STATE OF
MINNESOTA
EIGHTY-SEVENTH
SESSION - 2011
_____________________
FIFTY-EIGHTH
DAY
Saint Paul, Minnesota, Tuesday, May 17, 2011
The House of Representatives convened at
11:00 a.m. and was called to order by Kurt Zellers, Speaker of the House.
Prayer was offered by the Reverend Bill
Davnie, Minneapolis, Minnesota.
The members of the House gave the pledge
of allegiance to the flag of the United States of America.
The roll was called and the following
members were present:
Abeler
Anderson, B.
Anderson, D.
Anderson, P.
Anderson, S.
Anzelc
Atkins
Banaian
Barrett
Beard
Benson, J.
Benson, M.
Bills
Brynaert
Buesgens
Carlson
Champion
Clark
Cornish
Crawford
Daudt
Davids
Davnie
Dean
Dettmer
Dill
Dittrich
Doepke
Downey
Drazkowski
Eken
Erickson
Fabian
Falk
Franson
Fritz
Garofalo
Gauthier
Gottwalt
Greene
Greiling
Gruenhagen
Gunther
Hackbarth
Hamilton
Hancock
Hansen
Hausman
Hayden
Hilstrom
Hilty
Holberg
Hoppe
Hornstein
Hortman
Hosch
Howes
Huntley
Johnson
Kahn
Kath
Kelly
Kieffer
Kiel
Kiffmeyer
Knuth
Koenen
Kriesel
Laine
Lanning
Leidiger
LeMieur
Lenczewski
Lesch
Liebling
Lillie
Loeffler
Lohmer
Loon
Mack
Mahoney
Mariani
Marquart
Mazorol
McDonald
McElfatrick
McFarlane
McNamara
Melin
Moran
Morrow
Mullery
Murdock
Murphy, E.
Murphy, M.
Murray
Myhra
Nelson
Nornes
Norton
O'Driscoll
Paymar
Pelowski
Peppin
Persell
Petersen, B.
Peterson, S.
Poppe
Quam
Rukavina
Runbeck
Sanders
Scalze
Schomacker
Scott
Shimanski
Simon
Slawik
Slocum
Smith
Stensrud
Swedzinski
Thissen
Tillberry
Torkelson
Urdahl
Vogel
Wagenius
Ward
Wardlow
Westrom
Winkler
Woodard
Spk. Zellers
A quorum was present.
The Chief Clerk proceeded to read the
Journal of the preceding day. There
being no objection, further reading of the Journal was dispensed with and the
Journal was approved as corrected by the Chief Clerk.
REPORTS OF CHIEF CLERK
S. F. No. 134 and
H. F. No. 212, which had been referred to the Chief Clerk for
comparison, were examined and found to be identical.
Beard moved that
S. F. No. 134 be substituted for H. F. No. 212
and that the House File be indefinitely postponed. The motion prevailed.
S. F. No. 301 and
H. F. No. 506, which had been referred to the Chief Clerk for
comparison, were examined and found to be identical with certain exceptions.
SUSPENSION
OF RULES
Shimanski moved that the rules be so far
suspended that S. F. No. 301 be substituted for
H. F. No. 506 and that the House File be indefinitely
postponed. The motion prevailed.
S. F. No. 1009 and
H. F. No. 1408, which had been referred to the Chief Clerk for
comparison, were examined and found to be identical with certain exceptions.
SUSPENSION
OF RULES
Sanders moved that the rules be so far
suspended that S. F. No. 1009 be substituted for
H. F. No. 1408 and that the House File be indefinitely
postponed. The motion prevailed.
S. F. No. 1083 and
H. F. No. 1361, which had been referred to the Chief Clerk for
comparison, were examined and found to be identical.
Buesgens moved that
S. F. No. 1083 be substituted for H. F. No. 1361
and that the House File be indefinitely postponed. The motion prevailed.
S. F. No. 1143 and
H. F. No. 1466, which had been referred to the Chief Clerk for
comparison, were examined and found to be identical with certain exceptions.
SUSPENSION
OF RULES
Scott moved that the rules be so far
suspended that S. F. No. 1143 be substituted for
H. F. No. 1466 and that the House File be indefinitely
postponed. The motion prevailed.
S. F. No. 1265 and
H. F. No. 1422, which had been referred to the Chief Clerk for
comparison, were examined and found to be identical with certain exceptions.
SUSPENSION
OF RULES
Simon moved that the rules be so far
suspended that S. F. No. 1265 be substituted for
H. F. No. 1422 and that the House File be indefinitely
postponed. The motion prevailed.
S. F. No. 1285 and
H. F. No. 1500, which had been referred to the Chief Clerk for
comparison, were examined and found to be identical with certain exceptions.
SUSPENSION
OF RULES
Anderson, D., moved that the rules be so
far suspended that S. F. No. 1285 be substituted for
H. F. No. 1500 and that the House File be indefinitely
postponed. The motion prevailed.
REPORTS OF STANDING COMMITTEES AND
DIVISIONS
Holberg from the Committee on Ways and Means to which was referred:
H. F. No. 191, A bill for an act relating to state government; proposing the Redundant Technology Elimination Act; consolidating state agency information technology systems and services; transferring duties to the Office of Enterprise Technology; appropriating money; amending Minnesota Statutes 2010, sections 16B.99; 16E.14, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 16E.
Reported the same back with the following amendments:
Delete everything after the enacting clause and insert:
"Section 1. Minnesota Statutes 2010, section 16B.99, is amended to read:
16B.99
GEOSPATIAL INFORMATION OFFICE.
Subdivision 1. Creation. The Minnesota Geospatial Information
Office is created under the supervision of the commissioner of administration chief geospatial information officer, who is appointed by the chief
information officer.
Subd. 2. Responsibilities; authority. The office has authority to provide coordination, guidance, and leadership, and to plan the implementation of Minnesota's geospatial information technology. The office must identify, coordinate, and guide strategic investments in geospatial information technology systems, data, and services to ensure effective implementation and use of Geospatial Information Systems (GIS) by state agencies to maximize benefits for state government as an enterprise.
Subd. 3. Duties. The office must:
(1) coordinate and guide the efficient and effective use of available federal, state, local, and public-private resources to develop statewide geospatial information technology, data, and services;
(2) provide leadership and outreach, and ensure cooperation and coordination for all Geospatial Information Systems (GIS) functions in state and local government, including coordination between state agencies, intergovernment coordination between state and local units of government, and extragovernment coordination, which includes coordination with academic and other private and nonprofit sector GIS stakeholders;
(3) review state agency and intergovernment geospatial technology, data, and services development efforts involving state or intergovernment funding, including federal funding;
(4) provide information to the legislature regarding projects reviewed, and recommend projects for inclusion in the governor's budget under section 16A.11;
(5) coordinate management of geospatial technology, data, and services between state and local governments;
(6) provide coordination, leadership, and consultation to integrate government technology services with GIS infrastructure and GIS programs;
(7) work to avoid or eliminate unnecessary duplication of existing GIS technology services and systems, including services provided by other public and private organizations while building on existing governmental infrastructures;
(8) promote and coordinate consolidated geospatial technology, data, and services and shared geospatial Web services for state and local governments; and
(9) promote and coordinate geospatial technology training, technical guidance, and project support for state and local governments.
Subd. 4. Duties
of chief geospatial information officer.
(a) In consultation with the state geospatial advisory council, the
commissioner of administration, the commissioner of management and budget, and
the Minnesota chief geospatial information officer, the chief geospatial
information officer must identify when it is cost-effective for agencies to
develop and use shared information and geospatial technology systems, data, and
services. The chief geospatial
information officer may require agencies to use shared information and
geospatial technology systems, data, and services.
(b) The chief geospatial information
officer, in consultation with the state geospatial advisory council, must
establish reimbursement rates in cooperation with the commissioner of
management and budget to bill agencies and other governmental entities
sufficient to cover the actual development, operation, maintenance, and
administrative costs of the shared systems.
The methodology for billing may include the use of interagency
agreements, or other means as allowed by law.
Subd. 5. Fees. (a) The chief geospatial
information officer must set fees under section 16A.1285 that reflect the
actual cost of providing information products and services to clients. Fees collected must be deposited in the state
treasury and credited to the Minnesota Geospatial Information Office revolving
account. Money in the account is
appropriated to the chief geospatial information officer for providing
Geospatial Information Systems (GIS) consulting services, software, data, Web
services, and map products on a cost-recovery basis, including the cost of
services, supplies, material, labor, and equipment as well as the portion of
the general support costs and statewide indirect costs of the office that is
attributable to the delivery of these products and services. Money in the account must not be used for the
general operation of the Minnesota Geospatial Information Office.
(b) The chief geospatial
information officer may require a state agency to make an advance payment to
the revolving account sufficient to cover the agency's estimated obligation for
a period of 60 days or more. If the
revolving account is abolished or liquidated, the total net profit from the
operation of the account must be distributed to the various funds from which
purchases were made. For a given period
of time, the amount of total net profit to be distributed to each fund must
reflect the same ratio of total purchases attributable to each fund divided by
the total purchases from all funds.
Subd. 6. Accountability. The chief geospatial information officer
is appointed by the commissioner of administration and must work closely
with the Minnesota chief information officer who shall advise on technology
projects, standards, and services.
Subd. 7. Discretionary powers. The office may:
(1) enter into contracts for goods or services with public or private organizations and charge fees for services it provides;
(2) apply for, receive, and expend money from public agencies;
(3) apply for, accept, and disburse grants and other aids from the federal government and other public or private sources;
(4) enter into contracts with agencies of the federal government, local government units, the University of Minnesota and other educational institutions, and private persons and other nongovernment organizations as necessary to perform its statutory duties;
(5) appoint committees and task forces to assist the office in carrying out its duties;
(6) sponsor and conduct conferences and studies, collect and disseminate information, and issue reports relating to geospatial information and technology issues;
(7) participate in the activities and conferences related to geospatial information and communications technology issues;
(8) review the Geospatial Information Systems (GIS) technology infrastructure of regions of the state and cooperate with and make recommendations to the governor, legislature, state agencies, local governments, local technology development agencies, the federal government, private businesses, and individuals for the realization of GIS information and technology infrastructure development potential;
(9) sponsor, support, and facilitate innovative and collaborative geospatial systems technology, data, and services projects; and
(10) review and recommend alternative sourcing strategies for state geospatial information systems technology, data, and services.
Subd. 8. Geospatial
advisory councils created. The chief
geospatial information officer must establish a governance structure
that includes advisory councils to provide recommendations for improving the
operations and management of geospatial technology within state government and
also on issues of importance to users of geospatial technology throughout the
state.
(a) A statewide geospatial advisory council
must advise the Minnesota Geospatial Information Office regarding the
improvement of services statewide through the coordinated, affordable,
reliable, and effective use of geospatial technology. The commissioner of administration chief
information officer must appoint the members of the council. The members must represent a cross-section of
organizations including counties, cities, universities, business, nonprofit
organizations, federal agencies, and state agencies. No more than 20 percent of the members may be
employees of a state agency. In
addition, the chief geospatial information officer must be a nonvoting member.
(b) A state government geospatial advisory
council must advise the Minnesota Geospatial Information Office on issues
concerning improving state government services through the coordinated,
affordable, reliable, and effective use of geospatial technology. The commissioner of administration chief
information officer must appoint the members of the council. The members must represent up to 15 state
government agencies and constitutional offices, including the Office of
Enterprise Technology and the Minnesota Geospatial Information Office. The council must be chaired by the chief
geographic information officer. A
representative of the statewide geospatial advisory council must serve as a
nonvoting member.
(c) Members of both the statewide geospatial advisory council and the state government advisory council must be recommended by a process that ensures that each member is designated to represent a clearly identified agency or interested party category and that complies with the state's open appointment process. Members shall serve a term of two years.
(d) The Minnesota Geospatial Information Office must provide administrative support for both geospatial advisory councils.
(e) This subdivision expires June 30, 2011.
Subd. 9. Report
to legislature. By January 15, 2010,
the chief geospatial information officer must provide a report to the chairs
and ranking minority members of the legislative committees with jurisdiction
over the policy and budget for the office.
The report must address all statutes that refer to the Minnesota
Geospatial Information Office or land management information system and provide
any necessary draft legislation to implement any recommendations.
Sec. 2. [16E.0151]
RESPONSIBILITY FOR INFORMATION TECHNOLOGY SERVICES AND EQUIPMENT.
(a) The chief information officer is responsible for providing or entering into managed services contracts for the provision of the following information technology systems and services to state agencies:
(1) state data centers;
(2) mainframes including system
software;
(3) servers including system software;
(4) desktops including system software;
(5) laptop computers including system
software;
(6) a data network including system
software;
(7) database, electronic mail, office
systems, reporting, and other standard software tools;
(8) business application software and
related technical support services;
(9) help desk for the components listed
in clauses (1) to (8);
(10) maintenance, problem resolution,
and break-fix for the components listed in clauses (1) to (8);
(11) regular upgrades and replacement
for the components listed in clauses (1) to (8); and
(12) network-connected output devices.
(b) All state agency employees whose
work primarily involves functions specified in paragraph (a) are employees of
the Office of Enterprise Technology. This
includes employees who directly perform the functions in paragraph (a), as well
as employees whose work primarily involves managing, supervising, or providing
administrative services or support services to employees who directly perform these
functions. The chief information officer
may assign employees of the office to perform work exclusively for another
state agency.
(c) The chief information officer may
allow a state agency to obtain services specified in paragraph (a) through a
contract with an outside vendor when the chief information officer and the
agency head agree that a contract would provide best value, as defined in
section 16C.02, under the service-level agreement. The chief information officer must require
that agency contracts with outside vendors ensure that systems and services are
compatible with standards established by the Office of Enterprise Technology.
(d) In exercising authority under this
section, the chief information officer must cooperate with the commissioner of
administration on contracts for acquisition of information technology systems
and services. The authority granted to
the chief information officer does not limit the procurement, contract
management, and contract review authority of the commissioner of administration
under chapter 16C, including authority of the commissioner to enter into and
manage cooperative purchasing agreements with other states.
(e) The Minnesota State Retirement
System, the Public Employees Retirement Association, the Teachers Retirement
Association, the State Board of Investment, the Campaign Finance and Public
Disclosure Board, the State Lottery, and the Statewide Radio Board are not
state agencies for purposes of this section.
Sec. 3. [16E.036]
ADVISORY COMMITTEE.
(a) The Technology Advisory Committee
is created to advise the chief information officer. The committee consists of six members
appointed by the governor who are individuals actively involved in business
planning for state executive branch agencies, one county member designated by
the Association of Minnesota Counties, one member appointed by the governor as
a representative of a union that represents state information technology
employees, and one member appointed by the governor to represent private
businesses.
(b) Membership terms, removal of members, and filling of vacancies are as provided in section 15.059. Members do not receive compensation or reimbursement for expenses.
(c) The committee shall select a chair
from its members. The chief information officer
shall provide administrative support to the committee.
(d) The committee shall advise the chief information officer on:
(1) development and implementation of
the state information technology strategic plan;
(2) critical information technology initiatives
for the state;
(3) standards for state information
architecture;
(4) identification of business and
technical needs of state agencies;
(5) strategic information technology
portfolio management, project prioritization, and investment decisions;
(6) the office's performance measures and fees for service agreements with executive branch agencies;
(7) management of the state enterprise
technology revolving fund; and
(8) the efficient and effective
operation of the office.
Sec. 4. Minnesota Statutes 2010, section 16E.14, is amended by adding a subdivision to read:
Subd. 6. Technology
improvement account. The
technology improvement account is established as an account in the enterprise
technology fund. Money in the account is
appropriated to the chief information officer for the purpose of funding a
project that will result in improvements in state information and
telecommunications technology. The chief
information officer may spend money from the account on behalf of a state
agency or group of agencies or may transfer money in the account to a state
agency or group of agencies only according to an agreement under which: (1) the chief information officer has
determined that savings generated by the project to be funded from the account will
exceed the cost of the project; and (2) the agency or agencies sponsoring the
project have developed a plan for recouping the project costs to the fund.
Sec. 5. [16E.145]
INFORMATION TECHNOLOGY APPROPRIATION.
An appropriation for a state agency information
and telecommunications technology project must be made to the chief information
officer. The chief information officer
must manage and disburse the appropriation on behalf of the sponsoring state
agency. Any appropriation for an
information and telecommunications technology project made to a state agency
other than the Office of Enterprise Technology is transferred to the chief
information officer.
EFFECTIVE
DATE. This section is
effective July 1, 2011, and applies to appropriations made before or after that
date. The remainder of any appropriation
subject to this section made before July 1, 2011, is transferred to the chief
information officer on July 1, 2011.
Sec. 6. TRANSFERS;
TRANSITION.
(a) Powers, duties, responsibilities,
assets, personnel, and unexpended appropriations relating to functions assigned
to the chief information officer in Minnesota Statutes, section 16E.0151, are
transferred to the Office of Enterprise Technology from all other state
agencies, as defined in Minnesota Statutes, section 16E.03, subdivision 1,
paragraph (e), effective July 1, 2011. All
reporting relationships associated with the transferred powers, duties,
responsibilities, assets, personnel, and unexpended appropriations are also
transferred to the Office of Enterprise Technology on July 1, 2011. By January 15, 2012, the chief information
officer shall submit to the legislature any statutory changes needed to
complete implementation of the transfer in this section.
(b) Prior to the transfer mandated by paragraph
(a), the chief information officer must enter into a service-level agreement with each state agency governing the
provision of information technology systems and services in section 2. The
agreements must specify the services to be provided and the charges for these
services. As specified in section 2,
an agency may choose to obtain these services from an outside vendor, rather
than from the Office of Enterprise Technology.
Authority to enter into agreements under this paragraph is effective the
day following final enactment, with the resulting agreements effective July 1,
2011.
(c) Powers, duties, responsibilities,
assets, personnel, and unexpended appropriations relating to geospatial
information systems are transferred from the commissioner of administration to
the Office of Enterprise Technology.
(d) Minnesota Statutes, section 15.039, applies to transfers in this section. Executive branch officials may use authority under Minnesota Statutes, section 16B.37, as necessary to implement this section.
(e) The transfer of authority to the
Office of Enterprise Technology in this article does not require expansion or
consolidation of office space, data centers, help desks, or other systems. The chief information officer may implement
expansion, relocation, or consolidation to the extent feasible and desirable
with existing resources, or to the extent that savings resulting from the
expansions or consolidations will pay for the costs associated with these
activities during the biennium ending June 30, 2013.
(f) Expenses relating to transfer of
functions and other implementation of sections 1 to 8 must be paid from the
enterprise technology revolving fund.
Sec. 7. STUDY.
The chief information officer in the
Office of Enterprise Technology shall report to the chairs and ranking minority
members of the house of representatives and senate committees with jurisdiction
over state government finance by January 15, 2012, on the feasibility and
desirability of the office entering into service-level agreements with the
State Lottery and the Statewide Radio Board regarding provision of information
technology systems and services to those entities.
Sec. 8. REVISOR'S
INSTRUCTION.
The revisor of statutes shall recodify
Minnesota Statutes, section 16B.99, into Minnesota Statutes, chapter 16E.
Sec. 9. EFFECTIVE
DATE.
Sections 1 to 8 are effective July 1, 2011. However, the chief information officer may phase in the transfer of functions required by sections 1 to 8 between July 1, 2011, and July 1, 2012."
Delete the title and insert:
"A bill for an act relating to state government; consolidating services for information technology and telecommunications technology; establishing an advisory committee; transferring duties; requiring a report; appropriating money; amending Minnesota Statutes 2010, sections 16B.99; 16E.14, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 16E."
With the recommendation that when so amended the bill pass.
The
report was adopted.
Holberg from the Committee on
Ways and Means to which was referred:
H. F. No. 211, A bill for an act relating to
civil actions; modifying liability limits for certain tort claims against the
state and political subdivisions; regulating certain conciliation court claims;
providing a right of appeal on certain class action orders; modifying the
statute of limitations on certain claims; modifying prejudgment interest;
regulating attorney fees; providing a cause of action for sex trafficking
violations; amending Minnesota Statutes 2010, sections 3.736, subdivision 4;
466.03, subdivision 6e, by adding a subdivision; 466.04, subdivisions 1, 3;
491A.01, subdivision 3; 541.05, subdivision 1; 549.09, subdivision 1; proposing
coding for new law in Minnesota Statutes, chapters 540; 549; 609.
Reported the same back with the recommendation that the bill
pass.
The
report was adopted.
Holberg from the Committee on
Ways and Means to which was referred:
H. F. No. 637, A bill for an act relating to
health; modifying an exemption to the food, beverage, and lodging
establishments statutes; amending Minnesota Statutes 2010, sections 157.15,
subdivision 12b; 157.22.
Reported the same back with the recommendation that the bill
pass.
The
report was adopted.
Dean from the Committee on Rules
and Legislative Administration to which was referred:
H. F. No. 650, A bill for an act relating to
transportation; regulating driver education and driver examination related to
carbon monoxide poisoning; making technical changes; amending Minnesota
Statutes 2010, sections 171.0701; 171.13, subdivision 1, by adding a
subdivision.
Reported the same back with the recommendation that the bill
pass.
The
report was adopted.
Holberg from the Committee on
Ways and Means to which was referred:
H. F. No. 705, A bill for an act relating to
local government; permitting counties to have private audits performed that
meet state auditor requirements; eliminating certain publication and reporting
requirements; providing for use of surplus law library funds; repealing certain
county clerk hiring requirements; repealing seed and feed loans provisions;
providing for Ramsey County Community Corrections Department duties; making
clarifying and technical changes; amending Minnesota Statutes 2010, sections
6.48; 6.49; 134A.12; 279.09; 299A.77; 331A.11; 375.055, subdivision 1;
383A.404, by adding a subdivision; repealing Minnesota Statutes 2010, sections
279.07; 279.08; 340A.403, subdivision 4; 382.265; 383A.404, subdivision 5;
395.14; 395.15; 395.16; 395.17; 395.18; 395.19; 395.20; 395.21; 395.22; 395.23;
395.24.
Reported the same back with the following amendments:
Page 1, delete section 1
Renumber the sections in sequence
Amend the title as follows:
Page 1, line 2, delete everything after the semicolon
Page 1, line 3, delete everything before
"eliminating" and insert "delaying certain audit requirements
for new first class cities;"
Correct the title numbers accordingly
With the recommendation that when so amended the bill pass.
The
report was adopted.
Holberg from the Committee on
Ways and Means to which was referred:
H. F. No. 1025, A bill for an act relating to
energy; modifying provisions relating to energy rates, energy conservation and
savings programs, utility cost recovery and investments, qualifying facilities
and nongenerating utilities, energy-related rate impacts, large energy
customers, cold weather notices to energy consumers, hydropower, an innovative
energy project, transmission lines, Public Utilities Commission approval for
security issuance by utilities, assessments, establishment of Energy
Reliability and Intervention Office, the Energy Conservation Information Center
and residential weatherization programs, and membership in the Melrose Public
Utilities Commission; making technical and clarifying changes; amending
Minnesota Statutes 2010, sections 16E.15, subdivision 2; 216B.03; 216B.07;
216B.096, subdivision 3; 216B.16, subdivisions 6b, 7, 9, 15, by adding
subdivisions; 216B.1636, subdivision 1; 216B.164, subdivision 3; 216B.1691,
subdivision 1, by adding a subdivision; 216B.1694, by adding a subdivision;
216B.2401; 216B.241, subdivisions 1, 1a, 1b, 1c, 2; 216B.2425, subdivision 2;
216B.49, subdivision 3; 216B.62, subdivisions 2, 3; 216C.052; 216C.11;
216C.264, subdivision 2; 216E.18, subdivision 3; repealing Minnesota Statutes
2010, sections 216A.085; 216B.242; 216C.264, subdivision 4.
Reported the same back with the following amendments:
Page 6, line 4, after "commission" insert
", upon its own motion or upon petition of any party,"
Page 6, line 5, delete "hear and consider a petition
by any party to"
Page 8, line 7, before "conservation"
insert "and utility-initiated"
Page 9, after line 2, insert:
"(g) "Facility" means all buildings,
structures, equipment, and installations at a single site."
Page 9, lines 3, 12, 31, and 33, delete the new language and
reinstate the stricken language
Page 9, line 21, delete "(i)" and reinstate
the stricken "(j)"
Page 10, lines 1 and 3, delete the new language and reinstate
the stricken language
Page 10, line 28, before "customer" insert
"facility that qualifies the customer as a large energy"
Page 11, line 19, delete "300,000" and
insert "600,000"
Page 18, after line 31, insert:
"Sec. 2. Minnesota
Statutes 2010, section 216B.026, subdivision 1, is amended to read:
Subdivision 1. Election.
(a) A cooperative electric association may elect to become
subject to rate regulation by the commission pursuant to sections 216B.03 to
216B.23. The election shall be approved
by a majority of members or stockholders voting by mail ballot initiated by
petition of not less than five percent of the members or stockholders of the
association, as determined by membership figures submitted by the association
to the Rural Electric Administration for the month in which the petition was
submitted.
(b) For a cooperative electric association that is the
product of a merger or consolidation of three or more associations between
December 30, 1996, and January 1, 2001, the number of members or stockholders
necessary to initiate the petition shall be no less than one percent of the
members or stockholders of the association.
EFFECTIVE DATE. This section is effective the day following final enactment."
Page 27, after line 13, insert:
"ARTICLE
4
APPROPRIATION
Section 1. APPROPRIATION.
$207,000 is appropriated from the general fund to the Public
Utilities Commission for the rulemaking required under article 1, section 9,
and for appeals of exemptions made under article 2, sections 3 and 4."
Renumber the sections in sequence
Amend the title as follows:
Page 1, line 10, after "changes;" insert
"appropriating money;"
Correct the title numbers accordingly
With the recommendation that when so amended the bill pass.
The
report was adopted.
Holberg from the Committee on
Ways and Means to which was referred:
H. F. No. 1068, A bill for an act relating to
transportation; providing for various provisions governing transportation and
public safety policies, including data practices, bicycles and bikeways,
highways and bridges, transportation construction contracts, motor vehicles,
traffic regulations, driver licensing and training, alternative financing for
transportation projects, railroads, motor carriers and commercial drivers, and
agency reporting; establishing certain fees and an account; expanding a pilot
program; providing variance for seaplane base; repealing certain provisions;
making technical changes; appropriating money; amending Minnesota Statutes
2010, sections 13.72, subdivisions 1, 11, by adding subdivisions; 85.015, by
adding a subdivision; 85.018, subdivisions 2, 4; 160.263, subdivision 2;
161.14, subdivision 66, by adding a subdivision; 161.321; 161.3212; 162.081,
subdivision 4; 162.09, by adding a subdivision; 168.002, subdivisions 24, 26,
40, by adding subdivisions; 168.012, subdivision 1; 168.017, subdivision 3;
168.021; 168.12, subdivisions 1, 2b, 5; 168.123, subdivision 1; 168A.11,
subdivision 4; 168B.011, subdivision 12; 169.011, subdivision 27; 169.035,
subdivision 1, by adding a subdivision; 169.06, subdivisions 5, 7; 169.09,
subdivision 13; 169.19, subdivision 5; 169.223, subdivision 5; 169.306;
169.345, subdivisions 1, 3; 169.346, subdivision 3; 169.4503, by adding a
subdivision; 169.64, subdivision 2; 169.685, subdivision 6; 169.86,
subdivisions 4, 5; 169.99, subdivision 1b; 169A.54, subdivisions 1, 6; 171.03;
171.05, subdivision 2; 171.06, subdivision
2; 171.061, subdivision 4; 171.0701; 171.12, subdivision 6; 171.13, subdivision
1, by adding a subdivision; 171.27; 171.30, subdivision 1; 171.306,
subdivision 4; 174.02, by adding a subdivision; 174.56; 174.632; 174.80, by
adding a subdivision; 174.88, by adding a subdivision; 221.0314, subdivision
3a; 222.50, subdivision 4; 222.51; 222.53; 222.63, subdivision 9; Laws 2009,
chapter 59, article 3, section 4, as amended; proposing coding for new law in
Minnesota Statutes, chapters 160; 161; 171; repealing Minnesota Statutes 2010,
sections 161.08, subdivision 2; 161.115, subdivision 263; 168.012, subdivision
1b; 169A.54, subdivision 5; 222.48, subdivision 3a; Laws 2008, chapter 350,
article 1, section 5, as amended; Laws 2009, chapter 393, section 85.
Reported the same back with the following amendments:
Pages 1 to 5, delete sections 1 to 5
Page 12, delete lines 27 to 33
Page 13, delete lines 1 to 3
Page 14, line 25, after "Rules" insert ";
eligibility" and before "The" insert "(a)"
Page 14, after line 28, insert:
"(b) In addition to other eligibility requirements,
a small targeted group business or veteran-owned small business is eligible for
the bid preferences under this section only for eight years following the later
of (1) the effective date of this act, or (2) the date of initial designation
as a small targeted group business or veteran-owned small business by the
commissioner of administration under section 16C.16."
Page 14, line 33, strike "Report by commissioner"
and insert "Reporting" and before "The" insert
"(a)"
Page 14, after line 36, insert:
"(b) By February 1 of each even-numbered year, the
commissioner shall submit a report to the chairs and ranking minority members
of the legislative committees with jurisdiction over transportation policy and
finance concerning contract awards under this section. At a minimum, the report must include:
(1) a summary of the program;
(2) a review of the use of preferences for contracting,
including frequency of establishment of a preference and frequency of contract
award to a small targeted group business or veteran-owned small business;
(3) a review of goals and good faith efforts to use small
targeted group businesses and veteran-owned small businesses in subcontracts,
including analysis of methods used for, and effectiveness of, good faith
efforts;
(4) a summary of any financial incentives or sanctions
imposed;
(5) information on each reevaluation under subdivision 4a,
including details on the methodology for reevaluation; and
(6) any recommendations for legislative or programmatic
changes."
