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Chapter 298

Section 298.01

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298.01 MINING OR PRODUCING ORES.
    Subdivision 1.[Repealed, 1987 c 268 art 9 s 43]
    Subd. 2.[Repealed, 1985 c 300 s 30]
    Subd. 3. Occupation tax; other ores. Every person engaged in the business of mining or
producing ores in this state, except iron ore or taconite concentrates, shall pay an occupation tax
to the state of Minnesota as provided in this subdivision. The tax is determined in the same
manner as the tax imposed by section 290.02, except that sections 290.05, subdivision 1, clause
(a), 290.17, subdivision 4, and 290.191, subdivision 2, do not apply, and the occupation tax
must be computed by applying to taxable income the rate of 2.45 percent. A person subject to
occupation tax under this section shall apportion its net income on the basis of the percentage
obtained by taking the sum of:
(1) 75 percent of the percentage which the sales made within this state in connection with the
trade or business during the tax period are of the total sales wherever made in connection with
the trade or business during the tax period;
(2) 12.5 percent of the percentage which the total tangible property used by the taxpayer in
this state in connection with the trade or business during the tax period is of the total tangible
property, wherever located, used by the taxpayer in connection with the trade or business during
the tax period; and
(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or incurred in this
state or paid in respect to labor performed in this state in connection with the trade or business
during the tax period are of the taxpayer's total payrolls paid or incurred in connection with
the trade or business during the tax period.
The tax is in addition to all other taxes.
    Subd. 3a. Gross income. (a) For purposes of determining a person's taxable income under
subdivision 3, gross income is determined by the amount of gross proceeds from mining in this
state under section 298.016 and includes any gain or loss recognized from the sale or disposition
of assets used in the business in this state. If more than one mineral, metal, or energy resource
referred to in section 298.016 is mined and processed at the same mine and plant, a gross income
for each mineral, metal, or energy resource must be determined separately. The gross incomes
may be combined on one occupation tax return to arrive at the gross income of all production.
(b) In applying section 290.191, subdivision 5, transfers of ores are deemed to be sales in
this state.
    Subd. 3b. Deductions. (a) For purposes of determining taxable income under subdivision 3,
the deductions from gross income include only those expenses necessary to convert raw ores to
marketable quality. Such expenses include costs associated with refinement but do not include
expenses such as transportation, stockpiling, marketing, or marine insurance that are incurred after
marketable ores are produced, unless the expenses are included in gross income. The allowable
deductions from a mine or plant that mines and produces more than one mineral, metal, or energy
resource must be determined separately for the purposes of computing the deduction in section
290.01, subdivision 19c, clause (9). These deductions may be combined on one occupation tax
return to arrive at the deduction from gross income for all production.
(b) The provisions of section 290.01, subdivisions 19c, clauses (6) and (9), and 19d, clauses
(7) and (11), are not used to determine taxable income.
    Subd. 3c.[Repealed, 2006 c 259 art 12 s 17]
    Subd. 3d.[Repealed, 2006 c 259 art 12 s 17]
    Subd. 4. Occupation tax; iron ore; taconite concentrates. A person engaged in the
business of mining or producing of iron ore, taconite concentrates or direct reduced ore in this
state shall pay an occupation tax to the state of Minnesota. The tax is determined in the same
manner as the tax imposed by section 290.02, except that sections 290.05, subdivision 1, clause
(a), 290.17, subdivision 4, and 290.191, subdivision 2, do not apply, and the occupation tax
shall be computed by applying to taxable income the rate of 2.45 percent. A person subject to
occupation tax under this section shall apportion its net income on the basis of the percentage
obtained by taking the sum of:
(1) 75 percent of the percentage which the sales made within this state in connection with the
trade or business during the tax period are of the total sales wherever made in connection with
the trade or business during the tax period;
(2) 12.5 percent of the percentage which the total tangible property used by the taxpayer in
this state in connection with the trade or business during the tax period is of the total tangible
property, wherever located, used by the taxpayer in connection with the trade or business during
