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2023-2024 Regular Session

Cuts and credits, hikes and aids fill tax finance and policy law

The tax finance and policy law makes changes to the financial framework that funds state and local government. It modifies provisions governing individual income and corporate franchise taxes, federal income tax conformity, property taxes, certain state aid and credit programs, sales and use taxes, minerals taxes, tax increment financing, certain local taxes and other tax-related provisions. It also modifies and establishes various income tax credits, adds a one-time refundable rebate credit, and creates new additions and subtractions.

Sponsored by Rep. Aisha Gomez (DFL-Mpls) and Sen. Ann Rest (DFL-New Hope), the law also contains changes related to the taxation of pass-through entities and the reporting of corporate income. Property tax changes include modified exemptions, classifications and refunds. Several aid programs are either created, modified or see increased funding, including local government aid, county program aid, soil and water conservation district aid, electric generation transition aid, tribal nation aid, statewide local housing aid, and public safety aid.

The law also converts the renter’s property tax refund into a refundable individual income tax credit, modifies sales tax exemptions and local taxes and authorizes new ones, and modifies taconite taxes and certain retirement plans. It provides for a process to refund the state stadium bonds, modifies electronic bingo and electronic pull-tab devices, and establishes tourism improvement districts.


Individual Income and Corporate Franchise Taxes (Article 1)

All are effective May 26, 2023, and pertain to tax years 2023 and beyond, except where indicated.

Beginning farmer tax credit: The law increases the credit rate for land sales from 5% to 8% (of the lesser of the sale price or fair market value of the asset) and the maximum credit for sales from $32,000 to $50,000. It also allows the sale of land to a spouse or family member (brother, sister, ancestor or lineal descendant) to qualify for the credit (Sec. 2). It allocates $6.5 million for tax year 2023 and $4 million for tax year 2024 and beyond for the credit (Sec. 3). It requires a report to the Legislature that includes the number of beginning farmers who are members of a socially disadvantaged group (effective May 26, 2023; Sec. 4), and allows the commissioner of the Department of Employment and Economic Development to release data to the revenue department on individuals to the extent required to administer the credit (Sec. 6).

Angel investment tax credit: The law allocates $5 million annually for the angel investment credit for taxable years 2023 and 2024 (Sec. 7).

Film production tax credit: It specifies that the minimum $1 million expenditure must be made in the consecutive 12-month period beginning when expenditures are first paid in Minnesota (Sec. 8), increases the total annual amount available for credits from $4.95 million to $24.95 million (Sec. 9), and extends its availability through tax year 2030 (Secs. 10 and 33).

Pass-through entity tax: The law allows tiered pass-through entities to elect to file and pay the pass-through entity tax and allows 100 percent of the income of a resident pass-through owner to be used when determining the amount of PTE tax. It excludes from the election requirements any owner of a pass-through entity who is not a qualifying owner and clarifies that the election must be made by the owners who collectively hold a majority of the total ownership interests of qualifying owners (Sec. 14).

Reporting and payment requirements: The law requires that a partnership subject to a federal partnership level audit must report adjustments and file a new pass-through entity tax return to account for the changes (retroactive to tax year 2021; Sec. 15).

Limited deductions: The standard deduction or itemized deductions of a taxpayer with adjusted gross income over $220,650 are reduced by the lesser of: 3% of the excess of the taxpayer’s adjusted gross income over that amount plus 10% of adjusted gross income over $304,970, or 80% of the amount of the taxpayer’s standard deduction or itemized deductions. The itemized deductions of a taxpayer with adjusted gross income over $1 million are reduced by 80%. Married individuals filing separate returns must be calculated using one-half of adjusted gross income amounts (Secs. 18 and 19).

Inflation adjustments: The revenue commissioner must adjust standard deduction amounts and adjusted gross income amounts for inflation and set the statutory year to 2023 for the purposes of the brackets for inflation (Sec. 20).

Student loan discharges: A taxpayer’s qualified student loan discharge is now a subtraction (Sec. 23).