Page 16, line 9, delete "two" and insert
"four"
Page 32, delete section 39
Page 58, line 14, delete "and" and insert a
comma
Page 58, line 29, after "office" insert a
comma
Page 59, after line 4, insert:
"EFFECTIVE
DATE. This section is
effective August 1, 2011, except that (1) the changes in subdivision 2, clause (2), apply to projects that are
substantially completed on or after July 1, 2011; and (2) subdivision 2, clause
(6), is effective beginning with the report due by December 15, 2012."
Page 59, line 31, delete everything after the period
Page 59, delete lines 32 and 33
Page 66, line 32, delete "may" and insert
"shall"
Page 67, line 2, before the period, insert ", except
that the variance must be provided notwithstanding the requirements of any rule
to the contrary"
Page 67, line 31, delete "2009" and insert
"2002"
Renumber the sections in sequence
Correct the title numbers accordingly
With the recommendation that when so amended the bill pass.
The
report was adopted.
Holberg from the Committee on
Ways and Means to which was referred:
H. F. No. 1261, A bill for an act relating to
metropolitan government; providing for the additional financing of metropolitan
area transit and paratransit capital expenditures; authorizing the issuance of
certain obligations; amending Minnesota Statutes 2010, section 473.39, by
adding a subdivision.
Reported the same back with the recommendation that the bill
pass.
MINORITY REPORT
May 16, 2011
We, the undersigned, being a minority of the Committee on Ways and Means, recommend that H. F. No. 1261 do pass with the following amendments:
Delete everything after the enacting clause and insert:
"ARTICLE 1
CORPORATE FRANCHISE, INDIVIDUAL INCOME, AND ESTATE TAXES
Section 1. Minnesota Statutes 2010, section 270C.01, is amended by adding a subdivision to read:
Subd. 12. Nontax
purpose. Nontax purpose means
the taxpayer's purpose for entering into a transaction other than the
acquisition of the tax effects of the transaction. Nontax purposes include a business,
investment, or other nontax purpose for entering into a transaction.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 2. Minnesota Statutes 2010, section 270C.01, is amended by adding a subdivision to read:
Subd. 13. Economic
substance. Economic substance
means a transaction has an objective and substantial net effect on the
taxpayer's economic position and beneficial interest and the taxpayer has a
substantial nontax purpose, apart from tax effects, for entering into such
transaction or series of transactions.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 3. Minnesota Statutes 2010, section 270C.01, is amended by adding a subdivision to read:
Subd. 14. Tax
effects. The tax effects of a
transaction means the state and local tax effects arising from the application
of the laws of any state or local unit of government to the form of the transaction,
and the federal tax effects resulting from the transaction that affect federal
taxable income as defined in section 63 of the Internal Revenue Code, or both.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 4. Minnesota Statutes 2010, section 270C.01, is amended by adding a subdivision to read:
Subd. 15. Transaction. Transaction means any transaction or
series of transactions, including any fact or set of facts, material to the reduction,
deferral, nonrecognition, escape, avoidance, evasion, or any similar result of
any tax or income, or the creation of any loss, deduction, or credit.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 5. Minnesota Statutes 2010, section 270C.03, subdivision 1, is amended to read:
Subdivision 1. Powers and duties. The commissioner shall have and exercise the following powers and duties:
(1) administer and enforce the assessment and collection of taxes;
(2) make determinations, corrections, and assessments with respect to taxes, including interest, additions to taxes, and assessable penalties;
(3) administer the tax laws according
to the substance of a transaction, not the form of a transaction; in
administering these laws, the commissioner must disregard the tax effects of a
transaction that does not have economic substance and nontax purpose;
(3) (4) use statistical or
other sampling techniques consistent with generally accepted auditing standards
in examining returns or records and making assessments;
(4) (5) investigate the tax
laws of other states and countries, and formulate and submit to the legislature
such legislation as the commissioner may deem expedient to prevent evasions of state
revenue laws and to secure just and equal taxation and improvement in the
system of state revenue laws;
(5) (6) consult and confer
with the governor upon the subject of taxation, the administration of the laws
in regard thereto, and the progress of the work of the department, and furnish
the governor, from time to time, such assistance and information as the governor
may require relating to tax matters;
(6) (7) execute and administer
any agreement with the secretary of the treasury or the Bureau of Alcohol,
Tobacco, Firearms and Explosives in the Department of Justice of the United
States or a representative of another state regarding the exchange of
information and administration of the state revenue laws;
(7) (8) require town, city,
county, and other public officers to report information as to the collection of
taxes received from licenses and other sources, and such other information as
may be needful in the work of the commissioner, in such form as the
commissioner may prescribe;
(8) (9) authorize the use of
unmarked motor vehicles to conduct seizures or criminal investigations pursuant
to the commissioner's authority;
(9) (10) maintain toll-free
telephone access for taxpayer assistance for calls from locations within the
state; and
(10) (11) exercise other
powers and authority and perform other duties required of or imposed upon the
commissioner by law.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 6. [270C.331]
CRITERIA FOR ASSESSMENT.
(a) In determining whether a taxpayer has a nontax purpose for entering into a transaction pursuant to section 270C.03, subdivision 1, clause (3), the commissioner may determine that a transaction has a nontax purpose only if:
(1) the expected results of a
transaction are that the present value of the reasonably expected pretax profit
from the transaction is substantial in relation to the present value of the
expected net tax benefits that would be allowed if the transaction or series of
transactions were respected;
(2) the reasonably expected pretax
profit from the transaction or series of transactions exceeds a risk-free rate
of return;
(3) the nontax purpose is the
taxpayer's primary motivation for entering into the transaction; and
(4) the form of the transaction is a
reasonable means of attaining that purpose.
Fees and other transaction expenses and
foreign taxes must be taken into account as expenses in determining pretax
profit. The acquisition of a financial
accounting benefit is a nontax purpose only if the financial accounting benefit
is unrelated to the expected tax effects of a transaction.
(b) To overcome the presumption in
section 270C.33, subdivision 6, that an order of the commissioner disallowing
the tax effects of a transaction because the commissioner has determined that
the transaction does not have a nontax purpose and economic substance is
correct and valid, the taxpayer must prove the existence of a nontax purpose
and economic substance with clear and convincing evidence.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 7. Minnesota Statutes 2010, section 289A.08, subdivision 3, is amended to read:
Subd. 3. Corporations. (a) A corporation that is subject to the state's
jurisdiction to tax under section 290.014, subdivision 5, must file a return,
except that a foreign operating corporation as defined in section 290.01,
subdivision 6b, is not required to file a return.
(b) Members of a unitary business that are required to file a combined report on one return must designate a member of the unitary business to be responsible for tax matters, including the filing of returns, the payment of taxes, additions to tax, penalties, interest, or any other payment, and for the receipt of refunds of taxes or interest paid in excess of taxes lawfully due. The designated member must be a member of the unitary business that is filing the single combined report and either:
(1) a corporation that is subject to the taxes imposed by chapter 290; or
(2) a corporation that is not subject to the taxes imposed by chapter 290:
(i) Such corporation consents by filing the return as a designated member under this clause to remit taxes, penalties, interest, or additions to tax due from the members of the unitary business subject to tax, and receive refunds or other payments on behalf of other members of the unitary business. The member designated under this clause is a "taxpayer" for the purposes of this chapter and chapter 270C, and is liable for any liability imposed on the unitary business under this chapter and chapter 290.
(ii) If the state does not otherwise have the jurisdiction to tax the member designated under this clause, consenting to be the designated member does not create the jurisdiction to impose tax on the designated member, other than as described in item (i).
(iii) The member designated under this clause must apply for a business tax account identification number.
(c) The commissioner shall adopt rules for the filing of one return on behalf of the members of an affiliated group of corporations that are required to file a combined report. All members of an affiliated group that are required to file a combined report must file one return on behalf of the members of the group under rules adopted by the commissioner.
(d) If a corporation claims on a return that it has paid tax in excess of the amount of taxes lawfully due, that corporation must include on that return information necessary for payment of the tax in excess of the amount lawfully due by electronic means.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 8. Minnesota Statutes 2010, section 289A.60, is amended by adding a subdivision to read:
Subd. 27a. Noneconomic
substance transaction understatement penalty. (a) If a taxpayer has a transaction
without economic substance and nontax purpose as defined in section 270C.01, a
penalty equal to 20 percent of the amount of the disclosed noneconomic
substance transaction understatement must be added to the tax. This subdivision applies to any income or
item that is attributable to any transaction or series of transactions without
economic substance and nontax purpose under section 270C.01.
(b) If a taxpayer has a transaction
without economic substance and nontax purpose as defined in section 270C.01, in
the case of any portion of an underpayment which is attributable to one or more
nondisclosed noneconomic substance transactions, a penalty equal to 40 percent
of the noneconomic substance transaction understatement must be added to the
tax.
(c) For purposes of this subdivision,
the term "nondisclosed noneconomic substance transaction" means a
transaction described in section 270C.03, subdivision 1, clause (3), with
respect to which the relevant facts affecting the tax treatment are not
adequately disclosed in the return nor in a statement attached to the return.
(d) In no event shall any amendment or
supplement to a return of tax be taken into account for purposes of this
subdivision to reduce the noneconomic substance transaction understatement if
the amendment or supplement is filed after the date the taxpayer is first
contacted by the commissioner regarding examination of the return.
(e) For purposes of this subdivision, "noneconomic substance transaction understatement" means the product of:
(1) the amount of the increase, if any,
in taxable income that results from a difference between the proper tax
treatment of an item to which section 270C.03, subdivision 1, clause (3)
applies and the taxpayer's treatment of that item as shown on the taxpayer's
tax return. For purposes of this clause,
any reduction of the excess of deductions allowed for the taxable year over
gross income for that year, and any reduction in the amount of capital losses
which would, without regard to section 1211 of the Internal Revenue Code, be
allowed for that year, must be treated as an increase in taxable income; and
(2) the highest rate of tax imposable
on the taxpayer under section 290.06 determined without regard to the
understatement.
(f) If the noneconomic substance
transaction understatement penalty is imposed under this subdivision, the
noneconomic substance transaction understatement penalty applies in lieu of the
penalties imposed under subdivision 27.
EFFECTIVE
DATE. This section is
effective for noneconomic substance transaction understatements assessed after
December 31, 2012.
Sec. 9. Minnesota Statutes 2010, section 290.01, subdivision 7, is amended to read:
Subd. 7. Resident. (a) The term "resident" means any individual domiciled in Minnesota, except that an individual is not a "resident" for the period of time that the individual is a "qualified individual" as defined in section 911(d)(1) of the Internal Revenue Code, if the qualified individual notifies the county within three months of moving out of the country that homestead status be revoked for the Minnesota residence of the qualified individual, and the property is not classified as a homestead while the individual remains a qualified individual.
(b) "Resident" also means any individual domiciled outside the state who maintains a place of abode in the state and spends in the aggregate more than one-half of the tax year in Minnesota, unless:
(1) the individual or the spouse of the individual is in the armed forces of the United States; or
(2) the individual is covered under the reciprocity provisions in section 290.081.
For purposes of this subdivision, presence within the state for any part of a calendar day constitutes a day spent in the state. Individuals shall keep adequate records to substantiate the days spent outside the state.
The term "abode" means a dwelling maintained by an individual, whether or not owned by the individual and whether or not occupied by the individual, and includes a dwelling place owned or leased by the individual's spouse and a dwelling place owned by the individual or spouse of the individual that is leased to a person with a relationship to the individual or their spouse described in section 267(b) of the Internal Revenue Code.
(c) Neither the commissioner nor any court shall consider charitable contributions made by an individual within or without the state in determining if the individual is domiciled in Minnesota.
(d) "Part-year resident" means an individual domiciled outside the state, who is not a resident of the state under paragraph (b), who maintains a place of abode in the state for more than one-half of the tax year, and spends in the aggregate more than 60 days in the state during the period the individual was domiciled outside the state unless:
(1) the individual or spouse of the
individual is in the armed forces of the United States; or
(2) the individual is covered under the
reciprocity provisions in section 290.081.
For the purposes of this paragraph, a
day spent in Minnesota for the primary purpose of receiving medical treatment
by the taxpayer, or the spouse, child, or parent of the taxpayer, is not
treated as a day spent in Minnesota. Medical
treatment is treatment as defined in section 213(d)(1)(A) of the Internal
Revenue Code.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010, except days
spent in Minnesota prior to the date of enactment are not counted as days spent
in Minnesota for purposes of paragraph (d).
Sec. 10. Minnesota Statutes 2010, section 290.01, subdivision 19b, is amended to read:
Subd. 19b. Subtractions from federal taxable income. For individuals, estates, and trusts, there shall be subtracted from federal taxable income:
(1) net interest income on obligations of any authority, commission, or instrumentality of the United States to the extent includable in taxable income for federal income tax purposes but exempt from state income tax under the laws of the United States;
(2) if included in federal taxable income, the amount of any overpayment of income tax to Minnesota or to any other state, for any previous taxable year, whether the amount is received as a refund or as a credit to another taxable year's income tax liability;
(3) the amount paid to others, less the amount used to claim the credit allowed under section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and transportation of each qualifying child in attending an elementary or secondary school situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's compulsory attendance laws, which is not operated for profit, and which adheres to the provisions of the Civil Rights Act of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, "textbooks" includes books and other instructional materials and equipment purchased or leased for use in elementary and secondary schools in teaching only those subjects legally and commonly taught in public elementary and secondary schools in this state. Equipment expenses qualifying for deduction includes expenses as defined and limited in section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional books and materials used in the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such tenets, doctrines, or worship, nor does it include books or materials for, or transportation to, extracurricular activities including sporting events, musical or dramatic events, speech activities, driver's education, or similar programs. No deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or the qualifying child's vehicle to provide such transportation for a qualifying child. For purposes of the subtraction provided by this clause, "qualifying child" has the meaning given in section 32(c)(3) of the Internal Revenue Code;
(4) income as provided under section 290.0802;
(5) to the extent included in federal adjusted gross income, income realized on disposition of property exempt from tax under section 290.491;
(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) of the Internal Revenue Code in determining federal taxable income by an individual who does not itemize deductions for federal income tax purposes for the taxable year, an amount equal to 50 percent of the excess of charitable contributions over $500 allowable as a deduction for the taxable year under section 170(a) of the Internal Revenue Code, under the provisions of Public Law 109-1 and Public Law 111-126;
(7) for individuals who are allowed a federal foreign tax credit for taxes that do not qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover of subnational foreign taxes for the taxable year, but not to exceed the total subnational foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, "federal foreign tax credit" means the credit allowed under section 27 of the Internal Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed under section 904(c) of the Internal Revenue Code minus national level foreign taxes to the extent they exceed the federal foreign tax credit;
(8) in each of the five tax years immediately
following the tax year in which an addition is required under subdivision 19a,
clause (7), or 19c, clause (15) (14), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to
one-fifth of the delayed depreciation. For
purposes of this clause, "delayed depreciation" means the amount of
the addition made by the taxpayer under subdivision 19a, clause (7), or
subdivision 19c, clause (15) (14), in the case of a shareholder of
an S corporation, minus the positive value of any net operating loss under
section 172 of the Internal Revenue Code generated for the tax year of the
addition. The resulting delayed
depreciation cannot be less than zero;
(9) job opportunity building zone income as provided under section 469.316;
(10) to the extent included in federal taxable income, the amount of compensation paid to members of the Minnesota National Guard or other reserve components of the United States military for active service performed in Minnesota, excluding compensation for services performed under the Active Guard Reserve (AGR) program. For purposes of this clause, "active service" means (i) state active service as defined in section 190.05, subdivision 5a, clause (1); (ii) federally funded state active service as defined in section 190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05, subdivision 5c, but "active service" excludes service performed in accordance with section 190.08, subdivision 3;
(11) to the extent included in federal taxable income, the amount of compensation paid to Minnesota residents who are members of the armed forces of the United States or United Nations for active duty performed outside Minnesota under United States Code, title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of the United Nations;
(12) an amount, not to exceed $10,000, equal to qualified expenses related to a qualified donor's donation, while living, of one or more of the qualified donor's organs to another person for human organ transplantation. For purposes of this clause, "organ" means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; "human organ transplantation" means the medical procedure by which transfer of a human organ is made from the body of one person to the body of another person; "qualified expenses" means unreimbursed expenses for both the individual and the qualified donor for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses may be subtracted under this clause only once; and "qualified donor" means the individual or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An individual may claim the subtraction in this clause for each instance of organ donation for transplantation during the taxable year in which the qualified expenses occur;
(13) in each of the five tax years
immediately following the tax year in which an addition is required under
subdivision 19a, clause (8), or 19c, clause (16) (15), in the
case of a shareholder of a corporation that is an S corporation, an amount
equal to one-fifth of the addition made by the taxpayer under subdivision 19a,
clause (8), or 19c, clause (16) (15), in the case of a
shareholder of a corporation that is an S corporation, minus the positive value
of any net operating loss under section 172 of the Internal Revenue Code
generated for the tax year of the addition.
If the net operating loss exceeds the addition for the tax year, a
subtraction is not allowed under this clause;
(14) to the extent included in federal taxable income, compensation paid to a service member as defined in United States Code, title 10, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2);
(15) international economic development zone income as provided under section 469.325;
(16) to the extent included in federal taxable income, the amount of national service educational awards received from the National Service Trust under United States Code, title 42, sections 12601 to 12604, for service in an approved Americorps National Service program; and
(17) to the extent included in federal taxable income, discharge of indebtedness income resulting from reacquisition of business indebtedness included in federal taxable income under section 108(i) of the Internal Revenue Code. This subtraction applies only to the extent that the income was included in net income in a prior year as a result of the addition under section 290.01, subdivision 19a, clause (16).
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 11. Minnesota Statutes 2010, section 290.01, subdivision 19c, as amended by Laws 2011, chapter 8, section 4, is amended to read:
Subd. 19c. Corporations; additions to federal taxable income. For corporations, there shall be added to federal taxable income:
(1) the amount of any deduction taken for federal income tax purposes for income, excise, or franchise taxes based on net income or related minimum taxes, including but not limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, another state, a political subdivision of another state, the District of Columbia, or any foreign country or possession of the United States;
(2) interest not subject to federal tax upon obligations of: the United States, its possessions, its agencies, or its instrumentalities; the state of Minnesota or any other state, any of its political or governmental subdivisions, any of its municipalities, or any of its governmental agencies or instrumentalities; the District of Columbia; or Indian tribal governments;
(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal Revenue Code;
(4) the amount of any net operating loss deduction taken for federal income tax purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss deduction under section 810 of the Internal Revenue Code;
(5) the amount of any special deductions taken for federal income tax purposes under sections 241 to 247 and 965 of the Internal Revenue Code;
(6) losses from the business of mining, as defined in section 290.05, subdivision 1, clause (a), that are not subject to Minnesota income tax;
(7) the amount of any capital losses deducted for federal income tax purposes under sections 1211 and 1212 of the Internal Revenue Code;
(8) the exempt foreign trade income of a foreign sales corporation under sections 921(a) and 291 of the Internal Revenue Code;
(9) the
amount of percentage depletion deducted under sections 611 through 614 and 291
of the Internal Revenue Code;
(10) for certified pollution control facilities placed in service in a taxable year beginning before December 31, 1986, and for which amortization deductions were elected under section 169 of the Internal Revenue Code of 1954, as amended through December 31, 1985, the amount of the amortization deduction allowed in computing federal taxable income for those facilities;
(11) the amount of any deemed dividend
from a foreign operating corporation determined pursuant to section 290.17,
subdivision 4, paragraph (g). The deemed
dividend shall be reduced by the amount of the addition to income required by
clauses (20), (21), (22), and (23);
(12) (11) the amount of a
partner's pro rata share of net income which does not flow through to the
partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;
(13) (12) the amount of net
income excluded under section 114 of the Internal Revenue Code;
(14) (13) any increase in
subpart F income, as defined in section 952(a) of the Internal Revenue Code,
for the taxable year when subpart F income is calculated without regard to the
provisions of Division C, title III, section 303(b) of Public Law 110-343;
(15) (14) 80 percent of the
depreciation deduction allowed under section 168(k)(1)(A) and (k)(4)(A) of the
Internal Revenue Code. For purposes of
this clause, if the taxpayer has an activity that in the taxable year generates
a deduction for depreciation under section 168(k)(1)(A) and (k)(4)(A) and the
activity generates a loss for the taxable year that the taxpayer is not allowed
to claim for the taxable year, "the depreciation allowed under section
168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of
the depreciation claimed by the activity under section 168(k)(1)(A) and
(k)(4)(A) over the amount of the loss from the activity that is not allowed in
the taxable year. In succeeding taxable
years when the losses not allowed in the taxable year are allowed, the
depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
(16) (15) 80 percent of the
amount by which the deduction allowed by section 179 of the Internal Revenue
Code exceeds the deduction allowable by section 179 of the Internal Revenue
Code of 1986, as amended through December 31, 2003;
(17) (16) to the extent
deducted in computing federal taxable income, the amount of the deduction
allowable under section 199 of the Internal Revenue Code;
(18) (17) the exclusion
allowed under section 139A of the Internal Revenue Code for federal subsidies
for prescription drug plans;
(19) (18) the amount of
expenses disallowed under section 290.10, subdivision 2;
(20) an amount equal to the interest and
intangible expenses, losses, and costs paid, accrued, or incurred by any member
of the taxpayer's unitary group to or for the benefit of a corporation that is
a member of the taxpayer's unitary business group that qualifies as a foreign
operating corporation. For purposes of
this clause, intangible expenses and costs include:
(i) expenses, losses, and costs for, or
related to, the direct or indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of intangible property;
(ii) losses incurred, directly or
indirectly, from factoring transactions or discounting transactions;
(iii) royalty, patent, technical, and
copyright fees;
(iv) licensing fees; and
(v) other similar expenses and costs.
For purposes of this clause, "intangible
property" includes stocks, bonds, patents, patent applications, trade
names, trademarks, service marks, copyrights, mask works, trade secrets, and
similar types of intangible assets.
This clause does not apply to any item of interest or
intangible expenses or costs paid, accrued, or incurred, directly or
indirectly, to a foreign operating corporation with respect to such item of income
to the extent that the income to the foreign
operating corporation is income from sources without the United States as
defined in subtitle A, chapter 1, subchapter N, part 1, of the Internal
Revenue Code;
(21) except as already included in the
taxpayer's taxable income pursuant to clause (20), any interest income and
income generated from intangible property received or accrued by a foreign
operating corporation that is a member of the taxpayer's unitary group. For purposes of this clause, income generated
from intangible property includes:
(i) income related to the direct or
indirect acquisition, use, maintenance or management, ownership, sale,
exchange, or any other disposition of intangible property;
(ii) income from factoring transactions
or discounting transactions;
(iii) royalty, patent, technical, and
copyright fees;
(iv) licensing fees; and
(v) other similar income.
For purposes of this clause, "intangible
property" includes stocks, bonds, patents, patent applications, trade
names, trademarks, service marks, copyrights, mask works, trade secrets, and
similar types of intangible assets.
This clause does not apply to any item of interest or
intangible income received or accrued by a foreign operating corporation with
respect to such item of income to the extent that the income is income from
sources without the United States as defined in subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code;
(22) the dividends attributable to the
income of a foreign operating corporation that is a member of the taxpayer's
unitary group in an amount that is equal to the dividends paid deduction of a
real estate investment trust under section 561(a) of the Internal Revenue Code
for amounts paid or accrued by the real estate investment trust to the foreign
operating corporation;
(23) the income of a foreign operating
corporation that is a member of the taxpayer's unitary group in an amount that
is equal to gains derived from the sale of real or personal property located in
the United States;
(24) (19) for taxable years
beginning before January 1, 2010, and after December 31, 2010, the
additional amount allowed as a deduction for donation of computer technology
and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent
deducted from taxable income; and
(25) (20) discharge of
indebtedness income resulting from reacquisition of business indebtedness and
deferred under section 108(i) of the Internal Revenue Code.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 12. Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
Subd. 19d. Corporations; modifications decreasing federal taxable income. For corporations, there shall be subtracted from federal taxable income after the increases provided in subdivision 19c:
(1) the amount of foreign dividend gross-up added to gross income for federal income tax purposes under section 78 of the Internal Revenue Code;
(2) the amount of salary expense not allowed for federal income tax purposes due to claiming the work opportunity credit under section 51 of the Internal Revenue Code;
(3) any dividend (not including any distribution in liquidation) paid within the taxable year by a national or state bank to the United States, or to any instrumentality of the United States exempt from federal income taxes, on the preferred stock of the bank owned by the United States or the instrumentality;
(4) amounts disallowed for intangible drilling costs due to differences between this chapter and the Internal Revenue Code in taxable years beginning before January 1, 1987, as follows:
(i) to the extent the disallowed costs are represented by physical property, an amount equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, subdivision 7, subject to the modifications contained in subdivision 19e; and
(ii) to the extent the disallowed costs are not represented by physical property, an amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 290.09, subdivision 8;
(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the Internal Revenue Code, except that:
(i) for capital losses incurred in taxable years beginning after December 31, 1986, capital loss carrybacks shall not be allowed;
(ii) for capital losses incurred in taxable years beginning after December 31, 1986, a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be allowed;
(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a capital loss carryback to each of the three taxable years preceding the loss year, subject to the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
(iv) for capital losses incurred in taxable years beginning before January 1, 1987, a capital loss carryover to each of the five taxable years succeeding the loss year to the extent such loss was not used in a prior taxable year and subject to the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed;
(6) an amount for interest and expenses relating to income not taxable for federal income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 291 of the Internal Revenue Code in computing federal taxable income;
(7) in the case of mines, oil and gas wells, other natural deposits, and timber for which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a reasonable allowance for depletion based on actual cost. In the case of leases the deduction must be apportioned between the lessor and lessee in accordance with rules prescribed by the commissioner. In the case of property held in trust, the allowable deduction must be apportioned between the income beneficiaries and the trustee in accordance with the pertinent provisions of the trust, or if there is no provision in the instrument, on the basis of the trust's income allocable to each;
(8) for certified pollution control facilities placed in service in a taxable year beginning before December 31, 1986, and for which amortization deductions were elected under section 169 of the Internal Revenue Code of 1954, as amended through December 31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, subdivision 7;
(9) amounts included in federal taxable
income that are due to refunds of income, excise, or franchise taxes based on
net income or related minimum taxes paid by the corporation to Minnesota,
another state, a political subdivision of another state, the District of
Columbia, or a foreign country or possession of the United States to the extent
that the taxes were added to federal taxable income under section 290.01,
subdivision 19c, clause (1), in a prior taxable year;
(10) 80 percent of royalties, fees, or
other like income accrued or received from a foreign operating corporation or a
foreign corporation which is part of the same unitary business as the receiving
corporation, unless the income resulting from such payments or accruals is
income from sources within the United States as defined in subtitle A, chapter
1, subchapter N, part 1, of the Internal Revenue Code;
(11) (10) income or gains from
the business of mining as defined in section 290.05, subdivision 1, clause (a),
that are not subject to Minnesota franchise tax;
(12) (11) the amount of
disability access expenditures in the taxable year which are not allowed to be
deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
(13) (12) the amount of
qualified research expenses not allowed for federal income tax purposes under
section 280C(c) of the Internal Revenue Code, but only to the extent that the
amount exceeds the amount of the credit allowed under section 290.068;
(14) (13) the amount of salary
expenses not allowed for federal income tax purposes due to claiming the Indian
employment credit under section 45A(a) of the Internal Revenue Code;
(15) (14) for a corporation
whose foreign sales corporation, as defined in section 922 of the Internal
Revenue Code, constituted a foreign operating corporation during any taxable
year ending before January 1, 1995, and a return was filed by August 15, 1996,
claiming the deduction under section 290.21, subdivision 4, for income received
from the foreign operating corporation, an amount equal to 1.23 multiplied by
the amount of income excluded under section 114 of the Internal Revenue Code,
provided the income is not income of a foreign operating company;
(16) (15) any decrease in
subpart F income, as defined in section 952(a) of the Internal Revenue Code,
for the taxable year when subpart F income is calculated without regard to the
provisions of Division C, title III, section 303(b) of Public Law 110-343;
(17) (16) in each of the five
tax years immediately following the tax year in which an addition is required
under subdivision 19c, clause (15) (14), an amount equal to
one-fifth of the delayed depreciation. For
purposes of this clause, "delayed depreciation" means the amount of
the addition made by the taxpayer under subdivision 19c, clause (15) (14). The resulting delayed depreciation cannot be
less than zero;
(18) (17) in each of the five
tax years immediately following the tax year in which an addition is required
under subdivision 19c, clause (16) (15), an amount equal to
one-fifth of the amount of the addition; and
(19) (18) to the extent
included in federal taxable income, discharge of indebtedness income resulting
from reacquisition of business indebtedness included in federal taxable income
under section 108(i) of the Internal Revenue Code. This subtraction applies only to the extent
that the income was included in net income in a prior year as a result of the
addition under section 290.01, subdivision 19c, clause (25) (20).
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 13. Minnesota Statutes 2010, section 290.01, subdivision 22, is amended to read:
Subd. 22. Taxable net income. For tax years beginning after December 31, 1986, the term "taxable net income" means:
(1) for resident individuals the same as net income;
(2) for individuals who were not residents of Minnesota for the entire year, the same as net income except that the tax is imposed only on the Minnesota apportioned share of that income as determined pursuant to section 290.06, subdivision 2c, paragraph (e);
(3) for all other taxpayers, the part of net income that is allocable to Minnesota by assignment or apportionment under one or more of sections 290.17, 290.191, 290.20, 290.341, and 290.36.
