Journal of the House - 86th Day - Wednesday, April 25, 2018 - Top of Page 9051

STATE OF MINNESOTA

 

Journal of the House

 

NINETIETH SESSION - 2018

 

_____________________

 

EIGHTY-SIXTH DAY

 

Saint Paul, Minnesota, Wednesday, April 25, 2018

 

 

      The House of Representatives convened at 10:00 a.m. and was called to order by Kurt Daudt, Speaker of the House.

 

      Prayer was offered by the Reverend Dan Erickson, Chisholm Baptist Church, Chisholm, 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:

 


Albright

Allen

Anderson, P.

Anderson, S.

Anselmo

Backer

Bahr, C.

Baker

Bennett

Bernardy

Bliss

Bly

Carlson, A.

Carlson, L.

Christensen

Clark

Considine

Daniels

Davids

Davnie

Dean, M.

Dehn, R.

Dettmer

Drazkowski

Ecklund

Erickson

Fabian

Fenton

Fischer

Flanagan

Franson

Freiberg

Garofalo

Green

Grossell

Gruenhagen

Gunther

Haley

Halverson

Hamilton

Hansen

Hausman

Heintzeman

Hertaus

Hilstrom

Hoppe

Hornstein

Hortman

Howe

Jessup

Johnson, B.

Johnson, C.

Jurgens

Kiel

Knoblach

Koegel

Koznick

Kresha

Kunesh-Podein

Layman

Lee

Lesch

Liebling

Lien

Loeffler

Lohmer

Loon

Loonan

Lucero

Lueck

Mahoney

Mariani

Marquart

Masin

Maye Quade

McDonald

Metsa

Miller

Moran

Munson

Murphy, E.

Murphy, M.

Nash

Nelson

Neu

Newberger

Nornes

O'Driscoll

Olson

Omar

O'Neill

Pelowski

Peppin

Petersburg

Peterson

Pierson

Pinto

Poppe

Poston

Pryor

Pugh

Quam

Rarick

Rosenthal

Runbeck

Sandstede

Sauke

Schomacker

Schultz

Scott

Smith

Sundin

Swedzinski

Theis

Torkelson

Uglem

Urdahl

Vogel

Wagenius

Ward

West

Whelan

Wills

Youakim

Zerwas

Spk. Daudt


 

      A quorum was present.

 

      Applebaum; Barr, R.; Becker-Finn; Franke; Johnson, S.; Lillie and Slocum were excused.

 

      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.


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REPORTS OF CHIEF CLERK

 

      S. F. No. 3306 and H. F. No. 3837, which had been referred to the Chief Clerk for comparison, were examined and found to be not identical.

 

      O'Driscoll moved that S. F. No. 3306 be substituted for H. F. No. 3837 and that the House File be indefinitely postponed.  The motion prevailed.

 

 

REPORTS OF STANDING COMMITTEES AND DIVISIONS

 

 

Knoblach from the Committee on Ways and Means to which was referred:

 

H. F. No. 2856, A bill for an act relating to public safety; modifying certain provisions relating to courts, public safety, corrections, and crime; increasing amount of surcharge credited to training account of Peace Officer Standards and Training (POST) Board; providing for a task force and working group; requesting reports; providing for penalties; appropriating money for public safety, courts, corrections, Guardian Ad Litem Board, Board of Public Defense, and Human Services; amending Minnesota Statutes 2016, sections 168B.16; 169.64, subdivision 4; 169.92, subdivision 4; 169A.24, subdivision 1; 169A.55, subdivision 4; 171.07, subdivision 1a; 171.16, subdivisions 2, 3; 171.18, subdivision 1; 171.24, by adding a subdivision; 242.192; 243.166, subdivisions 1a, 1b, 2, 4, 4a, 4b, 4c, 5, 6, 7, 7a, by adding a subdivision; 257.57, subdivisions 1, 2, by adding a subdivision; 257.75, subdivision 4; 299C.091, subdivision 5; 299C.093; 299C.17; 357.021, subdivision 7; 388.23, subdivision 1; 518.145, subdivision 2; 549.09, subdivision 1; 590.11, subdivisions 1, 2, 5, 7; 609.015, subdivision 1; 609.095; 609.2112, subdivision 1; 609.2113, subdivisions 1, 2, 3; 609.2114, subdivisions 1, 2; 609.2231, subdivisions 1, 2, 3a; 609.324, subdivisions 3, 4, by adding a subdivision; 609.341, subdivision 10, by adding subdivisions; 609.342, subdivisions 1, 2; 609.343, subdivisions 1, 2; 609.344, subdivisions 1, 2; 609.345, subdivisions 1, 2; 609.3451, subdivisions 1, 3; 609.3455, subdivisions 6, 8, by adding subdivisions; 609.52, subdivision 3; 609.74; 609.855, subdivision 2; 611.365, subdivisions 2, 3; 611.367; 611.368; 617.246, subdivisions 2, 3, 4, 7, by adding a subdivision; 617.247, subdivisions 3, 4, 9, by adding a subdivision; 626.8452, by adding a subdivision; 626A.08, subdivision 2; 626A.37, subdivision 4; 631.40, subdivision 1a; Minnesota Statutes 2017 Supplement, sections 171.30, subdivisions 1, 2a; 171.306, subdivisions 1, 2; 171.3215, subdivisions 2, 3; 260C.163, subdivisions 3, 10; 357.021, subdivision 2; proposing coding for new law in Minnesota Statutes, chapters 243; 299A; 299C; 631; repealing Minnesota Statutes 2016, sections 401.13; 609.349.

 

Reported the same back with the following amendments:

 

Page 3, line 17, after the period, insert "This is a onetime appropriation."

 

Page 4, line 27, after the period, insert "This is a onetime appropriation."

 

Page 17, line 29, after "reversed" insert ", or a new trial was ordered,"

 

Page 19, line 5, after "sentence" insert "unless the other sentence arose from the circumstances described in paragraph (a), clause (4), item (ii)"


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Page 19, after line 28 insert:

 

"Sec. 15.  [611.065] LIMITATIONS ON RECORDING OR BROADCASTING CRIMINAL PROCEEDINGS.

 

Except as otherwise provided in this section, no person may record or broadcast any criminal matter, including a trial, hearing, motion, or argument, absent the express consent of the defendant and the victim.  This prohibition applies to the use of television, radio, audio, photographic, or other recording equipment.  This prohibition does not apply to the use of electronic, photographic, or other recording equipment approved by the court for purposes of making the court record, including closed-circuit interactive television."

 

Page 20, line 2, delete the new language

 

Page 22, delete section 21

 

Renumber the sections in sequence

 

Correct the title numbers accordingly

 

 

With the recommendation that when so amended the bill be placed on the General Register.

 

      The report was adopted.

 

 

Knoblach from the Committee on Ways and Means to which was referred:

 

H. F. No. 4167, A bill for an act relating to legacy; appropriating money from legacy funds; modifying requirements for certain recipients of legacy funds; modifying provisions for Capitol art displays; providing for women's suffrage commemoration; amending Minnesota Statutes 2016, sections 15B.32, as amended; 97A.056, subdivisions 3, 13; 129D.17, subdivision 2, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 15B.

 

Reported the same back with the following amendments:

 

Page 36, line 10, delete "any exhibit of works of art" and insert "a program of art exhibits to encourage public visits to the Capitol and"

 

Page 36, line 11, delete "the" and insert "an" and delete "may" and insert "that is part of the program can"

 

Page 36, line 12, after the period, insert "When considering recommendations made under section 15B.36, the commission must approve or reject recommended exhibits as a whole and may not approve or reject individual pieces within a recommended exhibit.  The approved program must address the proposed schedule, how it addresses adopted themes for art in the Capitol, and the type or types of artwork."

 

Page 36, line 15, after "legacy" insert "finance"

 

Page 36, line 26, delete everything after the period

 

Page 36, delete line 27, and insert "The speaker of the house, president of the senate, and chief justice of the Minnesota Supreme Court may request the"


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Page 37, after line 17, insert:

 

"(d) A preference shall be given for recommended art exhibits for artists currently living in Minnesota or living in Minnesota at the time portrayed.  The selection process should ensure that a wide range of artists have a chance to be considered and that, over time, the art reflects the contributions of artists of various demographic backgrounds, including age, disability, gender, and racial and ethnic identity."

 

Page 38, line 5, delete the second "commissioner" and insert "commission"

 

Page 42, delete section 7 and insert:

 

"Sec. 7.  ARTS AND CULTURAL HERITAGE FUND APPROPRIATION.

 

Subdivision 1.  Minnesota Humanities Center.  (a) These amounts are appropriated to the Board of Directors of the Minnesota Humanities Center for grants to the named organizations for the purposes specified in this subdivision.  The Minnesota Humanities Center may use up to five percent of this appropriation for costs that are directly related to and necessary to the administration of grants in this subdivision.

 

(b) Grant agreements entered into by the Minnesota Humanities Center and recipients of appropriations under this subdivision must ensure that money appropriated in this subdivision is used to supplement and not substitute for traditional sources of funding.

 

(c) All appropriations in this subdivision are onetime and available until June 20, 2020.

 

(d) $500,000 in fiscal year 2019 is appropriated from the arts and cultural heritage fund to support the work of the Women's Suffrage 100th Anniversary Commemoration Commission, including grants for educational and civic events.

 

Subd. 2.  Department of Administration.  (a) These amounts are appropriated to the commissioner of administration for grants to the named organizations for the purposes specified in this subdivision.  The commissioner of administration may use a portion of this appropriation for costs that are directly related to and necessary to the administration of grants in this subdivision.

 

(b) Grant agreements entered into by the commissioner and recipients of appropriations under this subdivision must ensure that money appropriated in this subdivision is used to supplement and not substitute for traditional sources of funding.

 

(c) All appropriations in this subdivision are onetime.

 

(d) $300,000 in fiscal year 2019 is appropriated from the arts and cultural heritage fund for a grant to the Lake Superior Center Authority to develop, prepare, and construct an exhibit on river systems to help educate Minnesotans on how to protect, enhance, and restore water quality in Minnesota rivers.

 

(e) $150,000 in fiscal year 2019 is appropriated from the arts and cultural heritage fund for a grant to the Minnesota China Friendship Garden Society to plan and design portions of the Chinese garden project in Phalen Park in St. Paul.

 

(f) $60,000 in fiscal year 2019 is appropriated from the arts and cultural heritage fund for staffing the Capitol Art Exhibit Advisory Committee as directed under Minnesota Statutes, section 15B.36.  The commissioner may enter into an interagency agreement with the Minnesota State Arts Board to help perform duties related to soliciting art and art proposals, art curation, and promotion of recommended and approved exhibits in the Capitol building.  This appropriation is available until December 31, 2019.


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(g) $50,000 in fiscal year 2019 is appropriated from the arts and cultural heritage fund for a grant to the Association of Minnesota Public Educational Radio Stations for statewide programming to promote the Veterans' Voices program to educate and engage communities regarding veterans' contributions, knowledge, skills, and experiences with an emphasis on Korean War veterans.

 

Subd. 3.  Minnesota Historical Society.  (a) These amounts are appropriated to the governing board of the Minnesota Historical Society for grants to the named organizations for the purposes specified in this subdivision.  The Minnesota Historical Society may use a portion of this appropriation for costs that are directly related to and necessary to the administration of grants in this subdivision.

 

(b) Grant agreements entered into by the Minnesota Historical Society and recipients of appropriations under this subdivision must ensure that money appropriated in this subdivision is used to supplement and not substitute for traditional sources of funding.

 

(c) All appropriations in this subdivision are onetime.

 

(d) $150,000 in fiscal year 2019 is appropriated from the arts and cultural heritage fund for a grant to the Preston Historical Society for the Preston grain elevator restoration and recreation project.

 

(e) $100,000 in fiscal year 2019 is appropriated from the arts and cultural heritage fund for a grant to the Greater Litchfield Opera House Association to repair and update the electrical capabilities and interior walls in the Litchfield Opera House.

 

(f) $10,000 in fiscal year 2019 is appropriated from the arts and cultural heritage fund for a grant to the city of Grove City for the Grove City Mill restoration."

 

Page 43, delete section 8

 

Renumber the sections in sequence

 

 

With the recommendation that when so amended the bill be placed on the General Register.

 

      The report was adopted.

 

 

Davids from the Committee on Taxes to which was referred:

 

H. F. No. 4385, A bill for an act relating to taxation; making modifications to individual income, corporate franchise, property, sales and use, estate, and tobacco taxes, and other tax provisions; modifying the working family credit; providing for a personal and dependent care credit; providing for certain conformity and nonconformity to federal provisions; modifying the property tax refund; extending the small business investment credit; preventing tax evasion; modifying the research and development credit; modifying the apportionment sales factor; clarifying the dividend received deduction; changing the qualified data center exemption; increasing the tax on certain nonadmitted insurance providers; modifying tobacco sales license provisions; specifying the application of tobacco taxes to vapor products; modifying tobacco stamp provisions; modifying homestead classification provisions; changing qualification and application provisions for the senior property tax deferral program; reinstating the inflator for the state general levy; eliminating the increase in the estate tax exclusion amount; reinstating the annual indexing for the cigarette tax; reinstating a higher rate for premium cigars; providing for monetary and criminal penalties; appropriating money; amending Minnesota Statutes 2016, sections 16D.08, subdivision 2; 116J.8737, subdivisions 5, 12; 270C.03, subdivision 1; 270C.33, subdivision 6; 270C.722, subdivision 1; 270C.728, by adding a


Journal of the House - 86th Day - Wednesday, April 25, 2018 - Top of Page 9056

subdivision; 273.124, subdivisions 13c, 14; 273.1245, subdivision 1; 273.1315, subdivision 2; 289A.60, by adding a subdivision; 290.01, subdivision 29a, by adding a subdivision; 290.0131, subdivisions 1, 3, 12, 13, by adding subdivisions; 290.0132, subdivisions 1, 7, 20, by adding subdivisions; 290.0133, subdivision 6, by adding a subdivision; 290.05, subdivision 3; 290.06, subdivisions 2c, 2d; 290.067, subdivision 2a; 290.0671, subdivision 7; 290.0672, subdivision 2; 290.0681, subdivisions 3, 4; 290.0802, subdivision 2; 290.091, subdivision 3; 290.0921, subdivision 2; 290.0922, subdivision 1; 290.095, subdivision 2; 290.191, subdivision 5; 290.21, subdivision 4, by adding a subdivision; 290.92, subdivision 1; 290A.03, subdivision 12; 290A.04, subdivision 4; 290B.03, subdivision 1; 290B.04, subdivision 1; 297A.68, subdivisions 25, 42; 297B.03; 297F.01, subdivisions 9a, 10, 14, 17, 19, 20, 21, by adding subdivisions; 297F.03, subdivisions 1, 2, 3, 5, 6, 7, by adding a subdivision; 297F.04, subdivisions 1, 2; 297F.05, by adding subdivisions; 297F.06, by adding a subdivision; 297F.08, subdivision 8a; 297F.09, subdivisions 2, 7, 10; 297F.12, subdivision 3; 297F.13, subdivisions 2, 4, by adding a subdivision; 297F.15, subdivision 9; 297F.19, by adding a subdivision; 297F.20, subdivisions 5, 6, 7, 9, by adding subdivisions; 297F.21, subdivision 1; 297I.05, subdivision 7; 461.12, subdivision 8; 469.316, subdivision 1; Minnesota Statutes 2017 Supplement, sections 270A.03, subdivision 5; 273.124, subdivisions 13, 13d; 275.025, subdivision 1; 289A.02, subdivision 7; 289A.10, subdivision 1; 289A.12, subdivision 14; 289A.35; 290.01, subdivisions 19, 31; 290.0131, subdivision 10; 290.0132, subdivision 26; 290.0133, subdivision 12; 290.067, subdivision 2b; 290.0671, subdivision 1; 290.0672, subdivision 1; 290.068, subdivision 2; 290.0681, subdivisions 1, 2; 290.0684, subdivisions 1, 2; 290.091, subdivision 2; 290.17, subdivision 2; 290A.03, subdivisions 3, 15; 291.005, subdivision 1; 291.016, subdivision 3; 297F.01, subdivision 13a; 297F.05, subdivisions 3, 3a, 4a; 462D.06, subdivisions 1, 2; proposing coding for new law in Minnesota Statutes, chapters 270C; 290; 297F; repealing Minnesota Statutes 2016, sections 289A.50, subdivision 10; 290.0131, subdivisions 7, 11; 290.0133, subdivisions 13, 14; 290.10, subdivision 2; 297F.185.

 

Reported the same back with the following amendments:

 

Delete everything after the enacting clause and insert:

 

"ARTICLE 1

FEDERAL TAX CONFORMITY

 

Section 1.  Minnesota Statutes 2017 Supplement, section 270A.03, subdivision 5, is amended to read:

 

Subd. 5.  Debt.  (a) "Debt" means a legal obligation of a natural person to pay a fixed and certain amount of money, which equals or exceeds $25 and which is due and payable to a claimant agency.  The term includes criminal fines imposed under section 609.10 or 609.125, fines imposed for petty misdemeanors as defined in section 609.02, subdivision 4a, and restitution.  A debt may arise under a contractual or statutory obligation, a court order, or other legal obligation, but need not have been reduced to judgment.

 

A debt includes any legal obligation of a current recipient of assistance which is based on overpayment of an assistance grant where that payment is based on a client waiver or an administrative or judicial finding of an intentional program violation; or where the debt is owed to a program wherein the debtor is not a client at the time notification is provided to initiate recovery under this chapter and the debtor is not a current recipient of food support, transitional child care, or transitional medical assistance.