Social security benefits: Minnesota’s Social Security subtraction is expanded to allow taxpayers with adjusted gross income below $100,000 (for married joint returns) or $78,000 (for single or head of household returns) to subtract the full amount of the taxpayer’s taxable Social Security benefits. The subtraction is phased down by 10% for each $4,000 of adjusted gross income in excess of the phaseouts for most filers, or 10% for each $2,000 of adjusted gross income for those married filing separately. The phaseout thresholds will be indexed for inflation (Sec. 24).

Qualified retirement benefits: A subtraction is established for a portion of public pension benefits, which would apply to pension benefits from state or federal plans that were earned based on service for which the member or survivor did not earn Social Security benefits. The subtraction is limited to $25,000 for married joint filers, and $12,500 for other filers. The subtraction is phased out beginning at $100,000 of adjusted gross income for married joint filers and $78,000 for single and head of household filers. The subtraction is reduced by 10% for each $2,000 of adjusted gross income above those thresholds.

Net investment income tax: A tax is imposed on the net investment income of individuals, estates and trusts in excess of $1 million at a rate of 1%, effective for tax year 2024 (Sec. 30).

Campaign contributions: Individuals who contribute to political parties and candidates will see their maximum refund grow to $75, or $150 for those married filing jointly, effective for contributions made in calendar year 2024 or after (Sec. 31).

Pass-through entity taxes paid elsewhere: A credit is provided for pass-through entity taxes paid to another state claimed by a qualifying owner of a pass-through entity (Sec. 32).

Minnesota child tax credit: The Minnesota working family credit is restructured into a combined credit based on the taxpayer’s earned income and number of qualifying children. Newly eligible for the credit are those who file with an individual taxpayer identification number, childless taxpayers who are 18 or are 65 and older, and taxpayers who have insufficient earned income to qualify for the federal earned income credit but can claim the child credit. The credit amount is $1,750 per qualifying child and begins phasing out at incomes of $35,000 for married joint filers or $29,500 for other filers. The phaseout thresholds will be adjusted for inflation each year, beginning in 2024. The revenue department may also create options for advance payment of credits (Sec. 34).

Dependent care credit: Unmarried taxpayers with a newborn child who do not have dependent care expenses are allowed to claim the “newborn credit” (Sec. 35).

Working family credit: This credit is revised to equal 4% of the first $8,750 of earned income. It is increased by $925 for a taxpayer with one qualifying older child, $2,100 for a taxpayer with two qualifying older children, or $2,500 for a taxpayer with three or more qualifying older children. It is phased out jointly with the Minnesota child tax credit (Sec. 36).

Education credit: The credit to defer some education-related expenses is now available to those with adjusted gross incomes up to $70,000, the maximum credit being $1,500 multiplied by the number of children from kindergarten through 12th grade in the family. Beyond that income level, the credit phases out, reduced by $2 for each $4 over that income level. It will now be annually adjusted for inflation (Sec. 37).

Current military service credit: The credit for military service is now available per calendar year, not taxable year (Sec. 38).

Historic structure rehabilitation credit: The sunset for the credit now expires after fiscal year 2030. The change is effective retroactively from July 1, 2022 (Sec. 39). Projects that have started rehabilitation work after June 30, 2022, and before July 1, 2023, may be eligible for the credit if the application is received on or before Aug. 30, 2023 (Sec. 50).

Credit for sales of manufactured home parks to cooperatives: A qualified seller is allowed a credit of 5% of the amount of the sale price of a qualifying property with a five-year carry-forward (Sec. 40).

Short line railroad infrastructure modernization credit: An eligible taxpayer is allowed a credit against tax due equal to 50% of eligible expenses, not to exceed $3,000 per mile, multiplied by the number of miles of railroad track owned or leased within the state for which they had reconstruction or replacement expenditures (Secs. 41 and 48).

Net operating loss limitation: The allowable deduction for a corporate net operating loss must now not exceed 70% of taxable net income in a single taxable year (Sec. 44).

Dividends received from another corporation: The percentage of dividends received by corporations that are deductible is reduced. (Sec. 45).

Global intangible low-taxed income: This category of income is earned abroad by U.S.-controlled foreign corporations and is subject to special treatment under the U.S. tax code. The law changes Minnesota statute to conform to federal law, classifying it as dividend income (Sec. 47).