For tax years beginning before January 1, 1987, the term "taxable net income" means the net income assignable to this state pursuant to sections 290.17 to 290.20. For corporations, taxable net income is then reduced by the deductions contained in section 290.21.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 14. Minnesota Statutes 2010, section 290.01, subdivision 29, is amended to read:
Subd. 29. Taxable income. The term "taxable income" means:
(1) for individuals, estates, and trusts, the same as taxable net income;
(2) for corporations, including insurance companies, the taxable net income less
(i) the net operating loss deduction under section 290.095;
(ii) the dividends received deduction under section 290.21, subdivision 4;
(iii) the exemption for operating in a job opportunity building zone under section 469.317;
(iv) the exemption for operating in a biotechnology and health sciences industry zone under section 469.337; and
(v) the exemption for operating in an international economic development zone under section 469.326.
EFFECTIVE
DATE. This section is effective
for taxable years beginning after December 31, 2010.
Sec. 15. Minnesota Statutes 2010, section 290.014, subdivision 5, is amended to read:
Subd. 5. Corporations. Except as provided in section 290.015, corporations are subject to the return filing requirements and to tax as provided in this chapter if the corporation so exercises its franchise as to engage in such contacts with this state as to cause part of the income of the corporation to be:
(1) allocable to this state under section 290.17, 290.191, 290.20, 290.341, or 290.36;
(2) taxed to the corporation under the Internal Revenue Code (or not taxed under the Internal Revenue Code by reason of its character but of a character which is taxable under this chapter) in its capacity as a beneficiary of an estate with income allocable to this state under section 290.17, 290.191, or 290.20 and the income, taking into
account the income character provisions of section 662(b) of the Internal Revenue Code, would be allocable to this state under section 290.17, 290.191, or 290.20 if realized by the corporation directly from the source from which realized by the estate;
(3) taxed to the corporation under the Internal Revenue Code (or not taxed under the Internal Revenue Code by reason of its character but of a character which is taxable under this chapter) in its capacity as a beneficiary or grantor or other person treated as a substantial owner of a trust with income allocable to this state under section 290.17, 290.191, or 290.20 and the income, taking into account the income character provisions of section 652(b), 662(b), or 664(b) of the Internal Revenue Code, would be allocable to this state under section 290.17, 290.191, or 290.20 if realized by the corporation directly from the source from which realized by the trust; or
(4) taxed to the corporation under the Internal Revenue Code (or not taxed under the Internal Revenue Code by reason of its character but of a character which is taxable under this chapter) in its capacity as a limited or general partner in a partnership with income allocable to this state under section 290.17, 290.191, or 290.20 and the income, taking into account the income character provisions of section 702(b) of the Internal Revenue Code, would be allocable to this state under section 290.17, 290.191, or 290.20 if realized by the corporation directly from the source from which realized by the partnership.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 16. Minnesota Statutes 2010, section 290.05, subdivision 1, is amended to read:
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. that
is domiciled in a state or country other than Minnesota that imposes
retaliatory taxes, fines, deposits, penalties, licenses, or fees and that does
not grant, on a reciprocal basis, exemption from such retaliatory taxes to
insurance companies or their agents domiciled in Minnesota. "Retaliatory taxes" has the meaning
provided in section 297I.05, subdivision 11; and
(d) town and farmer's mutual insurance
companies.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 17. Minnesota Statutes 2010, section 290.06, subdivision 2c, is amended to read:
Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income taxes imposed by this chapter upon married individuals filing joint returns and surviving spouses as defined in section 2(a) of the Internal Revenue Code must be computed by applying to their taxable net income the following schedule of rates:
(1) On the first $25,680 $33,770,
5.35 percent;
(2) On all over $25,680 $33,770,
but not over $102,030 $134,170, 7.05 percent;
(3) On all over $102,030 $134,170,
but not over $250,000, 7.85 percent.;
(4) On all over $250,000, 10.95
percent.
Married individuals filing separate returns, estates, and trusts must compute their income tax by applying the above rates to their taxable income, except that the income brackets will be one-half of the above amounts.
(b) The income taxes imposed by this chapter upon unmarried individuals must be computed by applying to taxable net income the following schedule of rates:
(1) On the first $17,570 $23,100,
5.35 percent;
(2) On all over $17,570 $23,100,
but not over $57,710 $75,890, 7.05 percent;
(3) On all over $57,710 $75,890,
but not over $150,000, 7.85 percent.;
(4) On all over $150,000, 10.95
percent.
(c) The income taxes imposed by this chapter upon unmarried individuals qualifying as a head of household as defined in section 2(b) of the Internal Revenue Code must be computed by applying to taxable net income the following schedule of rates:
(1) On the first $21,630 $28,440,
5.35 percent;
(2) On all over $21,630 $28,440,
but not over $86,910 $114,290, 7.05 percent;
(3) On all over $86,910 $114,290,
but not over $200,000, 7.85 percent.;
(4) On all over $200,000, 10.95
percent.
(d) In lieu of a tax computed according to the rates set forth in this subdivision, the tax of any individual taxpayer whose taxable net income for the taxable year is less than an amount determined by the commissioner must be computed in accordance with tables prepared and issued by the commissioner of revenue based on income brackets of not more than $100. The amount of tax for each bracket shall be computed at the rates set forth in this subdivision, provided that the commissioner may disregard a fractional part of a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
(e) An individual who is not a Minnesota resident for the entire year must compute the individual's Minnesota income tax as provided in this subdivision. After the application of the nonrefundable credits provided in this chapter, the tax liability must then be multiplied by a fraction in which:
(1) the numerator is the individual's Minnesota source federal adjusted gross income as defined in section 62 of the Internal Revenue Code and increased by the additions required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), (16), and (17), and reduced by the Minnesota assignable portion of the subtraction for United States government interest under section 290.01, subdivision 19b, clause (1), and the subtractions under section 290.01, subdivision 19b, clauses (8), (9), (13), (14), (15), and (17), after applying the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and
(2) the denominator is the individual's federal adjusted gross income as defined in section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), (16), and (17), and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), (8), (9), (13), (14), (15), and (17).
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 18. Minnesota Statutes 2010, section 290.06, subdivision 2d, is amended to read:
Subd. 2d. Inflation
adjustment of brackets. (a) For
taxable years beginning after December 31, 2000 2011, the minimum
and maximum dollar amounts for each rate bracket for which a tax is imposed in
subdivision 2c shall be adjusted for inflation by the percentage determined
under paragraph (b). For the purpose of
making the adjustment as provided in this subdivision all of the rate brackets
provided in subdivision 2c shall be the rate brackets
as they existed for taxable years beginning after December 31, 1999 2010,
and before January 1, 2001 2012. The rate applicable to any rate bracket must
not be changed. The dollar amounts
setting forth the tax shall be adjusted to reflect the changes in the rate
brackets. The rate brackets as adjusted
must be rounded to the nearest $10 amount.
If the rate bracket ends in $5, it must be rounded up to the nearest $10
amount.
(b) The commissioner shall adjust the rate
brackets and by the percentage determined pursuant to the provisions of section
1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B) the word "1999"
"2010" shall be substituted for the word "1992." For 2001 2012, the commissioner
shall then determine the percent change from the 12 months ending on August 31,
1999 2010, to the 12 months ending on August 31, 2000 2011,
and in each subsequent year, from the 12 months ending on August 31, 1999
2010, to the 12 months ending on August 31 of the year preceding the
taxable year. The determination of the
commissioner pursuant to this subdivision shall not be considered a
"rule" and shall not be subject to the Administrative Procedure Act
contained in chapter 14.
No later than December 15 of each year, the commissioner shall announce the specific percentage that will be used to adjust the tax rate brackets.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2011.
Sec. 19. Minnesota Statutes 2010, section 290.06, subdivision 22, is amended to read:
Subd. 22. Credit for taxes paid to another state. (a) A taxpayer who is liable for taxes based on net income to another state, as provided in paragraphs (b) through (f), upon income allocated or apportioned to Minnesota, is entitled to a credit for the tax paid to another state if the tax is actually paid in the taxable year or a subsequent taxable year. A taxpayer who is a resident of this state pursuant to section 290.01, subdivision 7, paragraph (b) or (d), and who is subject to income tax as a resident in the state of the individual's domicile is not allowed this credit unless the state of domicile does not allow a similar credit.
(b) For an individual, estate, or trust, the credit is determined by multiplying the tax payable under this chapter by the ratio derived by dividing the income subject to tax in the other state that is also subject to tax in Minnesota while a resident of Minnesota by the taxpayer's federal adjusted gross income, as defined in section 62 of the Internal Revenue Code, modified by the addition required by section 290.01, subdivision 19a, clause (1), and the subtraction allowed by section 290.01, subdivision 19b, clause (1), to the extent the income is allocated or assigned to Minnesota under sections 290.081 and 290.17.
(c) If the taxpayer is an athletic team that apportions all of its income under section 290.17, subdivision 5, the credit is determined by multiplying the tax payable under this chapter by the ratio derived from dividing the total net income subject to tax in the other state by the taxpayer's Minnesota taxable income.
(d) The credit determined under paragraph (b) or (c) shall not exceed the amount of tax so paid to the other state on the gross income earned within the other state subject to tax under this chapter, nor shall the allowance of the credit reduce the taxes paid under this chapter to an amount less than what would be assessed if such income amount was excluded from taxable net income.
(e) In the case of the tax assessed on a lump-sum distribution under section 290.032, the credit allowed under paragraph (a) is the tax assessed by the other state on the lump-sum distribution that is also subject to tax under section 290.032, and shall not exceed the tax assessed under section 290.032. To the extent the total lump-sum distribution defined in section 290.032, subdivision 1, includes lump-sum distributions received in prior years or is all or in part an annuity contract, the reduction to the tax on the lump-sum distribution allowed under section 290.032, subdivision 2, includes tax paid to another state that is properly apportioned to that distribution.
(f) If a Minnesota resident reported an item of income to Minnesota and is assessed tax in such other state on that same income after the Minnesota statute of limitations has expired, the taxpayer shall receive a credit for that year under paragraph (a), notwithstanding any statute of limitations to the contrary. The claim for the credit must be submitted within one year from the date the taxes were paid to the other state. The taxpayer must submit sufficient proof to show entitlement to a credit.
(g) For the purposes of this subdivision, a resident shareholder of a corporation treated as an "S" corporation under section 290.9725, must be considered to have paid a tax imposed on the shareholder in an amount equal to the shareholder's pro rata share of any net income tax paid by the S corporation to another state. For the purposes of the preceding sentence, the term "net income tax" means any tax imposed on or measured by a corporation's net income.
(h) For the purposes of this subdivision, a resident partner of an entity taxed as a partnership under the Internal Revenue Code must be considered to have paid a tax imposed on the partner in an amount equal to the partner's pro rata share of any net income tax paid by the partnership to another state. For purposes of the preceding sentence, the term "net income" tax means any tax imposed on or measured by a partnership's net income.
(i) For the purposes of this subdivision, "another state":
(1) includes:
(i) the District of Columbia; and
(ii) a province or territory of Canada; but
(2) excludes Puerto Rico and the several territories organized by Congress.
(j) The limitations on the credit in paragraphs (b), (c), and (d), are imposed on a state by state basis.
(k) For a tax imposed by a province or territory of Canada, the tax for purposes of this subdivision is the excess of the tax over the amount of the foreign tax credit allowed under section 27 of the Internal Revenue Code. In determining the amount of the foreign tax credit allowed, the net income taxes imposed by Canada on the income are deducted first. Any remaining amount of the allowable foreign tax credit reduces the provincial or territorial tax that qualifies for the credit under this subdivision.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 20. Minnesota Statutes 2010, section 290.068, subdivision 1, is amended to read:
Subdivision 1. Credit allowed. A corporation, partners in a partnership, or shareholders in a corporation treated as an "S" corporation under section 290.9725 are allowed a credit against the tax computed under this chapter for the taxable year equal to:
(a) ten 15 percent of the
first $2,000,000 of the excess (if any) of
(1) the qualified research expenses for the taxable year, over
(2) the base amount; and
(b) 2.5 percent on all of such excess expenses over $2,000,000.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 21. Minnesota Statutes 2010, section 290.068, subdivision 2, is amended to read:
Subd. 2. Definitions. For purposes of this section, the following terms have the meanings given.
(a) "Qualified research expenses" means (i) qualified research expenses and basic research payments as defined in section 41(b) and (e) of the Internal Revenue Code, except it does not include expenses incurred for qualified research or basic research conducted outside the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue Code; and (ii) contributions to a nonprofit corporation established and operated pursuant to the provisions of chapter 317A for the purpose of promoting the establishment and expansion of business in this state, provided the contributions are invested by the nonprofit corporation for the purpose of providing funds for small, technologically innovative enterprises in Minnesota during the early stages of their development.
(b) "Qualified research" means qualified research as defined in section 41(d) of the Internal Revenue Code, except that the term does not include qualified research conducted outside the state of Minnesota.
(c) "Base amount" means base
amount as defined in section 41(c) of the Internal Revenue Code, except that
the average annual gross receipts must be calculated using Minnesota sales or
receipts under section 290.191 and the definitions contained in clauses (a) and
(b) shall apply. If a taxpayer does
not have records to substantiate the aggregate
qualified research expenses for the taxable years beginning after December 31,
1983, and before January 1, 1989, and is not a start-up company to which
Internal Revenue Code, section 41(c)(3)(B), applies, the taxpayer may use a
fixed base percentage of 16 percent.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 22. Minnesota Statutes 2010, section 290.0921, subdivision 1, is amended to read:
Subdivision 1. Tax imposed. In addition to the taxes computed under this chapter without regard to this section, the franchise tax imposed on corporations includes a tax equal to the excess, if any, for the taxable year of:
(1) 5.8 percent of Minnesota alternative minimum taxable income less the credit allowed under section 290.341, subdivision 3; over
(2) the tax imposed under section 290.06, subdivision 1, without regard to this section.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 23. Minnesota Statutes 2010, section 290.0921, subdivision 2, is amended to read:
Subd. 2. Definitions. (a) For purposes of this section, the following terms have the meanings given them.
(b) "Alternative minimum taxable net income" is alternative minimum taxable income,
(1) less the exemption amount, and
(2) apportioned or allocated to Minnesota under section 290.17, 290.191, or 290.20.
(c) The "exemption amount" is $40,000, reduced, but not below zero, by 25 percent of the excess of alternative minimum taxable income over $150,000.
(d) "Minnesota alternative minimum taxable income" is alternative minimum taxable net income, less the deductions for alternative tax net operating loss under subdivision 4; and dividends received under subdivision 6. The sum of the deductions under this paragraph may not exceed 90 percent of alternative minimum taxable net income. This limitation does not apply to:
(1) a deduction for dividends paid to or received from a corporation which is subject to tax under section 290.341 or 290.36 and which is a member of an affiliated group of corporations as defined by the Internal Revenue Code; or
(2) a deduction for dividends received from a property and casualty insurer as defined under section 60A.60, subdivision 8, which is a member of an affiliated group of corporations as defined by the Internal Revenue Code and either: (i) the dividend is eliminated in consolidation under Treasury Regulation 1.1502-14(a), as amended through December 31, 1989; or (ii) the dividend is deducted under an election under section 243(b) of the Internal Revenue Code.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 24. Minnesota Statutes 2010, section 290.0921, subdivision 3, is amended to read:
Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable income" is Minnesota net income as defined in section 290.01, subdivision 19, and includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e), (f), and (h) of the Internal Revenue Code. If a corporation files a separate company Minnesota tax return, the minimum tax must be computed on a separate company basis. If a corporation is part of a tax group filing a unitary return, the minimum tax must be computed on a unitary basis. The following adjustments must be made.
(1) For purposes of the depreciation adjustments under section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal income tax purposes, including any modification made in a taxable year under section 290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7, paragraph (c).
For taxable years beginning after December 31, 2000, the amount of any remaining modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation allowance in the first taxable year after December 31, 2000.
(2) The portion of the depreciation
deduction allowed for federal income tax purposes under section 168(k) of the
Internal Revenue Code that is required as an addition under section 290.01,
subdivision 19c, clause (15) (14), is disallowed in determining
alternative minimum taxable income.
(3) The subtraction for depreciation allowed
under section 290.01, subdivision 19d, clause (17) (16), is
allowed as a depreciation deduction in determining alternative minimum taxable
income.
(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d) of the Internal Revenue Code does not apply.
(5) The
special rule for certain dividends under section 56(g)(4)(C)(ii) of the
Internal Revenue Code does not apply.
(6) The special rule for dividends from section 936 companies under section 56(g)(4)(C)(iii) does not apply.
(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue Code does not apply.
(8) The tax preference for intangible drilling costs under section 57(a)(2) of the Internal Revenue Code must be calculated without regard to subparagraph (E) and the subtraction under section 290.01, subdivision 19d, clause (4).
(9) The
tax preference for tax exempt interest under section 57(a)(5) of the Internal
Revenue Code does not apply.
(10) The tax preference for charitable contributions of appreciated property under section 57(a)(6) of the Internal Revenue Code does not apply.
(11) For purposes of calculating the tax preference for accelerated depreciation or amortization on certain property placed in service before January 1, 1987, under section 57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the deduction allowed under section 290.01, subdivision 19e.
For taxable years beginning after December 31, 2000, the amount of any remaining modification made under section 290.01, subdivision 19e, not previously deducted is a depreciation or amortization allowance in the first taxable year after December 31, 2004.
(12) For purposes of calculating the adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable income" as it is used in section 56(g) of the Internal Revenue Code, means alternative minimum taxable income as defined in this subdivision, determined without regard to the adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
(13) For purposes of determining the amount
of adjusted current earnings under section 56(g)(3) of the Internal Revenue
Code, no adjustment shall be made under section 56(g)(4) of the Internal
Revenue Code with respect to (i) the amount of foreign dividend gross-up
subtracted as provided in section 290.01, subdivision 19d, clause (1), or
(ii) the amount of refunds of income,
excise, or franchise taxes subtracted as provided in section 290.01,
subdivision 19d, clause (9), or (iii) the amount of royalties, fees
or other like income subtracted as provided in section 290.01, subdivision 19d,
clause (10).
(14) Alternative minimum taxable income excludes the income from operating in a job opportunity building zone as provided under section 469.317.
(15) Alternative minimum taxable income excludes the income from operating in a biotechnology and health sciences industry zone as provided under section 469.337.
(16) Alternative minimum taxable income excludes the income from operating in an international economic development zone as provided under section 469.326.
Items of tax preference must not be reduced below zero as a result of the modifications in this subdivision.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 25. Minnesota Statutes 2010, section 290.0921, subdivision 6, is amended to read:
Subd. 6. Dividends received. (a) A deduction is allowed from alternative minimum taxable net income equal to the deduction for dividends received under section 290.21, subdivision 4, for purposes of calculating taxable income under section 290.01, subdivision 29.
(b) The amount of the deduction must not exceed 90 percent of alternative minimum taxable net income.
This limitation does not apply to:
(1) dividends paid to or received from a corporation which is subject to tax under section 290.341 or 290.36 and which is a member of an affiliated group of corporations as defined by the Internal Revenue Code; or
(2) dividends received from a property and casualty insurer as defined under section 60A.60, subdivision 8, which is a member of an affiliated group of corporations as defined by the Internal Revenue Code and either: (i) the dividend is eliminated in consolidation under Treasury Regulation 1.1502-14(a), as amended through December 31, 1989; or (ii) the dividend is deducted under an election under section 243(b) of the Internal Revenue Code.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 26. Minnesota Statutes 2010, section 290.0922, subdivision 1, is amended to read:
Subdivision 1. Imposition. (a) In addition to the tax imposed by this chapter without regard to this section, the franchise tax imposed on a corporation required to file under section 289A.08, subdivision 3, other than a corporation treated as an "S" corporation under section 290.9725 for the taxable year includes a tax equal to the following amounts:
If the sum of the corporation's Minnesota property, payrolls, and sales or receipts is: |
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the tax equals: |
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$890,000
$1,779,999 $8,889,999 $17,779,999 $35,559,999 |
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$35,560,000
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or
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(b) A tax is imposed for each taxable year on a corporation required to file a return under section 289A.12, subdivision 3, that is treated as an "S" corporation under section 290.9725 and on a partnership required to file a return under section 289A.12, subdivision 3, other than a partnership that derives over 80 percent of its income from farming. The tax imposed under this paragraph is due on or before the due date of the return for the taxpayer due under section 289A.18, subdivision 1. The commissioner shall prescribe the return to be used for payment of this tax. The tax under this paragraph is equal to the following amounts:
(c) The commissioner shall adjust the
dollar amounts of both the tax and the property, payrolls, and sales or
receipts thresholds in paragraphs (a) and (b) by the percentage determined
pursuant to the provisions of section 1(f) of the Internal Revenue Code, except
that in section 1(f)(3)(B) the word "2010" must be substituted for
the word "1992." For 2012, the commissioner shall then
determine the percent change from the 12 months ending on August 31, 2010,
to the 12 months ending on August 31, 2011,
and in each subsequent year, from the 12 months ending on August 31, 2010,
to the 12 months ending on August 31 of the
year preceding the taxable year. The
determination of the commissioner pursuant to this subdivision is not a
"rule" subject to the Administrative Procedure Act contained in
chapter 14. The tax amounts as adjusted
must be rounded to the nearest $10 amounts and the threshold amounts must be
adjusted to the nearest $10,000 amounts.
For tax amounts that end in $5, the amount is rounded up to the nearest
$10 amount and for threshold amounts that end in $5,000, the amount is rounded
up to the nearest $10,000.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 27. Minnesota Statutes 2010, section 290.0922, subdivision 2, is amended to read:
Subd. 2. Exemptions. The following entities are exempt from the tax imposed by this section:
(1) corporations exempt from tax under section 290.05 other than insurance companies exempt under subdivision 1, paragraphs (c) and (d);
(2) real estate investment trusts;
(3) regulated investment companies or a fund thereof; and
(4) entities having a valid election in effect under section 860D(b) of the Internal Revenue Code;
(5) town and farmers' mutual insurance companies;
(6) cooperatives organized under chapter 308A or 308B that provide housing exclusively to persons age 55 and over and are classified as homesteads under section 273.124, subdivision 3;
(7) an entity, if for the taxable year all of its property is located in a job opportunity building zone designated under section 469.314 and all of its payroll is a job opportunity building zone payroll under section 469.310; and
(8) an entity, if for the taxable year all of its property is located in an international economic development zone designated under section 469.322, and all of its payroll is international economic development zone payroll under section 469.321. The exemption under this clause applies to taxable years beginning during the duration of the international economic development zone.
Entities not specifically exempted by this subdivision are subject to tax under this section, notwithstanding section 290.05.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 28. Minnesota Statutes 2010, section 290.093, is amended to read:
290.093
TAX COMPUTATION FOR MUTUAL SAVINGS BANKS CONDUCTING LIFE INSURANCE BUSINESS.
Mutual savings banks as defined in section
594 of the Internal Revenue Code are subject to a tax consisting of the sum
of the taxes determined under clauses (1) and (2).
(1) a tax computed on the taxable
income determined without regard to any items of gross income or deductions
properly allocable to the business of the life insurance department, at the
rates and in the manner for a corporation not engaged in the business of
issuing life insurance contracts as if this section did not apply; and
(2) a tax computed on the income of the life insurance department determined without regard to any items of gross income or deductions not properly allocable to the department computed in the manner provided in section 290.341 and at the rate provided in section 290.06.
This section applies only if the life insurance department would, if it were treated as a separate corporation, qualify as a life insurance company under section 816 of the Internal Revenue Code.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 29. Minnesota Statutes 2010, section 290.095, subdivision 2, is amended to read:
Subd. 2. Defined
and limited. (a) The term "net
operating loss" as used in this section shall mean a net operating loss as
defined in section 172(c) or 810(a), in the case of life insurance
companies, of the Internal Revenue Code, with the modifications specified
in subdivision 4. The deductions provided
in section 290.21 and the modification provided in section 290.01,
subdivision 19d, clause (10), cannot be used in the determination of a net
operating loss.
(b) The term "net operating loss deduction" as used in this section means the aggregate of the net operating loss carryovers to the taxable year, computed in accordance with subdivision 3. The provisions of section 172(b) of the Internal Revenue Code relating to the carryback of net operating losses, do not apply.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 30. Minnesota Statutes 2010, section 290.095, subdivision 3, is amended to read:
Subd. 3. Carryover. (a) A net operating loss incurred in a taxable year: (i) beginning after December 31, 1986, shall be a net operating loss carryover to each of the 15 taxable years following the taxable year of such loss; (ii) beginning before January 1, 1987, shall be a net operating loss carryover to each of the five taxable years following the taxable year of such loss subject to the provisions of Minnesota Statutes 1986, section 290.095; and (iii) beginning before January 1, 1987, shall be a net operating loss carryback to each of the three taxable years preceding the loss year subject to the provisions of Minnesota Statutes 1986, section 290.095.
(b) The entire amount of the net operating loss for any taxable year shall be carried to the earliest of the taxable years to which such loss may be carried. The portion of such loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of such loss over the sum of the taxable net income, adjusted by the modifications specified in subdivision 4, for each of the taxable years to which such loss may be carried.
(c) Where a corporation apportions its income under the provisions of section 290.191, the net operating loss deduction incurred in any taxable year shall be allowed to the extent of the apportionment ratio of the loss year plus the excess loss assigned by section 290.17, subdivision 2. The loss carryover is applied to income allocated to Minnesota in the carryover year.
(d) The provisions of sections 381, 382, and 384 of the Internal Revenue Code apply to carryovers in certain corporate acquisitions and special limitations on net operating loss carryovers. The limitation amount determined under section 382 shall be applied to net income, before apportionment, in each post change year to which a loss is carried.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 31. Minnesota Statutes 2010, section 290.17, subdivision 1, is amended to read:
Subdivision 1. Scope of allocation rules. (a) The income of resident individuals is not subject to allocation outside this state. The allocation rules apply to nonresident individuals, estates, trusts, nonresident partners of partnerships, nonresident shareholders of corporations treated as "S" corporations under section 290.9725, and all corporations not having such an election in effect. If a partnership or corporation would not otherwise be subject to the allocation rules, but conducts a trade or business that is part of a unitary business involving another legal entity that is subject to the allocation rules, the partnership or corporation is subject to the allocation rules.
(b) Expenses, losses, and other deductions (referred to collectively in this paragraph as "deductions") must be allocated along with the item or class of gross income to which they are definitely related for purposes of assignment under this section or apportionment under section 290.191, 290.20, or 290.36. Deductions definitely related to any item of gross income assigned under subdivision 2, paragraph (e), are assigned to the taxpayer's domicile.
(c) In the case of an individual who is a resident for only part of a taxable year, the individual's income, gains, losses, and deductions from the distributive share of a partnership, S corporation, trust, or estate are not subject to allocation outside this state to the extent of the distributive share multiplied by a ratio, the numerator of which is the number of days the individual was a resident of this state during the tax year of the partnership, S corporation, trust, or estate, and the denominator of which is the number of days in the taxable year of the partnership, S corporation, trust, or estate.
(d) In the case of an individual who is
a part-year resident as defined in section 290.01, subdivision 7, paragraph
(d), income is assigned or allocated under subdivisions 2 and 3 except a pro
rata share of income recognized while the individual maintains an abode in
Minnesota and is not assigned or allocated to the state under subdivision 2 or
3 is also assigned to the state. The pro
rata share is the income not assigned to the state under subdivision 2 or 3
multiplied by the ratio of the number of days physically present in Minnesota
while domiciled in another state during the tax year over the number of days the
individual maintains an abode in Minnesota while domiciled in another state.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 32. Minnesota Statutes 2010, section 290.17, subdivision 2, is amended to read:
Subd. 2. Income
not derived from conduct of a trade or business. The income of a taxpayer subject to the
allocation rules that is not derived from the conduct income of a
trade or business must be assigned in accordance with paragraphs (a) to (f):
(a)(1) Subject to paragraphs (a)(2) and (a)(3), income from wages as defined in section 3401(a) and (f) of the Internal Revenue Code is assigned to this state if, and to the extent that, the work of the employee is performed within it; all other income from such sources is treated as income from sources without this state.
Severance pay shall be considered income from labor or personal or professional services.
(2) In the case of an individual who is a nonresident of Minnesota and who is an athlete or entertainer, income from compensation for labor or personal services performed within this state shall be determined in the following manner:
(i) The amount of income to be assigned to Minnesota for an individual who is a nonresident salaried athletic team employee shall be determined by using a fraction in which the denominator contains the total number of days in which the individual is under a duty to perform for the employer, and the numerator is the total number of those days spent in Minnesota. For purposes of this paragraph, off-season training activities, unless conducted at the team's facilities as part of a team imposed program, are not included in the total number of duty days. Bonuses earned as a result of play during the regular season or for participation in championship, play-off, or all-star games must be allocated under the formula. Signing bonuses are not subject to allocation under the formula if they are not conditional on playing any games for the team, are payable separately from any other compensation, and are nonrefundable; and
(ii) The amount of income to be assigned to Minnesota for an individual who is a nonresident, and who is an athlete or entertainer not listed in clause (i), for that person's athletic or entertainment performance in Minnesota shall be determined by assigning to this state all income from performances or athletic contests in this state.
(3) For purposes of this section, amounts received by a nonresident as "retirement income" as defined in section (b)(1) of the State Income Taxation of Pension Income Act, Public Law 104-95, are not considered income derived from carrying on a trade or business or from wages or other compensation for work an employee performed in Minnesota, and are not taxable under this chapter.
(b) Income or gains from tangible property located in this state that is not employed in the business of the recipient of the income or gains must be assigned to this state.
(c) Income or gains from intangible personal property not employed in the business of the recipient of the income or gains must be assigned to this state if the recipient of the income or gains is a resident of this state or is a resident trust or estate.
Gain on the sale of a partnership interest is allocable to this state in the ratio of the original cost of partnership tangible property in this state to the original cost of partnership tangible property everywhere, determined at the time of the sale. If more than 50 percent of the value of the partnership's assets consists of intangibles, gain or loss from the sale of the partnership interest is allocated to this state in accordance with the sales factor of the partnership for its first full tax period immediately preceding the tax period of the partnership during which the partnership interest was sold.
