, section 297A.815, subdivision 3, is amended to read:
69.20 		Subd. 3.Motor vehicle lease sales tax revenue. (a) For purposes of this subdivision, 
69.21 	"net revenue" means an amount equal to the revenues, including interest and penalties, 
69.22 	collected under this section, during the fiscal year; less $32,000,000 in each fiscal year.
69.23 	(b) On or before June 30 of each fiscal year, the commissioner of revenue shall 
69.24 	estimate the amount of the net revenue for the current fiscal year.
69.25 	(c) On or after July 1 of the subsequent fiscal year, the commissioner of management 
69.26 	and budget shall transfer the net revenue as estimated in paragraph (b) from the general 
69.27 	fund, as follows:
69.28 	(1) $9,000,000 annually until January 1, 2015, and 50 percent annually thereafter to 
69.29 	the county state-aid highway fund. Notwithstanding any other law to the contrary, the 
69.30 	commissioner of transportation shall allocate the funds transferred under this clause to the 
69.31 	counties in the metropolitan area, as defined in section 473.121, subdivision 4, excluding 
69.32 	the counties of Hennepin and Ramsey, so that each county shall receive of such amount 
69.33 	the percentage that its population, as defined in section 477A.011, subdivision 3, estimated 
69.34 	or established by July 15 of the year prior to the current calendar year, bears to the total 
69.35 	population of the counties receiving funds under this clause; and
70.1 	(2) the remainder to the greater Minnesota transit account.
70.2 	(d) The revenues deposited under this subdivision do not include the revenues, 
70.3 	including interest and penalties, generated by the sales tax imposed under section 297A.62, 
70.4 	subdivision 1a, that must be deposited as provided under the Minnesota Constitution, 
70.5 	article XI, section 15.