 

(b) A debt does not include any legal obligation to pay a claimant agency for medical care, including hospitalization if the income of the debtor at the time when the medical care was rendered does not exceed the following amount:

 

(1) for an unmarried debtor, an income of $12,560 $13,180 or less;

 

(2) for a debtor with one dependent, an income of $16,080 $16,878 or less;


Journal of the House - 86th Day - Wednesday, April 25, 2018 - Top of Page 9057

(3) for a debtor with two dependents, an income of $19,020 $19,959 or less;

 

(4) for a debtor with three dependents, an income of $21,580 $22,643 or less;

 

(5) for a debtor with four dependents, an income of $22,760 $23,887 or less; and

 

(6) for a debtor with five or more dependents, an income of $23,730 $24,900 or less.

 

For purposes of this paragraph, "debtor" means the individual whose income, together with the income of the individual's spouse, other than a separated spouse, brings the individual within the income provisions of this paragraph.  For purposes of this paragraph, a spouse, other than a separated spouse, shall be considered a dependent.

 

(c) The commissioner shall adjust the income amounts in paragraph (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 "2014" "2017" shall be substituted for the word "1992."  For 2016, the commissioner shall then determine the percent change from the 12 months ending on August 31, 2014, to the 12 months ending on August 31, 2015, and in each subsequent year, from the 12 months ending on August 31, 2014, to the 12 months ending on August 31 of the year preceding the taxable year. "2016."  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.  The income amount as adjusted must be rounded to the nearest $10 amount.  If the amount ends in $5, the amount is rounded up to the nearest $10 amount.

 

(d) Debt also includes an agreement to pay a MinnesotaCare premium, regardless of the dollar amount of the premium authorized under section 256L.15, subdivision 1a.

 

EFFECTIVE DATE.  This section is effective for taxable year beginning after December 31, 2017.

 

Sec. 2.  Minnesota Statutes 2017 Supplement, section 289A.02, subdivision 7, is amended to read:

 

Subd. 7.  Internal Revenue Code.  Unless specifically defined otherwise, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through December 16, 2016 March 31, 2018.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 3.  Minnesota Statutes 2016, section 289A.08, subdivision 1, is amended to read:

 

Subdivision 1.  Generally; individuals.  (a) A taxpayer must file a return for each taxable year the taxpayer is required to file a return under section 6012 of the Internal Revenue Code or meets the requirements under paragraph (d) to file a return, except that:

 

(1) an individual who is not a Minnesota resident for any part of the year is not required to file a Minnesota income tax return if the individual's gross income derived from Minnesota sources as determined under sections 290.081, paragraph (a), and 290.17, is less than the filing requirements for a single individual who is a full year resident of Minnesota; and

 

(2) an individual who is a Minnesota resident is not required to file a Minnesota income tax return if the individual's gross income derived from Minnesota sources as determined under section 290.17, less the subtractions allowed under section 290.0132, subdivisions 12 and 15, is less than the filing requirements for a single individual who is a full-year resident of Minnesota.


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(b) The decedent's final income tax return, and other income tax returns for prior years where the decedent had gross income in excess of the minimum amount at which an individual is required to file and did not file, must be filed by the decedent's personal representative, if any.  If there is no personal representative, the return or returns must be filed by the transferees, as defined in section 270C.58, subdivision 3, who receive property of the decedent.

 

(c) The term "gross income," as it is used in this section, has the same meaning given it in section 290.01, subdivision 20.

 

(d) The commissioner of revenue shall annually determine the gross income levels at which individuals are required to file a return for each taxable year based on the amounts that may be deducted under section 290.0803.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 4.  Minnesota Statutes 2016, section 289A.08, subdivision 7, is amended to read:

 

Subd. 7.  Composite income tax returns for nonresident partners, shareholders, and beneficiaries.  (a) The commissioner may allow a partnership with nonresident partners to file a composite return and to pay the tax on behalf of nonresident partners who have no other Minnesota source income.  This composite return must include the names, addresses, Social Security numbers, income allocation, and tax liability for the nonresident partners electing to be covered by the composite return.

 

(b) The computation of a partner's tax liability must be determined by multiplying the income allocated to that partner by the highest rate used to determine the tax liability for individuals under section 290.06, subdivision 2c.  Nonbusiness deductions, standard deductions, or personal exemptions are not allowed.

 

(c) The partnership must submit a request to use this composite return filing method for nonresident partners.  The requesting partnership must file a composite return in the form prescribed by the commissioner of revenue.  The filing of a composite return is considered a request to use the composite return filing method.

 

(d) The electing partner must not have any Minnesota source income other than the income from the partnership and other electing partnerships.  If it is determined that the electing partner has other Minnesota source income, the inclusion of the income and tax liability for that partner under this provision will not constitute a return to satisfy the requirements of subdivision 1.  The tax paid for the individual as part of the composite return is allowed as a payment of the tax by the individual on the date on which the composite return payment was made.  If the electing nonresident partner has no other Minnesota source income, filing of the composite return is a return for purposes of subdivision 1.

 

(e) This subdivision does not negate the requirement that an individual pay estimated tax if the individual's liability would exceed the requirements set forth in section 289A.25.  The individual's liability to pay estimated tax is, however, satisfied when the partnership pays composite estimated tax in the manner prescribed in section 289A.25.

 

(f) If an electing partner's share of the partnership's gross income from Minnesota sources is less than the filing requirements for a nonresident under this subdivision, the tax liability is zero.  However, a statement showing the partner's share of gross income must be included as part of the composite return.

 

(g) The election provided in this subdivision is only available to a partner who has no other Minnesota source income and who is either (1) a full-year nonresident individual or (2) a trust or estate that does not claim a deduction under either section 651 or 661 of the Internal Revenue Code.


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(h) A corporation defined in section 290.9725 and its nonresident shareholders may make an election under this paragraph.  The provisions covering the partnership apply to the corporation and the provisions applying to the partner apply to the shareholder.

 

(i) Estates and trusts distributing current income only and the nonresident individual beneficiaries of the estates or trusts may make an election under this paragraph.  The provisions covering the partnership apply to the estate or trust.  The provisions applying to the partner apply to the beneficiary.

 

(j) For the purposes of this subdivision, "income" means the partner's share of federal adjusted gross income from the partnership modified by the additions provided in section 290.0131, subdivisions 8 to 11 10, 15, and 17, and the subtractions provided in:  (1) section 290.0132, subdivision 9, to the extent the amount is assignable or allocable to Minnesota under section 290.17; and (2) section 290.0132, subdivision 14.  The subtraction allowed under section 290.0132, subdivision 9, is only allowed on the composite tax computation to the extent the electing partner would have been allowed the subtraction.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 5.  Minnesota Statutes 2017 Supplement, section 289A.12, subdivision 14, is amended to read:

 

Subd. 14.  Reporting exempt interest and exempt-interest dividends.  (a) A regulated investment company paying $10 or more in exempt-interest dividends to an individual who is a resident of Minnesota, or any person receiving $10 or more of exempt interest or exempt-interest dividends and paying as nominee to an individual who is a resident of Minnesota, must make a return indicating the amount of the exempt interest or exempt-interest dividends, the name, address, and Social Security number of the recipient, and any other information that the commissioner specifies.  The return must be provided to the recipient by February 15 of the year following the year of the payment.  The return provided to the recipient must include a clear statement, in the form prescribed by the commissioner, that the exempt interest or exempt-interest dividends must be included in the computation of Minnesota taxable income.  By June 1 of each year, the payer must file a copy of the return with the commissioner.

 

(b) For purposes of this subdivision, the following definitions apply.

 

(1) "Exempt-interest dividends" mean exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue Code, but does not include the portion of exempt-interest dividends that are not required to be added to federal taxable adjusted gross income under section 290.0131, subdivision 2, paragraph (b).

 

(2) "Regulated investment company" means regulated investment company as defined in section 851(a) of the Internal Revenue Code or a fund of the regulated investment company as defined in section 851(g) of the Internal Revenue Code.

 

(3) "Exempt interest" means 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, and exempt from federal income taxes under the Internal Revenue Code or any other federal statute.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 6.  Minnesota Statutes 2017 Supplement, section 289A.35, is amended to read:

 

289A.35 ASSESSMENTS ON RETURNS.

 

(a) The commissioner may audit and adjust the taxpayer's computation of federal adjusted gross income, federal taxable income, items of federal tax preferences, or federal credit amounts to make them conform with the provisions of chapter 290 or section 298.01.  If a return has been filed, the commissioner shall enter the liability reported on the return and may make any audit or investigation that is considered necessary.


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(b) Upon petition by a taxpayer, and when the commissioner determines that it is in the best interest of the state, the commissioner may allow S corporations and partnerships to receive orders of assessment issued under section 270C.33, subdivision 4, on behalf of their owners, and to pay liabilities shown on such orders.  In such cases, the owners' liability must be calculated using the method provided in section 289A.08, subdivision 7, paragraph (b).

 

(c) A taxpayer may petition the commissioner for the use of the method described in paragraph (b) after the taxpayer is notified that an audit has been initiated and before an order of assessment has been issued.

 

(d) A determination of the commissioner under paragraph (b) to grant or deny the petition of a taxpayer cannot be appealed to the Tax Court or any other court.

 

(e) The commissioner may audit and adjust the taxpayer's computation of tax under chapter 291.  In the case of a return filed pursuant to section 289A.10, the commissioner shall notify the estate no later than nine months after the filing date, as provided by section 289A.38, subdivision 2, whether the return is under examination or the return has been processed as filed.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 7.  Minnesota Statutes 2016, section 290.01, is amended by adding a subdivision to read:

 

Subd. 14a.  Surviving spouse.  The term "surviving spouse" means an individual who is a surviving spouse under section 2(a) of the Internal Revenue Code for the taxable year.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 8.  Minnesota Statutes 2017 Supplement, section 290.01, subdivision 19, is amended to read:

 

Subd. 19.  Net income.  (a) For a corporation taxable under section 290.02, an estate, or a trust, 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 sections 290.0131 to 290.0136.

 

(b) For an individual, the term "net income" means federal adjusted gross income with the modifications provided in sections 290.0131, 290.0132, 290.0135, and 290.0136.

 

(c) 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.


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(d) 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.

 

(e) 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.

 

(f) For a taxpayer with a valid election under section 965(h) of the Internal Revenue Code, including any successor in interest, net income for the taxable year includes the ratable amount of deferred foreign income on which the taxpayer makes a federal tax payment in that year.

 

(f) The Internal Revenue Code of 1986, as amended through December 16, 2016 March 31, 2018, shall be in effect for taxable years beginning after December 31, 1996.

 

(g) Except as otherwise provided, references to the Internal Revenue Code in this subdivision and sections 290.0131 to 290.0136 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, except the changes incorporated by federal changes are effective retroactively at the same time as the changes were effective for federal purposes and the changes amending the new paragraph (a) and adding paragraph (b) are effective for taxable years beginning after December 31, 2017.

 

Sec. 9.  Minnesota Statutes 2016, section 290.01, is amended by adding a subdivision to read:

 

Subd. 21a.  Adjusted gross income.  The terms "adjusted gross income" and "federal adjusted gross income" mean adjusted gross income, as defined in section 62 of the Internal Revenue Code, as amended through the date named in subdivision 19, incorporating the federal effective date of changes to the Internal Revenue Code and any elections made by the taxpayer under the Internal Revenue Code in determining federal adjusted gross income for federal income tax purposes.

 

EFFECTIVE DATE.  This section is effective the day following final enactment.

 

Sec. 10.  Minnesota Statutes 2016, section 290.01, subdivision 22, is amended to read:

 

Subd. 22.  Taxable net income.  For tax years beginning after December 31, 1986 2017, the term "taxable net income" means:

 

(1) for resident individuals the same as, net income less the deductions allowed under section 290.0803;

 

(2) for individuals who were not residents of Minnesota for less than the entire year, the same as net income less the deductions allowed under section 290.0803, 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, and 290.36, except that for nonresident individuals net income is reduced by the amount of the standard deduction allowable under section 290.0803, subdivision 2, before allocation of net income to Minnesota.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.


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Sec. 11.  Minnesota Statutes 2017 Supplement, section 290.01, subdivision 31, is amended to read:

 

Subd. 31.  Internal Revenue Code.  Unless specifically defined otherwise, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through December 16, 2016 March 31, 2018.  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 and applies to the same taxable years as the changes incorporated by federal changes are effective for federal purposes, including any provisions that are retroactive to taxable years beginning after December 31, 2016.

 

Sec. 12.  Minnesota Statutes 2016, section 290.0131, subdivision 1, is amended to read:

 

Subdivision 1.  Definition; scope.  (a) For the purposes of this section, "addition" means an amount that must be added to federal taxable adjusted gross income, or for estates and trusts, federal taxable income, in computing net income for the taxable year to which the amounts relate.

 

(b) The additions in this section apply to individuals, estates, and trusts.

 

(c) Unless specifically indicated or unless the context clearly indicates otherwise, only amounts that were deducted or excluded in computing federal taxable adjusted gross income, or for estates and trusts, federal taxable income, are an addition under this section.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 13.  Minnesota Statutes 2016, section 290.0131, subdivision 3, is amended to read:

 

Subd. 3.  Income, sales and use, motor vehicle sales, or excise taxes paid.  (a) For trusts and estates, 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, sales and use, motor vehicle sales, or excise taxes paid to any other state or to any province or territory of Canada is an addition to the extent deducted under section 63(d) of the Internal Revenue Code.

 

(b) The addition under paragraph (a) may not be more than the amount by which the state itemized deduction exceeds the amount of the standard deduction as defined in section 63(c) of the Internal Revenue Code.  For the purpose of this subdivision, income, sales and use, motor vehicle sales, or excise taxes are the last itemized deductions disallowed under subdivision 12.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 14.  Minnesota Statutes 2017 Supplement, section 290.0131, subdivision 10, is amended to read:

 

Subd. 10.  Section 179 expensing.  Effective for property placed in service in taxable years beginning before January 1, 2018, 80 percent of the amount by which the deduction allowed under the dollar limits of section 179 of the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal Revenue Code, as amended through December 31, 2003, is an addition.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.


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Sec. 15.  Minnesota Statutes 2016, section 290.0131, is amended by adding a subdivision to read:

 

Subd. 15.  Foreign-derived intangible income.  The amount of foreign-derived intangible income deducted under section 250 of the Internal Revenue Code for the taxable year is an addition.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 16.  Minnesota Statutes 2016, section 290.0131, is amended by adding a subdivision to read:

 

Subd. 16.  529 plan distributions for K-12 expenses.  The lesser of the following amounts is an addition:

 

(1) the total distributions for the taxable year from a qualified plan under section 529 of the Internal Revenue Code, owned by the taxpayer, that are expended for qualified higher education expenses under section 529(c)(7) of the Internal Revenue Code (expenses for tuition for elementary or secondary public, private, or religious school); or

 

(2) the total amount required to be reported to the taxpayer by any trustee of a qualified tuition plan under section 529 of the Internal Revenue Code as earnings on Internal Revenue Service Form 1099Q for the taxable year.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 17.  Minnesota Statutes 2016, section 290.0131, is amended by adding a subdivision to read:

 

Subd. 17.  Qualified business income addition.  For a trust or estate, the amount deducted under section 199A of the Internal Revenue Code in computing the federal taxable income of the trust or estate is an addition.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 18.  Minnesota Statutes 2016, section 290.0132, subdivision 1, is amended to read:

 

Subdivision 1.  Definition; scope.  (a) For the purposes of this section, "subtraction" means an amount that shall is allowed to be subtracted from federal taxable adjusted gross income, or for estates and trusts, federal taxable income, in computing net income for the taxable year to which the amounts relate.

 

(b) The subtractions in this section apply to individuals, estates, and trusts.

 

(c) Unless specifically indicated or unless the context clearly indicates otherwise, no amount deducted, subtracted, or otherwise excluded in computing federal taxable adjusted gross income, or for estates and trusts, federal taxable income, is a subtraction under this section.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 19.  Minnesota Statutes 2016, section 290.0132, subdivision 7, is amended to read:

 

Subd. 7.  Charitable contributions for taxpayers who do not itemize.  To the extent not deducted or not deductible under section 408(d)(8)(E) of the Internal Revenue Code in determining federal taxable income by For an individual who does not itemize deductions for federal income tax purposes under section 290.0803 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 290.0803, subdivision 5, is a subtraction.  The subtraction under this subdivision must not include a distribution that is excluded from federal adjusted gross income and that is not deductible under section 408(d)(8)(E) of the Internal Revenue Code.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.


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Sec. 20.  Minnesota Statutes 2017 Supplement, section 290.0132, subdivision 21, is amended to read:

 

Subd. 21.  Military service pension; retirement pay.  To the extent included in federal taxable adjusted gross income, 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, is a subtraction.  The subtraction is limited to individuals who do not claim the credit under section 290.0677.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 21.  Minnesota Statutes 2017 Supplement, section 290.0132, subdivision 26, is amended to read:

 

Subd. 26.  Social Security benefits.  (a) A portion of Social Security benefits is allowed as a subtraction.  The subtraction equals the lesser of Social Security benefits or a maximum subtraction subject to the limits under paragraphs (b), (c), and (d).

 

(b) For married taxpayers filing a joint return and surviving spouses, the maximum subtraction equals $4,500 $4,590.  The maximum subtraction is reduced by 20 percent of provisional income over $77,000 $78,530.  In no case is the subtraction less than zero.

