.................... moves to amend H.F. No. 42 as follows:
Delete everything after the enacting clause and insert:
1.4INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES
Section 1. [116W.25] CITATION.
1.6Sections 116W.26 to 116W.34 may be cited as the "Minnesota science and
Sec. 2. [116W.26] DEFINITIONS.
1.9 Subdivision 1. Applicability. For the purposes of sections 116W.26 to 116W.34,
1.10the terms in this section have the meanings given them.
1.11 Subd. 2. Authority. "Authority" means the Minnesota Science and Technology
1.12Authority established under this chapter.
1.13 Subd. 3. Base-year taxation. "Base-year taxation" means the 2010 calendar
1.14year state withholding taxes of science and technology employees working for primary
1.15science and technology companies currently located in or operating in this state. Each
1.16year the commissioner of management and budget shall adjust the base-year taxation by
1.17the annual percentage change over the prior year in the consumer price index for all
1.18urban consumers for the St. Paul-Minneapolis metropolitan area prepared by the United
1.19States Department of Labor.
1.20 Subd. 4. College or university. "College or university" means an institution of
1.21postsecondary education, public or private, that grants undergraduate or postgraduate
1.22academic degrees, conducts significant research or development activities in the areas of
1.23science and technology.
1.24 Subd. 5. Commercialization. "Commercialization" means any of the full spectrum
1.25of activities required for a new technology, product, or process to be developed from
2.1its basic research of conceptual stage through applied research or development to the
2.2marketplace including, without limitation, the steps leading up to and including licensure,
2.3sales, and services.
2.4 Subd. 6. Commercialized research project. "Commercialized research project"
2.5means research conducted within a college or university or nonprofit research institution
2.6or by a qualified science and technology company that has shown advanced commercial
2.7potential through license agreements, patents, or other forms of invention disclosure, and
2.8by which a qualified science and technology company has been or is being currently
2.10 Subd. 7. Fund. "Fund" means the Minnesota science and technology fund.
2.11 Subd. 8. Nonprofit research institution. "Nonprofit research institution" means an
2.12entity with its principle place of business in Minnesota, that qualifies under section 501(c)
2.13of the Internal Revenue Code, and that conducts significant research or development
2.14activities in this state in the areas of science and technology.
2.15 Subd. 9. Primary science and technology company. "Primary science and
2.16technology company" means a corporation, limited liability company, S corporation,
2.17partnership, limited liability partnership, or sole proprietorship operating within a set of
2.18industries that are the primary developers of new scientific, engineered, or technological
2.19products and services and that operate under the following North American Industry
2.20Classification System codes or industry groups, or any successor code sections covering
2.21these areas of research, development, and commercial activities: 3241, 3251, 3252, 3253,
2.223254, 3255, 3259, 3331, 3332, 3333, 3336, 3339, 3341, 3342, 3343, 3344, 3345, 3353,
2.233359, 3364, 3369, 3391, 5112, 5172, 5182, 5415, 5417, 541330, 541380, 541620, 541690.
2.24 Subd. 10. Program. "Program" means the Minnesota science and technology
2.26 Subd. 11. Qualified science and technology company. "Qualified science and
2.27technology company" means a corporation, limited liability company, S corporation,
2.28partnership, limited liability partnership, or sole proprietorship with fewer than 100
2.29employees that is engaged in research, development, or production of science or
2.30technology in this state including, without limitation, research, development, or production
2.31directed toward developing or providing science and technology products, processes, or
2.32services for specific commercial or public purposes.
2.33 Subd. 12. Withholding taxes. "Withholding taxes" means the aggregate of all
2.34amounts withheld from amounts paid to primary science and technology company
2.35employees during a calendar year for the payment of state income taxes under chapter 290.
Sec. 3. [116W.27] MINNESOTA SCIENCE AND TECHNOLOGY FUND.
3.2(a) A Minnesota science and technology fund is created in the state treasury. The
3.3fund is a direct-appropriated special revenue fund. Money of the authority must be
3.4paid to the commissioner of management and budget as agent of the authority and the
3.5commissioner shall not commingle the money with other money. The money in the fund
3.6must be paid out only on warrants drawn by the commissioner of management and budget
3.7on requisition of the executive director of the authority or designee.
3.8(b) By September 1, 2011, the commissioner of revenue and the authority shall
3.9establish the base-year taxation for all primary science and technology companies. Within
3.10120 days after the end of each year beginning with the year ending December 31, 2011,
3.11and for each subsequent year prior to the end of the last funding year, the commissioner
3.12of revenue and the authority shall determine the increase of aggregate withholding taxes
3.13for the year over the base year taxation.
3.14(c) Notwithstanding the provisions of section 290.62, beginning with the taxable
3.15year ending December 31, 2011, the commissioner of management and budget shall
3.16pay annually 85 percent of the increase in aggregate withholding taxes that are over the
3.17base-year taxation amount, as certified by the commissioner of revenue, to the fund.
3.18The biennial amount of withholding paid into the fund must not exceed $7,000,000.
3.19The commissioner of management and budget may make estimated payments to the
3.20fund more frequently based on estimates provided by the commissioner of revenue but
3.21the payments must be reconciled annually.
Sec. 4. [116W.28] MINNESOTA SCIENCE AND TECHNOLOGY FUND;
3.24The Minnesota science and technology fund may be used for the following to:
3.25(1) establish the commercialized research program authorized under section
3.27(2) establish the federal research and development support program under section
3.29(3) establish the industry technology and competitiveness program under section
3.31(4) carry out the powers of the authority authorized under sections 116W.04 and
3.32116W.32 that are in support of the programs in clauses (1) to (3).
Sec. 5. [116W.29] COMMERCIALIZED RESEARCH PROGRAM.
4.1(a) The authority may establish a commercialized research program. The purpose of
4.2the program is to accelerate the commercialization of science and technology products,
4.3processes, or services from colleges or universities, nonprofit research institutions or
4.4qualified science and technology companies that lead to an increase in science and
4.5technology businesses and jobs. The program shall:
4.6(1) provide science and technology gap funding of up to $250,000 per science and
4.7technology research project to assist in the commercialization and transfer of science and
4.8technology research projects from a college or university or nonprofit research institution
4.9to a qualified science and technology company; and
4.10(2) provide funding of up to $250,000 for early stage development for qualified
4.11science and technology companies to conduct commercialized research projects.