the tax period; and
(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or incurred in this
state or paid in respect to labor performed in this state in connection with the trade or business
during the tax period are of the taxpayer's total payrolls paid or incurred in connection with
the trade or business during the tax period.
The tax is in addition to all other taxes.
    Subd. 4a. Gross income. (a) For purposes of determining a person's taxable income under
subdivision 4, gross income is determined by the mine value of the ore mined in Minnesota and
includes any gain or loss recognized from the sale or disposition of assets used in the business in
this state.
(b) Mine value is the value, or selling price, of iron ore or taconite concentrates, f.o.b. mine.
The mine value is calculated by multiplying the iron unit price for the period, as determined by
the commissioner, by the tons produced and the weighted average analysis.
(c) In applying section 290.191, subdivision 5, transfers of iron ore and taconite concentrates
are deemed to be sales in this state.
(d) If iron ore or taconite and a mineral, metal, or energy resource referred to in section
298.016 is mined and processed at the same mine and plant, a gross income for each mineral,
metal, or energy resource must be determined separately from the mine value for the iron ore
or taconite. The gross income may be combined on one occupation tax return to arrive at the
gross income from all production.
    Subd. 4b. Deductions. For purposes of determining taxable income under subdivision 4,
the deductions from gross income include only those expenses necessary to convert raw iron ore
or taconite concentrates to marketable quality. Such expenses include costs associated with
beneficiation and refinement but do not include expenses such as transportation, stockpiling,
marketing, or marine insurance that are incurred after marketable iron ore or taconite pellets are
produced. The allowable deductions from a mine or plant that mines and produces iron ore or
taconite and one or more mineral or metal referred to in section 298.016 must be determined
separately for the purposes of computing the deduction in section 290.01, subdivision 19c, clause
(9). These deductions may be combined on one occupation tax return to arrive at the deduction
from gross income for all production.
    Subd. 4c. Special deductions; net operating loss. (a) For purposes of determining taxable
income under subdivision 4, the provisions of section 290.01, subdivisions 19c, clauses (6) and
(9), and 19d, clauses (7) and (11), are not used to determine taxable income.
(b) The amount of net operating loss incurred in a taxable year beginning before January
1, 1990, that may be carried over to a taxable year beginning after December 31, 1989, is the
amount of net operating loss carryover determined in the calculation of the hypothetical corporate
franchise tax under Minnesota Statutes 1988, sections 298.40 and 298.402.
    Subd. 4d.[Repealed, 2006 c 259 art 12 s 17]
    Subd. 4e.[Repealed, 2006 c 259 art 12 s 17]
    Subd. 5. If declared unconstitutional. If the taxes imposed in subdivisions 3 and 4 are
found unconstitutional by any court of last resort, then persons engaged in the business of
mining or producing iron ore or other ores shall pay the occupation taxes imposed in Minnesota
Statutes 1986, chapter 298.
    Subd. 6. Deductions applicable to mining both taconite and other ores; ratio applied. If
a person is engaged in the business of mining or producing both iron ores, taconite concentrates,
or direct reduced ore, and other ores from the same mine or facility, that person must separately
determine the mine value of (1) the iron ore, taconite concentrates, and direct reduced ore, and
(2) the amount of gross proceeds from mining other ores in Minnesota. The ratio of mine value
from iron ore, taconite concentrates, and direct reduced ore to gross proceeds from mining other
ores must be applied to deductions common to both processes to determine taxable income
for tax paid pursuant to subdivisions 3 and 4.
History: (2373, 2373-1) 1921 c 223 s 1; Ex1937 c 85 s 1; 1939 c 356 s 1; 1941 c 544 s 1;
1943 c 590 s 1,2; 1945 c 448 s 1; 1947 c 542 s 1; Ex1955 c 2 art 2 s 1; Ex1957 c 1 art 4 s 1;
Ex1959 c 70 art 8 s 1; Ex1971 c 31 art 4 s 1; 1973 c 631 s 1,2; 1984 c 502 art 7 s 10; 1985 c 300
s 20; 1Sp1985 c 14 art 10 s 7; 1987 c 268 art 9 s 22-25; 1988 c 719 art 2 s 51,52; 1989 c 27 art 1
s 3-9; 1Sp1989 c 1 art 10 s 38,39; 1991 c 291 art 11 s 12-15; 1993 c 375 art 8 s 14; 1994 c 587
art 1 s 24; 1995 c 264 art 1 s 4; art 7 s 1; 1996 c 471 art 9 s 15; 1997 c 231 art 6 s 24; 1Sp2001 c
5 art 9 s 26,27; 2002 c 377 art 8 s 3,4; 1Sp2005 c 3 art 3 s 16,17; 2006 c 259 art 12 s 2-8

Official Publication of the State of Minnesota
Revisor of Statutes