 

(c) For single or head-of-household taxpayers, the maximum subtraction equals $3,500 $3,570.  The maximum subtraction is reduced by 20 percent of provisional income over $60,200 $61,400.  In no case is the subtraction less than zero.

 

(d) For married taxpayers filing separate returns, the maximum subtraction equals $2,250 one-half the maximum subtraction for joint returns under paragraph (b).  The maximum subtraction is reduced by 20 percent of provisional income over $38,500 one-half the maximum subtraction for joint returns under paragraph (b).  In no case is the subtraction less than zero.

 

(e) For purposes of this subdivision, "provisional income" means modified adjusted gross income as defined in section 86(b)(2) of the Internal Revenue Code, plus one-half of the Social Security benefits received during the taxable year, and "Social Security benefits" has the meaning given in section 86(d)(1) of the Internal Revenue Code.

 

(f) The commissioner shall adjust the maximum subtraction and threshold amounts in paragraphs (b) to (d) 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) of the Internal Revenue Code the word "2016" "2017" shall be substituted for the word "1992." For 2018, the commissioner shall then determine the percentage change from the 12 months ending on August 31, 2016, to the 12 months ending on August 31, 2017, and in each subsequent year, from the 12 months ending on August 31, 2016, to the 12 months ending on August 31 of the year preceding the taxable year. "2016."  The determination of the commissioner pursuant to this subdivision must not be considered a rule and is not subject to the Administrative Procedure Act contained in chapter 14, including section 14.386.  The maximum subtraction and threshold amounts as adjusted must be rounded to the nearest $10 amount.  If the amount ends in $5, the amount is rounded up to the nearest $10 amount.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 22.  Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision to read:

 

Subd. 27.  Global intangible low-taxed income.  The taxpayer's global intangible low-taxed income included under section 951A of the Internal Revenue Code for the taxable year is a subtraction.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.


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Sec. 23.  Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision to read:

 

Subd. 28.  Deferred foreign income of nonresidents.  For a nonresident individual the amount of deferred foreign income recognized because of section 965 of the Internal Revenue Code is a subtraction.

 

EFFECTIVE DATE.  This section is effective retroactively for taxable years beginning after December 31, 2016, and before January 1, 2019.

 

Sec. 24.  Minnesota Statutes 2016, section 290.0133, subdivision 6, is amended to read:

 

Subd. 6.  Special deductions.  (a) The amount of any special deductions under sections 241 to 247 of the Internal Revenue Code and 965 the amount of foreign derived intangible income deducted under section 250 of the Internal Revenue Code is an addition.

 

(b) The addition under this subdivision is reduced by the amount of the deduction under section 245A of the Internal Revenue Code that represents amounts included in federal taxable income in a prior taxable year under section 965 of the Internal Revenue Code.

 

EFFECTIVE DATE.  This section is effective retroactively for taxable years beginning after December 31, 2016.

 

Sec. 25.  Minnesota Statutes 2017 Supplement, section 290.0133, subdivision 12, is amended to read:

 

Subd. 12.  Section 179 expensing.  Effective for property placed in service in taxable years beginning before January 1, 2018, 80 percent of the amount by which the deduction allowed under the dollar limits of section 179 of the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal Revenue Code, as amended through December 31, 2003, is an addition.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 26.  Minnesota Statutes 2016, section 290.0134, is amended by adding a subdivision to read:

 

Subd. 17.  Global intangible low-taxed income.  The taxpayer's global intangible low-taxed income included under section 951A of the Internal Revenue Code for the taxable year is a subtraction.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 27.  Minnesota Statutes 2016, section 290.0136, is amended to read:

 

290.0136 CERTAIN PREFERRED STOCK LOSSES.

 

A taxpayer must compute net income by treating losses from the sale or transfer of certain preferred stock, which the taxpayer treated as ordinary losses pursuant to Division A, title III, section 301 of Public Law 110-343, as capital losses.  The amount of net income under section 290.01, subdivision 19; taxable net income under section 290.01, subdivision 22; taxable income under section 290.01, subdivision 29; the numerator and denominator in section 290.06, subdivision 2c, paragraph (e); individual alternative minimum taxable income under section 290.091, subdivision 2; corporate alternative minimum taxable income under section 290.0921, subdivision 3; and net operating losses under section 290.095 must be computed for each taxable year as if those losses had been treated by the taxpayer as capital losses under the Internal Revenue Code, including the limitations under section 1211 of the Internal Revenue Code.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.


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Sec. 28.  Minnesota Statutes 2016, section 290.05, subdivision 3, is amended to read:

 

Subd. 3.  Taxes imposed on exempt entities.  (a) An organization exempt from taxation under subdivision 2 shall, nevertheless, be subject to tax under this chapter to the extent provided in the following provisions of the Internal Revenue Code:

 

(1) section 527 (dealing with political organizations);

 

(2) section 528 (dealing with certain homeowners associations);

 

(3) sections 511 to 515 (dealing with unrelated business income);

 

(4) section 521 (dealing with farmers' cooperatives); and

 

(5) section 6033(e)(2) (dealing with lobbying expense); but notwithstanding this subdivision, shall be considered an organization exempt from income tax for the purposes of any law which refers to organizations exempt from income taxes.

 

(b) The tax shall be imposed on the taxable income of political organizations or homeowner associations or the unrelated business taxable income, as defined in section 512 of the Internal Revenue Code, of organizations defined in section 511 of the Internal Revenue Code, provided that the tax is not imposed on:

 

(1) advertising revenues from a newspaper published by an organization described in section 501(c)(4) of the Internal Revenue Code; or

 

(2) revenues from lawful gambling authorized under chapter 349 that are expended for purposes that qualify for the deduction for charitable contributions under section 170 of the Internal Revenue Code, disregarding the limitation under section 170(b)(2), but only to the extent the contributions are not deductible in computing federal taxable income.

 

The tax shall be at the corporate rates.  The tax shall only be imposed on income and deductions assignable to this state under sections 290.17 to 290.20.  To the extent deducted in computing federal taxable income, the deductions contained in section 290.21 shall not be allowed in computing Minnesota taxable net income.

 

(c) The tax shall be imposed on organizations subject to federal tax under section 6033(e)(2) of the Internal Revenue Code, in an amount equal to the corporate tax rate multiplied by the amount of lobbying expenses taxed under section 6033(e)(2) which are attributable to lobbying the Minnesota state government.

 

(d) In calculating unrelated business taxable income under section 512 of the Internal Revenue Code, the amount of any net operating loss deduction claimed under section 172 of the Internal Revenue Code is an addition.  Taxpayers making an addition under this paragraph may deduct a net operating loss for the taxable year in the same manner as a corporation under section 290.095, in a form and manner prescribed by the commissioner, and may calculate the loss without the application of the limitation provided for under section 512(a)(6) of the Internal Revenue Code.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.


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Sec. 29.  Minnesota Statutes 2016, section 290.06, subdivision 1, is amended to read:

 

Subdivision 1.  Computation, corporations.  (a) The franchise tax imposed upon corporations shall be computed by applying to their taxable income the rate of 9.8 9.06 percent.

 

(b) Notwithstanding paragraph (a), the rate for taxable years beginning after December 31, 2017, and before January 1, 2020, is 9.64 percent.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 30.  Minnesota Statutes 2016, 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 $35,480 $37,850, 5.35 percent;

 

(2) On all over $35,480 $37,850, but not over $140,960, 7.05 $150,380, 6.75 percent;

 

(3) On all over $140,960 $150,380, but not over $250,000 $266,700, 7.85 percent;

 

(4) On all over $250,000 $266,700, 9.85 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 $24,270 $25,890, 5.35 percent;

 

(2) On all over $24,270 $25,890, but not over $79,730, 7.05 $85,060, 6.75 percent;

 

(3) On all over $79,730 $85,060, but not over $150,000 $160,020, 7.85 percent;

 

(4) On all over $150,000 $160,020, 9.85 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 $29,880 $31,880, 5.35 percent;

 

(2) On all over $29,880 $31,880, but not over $120,070, 7.05 $128,090, 6.75 percent;

 

(3) On all over $120,070 $128,090, but not over $200,000 $213,360, 7.85 percent;

 

(4) On all over $200,000 $213,360, 9.85 percent.


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(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 290.0131, subdivisions 2 and 6 to 11 10, and reduced by the Minnesota assignable portion of the subtraction for United States government interest under section 290.0132, subdivision 2, and the subtractions under section 290.0132, subdivisions 9, 10, 14, 15, 17, and 18, 27, and 28, 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, increased by the amounts specified in section 290.0131, subdivisions 2 and 6 to 11 10, and reduced by the amounts specified in section 290.0132, subdivisions 2, 9, 10, 14, 15, 17, and 18, 27, and 28.

 

(f) For taxable years beginning after December 31, 2017, and before January 1, 2019, a rate of 6.95 percent applies instead of the 6.75 percent rate in paragraphs (a) to (c) and for taxable years beginning after December 31, 2018, and before January 1, 2020, a rate of 6.9 percent applies.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 31.  Minnesota Statutes 2016, section 290.06, subdivision 2d, is amended to read:

 

Subd. 2d.  Inflation adjustment of brackets.  (a) For taxable years beginning after December 31, 2013, 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, 2012, and before January 1, 2014.  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 "2012" "2017" shall be substituted for the word "1992."  For 2014, the commissioner shall then determine the percent change from the 12 months ending on August 31, 2012, to the 12 months ending on August 31, 2013, and in each subsequent year, from the 12 months ending on August 31, 2012, to the 12 months ending on August 31 of the year preceding the taxable year. "2016."  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, 2017.


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Sec. 32.  Minnesota Statutes 2017 Supplement, section 290.067, subdivision 1, is amended to read:

 

Subdivision 1.  Amount of credit.  (a) A taxpayer may take as a credit against the tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the dependent care credit for which the taxpayer is eligible pursuant to the provisions of section 21 of the Internal Revenue Code except that in determining whether the child qualified as a dependent, income received as a Minnesota family investment program grant or allowance to or on behalf of the child must not be taken into account in determining whether the child received more than half of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of the Internal Revenue Code do not apply.

 

(b) If a child who has not attained the age of six years at the close of the taxable year is cared for at a licensed family day care home operated by the child's parent, the taxpayer is deemed to have paid employment-related expenses.  If the child is 16 months old or younger at the close of the taxable year, the amount of expenses deemed to have been paid equals the maximum limit for one qualified individual under section 21(c) and (d) of the Internal Revenue Code.  If the child is older than 16 months of age but has not attained the age of six years at the close of the taxable year, the amount of expenses deemed to have been paid equals the amount the licensee would charge for the care of a child of the same age for the same number of hours of care.

 

(c) If a married couple:

 

(1) has a child who has not attained the age of one year at the close of the taxable year;

 

(2) files a joint tax return for the taxable year; and

 

(3) does not participate in a dependent care assistance program as defined in section 129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of (i) the combined earned income of the couple or (ii) the amount of the maximum limit for one qualified individual under section 21(c) and (d) of the Internal Revenue Code will be deemed to be the employment related expense paid for that child.  The earned income limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed amount.  These deemed amounts apply regardless of whether any employment-related expenses have been paid.

 

(d) If the taxpayer is not required and does not file a federal individual income tax return for the tax year, no credit is allowed for any amount paid to any person unless:

 

(1) the name, address, and taxpayer identification number of the person are included on the return claiming the credit; or

 

(2) if the person is an organization described in section 501(c)(3) of the Internal Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name and address of the person are included on the return claiming the credit.

 

In the case of a failure to provide the information required under the preceding sentence, the preceding sentence does not apply if it is shown that the taxpayer exercised due diligence in attempting to provide the information required.

 

(e) In the case of a nonresident, part-year resident, or a person who has earned income not subject to tax under this chapter including earned income excluded pursuant to section 290.0132, subdivision 10, the credit determined under section 21 of the Internal Revenue Code must be allocated based on the ratio by which the earned income of the claimant and the claimant's spouse from Minnesota sources bears to the total earned income of the claimant and the claimant's spouse.


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(f) For residents of Minnesota, the subtractions for military pay under section 290.0132, subdivisions 11 and 12, are not considered "earned income not subject to tax under this chapter."

 

(g) For residents of Minnesota, 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."

 

(h) For taxpayers with federal adjusted gross income in excess of $50,000 $50,990, the credit is equal to the lesser of the credit otherwise calculated under this subdivision, or the amount equal to $600 minus five percent of federal adjusted gross income in excess of $50,000 $50,990 for taxpayers with one qualified individual, or $1,200 minus five percent of federal adjusted gross income in excess of $50,000 $50,990 for taxpayers with two or more qualified individuals, but in no case is the credit less than zero.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 33.  Minnesota Statutes 2016, section 290.067, subdivision 2a, is amended to read:

 

Subd. 2a.  Income.  (a) For purposes of this section, "income" means the sum of the following:

 

(1) federal adjusted gross income as defined in section 62 of the Internal Revenue Code; and

 

(2) the sum of the following amounts to the extent not included in clause (1):

 

(i) all nontaxable income;

 

(ii) the amount of a passive activity loss that is not disallowed as a result of section 469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity loss carryover allowed under section 469(b) of the Internal Revenue Code;

 

(iii) an amount equal to the total of any discharge of qualified farm indebtedness of a solvent individual excluded from gross income under section 108(g) of the Internal Revenue Code;

 

(iv) cash public assistance and relief;

 

(v) any pension or annuity (including railroad retirement benefits, all payments received under the federal Social Security Act, Supplemental Security Income, and veterans benefits), which was not exclusively funded by the claimant or spouse, or which was funded exclusively by the claimant or spouse and which funding payments were excluded from federal adjusted gross income in the years when the payments were made;

 

(vi) interest received from the federal or a state government or any instrumentality or political subdivision thereof;

 

(vii) workers' compensation;

 

(viii) nontaxable strike benefits;

 

(ix) the gross amounts of payments received in the nature of disability income or sick pay as a result of accident, sickness, or other disability, whether funded through insurance or otherwise;

 

(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1995;


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(xi) contributions made by the claimant to an individual retirement account, including a qualified voluntary employee contribution; simplified employee pension plan; self-employed retirement plan; cash or deferred arrangement plan under section 401(k) of the Internal Revenue Code; or deferred compensation plan under section 457 of the Internal Revenue Code;

 

(xii) nontaxable scholarship or fellowship grants;

 

(xiii) the amount of deduction allowed under section 199 of the Internal Revenue Code;

 

(xiv) (xiii) the amount of deduction allowed under section 220 or 223 of the Internal Revenue Code;

 

(xv) (xiv) the amount deducted for tuition expenses under section 222 of the Internal Revenue Code; and

 

(xvi) (xv) the amount deducted for certain expenses of elementary and secondary school teachers under section 62(a)(2)(D) of the Internal Revenue Code.; and

 

(xvi) alimony received to the extent not included in the recipient's income.

 

In the case of an individual who files an income tax return on a fiscal year basis, the term "federal adjusted gross income" means federal adjusted gross income reflected in the fiscal year ending in the next calendar year.  Federal adjusted gross income may not be reduced by the amount of a net operating loss carryback or carryforward or a capital loss carryback or carryforward allowed for the year.

 

(b) "Income" does not include:

 

(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;

 

(2) amounts of any pension or annuity that were exclusively funded by the claimant or spouse if the funding payments were not excluded from federal adjusted gross income in the years when the payments were made;

 

(3) surplus food or other relief in kind supplied by a governmental agency;

 

(4) relief granted under chapter 290A;

 

(5) child support payments received under a temporary or final decree of dissolution or legal separation; and

 

(6) restitution payments received by eligible individuals and excludable interest as defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law 107-16.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 34.  Minnesota Statutes 2017 Supplement, section 290.067, subdivision 2b, is amended to read:

 

Subd. 2b.  Inflation adjustment.  The commissioner shall adjust the dollar amount of the income threshold at which the maximum credit begins to be reduced under subdivision 1 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 "2016" "2017" shall be substituted for the word "1992."  For 2018, the commissioner shall then determine the percent change from the 12 months ending on August 31, 2016, to the 12 months ending on August 31, 2017, and in each subsequent year, from the 12 months ending on August 31, 2016, to the 12 months ending on August 31 of the year preceding


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the taxable year. "2016."  The determination of the commissioner pursuant to this subdivision must not be considered a "rule" and is not subject to the Administrative Procedure Act contained in chapter 14.  The threshold amount as adjusted must be rounded to the nearest $10 amount.  If the amount ends in $5, the amount is rounded up to the nearest $10 amount.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 35.  Minnesota Statutes 2017 Supplement, section 290.0671, subdivision 1, is amended to read:

 

Subdivision 1.  Credit allowed.  (a) An individual who is a resident of Minnesota 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, except that a taxpayer with no qualifying children who has attained the age of 21, but not attained age 65 before the close of the taxable year and is otherwise eligible for a credit under section 32 of the Internal Revenue Code may also receive a credit.

 

(b) For individuals with no qualifying children, the credit equals 2.10 percent of the first $6,180 $6,480 of earned income.  The credit is reduced by 2.01 percent of earned income or adjusted gross income, whichever is greater, in excess of $8,130 $8,530, but in no case is the credit less than zero.

 

(c) For individuals with one qualifying child, the credit equals 9.35 percent of the first $11,120 $11,670 of earned income.  The credit is reduced by 6.02 percent of earned income or adjusted gross income, whichever is greater, in excess of $21,190 $22,340, but in no case is the credit less than zero.