One-time refundable tax credit payment: For tax year 2021, a taxpayer is allowed a credit against the individual income tax equal to $520 for a married couple filing a joint return (for those with adjusted gross incomes of $150,000 or less) and $260 for a single filer, head of household, or married taxpayer filing a separate return (for those with adjusted gross incomes of $75,000 or less). For taxpayers with dependents, the credit will be increased by $260 per dependent up to an additional maximum credit of $780 (Sec. 49).

Certain unemployment compensation: A subtraction may be available for unemployment compensation received by some individuals in tax year 2021 under the federal Pandemic Unemployment Assistance program (Sec. 52).

Sexual harassment: The law also states that, when a financial settlement is provided in a sexual harassment or abuse settlement between an employer and an employee, it cannot be provided as wages or severance pay to the employee, regardless of whether the settlement includes a nondisclosure agreement. And a subtraction is created for the amount of damages received under a sexual harassment or abuse claim that are not excluded from gross income because of personal physical injuries or sickness (Secs. 11, 27).

In several provisions, the law also makes conforming changes to federal definitions of “income,” “net income,” “deferred foreign income” and “net operating loss.”

Federal Conformity (Article 2)

The law conforms the language in statute to that of the federal tax code for several types of tax, as of May 1, 2023. All these changes are effective May 26, 2023, except in the case of retroactive provisions that apply to tax years 2020 and later (Sec. 7).

With this update, the state conforms with federal tax policy on:

• deferral of tax for sales of employer stock to an employee stock ownership plan sponsored by an S corporation;

• retirement account withdrawals for emergency expenses;

• allowing additional nonelective contributions to simple retirement accounts;

• distributions from 529 plans to Roth IRAs;

• one-time election for qualified charitable distribution to a split-interest entity;

• increases in qualified charitable distribution limitation;

• exclusion of disability-related first responder retirement payments;

• distributions from an IRA for federal disasters; and

• limitation on deduction for charitable conservation easements.

In addition to updating references to the Internal Revenue Code for purposes of calculating several taxes, the law amends the residency percentage formula to include additions and subtractions related to certain business interest and net operating losses (Sec. 4), and repeals the excess business loss subtraction enacted in the federal conformity bill signed into law by the governor on Jan. 12, 2023 (Sec. 8).

Property Tax (Article 3)

This article makes several changes related to property taxes. They include:

• increasing the maximum General Fund levy authority for watershed districts (effective 2024; Sec. 1);

• requiring real property to be classified as class 3a (commercial) if the property contains more than one solar energy generating system (effective 2024; Sec. 2);

• extending an exemption for property owned by the Minnesota Chippewa Tribe (effective 2023; Sec. 3);

• establishing an exemption for an elderly living facility in Duluth (effective 2023; Sec. 4);

• allowing certain community land trust property to receive the 4d classification (effective 2024; Sec. 5);

• raising the first-tier valuation limit for agricultural homestead property (effective 2024; Sec. 6);

• allowing property owners to provide an individual taxpayer identification number for homestead applications (effective 2023; Secs. 8-14 and 21);

• requiring property owners receiving class 4d(1) status to put savings toward certain improvements and receive certain approvals from the town or city (effective 2024; Sec. 15-17);

• setting the classification rates for class 4d(1) property at 0.25% and class 4d(2) property at 0.75% (effective 2024; Sec. 18);

• allowing certain surviving spouses to apply for the market value exclusion for veterans with a disability (effective 2023; Sec. 19);

• increasing the value thresholds and the maximum exclusion amount for the homestead market value exclusion (effective 2024; Sec. 20);

• modifying the proposed property tax statement (effective 2024; Secs. 22-24);

• modifying the senior deferral program (effective 2024; Secs. 26-29);

• instituting bonding and tax levy authority for Anoka County public safety improvements and equipment (effective when acted upon by the governing body of Anoka County; Sec. 30); and

• extending the property tax levy authority for the Northwest Minnesota Multi-County Housing and Redevelopment Authority (effective when acted upon by the authority; Sec. 33) and the property tax exemption for Independent School District No. 745 in Albany (effective March 26, 2023; Sec. 34).

