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Minnesota Legislature

Office of the Revisor of Statutes

Chapter 290

Section 290.05

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290.05 EXEMPT INDIVIDUALS, ORGANIZATIONS, ESTATES, TRUSTS.
    Subdivision 1. Exempt entities. The following corporations, individuals, estates, trusts, and
organizations shall be exempted from taxation under this chapter, provided that every such person
or corporation claiming exemption under this chapter, in whole or in part, must establish to the
satisfaction of the commissioner the taxable status of any income or activity:
(a) corporations, individuals, estates, and trusts engaged in the business of mining or
producing iron ore and other ores the mining or production of which is subject to the occupation
tax imposed by section 298.01; but if any such corporation, individual, estate, or trust engages in
any other business or activity or has income from any property not used in such business it shall
be subject to this tax computed on the net income from such property or such other business or
activity. Royalty shall not be considered as income from the business of mining or producing
iron ore within the meaning of this section;
(b) the United States of America, the state of Minnesota or any political subdivision of either
agencies or instrumentalities, whether engaged in the discharge of governmental or proprietary
functions; and
(c) any insurance company.
    Subd. 2. Entities taxable unless exempt under Subchapter F of Internal Revenue Code.
Except as provided in subdivisions 1 and 3, organizations, including specifically nonprofit health
service plan corporations, as defined in chapter 62C, are subject to taxation under this chapter
unless they are exempt from income taxation pursuant to Subchapter F of the Internal Revenue
Code.
    Subd. 3. Taxes imposed on exempt entities. (a) An organization exempt from taxation
under subdivision 2 shall, nevertheless, be subject to tax under this chapter to the extent provided
in the following provisions of the Internal Revenue Code:
(i) section 527 (dealing with political organizations);
(ii) section 528 (dealing with certain homeowners associations);
(iii) sections 511 to 515 (dealing with unrelated business income);
(iv) section 521 (dealing with farmers' cooperatives); and
(v) section 6033(e)(2) (dealing with lobbying expense); but notwithstanding this subdivision,
shall be considered an organization exempt from income tax for the purposes of any law which
refers to organizations exempt from income taxes.
(b) The tax shall be imposed on the taxable income of political organizations or homeowner
associations or the unrelated business taxable income, as defined in section 512 of the Internal
Revenue Code, of organizations defined in section 511 of the Internal Revenue Code, provided
that the tax is not imposed on:
(1) advertising revenues from a newspaper published by an organization described in section
501(c)(4) of the Internal Revenue Code; or
(2) revenues from lawful gambling authorized under chapter 349 that are expended for
purposes that qualify for the deduction for charitable contributions under section 170 of the
Internal Revenue Code, disregarding the limitation under section 170(b)(2), but only to the extent
the contributions are not deductible in computing federal taxable income.
The tax shall be at the corporate rates. The tax shall only be imposed on income and
deductions assignable to this state under sections 290.17 to 290.20. To the extent deducted in
computing federal taxable income, the deductions contained in section 290.21 shall not be
allowed in computing Minnesota taxable net income.
(c) The tax shall be imposed on organizations subject to federal tax under section 6033(e)(2)
of the Internal Revenue Code, in an amount equal to the corporate tax rate multiplied by the
amount of lobbying expenses taxed under section 6033(e)(2) which are attributable to lobbying
the Minnesota state government.
    Subd. 4. Notification to commissioner of federal action. (a) If the Internal Revenue
Service revokes, cancels or suspends, in whole or part, the exempt status of any corporation,
individual, estate, trust or organization, or if the amount of gross income, deductions, credits,
items of tax preference or taxable income is changed or corrected by either the taxpayer or the
Internal Revenue Service, or if the taxpayer consents to any extension of time for assessment
of federal income taxes, the corporation, individual, estate, trust or organization shall notify the
commissioner in writing of the action within 90 days after that date.
(b) The periods of limitations contained in section 289A.42, subdivision 2, apply when
there has been any action referred to in paragraph (a), notwithstanding any period of limitations
to the contrary.
    Subd. 5.[Repealed, 1990 c 480 art 1 s 45]
    Subd. 6.[Repealed, 1994 c 587 art 1 s 25]
    Subd. 7.[Repealed, 1989 c 184 art 1 s 20]
    Subd. 8. Authority to revoke exemption for failure to comply with federal law. The
commissioner may examine or investigate an entity claiming exemption under this section and
subpart F of the Internal Revenue Code. The commissioner may revoke the exemption under this
section for violations of federal law that would permit the commissioner of internal revenue or
the secretary of the treasury to revoke the exemption under federal law, regardless of whether
such action has been taken under federal law. A revocation under this subdivision is subject to
administrative review under section 270C.35.
History: (2394-5) 1933 c 405 s 5; Ex1937 c 49 s 5; 1939 c 446 s 1,2; 1941 c 109 s 1; 1941 c
550 s 2; 1943 c 643 s 1; 1943 c 656 s 27; 1947 c 635 s 3; 1953 c 647 s 1; 1965 c 596 s 1; 1967 c
671 s 1; 1971 c 769 s 2; 1971 c 802 s 1; 1973 c 123 art 2 s 1 subd 2; art 5 s 7; 1973 c 582 s 3;
1973 c 711 s 3; 1975 c 349 s 29; 1977 c 376 s 13; 1980 c 607 art 1 s 32; 1981 c 343 s 2; 1Sp1981
c 4 art 1 s 133; 1982 c 523 art 1 s 6,7; art 40 s 14; 1983 c 207 s 7,43; 1983 c 342 art 1 s 43; 1984
c 514 art 1 s 8; art 2 s 8; 1985 c 229 s 1; 1Sp1985 c 14 art 1 s 14; art 21 s 49; 1Sp1986 c 1 art 1 s
9; 1987 c 268 art 1 s 28,29,126; 1988 c 719 art 3 s 12; 1989 c 28 s 25; 1989 c 209 art 2 s 32;
1Sp1989 c 1 art 10 s 10-12; 1990 c 480 art 1 s 28; 1990 c 604 art 2 s 3,16; 1991 c 291 art 6 s
46; art 7 s 9; 1992 c 511 art 6 s 12,19; art 7 s 13; 1994 c 587 art 1 s 10,11; 1995 c 186 s 57;
1Sp2001 c 5 art 9 s 9; 2005 c 151 art 2 s 17