 

(d) For individuals with two or more qualifying children, the credit equals 11 percent of the first $18,240 $19,130 of earned income.  The credit is reduced by 10.82 percent of earned income or adjusted gross income, whichever is greater, in excess of $25,130 $26,360, but in no case is the credit less than zero.

 

(e) For a 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 290.0132, subdivision 10, 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 following clauses are not considered "earned income not subject to tax under this chapter":

 

(1) the subtractions for military pay under section 290.0132, subdivisions 11 and 12;

 

(2) the exclusion of combat pay under section 112 of the Internal Revenue Code; and

 

(3) income derived from an Indian reservation by an enrolled member of the reservation while living on the reservation.

 

(g) For tax years beginning after December 31, 2013 2018, the $8,130 $8,530 in paragraph (b), the $21,190 $22,340 in paragraph (c), and the $25,130 $26,360 in paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by $5,000 $5,700 for married taxpayers filing joint returns.  For tax years beginning after December 31, 2013 2018, the commissioner shall annually adjust the $5,000 $5,700 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" "2017" shall be substituted for the word "1992."  For 2014, the commissioner shall then determine the percent change from the 12 months ending on August 31, 2008, to the 12 months ending on


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August 31, 2013, 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. "2016."  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) 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, 2017.

 

Sec. 36.  Minnesota Statutes 2016, section 290.0671, subdivision 7, is amended to read:

 

Subd. 7.  Inflation adjustment.  The earned income amounts used to calculate the credit and the income thresholds at which the maximum credit begins to be reduced in subdivision 1 must be adjusted for inflation.  The commissioner shall adjust 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 "2013" "2017" shall be substituted for the word "1992." For 2015, the commissioner shall then determine the percent change from the 12 months ending on August 31, 2013, to the 12 months ending on August 31, 2014, and in each subsequent year, from the 12 months ending on August 31, 2013, to the 12 months ending on August 31 of the year preceding the taxable year. "2016."  The earned income thresholds as adjusted for inflation must be rounded to the nearest $10 amount.  If the amount ends in $5, the amount is rounded up to the nearest $10 amount.  The determination of the commissioner under this subdivision is not a rule under the Administrative Procedure Act.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 37.  Minnesota Statutes 2017 Supplement, section 290.0672, subdivision 1, is amended to read:

 

Subdivision 1.  Definitions.  (a) For purposes of this section, the following terms have the meanings given.

 

(b) "Long-term care insurance" means a policy that:

 

(1) qualifies for a deduction under section 213 of the Internal Revenue Code, disregarding the adjusted gross income test; or meets the requirements given in section 62A.46; or provides similar coverage issued under the laws of another jurisdiction; and

 

(2) has a lifetime long-term care benefit limit of not less than $100,000; and

 

(3) has been offered in compliance with the inflation protection requirements of section 62S.23.

 

(c) "Qualified beneficiary" means the taxpayer or the taxpayer's spouse.

 

(d) "Premiums deducted in determining federal taxable net income" means the lesser of (1) long-term care insurance premiums that qualify as deductions under section 213 of the Internal Revenue Code; and (2) the total amount deductible for medical care expenses under section 213 of the Internal Revenue Code 290.0803.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.


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Sec. 38.  Minnesota Statutes 2016, section 290.0672, subdivision 2, is amended to read:

 

Subd. 2.  Credit.  A taxpayer is allowed a credit against the tax imposed by this chapter for long-term care insurance policy premiums paid during the tax year.  The credit for each policy equals 25 percent of premiums paid to the extent not deducted in determining federal taxable net income.  A taxpayer may claim a credit for only one policy for each qualified beneficiary.  A maximum of $100 applies to each qualified beneficiary.  The maximum total credit allowed per year is $200 for married couples filing joint returns and $100 for all other filers.  For a nonresident or part-year resident, the credit determined under this section must be allocated based on the percentage calculated under section 290.06, subdivision 2c, paragraph (e).

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 39.  Minnesota Statutes 2017 Supplement, section 290.0681, subdivision 1, is amended to read:

 

Subdivision 1.  Definitions.  (a) For purposes of this section, the following terms have the meanings given.

 

(b) "Account" means the historic credit administration account in the special revenue fund.

 

(c) "Office" means the State Historic Preservation Office of the Department of Administration.

 

(d) "Project" means rehabilitation of a certified historic structure, as defined in section 47(c)(3)(A) of the Internal Revenue Code, that is located in Minnesota and is allowed a federal credit.

 

(e) "Federal credit" means the credit allowed under section 47(a)(2) 47(a) of the Internal Revenue Code, except that the amount allowed is deemed to be allocated in the taxable year that the project is placed in service.

 

(f) "Placed in service" has the meaning used in section 47 of the Internal Revenue Code.

 

(g) "Qualified rehabilitation expenditures" has the meaning given in section 47 of the Internal Revenue Code.

 

EFFECTIVE DATE.  This section is effective for applications for allocation certificates submitted after December 31, 2017.

 

Sec. 40.  Minnesota Statutes 2017 Supplement, section 290.0681, subdivision 2, is amended to read:

 

Subd. 2.  Credit or grant allowed; certified historic structure.  (a) A credit is allowed against the tax imposed under this chapter equal to not more than 100 percent of the credit allowed under section 47(a)(2) 47(a) of the Internal Revenue Code for a project.  The credit is payable in an amount equal to one-fifth of the total credit amount allowed in the five taxable years beginning with the year the project is placed in service.  To qualify for the credit:

 

(1) the project must receive Part 3 certification and be placed in service during the taxable year; and

 

(2) the taxpayer must be allowed the federal credit and be issued a credit certificate for the taxable year as provided in subdivision 4.

 

(b) The commissioner of administration may pay a grant in lieu of the credit.  The grant equals 90 percent of the credit that would be allowed for the project.  The grant is payable in an amount equal to one-fifth of 90 percent of the credit that would be allowed for the project in the five taxable years beginning with the year the project is placed in service.


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(c) In lieu of the credit under paragraph (a), an insurance company may claim a credit against the insurance premiums tax imposed under chapter 297I.

 

EFFECTIVE DATE.  This section is effective for applications for allocation certificates submitted after December 31, 2017.

 

Sec. 41.  Minnesota Statutes 2016, section 290.0681, subdivision 3, is amended to read:

 

Subd. 3.  Applications; allocations.  (a) To qualify for a credit or grant under this section, the developer of a project must apply to the office before the rehabilitation begins.  The application must contain the information and be in the form prescribed by the office.  The office may collect a fee for application of up to 0.5 percent of qualified rehabilitation expenditures, up to $40,000, based on estimated qualified rehabilitation expenditures, to offset costs associated with personnel and administrative expenses related to administering the credit and preparing the economic impact report in subdivision 9.  Application fees are deposited in the account.  The application must indicate if the application is for a credit or a grant in lieu of the credit or a combination of the two and designate the taxpayer qualifying for the credit or the recipient of the grant.

 

(b) Upon approving an application for credit, the office shall issue allocation certificates that:

 

(1) verify eligibility for the credit or grant;

 

(2) state the amount of credit or grant anticipated with the project, with the credit amount equal to 100 percent and the grant amount equal to 90 percent of the federal credit anticipated in the application;

 

(3) state that the credit or grant allowed may increase or decrease if the federal credit the project receives at the time it is placed in service is different than the amount anticipated at the time the allocation certificate is issued; and

 

(4) state the fiscal year in which the credit or grant is allocated, and that the taxpayer or grant recipient is entitled to receive one-fifth of the total amount of either the credit or the grant at the time the project is placed in service, provided that date is within three calendar years following the issuance of the allocation certificate.

 

(c) The office, in consultation with the commissioner, shall determine if the project is eligible for a credit or a grant under this section and must notify the developer in writing of its determination.  Eligibility for the credit is subject to review and audit by the commissioner.

 

(d) The federal credit recapture and repayment requirements under section 50 of the Internal Revenue Code do not apply to the credit allowed under this section.

 

(e) Any decision of the office under paragraph (c) may be challenged as a contested case under chapter 14.  The contested case proceeding must be initiated within 45 days of the date of written notification by the office.

 

EFFECTIVE DATE.  This section is effective for applications for allocation certificates submitted after December 31, 2017.

 

Sec. 42.  Minnesota Statutes 2016, section 290.0681, subdivision 4, is amended to read:

 

Subd. 4.  Credit certificates; grants.  (a)(1) The developer of a project for which the office has issued an allocation certificate must notify the office when the project is placed in service.  Upon verifying that the project has been placed in service, and was allowed a federal credit, the office must issue a credit certificate to the taxpayer designated in the application or must issue a grant to the recipient designated in the application.  The credit certificate must state the amount of the credit.


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(2) The credit amount equals the federal credit allowed for the project.

 

(3) The grant amount equals 90 percent of the federal credit allowed for the project.

 

(b) The recipient of a credit certificate may assign the certificate to another taxpayer before the first one-fifth payment is claimed, which is then allowed the credit under this section or section 297I.20, subdivision 3.  An assignment is not valid unless the assignee notifies the commissioner within 30 days of the date that the assignment is made.  The commissioner shall prescribe the forms necessary for notifying the commissioner of the assignment of a credit certificate and for claiming a credit by assignment.

 

(c) Credits passed through to partners, members, shareholders, or owners pursuant to subdivision 5 are not an assignment of a credit certificate under this subdivision.

 

(d) A grant agreement between the office and the recipient of a grant may allow the grant to be issued to another individual or entity.

 

EFFECTIVE DATE.  This section is effective for applications for allocation certificates submitted after December 31, 2017.

 

Sec. 43.  Minnesota Statutes 2017 Supplement, section 290.0684, subdivision 1, is amended to read:

 

Subdivision 1.  Definitions.  (a) For purposes of this section, the following terms have the meanings given them.

 

(b) "Contribution" means the amount contributed to one or more qualified accounts except that the amount:

 

(1) is reduced by any withdrawals or distributions, other than transfers or rollovers to another qualified account, from a qualified account during the taxable year; and

 

(2) excludes the amount of any transfers or rollovers from a qualified account made during the taxable year.

 

(c) "Federal adjusted gross income" has the meaning given under section 62(a) of the Internal Revenue Code.

 

(d) "Qualified account" means an account qualifying under section 529 529(e)(3) of the Internal Revenue Code.

 

(e) (d) "Qualified higher education expenses" has the meaning given in section 529 of the Internal Revenue Code, except section 529(c)(7) of the Internal Revenue Code does not apply to the definition of qualified higher education expenses.

 

EFFECTIVE DATE.  This section is effective the day following final enactment.

 

Sec. 44.  Minnesota Statutes 2017 Supplement, section 290.0684, subdivision 2, is amended to read:

 

Subd. 2.  Credit allowed.  (a) An individual who is a resident of Minnesota is allowed a credit against the tax imposed by this chapter.  The credit is not allowed to an individual who is eligible to be claimed as a dependent, as defined in sections 151 and 152 of the Internal Revenue Code.  The credit may not exceed the liability for tax under this chapter.

 

(b) The amount of the credit allowed equals 50 percent of contributions for the taxable year.  The maximum credit is $500, subject to the phaseout in paragraphs (c) and (d).  In no case is the credit less than zero.


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(c) For individual filers, the maximum credit is reduced by two percent of adjusted gross income in excess of $75,000 $76,490.

 

(d) For married couples filing a joint return, the maximum credit is phased out as follows:

 

(1) for married couples with adjusted gross income in excess of $75,000 $76,490, but not more than $100,000 $101,990, the maximum credit is reduced by one percent of adjusted gross income in excess of $75,000 $76,490;

 

(2) for married couples with adjusted gross income in excess of $100,000 $101,990, but not more than $135,000 $137,680, the maximum credit is $250; and

 

(3) for married couples with adjusted gross income in excess of $135,000 $137,680, the maximum credit is $250, reduced by one percent of adjusted gross income in excess of $135,000 $137,680.

 

(e) The income thresholds in paragraphs (c) and (d) used to calculate the maximum credit must be adjusted for inflation.  The commissioner shall adjust the income thresholds by the percentage determined under the provisions of section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B) the word "2016" "2017" is substituted for the word "1992."  For 2018, the commissioner shall then determine the percent change from the 12 months ending on August 31, 2016, to the 12 months ending on August 31, 2017, and in each subsequent year, from the 12 months ending on August 31, 2016, to the 12 months ending on August 31 of the year preceding the taxable year. "2016."  The income thresholds as adjusted for inflation must be rounded to the nearest $10 amount.  If the amount ends in $5, the amount is rounded up to the nearest $10 amount.  The determination of the commissioner under this subdivision is not subject to chapter 14, including section 14.386.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 45.  Minnesota Statutes 2016, section 290.0802, subdivision 2, is amended to read:

 

Subd. 2.  Subtraction.  (a) A qualified individual is allowed a subtraction from federal taxable adjusted gross income of the individual's subtraction base amount.  The excess of the subtraction base amount over the taxable net income computed without regard to the subtraction for the elderly or disabled under section 290.0132, subdivision 5, may be used to reduce the amount of a lump sum distribution subject to tax under section 290.032.

 

(b)(1) The initial subtraction base amount equals

 

(i) $12,000 for a married taxpayer filing a joint return if a spouse is a qualified individual,

 

(ii) $9,600 for a single taxpayer, and

 

(iii) $6,000 for a married taxpayer filing a separate federal return.

 

(2) The qualified individual's initial subtraction base amount, then, must be reduced by the sum of nontaxable retirement and disability benefits and one-half of the amount of adjusted gross income in excess of the following thresholds:

 

(i) $18,000 for a married taxpayer filing a joint return if both spouses are qualified individuals,

 

(ii) $14,500 for a single taxpayer or for a married couple filing a joint return if only one spouse is a qualified individual, and

 

(iii) $9,000 for a married taxpayer filing a separate federal return.


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(3) In the case of a qualified individual who is under the age of 65, the maximum amount of the subtraction base may not exceed the taxpayer's disability income.

 

(4) The resulting amount is the subtraction base amount.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 46.  [290.0803] INDIVIDUALS; DEDUCTIONS AND EXEMPTIONS ALLOWED.

 

Subdivision 1.  Deduction allowed.  Individuals are allowed to deduct the sum of the following amounts in computing taxable net income for the taxable year:

 

(1) the standard or itemized deductions, as provided under subdivision 2 or 3; and

 

(2) the exemption allowance computed under subdivision 9.

 

Subd. 2.  Standard deduction.  (a) An individual may elect to claim a standard deduction in lieu of the itemized deductions allowed under subdivision 3 for the taxable year equal to the following amount:

 

(1) for a married joint filer or a surviving spouse, $14,000;

 

(2) for a head of household filer, $10,300; or

 

(3) for any other filer, $7,000; plus

 

(4) the additional amount for the taxpayer under paragraph (b).

 

(b) The additional amount equals the sum of the following amounts:

 

(1) $1,300 if the taxpayer has attained age 65 before the close of the taxable year or $1,600 for such a taxpayer who is not married or a surviving spouse;

 

(2) $1,300 for the spouse of the taxpayer if the spouse has attained the age of 65 before the close of the taxable year and qualifies under subdivision 9, clause (2);

 

(3) $1,300 if the taxpayer is blind at the close of the taxable year or $1,600 for such a taxpayer who is not married or a surviving spouse; and

 

(4) $1,300 for the spouse of the taxpayer if the spouse is blind as of the close of the taxable year and qualifies under subdivision 9, clause (2).

 

(c) For an individual who is a dependent, as defined in section 152 of the Internal Revenue Code, of another taxpayer for a taxable year beginning in the calendar year in which the individual's taxable year begins, the standard deduction for that individual is limited to the greater of:

 

(1) $500; or

 

(2) the sum of $250 and that individual's earned income, as defined in section 32(c) of the Internal Revenue Code.


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(d) The standard deduction is zero for (1) a married individual filing a separate return if either spouse itemizes deductions, and (2) an individual making a return for a period of less than twelve months on account of changes in the annual accounting period.

 

Subd. 3.  Itemized deductions.  (a) An individual who is a resident is allowed itemized deductions for the taxable year equal to the sum of the following amounts:

 

(1) taxes paid, as provided in subdivision 4;

 

(2) charitable contributions, as provided in subdivision 5;

 

(3) interest, as provided in subdivision 6;

 

(4) medical expenses, as provided in subdivision 7;

 

(5) miscellaneous deductions, as provided in subdivision 8; and

 

(6) losses allowable under section 165(a) of the Internal Revenue Code, other than losses allowable under that section in computing adjusted gross income, and except that the provisions of section 165(h)(5) of the Internal Revenue Code apply regardless of the taxable year; reduced by

 

(7) the amount of the disallowed itemized deductions computed under paragraph (b).

 

(b) The amount of disallowed itemized deductions equals the lesser of:

 

(1) three percent of the excess of the taxpayer's adjusted gross income, over the applicable amount; or

 

(2) 80 percent of the amount of the itemized deductions, excluding:

 

(i) medical expense deduction under subdivision 7;

 

(ii) any interest deduction under subdivision 6, for investment interest as defined in section 163(d) of the Internal Revenue Code; and

 

(iii) losses allowable under section 165(c)(2) or (3), or (d), of the Internal Revenue Code, and allowed under paragraph (a), clause (6).

 

(c) "Applicable amount" means $190,050, or $95,025 for a married individual filing a separate return.

 

Subd. 4.  Taxes paid.  (a) The taxes paid deduction equals the sum of the following amounts for the taxable year:

 

(1) state and local real and personal property taxes in an amount not to exceed $30,000;

 

(2) foreign income, war profits, and excess profits taxes to the extent not reduced by the federal foreign tax credit; and

 

(3) 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.