4.12(b) All activities under the commercialized research program must require:
4.13(1) written criteria set by the authority for the application, award, and use of the
4.15(2) matching funds by the participating qualified science and technology company,
4.16college or university, or nonprofit research institution;
4.17(3) no more than 15 percent of the funds awarded by the authority may be used
4.18for overhead costs; and
4.19(4) a report by the participating qualified science and technology company, college
4.20or university, or nonprofit research institution that provides documentation of the use of
4.21funds and outcomes of the award. The report must be submitted to the authority within
4.22one calendar year of the date of the award.
Sec. 6. [116W.30] FEDERAL RESEARCH AND DEVELOPMENT SUPPORT
4.25The authority may establish a federal research and development support program.
4.26The purpose of the program is to increase and coordinate efforts to procure federal funding
4.27for research projects of primary benefit to qualified science and technology companies,
4.28colleges or universities, and nonprofit research institutions. The program shall:
4.29(1) develop and execute a strategy to identify specific federal agencies and programs
4.30that support the growth of science and technology industries in this state; and
4.31(2) provide grants to qualified science and technology companies:
4.32(i) to assist in the development of federal Small Business Innovation (SBIR) or
4.33Small Business Technology Transfer (STTR) proposals; and
4.34(ii) to match funds received through SBIR or STTR awards. No more than
4.35$1,500,000 may be awarded in a year for matching grants under this clause.
Sec. 7. [116W.31] INDUSTRY INNOVATION AND COMPETITIVENESS
5.3(a) The authority may establish an industry technology and competitiveness program.
5.4The purpose of the program is to advance the technological capacity and competitiveness
5.5of existing and emerging science and technology industries. The program shall:
5.6(1) provide matching funds to programs and organizations that assist entrepreneurs
5.7in starting and growing qualified science and technology companies including, but not
5.8limited to, matching funds for mentoring programs, consulting and technical services,
5.9and related activities;
5.10(2) fund initiatives that retain engineering, science, technology, and mathematical
5.11occupations in the state including, but not limited to, internships, mentoring, and support
5.12of industry and professional organizations; and
5.13(3) fund initiatives that support the growth of targeted industry clusters and the
5.14competitiveness of existing qualified science and technology companies in developing
5.15and marketing new products and services.
5.16(b) All activities under the industry innovation and competitiveness program shall
5.18(i) written criteria set by the authority for the application, award, and use of the funds;
5.19(ii) matching funds by the participating qualified science and technology company,
5.20college or university, or nonprofit research institution; and
5.21(iii) a report by the participating qualified science and technology company, college
5.22or university, or nonprofit research institution providing documentation on the use of the
5.23funds and outcomes of the award. The report must be submitted to the authority within
5.24one calendar year from the date of the award.
Sec. 8. [116W.32] MINNESOTA SCIENCE AND TECHNOLOGY AUTHORITY;
5.26POWERS UNDER FUND.
5.27 Subdivision 1. General powers. The authority shall have all of the powers
5.28necessary to carry out the purposes and provisions of sections 116W.26 to 116W.34,
5.29including, but not limited to, those provided under section 116W.04 and the following:
5.30(1) The authority may make awards in the forms of grants or loans, and charge and
5.31receive a reasonable interest for the loans, or take an equity position in form of stock, a
5.32convertible note, or other securities in consideration of an award. Interests, revenues, or
5.33other proceeds received as a result of a transaction authorized by use of this fund shall be
5.34deposited to the corpus of the fund and used in the same manner as the corpus of the fund.
6.1(2) In awarding money from the fund, priority shall be given to proposals from
6.2qualified science and technology companies that have demonstrable economic benefit to
6.3the state in terms of the formation of a new private sector business entity, the creation of
6.4jobs, or the attraction of federal and private funding.
6.5(3) In awarding money from the fund, priority shall be given to proposals from
6.6colleges or universities and nonprofit research institutions that:
6.7(i) promote collaboration between any combination of colleges or universities,
6.8nonprofit research institutions, and private industry;
6.9(ii) enhance existing research superiority by attracting new research entities,
6.10research talent, or resources to the state; and
6.11(iii) create new research superiority that attracts significant researchers and resources
6.12from outside the state.
6.13(4) Subject to the limits in this clause, money within the fund may be used
6.14for reasonable administrative expenses by the authority including staffing and direct
6.15operational expenses, and professional fees for accounting, legal, and other technical
6.16services required to carry out the intent of the program and administration of the fund.
6.17Administrative expenses may not exceed five percent of the first $5,000,000 in the fund
6.18and two percent of any amount in excess of $5,000,000.
6.19(5) Before making an award, the authority shall enter into a written agreement with
6.20the entity receiving the award that specifies the uses of the award.
6.21(6) If the award recipient has not used the award received for the purposes intended,
6.22as of the date provided in the agreement, the recipient shall repay that amount and any
6.23interest applicable under the agreement to the authority. All repayments must be deposited
6.24to the corpus of the fund.
6.25 Subd. 2. Rules. The authority may adopt rules to implement the programs
6.26authorized under sections 116W.29 to 116W.31.
Sec. 9. [116W.33] REPAYMENT.
6.28An entity must repay all or a portion of the amount of any award, grant, loan, or
6.29financial assistance of any type paid by the authority under sections 116W.29 to 116W.32
6.30if the entity relocates outside the state or ceases operation in Minnesota within three years
6.31from the date the authority provided the financial award. If the entity relocates outside of
6.32this state or ceases operation in Minnesota within two years of the financial award, the
6.33entity must repay 100 percent of the award. If the entity relocates or ceases operation in
6.34Minnesota after a period of two years but before three years from the date of the financial
6.35award, the entity must repay 75 percent of the financial award.
Sec. 10. [116W.34] EXPIRATION.
7.2Sections 116W.26 to 116W.33 expire on the expiration date of the authority under
7.3section 116W.03, subdivision 7. Any unused money in the fund shall be deposited in the
Sec. 11. Minnesota Statutes 2010, section 270B.12, is amended by adding a subdivision
7.7 Subd. 14. Wisconsin secretary of revenue; income tax reciprocity benchmark
7.8study. The commissioner may disclose return information to the secretary of revenue
7.9of the state of Wisconsin for the purpose of conducting a joint individual income tax
7.11EFFECTIVE DATE.This section is effective the day following final enactment.
Sec. 12. 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
, 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
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
(5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section
(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
(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
, clause (1); (ii) federally funded state active service as defined in section
9.7190.05, subdivision 5b
; or (iii) federal active service as defined in section
, but "active service" excludes service performed in accordance with section
9.9190.08, 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
(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
(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)
10.15(18) to the extent not deducted in computing federal taxable income, charitable
10.16contributions of food inventory as determined under the provisions of section 170(e)(3)(C)
10.17of the Internal Revenue Code, determined without regard to the termination date under
10.19EFFECTIVE DATE.This section is effective for taxable years beginning after
10.20December 31, 2010.