Property Tax Aids (Article 4)

This article makes several changes related to state aids, credits and refunds, all effective in 2024, except where indicated. They include:

• requiring electric generation transition aid to be paid to school districts at the same time as other property tax-related reimbursements (Sec. 1);

• reducing homestead credit refund co-pay percentages for all income ranges by 3%, and annually adjusting the thresholds and maximum amounts for inflation (Secs. 2 and 3);

• modifying the distribution formulas for local government aid (Secs. 4-8, 11 and 12) and county program aid (Secs. 9, 10, 17 and 18);

• increasing appropriations by $80 million for local government aid (Sec. 15) and county program aid (Sec. 16);

• increasing certain Payment in Lieu of Taxes payments (Secs. 17-19);

• establishing soil and water conservation district aid and appropriating $15 million annually (Sec. 20);

• establishing electric generation transition aid (Sec. 21);

• modifying local homelessness prevention aid (Sec. 22);

• appropriating property tax reimbursement aid for the county and city of Mahnomen and school district (Secs. 23 and 26);

• establishing statewide local housing aid and appropriating $22.5 million (Sec. 24);

• establishing tribal nation aid and appropriating $35 million annually (Sec. 25);

• establishing a onetime public safety aid for local, county and tribal governments and appropriating $300 million (Sec. 27);

• providing aid penalty forgiveness to the cities of Echo and Morton (Sec. 28);

• commissioning a study of valuation methods for state-owned lakeshore (Sec. 29);

• providing one-time increases in the renter’s credit and homestead credit state refunds (Sec. 30);

• increasing the targeted property tax refund and adding a temporary increase for property taxes paid in 2023 (Sec. 31); and

• modifying class 4d(1) low-income rental property transition aid (Sec. 32).

Sales and Use Taxes (Article 5)

This article makes several changes related to sales tax. All are effective July 1, 2023, except where noted. They include:

• modifying uses for a portion of county fair revenues (effective March 26, 2023; Sec. 1);

• instituting sales tax language for suite licenses and rights to purchase season tickets to collegiate events (effective for sales and purchases made after June 30, 2022; Secs. 2-4);

• making secure firearm storage units tax-exempt (Sec. 5);

• allowing a sales tax exemption for some sales between limited liability companies and disregarded entities (Sec. 6);

• making tax exempt some amenities that come with admission to major league professional sports events (effective July 1, 2022; Sec. 7);

• adding blood centers to the list of medical providers whose purchases are exempt from sales taxes (effective Jan. 1, 2020; Sec. 8);

• providing an exemption for fees paid on natural gas purchased during the “polar vortex” of February 2021 (Sec. 11); and

• providing exemption of construction materials for certain cities, school districts, and the Minneapolis-St. Paul International Airport (effective on various dates; Secs. 10 and 12-32).

Minerals Taxes (Article 6)

This article makes several changes related to minerals taxation. All are effective for tax year, assessment year, production year and distribution year 2023, and took effect on May 26, 2023. The changes include:

• converting the net proceeds tax into a gross proceeds tax (Secs. 1, 3 and 6);

• expanding the definition of the taconite assistance area (Sec. 2);

• modifying the distribution of the gross proceeds tax (Secs. 4 and 5);

• changing the production tax distribution amounts to certain accounts (Secs. 7-9 and 12);

• providing a one-time transfer from the property tax relief account to the Iron Range resources and rehabilitation account (Sec. 11); and

• authorizing the commissioner of the Iron Range Resources and Rehabilitation Board to have temporary loan authority (Sec. 10) and to issue bonds (Sec. 13).

Renter’s Credit (Article 7)

This article converts the Minnesota renter’s credit into a refundable income tax credit and changes the income measure used to calculate the credit from “household income” to adjusted gross income. Rather than filing for a renter’s credit on a separate form and receiving a credit payment in August or September, a claimant will file for and receive the credit during the normal income tax filing period.

The credit is available to households earning $75,389 or less. The law also appropriates $1 million each in fiscal years 2024 and 2025 to the revenue department to make grants to nonprofit organizations or federally recognized Indian tribes to publicize credits targeting low-income taxpayers and assist taxpayers in applying for such credits.