 

(b) For purposes of this subdivision, the following terms have the meanings given them:


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(1) "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;

 

(2) "federal foreign tax credit" means the credit allowed under section 27 of the Internal Revenue Code; and

 

(3) "foreign, income, war profits, and excess profits taxes" and "state and local real and personal property taxes" have the meanings given in section 164 of the Internal Revenue Code.

 

Subd. 5.  Charitable contributions.  The charitable contribution equals the amount of the charitable contribution deduction allowable to the taxpayer under section 170 of the Internal Revenue Code, except that the following rules apply:

 

(1) the provisions of section 170(b)(1)(G) apply regardless of the taxable year; and

 

(2) for taxable years beginning after December 31, 2017, determination of carryover amounts must be made by applying the rules under section 170 of the Internal Revenue Code based on the charitable contribution deductions claimed and allowable under this section.

 

Subd. 6.  Interest deduction.  The interest deduction equals the amount allowed to the taxpayer as interest paid or accrued during the taxable year under section 163(d) of the Internal Revenue Code with the following exceptions:

 

(1) qualified residence interest excludes home equity interest; and

 

(2) acquisition indebtedness must not exceed $750,000 ($375,000 for a married separate return) for indebtedness incurred on or after December 16, 2017.

 

The definitions of terms under section 163 of the Internal Revenue Code apply for purposes of this subdivision.

 

Subd. 7.  Medical expenses.  The medical expense deduction equals the deduction allowed for the taxable year under section 213 of the Internal Revenue Code.

 

Subd. 8.  Miscellaneous deduction.  The miscellaneous deduction equals the sum of the following amounts for the taxable year, but excluding any amounts allowed to be deducted in computing adjusted gross income:

 

(1) impairment-related work expenses allowed under section 67(d) of the Internal Revenue Code;

 

(2) the deduction for estate tax under section 691(c) of the Internal Revenue Code;

 

(3) any deduction allowable in connection with personal property used in a short sale as described under section 67(b)(8);

 

(4) the deduction under section 1341 of the Internal Revenue Code;

 

(5) the deduction under section 72(b)(3) of the Internal Revenue Code;

 

(6) the deduction under section 171 of the Internal Revenue Code; and

 

(7) the deduction under section 216 of the Internal Revenue Code.


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Subd. 9.  Exemption allowance.  (a) The exemption allowance is computed as follows:

 

(1) the exemption amount for the taxpayer; plus

 

(2) an additional exemption amount for the spouse of the taxpayer:

 

(i) for a joint return; or

 

(ii) if a joint return is not made by the taxpayer and spouse, and if the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not the dependent of another taxpayer; plus

 

(3) an exemption amount for each individual who is a dependent, as defined in section 152 of the Internal Revenue Code, of the taxpayer for the taxable year; minus

 

(4) the disallowed exemption amount under paragraph (d), but the remainder may not be less than zero.

 

(b) The exemption amount equals $4,150.

 

(c) The disallowed personal exemption amount equals the number of personal exemptions allowed under paragraph (a) multiplied by (i) the exemption amount under paragraph (b) and (ii) the applicable percentage.

 

(d) For a married individual filing a separate return, "applicable percentage" means two percentage points for each $1,250, or fraction of that amount, by which the taxpayer's federal adjusted gross income for the taxable year exceeds the threshold amount.  For all other filers, applicable percentage means two percentage points for each $2,500, or fraction of that amount, by which the taxpayer's federal adjusted gross income for the taxable year exceeds the threshold amount.  The applicable percentage must not exceed 100 percent.

 

(e) "Threshold amount" means:

 

(1) $285,050 for a joint return or a surviving spouse;

 

(2) $237,550 for a head of a household;

 

(3) $190,050 for an individual who is not married and who is not a surviving spouse or head of a household; and

 

(4) $142,500 for a married individual filing a separate return.

 

Subd. 10.  Indexing.  (a) For taxable years beginning after December 31, 2018, the commissioner must annually adjust the dollar amounts in subdivisions 2, 3, and 9, except the amounts in paragraph (d) of subdivision 9, for inflation as provided in paragraph (b).

 

(b) Each dollar amount is increased by an amount equal to:

 

(1) that dollar amount, multiplied by

 

(2) 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 2017" for "calendar year 2016" in subparagraph (B) of section 1(f)(3).

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.


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Sec. 47.  Minnesota Statutes 2017 Supplement, 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; and

 

(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 290.0131, subdivision 2; and

 

(6) the amount of addition required by section 290.0131, subdivisions 9 to 11 10;

 

(7) the deduction allowed under section 199A of the Internal Revenue Code;

 

less the sum of the amounts determined under the following:

 

(i) interest income as defined in section 290.0132, subdivision 2;

 

(ii) an overpayment of state income tax as provided by section 290.0132, subdivision 3, to the extent included in federal alternative minimum taxable income;

 

(iii) 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;

 

(iv) amounts subtracted from federal taxable adjusted gross income as provided by section 290.0132, subdivisions 7, 9 to 15, 17, 21, 24, and 26 to 28; and


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(v) the amount of the net operating loss allowed under section 290.095, subdivision 11, paragraph (c).

 

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, except that alternative minimum taxable income must be increased by the amount of the addition under section 290.0131, subdivision 17.

 

(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 6.75 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, 2017.

 

Sec. 48.  Minnesota Statutes 2016, section 290.091, subdivision 3, is amended to read:

 

Subd. 3.  Exemption amount.  (a) For purposes of computing the alternative minimum tax, the exemption amount is, for taxable years beginning after December 31, 2005, $60,000 $75,760 for married couples filing joint returns, $30,000 $37,880 for married individuals filing separate returns, estates, and trusts, and $45,000 $56,820 for unmarried individuals.

 

(b) The exemption amount determined under this subdivision is subject to the phase out under section 55(d)(3) of the Internal Revenue Code, except that alternative minimum taxable income as determined under this section must be substituted in the computation of the phase out.

 

(c) For taxable years beginning after December 31, 2006 2018, the exemption amount under paragraph (a) must be adjusted for inflation.  The commissioner shall adjust the exemption amount 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 "2005" "2017" shall be substituted for the word "1992."  For 2007, the commissioner shall then determine the percent change from the 12 months ending on August 31, 2005, to the 12 months ending on August 31, 2006, and in each subsequent year, from the 12 months ending on August 31, 2005, to the 12 months ending on August 31 of the year preceding the taxable year. "2016."  The exemption amount as adjusted must be rounded to the nearest $10.  If the amount ends in $5, it must be rounded up to the nearest $10 amount.  The determination of the commissioner under this subdivision is not a rule under the Administrative Procedure Act.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 49.  Minnesota Statutes 2016, section 290.0921, subdivision 8, is amended to read:

 

Subd. 8.  Carryover credit.  (a) A corporation is allowed a credit against qualified regular tax for qualified alternative minimum tax previously paid.  The credit is allowable only if the corporation has no tax liability under this section for the taxable year and if the corporation has an alternative minimum tax credit carryover from a previous year.  The credit allowable in a taxable year equals the lesser of

 

(1) the excess of the qualified regular tax for the taxable year over the amount computed under subdivision 1, clause (1), for the taxable year; or


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(2) the carryover credit to the taxable year.

 

(b) For purposes of this subdivision, the following terms have the meanings given.

 

(1) "Qualified alternative minimum tax" equals the amount determined under subdivision 1 for the a taxable year beginning before December 31, 2017.

 

(2) "Qualified regular tax" means the tax imposed under section 290.06, subdivision 1.

 

(c) The qualified alternative minimum tax for a taxable year is an alternative minimum tax credit carryover to each of the taxable years succeeding the taxable year.  The entire amount of the credit must be carried to the earliest taxable year to which the amount may be carried.  Any unused portion of the credit must be carried to the following taxable year.  No credit may be carried to a taxable year in which alternative minimum tax was paid.

 

(d) An acquiring corporation may carry over this credit from a transferor or distributor corporation in a corporate acquisition.  The provisions of section 381 of the Internal Revenue Code apply in determining the amount of the carryover, if any.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 50.  Minnesota Statutes 2016, 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:

 

the tax equals:

 

 

less than

 

$ 930,000 990,000

$0

 

 

$ 930,000 990,000

to

$ 1,869,999 1,989,999

$ 190 200

 

 

$ 1,870,000 1,990,000

to

$ 9,339,999 9,959,999

$ 560 600

 

 

$ 9,340,000 9,960,000

to

$ 18,679,999 19,929,999

$ 1,870 1,990

 

 

$ 18,680,000 19,930,000

to

$ 37,359,999 39,859,999

$ 3,740 3,990

 

 

$ 37,360,000 39,860,000

 or more

$ 9,340 9,960

 

(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:

 

If the sum of the S corporation's or partnership's Minnesota

property, payrolls, and sales or receipts is:

the tax equals:

 

 

 

 

less than

 

$ 930,000 990,000

$0

 

 

$ 930,000 990,000

to

$ 1,869,999 1,989,999

$ 190 200

 

 

$ 1,870,000 1,990,000

to

$ 9,339,999 9,959,999

$ 560 600

 

 

$ 9,340,000 9,960,000

to

$ 18,679,999 19,929,999

$ 1,870 1,990

 

 

$ 18,680,000 19,930,000

to

$ 37,359,999 39,859,999

$ 3,740 3,990

 

 

$ 37,360,000 39,860,000

 or more

 

$ 9,340 9,960


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(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 "2012" "2017" must be substituted for the word "1992."  For 2014, the commissioner shall determine the percentage change from the 12 months ending on August 31, 2012, to the 12 months ending on August 31, 2013, and in each subsequent year, from the 12 months ending on August 31, 2012, to the 12 months ending on August 31 of the year preceding the taxable year. "2016." 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 amount and the threshold amounts must be adjusted to the nearest $10,000 amount.  For tax amounts that end in $5, the amount is rounded up to the nearest $10 amount and for the 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, 2017.

 

Sec. 51.  Minnesota Statutes 2016, section 290.095, subdivision 4, is amended to read:

 

Subd. 4.  Computation and modifications.  The following modifications shall be made in computing a net operating loss in any taxable year and also in computing the taxable net income for any taxable year before a net operating loss deduction shall be allowed:

 

(a) No deduction shall be allowed for or with respect to losses connected with income producing activities if the income therefrom would not be required to be either assignable to this state or included in computing the taxpayer's taxable net income.

 

(b) A net operating loss deduction shall not be allowed.

 

(c) The amount deductible on account of losses from sales or exchanges of capital assets shall not exceed the amount includable on account of gains from sales or exchanges of capital assets.

 

(d) Renegotiation of profits for a prior taxable year under the renegotiation laws of the United States of America, including renegotiation of the profits with a subcontractor, shall not enter into the computation.

 

(e) Federal income and excess profits taxes shall not be allowed as a deduction.

 

(f) The 80-percent limitation under section 172(a)(2) of the Internal Revenue Code does not apply to the computations for corporate taxpayers under this section.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 52.  Minnesota Statutes 2017 Supplement, 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 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), and (i) 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:


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(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 item (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 allocable 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.


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(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 wages paid after December 31, 2017.

 

Sec. 53.  Minnesota Statutes 2016, section 290.21, is amended by adding a subdivision to read:

 

Subd. 9.  Deferred foreign income.  The income of domestic corporations that is included in net income under section 965 of the Internal Revenue Code is dividend income.

 

EFFECTIVE DATE.  This section is effective retroactively for each taxpayer's last taxable year beginning before January 1, 2018.

 

Sec. 54.  Minnesota Statutes 2016, section 290.34, is amended by adding a subdivision to read:

 

Subd. 5.  Insurance companies; interest expense limitation.  To be consistent with the federal treatment of the interest expense limitation under section 163(j) of the Internal Revenue Code for an affiliated group that includes an insurance company taxable under chapter 297I and exempt from taxation under section 290.05, subdivision 1, clause (c), the rules under this subdivision apply.  In that case, the interest expense limitation under section 163(j) must be computed for the corporation subject to tax under this chapter using the adjusted taxable income of the insurance companies that are part of the affiliated group and taxed under chapter 297I.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 55.  Minnesota Statutes 2016, section 290.92, subdivision 1, is amended to read:

 

Subdivision 1.  Definitions.  (1) Wages.  For purposes of this section, the term "wages" means the same as that term is defined in section 3401(a) and, (f), and (i) of the Internal Revenue Code.

 

(2) Payroll period.  For purposes of this section the term "payroll period" means a period for which a payment of wages is ordinarily made to the employee by the employee's employer, and the term "miscellaneous payroll period" means a payroll period other than a daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual, or annual payroll period.

 

(3) Employee.  For purposes of this section the term "employee" means any resident individual performing services for an employer, either within or without, or both within and without the state of Minnesota, and every nonresident individual performing services within the state of Minnesota, the performance of which services constitute, establish, and determine the relationship between the parties as that of employer and employee.  As used in the preceding sentence, the term "employee" includes an officer of a corporation, and an officer, employee, or elected official of the United States, a state, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing.

 

(4) Employer.  For purposes of this section the term "employer" means any person, including individuals, fiduciaries, estates, trusts, partnerships, limited liability companies, and corporations transacting business in or deriving any income from sources within the state of Minnesota for whom an individual performs or performed any service, of whatever nature, as the employee of such person, except that if the person for whom the individual performs or performed the services does not have control of the payment of the wages for such services, the term "employer," except for purposes of paragraph (1), means the person having control of the payment of such wages.  As used in the preceding sentence, the term "employer" includes any corporation, individual, estate, trust, or organization which is exempt from taxation under section 290.05 and further includes, but is not limited to, officers of corporations who have control, either individually or jointly with another or others, of the payment of the wages.


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(5) Number of withholding exemptions claimed.  For purposes of this section, the term "number of withholding exemptions claimed" means the number of withholding exemptions claimed in a withholding exemption certificate in effect under subdivision 5, except that if no such certificate is in effect, the number of withholding exemptions claimed shall be considered to be zero.

 

EFFECTIVE DATE.  This section is effective for wages paid after July 1, 2018.

 

Sec. 56.  Minnesota Statutes 2017 Supplement, section 290A.03, subdivision 3, is amended to read:

 

Subd. 3.  Income.  (a) "Income" means the sum of the following:

 

(1) federal adjusted gross income as defined in the Internal Revenue Code; and

 

(2) the sum of the following amounts to the extent not included in clause (1):

 

(i) all nontaxable income;

 

(ii) the amount of a passive activity loss that is not disallowed as a result of section 469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity loss carryover allowed under section 469(b) of the Internal Revenue Code;

 

(iii) an amount equal to the total of any discharge of qualified farm indebtedness of a solvent individual excluded from gross income under section 108(g) of the Internal Revenue Code;

 

(iv) cash public assistance and relief;

 

(v) any pension or annuity (including railroad retirement benefits, all payments received under the federal Social Security Act, Supplemental Security Income, and veterans benefits), which was not exclusively funded by the claimant or spouse, or which was funded exclusively by the claimant or spouse and which funding payments were excluded from federal adjusted gross income in the years when the payments were made;

 

(vi) interest received from the federal or a state government or any instrumentality or political subdivision thereof;

 

(vii) workers' compensation;

 

(viii) nontaxable strike benefits;

 

(ix) the gross amounts of payments received in the nature of disability income or sick pay as a result of accident, sickness, or other disability, whether funded through insurance or otherwise;

 

(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1995;

 

(xi) contributions made by the claimant to an individual retirement account, including a qualified voluntary employee contribution; simplified employee pension plan; self-employed retirement plan; cash or deferred arrangement plan under section 401(k) of the Internal Revenue Code; or deferred compensation plan under section 457 of the Internal Revenue Code, to the extent the sum of amounts exceeds the retirement base amount for the claimant and spouse;


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(xii) to the extent not included in federal adjusted gross income, distributions received by the claimant or spouse from a traditional or Roth style retirement account or plan;

 

(xiii) nontaxable scholarship or fellowship grants;

 

(xiv) the amount of deduction allowed under section 199 of the Internal Revenue Code alimony received to the extent not included in the recipient's income;

 

(xv) the amount of deduction allowed under section 220 or 223 of the Internal Revenue Code;

 

(xvi) the amount deducted for tuition expenses under section 222 of the Internal Revenue Code; and

 

(xvii) the amount deducted for certain expenses of elementary and secondary school teachers under section 62(a)(2)(D) of the Internal Revenue Code.

 

In the case of an individual who files an income tax return on a fiscal year basis, the term "federal adjusted gross income" shall mean federal adjusted gross income reflected in the fiscal year ending in the calendar year.  Federal adjusted gross income shall not be reduced by the amount of a net operating loss carryback or carryforward or a capital loss carryback or carryforward allowed for the year.

 

(b) "Income" does not include:

 

(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;

 

(2) amounts of any pension or annuity which was exclusively funded by the claimant or spouse and which funding payments were not excluded from federal adjusted gross income in the years when the payments were made;

 

(3) to the extent included in federal adjusted gross income, amounts contributed by the claimant or spouse to a traditional or Roth style retirement account or plan, but not to exceed the retirement base amount reduced by the amount of contributions excluded from federal adjusted gross income, but not less than zero;

 

(4) surplus food or other relief in kind supplied by a governmental agency;

 

(5) relief granted under this chapter;

 

(6) child support payments received under a temporary or final decree of dissolution or legal separation; or

 

(7) restitution payments received by eligible individuals and excludable interest as defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law 107-16.