Gain on the sale of an interest in a single member limited liability company that is disregarded for federal income tax purposes is allocable to this state as if the single member limited liability company did not exist and the assets of the limited liability company are personally owned by the sole member.
Gain on the sale of goodwill or income from a covenant not to compete that is connected with a business operating all or partially in Minnesota is allocated to this state to the extent that the income from the business in the year preceding the year of sale was assignable to Minnesota under subdivision 3.
When an employer pays an employee for a covenant not to compete, the income allocated to this state is in the ratio of the employee's service in Minnesota in the calendar year preceding leaving the employment of the employer over the total services performed by the employee for the employer in that year.
(d) Income from winnings on a bet made by an individual while in Minnesota is assigned to this state. In this paragraph, "bet" has the meaning given in section 609.75, subdivision 2, as limited by section 609.75, subdivision 3, clauses (1), (2), and (3).
(e) All items of gross income not covered in paragraphs (a) to (d) and not part of the taxpayer's income from a trade or business shall be assigned to the taxpayer's domicile.
(f) For the purposes of this section, working as an employee shall not be considered to be conducting a trade or business.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2011.
Sec. 33. Minnesota Statutes 2010, section 290.17, subdivision 3, is amended to read:
Subd. 3. Trade
or business income; general rule. All
income of a trade or business is subject to apportionment except nonbusiness
income. Income derived from carrying
on of a trade or business must be assigned apportioned
to this state if the trade or business is conducted wholly within this state, assigned
apportioned outside this state if conducted wholly without this state
and apportioned between this state and other states and countries under this
subdivision if conducted partly within and partly without this state. For purposes of determining whether a trade
or business is carried on exclusively within or without this state:
(a) A trade or business physically located exclusively within this state is nevertheless carried on partly within and partly without this state if any of the principles set forth in section 290.191 for the allocation of sales or receipts within or without this state when applied to the taxpayer's situation result in the allocation of any sales or receipts without this state.
(b) A trade or business physically located exclusively without this state is nevertheless carried on partly within and partly without this state if any of the principles set forth in section 290.191 for the allocation of sales or receipts within or without this state when applied to the taxpayer's situation result in the allocation of any sales or receipts within this state. The jurisdiction to tax such a business under this chapter must be determined in accordance with sections 290.014 and 290.015.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2011.
Sec. 34. Minnesota Statutes 2010, section 290.17, subdivision 4, is amended to read:
Subd. 4. Unitary business principle. (a) If a trade or business conducted wholly within this state or partly within and partly without this state is part of a unitary business, the entire income of the unitary business is subject to apportionment pursuant to section 290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of
a unitary business is considered to be derived from any particular source and none may be allocated to a particular place except as provided by the applicable apportionment formula. The provisions of this subdivision do not apply to business income subject to subdivision 5, income of an insurance company determined under section 290.341, or income of an investment company determined under section 290.36.
(b) The term "unitary business" means business activities or operations which result in a flow of value between them. The term may be applied within a single legal entity or between multiple entities and without regard to whether each entity is a sole proprietorship, a corporation, a partnership or a trust.
(c) Unity is presumed whenever there is unity of ownership, operation, and use, evidenced by centralized management or executive force, centralized purchasing, advertising, accounting, or other controlled interaction, but the absence of these centralized activities will not necessarily evidence a nonunitary business. Unity is also presumed when business activities or operations are of mutual benefit, dependent upon or contributory to one another, either individually or as a group.
(d) Where a business operation conducted in Minnesota is owned by a business entity that carries on business activity outside the state different in kind from that conducted within this state, and the other business is conducted entirely outside the state, it is presumed that the two business operations are unitary in nature, interrelated, connected, and interdependent unless it can be shown to the contrary.
(e) Unity of ownership is not deemed to exist when a corporation is involved unless that corporation is a member of a group of two or more business entities and more than 50 percent of the voting stock of each member of the group is directly or indirectly owned by a common owner or by common owners, either corporate or noncorporate, or by one or more of the member corporations of the group. For this purpose, the term "voting stock" shall include membership interests of mutual insurance holding companies formed under section 66A.40.
(f) The net income and apportionment
factors under section 290.191 or 290.20 of foreign corporations and other
foreign entities which are part of a unitary business shall not be included in
the net income or the apportionment factors of the unitary business, except
that foreign corporations or other foreign entities that are included on a
federal income tax return must be included on the combined report. Income of a foreign partnership or other foreign
entity treated as a partnership included in federal taxable income, as defined
in section 63 of the Internal Revenue Code of 1986, as amended through the date
named in section 290.01, subdivision 19, and the proportionate amount of
apportionment factors, must be included in the combined report. A foreign corporation or other foreign entity
which is not included on a combined report and which is required to file
a return under this chapter shall file on a separate return basis. The net income and apportionment factors
under section 290.191 or 290.20 of foreign operating corporations shall not be
included in the net income or the apportionment factors of the unitary business
except as provided in paragraph (g).
(g) The adjusted net income of a
foreign operating corporation shall be deemed to be paid as a dividend on the
last day of its taxable year to each shareholder thereof, in proportion to each
shareholder's ownership, with which such corporation is engaged in a unitary
business. Such deemed dividend shall be
treated as a dividend under section 290.21, subdivision 4.
Dividends actually paid by a foreign
operating corporation to a corporate shareholder which is a member of the same
unitary business as the foreign operating corporation shall be eliminated from
the net income of the unitary business in preparing a combined report for the
unitary business. The adjusted net
income of a foreign operating corporation shall be its net income adjusted as
follows:
(1) any taxes paid or accrued to a
foreign country, the commonwealth of Puerto Rico, or a United States possession
or political subdivision of any of the foregoing shall be a deduction; and
(2) the subtraction from federal
taxable income for payments received from foreign corporations or foreign operating
corporations under section 290.01, subdivision 19d, clause (10), shall not be
allowed.
If a foreign operating corporation
incurs a net loss, neither income nor deduction from that corporation shall be
included in determining the net income of the unitary business.
(h) (g) For purposes of
determining the net income of a unitary business and the factors to be used in
the apportionment of net income pursuant to section 290.191 or 290.20, there
must be included only the income and apportionment factors of domestic
corporations or other domestic entities other than foreign operating
corporations that are determined to be part of the unitary business
pursuant to this subdivision, notwithstanding that foreign corporations or
other foreign entities might be included in the unitary business, except
that foreign corporations or other foreign entities that are included on a
federal income tax return must be included on the combined report. Income of a foreign partnership or other
foreign entity treated as a partnership included in federal taxable income, as
defined in section 63 of the Internal Revenue Code of 1986, as amended through
the date named in section 290.01, subdivision 19, and the proportionate amount
of apportionment factors, must be included in the combined report.
(i) Deductions for expenses, interest,
or taxes otherwise allowable under this chapter that are connected with or
allocable against dividends, deemed dividends described in paragraph (g), or
royalties, fees, or other like income described in section 290.01, subdivision
19d, clause (10), shall not be disallowed.
(j) (h) Each corporation or
other entity, except a sole proprietorship, that is part of a unitary business
must file combined reports as the commissioner determines. On the reports, all intercompany transactions
between entities included pursuant to paragraph (h) (g) must be
eliminated and the entire net income of the unitary business determined in
accordance with this subdivision is apportioned among the entities by using
each entity's Minnesota factors for apportionment purposes in the numerators of
the apportionment formula and the total factors for apportionment purposes of
all entities included pursuant to paragraph (h) (g) in the
denominators of the apportionment formula.
All sales of the unitary business made within Minnesota pursuant to
section 290.191 or 290.20 must be included on the separate combined report of a
corporation that is a member of the unitary business and is subject to the
jurisdiction of this state to impose tax under this chapter.
(k) (i) If a corporation has
been divested from a unitary business and is included in a combined report for
a fractional part of the common accounting period of the combined report:
(1) its income includable in the combined report is its income incurred for that part of the year determined by proration or separate accounting; and
(2) its sales, property, and payroll included in the apportionment formula must be prorated or accounted for separately.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010, except that the
new language added to paragraph (f) and the new language added to the new
paragraph (g) are effective for taxable years beginning after December 31,
2011.
Sec. 35. Minnesota Statutes 2010, section 290.191, subdivision 2, is amended to read:
Subd. 2. Apportionment formula of general application. (a) Except for those trades or businesses required to use a different formula under subdivision 3 or section 290.341 or 290.36, and for those trades or businesses that receive permission to use some other method under section 290.20 or under subdivision 4, a trade or business required to apportion its net income must apportion its income to this state on the basis of the percentage obtained by taking the sum of:
(1) the percent for the sales factor under paragraph (b) 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) the percent for the property factor under paragraph (b) 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) the percent for the payroll factor under paragraph (b) 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.
(b) For purposes of paragraph (a) and subdivision 3, the following percentages apply for the taxable years specified:
Taxable years beginning during calendar year |
Sales factor percent |
Property factor percent |
Payroll factor percent |
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2007 2008 2009 2010 2011 2012 2013 2014 and later calendar years |
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78 |
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11 |
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11 |
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81 |
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9.5 |
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9.5 |
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84 |
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8 |
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8 |
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87 |
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6.5 |
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6.5 |
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90 |
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5 |
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5 |
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93 |
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3.5 |
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3.5 |
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96 |
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2 |
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2 |
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100 |
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0 |
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0 |
|
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EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 36. Minnesota Statutes 2010, section 290.191, subdivision 5, is amended to read:
Subd. 5. Determination of sales factor. For purposes of this section, the following rules apply in determining the sales factor.
(a) The sales factor includes all sales, gross earnings, or receipts received in the ordinary course of the business, except that the following types of income are not included in the sales factor:
(1) interest;
(2) dividends;
(3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
(4) sales of property used in the trade or
business, except sales of leased property of a type which is regularly sold as
well as leased; and
(5) sales of debt instruments as defined in
section 1275(a)(1) of the Internal Revenue Code or sales of stock; and.
(6) royalties, fees, or other like income
of a type which qualify for a subtraction from federal taxable income under
section 290.01, subdivision 19d(10).
(b) Sales of tangible personal property are made within this state if the property is received by a purchaser at a point within this state, and the taxpayer is taxable in this state, regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination of the property.
(c) Tangible personal property delivered to a common or contract carrier or foreign vessel for delivery to a purchaser in another state or nation is a sale in that state or nation, regardless of f.o.b. point or other conditions of the sale.
(d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine, fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is licensed by a state or political subdivision to resell this property only within the state of ultimate destination, the sale is made in that state.
(e) Sales made by or through a corporation that is qualified as a domestic international sales corporation under section 992 of the Internal Revenue Code are not considered to have been made within this state.
(f) Sales, rents, royalties, and other income in connection with real property is attributed to the state in which the property is located.
(g) Receipts from the lease or rental of tangible personal property, including finance leases and true leases, must be attributed to this state if the property is located in this state and to other states if the property is not located in this state. Receipts from the lease or rental of moving property including, but not limited to, motor vehicles, rolling stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts factor to the extent that the property is used in this state. The extent of the use of moving property is determined as follows:
(1) A motor vehicle is used wholly in the state in which it is registered.
(2) The extent that rolling stock is used in this state is determined by multiplying the receipts from the lease or rental of the rolling stock by a fraction, the numerator of which is the miles traveled within this state by the leased or rented rolling stock and the denominator of which is the total miles traveled by the leased or rented rolling stock.
(3) The extent that an aircraft is used in this state is determined by multiplying the receipts from the lease or rental of the aircraft by a fraction, the numerator of which is the number of landings of the aircraft in this state and the denominator of which is the total number of landings of the aircraft.
(4) The extent that a vessel, mobile equipment, or other mobile property is used in the state is determined by multiplying the receipts from the lease or rental of the property by a fraction, the numerator of which is the number of days during the taxable year the property was in this state and the denominator of which is the total days in the taxable year.
(h) Royalties and other income not described in paragraph (a), clause (6), received for the use of or for the privilege of using intangible property, including patents, know-how, formulas, designs, processes, patterns, copyrights, trade names, service names, franchises, licenses, contracts, customer lists, or similar items, must be attributed to the state in which the property is used by the purchaser. If the property is used in more than one state, the royalties or other income must be apportioned to this state pro rata according to the portion of use in this state. If the portion of use in this state cannot be determined, the royalties or other income must be excluded from both the numerator and the denominator. Intangible property is used in this state if the purchaser uses the intangible property or the rights therein in the regular course of its business operations in this state, regardless of the location of the purchaser's customers.
(i) Sales of intangible property are made within the state in which the property is used by the purchaser. If the property is used in more than one state, the sales must be apportioned to this state pro rata according to the portion of use in this state. If the portion of use in this state cannot be determined, the sale must be excluded from both the numerator and the denominator of the sales factor. Intangible property is used in this state if the purchaser used the intangible property in the regular course of its business operations in this state.
(j) Receipts from the performance of services must be attributed to the state where the services are received. For the purposes of this section, receipts from the performance of services provided to a corporation, partnership, or trust may only be attributed to a state where it has a fixed place of doing business. If the state where the services are received is not readily determinable or is a state where the corporation, partnership, or trust receiving the service does not have a fixed place of doing business, the services shall be deemed to be received at the location of the office of the customer from which the services were ordered in the regular course of the customer's trade or business. If the ordering office cannot be determined, the services shall be deemed to be received at the office of the customer to which the services are billed.
(k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts from management, distribution, or administrative services performed by a corporation or trust for a fund of a corporation or trust regulated under United States Code, title 15, sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of the fund resides. Under this paragraph, receipts for services attributed to shareholders are determined on the basis of the ratio of: (1) the average of the outstanding shares in the fund owned by shareholders residing within Minnesota at the beginning and end of each year; and (2) the average of the total number of outstanding shares in the fund at the beginning and end of each year. Residence of the shareholder, in the case of an individual, is determined by the mailing address furnished by the shareholder to the fund. Residence of the shareholder, when the shares are held by an insurance company as a depositor for the insurance company policyholders, is the mailing address of the policyholders. In the case of an insurance company holding the shares as a depositor for the insurance company policyholders, if the mailing address of the policyholders cannot be determined by the taxpayer, the receipts must be excluded from both the numerator and denominator. Residence of other shareholders is the mailing address of the shareholder.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 37. Minnesota Statutes 2010, section 290.21, subdivision 4, is amended to read:
Subd. 4. Dividends received from another corporation. (a)(1) Eighty percent of dividends received by a corporation during the taxable year from another corporation, in which the recipient owns 20 percent or more of the stock, by vote and value, not including stock described in section 1504(a)(4) of the Internal Revenue Code when the corporate stock with respect to which dividends are paid does not constitute the stock in trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not constitute property held by the taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or business, or when the trade or business of the taxpayer does not consist principally of the holding of the stocks and the collection of the income and gains therefrom; and
(2)(i) the remaining 20 percent of dividends if the dividends received are the stock in an affiliated company transferred in an overall plan of reorganization and the dividend is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as amended through December 31, 1989;
(ii) the remaining 20 percent of dividends if the dividends are received from a corporation which is subject to tax under section 290.341 or 290.36 and which is a member of an affiliated group of corporations as defined by the Internal Revenue Code and the dividend is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as amended through December 31, 1989, or is deducted under an election under section 243(b) of the Internal Revenue Code; or
(iii) the remaining 20 percent of the dividends if the dividends are received from a property and casualty insurer as defined under section 60A.60, subdivision 8, which is a member of an affiliated group of corporations as defined by the Internal Revenue Code and either: (A) the dividend is eliminated in consolidation under Treasury Regulation 1.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted under an election under section 243(b) of the Internal Revenue Code.
(b) Seventy percent of dividends received by a corporation during the taxable year from another corporation in which the recipient owns less than 20 percent of the stock, by vote or value, not including stock described in section 1504(a)(4) of the Internal Revenue Code when the corporate stock with respect to which dividends are paid does not constitute the stock in trade of the taxpayer, or does not constitute property held by the taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or business, or when the trade or business of the taxpayer does not consist principally of the holding of the stocks and the collection of income and gain therefrom.
(c) The dividend deduction provided in this subdivision shall be allowed only with respect to dividends that are included in a corporation's Minnesota taxable net income for the taxable year.
The dividend deduction provided in this subdivision does not apply to a dividend from a corporation which, for the taxable year of the corporation in which the distribution is made or for the next preceding taxable year of the corporation, is a corporation exempt from tax under section 501 of the Internal Revenue Code.
The dividend deduction provided in this
subdivision does not apply to a dividend received from a real estate investment
trust, as defined in section 856 of the Internal Revenue Code.
The dividend deduction provided in this subdivision applies to the amount of regulated investment company dividends only to the extent determined under section 854(b) of the Internal Revenue Code.
The dividend deduction provided in this subdivision shall not be allowed with respect to any dividend for which a deduction is not allowed under the provisions of section 246(c) of the Internal Revenue Code.
(d) If dividends received by a corporation that does not have nexus with Minnesota under the provisions of Public Law 86-272 are included as income on the return of an affiliated corporation permitted or required to file a combined report under section 290.17, subdivision 4, or 290.34, subdivision 2, then for purposes of this subdivision the determination as to whether the trade or business of the corporation consists principally of the holding of stocks and the collection of income and gains therefrom shall be made with reference to the trade or business of the affiliated corporation having a nexus with Minnesota.
(e) The deduction provided by this subdivision does not apply if the dividends are paid by a FSC as defined in section 922 of the Internal Revenue Code.
(f) If one or more of the members of the unitary group whose income is included on the combined report received a dividend, the deduction under this subdivision for each member of the unitary business required to file a return under this chapter is the product of: (1) 100 percent of the dividends received by members of the group; (2) the percentage allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business income apportionable to this state for the taxable year under section 290.191 or 290.20.
EFFECTIVE
DATE. The changes made to
paragraph (a) are effective for taxable years beginning after December 31, 2010, and the changes made to paragraph (c)
are effective for taxable years beginning after December 31, 2011.
Sec. 38. [290.341]
INSURANCE COMPANIES; REPORT OF NET INCOME; COMPUTATION OF AMOUNT OF INCOME
ALLOCABLE TO STATE.
Subdivision 1. Computation
of net income. (a) The net
income of insurance companies taxable under this chapter is computed as
follows.
(b) Each life insurance company must
report to the commissioner the life insurance company taxable net income as
defined in section 801(b) of the Internal Revenue Code, incorporating any
elections made by the taxpayer in determining life insurance company taxable
income for federal income tax purposes.
(c) Each insurance company other than a
life insurance company must report to the commissioner its federal taxable
income as defined in section 832 of the Internal Revenue Code, or its taxable
investment income as defined in section 832 of the Internal Revenue Code,
incorporating any elections made by the taxpayer in accordance with the
Internal Revenue Code in determining federal taxable income or taxable
investment income for federal income tax purposes.
(d) The life insurance company taxable
net income, federal taxable income, or taxable investment income so reported is
subject to the modifications provided in section 290.01, subdivisions 19c to
19f.
Subd. 2. Apportionment
of taxable net income. (a)
The commissioner shall compute from net income the taxable net income of
insurance companies by apportioning to this state net income on the ratio of
gross premiums collected by them during the taxable year from old and new
business within this state, including reinsurance premiums, to the total gross
premiums collected by them during that year from their entire old and new
business, including reinsurance premiums; the commissioner shall add to the
taxable net income so apportioned to this state the amount of any taxes on
premiums paid by the company by virtue of any law of this state, other than the
surcharge on premiums imposed by section 297I.06 and the surcharge imposed by
section 168A.40, subdivision 3, which shall have been deducted from gross
income by the company in arriving at its total net income under the provisions
of section 810(b) or 832 of the Internal Revenue Code.
(b) For purposes of determining the Minnesota apportionment percentage, premiums from reinsurance contracts in connection with property in or liability arising out of activity in, or in connection with the lives or health of Minnesota residents must be attributed to Minnesota and premiums from reinsurance contracts in connection with property in or liability arising out of activity in, or in connection with the lives or health of non-Minnesota residents must be attributed outside of Minnesota. Reinsurance premiums are presumed to be received for a Minnesota risk and are assigned to Minnesota, if:
(1) the reinsurance contract is assumed
for a company domiciled in Minnesota; and
(2) the taxpayer, upon request of the
commissioner, fails to provide reliable records indicating the reinsured
contract covered non-Minnesota risks.
For purposes of this paragraph,
"Minnesota risk" means coverage in connection with property in or
liability arising out of activity in Minnesota, or in connection with the lives
or health of Minnesota residents.
(c) The apportionment method prescribed
by paragraph (b) must be presumed to fairly and correctly determine the
taxpayer's taxable net income. If the
method prescribed in paragraph (b) does not fairly reflect all or any part of
taxable net income, the taxpayer may petition for or the commissioner may
require the determination of taxable net income by use of another method if
that method fairly reflects taxable net income.
A petition within the meaning of this section must be filed by the
taxpayer on a form as the commissioner requires.
Subd. 3. Credit. An insurance company shall receive a
credit against the tax computed under sections 290.06, subdivision 1, and
290.0921, equal to any taxes based on premiums imposed by section 297I.05 and
paid by the insurance company that are attributable to the period for which the
tax under this chapter is imposed.
Subd. 4. Guaranty
association assessment offset. (a)
An insurance company may offset against its corporate franchise tax liability
under this chapter any amount paid pursuant to assessments made for
insolvencies which occur after December 31, 2010, under chapter 60C, and any
amount paid pursuant to assessments made after December 31, 2010, under chapter
61B, as follows.
(b) Each such assessment must give rise
to an amount of offset equal to 20 percent of the amount of the assessment for
each of the five calendar years following the year in which the assessment was
paid.
(c) The amount of offset initially
determined for each taxable year is the sum of the amounts determined under
paragraph (b) for that taxable year.
(d) Each year the commissioner of
revenue shall compare total guaranty association assessments levied over the
preceding five calendar years to the sum of all premium tax and corporate
franchise tax revenues collected from insurance companies without reduction for
any guaranty association assessment offset in the preceding calendar year,
referred to in this subdivision as "preceding year insurance tax revenues." If total guaranty association assessments
levied over the preceding five years exceed the preceding year insurance tax
revenues, insurance companies are allowed only a proportionate part of the
corporate franchise tax offset calculated under paragraph (c) for the current
calendar year. The proportionate part of
the corporate franchise tax offset allowed in the current calendar year is
determined by multiplying the amount calculated under paragraph (c) by a
fraction, the numerator of which equals the preceding year insurance tax
revenues and the denominator of which equals total guaranty association
assessments levied over the preceding five-year period. The proportionate part of the premium tax
offset that is not allowed is carried forward to subsequent tax years and added
to the amount of corporate franchise tax offset calculated under paragraph (c)
before application of the limitation imposed by this paragraph. Any amount carried forward from prior years
must be allowed before allowance of the offset for the current year calculated
under paragraph (c). The corporate
franchise tax offset limitation must be calculated separately for (1) insurance
companies subject to assessment under chapter 60C, and (2) insurance companies
subject to assessment under chapter 61B.
When the corporate franchise tax offset is limited by this provision,
the commissioner of revenue shall notify affected insurance companies before
February 1 for purposes of filing premium and corporate franchise tax returns. The guaranty associations created under
chapters 60C and 61B must provide the commissioner of revenue with the
necessary information on guaranty association assessments. The limitation in this paragraph is effective
for offsets allowable in 2011 and thereafter.
(e) If the offset determined by the
application of paragraphs (b) and (c) exceeds the greater of the insurance
company's corporate franchise tax liability under this chapter prior to
allowance of the credit provided by subdivision 3 or its premium tax liability
under chapter 297I, then the insurance company may carry forward the excess,
referred to in this subdivision as the "carryforward credit," to
subsequent taxable years. The
carryforward credit must be allowed as an offset against corporate franchise
tax liability for the first succeeding year to the extent that the corporate
franchise tax liability for that year exceeds the amount of the allowable
offset for the year determined under paragraphs (b) and (c). The carryforward credit must be reduced, but
not below zero, by the greater of the amount of the carryforward credit allowed
as an offset against the corporate franchise tax pursuant to this paragraph or
the amount of the carryforward credit allowed as an offset against the
insurance company's premium tax liability under chapter 297I pursuant to
section 297I.20, subdivision 1, paragraph (b), clause (4). The remainder, if any, of the carryforward
credit must be carried forward to succeeding taxable years until the entire
carryforward credit has been credited against the insurance company's liability
for corporate franchise tax under this chapter and premium tax under chapter
297I.
(f) A refund paid by the Minnesota life
and health insurance guaranty association to member insurers under section
61B.24, subdivision 6, with respect to an assessment payment which has been
offset against taxes must reduce the carryforward credit determined under
paragraph (e) and, if the refund exceeds the amount of the carryforward credit,
must be repaid by the insurers to the extent of the offset to the state in the
manner the commissioner of revenue requires.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 39. Minnesota Statutes 2010, section 290.9201, subdivision 11, is amended to read:
Subd. 11. Exception
Exemption from withholding for public speakers and tax. The provisions of (a) Subdivisions
7 and 8 shall not be effective for do not apply to:
(1) compensation paid to
nonresident public speakers, if the compensation paid to the speaker is less
than $2,000 or is only a payment of the speaker's expenses.; or
(2)
compensation paid to an entertainment entity if the compensation paid to the
entertainment entity is less than $600.
(b) Compensation paid to a public
speaker or an entertainment entity that is not subject to withholding tax under
this subdivision is not subject to tax under subdivision 2 unless the total compensation
received by the public speaker or entertainment entity in the tax year exceeds
the individual income tax filing requirements for a nonresident individual
under section 289A.08, subdivision 1, paragraph (a), clause (1).
EFFECTIVE
DATE. This section is
effective for compensation paid or received after December 31, 2011.
Sec. 40. Minnesota Statutes 2010, section 291.005, subdivision 1, is amended to read:
Subdivision 1. Scope. Unless the context otherwise clearly requires, the following terms used in this chapter shall have the following meanings:
(1) "Commissioner" means the commissioner of revenue or any person to whom the commissioner has delegated functions under this chapter.
(2) "Federal gross estate" means the gross estate of a decedent as required to be valued and otherwise determined for federal estate tax purposes under the Internal Revenue Code.
(3) "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended through March 18, 2010, but without regard to the provisions of sections 501 and 901 of Public Law 107-16.
(4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.
(5) "Minnesota gross estate" means the federal gross estate of a decedent after (a) excluding therefrom any property included therein which has its situs outside Minnesota, and (b) including therein any property omitted from the federal gross estate which is includable therein, has its situs in Minnesota, and was not disclosed to federal taxing authorities.
(6) "Nonresident decedent" means an individual whose domicile at the time of death was not in Minnesota.
(7) "Personal representative" means the executor, administrator or other person appointed by the court to administer and dispose of the property of the decedent. If there is no executor, administrator or other person appointed, qualified, and acting within this state, then any person in actual or constructive possession of any property having a situs in this state which is included in the federal gross estate of the decedent shall be deemed to be a personal representative to the extent of the property and the Minnesota estate tax due with respect to the property.
(8) "Resident decedent" means an individual whose domicile at the time of death was in Minnesota.
(9) "Situs of property" means,
with respect to real property, the state or country in which it is located;
with respect to tangible personal property, the state or country in which it
was normally kept or located at the time of the decedent's death; and with
respect to intangible personal property, the state or country in which the
decedent was domiciled at death. For
a nonresident decedent with an ownership interest in a pass-through entity with
assets that include real or tangible personal property, situs of the real or
tangible personal property is determined as if the pass-through entity does not
exist and the real or tangible personal property is personally owned by the
decedent. If the pass-through entity is
owned by a person or persons in addition to the decedent, ownership of the
property is attributed to the decedent in proportion to the decedent's capital
ownership share of the pass-through entity.
(10) "Pass-through entity" includes the following:
(i) an entity electing S corporation
status under section 1362 of the Internal Revenue Code;
(ii) an entity taxed as a partnership
under subchapter K of the Internal Revenue Code;
(iii) a single member limited liability
company or similar entity, regardless of whether it is taxed as an association
or is disregarded for federal income tax purposes under Code of Federal
Regulations, title 26, section 301.7701-3; or
(iv) a trust.
EFFECTIVE
DATE. This section is
effective for estates of decedents dying after December 31, 2010.
Sec. 41. Minnesota Statutes 2010, section 297I.20, subdivision 1, is amended to read:
Subdivision 1. Guaranty association assessment offsets. (a) An insurance company may offset against its premium tax liability to this state any amount paid for assessments made for insolvencies which occur after July 31, 1994, under sections 60C.01 to 60C.22; and any amount paid for assessments made after July 31, 1994, under Minnesota Statutes 1992, sections 61B.01 to 61B.16, or under sections 61B.18 to 61B.32 as follows:
(1) Each such assessment shall give rise to an amount of offset equal to 20 percent of the amount of the assessment for each of the five calendar years following the year in which the assessment was paid.
(2) The amount of offset initially determined for each taxable year is the sum of the amounts determined under clause (1) for that taxable year.
(b)(1) Each year the commissioner shall compare total guaranty association assessments levied over the preceding five calendar years to the sum of all premium tax and corporate franchise tax revenues collected from insurance companies, without reduction for any guaranty association assessment offset in the preceding calendar year, referred to in this subdivision as "preceding year insurance tax revenues."
(2) If total guaranty association assessments levied over the preceding five years exceed the preceding year insurance tax revenues, insurance companies must be allowed only a proportionate part of the premium tax offset calculated under paragraph (a) for the current calendar year.
(3) The proportionate part of the premium tax offset allowed in the current calendar year is determined by multiplying the amount calculated under paragraph (a) by a fraction. The numerator of the fraction equals the preceding year insurance tax revenues, and its denominator equals total guaranty association assessments levied over the preceding five-year period.
(4) The proportionate part of the premium tax offset that is not allowed must be carried forward to subsequent tax years and added to the amount of premium tax offset calculated under paragraph (a) prior to application of the limitation imposed by this paragraph.