Sec. 13. 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,
(2) On all over $25,680, but not over $102,030,
(3) On all over $102,030,
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,
(2) On all over $17,570, but not over $57,710,
(3) On all over $57,710,
(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,
(2) On all over $21,630, but not over $86,910,
(3) On all over $86,910,
(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
(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
, clause (a), or
(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
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).
11.32EFFECTIVE DATE.This section is effective for taxable years beginning after
11.33December 31, 2011, except that the 4.75 percent rates in paragraphs (a), clause (1), (b),
11.34clause (1), and (c), clause (1), are 5.25 percent for taxable years beginning after December
11.3531, 2011, and before January 1, 2013, and 5.15 percent for taxable years beginning after
11.36December 31, 2012, and before January 1, 2014, and the 6.75 percent rates in paragraphs
12.1(a), clause (2), (b), clause (2), and (c), clause (2), are 6.85 percent for taxable years
12.2beginning after December 31, 2011, and before January 1, 2014.
Sec. 14. 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
allowed a credit against the tax computed under this chapter for the taxable year equal to:
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
percent on all of such excess expenses over $2,000,000.
12.11EFFECTIVE DATE.This section is effective for taxable years beginning after
12.12December 31, 2010.
Sec. 15. Minnesota Statutes 2010, section 290.081, is amended to read:
12.14290.081 INCOME OF NONRESIDENTS, RECIPROCITY.
12.15 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
When it is deemed to be in the best interests of the people of this state, the
12.23 commissioner may determine that the provisions of paragraph (a) shall not apply.
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
accrues from July 1 of the taxable year.
commissioner of revenue is authorized to enter into agreements reciprocity
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
13.7loss relating to each taxable year, with one or more estimated payment due dates in the
13.8same fiscal year in which the revenue loss occurred, and a final payment in the following
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
13.11the 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.
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.
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.
13.30(h) Any reciprocity agreement entered into under this section continues in effect
13.31until terminated by Minnesota or Wisconsin law. The commissioner may agree to modify
13.32the timing or method of calculating the state payments to be made under the agreement,
13.33consistent with the requirements of paragraphs (c) and (e), but may not terminate the
13.35 Subd. 2. New reciprocity agreement with Wisconsin. The commissioner of
13.36revenue is directed to initiate negotiations with the secretary of revenue of Wisconsin,
14.1with the objective of entering into an income tax reciprocity agreement effective for tax
14.2years beginning after December 31, 2011. The agreement must satisfy the conditions of
14.3subdivision 1, with one or more estimated payment due dates and a final payment due
14.4date specified so that the state with a net revenue loss as a result of the agreement receives
14.5estimated payments from the other state, in the same fiscal year as that in which the net
14.6revenue loss occurred and a final payment with interest in the following fiscal year.
14.7EFFECTIVE DATE.Subdivision 2 is effective the day following final enactment.
14.8The changes to subdivision 1 are effective for taxable years beginning after December 31
14.9of the year of the agreement, contingent upon agreement from the state of Wisconsin to a
14.10reciprocity arrangement in which estimated payments are made in the same fiscal year in
14.11which a change in revenue occurs, and a final payment is made in the following fiscal year.
Sec. 16. 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
14.23under 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
, 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
, clauses (6), (8) to (15), and (17).
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.
15.25EFFECTIVE DATE.This section is effective for taxable years beginning after
15.26December 31, 2010.
Sec. 17. INCOME TAX RECIPROCITY BENCHMARK STUDY.
15.28(a) The Department of Revenue, in conjunction with the Wisconsin Department of
15.29Revenue, must conduct a study to determine at least the following:
15.30(1) the number of residents of each state who earn income from personal services in
15.31the other state;
15.32(2) the total amount of income earned by residents of each state who earn income
15.33from personal services in the other state; and
16.1(3) the change in tax revenue in each state if an income tax reciprocity arrangement
16.2were resumed between the two states under which the taxpayers were required to pay
16.3income taxes on the income only in their state of residence.
16.4(b) The study must be conducted as soon as practicable, using information obtained
16.5from each state's income tax returns for tax year 2011, and from any other source of
16.6information the departments determine is necessary to complete the study.
16.7(c) No later than March 1, 2013, the Department of Revenue must submit a report
16.8containing the results of the study to the governor and to the chairs and ranking minority
16.9members of the legislative committees having jurisdiction over taxes.
16.10EFFECTIVE DATE.This section is effective the day following final enactment.
Section 1. Minnesota Statutes 2010, section 289A.20, subdivision 4, is amended to
Subd. 4. Sales and use tax.
(a) The taxes imposed by chapter 297A are due and
payable to the commissioner monthly on or before the 20th day of the month following
the month in which the taxable event occurred, or following another reporting period
as the commissioner prescribes or as allowed under section
289A.18, subdivision 4
paragraph (f) or (g), except that
use taxes due on an annual use tax return as provided under section
, are payable by April 15 following the close of the calendar year
16.22 (2) except as provided in paragraph (f), for a vendor having a liability of $120,000
16.23 or more during a fiscal year ending June 30, 2009, and fiscal years thereafter, the taxes
16.24 imposed by chapter 297A, except as provided in paragraph (b), are due and payable to the
16.25 commissioner monthly in the following manner:
16.26 (i) On or before the 14th day of the month following the month in which the taxable
16.27 event occurred, the vendor must remit to the commissioner 90 percent of the estimated
16.28 liability for the month in which the taxable event occurred.
16.29 (ii) On or before the 20th day of the month in which the taxable event occurs, the
16.30 vendor must remit to the commissioner a prepayment for the month in which the taxable
16.31 event occurs equal to 67 percent of the liability for the previous month.
16.32 (iii) On or before the 20th day of the month following the month in which the taxable
16.33 event occurred, the vendor must pay any additional amount of tax not previously remitted
16.34 under either item (i) or (ii ) or, if the payment made under item (i) or (ii) was greater than
17.1 the vendor's liability for the month in which the taxable event occurred, the vendor may
17.2 take a credit against the next month's liability in a manner prescribed by the commissioner.
17.3 (iv) Once the vendor first pays under either item (i) or (ii), the vendor is required to
17.4 continue to make payments in the same manner, as long as the vendor continues having a
17.5 liability of $120,000 or more during the most recent fiscal year ending June 30.
17.6 (v) Notwithstanding items (i), (ii), and (iv), if a vendor fails to make the required
17.7 payment in the first month that the vendor is required to make a payment under either item
17.8 (i) or (ii), then the vendor is deemed to have elected to pay under item (ii) and must make
17.9 subsequent monthly payments in the manner provided in item (ii).