The change is effective for taxable years beginning after Dec. 31, 2023.

Tax Increment Financing (Article 8)

This article makes several changes related to tax increment financing districts within various municipalities. All are effective after the approval of local authorities. The changes include:

• changing the definition of a “small city” (Sec. 1);

• modifying preexisting special legislation for the cities of Hopkins (Sec. 2), Bloomington (Sec. 3), Savage (Sec. 6) and Ramsey (Sec. 8);

• identifying authorized expenditures for St. Paul’s TIF district (Sec. 4); and

• granting special TIF authorization to the cities of Duluth (Secs. 7 and 10), Chatfield (Sec. 9), Fridley (Sec. 11), Plymouth (Sec. 12), Shakopee (Sec. 13), West St. Paul (Sec. 14) and Woodbury (Sec. 15).

Tax Increment Financing General Law Modifications (Article 9)

For the purposes of clarifying the oversight responsibilities of the Office of the State Auditor pertaining to tax increment financing districts, changes have been made to language in statute. Effective May 26, 2023, they include:

• redefining and modifying treatment of administrative expenses (Sec. 1);

• defining a “pay-as-you-go” contract and note (Sec. 2);

• establishing limitations on administrative expenses, expenditures and uses of revenues, including for decertification (Secs. 4-8);

• modifying pooling restrictions (Sec. 9); and

• modifying treatment of violations of TIF law (Secs. 11 and 12).

Local Sales and Use Taxes (Article 10)

While the law does allow several municipalities and counties to seek approval from voters for local sales taxes with specific allocations outlined on ballots, it also includes a temporary moratorium on adopting any new resolutions or seeking voter approval for such taxes through May 31, 2025 (Sec. 1).

Among the municipalities and counties that will be allowed to place new local option sales tax measures and bonding proposals on city ballots this fall are St. Paul (Secs. 2-5), Rochester (Secs. 6-9), Marshall (Sec. 11), Beltrami County (Sec. 25), Blackduck (Sec. 26), Bloomington (Sec. 27), Brooklyn Center (Sec. 28), Chanhassen (Sec. 29), Cottage Grove (Sec. 30), Detroit Lakes (Sec. 31), Dilworth (Sec. 32), East Grand Forks (Sec. 33), Fairmont (Sec. 34), Henderson (Sec. 35), Hibbing (Sec. 36), Golden Valley (Sec. 37), Jackson (Sec. 38), Jackson County (Sec. 39), Monticello (Sec. 40), Mounds View (Sec. 41), Proctor (Sec. 42), Rice County (Sec. 43), Richfield (Sec. 44), Roseville (Sec. 45), St. Joseph (Sec. 46), Stearns County (Sec. 47), Stillwater (Sec. 48), Winona County (Sec. 49), and Woodbury (Sec. 50).

Cities that will be asking voters to extend or expand the purview of their current local sales taxes or bonding authority include North Mankato (Sec. 10), Avon (Secs. 12-14), Excelsior (Sec. 15), Rogers (Sec. 16), Edina (Sec. 17), and Oakdale (Secs. 20-23).

Fergus Falls is planning to increase its sales tax and bonding authority without voter approval (Secs. 18 and 19).

The law also establishes a local taxes advisory task force to examine the use of local taxes as a funding mechanism for cities and counties to fund capital projects and other improvement projects (effective May 26, 2023; Sec. 51).

Local Special Taxes (Article 11)

Duluth received approval to expand both its bonding authority and its lodging tax threefold to fund capital improvements to park-based public athletic facilities (Secs. 1 and 2); Cook County will eliminate its admissions and recreation tax and terminate its lodging tax after 30 years (effective May 26, 2023; Sec. 3); and Lake of the Woods County is authorized to institute a lodging tax (Sec. 4). Except where noted, all are pending the approval of local authorities.