(5) Any amount carried forward from prior years must be allowed before allowance of the offset for the current year calculated under paragraph (a).
(6) The premium tax offset limitation must be calculated separately for (i) insurance companies subject to assessment under sections 60C.01 to 60C.22, and (ii) insurance companies subject to assessment under Minnesota Statutes 1992, sections 61B.01 to 61B.16, or 61B.18 to 61B.32.
(7) When the premium tax offset is limited by this provision, the commissioner shall notify affected insurance companies on a timely basis for purposes of completing premium and corporate franchise tax returns.
(8) The guaranty associations created under sections 60C.01 to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, and 61B.18 to 61B.32, shall provide the commissioner with the necessary information on guaranty association assessments.
(c)(1) If the offset determined by the application of paragraphs (a) and (b) exceeds the greater of the insurance company's premium tax liability under this section or its corporate franchise tax liability under chapter 290 prior to allowance of the credit for premium taxes, then the insurance company may carry forward the excess, referred to in this subdivision as the "carryforward credit" to subsequent taxable years.
(2) The carryforward credit is allowed as an offset against premium tax liability for the first succeeding year to the extent that the premium tax liability for that year exceeds the amount of the allowable offset for the year determined under paragraphs (a) and (b).
(3) The carryforward credit must be reduced, but not below zero, by the greater of the amount of the carryforward credit allowed as an offset against the premium tax under this paragraph or the amount of the carryforward credit allowed as an offset against the insurance company's corporate franchise tax liability under section 290.341, subdivision 5. The remainder, if any, of the carryforward credit must be carried forward to succeeding taxable years until the entire carryforward credit has been credited against the insurance company's liability for premium tax under this chapter and corporate franchise tax under chapter 290 if applicable for that taxable year.
(d) When an insurer has offset against taxes its payment of an assessment of the Minnesota Life and Health Guaranty Association, and the association pays the insurer a refund with respect to the assessment under Minnesota Statutes 1992, section 61B.07, subdivision 6, or 61B.24, subdivision 6, then the refund reduces the insurer's carryforward credit under paragraph (c). If the refund exceeds the amount of the carryforward credit, the excess amount must be repaid to the state by the insurers to the extent of the offset in the manner the commissioner requires.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 42. REPEALER.
(a) Minnesota Statutes 2010, section 290.01,
subdivision 6b, is repealed.
(b) Minnesota Statutes 2010, section
290.0678, is repealed.
(c) Minnesota Statutes 2010, section
290.9201, subdivision 3, is repealed.
EFFECTIVE DATE. Paragraph (a) is effective for taxable years beginning after December 31, 2010. Paragraph (b) is effective for taxable years beginning after December 31, 2011. Paragraph (c) is effective for compensation received after December 31, 2011.
ARTICLE 2
FEDERAL UPDATE
Section 1. Minnesota Statutes 2010, section 289A.02, subdivision 7, as amended by Laws 2011, chapter 8, section 1, is amended to read:
Subd. 7. Internal
Revenue Code. Unless specifically
defined otherwise, for taxable years beginning before January 1, 2010, and
after December 31, 2010, "Internal Revenue Code" means the
Internal Revenue Code of 1986, as amended
through March 18, 2010; and for taxable years beginning after December 31,
2009, and before January 1, 2011, "Internal Revenue
Code" means the Internal Revenue Code of 1986, as amended through
December 31, 2010.
EFFECTIVE
DATE. This section is
effective the day following final enactment.
Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19, as amended by Laws 2011, chapter 8, section 2, is amended to read:
Subd. 19. Net income. The term "net income" means the federal taxable income, as defined in section 63 of the Internal Revenue Code of 1986, as amended through the date named in this subdivision, incorporating the federal effective dates of changes to the Internal Revenue Code and any elections made by the taxpayer in accordance with the Internal Revenue Code in determining federal taxable income for federal income tax purposes, and with the modifications provided in subdivisions 19a to 19f.
In the case of a regulated investment company or a fund thereof, as defined in section 851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, except that:
(1) the exclusion
of net capital gain provided in section 852(b)(2)(A) of the Internal Revenue
Code does not apply;
(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal Revenue Code must be applied by allowing a deduction for capital gain dividends and exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal Revenue Code; and
(3) the deduction for dividends paid must also be applied in the amount of any undistributed capital gains which the regulated investment company elects to have treated as provided in section 852(b)(3)(D) of the Internal Revenue Code.
The net income of a real estate investment trust as defined and limited by section 856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
The net income of a designated settlement fund as defined in section 468B(d) of the Internal Revenue Code means the gross income as defined in section 468B(b) of the Internal Revenue Code.
The Internal Revenue Code of 1986, as
amended through March 18 December 31, 2010, shall be in effect
for taxable years beginning after December 31, 1996, except that for taxable
years beginning after December 31, 2009, and before January 1, 2011,
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended through December 31, 2010. The
provisions of the act of January 22, 2010, Public Law 111-126, to accelerate
the benefits for charitable cash contributions for the relief of victims of the
Haitian earthquake, are effective at the same time it became effective for
federal purposes and apply to the subtraction under subdivision 19b, clause (6). The provisions of title II, section 2112, of
the act of September 27, 2010, Public Law 111-240, rollovers from elective
deferral plans to designated Roth accounts, are effective at the same time they
became effective for federal purposes and taxable rollovers are included in net
income at the same time they are included in gross income for federal purposes.
Except as otherwise provided, references to the Internal Revenue Code in subdivisions 19 to 19f mean the code in effect for purposes of determining net income for the applicable year.
EFFECTIVE
DATE. This section is
effective the day following final enactment.
Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19a, as amended by Laws 2011, chapter 8, section 3, is amended to read:
Subd. 19a. Additions to federal taxable income. For individuals, estates, and trusts, there shall be added to federal taxable income:
(1)(i) interest income on obligations of any state other than Minnesota or a political or governmental subdivision, municipality, or governmental agency or instrumentality of any state other than Minnesota exempt from federal income taxes under the Internal Revenue Code or any other federal statute; and
(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue Code, except:
(A) the
portion of the exempt-interest dividends exempt from state taxation under the
laws of the United States; and
(B) the portion of the exempt-interest dividends derived from interest income on obligations of the state of Minnesota or its political or governmental subdivisions, municipalities, governmental agencies or instrumentalities, but only if the portion of the exempt-interest dividends from such Minnesota sources paid to all shareholders represents 95 percent or more of the exempt-interest dividends, including any dividends exempt under subitem (A), that are paid by the regulated investment company as defined in section 851(a) of the Internal Revenue Code, or the fund of the regulated investment company as defined in section 851(g) of the Internal Revenue Code, making the payment; and
(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal government described in section 7871(c) of the Internal Revenue Code shall be treated as interest income on obligations of the state in which the tribe is located;
(2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or accrued within the taxable year under this chapter and the amount of taxes based on net income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state or to any province or territory of Canada, to the extent allowed as a deduction under section 63(d) of the Internal Revenue Code minus any addition that would have been required under clause (20) if the taxpayer had claimed the standard deduction, but the addition may not be more than the amount by which the itemized deductions as allowed under section 63(d) of the Internal Revenue Code exceeds the amount of the
standard deduction as defined in section 63(c) of the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code. For the purpose of this paragraph, the disallowance of itemized deductions under section 68 of the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise taxes are the last itemized deductions disallowed;
(3) the capital gain amount of a lump-sum distribution to which the special tax under section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
(4) the amount of income taxes paid or accrued within the taxable year under this chapter and taxes based on net income paid to any other state or any province or territory of Canada, to the extent allowed as a deduction in determining federal adjusted gross income. For the purpose of this paragraph, income taxes do not include the taxes imposed by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10 other than expenses or interest used in computing net interest income for the subtraction allowed under subdivision 19b, clause (1);
(6) the amount of a partner's pro rata share of net income which does not flow through to the partner because the partnership elected to pay the tax on the income under section 6242(a)(2) of the Internal Revenue Code;
(7) 80 percent of the depreciation deduction allowed under section 168(k) of the Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that in the taxable year generates a deduction for depreciation under section 168(k) and the activity generates a loss for the taxable year that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is limited to excess of the depreciation claimed by the activity under section 168(k) over the amount of the loss from the activity that is not allowed in the taxable year. In succeeding taxable years when the losses not allowed in the taxable year are allowed, the depreciation under section 168(k) is allowed;
(8) 80 percent of the amount by which the deduction allowed by section 179 of the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended through December 31, 2003;
(9) to the extent deducted in computing federal taxable income, the amount of the deduction allowable under section 199 of the Internal Revenue Code;
(10) for tax years beginning before January 1, 2013, the exclusion allowed under section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
(11) the amount of expenses disallowed under section 290.10, subdivision 2;
(12) for taxable years beginning before
January 1, 2010, and after December 31, 2010, the amount deducted for
qualified tuition and related expenses under section 222 of the Internal
Revenue Code, to the extent deducted from gross income;
(13) for taxable years beginning before
January 1, 2010, and after December 31, 2010, the amount deducted for
certain expenses of elementary and secondary school teachers under section
62(a)(2)(D) of the Internal Revenue Code, to the extent deducted from gross
income;
(14) the additional standard deduction for property taxes payable that is allowable under section 63(c)(1)(C) of the Internal Revenue Code;
(15) the additional standard deduction for qualified motor vehicle sales taxes allowable under section 63(c)(1)(E) of the Internal Revenue Code;
(16) discharge of indebtedness income
resulting from reacquisition of business indebtedness and deferred under
section 108(i) of the Internal Revenue Code; and
(17) the amount of unemployment
compensation exempt from tax under section 85(c) of the Internal Revenue Code.;
and
(18) to the extent included in the
computation of federal taxable income in taxable years beginning after December
31, 2010, the amount of disallowed itemized deductions.
(i) The amount of disallowed itemized deductions is equal to the lesser of:
(A) three percent of the excess of the taxpayer's federal adjusted gross income over the applicable amount; or
(B) 80 percent of the amount of the
itemized deductions otherwise allowable to the taxpayer under the Internal
Revenue Code for the taxable year.
(ii) The term "applicable amount" means $100,000, or $50,000 in the case of a married individual filing a separate return. Each dollar amount shall be increased by an amount equal to:
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment
determined under section 1(f)(3) of the Internal Revenue Code for the calendar
year in which the taxable year begins, by substituting "calendar year
1990" for "calendar year 1992" in subparagraph (B) thereof.
(iii) The term "itemized deductions" does not include:
(A) the deduction for medical expenses
under section 213 of the Internal Revenue Code;
(B) any deduction for investment
interest as defined in section 163(d) of the Internal Revenue Code; and
(C) the deduction under section 165(a)
of the Internal Revenue Code for casualty or theft losses described in
paragraph (2) or (3) of section 165(c) of the Internal Revenue Code or for
losses described in section 165(d) of the Internal Revenue Code;
(19) to the extent included in federal
taxable income in taxable years beginning after December 31, 2010, the amount
of disallowed personal exemptions for taxpayers with federal adjusted gross
income over the threshold amount.
(i) The disallowed personal exemption
amount is equal to the dollar amount of the personal exemptions claimed by the
taxpayer in the computation of federal taxable income multiplied by the
applicable percentage.
(ii) "Applicable percentage"
means two percentage points for each $2,500 (or fraction thereof) by which the
taxpayer's federal adjusted gross income for the taxable year exceeds the
threshold amount. In the case of a
married individual filing a separate return, the preceding sentence shall be
applied by substituting "$1,250" for "$2,500." In no event shall the applicable percentage
exceed 100 percent.
(iii) The term "threshold amount" means:
(A) $150,000 in the case of a joint
return or a surviving spouse;
(B) $125,000 in the case of a head of a
household;
(C) $100,000 in the case of an
individual who is not married and who is not a surviving spouse or head of a
household; and
(D) $75,000 in the case of a married
individual filing a separate return.
(iv) The thresholds shall be increased by an amount equal to:
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment
determined under section 1(f)(3) of the Internal Revenue Code for the calendar
year in which the taxable year begins, by substituting "calendar year
1990" for "calendar year 1992" in subparagraph (B) thereof; and
(20) to the extent deducted in the
computation of federal taxable income, for taxable years beginning after
December 31, 2010, and before January 1, 2013, the difference between the
standard deduction allowed under section 63(a) of the Internal Revenue Code and
the standard deduction allowed for 2011 and 2012 under the Internal Revenue
Code as amended through December 1, 2010.
EFFECTIVE
DATE. This section is
effective the day following final enactment.
Sec. 4. Minnesota Statutes 2010, section 290.01, subdivision 19c, as amended by Laws 2011, chapter 8, section 4, is amended to read:
Subd. 19c. Corporations; additions to federal taxable income. For corporations, there shall be added to federal taxable income:
(1) the amount of any deduction taken for federal income tax purposes for income, excise, or franchise taxes based on net income or related minimum taxes, including but not limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, another state, a political subdivision of another state, the District of Columbia, or any foreign country or possession of the United States;
(2) interest not subject to federal tax upon obligations of: the United States, its possessions, its agencies, or its instrumentalities; the state of Minnesota or any other state, any of its political or governmental subdivisions, any of its municipalities, or any of its governmental agencies or instrumentalities; the District of Columbia; or Indian tribal governments;
(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal Revenue Code;
(4) the amount of any net operating loss deduction taken for federal income tax purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss deduction under section 810 of the Internal Revenue Code;
(5) the amount of any special deductions taken for federal income tax purposes under sections 241 to 247 and 965 of the Internal Revenue Code;
(6) losses from the business of mining, as defined in section 290.05, subdivision 1, clause (a), that are not subject to Minnesota income tax;
(7) the amount of any capital losses deducted for federal income tax purposes under sections 1211 and 1212 of the Internal Revenue Code;
(8) the exempt foreign trade income of a foreign sales corporation under sections 921(a) and 291 of the Internal Revenue Code;
(9) the
amount of percentage depletion deducted under sections 611 through 614 and 291
of the Internal Revenue Code;
(10) for certified pollution control facilities placed in service in a taxable year beginning before December 31, 1986, and for which amortization deductions were elected under section 169 of the Internal Revenue Code of 1954, as amended through December 31, 1985, the amount of the amortization deduction allowed in computing federal taxable income for those facilities;
(11) the amount of any deemed dividend from a foreign operating corporation determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend shall be reduced by the amount of the addition to income required by clauses (20), (21), (22), and (23);
(12) the amount of a partner's pro rata share of net income which does not flow through to the partner because the partnership elected to pay the tax on the income under section 6242(a)(2) of the Internal Revenue Code;
(13) the amount of net income excluded under section 114 of the Internal Revenue Code;
(14) any increase in subpart F income, as
defined in section 952(a) of the Internal Revenue Code, for the taxable year
when subpart F income is calculated without regard to the provisions of Division
C, title III, section 303(b) of Public Law 110-343 section 750 of Public
Law 111-312;
(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that in the taxable year generates a deduction for depreciation under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the amount of the loss from the activity that is not allowed in the taxable year. In succeeding taxable years when the losses not allowed in the taxable year are allowed, the depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
(16) 80 percent of the amount by which the deduction allowed by section 179 of the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended through December 31, 2003;
(17) to the extent deducted in computing federal taxable income, the amount of the deduction allowable under section 199 of the Internal Revenue Code;
(18) for taxable years beginning before January 1, 2013, the exclusion allowed under section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
(19) the amount of expenses disallowed under section 290.10, subdivision 2;
(20) an amount equal to the interest and intangible expenses, losses, and costs paid, accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit of a corporation that is a member of the taxpayer's unitary business group that qualifies as a foreign operating corporation. For purposes of this clause, intangible expenses and costs include:
(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition, use, maintenance or management, ownership, sale, exchange, or any other disposition of intangible property;
(ii) losses incurred, directly or indirectly, from factoring transactions or discounting transactions;
(iii) royalty, patent, technical, and copyright fees;
(iv) licensing fees; and
(v) other similar expenses and costs.
For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent applications, trade names, trademarks, service marks, copyrights, mask works, trade secrets, and similar types of intangible assets.
This clause does not apply to any item of interest or intangible expenses or costs paid, accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect to such item of income to the extent that the income to the foreign operating corporation is income from sources without the United States as defined in subtitle A, chapter 1, subchapter N, part 1, of the Internal Revenue Code;
(21) except as already included in the taxpayer's taxable income pursuant to clause (20), any interest income and income generated from intangible property received or accrued by a foreign operating corporation that is a member of the taxpayer's unitary group. For purposes of this clause, income generated from intangible property includes:
(i) income related to the direct or indirect acquisition, use, maintenance or management, ownership, sale, exchange, or any other disposition of intangible property;
(ii) income from factoring transactions or discounting transactions;
(iii) royalty, patent, technical, and copyright fees;
(iv) licensing fees; and
(v) other similar income.
For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent applications, trade names, trademarks, service marks, copyrights, mask works, trade secrets, and similar types of intangible assets.
This clause does not apply to any item of interest or intangible income received or accrued by a foreign operating corporation with respect to such item of income to the extent that the income is income from sources without the United States as defined in subtitle A, chapter 1, subchapter N, part 1, of the Internal Revenue Code;
(22) the dividends attributable to the income of a foreign operating corporation that is a member of the taxpayer's unitary group in an amount that is equal to the dividends paid deduction of a real estate investment trust under section 561(a) of the Internal Revenue Code for amounts paid or accrued by the real estate investment trust to the foreign operating corporation;
(23) the income of a foreign operating corporation that is a member of the taxpayer's unitary group in an amount that is equal to gains derived from the sale of real or personal property located in the United States;
(24) for taxable years beginning before
January 1, 2010, and after December 31, 2010, the additional amount
allowed as a deduction for donation of computer technology and equipment under
section 170(e)(6) of the Internal Revenue Code, to the extent deducted from
taxable income; and
(25) discharge of indebtedness income resulting from reacquisition of business indebtedness and deferred under section 108(i) of the Internal Revenue Code.
EFFECTIVE
DATE. The changes to clauses
(14) and (24) are effective for taxable years beginning after December 31, 2009. The change to clause (18) is effective the
day following final enactment.
Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
Subd. 19d. Corporations; modifications decreasing federal taxable income. For corporations, there shall be subtracted from federal taxable income after the increases provided in subdivision 19c:
(1) the amount of foreign dividend gross-up added to gross income for federal income tax purposes under section 78 of the Internal Revenue Code;
(2) the amount of salary expense not allowed for federal income tax purposes due to claiming the work opportunity credit under section 51 of the Internal Revenue Code;
(3) any dividend (not including any distribution in liquidation) paid within the taxable year by a national or state bank to the United States, or to any instrumentality of the United States exempt from federal income taxes, on the preferred stock of the bank owned by the United States or the instrumentality;
(4) amounts disallowed for intangible drilling costs due to differences between this chapter and the Internal Revenue Code in taxable years beginning before January 1, 1987, as follows:
(i) to the extent the disallowed costs are represented by physical property, an amount equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, subdivision 7, subject to the modifications contained in subdivision 19e; and
(ii) to the extent the disallowed costs are not represented by physical property, an amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 290.09, subdivision 8;
(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the Internal Revenue Code, except that:
(i) for capital losses incurred in taxable years beginning after December 31, 1986, capital loss carrybacks shall not be allowed;
(ii) for capital losses incurred in taxable years beginning after December 31, 1986, a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be allowed;
(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a capital loss carryback to each of the three taxable years preceding the loss year, subject to the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
(iv) for capital losses incurred in taxable years beginning before January 1, 1987, a capital loss carryover to each of the five taxable years succeeding the loss year to the extent such loss was not used in a prior taxable year and subject to the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed;
(6) an amount for interest and expenses relating to income not taxable for federal income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 291 of the Internal Revenue Code in computing federal taxable income;
(7) in the case of mines, oil and gas wells, other natural deposits, and timber for which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a reasonable allowance for depletion based on actual cost. In the case of leases the deduction must be apportioned between the lessor and lessee in accordance with rules prescribed by the commissioner. In the case of property held in trust, the allowable deduction must be apportioned between the income beneficiaries and the trustee in accordance with the pertinent provisions of the trust, or if there is no provision in the instrument, on the basis of the trust's income allocable to each;
(8) for certified pollution control facilities placed in service in a taxable year beginning before December 31, 1986, and for which amortization deductions were elected under section 169 of the Internal Revenue Code of 1954, as amended through December 31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, subdivision 7;
(9) amounts included in federal taxable income that are due to refunds of income, excise, or franchise taxes based on net income or related minimum taxes paid by the corporation to Minnesota, another state, a political subdivision of another state, the District of Columbia, or a foreign country or possession of the United States to the extent that the taxes were added to federal taxable income under section 290.01, subdivision 19c, clause (1), in a prior taxable year;
(10) 80 percent of royalties, fees, or other like income accrued or received from a foreign operating corporation or a foreign corporation which is part of the same unitary business as the receiving corporation, unless the income resulting from such payments or accruals is income from sources within the United States as defined in subtitle A, chapter 1, subchapter N, part 1, of the Internal Revenue Code;
(11) income or gains from the business of mining as defined in section 290.05, subdivision 1, clause (a), that are not subject to Minnesota franchise tax;
(12) the amount of disability access expenditures in the taxable year which are not allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
(13) the amount of qualified research expenses not allowed for federal income tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that the amount exceeds the amount of the credit allowed under section 290.068;
(14) the amount of salary expenses not allowed for federal income tax purposes due to claiming the Indian employment credit under section 45A(a) of the Internal Revenue Code;
(15) for a corporation whose foreign sales corporation, as defined in section 922 of the Internal Revenue Code, constituted a foreign operating corporation during any taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, claiming the deduction under section 290.21, subdivision 4, for income received from the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of income excluded under section 114 of the Internal Revenue Code, provided the income is not income of a foreign operating company;
(16) any decrease in subpart F income, as
defined in section 952(a) of the Internal Revenue Code, for the taxable year
when subpart F income is calculated without regard to the provisions of Division
C, title III, section 303(b) of Public Law 110-343 section 750 of Public
Law 111-312;
(17) in each of the five tax years immediately following the tax year in which an addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount of the addition made by the taxpayer under subdivision 19c, clause (15). The resulting delayed depreciation cannot be less than zero;
(18) in each of the five tax years immediately following the tax year in which an addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of the amount of the addition; and
(19) to the extent included in federal taxable income, discharge of indebtedness income resulting from reacquisition of business indebtedness included in federal taxable income under section 108(i) of the Internal Revenue Code. This subtraction applies only to the extent that the income was included in net income in a prior year as a result of the addition under section 290.01, subdivision 19c, clause (25).
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2009.
Sec. 6. Minnesota Statutes 2010, section 290.01, subdivision 31, as amended by Laws 2011, chapter 8, section 5, is amended to read:
Subd. 31. Internal
Revenue Code. Unless specifically
defined otherwise, for taxable years beginning before January 1, 2010, and
after December 31, 2010, "Internal Revenue Code" means the
Internal Revenue Code of 1986, as amended through March 18, 2010; and for
taxable years beginning after December 31, 2009, and before January 1,
2011, "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended through December 31, 2010.
Internal Revenue Code also includes any uncodified provision in federal
law that relates to provisions of the Internal Revenue Code that are
incorporated into Minnesota law. When
used in this chapter, the reference to "subtitle A, chapter 1, subchapter
N, part 1, of the Internal Revenue Code" is to the Internal Revenue Code
as amended through March 18, 2010.
EFFECTIVE
DATE. This section is
effective the day following final enactment except that the changes
incorporated by federal changes are effective at the same time as the changes
were effective for federal purposes.
Sec. 7. Minnesota Statutes 2010, section 290.0671, subdivision 1, is amended to read:
Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax imposed by this chapter equal to a percentage of earned income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
(b) For individuals with no qualifying children, the credit equals 1.9125 percent of the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned income or adjusted gross income, whichever is greater, in excess of $5,770, but in no case is the credit less than zero.
(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first $6,920 of earned income and 8.5 percent of earned income over $12,080 but less than $13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income, whichever is greater, in excess of $15,080, but in no case is the credit less than zero.
(d) For individuals with two or more qualifying children, the credit equals ten percent of the first $9,720 of earned income and 20 percent of earned income over $14,860 but less than $16,800. The credit is reduced by 10.3 percent of earned income or adjusted gross income, whichever is greater, in excess of $17,890, but in no case is the credit less than zero.
(e) For a nonresident or part-year resident, the credit must be allocated based on the percentage calculated under section 290.06, subdivision 2c, paragraph (e).
(f) For a person who was a resident for the entire tax year and has earned income not subject to tax under this chapter, including income excluded under section 290.01, subdivision 19b, clause (9) or (15), the credit must be allocated based on the ratio of federal adjusted gross income reduced by the earned income not subject to tax under this chapter over federal adjusted gross income. For purposes of this paragraph, the subtractions for military pay under section 290.01, subdivision 19b, clauses (10) and (11), are not considered "earned income not subject to tax under this chapter."
For the purposes of this paragraph, the exclusion of combat pay under section 112 of the Internal Revenue Code is not considered "earned income not subject to tax under this chapter."
(g) For tax years beginning after December 31, 2007, and before December 31, 2010, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by $3,000 for married taxpayers filing joint returns. For tax years beginning after December 31, 2008, the commissioner shall annually adjust the $3,000 by the percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2007" shall be substituted for the word "1992." For 2009, the commissioner shall then determine the percent change from the 12 months ending on August 31, 2007, to the 12 months ending on August 31, 2008, and in each subsequent year, from the 12 months ending on August 31, 2007, to the 12 months ending on August 31 of the year preceding the taxable year. The earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the amount ends in $5, the amount is rounded up to the nearest $10. The determination of the commissioner under this subdivision is not a rule under the Administrative Procedure Act.
(h)
For tax years beginning after December 31, 2010, and before January 1, 2013,
the $5,770 in paragraph (b), the $15,800 in paragraph (c), and the $17,890 in
paragraph (d), after being adjusted for inflation under subdivision 7, are each
increased by $5,000 for married taxpayers filing joint returns. For tax years beginning after December 31,
2010, the commissioner shall annually adjust the $5,000 by the
percentage determined pursuant to the provisions of section 1(f) of the
Internal Revenue Code, except that in section 1(f)(3)(B), the word
"2008" shall be substituted for the word "1992." For 2011, the commissioner shall then
determine the percent change from the 12 months ending on August 31, 2008, to
the 12 months ending on August 31, 2010, and in each subsequent year, from the
12 months ending on August 31, 2008, to the 12 months ending on August 31 of
the year preceding the taxable year. The
earned income thresholds as adjusted for inflation must be rounded to the
nearest $10. If the amount ends in $5,
the amount is rounded up to the nearest $10.
The determination of the commissioner under this subdivision is not a
rule under the Administrative Procedure Act.
(h) (i) The commissioner
shall construct tables showing the amount of the credit at various income
levels and make them available to taxpayers.
The tables shall follow the schedule contained in this subdivision,
except that the commissioner may graduate the transition between income
brackets.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 8. Minnesota Statutes 2010, section 290.0675, subdivision 1, is amended to read:
Subdivision 1. Definitions. (a) For purposes of this section the following terms have the meanings given.
(b) "Earned income" means the sum of the following, to the extent included in Minnesota taxable income:
(1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
(2) income received from a retirement pension, profit-sharing, stock bonus, or annuity plan; and
(3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue Code.
(c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
(d) "Earned income of lesser-earning spouse" means the earned income of the spouse with the lesser amount of earned income as defined in paragraph (b) for the taxable year minus the sum of (i) the amount for one exemption under section 151(d) of the Internal Revenue Code and (ii) one-half the amount of the standard deduction under section 63(c)(2)(A) and (4) of the Internal Revenue Code minus one-half of any addition required under section 290.01, subdivision 19a, clause (20), and one-half of the addition that would have been required under section 290.01, subdivision 19a, clause (20), if the taxpayer had claimed the standard deduction.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 9. Minnesota Statutes 2010, section 290A.03, subdivision 15, as amended by Laws 2011, chapter 8, section 6, is amended to read:
Subd. 15. Internal
Revenue Code. For taxable years
beginning before January 1, 2010, and after December 31, 2010, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through March
18, 2010; and for taxable years beginning after December 31, 2009, and before
January 1, 2011, "Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended through December 31, 2010.
EFFECTIVE
DATE. This section is
effective for property tax refunds based on property taxes payable after
December 31, 2010, and rent paid after December 31, 2009.
Sec. 10. Minnesota Statutes 2010, section 291.005, subdivision 1, is amended to read:
Subdivision 1. Scope. Unless the context otherwise clearly requires, the following terms used in this chapter shall have the following meanings:
(1) "Commissioner" means the commissioner of revenue or any person to whom the commissioner has delegated functions under this chapter.
(2) "Federal gross estate" means the gross estate of a decedent as required to be valued and otherwise determined for federal estate tax purposes under the Internal Revenue Code.
(3) "Internal Revenue Code" means
the United States Internal Revenue Code of 1986, as amended through March 18
December 31, 2010, but without regard to the provisions of sections 501
and 901 of Public Law 107-16, as amended by Public Law 111-312, and section
301(c) of Public Law 111-312.
(4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.
(5) "Minnesota gross estate" means the federal gross estate of a decedent after (a) excluding therefrom any property included therein which has its situs outside Minnesota, and (b) including therein any property omitted from the federal gross estate which is includable therein, has its situs in Minnesota, and was not disclosed to federal taxing authorities.
(6) "Nonresident decedent" means an individual whose domicile at the time of death was not in Minnesota.
(7) "Personal representative" means the executor, administrator or other person appointed by the court to administer and dispose of the property of the decedent. If there is no executor, administrator or other person appointed, qualified, and acting within this state, then any person in actual or constructive possession of any property having a situs in this state which is included in the federal gross estate of the decedent shall be deemed to be a personal representative to the extent of the property and the Minnesota estate tax due with respect to the property.
(8) "Resident decedent" means an individual whose domicile at the time of death was in Minnesota.