17.10 (vi) For vendors making an accelerated payment under item (ii), for the first month
17.11 that the vendor is required to make the accelerated payment, on the 20th of that month, the
17.12 vendor will pay 100 percent of the liability for the previous month and a prepayment for
17.13 the first month equal to 67 percent of the liability for the previous month.
Notwithstanding paragraph (a),
A vendor having a liability of $120,000 or more
during a fiscal year ending June 30 must remit the June liability for the next year in the
(1) Two business days before June 30 of the year, the vendor must remit 90 percent
of the estimated June liability to the commissioner.
(2) On or before August 20 of the year, the vendor must pay any additional amount
of tax not remitted in June.
(c) A vendor having a liability of:
(1) $10,000 or more, but less than $120,000 during a fiscal year ending June 30,
2009, and fiscal years thereafter, must remit by electronic means all liabilities on returns
due for periods beginning in the subsequent calendar year on or before the 20th day of
the month following the month in which the taxable event occurred, or on or before the
20th day of the month following the month in which the sale is reported under section
17.27289A.18, subdivision 4
(2) $120,000 or more, during a fiscal year ending June 30, 2009, and fiscal years
thereafter, must remit by electronic means all liabilities in the manner provided in
, clause (2),
on returns due for periods beginning in the subsequent calendar
year, except for 90 percent of the estimated June liability, which is due two business days
before June 30. The remaining amount of the June liability is due on August 20.
(d) Notwithstanding paragraph (b) or (c), a person prohibited by the person's
religious beliefs from paying electronically shall be allowed to remit the payment by mail.
The filer must notify the commissioner of revenue of the intent to pay by mail before
doing so on a form prescribed by the commissioner. No extra fee may be charged to a
person making payment by mail under this paragraph. The payment must be postmarked
at least two business days before the due date for making the payment in order to be
considered paid on a timely basis.
(e) Whenever the liability is $120,000 or more separately for: (1) the tax imposed
18.5 under chapter 297A; (2) a fee that is to be reported on the same return as and paid with the
18.6 chapter 297A taxes; or (3) any other tax that is to be reported on the same return as and
18.7 paid with the chapter 297A taxes, then the payment of all the liabilities on the return must
18.8 be accelerated as provided in this subdivision.
18.9 (f) At the start of the first calendar quarter at least 90 days after the cash flow
18.10 account established in section
16A.152, subdivision 1 , and the budget reserve account
18.11 established in section
16A.152, subdivision 1a , reach the amounts listed in section
18.12 16A.152, subdivision 2 , paragraph (a), the remittance of the accelerated payments required
18.13 under paragraph (a), clause (2), must be suspended. The commissioner of management
18.14 and budget shall notify the commissioner of revenue when the accounts have reached
18.15 the required amounts. Beginning with the suspension of paragraph (a), clause (2), for a
18.16 vendor with a liability of $120,000 or more during a fiscal year ending June 30, 2009,
18.17 and fiscal years thereafter, the taxes imposed by chapter 297A are due and payable to the
18.18 commissioner on the 20th day of the month following the month in which the taxable
18.19 event occurred. Payments of tax liabilities for taxable events occurring in June under
18.20 paragraph (b) are not changed.
18.21EFFECTIVE DATE.This section is effective for taxes due and payable after
18.22July 1, 2011.
Sec. 2. 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.
297A.67, subdivision 2
, taxable food includes, but is not limited
to, the following:
(1) prepared food sold by the retailer;
(2) soft drinks;
(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.
(g) A sale and a purchase includes the furnishing for a consideration of the following
(1) the privilege of admission to places of amusement, recreational areas, or athletic
events, and the making available of amusement devices, tanning facilities, reducing
salons, steam baths, Turkish baths, health clubs, and spas or athletic facilities;
(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;
(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
(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
(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
(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
: 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
21.30EFFECTIVE DATE.This section is effective for sales and purchases made after
21.31June 30, 2011.
Sec. 3. Minnesota Statutes 2010, section 297A.62, is amended by adding a subdivision
21.34 Subd. 5. Transitional period for services. When there is a change in the rate of tax
21.35imposed by this section, the following transitional period shall apply to the retail sale of
22.1services covering a billing period starting before and ending after the statutory effective
22.2date of the rate change:
22.3(1) for a rate increase, the new rate shall apply to the first billing period starting
22.4on or after the effective date; and
22.5(2) for a rate decrease, the new rate shall apply to bills rendered on or after the
22.7EFFECTIVE DATE.This section is effective the day following final enactment.
Sec. 4. Minnesota Statutes 2010, section 297A.63, is amended by adding a subdivision
22.10 Subd. 3. Transitional period for services. When there is a change in the rate of
22.11tax imposed by this section, the following transitional period shall apply to the taxable
22.12services purchased for use, storage, distribution, or consumption in this state when the
22.13service purchased covers a billing period starting before and ending after the statutory
22.14effective date of the rate change:
22.15(1) for a rate increase, the new rate shall apply to the first billing period starting
22.16on or after the effective date; and
22.17(2) for a rate decrease, the new rate shall apply to bills rendered on or after the
22.19EFFECTIVE DATE.This section is effective the day following final enactment.
Sec. 5. Minnesota Statutes 2010, section 297A.668, subdivision 7, is amended to read:
Subd. 7. Advertising and promotional direct mail.
(a) Notwithstanding other
subdivisions of this section, the provisions in paragraphs (b) to (e) apply to the sale of
22.23advertising and promotional direct mail. "Advertising and promotional direct mail" means
22.24printed material that is direct mail as defined in section 297A.61, subdivision 35, the
22.25primary purpose of which is to attract public attention to a product, person, business, or
22.26organization, or to attempt to sell, popularize, or secure financial support for a person,
22.27business, organization, or product. "Product" includes tangible personal property, a digital
22.28product transferred electronically, or a service.
A purchaser of advertising and promotional
that is not a holder of
22.30 a direct pay permit shall provide to the seller, in conjunction with the purchase, either a
22.31 direct mail form or may provide the seller with either:
23.1(1) a fully completed exemption certificate as described in section 297A.72
23.2indicating that the purchaser is authorized to pay any sales or use tax due on purchases
23.3made by the purchaser directly to the commissioner under section 297A.89;
23.4(2) a fully completed exemption certificate claiming an exemption for direct mail; or
to show showing
the jurisdictions to which the advertising and
direct mail is to be
delivered to recipients.