Public Finance (Article 12)

This article makes several changes to the law governing public finance, including:

• allowing local governments to invest public funds in time deposits insured by credit units (Sec. 1);

• extending from 10 to 20 years the period during which the notes, certificates of indebtedness, and general obligation certificates of certain political subdivisions must be payable (Secs. 2-7);

• allowing local governments to issue debt to pay to eliminate ice-making systems in public facilities that use R-22 (Secs. 3-7);

• clarifying levy certification requirements for housing and redevelopment authorities, port authorities, and economic development authorities (Secs. 8-11);

• eliminating the requirement that public facilities funded by tax-exempt bonds be publicly owned, or a facility used for district heating or cooling (Sec. 12);

• eliminating specific projects that can be financed with public facility bonds so that federal tax rules apply (Sec. 13);

• setting installment schedules and annual bonding limits for municipal water and wastewater treatment systems (Sec. 14);

• extending St. Paul’s bonding authority through 2035 and increasing its aggregate principal amount to $30 million for each year (Sec. 15); and

• determining that Virginia’s loan from the U.S. Department of Agriculture to finance a public safety building should not be computed into the city’s net debt (Sec. 16).

All are effective May 26, 2023, save the provisions in Secs. 15 and 16, which are pending the approval of local authorities.

Stadium Payoff, Electronic Pull-tabs and Gambling Taxes (Article 13)

U.S. Bank Stadium: Effective July 1, 2023, the law repeals the requirement that the commissioner of revenue retain sales tax revenue generated in Minneapolis for the purpose of repaying state payments made to the Minnesota Sports Facilities Authority from 2016 through 2020 for operating and capital expenses related to U.S. Bank Stadium.

It also makes three Minneapolis-related changes: the city does not have to repay the state advance for operating and capital expenses; the amount of tax retained for the benefit of the MSFA is limited to 3 percent of the taxes collected in the preceding year; and if stadium bonds are paid off, the city's debt service support payments are reduced essentially by the amount of interest payments on the city's share of the bonds.

It requires that certain tax revenues remitted to the authority be used for capital improvements (Secs. 2, 13-14).

A General Fund appropriation of $15.7 million in fiscal year 2023 to Minnesota Management and Budget is designed to provide a secure perimeter around the stadium. And the commissioner will have the option of paying off the debt for the stadium, including any accrued interest and associated financing costs, in fiscal year 2023, if general reserve account dollars are available to prepay the entire debt (Secs. 16-17).

Electronic pull-tabs: The law reduces the combined net receipts tax rate for charitable gambling revenues (Sec. 3), and stipulates that “gross receipts” do not include a licensed organization’s receipts from electronic pull-tabs, provided the electronic pull-tab manufacturer has completed an annual system and organization controls audit (Sec. 4). This is effective for audits conducted after June 30, 2024.

It clarifies that neither electronic bingo devices nor electronic pull-tab devices can contain spinning reels or other representations that mimic the display or user interface of a video slot machine (Secs. 5-7), and that electronic pull-tab games must contain a mechanism requiring a player to manually activate each electronic pull-tab ticket to be opened, and to manually activate the reveal of each single row of symbols with a separate and distinct action (Secs. 8 and 9). These changes are effective for games approved after Aug. 1, 2023.

The state’s gambling control board is authorized to remove games that violate these rules from the inventories of distributors and organizations by Dec. 31, 2024 (Secs. 10 and 15). Distributors may not charge a licensed organization more than 25% of gross profits derived from electronic pull-tab games supplied by the distributor (Sec. 11). And manufacturers of such devices are required to submit an annual systems and controls audit (Sec. 12).

Teachers Retirement Association (Article 14)

Adjustments are made to the pension adjustment rate for members of the Teachers Retirement Association and the St. Paul Teachers’ Retirement Fund Association. “Normal retirement age” is defined and policy on employee contributions extended through June 30, 2025. Both employer and employee contributions are revised. For the Teachers Retirement Association, the date for full funding is moved to June 30, 2053. And base amounts are increased for employer pension contributions to the Teachers Retirement Association for employees of the Minnesota State system of colleges and universities, the Minnesota State Academies and the Perpich Center for Arts Education (Secs. 1-99).

Miscellaneous (Article 15)

All of these changes are effective May 26, 2023, except where indicated.