70.6 	EFFECTIVE DATE. This section is effective the day following final enactment.

70.7 	Sec. 6. Minnesota Statutes 2014, section 297A.94, is amended to read:
70.8 	297A.94 DEPOSIT OF REVENUES.
70.9 	(a) Except as provided in this section, the commissioner shall deposit the revenues, 
70.10 	including interest and penalties, derived from the taxes imposed by this chapter in the state 
70.11 	treasury and credit them to the general fund.
70.12 	(b) The commissioner shall deposit taxes in the Minnesota agricultural and economic 
70.13 	account in the special revenue fund if:
70.14 	(1) the taxes are derived from sales and use of property and services purchased for 
70.15 	the construction and operation of an agricultural resource project; and
70.16 	(2) the purchase was made on or after the date on which a conditional commitment 
70.17 	was made for a loan guaranty for the project under section 41A.04, subdivision 3.
70.18 	The commissioner of management and budget shall certify to the commissioner the date 
70.19 	on which the project received the conditional commitment. The amount deposited in 
70.20 	the loan guaranty account must be reduced by any refunds and by the costs incurred by 
70.21 	the Department of Revenue to administer and enforce the assessment and collection of 
70.22 	the taxes.
70.23 	(c) The commissioner shall deposit the revenues, including interest and penalties, 
70.24 	derived from the taxes imposed on sales and purchases included in section 297A.61, 
70.25 	subdivision 3, paragraph (g), clauses (1) and (4), in the state treasury, and credit them 
70.26 	as follows:
70.27 	(1) first to the general obligation special tax bond debt service account in each fiscal 
70.28 	year the amount required by section 16A.661, subdivision 3, paragraph (b); and
70.29 	(2) after the requirements of clause (1) have been met, the balance to the general fund.
70.30 	(d) The commissioner shall deposit the revenues, including interest and penalties, 
70.31 	collected under section 297A.64, subdivision 5, in the state treasury and credit them to the 
70.32 	general fund. By July 15 of each year the commissioner shall transfer to the highway user 
70.33 	tax distribution fund an amount equal to the excess fees collected under section 297A.64, 
70.34 	subdivision 5, for the previous calendar year.
71.1 	(e) 72.43 percent of the revenues, including interest and penalties, transmitted to 
71.2 	the commissioner under section 297A.65, must be deposited by the commissioner in the 
71.3 	state treasury as follows:
71.4 	(1) 50 percent of the receipts must be deposited in the heritage enhancement account 
71.5 	in the game and fish fund, and may be spent only on activities that improve, enhance, or 
71.6 	protect fish and wildlife resources, including conservation, restoration, and enhancement 
71.7 	of land, water, and other natural resources of the state;
71.8 	(2) 22.5 percent of the receipts must be deposited in the natural resources fund, and 
71.9 	may be spent only for state parks and trails;
71.10 	(3) 22.5 percent of the receipts must be deposited in the natural resources fund, and 
71.11 	may be spent only on metropolitan park and trail grants;
71.12 	(4) three percent of the receipts must be deposited in the natural resources fund, and 
71.13 	may be spent only on local trail grants; and
71.14 	(5) two percent of the receipts must be deposited in the natural resources fund, 
71.15 	and may be spent only for the Minnesota Zoological Garden, the Como Park Zoo and 
71.16 	Conservatory, and the Duluth Zoo.
71.17 	(f) The revenue dedicated under paragraph (e) may not be used as a substitute 
71.18 	for traditional sources of funding for the purposes specified, but the dedicated revenue 
71.19 	shall supplement traditional sources of funding for those purposes. Land acquired with 
71.20 	money deposited in the game and fish fund under paragraph (e) must be open to public 
71.21 	hunting and fishing during the open season, except that in aquatic management areas or 
71.22 	on lands where angling easements have been acquired, fishing may be prohibited during 
71.23 	certain times of the year and hunting may be prohibited. At least 87 percent of the money 
71.24 	deposited in the game and fish fund for improvement, enhancement, or protection of fish 
71.25 	and wildlife resources under paragraph (e) must be allocated for field operations.
71.26 	(g) The revenues deposited ~~under paragraphs (a) to (f)~~ in, transferred to, or credited 
71.27 	to a fund other than the general fund by a provision in this chapter do not include the 
71.28 	revenues, including interest and penalties, generated by the sales tax imposed under 
71.29 	section 297A.62, subdivision 1a, which must be deposited as provided under the 
71.30 	Minnesota Constitution, article XI, section 15.

71.31 	EFFECTIVE DATE. This section is effective the day following final enactment.

71.32 	Sec. 7. SUPPLEMENTAL CITY FORMULA AID.
 71.33 	(a) For aids payable in 2016 only, the total aid payable to cities under Minnesota 
71.34 	Statutes, section 477A.03, subdivision 2a, is increased by $21,500,000.
72.1 	(b) The increase in a city's formula aid due to the aid provided in paragraph (a) is 
72.2 	deemed to be supplemental aid.
72.3 	(c) For aids payable in 2017 and thereafter, the commissioner of revenue shall 
72.4 	calculate the formula aid for a city under Minnesota Statutes, section 477A.013, 
72.5 	subdivision 8, as though a city had not received supplemental aid under this section.
72.6 	(d) The commissioner of revenue shall notify a city of any supplemental increase in 
72.7 	its city formula aid under this section by June 30, 2016.

72.8 	EFFECTIVE DATE. This section is effective for aids payable in 2016.

72.9 	Sec. 8. SUPPLEMENTAL COUNTY PROGRAM AID.
 72.10 	(a) For aids payable in 2016 only, the total aid payable to counties under Minnesota 
72.11 	Statutes, section 477A.03, subdivision 2b, paragraph (a), is increased by $12,500,000.
72.12 	(b) For aids payable in 2016 only, the total aid payable to counties under Minnesota 
72.13 	Statutes, section 477A.03, subdivision 2b, paragraph (b), is increased by $12,500,000.
72.14 	(c) The commissioner of revenue shall notify a county of any increase to its county 
72.15 	program aid under this section by June 30, 2016.

72.16 	EFFECTIVE DATE. This section is effective for aids payable in 2016.