(1) Upon receipt of the direct mail form, (c) In the absence of bad faith, if the
23.8purchaser provides one of the exemption certificates indicated in paragraph (b), clauses (1)
the seller is relieved of all obligations to collect, pay, or remit the applicable tax
and the purchaser is obligated to pay or remit the
applicable tax on a direct pay basis. A
23.11 direct mail form remains in effect for all future sales of direct mail by the seller to the
23.12 purchaser until it is revoked in writing. tax on any transaction involving advertising and
23.13promotional direct mail to which the certificate applies. The purchaser shall source the
23.14sale to the jurisdictions to which the advertising and promotional direct mail is to be
23.15delivered to the recipients of the mail, and shall report and pay any applicable tax due.
23.16 (2) Upon receipt of (d) If the purchaser provides the seller
showing the jurisdictions to which the advertising and promotional
is to be
delivered to recipients, the seller shall source the sale to the jurisdictions to which
23.19the advertising and promotional direct mail is to be delivered and shall
collect and remit
according to the delivery information provided by the purchaser
the absence of bad faith, the seller is relieved of any further obligation to collect any
any transaction for which the sale of advertising and promotional direct
the seller has
collected tax pursuant sourced the sale according
to the delivery
information provided by the purchaser.
If the purchaser
of direct mail
have a direct pay permit and does
provide the seller with
either a direct mail form or delivery information, as required
23.27 by paragraph (a), the seller shall collect the tax according to any of the items listed in
23.28paragraph (b), the sale shall be sourced under
subdivision 2, paragraph (f). Nothing in
this paragraph limits a purchaser's obligation for sales or use tax to any state to which the
direct mail is delivered.
(c) If a purchaser of direct mail provides the seller with documentation of direct
23.32 pay authority, the purchaser is not required to provide a direct mail form or delivery
23.33 information to the seller.
23.34(f) This subdivision does not apply to printed materials that result from developing
23.35billing information or providing any data processing service that is more than incidental
24.1to producing the printed materials, regardless of whether advertising and promotional
24.2direct mail is included in the same mailing.
24.3(g) If a transaction is a bundled transaction that includes advertising and promotional
24.4direct mail, this subdivision applies only if the primary purpose of the transaction is the sale
24.5of products or services that meet the definition of advertising and promotional direct mail.
24.6EFFECTIVE DATE.This section is effective for sales and purchases made after
24.7June 30, 2011.
Sec. 6. Minnesota Statutes 2010, section 297A.668, is amended by adding a
subdivision to read:
24.10 Subd. 7a. Other direct mail. (a) Notwithstanding other subdivisions of this section,
24.11the provisions in paragraphs (b) and (c) apply to the sale of other direct mail. "Other direct
24.12mail" means printed material that is direct mail as defined in section 297A.61, subdivision
24.1335, but is not advertising and promotional direct mail as described in subdivision 7,
24.14regardless of whether advertising and promotional direct mail is included in the same
24.15mailing. Other direct mail includes, but is not limited to:
24.16(1) direct mail pertaining to a transaction between the purchaser and addressee,
24.17where the mail contains personal information specific to the addressee including, but not
24.18limited to, invoices, bills, statements of account, and payroll advices;
24.19(2) any legally required mailings including, but not limited to, privacy notices,
24.20tax reports, and stockholder reports; and
24.21(3) other nonpromotional direct mail delivered to existing or former shareholders,
24.22customers, employees, or agents including, but not limited to, newsletters and
24.24Other direct mail does not include printed materials that result from developing
24.25billing information or providing any data processing service that is more than incidental to
24.26producing the other direct mail.
24.27(b) A purchaser of other direct mail may provide the seller with either a fully
24.28completed exemption certificate as described in section 297A.72 indicating that the
24.29purchaser is authorized to pay any sales or use tax due on purchases made by the purchaser
24.30directly to the commissioner under section 297A.89, or a fully completed exemption
24.31certificate claiming an exemption for direct mail. If the purchaser provides one of the
24.32exemption certificates listed, then the seller, in the absence of bad faith, is relieved of all
24.33obligations to collect, pay, or remit the tax on any transaction involving other direct mail
24.34to which the certificate applies. The purchaser shall source the sale to the jurisdictions to
25.1which the other direct mail is to be delivered to the recipients of the mail, and shall report
25.2and pay any applicable tax due.
25.3(c) If the purchaser does not provide the seller with a fully completed exemption
25.4certificate claiming either exemption listed in paragraph (b), the sale shall be sourced
25.5according to subdivision 2, paragraph (d).
25.6EFFECTIVE DATE.This section is effective for sales and purchases made after
25.7June 30, 2011.
Sec. 7. Minnesota Statutes 2010, section 297A.68, subdivision 5, is amended to read:
Subd. 5. Capital equipment.
(a) Capital equipment is exempt.
The tax must be
25.10 imposed and collected as if the rate under section
297A.62, subdivision 1 , applied, and
25.11 then refunded in the manner provided in section
"Capital equipment" means machinery and equipment purchased or leased, and used
in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
or refining tangible personal property to be sold ultimately at retail if the machinery and
equipment are essential to the integrated production process of manufacturing, fabricating,
mining, or refining. Capital equipment also includes machinery and equipment
used primarily to electronically transmit results retrieved by a customer of an online
computerized data retrieval system.
(b) Capital equipment includes, but is not limited to:
(1) machinery and equipment used to operate, control, or regulate the production
(2) machinery and equipment used for research and development, design, quality
control, and testing activities;
(3) environmental control devices that are used to maintain conditions such as
temperature, humidity, light, or air pressure when those conditions are essential to and are
part of the production process;
(4) materials and supplies used to construct and install machinery or equipment;
(5) repair and replacement parts, including accessories, whether purchased as spare
parts, repair parts, or as upgrades or modifications to machinery or equipment;
(6) materials used for foundations that support machinery or equipment;
(7) materials used to construct and install special purpose buildings used in the
(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
as part of the delivery process regardless if mounted on a chassis, repair parts for
ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
(9) machinery or equipment used for research, development, design, or production
of computer software.
(c) Capital equipment does not include the following:
(1) motor vehicles taxed under chapter 297B;
(2) machinery or equipment used to receive or store raw materials;
(3) building materials, except for materials included in paragraph (b), clauses (6)
(4) machinery or equipment used for nonproduction purposes, including, but not
limited to, the following: plant security, fire prevention, first aid, and hospital stations;
support operations or administration; pollution control; and plant cleaning, disposal of
scrap and waste, plant communications, space heating, cooling, lighting, or safety;
(5) farm machinery and aquaculture production equipment as defined by section
26.13297A.61, subdivisions 12 and 13
(6) machinery or equipment purchased and installed by a contractor as part of an
improvement to real property;
(7) machinery and equipment used by restaurants in the furnishing, preparing, or
serving of prepared foods as defined in section
297A.61, subdivision 31
(8) machinery and equipment used to furnish the services listed in section
, paragraph (g), clause (6), items (i) to (vi) and (viii);
(9) machinery or equipment used in the transportation, transmission, or distribution
of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
tanks, mains, or other means of transporting those products. This clause does not apply to
machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
(10) any other item that is not essential to the integrated process of manufacturing,
fabricating, mining, or refining.