Rules are revised for the Tax Expenditure Commission (Secs. 1 and 2), and the revenue commissioner is tasked with developing an interactive “taxpayer receipt” function on the department’s website that calculates a taxpayer’s share of state General Fund expenditures in multiple categories in the most recent fiscal year (effective for tax year 2023; Secs. 3 and 10).

The law provides that the population used to compute refunds and payments under tax agreements between the commissioner of revenue and tribal governments is the number of enrolled members of the tribe who live on or adjacent to the reservation as reported by the tribe (Sec. 5).

The commissioner will no longer charge fees for entering into payment agreements (effective June 24, 2023; Sec. 6), a county auditor’s responsibilities in determining validity of a claim are laid out (Sec. 7), and county boards are given guidelines on establishing interest rates (effective Jan. 1, 2024; Secs. 8 and 9). And some allocations are delineated for the Environmental Trust Fund (Sec. 11).

Upon petition by business owners, a municipality or county may establish a tourism improvement district with some taxing authority (Secs. 12-21). The revenue department is commissioned to perform a study on free electronic filing options for filers (Sec. 23). All grant and business subsidy recipients will be subject to financial review (Sec. 26). And redemption periods of targeted properties in Ramsey County are extended upon approval by local governing bodies (Sec. 25).

The law also appropriates funds for:

• a workforce and affordable homeownership development account (effective July 1, 2023);

• a tax filing modernization account;

• the taxpayer receipt;

• debt relief for the Crane Lake water and sanitary district;

• Minneapolis for business development on the Lake Street corridor;

• Northfield for infrastructure for a manufactured home park;

• Spring Grove to remediate the effects of a fire (effective July 1, 2023);

• Windom for relief related to the closure of a pork production plant;

• the Windom school district; and

• administrative support for the revenue department (Secs. 22, 24, 27-35).

Revenue Department Policy (Article 16)

This article mostly deals with technical aspects of state tax policy and outlines the responsibilities of the revenue department to make changes.

Among the topics addressed are nonresident withholding tax refunds, credit for taxes paid to another state, miscellaneous withholding arrangements, withholding of payments to out-of-state contractors, and property taxes payable for tax year 2022 and later.

Save the last one, all changes are effective May 26, 2023.

Fire and Police State Aids (Article 17)

This article makes a number of policy and technical changes related to the fire state aid and police state aid programs, effective for aids payable in calendar year 2024 and thereafter.

The state auditor is required to file to the revenue commissioner a financial compliance report for each relief organization. Much of the article clarifies definitions. Also clarified are filing requirements and certification for apportion agreements, the Public Employees Retirement Association and fire departments. It also lays out penalties for failure to correct a certification, apportionment, allocations and corrections of fire state aid, and use of the most recent population estimates. Similarly, apportionment, allocations and corrections of police state aid are clarified (Secs. 1-24).

Data Practices (Article 18)

This article makes clear that data on individuals collected, maintained, used or disseminated by the welfare system are private data and shall not be disclosed, with some exceptions that are explained. It clarifies that the revenue commissioner may request information from any state officer or agency in order to file their biennial report to the Legislature. It also clarifies requirements for tax preparers, owners or managing agents who provide rent certificates, and who can perform criminal history record information checks (Secs. 1-4, 6-76). All changes are effective May 26, 2023.

Miscellaneous Revenue Department matters (Article 19)

The law’s final article clarifies that the population used to compute refunds and payments under tax agreements between the commissioner of revenue and tribal governments is the number of enrolled members of the tribe who live on or adjacent to the reservation as reported to the commissioner by the tribe (effective for agreements entered into after Dec. 31, 2022).

It also clarifies that a health care provider, for MinnesotaCare tax purposes, does not include a person or entity that receives all their payments for patient services from a source of funds that is excluded from tax. The law also moves the annual deadline for publication of the debt service surcharge from April 1 to May 1 and amends the definition of “state,” effective for sales and purchases made after June 30, 2023.

Each of the changes is effective May 26, 2023, unless noted otherwise.

New Laws 2023

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HF1938* / SF1811 / CH64
House Chief Author: Gomez
Senate Chief Author: Rest
Effective Dates: See chapter summary in the file link above.
* The legislative bill marked with an asterisk denotes the file submitted to the governor.