(9) "Situs of property" means, with respect to real property, the state or country in which it is located; with respect to tangible personal property, the state or country in which it was normally kept or located at the time of the decedent's death; and with respect to intangible personal property, the state or country in which the decedent was domiciled at death.
EFFECTIVE
DATE. This section is
effective the day following final enactment.
ARTICLE 3
SALES AND USE TAX
Section 1. Minnesota Statutes 2010, section 297A.61, subdivision 3, is amended to read:
Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not limited to, each of the transactions listed in this subdivision.
(b) Sale and purchase include:
(1) any transfer of title or possession, or both, of tangible personal property, whether absolutely or conditionally, for a consideration in money or by exchange or barter; and
(2) the leasing of or the granting of a license to use or consume, for a consideration in money or by exchange or barter, tangible personal property, other than a manufactured home used for residential purposes for a continuous period of 30 days or more.
(c) Sale and purchase include the production, fabrication, printing, or processing of tangible personal property for a consideration for consumers who furnish either directly or indirectly the materials used in the production, fabrication, printing, or processing.
(d) Sale and purchase include the preparing for a consideration of food. Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited to, the following:
(1) prepared food sold by the retailer;
(2) soft drinks;
(3) candy;
(4) dietary supplements; and
(5) all food sold through vending machines.
(e) A sale and a purchase includes the furnishing for a consideration of electricity, gas, water, or steam for use or consumption within this state.
(f) A sale and a purchase includes the
transfer for a consideration of prewritten computer software whether delivered
electronically, by load and leave, or otherwise. A sale and purchase also includes the
right to access and use prewritten computer software for a consideration, where
possession of the software is maintained by the seller or third party,
regardless of whether the consideration is paid on a per use, per user, per
license, subscription, or some other basis.
(g) A sale and a purchase includes the furnishing for a consideration of the following services:
(1) the privilege of admission to places of amusement, amusement events, exhibitions, selling events, recreational areas, or athletic events, including the rental of box seats and suites, and the making available of amusement devices, tanning facilities, reducing salons, steam baths, Turkish baths, health clubs, and spas or athletic facilities. "Exhibitions" includes, but is not limited to, trade shows, boat shows, home shows, garden shows, and other similar events. "Selling events" includes, but is not limited to, flea markets, estate sales, auctions, and other similar events;
(2) lodging and related services by a hotel, rooming house, resort, campground, motel, or trailer camp, including furnishing the guest of the facility with access to telecommunication services, and the granting of any similar license to use real property in a specific facility, other than the renting or leasing of it for a continuous period of 30 days or more under an enforceable written agreement that may not be terminated without prior notice and including accommodations intermediary service provided in connection with other services provided under this clause;
(3) nonresidential parking services, whether on a contractual, hourly, or other periodic basis, except for parking at a meter;
(4) the granting of membership in a club, association, or other organization if:
(i) the club, association, or other organization makes available for the use of its members sports and athletic facilities, without regard to whether a separate charge is assessed for use of the facilities; and
(ii) use of the sports and athletic facility is not made available to the general public on the same basis as it is made available to members.
Granting of membership means both onetime initiation fees and periodic membership dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and squash courts; basketball and volleyball facilities; running tracks; exercise equipment; swimming pools; and other similar athletic or sports facilities;
(5) delivery of aggregate materials by a third party, excluding delivery of aggregate material used in road construction, and delivery of concrete block by a third party if the delivery would be subject to the sales tax if provided by the seller of the concrete block; and
(6) services as provided in this clause:
(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not include services provided by coin operated facilities operated by the customer;
(ii) motor vehicle washing, waxing, and cleaning services, including services provided by coin operated facilities operated by the customer, and rustproofing, undercoating, and towing of motor vehicles;
(iii) building and residential cleaning, maintenance, and disinfecting services and pest control and exterminating services;
(iv) detective, security, burglar, fire alarm, and armored car services; but not including services performed within the jurisdiction they serve by off-duty licensed peace officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit organization for monitoring and electronic surveillance of persons placed on in-home detention pursuant to court order or under the direction of the Minnesota Department of Corrections;
(v) pet grooming services;
(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor plant care; tree, bush, shrub, and stump removal, except when performed as part of a land clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for public utility lines. Services performed under a construction contract for the installation of shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
(vii) massages, except when provided by a licensed health care facility or professional or upon written referral from a licensed health care facility or professional for treatment of illness, injury, or disease; and
(viii) the furnishing of lodging, board, and care services for animals in kennels and other similar arrangements, but excluding veterinary and horse boarding services.
In applying the provisions of this chapter, the terms "tangible personal property" and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii), and the provision of these taxable services, unless specifically provided otherwise. Services performed by an employee for an employer are not taxable. Services performed by a partnership or association for another partnership or association are not taxable if one of the entities owns or controls more than 80 percent of the voting power of the equity interest in the other entity. Services performed between members of an affiliated group of corporations are not taxable.
For purposes of the preceding sentence, "affiliated group of corporations" means those entities that would be classified as members of an affiliated group as defined under United States Code, title 26, section 1504, disregarding the exclusions in section 1504(b).
For purposes of clause (5), "road construction" means construction of (1) public roads, (2) cartways, and (3) private roads in townships located outside of the seven-county metropolitan area up to the point of the emergency response location sign.
(h) A sale and a purchase includes the furnishing for a consideration of tangible personal property or taxable services by the United States or any of its agencies or instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political subdivisions.
(i) A sale and a purchase includes the
furnishing for a consideration of telecommunications services, ancillary
services associated with telecommunication services, cable television services,
and direct satellite services, and ring tones. Telecommunication services include, but are
not limited to, the following services, as defined in section 297A.669: air-to-ground radiotelephone service, mobile
telecommunication service, postpaid calling service, prepaid calling service,
prepaid wireless calling service, and private communication services. The services in this paragraph are taxed to
the extent allowed under federal law.
(j) A sale and a purchase includes the furnishing for a consideration of installation if the installation charges would be subject to the sales tax if the installation were provided by the seller of the item being installed.
(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer to a customer when (1) the vehicle is rented by the customer for a consideration, or (2) the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section 59B.02, subdivision 11.
EFFECTIVE
DATE. This section is
effective for sales and purchases made after June 30, 2011, except the changes
made to paragraph (g), clause (2), are effective the day following final
enactment.
Sec. 2. Minnesota Statutes 2010, section 297A.61, subdivision 25, is amended to read:
Subd. 25. Cable
television service. "Cable
television service" means the transmission of video, audio, or other
programming service to purchasers, and the subscriber interaction, if any,
required for the selection or use of the programming service, regardless of
whether the programming is transmitted over facilities owned or operated by the
cable service provider or over facilities owned or operated by one or more
dealers of communications services. The
term includes point-to-multipoint distribution services by which programming is
transmitted or broadcast by microwave or other equipment directly to the
subscriber's premises. The term includes
basic, extended, premium, pay-per-view, digital, and music services.
EFFECTIVE
DATE. This section is
effective for sales and purchases made after June 30, 2011.
Sec. 3. Minnesota Statutes 2010, section 297A.61, subdivision 27, is amended to read:
Subd. 27. Direct
satellite service. "Direct
satellite service" means the transmission of video, audio, or other
programming services transmitted or broadcast by satellite directly to
the subscriber's premises subscriber without the use of ground
receiving or distribution equipment, except at the subscriber's premises
subscriber location or in the uplink process to the satellite. The term also includes any subscriber
interaction, if any, required for the selection or use of the programming
service as well as any point-to-multipoint distribution services transmitted or
broadcast by satellite or other equipment directly to the subscriber. The term includes any and all service
packages and formats as well as pay-per-view, digital video recorder, and
digital music services.
EFFECTIVE
DATE. This section is
effective for sales and purchases made after June 30, 2011.
Sec. 4. Minnesota Statutes 2010, section 297A.61, is amended by adding a subdivision to read:
Subd. 47. Accommodations
intermediary. "Accommodations
intermediary" means any person or entity, other than an accommodations
provider, that facilitates the sale of lodging as defined in subdivision 3,
paragraph (g), clause (2), and that charges a room charge to a customer. The term "facilitates the sale" includes
brokering, coordinating, or in any way arranging for the purchase of or the
right to use accommodations by a customer.
EFFECTIVE
DATE. This section is
effective the day following final enactment.
Sec. 5. Minnesota Statutes 2010, section 297A.61, is amended by adding a subdivision to read:
Subd. 48. Accommodations
provider. "Accommodations
provider" means any person or entity that furnishes lodging as defined in
subdivision 3, paragraph (g), clause (2), to the general public for
compensation. The term
"furnishes" includes the sale of use or possession, or the sale of
the right to use or possess.
EFFECTIVE
DATE. This section is
effective the day following final enactment.
Sec. 6. Minnesota Statutes 2010, section 297A.64, subdivision 1, is amended to read:
Subdivision 1. Tax
imposed. A tax is imposed on the
lease or rental in this state for not more than 28 days of a passenger automobile as defined in section
168.002, subdivision 24, a van as defined in section 168.002, subdivision 40,
or a pickup truck as defined in section 168.002, subdivision 26. The rate of tax is 6.2 7.2
percent of the sales price. The tax
applies whether or not the vehicle is licensed in the state.
EFFECTIVE
DATE. This section is
effective for leases or rentals entered into after June 30, 2011.
Sec. 7. Minnesota Statutes 2010, section 297A.66, is amended by adding a subdivision to read:
Subd. 4a. Solicitor. (a) A retailer is presumed to have a
solicitor in this state if it enters into an agreement with a resident under
which the resident, for a commission or other consideration, directly or
indirectly refers potential customers, whether by a link on an Internet Web
site, or otherwise, to the seller. This
paragraph only applies if the total gross receipts from sales to customers
located in this state who were referred to the retailer by all residents with
this type of agreement with the retailer are at least $10,000 in the 12-month
period ending on the last day of the most recent calendar quarter before the
calendar quarter in which the sale is made.
(b) The presumption under paragraph (a)
may be rebutted by proof that the resident with whom the retailer has an
agreement did not engage in any solicitation in this state on behalf of the
retailer that would satisfy the nexus requirements of the United States
Constitution during the 12-month period in question. Nothing in this section shall be construed to
narrow the scope of the terms affiliate, agent, salesperson, canvasser, or
other representative for purposes of subdivision 1, paragraph (a).
(c) For purposes of this paragraph,
"resident" includes an individual who is a resident of this state, as
defined in section 290.01, or a business that owns tangible personal property
located in this state or has one or more employees providing services for it in
this state.
EFFECTIVE
DATE. This section is
effective for sales and purchases made after June 30, 2011.
Sec. 8. Minnesota Statutes 2010, section 297A.66, is amended by adding a subdivision to read:
Subd. 6. Lodging
services. An accommodations
intermediary shall collect sales tax and remit it to the commissioner under
section 297A.77 for services provided in connection with or for lodging located
in this state.
EFFECTIVE
DATE. This section is effective
the day following final enactment.
Sec. 9. Minnesota Statutes 2010, section 297A.668, is amended by adding a subdivision to read:
Subd. 9. Florist sales. (a) Notwithstanding other subdivisions of this section, the retail sale of "florist sales" is sourced as follows:
(1) When a Minnesota retailer takes a
florist sales order directly from a customer, whether or not the customer is
physically present in Minnesota when placing the order, and delivers the items
to the customer or a third person, either within this state or outside this
state, and regardless of the delivery method, the florist sale is sourced
according to subdivision 2.
(2) When one retailer transmits a
florist sales order to another retailer of florist sales through a floral network
service or floral delivery association, whether by telephone, telegraph,
Internet, or other means of communication, the florist sale is sourced to the
location of the retailer which originally takes the order from the customer and
accepts payment.
(b) For purposes of this subdivision,
florist sales means sales at retail of flowers, wreaths, floral bouquets,
potted plants, hospital baskets, funeral designs, seeds, nursery seedling
stock, trees, shrubs, plants, sod, soil, bulbs, sand, rock, and all other
floral or nursery products.
EFFECTIVE
DATE. This section is
effective for sales and purchases made after June 30, 2011.
Sec. 10. Minnesota Statutes 2010, section 297A.70, subdivision 6, is amended to read:
Subd. 6. Ambulances. The lease of a motor vehicle for use
as an ambulance by an ambulance service licensed under section 144E.10 that
is equipped and specifically intended for emergency response or for providing
ambulance services is exempt.
EFFECTIVE
DATE. This section is effective
for sales and purchases made after June 30, 2011.
Sec. 11. Minnesota Statutes 2010, section 297A.94, is amended to read:
297A.94
DEPOSIT OF REVENUES.
(a) Except as provided in this section, the commissioner shall deposit the revenues, including interest and penalties, derived from the taxes imposed by this chapter in the state treasury and credit them to the general fund.
(b) The commissioner shall deposit taxes in the Minnesota agricultural and economic account in the special revenue fund if:
(1) the taxes are derived from sales and use of property and services purchased for the construction and operation of an agricultural resource project; and
(2) the purchase was made on or after the date on which a conditional commitment was made for a loan guaranty for the project under section 41A.04, subdivision 3.
The commissioner of management and budget shall certify to the commissioner the date on which the project received the conditional commitment. The amount deposited in the loan guaranty account must be reduced by any refunds and by the costs incurred by the Department of Revenue to administer and enforce the assessment and collection of the taxes.
(c) The commissioner shall deposit the revenues, including interest and penalties, derived from the taxes imposed on sales and purchases included in section 297A.61, subdivision 3, paragraph (g), clauses (1) and (4), in the state treasury, and credit them as follows:
(1) first to the general obligation special tax bond debt service account in each fiscal year the amount required by section 16A.661, subdivision 3, paragraph (b); and
(2) after the requirements of clause (1) have been met, the balance to the general fund.
(d) The commissioner shall deposit the revenues, including interest and penalties, collected under section 297A.64, subdivision 5, in the state treasury and credit them to the general fund. By July 15 of each year the commissioner shall transfer to the highway user tax distribution fund an amount equal to the excess fees collected under section 297A.64, subdivision 5, for the previous calendar year.
(e) For fiscal year 2001, 97 percent; for fiscal years 2002 and 2003, 87 percent; and for fiscal year 2004 and thereafter, 72.43 percent of the revenues, including interest and penalties, transmitted to the commissioner under section 297A.65, must be deposited by the commissioner in the state treasury as follows:
(1) 50 percent of the receipts must be deposited in the heritage enhancement account in the game and fish fund, and may be spent only on activities that improve, enhance, or protect fish and wildlife resources, including conservation, restoration, and enhancement of land, water, and other natural resources of the state;
(2) 22.5 percent of the receipts must be deposited in the natural resources fund, and may be spent only for state parks and trails;
(3) 22.5 percent of the receipts must be deposited in the natural resources fund, and may be spent only on metropolitan park and trail grants;
(4) three percent of the receipts must be deposited in the natural resources fund, and may be spent only on local trail grants; and
(5) two percent of the receipts must be deposited in the natural resources fund, and may be spent only for the Minnesota Zoological Garden, the Como Park Zoo and Conservatory, and the Duluth Zoo.
(f) The revenue dedicated under paragraph (e) may not be used as a substitute for traditional sources of funding for the purposes specified, but the dedicated revenue shall supplement traditional sources of funding for those purposes. Land acquired with money deposited in the game and fish fund under paragraph (e) must be open to public hunting and fishing during the open season, except that in aquatic management areas or on lands where angling easements have been acquired, fishing may be prohibited during certain times of the year and hunting may be prohibited. At least 87 percent of the money deposited in the game and fish fund for improvement, enhancement, or protection of fish and wildlife resources under paragraph (e) must be allocated for field operations.
(g) The revenues deposited under paragraphs (a) to (f) do not include the revenues, including interest and penalties, generated by the sales tax imposed under section 297A.62, subdivision 1a, which must be deposited as provided under the Minnesota Constitution, article XI, section 15.
(h)
The commissioner shall deposit 13.89 percent of the revenues collected under
section 297A.64, subdivision 1, in the state treasury and credit them to
a special revenue fund dedicated to Explore Minnesota Tourism for promotional
and marketing purposes under chapter 116U.
EFFECTIVE
DATE. This section is
effective for leases or rentals entered into after June 30, 2011.
Sec. 12. Minnesota Statutes 2010, section 297B.03, is amended to read:
297B.03
EXEMPTIONS.
There is specifically exempted from the provisions of this chapter and from computation of the amount of tax imposed by it the following:
(1) purchase or use, including use under a lease purchase agreement or installment sales contract made pursuant to section 465.71, of any motor vehicle by the United States and its agencies and instrumentalities and by any person described in and subject to the conditions provided in section 297A.67, subdivision 11;
(2) purchase or use of any motor vehicle by any person who was a resident of another state or country at the time of the purchase and who subsequently becomes a resident of Minnesota, provided the purchase occurred more than 60 days prior to the date such person began residing in the state of Minnesota and the motor vehicle was registered in the person's name in the other state or country;
(3) purchase or use of any motor vehicle by any person making a valid election to be taxed under the provisions of section 297A.90;
(4) purchase or use of any motor vehicle previously registered in the state of Minnesota when such transfer constitutes a transfer within the meaning of section 118, 331, 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 1563(a) of the Internal Revenue Code;
(5) purchase or use of any vehicle owned by a resident of another state and leased to a Minnesota-based private or for-hire carrier for regular use in the transportation of persons or property in interstate commerce provided the vehicle is titled in the state of the owner or secured party, and that state does not impose a sales tax or sales tax on motor vehicles used in interstate commerce;
(6) purchase or use of a motor vehicle by a private nonprofit or public educational institution for use as an instructional aid in automotive training programs operated by the institution. "Automotive training programs" includes motor vehicle body and mechanical repair courses but does not include driver education programs;
(7) purchase of a motor vehicle for use
as an ambulance by an ambulance service licensed under section 144E.10 when
that vehicle is equipped and specifically intended for emergency response or
for providing ambulance services;
(8) purchase of a motor vehicle by or for a public library, as defined in section 134.001, subdivision 2, as a bookmobile or library delivery vehicle;
(9) purchase of a ready-mixed concrete truck;
(10) purchase or use of a motor vehicle by a town for use exclusively for road maintenance, including snowplows and dump trucks, but not including automobiles, vans, or pickup trucks;
(11) purchase or use of a motor vehicle by a corporation, society, association, foundation, or institution organized and operated exclusively for charitable, religious, or educational purposes, except a public school, university, or library, but only if the vehicle is:
(i) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a passenger automobile, as defined in section 168.002, if the automobile is designed and used for carrying more than nine persons including the driver; and
(ii) intended to be used primarily to transport tangible personal property or individuals, other than employees, to whom the organization provides service in performing its charitable, religious, or educational purpose;
(12) purchase of a motor vehicle for use by a transit provider exclusively to provide transit service is exempt if the transit provider is either (i) receiving financial assistance or reimbursement under section 174.24 or 473.384, or (ii) operating under section 174.29, 473.388, or 473.405;
(13) purchase or use of a motor vehicle by a qualified business, as defined in section 469.310, located in a job opportunity building zone, if the motor vehicle is principally garaged in the job opportunity building zone and is primarily used as part of or in direct support of the person's operations carried on in the job opportunity building zone. The exemption under this clause applies to sales, if the purchase was made and delivery received during the duration of the job opportunity building zone. The exemption under this clause also applies to any local sales and use tax; and
(14) purchase of a leased vehicle by the lessee who was a participant in a lease-to-own program from a charitable organization that is:
(i) described in section 501(c)(3) of the Internal Revenue Code; and
(ii) licensed as a motor vehicle lessor under section 168.27, subdivision 4.
EFFECTIVE
DATE. This section is
effective the day following final enactment.
Sec. 13. REVISOR'S
INSTRUCTION.
In Minnesota Rules, part 8130.9700, the
revisor of statutes shall remove the last sentence in subpart 3, item B, that
reads "Use of equipment on a time-sharing basis, where access to the
equipment is only by means of remote access facilities, is not taxable leasing
of such equipment."
EFFECTIVE
DATE. This section is
effective for sales and purchases made after June 30, 2011.
Sec. 14. REPEALER.
Minnesota Rules, part 8130.0500,
subpart 2, is repealed.
EFFECTIVE
DATE. This section is
effective for sales and purchases made after June 30, 2011.
ARTICLE 4
SPECIAL TAXES
Section 1. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision to read:
Subd. 2a. Affiliated
group. "Affiliated
group" means a group that includes the insured and any entity, or group of
entities, that controls, is controlled by, or is under common control with the
insured. An entity has control over
another entity when: (1) the entity
directly or indirectly or acting through one or more other persons owns,
controls, or has the power to vote 25 percent or more of any class of voting
securities of the other entity; or (2) the entity controls in any manner the
election of a majority of the directors or trustees of the other entity.
EFFECTIVE
DATE. This section is
effective for nonadmitted insurance policies that go into effect after July 20,
2011.
Sec. 2. Minnesota Statutes 2010, section 297I.01, subdivision 9, is amended to read:
Subd. 9. Gross premiums. "Gross premiums" means total premiums paid by policyholders and applicants of policies, whether received in the form of money or other valuable consideration, on property, persons, lives, interests and other risks located, resident, or to be performed in this state, but excluding consideration and premiums for reinsurance assumed from other insurance companies.
(a) "Gross premiums" includes the total consideration paid to bail bond agents for bail bonds.
(b) For title insurance companies, "gross premiums" means the charge for title insurance made by a title insurance company or its agents according to the company's rate filing approved by the commissioner of commerce without a deduction for commissions paid to or retained by the agent. Gross premiums of a title insurance company does not include any other charge or fee for abstracting, searching, or examining the title, or escrow, closing, or other related services.
(c) "Gross premiums" includes any workers' compensation special compensation fund premium surcharge pursuant to section 176.129.
(d) "Gross premiums" for surplus
lines nonadmitted insurance includes all related charges,
commissions, and fees received by the licensee any payment made as
consideration for an insurance contract for such insurance, including premium
deposits, assessments, fees, and any other compensation given in consideration
for a contract of insurance. Gross
premiums does not include the stamping fee, as provided under section 60A.2085,
subdivision 7, nor the operating assessment, as provided under section 60A.208,
subdivision 8.
EFFECTIVE
DATE. This section is
effective for nonadmitted insurance policies that go into effect after July 20,
2011.
Sec. 3. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision to read:
Subd. 10a. Home
state. "Home state"
means the state in which an insured maintains its principal place of business,
or in the case of an individual, the individual's principal residence; or if
100 percent of the insured risk is located out of the state, the state to which
the greatest percentage of the insured's taxable premium for that insurance
contract is allocated. If more than one
insured from an affiliated group are named insureds on a single nonadmitted
insurance contract, the term home state means the home state of the member of
the affiliated group that has the largest percentage of premium attributed to
it under that insurance contract.
EFFECTIVE
DATE. This section is
effective for nonadmitted insurance policies that go into effect after July 20,
2011.
Sec. 4. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision to read:
Subd. 10b. Independently
procured insurance. "Independently
procured insurance" means insurance procured directly by an insured from a
nonadmitted insurer.
EFFECTIVE
DATE. This section is
effective for nonadmitted insurance policies that go into effect after July 20,
2011.
Sec. 5. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision to read:
Subd. 10c. Nonadmitted
insurance. "Nonadmitted
insurance" means any property and casualty insurance permitted to be
placed directly or through a surplus lines broker with a nonadmitted insurer.
EFFECTIVE
DATE. This section is
effective for nonadmitted insurance policies that go into effect after July 20,
2011.
Sec. 6. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision to read:
Subd. 10d. Nonadmitted
insurance premium tax. "Nonadmitted
insurance premium tax" means, with respect to surplus lines or
independently procured insurance coverage, any tax, fee, assessment, or other
charge imposed directly or indirectly by a government entity.
EFFECTIVE
DATE. This section is
effective for nonadmitted insurance policies that go into effect after July 20,
2011.
Sec. 7. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision to read:
Subd. 10e. Nonadmitted
insurer. "Nonadmitted
insurer" means an insurer not licensed to engage in the business of
insurance in Minnesota, but does not include a risk retention group as the term
is defined in section 2(a)(4) of the Liability Risk Retention Act of 1986,
United States Code, title 15, section 3901(a)(4).
EFFECTIVE
DATE. This section is
effective for nonadmitted insurance policies that go into effect after July 20,
2011.
Sec. 8. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision to read:
Subd. 15a. Surplus
lines broker. "Surplus
lines broker" means an individual, firm, or corporation which is licensed
in a state to sell, solicit, or negotiate insurance on properties, risks, or
exposures located or to be performed in a state with nonadmitted insurers.
EFFECTIVE
DATE. This section is
effective for nonadmitted insurance policies that go into effect after July 20,
2011.
Sec. 9. Minnesota Statutes 2010, section 297I.01, subdivision 16, is amended to read:
Subd. 16. Taxpayer. "Taxpayer" means any insurance
company, association, surplus lines licensee broker, automobile
risk self-insurer, or insured or any other person or entity required to pay any
amount due under this chapter.
EFFECTIVE
DATE. This section is
effective for nonadmitted insurance policies that go into effect after July 20,
2011.
Sec. 10. Minnesota Statutes 2010, section 297I.05, subdivision 7, is amended to read:
Subd. 7. Surplus
lines Nonadmitted insurance premium tax. (a) A tax is imposed on surplus lines licensees
brokers. The rate of tax is equal
to three percent of the gross premiums less return premiums paid by an
insured whose home state is Minnesota.
(b) If surplus lines insurance placed by
a surplus lines licensee and taxed under this subdivision covers a subject of insurance
residing, located, or to be performed outside this state, a proper pro rata
portion of the entire premium payable for all of that insurance must be
allocated according to the subjects of insurance residing, located, or to be
performed in this state. A tax is
imposed on persons, firms, or corporations that procure insurance directly from
a nonadmitted insurer. The rate of tax
is equal to two percent of the gross premiums less return premiums paid by an
insured whose home state is Minnesota.
(c) No state other than the home state
of an insured may require any premium tax payment for nonadmitted insurance. When Minnesota is the home state of the
insured, as provided under section 297I.01, 100 percent of the gross premiums
are taxable in Minnesota with no allocation of the tax to other states.
EFFECTIVE
DATE. This section is
effective for nonadmitted insurance policies that go into effect after July 20,
2011.
Sec. 11. Minnesota Statutes 2010, section 297I.05, subdivision 12, is amended to read:
Subd. 12. Other entities. (a) A tax is imposed equal to two percent of:
(1) gross
premiums less return premiums written for risks resident or located in
Minnesota by a risk retention group;
(2) gross premiums less return premiums received by an attorney in fact acting in accordance with chapter 71A;
(3) gross premiums less return premiums received pursuant to assigned risk policies and contracts of coverage under chapter 79;
(4) the direct funded premium received by the reinsurance association under section 79.34 from self-insurers approved under section 176.181 and political subdivisions that self-insure; and
(5) gross premiums less return premiums paid
to an insurer other than a licensed insurance company or a surplus lines licensee
broker for coverage of risks resident or located in Minnesota by a
purchasing group or any members of the purchasing group to a broker or agent
for the purchasing group.
(b) A tax is imposed on a joint self-insurance plan operating under chapter 60F. The rate of tax is equal to two percent of the total amount of claims paid during the fund year, with no deduction for claims wholly or partially reimbursed through stop-loss insurance.
(c) A tax is imposed on a joint self-insurance plan operating under chapter 62H. The rate of tax is equal to two percent of the total amount of claims paid during the fund's fiscal year, with no deduction for claims wholly or partially reimbursed through stop-loss insurance.
(d) A tax is imposed equal to the tax imposed under section 297I.05, subdivision 5, on the gross premiums less return premiums on all coverages received by an accountable provider network or agents of an accountable provider network in Minnesota, in cash or otherwise, during the year.
EFFECTIVE
DATE. This section is
effective for nonadmitted insurance policies that go into effect after July 20,
2011.
Sec. 12. Minnesota Statutes 2010, section 297I.30, subdivision 1, is amended to read:
Subdivision 1. General
rule. On or before March 1, every
taxpayer subject to taxation under section 297I.05, subdivisions 1 to 5, 9,
10 7, paragraph (b), 12, paragraphs (a), clauses (1) to (4), (b),
(c), and (d), and 14, shall file an annual return for the preceding calendar
year in the form prescribed by the commissioner.
EFFECTIVE
DATE. This section is
effective for nonadmitted insurance policies that go into effect after July 20,
2011.
Sec. 13. Minnesota Statutes 2010, section 297I.30, subdivision 2, is amended to read:
Subd. 2. Surplus
lines licensees brokers and purchasing groups. On or before February 15 and August 15 of
each year, every surplus lines licensee broker subject to
taxation under section 297I.05, subdivision 7, paragraph (a), and every
purchasing group or member of a purchasing group subject to tax under section
297I.05, subdivision 12, paragraph (a), clause (5), shall file a return with
the commissioner for the preceding six-month period ending December 31, or June
30, in the form prescribed by the commissioner.
EFFECTIVE
DATE. This section is
effective for nonadmitted insurance policies that go into effect after July 20,
2011.
Sec. 14. REPEALER.
(a) Minnesota Statutes 2010, section
297F.14, subdivision 4, is repealed.
(b) Minnesota Statutes 2010, section
297I.05, subdivisions 9 and 10, are repealed.
EFFECTIVE DATE. Paragraph (a) is effective for claims filed after June 30, 2011. Paragraph (b) is effective for nonadmitted insurance policies that go into effect after July 20, 2011."