(d) For purposes of this subdivision:
(1) "Equipment" means independent devices or tools separate from machinery but
essential to an integrated production process, including computers and computer software,
used in operating, controlling, or regulating machinery and equipment; and any subunit or
assembly comprising a component of any machinery or accessory or attachment parts of
machinery, such as tools, dies, jigs, patterns, and molds.
(2) "Fabricating" means to make, build, create, produce, or assemble components or
property to work in a new or different manner.
(3) "Integrated production process" means a process or series of operations through
which tangible personal property is manufactured, fabricated, mined, or refined. For
purposes of this clause, (i) manufacturing begins with the removal of raw materials
from inventory and ends when the last process prior to loading for shipment has been
completed; (ii) fabricating begins with the removal from storage or inventory of the
property to be assembled, processed, altered, or modified and ends with the creation
or production of the new or changed product; (iii) mining begins with the removal of
overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
ends when the last process before stockpiling is completed; and (iv) refining begins with
the removal from inventory or storage of a natural resource and ends with the conversion
of the item to its completed form.
(4) "Machinery" means mechanical, electronic, or electrical devices, including
computers and computer software, that are purchased or constructed to be used for the
activities set forth in paragraph (a), beginning with the removal of raw materials from
inventory through completion of the product, including packaging of the product.
(5) "Machinery and equipment used for pollution control" means machinery and
equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
described in paragraph (a).
(6) "Manufacturing" means an operation or series of operations where raw materials
are changed in form, composition, or condition by machinery and equipment and which
results in the production of a new article of tangible personal property. For purposes of
this subdivision, "manufacturing" includes the generation of electricity or steam to be
sold at retail.
(7) "Mining" means the extraction of minerals, ores, stone, or peat.
(8) "Online data retrieval system" means a system whose cumulation of information
is equally available and accessible to all its customers.
(9) "Primarily" means machinery and equipment used 50 percent or more of the time
in an activity described in paragraph (a).
(10) "Refining" means the process of converting a natural resource to an intermediate
or finished product, including the treatment of water to be sold at retail.
(11) This subdivision does not apply to telecommunications equipment as
provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
for telecommunications services.
27.32EFFECTIVE DATE.This section is effective for sales and purchases made after
27.33June 30, 2013.
Sec. 8. Minnesota Statutes 2010, section 297A.70, subdivision 3, is amended to read:
Subd. 3. Sales of certain goods and services to government.
(a) The following
sales to or use by the specified governments and political subdivisions of the state are
(1) repair and replacement parts for emergency rescue vehicles, fire trucks, and
fire apparatus to a political subdivision;
(2) machinery and equipment, except for motor vehicles, used directly for mixed
municipal solid waste management services at a solid waste disposal facility as defined in
115A.03, subdivision 10
(3) chore and homemaking services to a political subdivision of the state to be
provided to elderly or disabled individuals;
(4) telephone services to the Office of Enterprise Technology that are used to provide
telecommunications services through the enterprise technology revolving fund;
(5) firefighter personal protective equipment as defined in paragraph (b), if purchased
or authorized by and for the use of an organized fire department, fire protection district, or
fire company regularly charged with the responsibility of providing fire protection to the
state or a political subdivision;
(6) bullet-resistant body armor that provides the wearer with ballistic and trauma
protection, if purchased by a law enforcement agency of the state or a political subdivision
of the state, or a licensed peace officer, as defined in section
626.84, subdivision 1
(7) motor vehicles purchased or leased by political subdivisions of the state if the
vehicles are exempt from registration under section
168.012, subdivision 1
, paragraph (b),
exempt from taxation under section
, or exempt from the motor vehicle sales tax
, clause (12);
(8) equipment designed to process, dewater, and recycle biosolids for wastewater
treatment facilities of political subdivisions, and materials incidental to installation of
(9) sales to a town of gravel and of machinery, equipment, and accessories, except
motor vehicles, used exclusively for road and bridge maintenance, and leases by a town of
motor vehicles exempt from tax under section
, clause (10);
(10) the removal of trees, bushes, or shrubs for the construction and maintenance
of roads, trails, or firebreaks when purchased by an agency of the state or a political
subdivision of the state;
(11) purchases by the Metropolitan Council or the Department of Transportation of
vehicles and repair parts to equip operations provided for in section
, including, but
not limited to, the Northstar Corridor Rail project
29.1(12) purchases of water used directly in providing public safety services by an
29.2organized fire department, fire protection district, or fire company regularly charged with
29.3the responsibility of providing fire protection to the state or a political subdivision.
(b) For purposes of this subdivision, "firefighters personal protective equipment"
means helmets, including face shields, chin straps, and neck liners; bunker coats and
pants, including pant suspenders; boots; gloves; head covers or hoods; wildfire jackets;
protective coveralls; goggles; self-contained breathing apparatus; canister filter masks;
personal alert safety systems; spanner belts; optical or thermal imaging search devices;
and all safety equipment required by the Occupational Safety and Health Administration.
(c) For purchases of items listed in paragraph (a), clause (11), the tax must be
imposed and collected as if the rate under section
297A.62, subdivision 1
, applied and
then refunded in the manner provided in section
29.13EFFECTIVE DATE.This section is effective retroactively for sales and purchases
29.14made after June 30, 2007; however, no refunds may be made for amounts already paid on
29.15water purchased between June 30, 2007, and January 30, 2010.
Sec. 9. Minnesota Statutes 2010, section 297A.75, is amended to read:
29.17297A.75 REFUND; APPROPRIATION.
Subdivision 1. Tax collected.