 

(c) The sum of the following amounts may be subtracted from income:

 

(1) for the claimant's first dependent, the exemption amount multiplied by 1.4;

 

(2) for the claimant's second dependent, the exemption amount multiplied by 1.3;

 

(3) for the claimant's third dependent, the exemption amount multiplied by 1.2;

 

(4) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;

 

(5) for the claimant's fifth dependent, the exemption amount; and


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(6) if the claimant or claimant's spouse was disabled or attained the age of 65 on or before December 31 of the year for which the taxes were levied or rent paid, the exemption amount.

 

(d) For purposes of this subdivision, the following terms have the meanings given them:

 

(1) "exemption amount" means the exemption amount under section 151(d) of the Internal Revenue Code 290.0803, subdivision 9, for the taxable year for which the income is reported;

 

(2) "retirement base amount" means the deductible amount for the taxable year for the claimant and spouse under section 219(b)(5)(A) of the Internal Revenue Code, adjusted for inflation as provided in section 219(b)(5)(C) of the Internal Revenue Code, without regard to whether the claimant or spouse claimed a deduction; and

 

(3) "traditional or Roth style retirement account or plan" means retirement plans under sections 401, 403, 408, 408A, and 457 of the Internal Revenue Code.

 

EFFECTIVE DATE.  This section is effective for property tax refunds based on property taxes payable after December 31, 2018, and rent paid after December 31, 2017.

 

Sec. 57.  Minnesota Statutes 2016, section 290A.03, subdivision 12, is amended to read:

 

Subd. 12.  Gross rent.  (a) "Gross rent" means rental paid for the right of occupancy, at arm's length, of a homestead, exclusive of charges for any medical services furnished by the landlord as a part of the rental agreement, whether expressly set out in the rental agreement or not.

 

(b) The gross rent of a resident of a nursing home or intermediate care facility is $350 $490 per month.  The gross rent of a resident of an adult foster care home is $550 $760 per month.  Beginning for rent paid in 2002 2019, the commissioner shall annually adjust for inflation the gross rent amounts stated in this paragraph.  The adjustment must be made in accordance with section 1(f) of the Internal Revenue Code, except that for purposes of this paragraph the percentage increase shall be determined from the year ending on June 30, 2001 2017, to the year ending on June 30 of the year in which the rent is paid.  The commissioner shall round the gross rents to the nearest $10 amount.  If the amount ends in $5, the commissioner shall round it up to the next $10 amount.  The determination of the commissioner under this paragraph is not a rule under the Administrative Procedure Act.

 

(c) If the landlord and tenant have not dealt with each other at arm's length and the commissioner determines that the gross rent charged was excessive, the commissioner may adjust the gross rent to a reasonable amount for purposes of this chapter.

 

(d) Any amount paid by a claimant residing in property assessed pursuant to section 273.124, subdivision 3, 4, 5, or 6 for occupancy in that property shall be excluded from gross rent for purposes of this chapter.  However, property taxes imputed to the homestead of the claimant or the dwelling unit occupied by the claimant that qualifies for homestead treatment pursuant to section 273.124, subdivision 3, 4, 5, or 6 shall be included within the term "property taxes payable" as defined in subdivision 13, notwithstanding the fact that ownership is not in the name of the claimant.

 

EFFECTIVE DATE.  This section is effective for refunds based on rent paid after December 31, 2017, and property taxes payable after December 31, 2018.


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Sec. 58.  Minnesota Statutes 2017 Supplement, section 290A.03, subdivision 15, is amended to read:

 

Subd. 15.  Internal Revenue Code.  "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through December 16, 2016 March 31, 2018.

 

EFFECTIVE DATE.  This section is effective for property tax refunds based on property taxes payable after December 31, 2018, and rent paid after December 31, 2017.

 

Sec. 59.  Minnesota Statutes 2016, section 290A.04, subdivision 4, is amended to read:

 

Subd. 4.  Inflation adjustment.  (a) Beginning for property tax refunds payable in calendar year 2002, the commissioner shall annually adjust the dollar amounts of the income thresholds and the maximum refunds under subdivisions 2 and 2a for inflation.  The commissioner shall make the inflation adjustments in accordance with section 1(f) of the Internal Revenue Code, except that for purposes of this subdivision using the Consumer Price Index for All Urban Consumers.  The percentage increase shall be determined as provided in this subdivision.

 

(b) In adjusting the dollar amounts of the income thresholds and the maximum refunds under subdivision 2 for inflation, the percentage increase shall be determined from the year ending on June 30, 2013, to the year ending on June 30 of the year preceding that in which the refund is payable.

 

(c) In adjusting the dollar amounts of the income thresholds and the maximum refunds under subdivision 2a for inflation, the percentage increase shall be determined from the year ending on June 30, 2013, to the year ending on June 30 of the year preceding that in which the refund is payable.

 

(d) The commissioner shall use the appropriate percentage increase to annually adjust the income thresholds and maximum refunds under subdivisions 2 and 2a for inflation without regard to whether or not the income tax brackets are adjusted for inflation in that year.  The commissioner shall round the thresholds and the maximum amounts, as adjusted to the nearest $10 amount.  If the amount ends in $5, the commissioner shall round it up to the next $10 amount.

 

(e) The commissioner shall annually announce the adjusted refund schedule at the same time provided under section 290.06.  The determination of the commissioner under this subdivision is not a rule under the Administrative Procedure Act.

 

EFFECTIVE DATE.  This section is effective for refunds based on rent paid after December 31, 2018, and property taxes payable after December 31, 2019.

 

Sec. 60.  Minnesota Statutes 2017 Supplement, 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, increased by the value of any property in which the decedent had a qualifying income interest for life and for which an election was made under section 291.03, subdivision 1d, for Minnesota estate tax purposes, but was not made for federal estate tax purposes.


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(3) "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended through December 16, 2016 March 31, 2018.

 

(4) "Minnesota gross estate" means the federal gross estate of a decedent after (a) excluding therefrom any property included in the estate which has its situs outside Minnesota, and (b) including any property omitted from the federal gross estate which is includable in the estate, has its situs in Minnesota, and was not disclosed to federal taxing authorities.

 

(5) "Nonresident decedent" means an individual whose domicile at the time of death was not in Minnesota.

 

(6) "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.

 

(7) "Resident decedent" means an individual whose domicile at the time of death was in Minnesota.  The provisions of section 290.01, subdivision 7, paragraphs (c) and (d), apply to determinations of domicile under this chapter.

 

(8) "Situs of property" means, with respect to:

 

(i) real property, the state or country in which it is located;

 

(ii) tangible personal property, the state or country in which it was normally kept or located at the time of the decedent's death or for a gift of tangible personal property within three years of death, the state or country in which it was normally kept or located when the gift was executed;

 

(iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue Code, owned by a nonresident decedent and that is normally kept or located in this state because it is on loan to an organization, qualifying as exempt from taxation under section 501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and

 

(iv) intangible personal property, the state or country in which the decedent was domiciled at death or for a gift of intangible personal property within three years of death, the state or country in which the decedent was domiciled when the gift was executed.

 

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, including qualified works of art, 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.

 

(9) "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;


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(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 to the extent the property is includible in the decedent's federal gross estate; but excludes

 

(v) an entity whose ownership interest securities are traded on an exchange regulated by the Securities and Exchange Commission as a national securities exchange under section 6 of the Securities Exchange Act, United States Code, title 15, section 78f.

 

EFFECTIVE DATE.  This section is effective retroactively for estates of decedents dying after December 31, 2017.

 

Sec. 61.  Minnesota Statutes 2016, section 297A.68, subdivision 25, is amended to read:

 

Subd. 25.  Sale of property used in a trade or business.  (a) The sale of tangible personal property primarily used in a trade or business is exempt if the sale is not made in the normal course of business of selling that kind of property and if one of the following conditions is satisfied:

 

(1) the sale occurs in a transaction subject to or described in section 118, 331, 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, or 1033 of the Internal Revenue Code, as amended through December 16, 2016;

 

(2) the sale is between members of a controlled group as defined in section 1563(a) of the Internal Revenue Code;

 

(3) the sale is a sale of farm machinery;

 

(4) the sale is a farm auction sale;

 

(5) the sale is a sale of substantially all of the assets of a trade or business; or

 

(6) the total amount of gross receipts from the sale of trade or business property made during the calendar month of the sale and the preceding 11 calendar months does not exceed $1,000.

 

The use, storage, distribution, or consumption of tangible personal property acquired as a result of a sale exempt under this subdivision is also exempt.

 

(b) For purposes of this subdivision, the following terms have the meanings given.

 

(1) A "farm auction" is a public auction conducted by a licensed auctioneer if substantially all of the property sold consists of property used in the trade or business of farming and property not used primarily in a trade or business.

 

(2) "Trade or business" includes the assets of a separate division, branch, or identifiable segment of a trade or business if, before the sale, the income and expenses attributable to the separate division, branch, or identifiable segment could be separately ascertained from the books of account or record (the lease or rental of an identifiable segment does not qualify for the exemption).

 

(3) A "sale of substantially all of the assets of a trade or business" must occur as a single transaction or a series of related transactions within the 12-month period beginning on the date of the first sale of assets intended to qualify for the exemption provided in paragraph (a), clause (5).

 

EFFECTIVE DATE.  This section is effective retroactively for sales and purchases made after December 31, 2017.


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Sec. 62.  Minnesota Statutes 2016, 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, as amended through December 16, 2016;

 

(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 by an ambulance service licensed under section 144E.10 when that vehicle is equipped and specifically intended for emergency response or for providing ambulance service;

 

(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


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(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;

 

(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; and

 

(15) purchase of a motor vehicle used exclusively as a mobile medical unit for the provision of medical or dental services by a federally qualified health center, as defined under title 19 of the Social Security Act, as amended by Section 4161 of the Omnibus Budget Reconciliation Act of 1990.

 

EFFECTIVE DATE.  This section is effective retroactively for sales and purchases made after December 31, 2017.

 

Sec. 63.  Minnesota Statutes 2017 Supplement, section 462D.06, subdivision 1, is amended to read:

 

Subdivision 1.  Subtraction.  (a) As provided in section 290.0132, subdivision 25, an account holder is allowed a subtraction from the federal taxable adjusted gross income equal to interest or dividends earned on the first-time home buyer savings account during the taxable year.

 

(b) The subtraction under paragraph (a) is allowed each year for the taxable years including and following the taxable year in which the account was established.  No person other than the account holder is allowed a subtraction under this section.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 64.  Minnesota Statutes 2017 Supplement, section 462D.06, subdivision 2, is amended to read:

 

Subd. 2.  Addition.  (a) As provided in section 290.0131, subdivision 14, an account holder must add to federal taxable adjusted gross income the following amounts:

 

(1) the amount in excess of the total contributions for all taxable years that is withdrawn and used for other than eligible costs, or for a transfer permitted under section 462D.04, subdivision 2; and

 

(2) the amount remaining in the first-time home buyer savings account at the close of the tenth taxable year that exceeds the total contributions to the account for all taxable years.


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(b) For an account that received a transfer under section 462D.04, subdivision 2, the ten-year period under paragraph (a), clause (2), ends at the close of the earliest taxable year that applies to either account under that clause.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 65.  Minnesota Statutes 2016, section 469.316, subdivision 1, is amended to read:

 

Subdivision 1.  Application.  An individual, estate, or trust operating a trade or business in a job opportunity building zone, and an individual, estate, or trust making a qualifying investment in a qualified business operating in a job opportunity building zone qualifies for the exemptions from taxes imposed under chapter 290, as provided in this section.  The exemptions provided under this section apply only to the extent that the income otherwise would be taxable under chapter 290.  Subtractions under this section from federal adjusted gross income, federal taxable income, alternative minimum taxable income, or any other base subject to tax are limited to the amount that otherwise would be included in the tax base absent the exemption under this section.  This section applies only to taxable years beginning during the duration of the job opportunity building zone.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 66.  Minnesota Statutes 2016, section 469.317, is amended to read:

 

469.317 CORPORATE FRANCHISE TAX EXEMPTION.

 

(a) A qualified business is exempt from taxation under section 290.02, the alternative minimum tax under section 290.0921, and the minimum fee under section 290.0922, on the portion of its income attributable to operations within the zone.  This exemption is determined as follows:

 

(1) (b) For purposes of the tax imposed under section 290.02, the exemption is determined by multiplying its taxable net income by its zone percentage and by its relocation payroll percentage and subtracting the result in determining taxable income;.

 

(2) for purposes of the alternative minimum tax under section 290.0921, by multiplying its alternative minimum taxable income by its zone percentage and by its relocation payroll percentage and reducing alternative minimum taxable income by this amount; and

 

(3) (c) For purposes of the minimum fee under section 290.0922, the exemption is determined by excluding property and payroll in the zone from the computations of the fee or by exempting the entity under section 290.0922, subdivision 2, clause (7).

 

(b) (d) No subtraction is allowed under this section in excess of 20 percent of the sum of the corporation's job opportunity building zone payroll and the adjusted basis of the property at the time that the property is first used in the job opportunity building zone by the corporation.

 

(c) (e) This section applies only to taxable years beginning during the duration of the job opportunity building zone.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.


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Sec. 67.  ESTIMATED TAXES; EXCEPTIONS.

 

No addition to tax, penalties, or interest may be made under Minnesota Statutes, section 289A.25 or 289A.26, for any period before September 15, 2018, with respect to an underpayment of estimated tax, to the extent that the underpayment was created or increased by the inclusion of deferred foreign income in federal taxable income under section 965 of the Internal Revenue Code under this article.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 68.  REPEALER.

 

Minnesota Statutes 2016, sections 290.01, subdivision 29a; 290.0131, subdivisions 7, 11, 12, and 13; 290.0132, subdivisions 8, 19, and 20; 290.0133, subdivisions 13 and 14; 290.0921, subdivisions 1, 2, 3a, 4, and 6; and 290.10, subdivision 2, are repealed.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

ARTICLE 2

INDIVIDUAL INCOME, CORPORATE FRANCHISE,

AND ESTATE TAXES

 

Section 1.  Minnesota Statutes 2016, section 116J.8737, subdivision 5, is amended to read:

 

Subd. 5.  Credit allowed.  (a)(1) A qualified investor or qualified fund is eligible for a credit equal to 25 percent of the qualified investment in a qualified small business.  Investments made by a pass-through entity qualify for a credit only if the entity is a qualified fund.  The commissioner must not allocate more than $15,000,000 $10,000,000 in credits to qualified investors or qualified funds for taxable years beginning after December 31, 2013 2017, and before January 1, 2017, and must not allocate more than $10,000,000 in credits to qualified investors or qualified funds for taxable years beginning after December 31, 2016, and before January 1, 2018 2019; and

 

(2) for taxable years beginning after December 31, 2014, and before January 1, 2018, 50 percent must be allocated to credits for qualifying investments in qualified greater Minnesota businesses and minority- or women‑owned qualified small businesses in Minnesota.  Any portion of a taxable year's credits that is reserved for qualifying investments in greater Minnesota businesses and minority- or women-owned qualified small businesses in Minnesota that is not allocated by September 30 of the taxable year is available for allocation to other credit applications beginning on October 1.  Any portion of a taxable year's credits that is not allocated by the commissioner does not cancel and may be carried forward to subsequent taxable years until all credits have been allocated.

 

(b) The commissioner may not allocate more than a total maximum amount in credits for a taxable year to a qualified investor for the investor's cumulative qualified investments as an individual qualified investor and as an investor in a qualified fund; for married couples filing joint returns the maximum is $250,000, and for all other filers the maximum is $125,000.  The commissioner may not allocate more than a total of $1,000,000 in credits over all taxable years for qualified investments in any one qualified small business.

 

(c) The commissioner may not allocate a credit to a qualified investor either as an individual qualified investor or as an investor in a qualified fund if, at the time the investment is proposed:

 

(1) the investor is an officer or principal of the qualified small business; or


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(2) the investor, either individually or in combination with one or more members of the investor's family, owns, controls, or holds the power to vote 20 percent or more of the outstanding securities of the qualified small business.

 

A member of the family of an individual disqualified by this paragraph is not eligible for a credit under this section.  For a married couple filing a joint return, the limitations in this paragraph apply collectively to the investor and spouse.  For purposes of determining the ownership interest of an investor under this paragraph, the rules under section 267(c) and 267(e) of the Internal Revenue Code apply.

 

(d) Applications for tax credits for 2010 must be made available on the department's Web site by September 1, 2010, and the department must begin accepting applications by September 1, 2010.  Applications for subsequent years must be made available by November 1 of the preceding year.

 

(e) Qualified investors and qualified funds must apply to the commissioner for tax credits.  Tax credits must be allocated to qualified investors or qualified funds in the order that the tax credit request applications are filed with the department.  The commissioner must approve or reject tax credit request applications within 15 days of receiving the application.  The investment specified in the application must be made within 60 days of the allocation of the credits.  If the investment is not made within 60 days, the credit allocation is canceled and available for reallocation.  A qualified investor or qualified fund that fails to invest as specified in the application, within 60 days of allocation of the credits, must notify the commissioner of the failure to invest within five business days of the expiration of the 60-day investment period.

 

(f) All tax credit request applications filed with the department on the same day must be treated as having been filed contemporaneously.  If two or more qualified investors or qualified funds file tax credit request applications on the same day, and the aggregate amount of credit allocation claims exceeds the aggregate limit of credits under this section or the lesser amount of credits that remain unallocated on that day, then the credits must be allocated among the qualified investors or qualified funds who filed on that day on a pro rata basis with respect to the amounts claimed.  The pro rata allocation for any one qualified investor or qualified fund is the product obtained by multiplying a fraction, the numerator of which is the amount of the credit allocation claim filed on behalf of a qualified investor and the denominator of which is the total of all credit allocation claims filed on behalf of all applicants on that day, by the amount of credits that remain unallocated on that day for the taxable year.