Delete the title and insert:
"A bill for an act relating to taxation; making policy, technical, administrative, enforcement, and other changes to individual income, corporate franchise, estate, sales and use, insurance, and other taxes and tax-related provisions; conforming to changes made to the Internal Revenue Code; amending Minnesota Statutes 2010, sections 270C.01, by adding subdivisions; 270C.03, subdivision 1; 289A.02, subdivision 7, as amended; 289A.08, subdivision 3; 289A.60, by adding a subdivision; 290.01, subdivisions 7, 19, as amended, 19a, as amended, 19b, 19c, as amended, 19d, 22, 29, 31, as amended; 290.014, subdivision 5; 290.05, subdivision 1; 290.06, subdivisions 2c, 2d, 22; 290.0671, subdivision 1; 290.0675, subdivision 1; 290.068, subdivisions 1, 2; 290.0921, subdivisions 1, 2, 3, 6; 290.0922, subdivisions 1, 2; 290.093; 290.095, subdivisions 2, 3; 290.17, subdivisions 1, 2, 3, 4; 290.191, subdivisions 2, 5; 290.21, subdivision 4; 290.9201, subdivision 11; 290A.03, subdivision 15, as amended; 291.005, subdivision 1; 297A.61, subdivisions 3, 25, 27, by adding subdivisions; 297A.64, subdivision 1; 297A.66, by adding subdivisions; 297A.668, by adding a subdivision; 297A.70, subdivision 6; 297A.94; 297B.03; 297I.01, subdivisions 9, 16, by adding subdivisions; 297I.05, subdivisions 7, 12; 297I.20, subdivision 1; 297I.30, subdivisions 1, 2; proposing coding for new law in Minnesota Statutes, chapters 270C; 290; repealing Minnesota Statutes 2010, sections 290.01, subdivision 6b; 290.0678; 290.9201, subdivision 3; 297F.14, subdivision 4; 297I.05, subdivisions 9, 10; Minnesota Rules, part 8130.0500, subpart 2."
Signed:
Sarah
Anderson Mary Liz Holberg
Anderson, S., moved that the Minority
Report on H. F. No. 1261 be substituted for the Majority Report and that the
Minority Report be now adopted.
A roll call was requested and properly
seconded.
The Speaker called Davids to the Chair.
Champion was excused between the hours of
12:50 p.m. and 2:15 p.m.
POINT OF
ORDER
Hosch raised a point of order pursuant to
rule 2.32 relating to Order in Debate.
Speaker pro tempore Davids ruled the point of order well taken.
Speaker pro tempore Davids called Holberg
to the Chair.
The
Speaker resumed the Chair.
The Speaker called Westrom to the Chair.
Rukavina was excused between the hours of
3:20 p.m. and 8:05 p.m.
CALL OF
THE HOUSE
On the motion of Hilstrom and on the
demand of 10 members, a call of the House was ordered. The following members answered to their
names:
Abeler
Anderson, B.
Anderson, D.
Anderson, P.
Anderson, S.
Anzelc
Atkins
Banaian
Barrett
Benson, J.
Benson, M.
Bills
Brynaert
Buesgens
Carlson
Champion
Clark
Crawford
Daudt
Davids
Davnie
Dean
Dettmer
Dill
Dittrich
Doepke
Downey
Drazkowski
Eken
Erickson
Fabian
Falk
Franson
Fritz
Gauthier
Gottwalt
Greene
Greiling
Gruenhagen
Gunther
Hackbarth
Hamilton
Hancock
Hansen
Hausman
Hayden
Hilstrom
Hilty
Holberg
Hoppe
Hornstein
Hortman
Hosch
Howes
Huntley
Kahn
Kath
Kelly
Kieffer
Kiel
Kiffmeyer
Knuth
Koenen
Kriesel
Laine
Lanning
Leidiger
LeMieur
Lenczewski
Lesch
Liebling
Lillie
Loeffler
Lohmer
Loon
Mack
Mahoney
Mariani
Marquart
Mazorol
McDonald
McElfatrick
McFarlane
McNamara
Melin
Moran
Morrow
Mullery
Murdock
Murphy, E.
Murphy, M.
Murray
Myhra
Nelson
Nornes
Norton
O'Driscoll
Paymar
Pelowski
Peppin
Persell
Petersen, B.
Peterson, S.
Poppe
Quam
Runbeck
Sanders
Scalze
Schomacker
Scott
Shimanski
Simon
Slawik
Slocum
Smith
Stensrud
Swedzinski
Thissen
Tillberry
Torkelson
Urdahl
Vogel
Wagenius
Ward
Wardlow
Westrom
Winkler
Woodard
Spk. Zellers
Dean moved that further proceedings of the
roll call be suspended and that the Sergeant at Arms be instructed to bring in
the absentees. The motion prevailed and
it was so ordered.
The question recurred on the adoption of
the Minority Report on H. F. No. 1261 and the roll was called. There were 60 yeas and 73 nays as follows:
Those who voted in the affirmative were:
Anzelc
Atkins
Benson, J.
Brynaert
Carlson
Champion
Clark
Davnie
Dill
Dittrich
Eken
Falk
Fritz
Gauthier
Greene
Greiling
Hansen
Hausman
Hayden
Hilstrom
Hilty
Hornstein
Hortman
Hosch
Huntley
Johnson
Kahn
Kath
Knuth
Koenen
Laine
Lenczewski
Lesch
Liebling
Lillie
Loeffler
Mahoney
Mariani
Marquart
Melin
Moran
Morrow
Mullery
Murphy, E.
Murphy, M.
Nelson
Norton
Paymar
Persell
Peterson, S.
Poppe
Scalze
Simon
Slawik
Slocum
Thissen
Tillberry
Wagenius
Ward
Winkler
Those who voted in the negative were:
Abeler
Anderson, B.
Anderson, D.
Anderson, P.
Anderson, S.
Banaian
Barrett
Beard
Benson, M.
Bills
Buesgens
Cornish
Crawford
Daudt
Davids
Dean
Dettmer
Doepke
Downey
Drazkowski
Erickson
Fabian
Franson
Garofalo
Gottwalt
Gruenhagen
Gunther
Hackbarth
Hamilton
Hancock
Holberg
Hoppe
Howes
Kelly
Kieffer
Kiel
Kiffmeyer
Kriesel
Lanning
Leidiger
LeMieur
Lohmer
Loon
Mack
Mazorol
McDonald
McElfatrick
McFarlane
McNamara
Murdock
Murray
Myhra
Nornes
O'Driscoll
Pelowski
Peppin
Petersen, B.
Quam
Runbeck
Sanders
Schomacker
Scott
Shimanski
Smith
Stensrud
Swedzinski
Torkelson
Urdahl
Vogel
Wardlow
Westrom
Woodard
Spk. Zellers
The motion did not prevail and the
Minority Report on H. F. No. 1261 was not adopted.
The
Speaker resumed the Chair.
The question recurred on the adoption of
the Majority Report from the Committee on Ways and Means relating to
H. F. No. 1261. The
Majority Report on H. F. No. 1261 was adopted.
Holberg from the Committee on
Ways and Means to which was referred:
H. F. No. 1423, A bill for an act relating to
human services; providing for adoption assistance reform, child protection,
child support, and technical and conforming amendments; amending Minnesota
Statutes 2010, sections 256.01, subdivision 14b; 257.01; 257.75, subdivision 7;
259.73; 260.012; 260C.001; 260C.007, subdivision 4, by adding subdivisions;
260C.101, subdivision 2; 260C.150, subdivision 1; 260C.157, subdivisions 1, 3;
260C.163, subdivisions 1, 4, 8; 260C.178, subdivisions 1, 7; 260C.193,
subdivisions 3, 6; 260C.201, subdivisions 2, 10; 260C.212, subdivisions 5, 7;
260C.215, subdivisions 4, 6; 260C.301, subdivisions 1, 8; 260C.328; 260C.451;
260D.08; 518C.205; 626.556, subdivisions 2, 10, 10e, 10f, 10i, 10k; proposing
coding for new law in Minnesota Statutes, chapters 260C; 611; proposing coding
for new law as Minnesota Statutes, chapter 259A.
Reported the same back with the recommendation that the bill
pass.
The
report was adopted.
Holberg from the Committee on
Ways and Means to which was referred:
H. F. No. 1611, A bill for an act relating to
agriculture; changing certain programs, requirements, fees, and duties;
appropriating money; amending Minnesota Statutes 2010, sections 18B.03,
subdivision 1, as amended; 18B.065, by adding a subdivision; 18B.316,
subdivision 6; 18G.07, subdivision 1; 18G.10, subdivisions 5, 7, by adding a subdivision; 18H.07, subdivisions 2, 3;
18H.10; 18H.14; 21.82, subdivisions 7, 8; 35.0661, subdivisions 2, 3; 41A.105, by adding a subdivision; 41A.12,
subdivisions 2, 4; 115.03, by adding a subdivision; 116.07, subdivision 7d;
223.17, subdivision 6; 232.22, subdivisions 3, 4, 5; 232.23, subdivision 10;
232.24, subdivisions 1, 2; 236.02, subdivision 5, by adding a subdivision; Laws
2011, chapter 14, section 6; proposing coding for new law as Minnesota
Statutes, chapter 32C; repealing Minnesota Statutes 2010, sections 17B.01;
17B.02; 17B.03; 17B.04;
17B.041; 17B.0451; 17B.048; 17B.05; 17B.06; 17B.07; 17B.10;
17B.11; 17B.12; 17B.13; 17B.14; 17B.15, subdivisions
1, 3; 17B.16; 17B.17; 17B.18; 17B.20; 17B.22, subdivisions 1, 2; 17B.28;
17B.29; 232.24, subdivision 3; 395.14; 395.15; 395.16; 395.17; 395.18;
395.19; 395.20; 395.21; 395.22; 395.23; 395.24; Minnesota Rules, parts
1505.0780; 1505.0810; 1562.0100, subparts 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13,
14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25; 1562.0200; 1562.0700, subparts
1b, 3; 1562.0900; 1562.1300.
Reported the same back with the following amendments:
Page 21, delete section 36
Renumber the sections in sequence
Amend the title as follows:
Page 1, line 3, delete "appropriating money;"
With the recommendation that when so amended the bill pass.
The
report was adopted.
Holberg from the Committee on
Ways and Means to which was referred:
S. F. No. 346, A bill for an act relating to
the Mississippi River Parkway Commission; changing its expiration date;
amending Minnesota Statutes 2010, section 161.1419, subdivision 8.
Reported the same back with the following amendments:
Delete everything after the enacting clause and insert:
"Section 1. Minnesota
Statutes 2010, section 161.1419, subdivision 8, is amended to read:
Subd. 8. Expiration.
The commission expires on June 30, 2012 2016."
Delete the title and insert:
"A bill for an act relating to the Mississippi River
Parkway Commission; changing its expiration date; amending Minnesota Statutes
2010, section 161.1419, subdivision 8."
With the recommendation that when so amended the bill pass.
The
report was adopted.
SECOND READING
OF HOUSE BILLS
H. F. Nos. 191, 211, 637,
650, 705, 1025, 1068, 1261, 1423 and 1611 were read for the second time.
SECOND READING
OF SENATE BILLS
S. F. Nos. 134, 301, 1009,
1083, 1143, 1265, 1285 and 346 were read for the second time.
INTRODUCTION AND FIRST READING OF
HOUSE BILLS
The
following House Files were introduced:
Dill introduced:
H. F. No. 1718, A bill for an act relating to capital investment; appropriating money for repairs to an elevator shaft in Soudan Underground Mine State Park; authorizing the sale and issuance of bonds.
The bill was read for the first time and referred to the Committee on Environment, Energy and Natural Resources Policy and Finance.
Gauthier, Smith, Johnson and Slocum introduced:
H. F. No. 1719, A bill for an act relating to public safety; adding the term drug and modifying the term hazardous substance for driving while impaired crimes; amending Minnesota Statutes 2010, sections 169A.03, by adding a subdivision; 169A.20, subdivisions 1, 1a, 1b, 1c; repealing Minnesota Statutes 2010, section 169A.03, subdivision 9.
The bill was read for the first time and referred to the Committee on Health and Human Services Reform.
Mullery introduced:
H. F. No. 1720, A bill for an act relating to state government; creating a council on the Rev. Dr. Martin Luther King, Jr. Holiday; proposing coding for new law in Minnesota Statutes, chapter 10.
The bill was read for the first time and referred to the Committee on Government Operations and Elections.
Gunther introduced:
H. F. No. 1721, A bill for an act relating to economic development; authorizing redevelopment demolition loans; amending Minnesota Statutes 2010, sections 116J.571; 116J.572; 116J.575, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 116J.
The bill was read for the first time and referred to the Committee on Jobs and Economic Development Finance.
MESSAGES FROM THE SENATE
The
following messages were received from the Senate:
Mr. Speaker:
I hereby announce the passage by the Senate of the following House File, herewith returned:
H. F. No. 724, A bill for an act relating to highways; removing Route No. 332 from trunk highway system; repealing Minnesota Statutes 2010, section 161.115, subdivision 263.
Cal R. Ludeman, Secretary of the Senate
Mr. Speaker:
I hereby announce that the Senate accedes to the request of the House for the appointment of a Conference Committee on the amendments adopted by the Senate to the following House File:
H. F. No. 201, A bill for an act relating to health; limiting use of funds for state-sponsored health programs for funding abortions.
The Senate has appointed as such committee:
Senators Thompson, Hall and Stumpf.
Said House File is herewith returned to the House.
Cal R. Ludeman, Secretary of the Senate
Mr. Speaker:
I hereby announce that the Senate accedes to the request of the House for the appointment of a Conference Committee on the amendments adopted by the Senate to the following House File:
H. F. No. 936, A bill for an act relating to health; prohibiting abortions at or after 20 weeks postfertilization age unless certain exceptions apply; providing civil and criminal penalties; amending Minnesota Statutes 2010, section 145.4131, subdivision 1; proposing coding for new law in Minnesota Statutes, chapters 8; 145.
The Senate has appointed as such committee:
Senators Hoffman, Kubly and Gazelka.
Said House File is herewith returned to the House.
Cal R. Ludeman, Secretary of the Senate
Mr. Speaker:
I hereby announce that the Senate accedes to the request of the House for the appointment of a Conference Committee on the amendments adopted by the Senate to the following House File:
H. F. No. 1326, A bill for an act relating to liquor; authorizing brewer taproom licenses; allowing a bed and breakfast to serve Minnesota beer; making clarifying, technical, and other changes to certain license provisions; authorizing the issuance of certain on-sale and off-sale licenses; amending Minnesota Statutes 2010, sections 340A.301, by adding a subdivision; 340A.4011, subdivision 2; 340A.404, subdivision 7, by adding subdivisions; 340A.412, subdivisions 4, 14.
The Senate has appointed as such committee:
Senators Gerlach, Dahms and Scheid.
Said House File is herewith returned to the House.
Cal R. Ludeman, Secretary of the Senate
Mr. Speaker:
I hereby announce the Senate refuses to concur in the House amendments to the following Senate File:
S. F. No. 1363, A bill for an act relating to state government; appropriating money from the outdoor heritage fund; appropriating money from the clean water fund; appropriating money from the parks and trails fund; appropriating money from the arts and cultural heritage fund; modifying certain outdoor heritage provisions; modifying the Clean Water Legacy Act; revising the Clean Water Council; providing appointments; amending Minnesota Statutes 2010, sections 10A.01, subdivision 35; 85.013, by adding a subdivision; 85.53, subdivisions 1, 5; 85.535, subdivision 1; 97A.056, subdivisions 2, 3, 5, 6, 9, 10, by adding a subdivision; 114D.10; 114D.20, subdivisions 1, 2, 3, 6, 7; 114D.35; 114D.50, subdivision 6; 116.195; 129D.18, subdivision 4; 129D.19, subdivision 5; Laws 2009, chapter 172, article 1, section 2, subdivisions 3, 15; Laws 2010, chapter 361, article 1, section 2, subdivision 14; proposing coding for new law in Minnesota Statutes, chapter 114D; repealing Minnesota Statutes 2010, sections 84.02, subdivisions 1, 2, 3, 4, 5, 6, 7, 8; 114D.30; 114D.45.
The Senate respectfully requests that a Conference Committee be appointed thereon. The Senate has appointed as such committee:
Senators Ingebrigtsen, Pederson, Nelson, Cohen and Hall.
Said Senate File is herewith transmitted to the House with the request that the House appoint a like committee.
Cal R. Ludeman, Secretary of the Senate
Urdahl moved that the House accede to the
request of the Senate and that the Speaker appoint a Conference Committee of 5
members of the House to meet with a like committee appointed by the Senate on
the disagreeing votes of the two houses on S. F. No. 1363. The motion prevailed.
Mr. Speaker:
I hereby announce the passage by the
Senate of the following Senate Files, herewith transmitted:
S. F. Nos. 149, 54, 530,
885, 1234 and 1270.
Cal R. Ludeman,
Secretary of the Senate
FIRST READING OF
SENATE BILLS
S. F. No. 149, A bill for an act relating to civil actions; modifying remedies related to certain unlawful or deceptive trade practice actions; permitting appeals of certain court orders related to class actions; amending Minnesota Statutes 2010, section 8.31, subdivision 3a, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 540.
The bill was read for the first time.
Wardlow moved that S. F. No. 149 and H. F. No. 211, now on the General Register, be referred to the Chief Clerk for comparison. The motion prevailed.
S. F. No. 54, A bill for an act relating to claims against the state; providing for settlement of certain claims; appropriating money.
The bill was read for the first time.
Smith moved that S. F. No. 54 and H. F. No. 104, now on the General Register, be referred to the Chief Clerk for comparison. The motion prevailed.
S. F. No. 530, A bill for an act relating to civil actions; regulating interest on verdicts, awards, and judgments; amending Minnesota Statutes 2010, section 549.09, subdivisions 1, 2.
The bill was read for the first time and referred to the Committee on Judiciary Policy and Finance.
S. F. No. 885, A bill for an act relating to legislative enactments; correcting erroneous, ambiguous, and omitted text and obsolete references; removing redundant, conflicting, and superseded provisions; making miscellaneous corrections to laws, statutes, and rules; amending Minnesota Statutes 2010, sections 5.15; 13.04, subdivision 4a; 13.319, subdivision 1; 13.3806, by adding a subdivision; 13.381, subdivision 1; 13.411, subdivision 1; 13.4967, subdivision 1; 13.607, subdivision 1; 13.6401, subdivision 1, by adding a subdivision; 13.6905, subdivision 1, by adding a subdivision; 13.7191, subdivision 1, by adding a subdivision; 13.785, subdivision 1; 13.7931, subdivision 1; 13.841, subdivision 1, by adding a subdivision; 13.851, subdivision 1, by adding a subdivision; 15B.24, subdivision 1; 60A.121, subdivision 5; 82.67, subdivision 3; 115A.072, subdivision 1; 115A.908, subdivision 2; 115B.25, subdivision 8; 115B.34, subdivision 1; 116W.03, subdivision 5; 120B.022, subdivision 1; 121A.15, subdivisions 8, 9; 123B.72, subdivision 3; 123B.76, subdivision 3; 125A.027, subdivision 4; 125A.29; 125A.56, subdivision 1; 127A.45, subdivision 12; 152.027, subdivision 4; 168.1293, subdivision 5; 168D.01, subdivision 4; 168D.02, subdivision 1; 169.771, subdivision 1; 174.82; 203B.06, subdivision 3; 204B.34, subdivision 1; 204C.13, subdivision 6; 205A.10, subdivision 2; 216B.1691, subdivision 5; 216B.1692, subdivisions 1, 2; 216C.01, subdivision 1a; 219.01; 239.002; 244.11, subdivision 3; 245B.031, subdivision 5; 256B.0625, subdivision 14;
260D.07; 268.046, subdivision 1; 273.054; 273.063; 273.1103; 279.33; 295.75, subdivision 9; 297I.01, subdivision 16; 299F.56, subdivisions 11, 16; 299F.57, subdivision 1; 299J.03, subdivision 2; 299M.03, subdivision 2; 326B.118; 326B.986, subdivision 4; 326B.992; 383D.411; 394.21, subdivision 3; 394.232; 462.3535, subdivisions 1, 8; 466.07, subdivision 1; 501B.16; 514.977; 515B.1-102; 517.08, subdivision 1b; 518D.314; 524.1-304; 572A.01, subdivision 1; 572A.02, subdivisions 5, 6; 572A.03, subdivision 2; 576.011, subdivision 1; 580.041, subdivision 2; 580.06, subdivision 2; 609.485, subdivision 2; 609.5314, subdivision 3; 609.902, subdivision 4; 611A.033; 628.56; 628.63; 628.68; 630.18; 631.05; Laws 2009, chapter 88, article 2, section 43; Laws 2010, chapter 184, section 18; Laws 2010, chapter 280, section 40; Laws 2010, chapter 382, section 87, subdivision 8; Laws 2010, chapter 389, article 1, sections 7; 8; 9; repealing Minnesota Statutes 2010, sections 462.3535, subdivisions 9, 10; 626.8441, subdivision 1; Laws 2006, chapter 259, article 13, section 10; Laws 2008, chapter 202, section 10; Laws 2009, chapter 82, section 2; Laws 2010, chapter 184, section 7; Laws 2010, chapter 310, article 6, section 1; article 16, section 2; Laws 2010, chapter 359, article 12, section 18; Laws 2010, chapter 392, article 1, section 6; Laws 2010, First Special Session chapter 1, article 15, section 8; Minnesota Rules, part 7890.0120, subpart 3.
The bill was read for the first time.
Wardlow moved that S. F. No. 885 and H. F. No. 1220, now on the General Register, be referred to the Chief Clerk for comparison. The motion prevailed.
S. F. No. 1234, A bill for an act relating to the secretary of state; simplifying certain certificates issued to business entities; modifying provisions governing certain contracts entered into by nonprofit corporations; modifying effective date of resignations of agents; revising notice provided to organizations; allowing use of an alternate name; redefining business entities; eliminating issuance of certificates to business trusts and municipal power agencies; amending Minnesota Statutes 2010, sections 5.001, subdivision 2; 302A.711, subdivision 4; 302A.734, subdivision 2; 302A.751, subdivision 1; 303.08, subdivision 2; 303.17, subdivisions 2, 3, 4; 317A.255, subdivision 1; 317A.711, subdivision 4; 317A.733, subdivision 4; 317A.751, subdivision 3; 318.02, subdivisions 1, 2; 321.0809; 321.0906; 322B.826, subdivision 2; 322B.935, subdivisions 2, 3; 323A.1102; 453.53, subdivision 2; 453A.03, subdivision 2; proposing coding for new law in Minnesota Statutes, chapter 323A; repealing Minnesota Statutes 2010, sections 302A.801; 302A.805; 308A.151; 317A.022, subdivision 1; 317A.801; 317A.805; 318.02, subdivision 5.
The bill was read for the first time and referred to the Committee on Rules and Legislative Administration.
S. F. No. 1270, A bill for an act relating to state government; changing a provision in geospatial advisory council and extending the expiration date; amending Minnesota Statutes 2010, section 16B.99, subdivision 8; repealing Minnesota Statutes 2010, section 16B.99, subdivision 9.
The bill was read for the first time.
Kahn moved that S. F. No. 1270 and H. F. No. 1411, now on the Calendar for the Day, be referred to the Chief Clerk for comparison. The motion prevailed.
ANNOUNCEMENT
BY THE SPEAKER
The Speaker announced the appointment of
the following members of the House to a Conference Committee on
S. F. No. 1363:
Urdahl, McFarlane, McNamara, Torkelson and
Murphy, M.
REPORT FROM THE COMMITTEE ON
RULES
AND LEGISLATIVE ADMINISTRATION
Dean from the Committee on Rules and
Legislative Administration, pursuant to rule 1.21, designated the following
bills to be placed on the Calendar for the Day for Tuesday, May 17, 2011:
H. F. Nos. 1500, 1358 and
1270; S. F. Nos. 955 and 249; and
H. F. Nos. 1408, 122, 1384 and 264.
CALL OF
THE HOUSE LIFTED
Dean moved that the call of the House be
lifted. The motion prevailed and it was
so ordered.
Dean moved that the House recess subject
to the call of the Chair. The motion
prevailed.
RECESS
RECONVENED
The House reconvened and was called to
order by the Speaker.
Laine was excused between the hours of
6:05 p.m. and 7:55 p.m.
There being no objection, the order of
business reverted to Messages from the Senate.
MESSAGES FROM THE SENATE
The
following messages were received from the Senate:
Mr. Speaker:
I hereby announce the passage by the Senate of the following House File, herewith returned:
H. F. No. 1425, A bill for an act relating to redistricting; adopting a legislative districting plan for use in 2012 and thereafter; amending Minnesota Statutes 2010, sections 2.031, subdivision 1; 2.91, subdivision 1; repealing Minnesota Statutes 2010, sections 2.031, subdivision 2; 2.444; 2.484.
Cal R. Ludeman, Secretary of the Senate
Mr. Speaker:
I hereby announce the passage by the Senate of the following House File, herewith returned:
H. F. No. 1426, A bill for an act relating to redistricting; adopting a congressional districting plan for use in 2012 and thereafter; adopting districting principles for legislative and congressional districts; amending Minnesota Statutes 2010, sections 2.731; 2.91, subdivision 1; repealing Minnesota Statutes 2010, section 2.031, subdivision 2.
Cal R. Ludeman, Secretary of the Senate
Mr.
Speaker:
I hereby announce the passage by the
Senate of the following Senate Files, herewith transmitted:
S. F. Nos. 302, 361, 1266,
1183 and 1205.
Cal R. Ludeman,
Secretary of the Senate
FIRST READING OF SENATE BILLS
S. F. No. 302, A bill for an act relating to insurance; regulating dental provider contracts and provider audits; amending Minnesota Statutes 2010, sections 62Q.76, by adding a subdivision; 62Q.78, by adding subdivisions.
The bill was read for the first time.
Davids moved that S. F. No. 302 and H. F. No. 122, now on the Calendar for the Day, be referred to the Chief Clerk for comparison. The motion prevailed.
S. F. No. 361, A bill for an act relating to state government; Mitochondrial Disease Awareness Week; proposing coding for new law in Minnesota Statutes, chapter 10.
The bill was read for the first time.
Hamilton moved that S. F. No. 361 and H. F. No. 287, now on the General Register, be referred to the Chief Clerk for comparison. The motion prevailed.
S. F. No. 1266, A bill for an act relating to state government; making changes to state government resource recovery program; amending Minnesota Statutes 2010, section 115A.15, subdivisions 2, 9, 10; repealing Minnesota Statutes 2010, section 115A.15, subdivisions 4, 6.
The bill was read for the first time.
Stensrud moved that S. F. No. 1266 and H. F. No. 1470, now on the Calendar for the Day, be referred to the Chief Clerk for comparison. The motion prevailed.
S. F. No. 1183, A bill for an act relating to civil law; restoring state and local government tort liability limits to pre-2008 levels in certain instances; prohibiting state and local government contracts that require contractors to provide liability insurance or other security in excess of those limits; amending Minnesota Statutes 2010, sections 3.736, subdivision 4; 466.04, subdivisions 1, 3.
The bill was read for the first time and referred to the Committee on Judiciary Policy and Finance.
S. F. No. 1205, A bill for an act relating to energy; eliminating certain allocations and temporarily prohibiting approval of certain expenditures from renewable development account; amending Minnesota Statutes 2010, section 116C.779, subdivisions 1, 3.
The bill was read for the first time and referred to the Committee on Environment, Energy and Natural Resources Policy and Finance.
The
following Conference Committee Reports were received:
CONFERENCE COMMITTEE REPORT ON H. F. NO. 42
A bill for an act relating to the financing and operation of state and local government; making changes to individual income, corporate franchise, property, aids, credits, payments, refunds, sales and use, tax increment financing, aggregate material, minerals, local, and other taxes and tax-related provisions; making changes to the green acres and rural preserve programs; authorizing border city development zone powers and local taxes; extending levy limits; modifying regional railroad authority provisions; repealing sustainable forest resource management incentive; authorizing grants to local governments for cooperation, consolidation, and service innovation; providing a science and technology program; reducing certain income rates; allowing capital equipment exemption at time of purchase; directing commissioner of revenue to negotiate a reciprocity agreement with state of Wisconsin and permitting its termination only by law; requiring studies; requiring reports; canceling amounts in the cash flow account; appropriating money; amending Minnesota Statutes 2010, sections 97A.061, subdivisions 1, 3; 126C.01, subdivision 3; 270A.03, subdivision 7; 270B.12, by adding a subdivision; 270C.13, subdivision 1; 272.02, by adding a subdivision; 273.111, subdivision 9, by adding a subdivision; 273.114, subdivisions 2, 5, 6; 273.121, subdivision 1; 273.13, subdivisions 21b, 25, 34; 273.1384, subdivisions 1, 3, 4; 273.1393; 273.1398, subdivision 3; 275.025, subdivisions 1, 3, 4; 275.066; 275.08, subdivisions 1a, 1d; 275.70, subdivision 5; 275.71, subdivisions 2, 4, 5; 276.04, subdivision 2; 279.01, subdivision 1; 289A.20, subdivision 4; 289A.50, subdivision 1; 290.01, subdivisions 6, 19b; 290.06, subdivision 2c; 290.068, subdivision 1; 290.081; 290.091, subdivision 2; 290A.03, subdivisions 11, 13; 297A.61, subdivision 3; 297A.62, by adding a subdivision; 297A.63, by adding a subdivision; 297A.668, subdivision 7, by adding a subdivision; 297A.68, subdivision 5; 297A.70, subdivision 3; 297A.75; 297A.99, subdivision 1; 298.01, subdivision 3; 298.015, subdivision 1; 298.018, subdivision 1; 298.28, subdivision 3; 298.75, by adding a subdivision; 398A.04, subdivision 8; 398A.07, subdivision 2; 469.1763, subdivision 2; 473.757, subdivisions 2, 11; 477A.011, by adding a subdivision; 477A.0124, by adding a subdivision; 477A.013, subdivisions 8, 9, by adding a subdivision; 477A.03; 477A.11, subdivision 1; 477A.12, subdivision 1; 477A.14, subdivision 1; 477A.17; Laws 1996, chapter 471, article 2, section 29, subdivision 1, as amended; Laws 1998, chapter 389, article 8, section 43, subdivisions 3, as amended, 4, as amended, 5, as amended; Laws 2008, chapter 366, article 7, section 19, subdivision 3; Laws 2010, chapter 389, article 7, section 22; proposing coding for new law in Minnesota Statutes, chapters 116W; 275; 373; repealing Minnesota Statutes 2010, sections 10A.322, subdivision 4; 13.4967, subdivision 2; 273.114, subdivision 1; 273.1384, subdivision 6; 279.01, subdivision 4; 289A.60, subdivision 31; 290.06, subdivision 23; 290C.01; 290C.02; 290C.03; 290C.04; 290C.05; 290C.055; 290C.06; 290C.07; 290C.08; 290C.09; 290C.10; 290C.11; 290C.12; 290C.13; 477A.145.