The tax on the gross receipts from the sale of the
following exempt items must be imposed and collected as if the sale were taxable and the
rate under section
297A.62, subdivision 1
, applied. The exempt items include:
(1) capital equipment exempt under section
297A.68, subdivision 5 ;
29.22 (2) (1)
building materials for an agricultural processing facility exempt under section
29.23297A.71, subdivision 13
building materials for mineral production facilities exempt under section
29.25297A.71, subdivision 14
building materials for correctional facilities under section
building materials used in a residence for disabled veterans exempt under
297A.71, subdivision 11
elevators and building materials exempt under section
building materials for the Long Lake Conservation Center exempt under
297A.71, subdivision 17
materials and supplies for qualified low-income housing under section
30.2297A.71, subdivision 23
materials, supplies, and equipment for municipal electric utility facilities
297A.71, subdivision 35
equipment and materials used for the generation, transmission, and
distribution of electrical energy and an aerial camera package exempt under section
, subdivision 37;
tangible personal property and taxable services and construction materials,
supplies, and equipment exempt under section
, subdivision 41;
commuter rail vehicle and repair parts under section
3, clause (11);
materials, supplies, and equipment for construction or improvement of
projects and facilities under section
297A.71, subdivision 40
materials, supplies, and equipment for construction or improvement of a
meat processing facility exempt under section
297A.71, subdivision 41
materials, supplies, and equipment for construction, improvement, or
expansion of an aerospace defense manufacturing facility exempt under section
Subd. 2. Refund; eligible persons.
Upon application on forms prescribed by the
commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
must be paid to the applicant. Only the following persons may apply for the refund:
(1) for subdivision 1, clauses (1)
to (3) and (2)
, the applicant must be the purchaser;
(2) for subdivision 1, clauses
, the applicant must be the
(3) for subdivision 1, clause
, the applicant must be the recipient of the
benefits provided in United States Code, title 38, chapter 21;
(4) for subdivision 1, clause
, the applicant must be the owner of the
(5) for subdivision 1, clause
, the owner of the qualified low-income housing
(6) for subdivision 1, clause
, the applicant must be a municipal electric utility
or a joint venture of municipal electric utilities;
(7) for subdivision 1, clauses (9),
(11), (13), and
of the qualifying business; and
(8) for subdivision 1, clauses (11) and
, the applicant must be the
governmental entity that owns or contracts for the project or facility.
Subd. 3. Application.
(a) The application must include sufficient information
to permit the commissioner to verify the tax paid. If the tax was paid by a contractor,
subcontractor, or builder, under subdivision 1, clause (3),
(4), (5), (6), (7), (8), (9), (10),
(11), (12), (13), or
the contractor, subcontractor, or builder must furnish to
the refund applicant a statement including the cost of the exempt items and the taxes paid
on the items unless otherwise specifically provided by this subdivision. The provisions of
apply to refunds under this section.
(b) An applicant may not file more than two applications per calendar year for
31.9 refunds for taxes paid on capital equipment exempt under section
297A.68, subdivision 5 .
31.10 (c) (b)
Total refunds for purchases of items in section
297A.71, subdivision 40
must not exceed $5,000,000 in fiscal years 2010 and 2011. Applications for refunds for
purchases of items in sections
297A.70, subdivision 3
, paragraph (a), clause (11), and
, subdivision 40, must not be filed until after June 30, 2009.
Subd. 4. Interest.
Interest must be paid on the refund at the rate in section
from 90 days after the refund claim is filed with the commissioner for taxes paid under
Subd. 5. Appropriation.
The amount required to make the refunds is annually
appropriated to the commissioner.
31.19EFFECTIVE DATE.This section is effective for sales and purchases made after
31.20June 30, 2013.
Sec. 10. REPEALER.
31.22Minnesota Statutes 2010, section 289A.60, subdivision 31, is repealed.
31.23EFFECTIVE DATE.This section is effective for taxes due and payable after
31.24July 1, 2011.
Section 1. Minnesota Statutes 2010, section 297F.01, is amended by adding a
subdivision to read:
31.29 Subd. 10b. Moist snuff. "Moist snuff" means any finely cut, ground, or powdered
31.30smokeless tobacco that is intended to be placed or dipped in the oral cavity, but does
31.31not include any finely cut, ground, or powdered tobacco that is intended to be placed
31.32in the nasal cavity.
31.33EFFECTIVE DATE.This section is effective July 1, 2011.
Sec. 2. Minnesota Statutes 2010, section 297F.01, subdivision 19, is amended to read:
Subd. 19. Tobacco products.
"Tobacco products" means any product containing,
made, or derived from tobacco that is intended for human consumption, whether
chewed, smoked, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any
other means, or any component, part, or accessory of a tobacco product, including, but
not limited to, cigars; little cigars; cheroots; stogies; periques; granulated, plug cut,
crimp cut, ready rubbed, and other smoking tobacco; snuff, including moist snuff
flour; cavendish; plug and twist tobacco; fine-cut and other chewing tobacco; shorts;
refuse scraps, clippings, cuttings and sweepings of tobacco, and other kinds and forms
of tobacco; but does not include cigarettes as defined in this section. Tobacco products
excludes any tobacco product that has been approved by the United States Food and
Drug Administration for sale as a tobacco cessation product, as a tobacco dependence
product, or for other medical purposes, and is being marketed and sold solely for such an
32.15EFFECTIVE DATE.This section is effective July 1, 2011.
Sec. 3. Minnesota Statutes 2010, section 297F.05, subdivision 3, is amended to read:
Subd. 3. Rates; tobacco products. (a)
A tax is imposed upon all tobacco products
in this state and upon any person engaged in business as a distributor, at the
35 percent of the wholesale sales price of the tobacco products
. other than moist
32.21(2) for moist snuff, at the rate of $1.45 per ounce, and a proportionate rate for any
32.22other quantity or fractional part in excess of 1.2 ounces. The tax imposed on a can or
32.23package of moist snuff that weighs less than 1.2 ounces is equal to the amount of tax
32.24imposed on a can or package of moist snuff that weighs 1.2 ounces.
The tax is imposed at the time the distributor:
(1) brings, or causes to be brought, into this state from outside the state tobacco
products for sale;
(2) makes, manufactures, or fabricates tobacco products in this state for sale in
this state; or
(3) ships or transports tobacco products to retailers in this state, to be sold by those
32.32EFFECTIVE DATE.This section is effective July 1, 2011.
Sec. 4. Minnesota Statutes 2010, section 297F.05, subdivision 4, is amended to read:
Subd. 4. Use tax; tobacco products.
A tax is imposed upon the use or storage by
consumers of tobacco products in this state, and upon such consumers, at the
35 percent of the cost to the consumer of the tobacco products
. other than moist
33.5(2) for moist snuff, at the rate of $1.45 per ounce, and a proportionate rate for any
33.6other quantity or fractional part in excess of 1.2 ounces. The tax imposed on a can or
33.7package of moist snuff that weighs less than 1.2 ounces is equal to the amount of tax
33.8imposed on a can or package of moist snuff that weighs 1.2 ounces.