 

(g) A qualified investor or qualified fund, or a qualified small business acting on their behalf, must notify the commissioner when an investment for which credits were allocated has been made, and the taxable year in which the investment was made.  A qualified fund must also provide the commissioner with a statement indicating the amount invested by each investor in the qualified fund based on each investor's share of the assets of the qualified fund at the time of the qualified investment.  After receiving notification that the investment was made, the commissioner must issue credit certificates for the taxable year in which the investment was made to the qualified investor or, for an investment made by a qualified fund, to each qualified investor who is an investor in the fund.  The certificate must state that the credit is subject to revocation if the qualified investor or qualified fund does not hold the investment in the qualified small business for at least three years, consisting of the calendar year in which the investment was made and the two following years.  The three-year holding period does not apply if:

 

(1) the investment by the qualified investor or qualified fund becomes worthless before the end of the three-year period;

 

(2) 80 percent or more of the assets of the qualified small business is sold before the end of the three-year period;

 

(3) the qualified small business is sold before the end of the three-year period;

 

(4) the qualified small business's common stock begins trading on a public exchange before the end of the three‑year period; or


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(5) the qualified investor dies before the end of the three-year period.

 

(h) The commissioner must notify the commissioner of revenue of credit certificates issued under this section.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 2.  Minnesota Statutes 2016, section 116J.8737, subdivision 12, is amended to read:

 

Subd. 12.  Sunset.  This section expires for taxable years beginning after December 31, 2017 2018, except that reporting requirements under subdivision 6 and revocation of credits under subdivision 7 remain in effect through 2019 2020 for qualified investors and qualified funds, and through 2021 2022 for qualified small businesses, reporting requirements under subdivision 9 remain in effect through 2022 2023, and the appropriation in subdivision 11 remains in effect through 2021 2022.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 3.  Minnesota Statutes 2017 Supplement, section 290.01, subdivision 4a, is amended to read:

 

Subd. 4a.  Financial institution.  (a) "Financial institution" means:

 

(1) any corporation or other business entity registered (i) under state law as a bank holding company; (ii) under the federal Bank Holding Company Act of 1956, as amended; or (iii) as a savings and loan holding company under the federal National Housing Act, as amended;

 

(2) a national bank organized and existing as a national bank association pursuant to the provisions of United States Code, title 12, chapter 2;

 

(3) a savings association or federal savings bank as defined in United States Code, title 12, section 1813(b)(1);

 

(4) any bank or thrift institution incorporated or organized under the laws of any state;

 

(5) any corporation organized under United States Code, title 12, sections 611 to 631;

 

(6) any agency or branch of a foreign depository as defined under United States Code, title 12, section 3101;

 

(7) any corporation or other business entity that is more than 50 percent owned, directly or indirectly, by any person or business entity described in clauses (1) to (6), other than an insurance company taxable under chapter 297I;

 

(8) a corporation or other business entity that derives more than 50 percent of its total gross income for financial accounting purposes from finance leases.  For the purposes of this clause, "gross income" means the average from the current tax year and immediately preceding two years and excludes gross income from incidental or occasional transactions.  For purposes of this clause, "finance lease" means any lease transaction that is the functional equivalent of an extension of credit and that transfers substantially all the benefits and risks incident to the ownership of property, including any direct financing lease or leverage lease that meets the criteria of Financial Accounting Standards Board Statement No. 13, accounting for leases, or any other lease that is accounted for as financing by a lessor under generally accepted accounting principles; or

 

(9) any other person or business entity, other than an insurance company taxable under chapter 297I, that derives more than 50 percent of its gross income from activities that an entity described in clauses (2) to (6) or (8) is authorized to transact.  For the purposes of this clause, gross income does not include income from nonrecurring, extraordinary items.


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(b) The commissioner is authorized to exclude any person from the application of paragraph (a), clause (9), if the person proves by clear and convincing evidence that the person's income-producing activity is not in substantial competition with any person described in paragraph (a), clauses (2) to (6) or (8).

 

EFFECTIVE DATE.  This section is effective retroactively for taxable years beginning after December 31, 2016.

 

Sec. 4.  Minnesota Statutes 2016, section 290.01, is amended by adding a subdivision to read:

 

Subd. 5c.  Disqualified captive insurance company.  (a) "Disqualified captive insurance company" means a company that:

 

(1)(i) is licensed as a captive insurance company under the laws of any state or foreign country; or

 

(ii) derives 80 percent or more of its total premiums for the taxable year from entities that are members of the unitary business, as that term is used in section 290.17; and

 

(2)(i) receives less than 50 percent of its gross receipts for the taxable year from premiums; or

 

(ii) pays less than 0.25 percent of its total premiums for the taxable year in tax under chapter 297I or a comparable tax of another state or country.

 

(b) For purposes of this subdivision, "premiums" means amounts paid for arrangements that constitute insurance for federal income tax purposes, but excludes return premiums, premiums for reinsurance assumed from other insurance companies, and any other premiums that are or would be exempt from taxation under section 297I.05 as a result of their type or character, if the insurance was for business in Minnesota.

 

EFFECTIVE DATE.  This section is effective retroactively for taxable years beginning after December 31, 2016.

 

Sec. 5.  Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision to read:

 

Subd. 29.  Disallowed section 280E expenses; medical cannabis manufacturers.  The amount of expenses of a medical cannabis manufacturer, as defined under section 152.22, subdivision 7, related to the business of medical cannabis under sections 152.21 to 152.37, and not allowed for federal income tax purposes under section 280E of the Internal Revenue Code is a subtraction.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 6.  Minnesota Statutes 2016, section 290.0133, is amended by adding a subdivision to read:

 

Subd. 15.  Prepared food donation.  The amount of charitable contributions under section 170 of the Internal Revenue Code used to claim the credit under section 290.06, subdivision 39, is an addition.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 7.  Minnesota Statutes 2016, section 290.0134, is amended by adding a subdivision to read:

 

Subd. 18.  Disallowed section 280E expenses; medical cannabis manufacturers.  The amount of expenses of a medical cannabis manufacturer, as defined under section 152.22, subdivision 7, related to the business of medical cannabis under sections 152.21 to 152.37, and not allowed for federal income tax purposes under section 280E of the Internal Revenue Code is a subtraction.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.


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Sec. 8.  Minnesota Statutes 2017 Supplement, 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 mining, producing, or refining other ores, metals, and minerals, the mining, production, or refining 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, as defined in section 290.17, subdivision 4, paragraph (j), but including any insurance company licensed and domiciled in another state that grants, on a reciprocal basis, exemption from retaliatory taxes other than a disqualified captive insurance company.

 

EFFECTIVE DATE.  This section is effective retroactively for taxable years beginning after December 31, 2016.

 

Sec. 9.  Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to read:

 

Subd. 39.  Prepared food donation credit.  (a) A qualifying taxpayer is allowed a credit against the tax imposed by this chapter equal to 20 percent of the taxpayer's eligible charitable food donation.  The credit may not exceed the taxpayer's liability for tax and may not be carried forward to any other taxable year.

 

(b) For purposes of this subdivision, the following terms have the meanings given:

 

(1) "eligible charitable food donation" means a contribution of prepared food allowable as a charitable deduction for the taxable year under section 170(a) of the Internal Revenue Code, subject to the limitations of section 170(b) of the Internal Revenue Code, and determined without regard to whether or not the taxpayer itemizes deductions;

 

(2) "prepared food" means food that meets all quality and labeling standards imposed by federal, state, and local laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other conditions, and includes:

 

(i) food that is cooked or heated by the qualifying taxpayer;

 

(ii) two or more ingredients mixed together to be eaten as a single item; and

 

(iii) any ingredients supplied for ingestion or chewing by humans that are consumed for their taste or nutritional value; and

 

(3) "qualifying taxpayer" means an individual or entity that makes a charitable food donation in Minnesota and is engaged in a trade or business that includes regularly selling prepared food.

 

(c) A food donation for which a credit is claimed under this section may not be deducted as a charitable contribution deduction under section 290.0803.


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(d) Credits allowed to a partnership, a limited liability company taxed as a partnership, an S corporation, or multiple owners of property are passed through to the partners, members, shareholders, or owners, respectively, pro rata to each partner, member, shareholder, or owner based on their share of the entity's income for the taxable year.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 10.  Minnesota Statutes 2016, section 290.0685, subdivision 1, is amended to read:

 

Subdivision 1.  Credit allowed.  (a) An eligible individual is allowed a credit against the tax imposed by this chapter equal to $2,000 for each birth for which a certificate of birth resulting in stillbirth has been issued under section 144.2151 stillbirth.  The credit under this section is allowed only in the taxable year in which the stillbirth occurred and if the child would have been a dependent of the taxpayer as defined in section 152 of the Internal Revenue Code.

 

(b) 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).

 

EFFECTIVE DATE.  This section is effective retroactively for taxable years beginning after December 31, 2015.

 

Sec. 11.  Minnesota Statutes 2016, section 290.0685, is amended by adding a subdivision to read:

 

Subd. 1a.  Definitions.  (a) For purposes of this section, the following terms have the meanings given, unless the context clearly indicates otherwise.

 

(b) "Certificate of birth resulting in stillbirth" means the printed certificate of birth resulting in stillbirth issued under section 144.2151 or for a stillbirth occurring in another state or country a similar certificate issued under that state's or country's law.

 

(c) "Eligible individual" means an individual who is:

 

(1)(i) a resident; or

 

(ii) the nonresident spouse of a resident who is a member of armed forces of the United States or the United Nations; and

 

(2)(i) the individual who gave birth resulting in stillbirth and is listed as a parent on the certificate of birth resulting in stillbirth;

 

(ii) if no individual meets the requirements of clause (i) for a stillbirth that occurs in this state, then the first parent listed on the certificate of birth resulting in stillbirth; or

 

(iii) the individual who gave birth resulting in stillbirth for a birth outside of this state for which no certificate of birth resulting in stillbirth was issued.

 

(d) "Stillbirth" means a birth for which a fetal death report would be required under section 144.222, subdivision 1, if the birth occurred in this state.

 

EFFECTIVE DATE.  This section is effective retroactively for taxable years beginning after December 31, 2015.


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Sec. 12.  Minnesota Statutes 2017 Supplement, section 290.0686, subdivision 1, is amended to read:

 

Subdivision 1.  Definitions.  (a) For purposes of this section, the following terms have the meanings given them.

 

(b) "Master's degree program" means a graduate-level program at an accredited university leading to a master of arts or science degree in either a core content area directly related to a qualified teacher's licensure field or special education.  Except for a special education program authorized under paragraph (e), the master's degree program may not include pedagogy or a pedagogy component.  To be eligible under this credit, a licensed elementary school teacher must pursue and complete a master's degree program in either a core content area in which the teacher provides direct classroom instruction or a special education program.

 

(c) "Qualified teacher" means a person who:

 

(1) holds a teaching license issued by the licensing division in the Department of Education on behalf of the Professional Educator Licensing and Standards Board both when the teacher begins the master's degree program and when the teacher completes the master's degree program;

 

(2) began a master's degree program after June 30, 2017; and

 

(3) completes the master's degree program during the taxable year.

 

(d) "Core content area" means the academic subject of reading, English or language arts, mathematics, science, foreign languages, civics and government, economics, arts, history, or geography.

 

(e) "Special education" means a program of study directly related to licensure in developmental disabilities, early childhood special education, emotional or behavioral disorders, autism spectrum disorders, or learning disabilities.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 13.  [290.0687] TAX CREDIT; RAILROAD CROSSING IMPROVEMENTS.

 

Subdivision 1.  Credit allowed.  An individual or entity operating a railroad is allowed a credit against the liability for tax equal to 50 percent of the expenditures during the taxable year on qualified costs.

 

Subd. 2.  Definitions.  (a) For purposes of this section, the following terms have the meanings given them.

 

(b) "Crossing" means a grade crossing as defined in section 219.16.

 

(c) "Liability for tax" means the sum of the tax imposed under sections 290.06, subdivision 1 or 2c; and 290.091 for the taxable year, reduced by the sum of the nonrefundable credits allowed under this chapter.

 

(d) "Qualified costs" means amounts expended to improve a priority crossing that:

 

(1) increase the safety of the crossing by installing, facilitating the installation of, or improving the quality of active traffic signals or controls or by assisting in implementing grade separation for the crossing;

 

(2) would qualify for depreciation deductions under section 167(a) of the Internal Revenue Code without regard to whether the improvements are property of the taxpayer; and

 

(3) are not required by law to be made by the railroad.


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(e) "Railroad" means a rail carrier as defined in United States Code, title 49, section 20102, as amended.

 

(f) "Priority crossing" means a crossing that is designated by the commissioner of transportation under subdivision 5.

 

Subd. 3.  Carryover.  The credit for a taxable year must not exceed the taxpayer's liability for tax.  If the credit for a taxable year exceeds the liability for tax, the excess is a carryover to each of the 15 succeeding taxable years.  The entire amount of the excess unused credit for the taxable year must be carried first to the earliest of the taxable years to which the credit may be carried and then to each successive year to which the credit may be carried.  The amount of the unused credit that may be added under this subdivision must not exceed the liability for tax less the credit for the taxable year.

 

Subd. 4.  Partnerships and S corporations.  For a railroad operated as a partnership, a limited liability company taxed as a partnership, or an S corporation, the credit under this section is passed through to each partner, member, or shareholder in proportion to their share of the entity's net income for the taxable year.

 

Subd. 5.  Designation of priority crossings.  (a) By October 1, 2018, the commissioner of transportation shall designate a list of at least 15 priority crossings that qualify for the tax credit under this section and publish the list on the Web site of the Department of Transportation.  The list establishes priority crossings, expenditures for which qualify for the tax credit under this section.  The commissioner may revise the list of priority crossings as the commissioner determines appropriate, based on changing conditions and circumstances.

 

(b) In establishing a list of priority crossings, the commissioner of transportation shall use a methodology for evaluating the priority for and cost-effectiveness of expenditures for improving public safety following or similar to the methods used in preparing the study required by Laws 2014, chapter 312, article 10, section 10, with any modifications or improvements the commissioner determines appropriate.

 

(c) Actions of the commissioner of transportation in establishing a list of priority crossings under this subdivision are not an administrative rule subject to the Administrative Procedure Act in chapter 14, including section 14.386.

 

EFFECTIVE DATE.  This section is effective for taxable years beginning after December 31, 2017, and applies to expenditures made after October 1, 2018.

 

Sec. 14.  Minnesota Statutes 2017 Supplement, 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;

 

(ii) the medical expense deduction;


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(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 290.0131, subdivision 2; and

 

(6) the amount of addition required by section 290.0131, subdivisions 9 to 11;

 

less the sum of the amounts determined under the following:

 

(i) interest income as defined in section 290.0132, subdivision 2;

 

(ii) an overpayment of state income tax as provided by section 290.0132, subdivision 3, to the extent included in federal alternative minimum taxable income;

 

(iii) 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;

 

(iv) amounts subtracted from federal taxable income as provided by section 290.0132, subdivisions 7, 9 to 15, 17, 21, 24, and 26, and 29; and

 

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11, paragraph (c).

 

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 6.75 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, 2017.


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Sec. 15.  Minnesota Statutes 2017 Supplement, 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, 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 does not exist when two or more corporations are involved unless more than 50 percent of the voting stock of each corporation 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, but excluding a disqualified captive insurance company, 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 the income and apportionment factors of a foreign entity, other than an entity treated as a C corporation for federal income tax purposes, that are included in the federal taxable income, as defined in section 63 of the Internal Revenue Code as amended through the date named in section 290.01, subdivision 19, of a domestic corporation, domestic entity, or individual must be included in determining net income and the factors to be used in the apportionment of net income pursuant to section 290.191 or 290.20.  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.

 

(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 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 the income and apportionment factors of a foreign entity, other than an entity treated as a C corporation for federal income tax purposes, that is included in the federal taxable income, as defined in section 63 of the Internal Revenue Code as amended through the date named in section 290.01, subdivision 19, of a domestic corporation, domestic entity, or individual must be included in determining net income and the factors to be used in the apportionment of net income pursuant to section 290.191 or 290.20.


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(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 (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 (g) in the denominators of the apportionment formula.  Except as otherwise provided by paragraph (f), all sales of the unitary business made within this state pursuant to section 290.191 or 290.20 must be included on the combined report of a corporation or other entity that is a member of the unitary business and is subject to the jurisdiction of this state to impose tax under this chapter.

 

(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.

 

(j) For purposes of this subdivision, "insurance company" means an insurance company, as defined in section 290.01, subdivision 5b, that is:

 

(1) licensed to engage in the business of insurance in Minnesota pursuant to chapter 60A; or

 

(2) domiciled and licensed to engage in the business of insurance in another state or country 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.

 

(k) For purposes of this subdivision, "retaliatory taxes" means taxes imposed on insurance companies organized in another state or country that result from the fact that an insurance company organized in the taxing jurisdiction and doing business in the other jurisdiction is subject to taxes, fines, deposits, penalties, licenses, or fees in an amount exceeding that imposed by the taxing jurisdiction upon an insurance company organized in the other state or country and doing business to the same extent in the taxing jurisdiction not a disqualified captive insurance company.

 

EFFECTIVE DATE.  This section is effective retroactively for taxable years beginning after December 31, 2016.

 

Sec. 16.  Minnesota Statutes 2016, section 291.03, subdivision 8, is amended 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, or a trust whose present beneficiaries are all family members as defined in section 2032A(e)(2) of the Internal Revenue Code.