May 16, 2011
The Honorable Kurt Zellers
Speaker of the House of Representatives
The Honorable Michelle L. Fischbach
President of the Senate
We, the undersigned conferees for H. F. No. 42 report that we have agreed upon the items in dispute and recommend as follows:
That the Senate recede from its amendments and that H. F. No. 42 be further amended as follows:
Delete everything after the enacting clause and insert:
"ARTICLE 1
INDIVIDUAL INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES
Section 1. Minnesota Statutes 2010, section 270B.12, is amended by adding a subdivision to read:
Subd. 14. Wisconsin
secretary of revenue; income tax reciprocity benchmark study. The commissioner may disclose return
information to the secretary of revenue of the state of Wisconsin for the
purpose of conducting a joint individual income tax reciprocity study.
EFFECTIVE
DATE. This section is effective
the day following final enactment.
Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19b, is amended to read:
Subd. 19b. Subtractions from federal taxable income. For individuals, estates, and trusts, there shall be subtracted from federal taxable income:
(1) net interest income on obligations of any authority, commission, or instrumentality of the United States to the extent includable in taxable income for federal income tax purposes but exempt from state income tax under the laws of the United States;
(2) if included in federal taxable income, the amount of any overpayment of income tax to Minnesota or to any other state, for any previous taxable year, whether the amount is received as a refund or as a credit to another taxable year's income tax liability;
(3) the amount paid to others, less the amount used to claim the credit allowed under section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and transportation of each qualifying child in attending an elementary or secondary school situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's compulsory attendance laws, which is not operated for profit, and which adheres to the provisions of the Civil Rights Act of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, "textbooks" includes books and other instructional materials and equipment purchased or leased for use in elementary and secondary schools in teaching only those subjects legally and commonly taught in public elementary and secondary schools in this state. Equipment expenses qualifying for deduction includes expenses as defined and limited in section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional books and materials used in the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such tenets, doctrines, or worship, nor does it include books or materials for, or transportation to, extracurricular activities including sporting events, musical or dramatic events, speech activities, driver's education, or similar programs. No deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or the qualifying child's vehicle to provide such transportation for a qualifying child. For purposes of the subtraction provided by this clause, "qualifying child" has the meaning given in section 32(c)(3) of the Internal Revenue Code;
(4) income as provided under section 290.0802;
(5) to the extent included in federal adjusted gross income, income realized on disposition of property exempt from tax under section 290.491;
(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) of the Internal Revenue Code in determining federal taxable income by an individual who does not itemize deductions for federal income tax purposes for the taxable year, an amount equal to 50 percent of the excess of charitable contributions over $500 allowable as a deduction for the taxable year under section 170(a) of the Internal Revenue Code, under the provisions of Public Law 109-1 and Public Law 111-126;
(7) for individuals who are allowed a federal foreign tax credit for taxes that do not qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover of subnational foreign taxes for the taxable year, but not to exceed the total subnational foreign taxes reported in claiming the foreign tax credit. For purposes of this
clause, "federal foreign tax credit" means the credit allowed under section 27 of the Internal Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed under section 904(c) of the Internal Revenue Code minus national level foreign taxes to the extent they exceed the federal foreign tax credit;
(8) in each of the five tax years immediately following the tax year in which an addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the positive value of any net operating loss under section 172 of the Internal Revenue Code generated for the tax year of the addition. The resulting delayed depreciation cannot be less than zero;
(9) job opportunity building zone income as provided under section 469.316;
(10) to the extent included in federal taxable income, the amount of compensation paid to members of the Minnesota National Guard or other reserve components of the United States military for active service performed in Minnesota, excluding compensation for services performed under the Active Guard Reserve (AGR) program. For purposes of this clause, "active service" means (i) state active service as defined in section 190.05, subdivision 5a, clause (1); (ii) federally funded state active service as defined in section 190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05, subdivision 5c, but "active service" excludes service performed in accordance with section 190.08, subdivision 3;
(11) to the extent included in federal taxable income, the amount of compensation paid to Minnesota residents who are members of the armed forces of the United States or United Nations for active duty performed outside Minnesota under United States Code, title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of the United Nations;
(12) an amount, not to exceed $10,000, equal to qualified expenses related to a qualified donor's donation, while living, of one or more of the qualified donor's organs to another person for human organ transplantation. For purposes of this clause, "organ" means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; "human organ transplantation" means the medical procedure by which transfer of a human organ is made from the body of one person to the body of another person; "qualified expenses" means unreimbursed expenses for both the individual and the qualified donor for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses may be subtracted under this clause only once; and "qualified donor" means the individual or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An individual may claim the subtraction in this clause for each instance of organ donation for transplantation during the taxable year in which the qualified expenses occur;
(13) in each of the five tax years immediately following the tax year in which an addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the case of a shareholder of a corporation that is an S corporation, minus the positive value of any net operating loss under section 172 of the Internal Revenue Code generated for the tax year of the addition. If the net operating loss exceeds the addition for the tax year, a subtraction is not allowed under this clause;
(14) to the extent included in federal taxable income, compensation paid to a service member as defined in United States Code, title 10, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2);
(15) international economic development zone income as provided under section 469.325;
(16) to the extent included in federal
taxable income, the amount of national service educational awards received from
the National Service Trust under United States Code, title 42, sections 12601
to 12604, for service in an approved Americorps National Service program; and
(17) to the extent included in federal
taxable income, discharge of indebtedness income resulting from reacquisition
of business indebtedness included in federal taxable income under section
108(i) of the Internal Revenue Code. This
subtraction applies only to the extent that the income was included in net
income in a prior year as a result of the addition under section 290.01,
subdivision 19a, clause (16).;
(18) to the extent not deducted in
computing federal taxable income, charitable contributions of food inventory as
determined under the provisions of section 170(e)(3)(C) of the Internal Revenue
Code, determined without regard to the termination date under section
170(e)(3)(C)(iv); and
(19) to the extent included in federal
taxable income, 55 percent of compensation received from a pension or other
retirement pay from the federal government for service in the military, as
computed under United States Code, title 10, sections 1401 to 1414, 1447 to
1455, and 12733.
EFFECTIVE DATE. Clause (18) is effective for taxable years
beginning after December 31, 2010.
Clause (19) is effective for taxable years beginning after
December 31, 2012.
Sec. 3. Minnesota Statutes 2010, section 290.06, subdivision 2c, is amended to read:
Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income taxes imposed by this chapter upon married individuals filing joint returns and surviving spouses as defined in section 2(a) of the Internal Revenue Code must be computed by applying to their taxable net income the following schedule of rates:
(1) On the first $25,680, 5.35 percent;
(2) On all over $25,680, but not over $102,030, 7.05 percent;
(3) On all over $102,030, 7.85 percent.
Married individuals filing separate returns, estates, and trusts must compute their income tax by applying the above rates to their taxable income, except that the income brackets will be one-half of the above amounts.
(b) The income taxes imposed by this chapter upon unmarried individuals must be computed by applying to taxable net income the following schedule of rates:
(1) On the first $17,570, 5.35 percent;
(2) On all over $17,570, but not over $57,710, 7.05 percent;
(3) On all over $57,710, 7.85 percent.
(c) The income taxes imposed by this chapter upon unmarried individuals qualifying as a head of household as defined in section 2(b) of the Internal Revenue Code must be computed by applying to taxable net income the following schedule of rates:
(1) On the first $21,630, 5.35 percent;
(2) On all over $21,630, but not over $86,910, 7.05 percent;
(3) On all over $86,910, 7.85 percent.
(d) In lieu of a tax computed according to the rates set forth in this subdivision, the tax of any individual taxpayer whose taxable net income for the taxable year is less than an amount determined by the commissioner must be computed in accordance with tables prepared and issued by the commissioner of revenue based on income brackets of not more than $100. The amount of tax for each bracket shall be computed at the rates set forth in this subdivision, provided that the commissioner may disregard a fractional part of a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
(e) An individual who is not a Minnesota resident for the entire year must compute the individual's Minnesota income tax as provided in this subdivision. After the application of the nonrefundable credits provided in this chapter, the tax liability must then be multiplied by a fraction in which:
(1) the numerator is the individual's
Minnesota source federal adjusted gross income as defined in section 62 of the
Internal Revenue Code and increased by the additions required under section
290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13),
(16), and (17), and reduced by the Minnesota assignable portion of the
subtraction for United States government interest under section 290.01,
subdivision 19b, clause (1), and the subtractions under section 290.01,
subdivision 19b, clauses (8), (9), (13), (14), (15), and (17), (18),
and (19), after applying the allocation and assignability provisions of
section 290.081, clause (a), or 290.17; and
(2) the denominator is the individual's
federal adjusted gross income as defined in section 62 of the Internal Revenue
Code of 1986, increased by the amounts specified in section 290.01, subdivision
19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), (16), and (17), and
reduced by the amounts specified in section 290.01, subdivision 19b, clauses
(1), (8), (9), (13), (14), (15), and (17), (18), and (19).
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010, except that the
new references to Minnesota Statutes, section 290.01, subdivision 19b, clause
(19), in paragraph (e), clauses (1) and (2), are effective for taxable years
beginning after December 31, 2012.
Sec. 4. Minnesota Statutes 2010, section 290.0674, subdivision 1, is amended to read:
Subdivision 1. Credit allowed. An individual is allowed a credit against the tax imposed by this chapter in an amount equal to 75 percent of the amount paid for education-related expenses for a qualifying child in kindergarten through grade 12. For purposes of this section, "education-related expenses" means:
(1) fees or tuition for instruction by an instructor under section 120A.22, subdivision 10, clause (1), (2), (3), (4), or (5), or a member of the Minnesota Music Teachers Association, and who is not a lineal ancestor or sibling of the dependent for instruction outside the regular school day or school year, including tutoring, driver's education offered as part of school curriculum, regardless of whether it is taken from a public or private entity or summer camps, in grade or age appropriate curricula that supplement curricula and instruction available during the regular school year, that assists a dependent to improve knowledge of core curriculum areas or to expand knowledge and skills under the required academic standards under section 120B.021, subdivision 1, and the elective standard under section 120B.022, subdivision 1, clause (2), and that do not include the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such tenets, doctrines, or worship;
(2) expenses for textbooks, including books and other instructional materials and equipment purchased or leased for use in elementary and secondary schools in teaching only those subjects legally and commonly taught in public elementary and secondary schools in this state. "Textbooks" does not include instructional books and materials used in the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such tenets, doctrines, or worship, nor does it include books or materials for extracurricular activities including sporting events, musical or dramatic events, speech activities, driver's education, or similar programs;
(3) a maximum expense of $200 per family for personal computer hardware, excluding single purpose processors, and educational software that assists a dependent to improve knowledge of core curriculum areas or to expand knowledge and skills under the required academic standards under section 120B.021, subdivision 1, and the elective standard under section 120B.022, subdivision 1, clause (2), purchased for use in the taxpayer's home and not used in a trade or business regardless of whether the computer is required by the dependent's school; and
(4) the amount paid to others for tuition and transportation of a qualifying child attending an elementary or secondary school situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's compulsory attendance laws, which is not operated for profit, and which adheres to the provisions of the Civil Rights Act of 1964 and chapter 363A.
For
purposes of this section, "qualifying child" has the meaning given in
section 32(c)(3) of the Internal Revenue Code.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2012.
Sec. 5. Minnesota Statutes 2010, section 290.068, subdivision 1, is amended to read:
Subdivision 1. Credit allowed. A corporation, partners in a partnership, or shareholders in a corporation treated as an "S" corporation under section 290.9725 are allowed a credit against the tax computed under this chapter for the taxable year equal to:
(a) ten percent of the first $2,000,000 of the excess (if any) of
(1) the qualified research expenses for the taxable year, over
(2) the base amount; and
(b) 2.5 4.7 percent on all of
such excess expenses over $2,000,000.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2013.
Sec. 6. Minnesota Statutes 2010, section 290.081, is amended to read:
290.081
INCOME OF NONRESIDENTS, RECIPROCITY.
Subdivision 1. Reciprocity with other states. (a) The compensation received for the performance of personal or professional services within this state by an individual whose residence, place of abode, and place customarily returned to at least once a month is in another state, shall be excluded from gross income to the extent such compensation is subject to an income tax imposed by the state of residence; provided that such state allows a similar exclusion of compensation received by residents of Minnesota for services performed therein.
(b) When it is deemed to be in the best interests of the people of this state, the commissioner may determine that the provisions of paragraph (a) shall not apply, as they relate to all states except Wisconsin. The provisions of paragraph (a) apply with respect to Wisconsin only for taxable years in which a reciprocity agreement with Wisconsin is in effect as provided by this section. As long as the provisions of paragraph (a) apply between Minnesota and Wisconsin, the provisions of paragraph (a) shall apply to any individual who is domiciled in Wisconsin.
(c) For the purposes of paragraph (a), whenever the Wisconsin tax on Minnesota residents which would have been paid Wisconsin without paragraph (a) exceeds the Minnesota tax on Wisconsin residents which would have been paid Minnesota without paragraph (a), or vice versa, then the state with the net revenue loss resulting from
paragraph (a) must be compensated by the other state as provided in the agreement under paragraph (d). This provision shall be effective for all years beginning after December 31, 1972. The data used for computing the loss to either state shall be determined on or before September 30 of the year following the close of the previous calendar year.
(d) Interest is payable on all amounts calculated under paragraph (c) relating to taxable years beginning after December 31, 2000 and before January 1, 2010. Interest accrues from July 1 of the taxable year.
(e) The commissioner of revenue
is authorized to enter into agreements reciprocity agreement with
the state of Wisconsin specifying must specify the compensation
required under paragraph (b), the one or more reciprocity payment
due date, dates for the revenue loss relating to each taxable year,
with one or more estimated payment due dates in the same fiscal year in which
the revenue loss occurred, and a final payment in the following fiscal year,
conditions constituting delinquency, interest rates, and a method for computing
interest due. Interest is payable
from July 1 of the taxable year on final payments made in the following fiscal
year. Calculation of compensation
under the agreement must specify if the revenue loss is determined before or
after the allowance of each state's credit for taxes paid to the other state.
(e) (f) If an agreement
cannot be reached as to the amount of the loss, the commissioner of revenue and
the taxing official of the state of Wisconsin shall each appoint a member of a
board of arbitration and these members shall appoint the third member of the
board. The board shall select one of its
members as chair. Such board may
administer oaths, take testimony, subpoena witnesses, and require their
attendance, require the production of books, papers and documents, and hold
hearings at such places as are deemed necessary. The board shall then make a determination as
to the amount to be paid the other state which determination shall be final and
conclusive.
(f) (g) The commissioner may
furnish copies of returns, reports, or other information to the taxing official
of the state of Wisconsin, a member of the board of arbitration, or a
consultant under joint contract with the states of Minnesota and Wisconsin for
the purpose of making a determination as to the amount to be paid the other
state under the provisions of this section.
Prior to the release of any information under the provisions of this
section, the person to whom the information is to be released shall sign an
agreement which provides that the person will protect the confidentiality of
the returns and information revealed thereby to the extent that it is protected
under the laws of the state of Minnesota.
(h) Any reciprocity agreement entered
into under this section continues in effect until terminated by Minnesota or
Wisconsin law. The commissioner may
agree to modify the timing or method of calculating the state payments to be
made under the agreement, consistent with the requirements of paragraphs (c)
and (e), but may not terminate the agreement.
Subd. 2. New
reciprocity agreement with Wisconsin.
(a) The commissioner of revenue is directed to initiate negotiations
with the secretary of revenue of Wisconsin, with the objective of entering into
an income tax reciprocity agreement effective for tax years beginning after
December 31, 2011. The agreement must
satisfy the conditions of subdivision 1, with one or more estimated payment due
dates and a final payment due date specified so that the state with a net
revenue loss as a result of the agreement receives estimated payments from the
other state, in the same fiscal year as that in which the net revenue loss
occurred and a final payment with interest in the following fiscal year.
(b) The commissioner may not enter into
an income tax reciprocity agreement with Wisconsin under this section until
after Wisconsin has paid in full with interest the amount due to Minnesota
under the income tax reciprocity agreement in effect for taxable years
beginning before January 1, 2010.
EFFECTIVE DATE. Subdivision 2 is effective the day following final
enactment. The changes to subdivision 1
are effective for taxable years beginning after December 31 of the year of the
agreement, contingent upon agreement from the state of Wisconsin to a
reciprocity arrangement in which estimated payments are made in the same fiscal
year in which a change in revenue occurs, and a final payment is made in the
following fiscal year.
Sec. 7. Minnesota Statutes 2010, section 290.091, subdivision 2, is amended to read:
Subd. 2. Definitions. For purposes of the tax imposed by this
section, the following terms have the meanings given:
(a) "Alternative minimum taxable income" means the sum of the following for the taxable year:
(1) the taxpayer's federal alternative minimum taxable income as defined in section 55(b)(2) of the Internal Revenue Code;
(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum taxable income, but excluding:
(i) the charitable contribution deduction under section 170 of the Internal Revenue Code, including any additional subtraction for charitable contributions of food inventory under section 290.01, subdivision 19b;
(ii) the medical expense deduction;
(iii) the casualty, theft, and disaster loss deduction; and
(iv) the impairment-related work expenses of a disabled person;
(3) for depletion allowances computed under section 613A(c) of the Internal Revenue Code, with respect to each property (as defined in section 614 of the Internal Revenue Code), to the extent not included in federal alternative minimum taxable income, the excess of the deduction for depletion allowable under section 611 of the Internal Revenue Code for the taxable year over the adjusted basis of the property at the end of the taxable year (determined without regard to the depletion deduction for the taxable year);
(4) to the extent not included in federal alternative minimum taxable income, the amount of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue Code determined without regard to subparagraph (E);
(5) to the extent not included in federal alternative minimum taxable income, the amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
(6) the
amount of addition required by section 290.01, subdivision 19a, clauses (7) to
(9), (12), (13), (16), and (17);
less the sum of the amounts determined under the following:
(1) interest income as defined in section 290.01, subdivision 19b, clause (1);
(2) an overpayment of state income tax as provided by section 290.01, subdivision 19b, clause (2), to the extent included in federal alternative minimum taxable income;
(3) the amount of investment interest paid or accrued within the taxable year on indebtedness to the extent that the amount does not exceed net investment income, as defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted in computing federal adjusted gross income; and
(4) amounts subtracted from federal taxable
income as provided by section 290.01, subdivision 19b, clauses (6), (8) to
(15), and (17) , and (19).
In the case of an estate or trust, alternative minimum taxable income must be computed as provided in section 59(c) of the Internal Revenue Code.
(b) "Investment interest" means investment interest as defined in section 163(d)(3) of the Internal Revenue Code.
(c) "Net minimum tax" means the minimum tax imposed by this section.
(d) "Regular tax" means the tax that would be imposed under this chapter (without regard to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed under this chapter.
(e) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable income after subtracting the exemption amount determined under subdivision 3.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2010.
Sec. 8. Minnesota Statutes 2010, section 290.191, subdivision 2, is amended to read:
Subd. 2. Apportionment
formula of general application. (a)
Except for those trades or businesses required to use a different formula under
subdivision 3 or section 290.36, and for those trades or businesses that
receive permission to use some other method under section 290.20 or under
subdivision 4, a trade or business required to apportion its net income must
apportion its income to this state on the basis of the percentage obtained
by taking the sum of:
(1) the percent for the sales factor
under paragraph (b) 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) the percent for the property factor
under paragraph (b) 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) the percent for the payroll factor
under paragraph (b) 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.
(b) For purposes of paragraph (a) and
subdivision 3, the following percentages apply for the taxable years specified:
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EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2011.
Sec. 9. Minnesota Statutes 2010, section 290.191, subdivision 3, is amended to read:
Subd. 3. Apportionment
formula for financial institutions. Except
for an investment company required to apportion its income under section
290.36, a financial institution that is required to apportion its net income
must apportion its net income to this state on the basis of the percentage obtained
by taking the sum of:
(1) the percent for the sales factor
under subdivision 2, paragraph (b), of the percentage which the receipts
from within this state in connection with the trade or business during the tax
period are of the total receipts in connection with the trade or business
during the tax period, from wherever derived; .
(2) the percent for the property factor
under subdivision 2, paragraph (b), of the percentage which the sum of the
total tangible property used by the taxpayer in this state and the intangible
property owned by the taxpayer and attributed to this state in connection with
the trade or business during the tax period is of the sum of the total tangible
property, wherever located, used by the taxpayer and the intangible property
owned by the taxpayer and attributed to all states in connection with the trade
or business during the tax period; and
(3) the percent for the payroll factor
under subdivision 2, paragraph (b), 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.
EFFECTIVE
DATE. This section is
effective for taxable years beginning after December 31, 2011.
Sec. 10. Minnesota Statutes 2010, section 291.005, subdivision 1, is amended to read:
Subdivision 1. Scope. Unless the context otherwise clearly requires, the following terms used in this chapter shall have the following meanings:
(1) "Commissioner" means the commissioner of revenue or any person to whom the commissioner has delegated functions under this chapter.
(2) "Federal gross estate" means the gross estate of a decedent as required to be valued and otherwise determined for federal estate tax purposes under the Internal Revenue Code.
(3) "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended through March 18, 2010, but without regard to the provisions of sections 501 and 901 of Public Law 107-16.
(4) "Minnesota adjusted taxable
estate" means federal adjusted taxable estate as defined by section
2011(b)(3) of the Internal Revenue Code, increased by plus
(i) the amount of deduction for
state death taxes allowed under section 2058 of the Internal Revenue Code;
less
(ii) (A) the value of qualified small business property under section 291.03, subdivision 9, and the value of qualified farm property under section 291.03, subdivision 10, or (B) $4,000,000, whichever is less.
(5) "Minnesota gross estate" means the federal gross estate of a decedent after (a) excluding therefrom any property included therein which has its situs outside Minnesota, and (b) including therein any property omitted from the federal gross estate which is includable therein, has its situs in Minnesota, and was not disclosed to federal taxing authorities.
(6) "Nonresident decedent" means an individual whose domicile at the time of death was not in Minnesota.
(7) "Personal representative" means the executor, administrator or other person appointed by the court to administer and dispose of the property of the decedent. If there is no executor, administrator or other person appointed, qualified, and acting within this state, then any person in actual or constructive possession of any property having a situs in this state which is included in the federal gross estate of the decedent shall be deemed to be a personal representative to the extent of the property and the Minnesota estate tax due with respect to the property.
(8) "Resident decedent" means an individual whose domicile at the time of death was in Minnesota.
(9) "Situs of property" means, with respect to real property, the state or country in which it is located; with respect to tangible personal property, the state or country in which it was normally kept or located at the time of the decedent's death; and with respect to intangible personal property, the state or country in which the decedent was domiciled at death.
EFFECTIVE
DATE. This section is
effective for decedents dying after December 31, 2010.
Sec. 11. Minnesota Statutes 2010, section 291.03, subdivision 1, is amended to read:
Subdivision 1. Tax amount. (a) The tax imposed shall be an amount equal to the proportion of the maximum credit for state death taxes computed under section 2011 of the Internal Revenue Code, but using Minnesota adjusted taxable estate instead of federal adjusted taxable estate, as the Minnesota gross estate bears to the value of the federal gross estate.
(b) The tax determined under this subdivision must not be greater than the sum of the following amounts multiplied by a fraction, the numerator of which is the Minnesota gross estate and the denominator of which is the federal gross estate:
(1) the rates and brackets under section 2001(c) of the Internal Revenue Code multiplied by the sum of:
(i) the taxable estate, as defined under section 2051 of the Internal Revenue Code; plus
(ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue Code; less
(iii) the lesser of (A) the sum of the
value of qualified small business property under subdivision 9, and the value
of qualified farm property under subdivision 10, or (B) $4,000,000; less
(2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue Code; and less
(3) the federal credit allowed under section 2010 of the Internal Revenue Code.
(c) For purposes of this subdivision, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through December 31, 2000.
EFFECTIVE
DATE. This section is
effective for decedents dying after December 31, 2010.
Sec. 12. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision to read:
Subd. 8. Definitions. (a) For purposes of this section, the
following terms have the meanings given in this subdivision.
(b) "Family member" means a
family member as defined in section 2032A(e)(2) of the Internal Revenue Code.
(c) "Qualified heir" means a
family member who acquired qualified property from the decedent and satisfies
the requirement under subdivision 9, clause (6), or subdivision 10, clause (4),
for the property.
(d) "Qualified property"
means qualified small businesss property under subdivision 9 and qualified farm
property under subdivision 10.
EFFECTIVE
DATE. This section is
effective for decedents dying after December 31, 2010.
Sec. 13. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision to read:
Subd. 9. Qualified small business property. Property satisfying all of the following requirements is qualified small business property:
(1) The value of the property was
included in the federal adjusted taxable estate.
(2) The property consists of the assets
of a trade or business or shares of stock or other ownership interests in a
corporation or other entity engaged in a trade or business. The decedent or the decedent's spouse must
have materially participated in the trade or business within the meaning of section
469 of the Internal Revenue Code during the taxable year that ended before the
date of the decedent's death. Shares of
stock in a corporation or an ownership interest in another type of entity do
not qualify under this subdivision if the shares or ownership interests are traded on a public stock exchange at any time
during the three-year period ending on the decedent's date of death.
(3) The gross annual sales of the trade
or business were $10,000,000 or less for the last taxable year that ended before
the date of the death of the decedent.
(4) The property does not consist of
cash or cash equivalents. For property
consisting of shares of stock or other ownership interests in an entity, the
amount of cash or cash equivalents held by the corporation or other entity must
be deducted from the value of the property qualifying under this subdivision in
proportion to the decedent's share of ownership of the entity on the date of
death.
(5) The decedent continuously owned the
property for the three-year period ending on the date of death of the decedent.
(6) A family member continuously uses
the property in the operation of the trade or business for three years
following the date of death of the decedent.
(7) The estate and the qualified heir
elect to treat the property as qualified small business property and agree, in
the form prescribed by the commissioner, to pay the recapture tax under
subdivision 11, if applicable.
EFFECTIVE
DATE. This section is
effective for decedents dying after December 31, 2010.
Sec. 14. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision to read:
Subd. 10. Qualified farm property. Property satisfying all of the following requirements is qualified farm property:
(1) The value of the property was
included in the federal adjusted taxable estate.
(2) The property consists of a farm
meeting the requirements of section 500.24, and was classified for property tax purposes as the homestead of the decedent or
the decedent's spouse or both under section 273.124, and as class 2a
property under section 273.13, subdivision 23.
(3) The decedent continuously owned the
property for the three-year period ending on the date of death of the decedent.
(4) A family member continuously uses
the property in the operation of the trade or business for three years
following the date of death of the decedent.
(5) The estate and the qualified heir
elect to treat the property as qualified farm property and agree, in a form
prescribed by the commissioner, to pay the recapture tax under subdivision 11,
if applicable.
EFFECTIVE
DATE. This section is
effective for decedents dying after December 31, 2010.
Sec. 15. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision to read:
Subd. 11. Recapture
tax. (a) If, within three
years after the decedent's death and before the death of the qualified heir,
the qualified heir disposes of any interest in the qualified property, other
than by a disposition to a family member, or a family member ceases to use the
qualified property which was acquired or passed from the decedent, an
additional estate tax is imposed on the property.
(b)
The amount of the additional tax equals the amount of the exclusion claimed by
the estate under subdivision 8, paragraph (d), multiplied by 16 percent.
(c) The additional tax under this
subdivision is due on the day which is six months after the date of the
disposition or cessation in paragraph (a).
EFFECTIVE
DATE. This section is
effective for decedents dying after December 31, 2010.
Sec. 16. INCOME
TAX RECIPROCITY BENCHMARK STUDY.
(a) The Department of Revenue, in conjunction with the Wisconsin Department of Revenue, must conduct a study to determine at least the following:
(1) the number of residents of each
state who earn income from personal services in the other state;
(2) the total amount of income earned
by residents of each state who earn income from personal services in the other
state; and
(3) the change in tax revenue in each
state if an income tax reciprocity arrangement were resumed between the two
states under which the taxpayers were required to pay income taxes on the
income only in their state of residence.
(b) The study must be conducted as soon
as practicable, using information obtained from each state's income tax returns
for tax year 2011, and from any other source of information the departments
determine is necessary to complete the study.
(c) No later than March 1, 2013, the
Department of Revenue must submit a report containing the results of the study
to the governor and to the chairs and ranking minority members of the
legislative committees having jurisdiction over taxes.
EFFECTIVE
DATE. This section is
effective the day following final enactment.
Sec. 17. ESTATE
TAX; STUDY.
(a) The commissioner of revenue shall conduct a study of the Minnesota estate tax. The study must include at least the following elements:
(1) evaluation of the estate tax using
standard tax policy principles and methods of analysis;
(2) consideration of the implications of
recent federal estate tax changes, including the repeal of the federal credit
for state death taxes, the increase in the federal exclusion amount, and the
portability of the federal exclusion, for state estate and inheritance taxes;
(3) consideration of the advantages and
disadvantages of revenue neutral alternatives to the estate tax, such as an
inheritance tax, a complementary gift tax, or imposition of the income tax on
bequests; and
(4) analysis of the available empirical evidence on the effects of the present and alternative tax structures of a Minnesota tax on estates or inheritances on domicile and migration decisions of residen