33.9EFFECTIVE DATE.This section is effective July 1, 2011.
Sec. 5. Minnesota Statutes 2010, section 297F.09, subdivision 2, is amended to read:
Subd. 2. Monthly return; tobacco products distributor.
On or before the 18th
day of each calendar month, a distributor with a place of business in this state shall file
a return with the commissioner showing the quantity and wholesale sales price of each
tobacco product, including the number of ounces of moist snuff tobacco
(1) brought, or caused to be brought, into this state for sale; and
(2) made, manufactured, or fabricated in this state for sale in this state, during the
preceding calendar month.
Every licensed distributor outside this state shall in like manner file a return showing the
quantity and wholesale sales price of each tobacco product, including the number of
33.20ounces of moist snuff tobacco,
shipped or transported to retailers in this state to be sold by
those retailers, during the preceding calendar month. Returns must be made in the form
and manner prescribed by the commissioner and must contain any other information
required by the commissioner. The return must be accompanied by a remittance for the full
tax liability shown. For distributors subject to the accelerated tax payment requirements in
subdivision 10, the return for the May liability is due two business days before June 30th
of the year and the return for the June liability is due on or before August 18th of the year.
33.27EFFECTIVE DATE.This section is effective July 1, 2011.
Sec. 6. Minnesota Statutes 2010, section 297F.09, subdivision 3, is amended to read:
Subd. 3. Use tax return; cigarette or tobacco products consumer.
On or before
the 18th day of each calendar month, a consumer who, during the preceding calendar
month, has acquired title to or possession of cigarettes or tobacco products for use or
storage in this state, upon which cigarettes or tobacco products the tax imposed by
this chapter has not been paid, shall file a return with the commissioner showing the
quantity of cigarettes or tobacco products, including the number of ounces of moist snuff
so acquired. The return must be made in the form and manner prescribed by the
commissioner, and must contain any other information required by the commissioner. The
return must be accompanied by a remittance for the full unpaid tax liability shown by it.
34.5EFFECTIVE DATE.This section is effective July 1, 2011.
Section 1. Minnesota Statutes 2010, section 270C.13, subdivision 1, is amended to read:
Subdivision 1. Biennial report.
The commissioner shall report to the legislature
by March 1 of each odd-numbered year on the overall incidence of the income tax,
sales and excise taxes, and property tax. The report shall present information on the
distribution of the tax burden as follows: (1) for the overall income distribution, using
a systemwide incidence measure such as the Suits index or other appropriate measures
of equality and inequality; (2) by income classes, including at a minimum deciles of the
income distribution; and (3) by other appropriate taxpayer characteristics. The report
34.16must also include information on the distribution of the burden of federal taxes borne
34.17by Minnesota residents.
34.18EFFECTIVE DATE.This section is effective beginning with the report due in
Sec. 2. Minnesota Statutes 2010, section 275.025, subdivision 1, is amended to read:
Subdivision 1. Levy amount.
The state general levy is levied against
commercial-industrial property and seasonal residential recreational property, as defined
in this section. The state general levy base amount for commercial-industrial property
for taxes payable in
2002 2012. The state general levy base
34.25amount for seasonal recreational property is $40,585,000 for taxes payable in 2012
taxes payable in subsequent years,
levy base amount is increased each year by
multiplying the levy base amount for the prior year by the sum of one plus the rate of
increase, if any, in the implicit price deflator for government consumption expenditures
and gross investment for state and local governments prepared by the Bureau of Economic
Analysts of the United States Department of Commerce for the 12-month period ending
March 31 of the year prior to the year the taxes are payable. The tax under this section is
not treated as a local tax rate under section
and is not the levy of a governmental
unit under chapters 276A and 473F.
The commissioner shall increase or decrease the preliminary or final rate for a year
as necessary to account for errors and tax base changes that affected a preliminary or final
rate for either of the two preceding years. Adjustments are allowed to the extent that the
necessary information is available to the commissioner at the time the rates for a year must
be certified, and for the following reasons:
(1) an erroneous report of taxable value by a local official;
(2) an erroneous calculation by the commissioner; and
(3) an increase or decrease in taxable value for commercial-industrial or seasonal
residential recreational property reported on the abstracts of tax lists submitted under
that was not reported on the abstracts of assessment submitted under
for the same year.
The commissioner may, but need not, make adjustments if the total difference in the tax
levied for the year would be less than $100,000.
35.14EFFECTIVE DATE.This section is effective for taxes payable in 2012 and
Sec. 3. Minnesota Statutes 2010, section 275.025, subdivision 4, is amended to read:
Subd. 4. Apportionment and levy of state general tax.
Ninety-five percent of
state general tax must be levied by applying a uniform rate to all commercial-industrial tax
five percent of the state general tax must be levied by applying
rate to all seasonal residential recreational tax capacity. On or before October 1 each
year, the commissioner of revenue shall certify the preliminary state general levy rates to
each county auditor that must be used to prepare the notices of proposed property taxes
for taxes payable in the following year. By January 1 of each year, the commissioner
shall certify the final state general levy
to each county auditor that shall be
used in spreading taxes.
35.26EFFECTIVE DATE.This section is effective for taxes payable in 2012 and
Sec. 4. APPROPRIATIONS.
35.29 Subdivision 1. Income tax reciprocity benchmark study. $115,000 in fiscal year
35.302012 and $215,000 in fiscal year 2013 are appropriated from the general fund to the
35.31commissioner of revenue for the income tax reciprocity benchmark study in article 1,
35.32section 17. This appropriation is onetime and is not added to the agency's base budget.
36.1 Subd. 2. Tax incidence report. $15,000 in fiscal year 2012 and $15,000 in fiscal
36.2year 2013 are appropriated from the general fund to the commissioner of revenue for the
36.3change to the tax incidence report in section 1.
Delete the title and insert:
relating to taxation; making changes to individual income, corporate franchise,
property, sales and use, tobacco products, and other taxes and tax-related
provisions; 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 a study;
appropriating money;amending Minnesota Statutes 2010, sections 270B.12,
by adding a subdivision; 270C.13, subdivision 1; 275.025, subdivisions 1,
4; 289A.20, subdivision 4; 290.01, subdivision 19b; 290.06, subdivision 2c;
290.068, subdivision 1; 290.081; 290.091, subdivision 2; 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; 297F.01, subdivision 19, by adding a subdivision;
297F.05, subdivisions 3, 4; 297F.09, subdivisions 2, 3; proposing coding for new
law in Minnesota Statutes, chapter 116W; repealing Minnesota Statutes 2010,
section 289A.60, subdivision 31."