 

(c) "Qualified heir" means a family member who acquired qualified property upon the death of the decedent and satisfies the requirement under subdivision 9, clause (7) (8), or subdivision 10, clause (5), for the property.

 

(d) "Qualified property" means qualified small business property under subdivision 9 and qualified farm property under subdivision 10.

 

EFFECTIVE DATE.  This section is effective the day following final enactment.


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Sec. 17.  Minnesota Statutes 2017 Supplement, section 291.03, subdivision 9, is amended 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.  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.  For purposes of this subdivision, an ownership interest includes the interest the decedent is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue Code.

 

(3) During the taxable year that ended before the decedent's death, the trade or business must not have been a passive activity within the meaning of section 469(c) of the Internal Revenue Code, and the decedent or the decedent's spouse must have materially participated in the trade or business within the meaning of section 469(h) of the Internal Revenue Code, excluding section 469(h)(3) of the Internal Revenue Code and any other provision provided by United States Treasury Department regulation that substitutes material participation in prior taxable years for material participation in the taxable year that ended before the decedent's death.

 

(4) 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.

 

(5) The property does not include:

 

(i) cash;

 

(ii) cash equivalents;

 

(iii) publicly traded securities; or

 

(iv) any assets not used in the operation of the trade or business.

 

(6) For property consisting of shares of stock or other ownership interests in an entity, the value of items described in clause (5) must be excluded in the valuation of the decedent's interest in the entity.

 

(7) The decedent or the decedent's spouse continuously owned the property, or an undivided or joint interest in the property, including property the decedent or the decedent's spouse is deemed to own under sections 2036, 2037, and 2038, 2040, or 2044 of the Internal Revenue Code, or under subdivision 1d, for the three-year period ending on the date of death of the decedent.  In the case of a sole proprietor, if the property replaced similar property within the three-year period, the replacement property will be treated as having been owned for the three-year period ending on the date of death of the decedent.  For the purposes of the three-year holding period under this clause, any ownership by the decedent's spouse, whether the spouse predeceases or survives the decedent, is attributed to the decedent.

 

(8) For three years following the date of death of the decedent, the trade or business is not a passive activity within the meaning of section 469(c) of the Internal Revenue Code, and a family member materially participates in the operation of the trade or business within the meaning of section 469(h) of the Internal Revenue Code, excluding section 469(h)(3) of the Internal Revenue Code and any other provision provided by United States Treasury Department regulation that substitutes material participation in prior taxable years for material participation in the three years following the date of death of the decedent.


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(9) 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 retroactively for estates of decedents dying after December 31, 2017.

 

Sec. 18.  Minnesota Statutes 2016, section 291.03, subdivision 10, is amended 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 agricultural land and is owned by a person or entity that is either not subject to or is in compliance with section 500.24.

 

(3) For property taxes payable in the taxable year of the decedent's death, the property is classified as class 2a property under section 273.13, subdivision 23, and is classified as agricultural homestead, agricultural relative homestead, or special agricultural homestead under section 273.124.

 

(4) The decedent or the decedent's spouse continuously owned the property, or an undivided or joint interest in the property, including property the decedent or the decedent's spouse is deemed to own under sections 2036, 2037, and 2038, 2040, or 2044 of the Internal Revenue Code, or under subdivision 1d, for the three-year period ending on the date of death of the decedent either by ownership of the agricultural land or pursuant to holding an interest in an entity that is not subject to or is in compliance with section 500.24.  For the purposes of the three-year holding period under this clause, any ownership by the decedent's spouse, whether the spouse predeceases or survives the decedent, is attributed to the decedent.

 

(5) The property is classified for property tax purposes as class 2a property under section 273.13, subdivision 23, for three years following the date of death of the decedent.

 

(6) 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 retroactively for estates of decedents dying after December 31, 2017.

 

Sec. 19.  Minnesota Statutes 2017 Supplement, section 291.03, subdivision 11, is amended 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 satisfy the requirement under subdivision 9, clause (7) (8); or 10, clause (5), an additional estate tax is imposed on the property.  In the case of a sole proprietor, if the qualified heir replaces qualified small business property excluded under subdivision 9 with similar property, then the qualified heir will not be treated as having disposed of an interest in the qualified 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).


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(d) The tax under this subdivision does not apply to the acquisition of title or possession of the qualified property by a federal, state, or local government unit, or any other entity with the power of eminent domain for a public purpose, as defined in section 117.025, subdivision 11, within the three-year holding period.

 

(e) This subdivision shall not apply as a result of any of the following:

 

(1) a portion of qualified farm property consisting of less than one-fifth of the acreage of the property is reclassified as class 2b property under section 273.13, subdivision 23, and the qualified heir has not substantially altered the reclassified property during the three-year holding period; or

 

(2) a portion of qualified farm property classified as 2a property at the death of the decedent pursuant to section 273.13, subdivision 23, paragraph (a), consisting of a residence, garage, and immediately surrounding one acre of land is reclassified as 4bb property during the three-year holding period, and the qualified heir has not substantially altered the property.

 

(f) This paragraph applies only to estates of decedents dying after December 31, 2011, and before January 1, 2017, for which no tax liability was reported on the final estate tax return.  For purposes of estates qualifying under this paragraph, the amount of the exclusion claimed by the estate for purposes of calculating the tax under paragraph (b) is deemed to be the minimum amount of the exclusion necessary to reduce the amount of estate tax to zero, without regard to the amount of the exclusion actually claimed on the final estate tax return.  The provisions of this paragraph expire effective January 1, 2021.

 

EFFECTIVE DATE.  The provisions of this section are effective retroactively for estates of decedents dying after December 31, 2011, and amended returns and claims for refund of recapture tax may be filed without regard to any applicable statute of limitation.

 

ARTICLE 3

SALES AND USE TAXES

 

Section 1.  Minnesota Statutes 2016, section 295.50, subdivision 4, is amended to read:

 

Subd. 4.  Health care provider.  (a) "Health care provider" means:

 

(1) a person whose health care occupation is regulated or required to be regulated by the state of Minnesota furnishing any or all of the following goods or services directly to a patient or consumer:  medical, surgical, optical, visual, dental, hearing, nursing services, drugs, laboratory, diagnostic or therapeutic services;

 

(2) a person who provides goods and services not listed in clause (1) that qualify for reimbursement under the medical assistance program provided under chapter 256B;

 

(3) a staff model health plan company;

 

(4) an ambulance service required to be licensed; or

 

(5) a person who sells or repairs hearing aids and related equipment or prescription eyewear; or

 

(6) a massage therapist.

 

(b) Health care provider does not include:


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(1) hospitals; medical supplies distributors, except as specified under paragraph (a), clause (5); nursing homes licensed under chapter 144A or licensed in any other jurisdiction; wholesale drug distributors; pharmacies; surgical centers; bus and taxicab transportation, or any other providers of transportation services other than ambulance services required to be licensed; supervised living facilities for persons with developmental disabilities, licensed under Minnesota Rules, parts 4665.0100 to 4665.9900; housing with services establishments required to be registered under chapter 144D; board and lodging establishments providing only custodial services that are licensed under chapter 157 and registered under section 157.17 to provide supportive services or health supervision services; adult foster homes as defined in Minnesota Rules, part 9555.5105; day training and habilitation services for adults with developmental disabilities as defined in section 252.41, subdivision 3; boarding care homes, as defined in Minnesota Rules, part 4655.0100; and adult day care centers as defined in Minnesota Rules, part 9555.9600;

 

(2) home health agencies as defined in Minnesota Rules, part 9505.0175, subpart 15; a person providing personal care services and supervision of personal care services as defined in Minnesota Rules, part 9505.0335; a person providing home care nursing services as defined in Minnesota Rules, part 9505.0360; and home care providers required to be licensed under chapter 144A;

 

(3) a person who employs health care providers solely for the purpose of providing patient services to its employees;

 

(4) an educational institution that employs health care providers solely for the purpose of providing patient services to its students if the institution does not receive fee for service payments or payments for extended coverage; and

 

(5) a person who receives all payments for patient services from health care providers, surgical centers, or hospitals for goods and services that are taxable to the paying health care providers, surgical centers, or hospitals, as provided under section 295.53, subdivision 1, clause (3) or (4), or from a source of funds that is exempt from tax under this chapter.

 

EFFECTIVE DATE.  This section is effective for gross revenues received after June 30, 2018.

 

Sec. 2.  Minnesota Statutes 2016, section 295.50, is amended by adding a subdivision to read:

 

Subd. 8a.  Massage therapist.  "Massage therapist" means a person providing massage therapy services who registers with the commissioner to pay the tax imposed under section 295.52 prior to the calendar quarter in which the massage therapy services are provided.

 

EFFECTIVE DATE.  This section is effective for gross revenues received after June 30, 2018.

 

Sec. 3.  Minnesota Statutes 2016, section 295.50, is amended by adding a subdivision to read:

 

Subd. 8b.  Massage therapy services.  (a) "Massage therapy services" or "massage therapy" means a health care service provided by a massage therapist that involves systematic and structured touch and palpation and pressure and movement of the muscles, tendons, ligaments, and fascia, in order to reduce muscle tension, relieve soft tissue pain, improve circulation, increase flexibility, increase activity of the parasympathetic branch of the autonomic nervous system, or promote general wellness.

 

(b) Massage therapy services or massage therapy excludes services described in paragraph (a) that are 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.

 

EFFECTIVE DATE.  This section is effective for gross revenues received after June 30, 2018.


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Sec. 4.  Minnesota Statutes 2016, section 295.50, subdivision 9b, is amended to read:

 

Subd. 9b.  Patient services.  (a) "Patient services" means inpatient and outpatient services and other goods and services provided by hospitals, surgical centers, or health care providers.  They include the following health care goods and services provided to a patient or consumer:

 

(1) bed and board;

 

(2) nursing services and other related services;

 

(3) use of hospitals, surgical centers, or health care provider facilities;

 

(4) medical social services;

 

(5) drugs, biologicals, supplies, appliances, and equipment;

 

(6) other diagnostic or therapeutic items or services;

 

(7) medical or surgical services;

 

(8) items and services furnished to ambulatory patients not requiring emergency care; and

 

(9) emergency services; and

 

(10) massage therapy services.

 

(b) "Patient services" does not include:

 

(1) services provided to nursing homes licensed under chapter 144A;

 

(2) examinations for purposes of utilization reviews, insurance claims or eligibility, litigation, and employment, including reviews of medical records for those purposes;

 

(3) services provided to and by community residential mental health facilities licensed under Minnesota Rules, parts 9520.0500 to 9520.0670, and to and by residential treatment programs for children with severe emotional disturbance licensed or certified under chapter 245A;

 

(4) services provided to and by community support programs and family community support programs approved under Minnesota Rules, parts 9535.1700 to 9535.1760, or certified as mental health rehabilitative services under chapter 256B;

 

(5) services provided to and by community mental health centers as defined in section 245.62, subdivision 2;

 

(6) services provided to and by assisted living programs and congregate housing programs;

 

(7) hospice care services;

 

(8) home and community-based waivered services under sections 256B.0915, 256B.49, and 256B.501;

 

(9) targeted case management services under sections 256B.0621; 256B.0625, subdivisions 20, 20a, 33, and 44; and 256B.094; and


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(10) services provided to the following:  supervised living facilities for persons with developmental disabilities licensed under Minnesota Rules, parts 4665.0100 to 4665.9900; housing with services establishments required to be registered under chapter 144D; board and lodging establishments providing only custodial services that are licensed under chapter 157 and registered under section 157.17 to provide supportive services or health supervision services; adult foster homes as defined in Minnesota Rules, part 9555.5105; day training and habilitation services for adults with developmental disabilities as defined in section 252.41, subdivision 3; boarding care homes as defined in Minnesota Rules, part 4655.0100; adult day care services as defined in section 245A.02, subdivision 2a; and home health agencies as defined in Minnesota Rules, part 9505.0175, subpart 15, or licensed under chapter 144A.

 

EFFECTIVE DATE.  This section is effective for gross revenues received after June 30, 2018.

 

Sec. 5.  Minnesota Statutes 2017 Supplement, 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.  In applying the provisions of this chapter, the terms "tangible personal property" and "retail sale" include the taxable services listed in paragraph (g), 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).

 

(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; and

 

(4) dietary supplements.

 

(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.


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(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 services:

 

(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, 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 and including accommodations intermediary services 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.  For purposes of this clause, "road construction" means construction of:

 

(i) public roads;

 

(ii) cartways; and

 

(iii) private roads in townships located outside of the seven-county metropolitan area up to the point of the emergency response location sign; 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;


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(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 or any organization at the direction of a county 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.

 

(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, and pay television services.  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.

 

(l) A sale and a purchase includes furnishing for a consideration of specified digital products or other digital products or granting the right for a consideration to use specified digital products or other digital products on a temporary or permanent basis and regardless of whether the purchaser is required to make continued payments for such right.  Wherever the term "tangible personal property" is used in this chapter, other than in subdivisions 10 and 38, the provisions also apply to specified digital products, or other digital products, unless specifically provided otherwise or the context indicates otherwise.


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(m) The sale of the privilege of admission under section 297A.61, subdivision 3, paragraph (g), clause (1), to a place of amusement, recreational area, or athletic event includes all charges included in the privilege of admission's sales price, without deduction for amenities that may be provided, unless the amenities are separately stated and the purchaser of the privilege of admission is entitled to add or decline the amenities, and the amenities are not otherwise taxable.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.

 

Sec. 6.  Minnesota Statutes 2017 Supplement, section 297A.67, subdivision 34, is amended to read:

 

Subd. 34.  Precious metal bullion and bullion coin.  (a) Precious metal bullion is exempt.  For purposes of this subdivision,:

 

(1) "precious metal bullion" means bars or rounds that consist of 99.9 percent or more by weight of either gold, silver, platinum, or palladium and are marked with weight, purity, and content.; and

 

(2) "bullion coin" means a coin as described in section 80G.01, subdivision 2.

 

(b) The exemption under this subdivision does not apply to sales and purchases of jewelry, works of art, or scrap metal.

 

(c) The intent of this subdivision is to eliminate the difference in tax treatment between the sale of precious metal bullion and bullion coin and the sale of stock, bullion ETFs, bonds, and other investment instruments.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.

 

Sec. 7.  Minnesota Statutes 2016, section 297A.67, is amended by adding a subdivision to read:

 

Subd. 37.  Massage therapy.  Massage therapy services subject to tax under section 295.52 or provided upon referral from a professional or licensed health care facility for treatment of illness, injury, or disease are exempt.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.

 

Sec. 8.  Minnesota Statutes 2016, section 297A.67, is amended by adding a subdivision to read:

 

Subd. 38.  Certain herbicides.  Purchases of herbicides authorized for use pursuant to an invasive aquatic plant management permit as defined under section 103G.615 are exempt if purchased by a lakeshore property owner, an association of lakeshore property owners organized under chapter 317A, or by a contractor hired by a lakeshore owner or association to provide invasive aquatic plant management under the permit.  For purposes of this subdivision, "herbicides" means all herbicides that meet the following requirements:

 

(1) are labeled for use in water;

 

(2) are registered for use in this state by the Minnesota Department of Agriculture under section 18B.26; and

 

(3) are listed as one of the herbicides proposed for use on the invasive aquatic plant management permit.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.


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Sec. 9.  Minnesota Statutes 2016, section 297A.67, is amended by adding a subdivision to read:

 

Subd. 39.  Ticket purchasing rights to collegiate events.  The sale of the privilege of admission under section 297A.61, subdivision 3, paragraph (g), clause (1), does not include consideration paid for the right to purchase a ticket to a collegiate athletic event in a preferred area, and the sale of the right to purchase a ticket is exempt provided that:

 

(1) the consideration paid for the right to purchase in the preferred area is used entirely to support student scholarship costs;

 

(2) the consideration paid for the right to purchase in the preferred area is separately stated from the admission price; and

 

(3) the admission price is equal to or greater than the highest priced general admission ticket for the closest seat not in the preferred area.

 

EFFECTIVE DATE.  This section is effective the day following final enactment.

 

Sec. 10.  Minnesota Statutes 2016, section 297A.68, subdivision 29, is amended to read:

 

Subd. 29.  Prizes.  (a) Tangible personal property that will be given as prizes to players in games of skill or chance is exempt if:

 

(1) the games are conducted at events such as community festivals, fairs, and carnivals and if the events last less than six days.; or

 

(2) the property is awarded as prizes in connection with lawful gambling as defined in section 349.12.

 

(b) This exemption does not apply to property awarded as prizes in connection with lawful gambling as defined in section 349.12 or the State Lottery.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.

 

Sec. 11.  Minnesota Statutes 2016, section 297A.70, subdivision 7, is amended to read:

 

Subd. 7.  Hospitals, outpatient surgical centers, and critical access dental providers.  (a) Sales, except for those listed in paragraph (d), to a hospital are exempt, if the items purchased are used in providing hospital services.  For purposes of this subdivision, "hospital" means a hospital organized and operated for charitable purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other jurisdiction, and "hospital services" are services authorized or required to be performed by a "hospital" under chapter 144.

 

(b) Sales, except for those listed in paragraph (d), to an outpatient surgical center are exempt, if the items purchased are used in providing outpatient surgical services.  For purposes of this subdivision, "outpatient surgical center" means an outpatient surgical center organized and operated for charitable purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other jurisdiction.  For the purposes of this subdivision, "outpatient surgical services" means:  (1) services authorized or required to be performed by an outpatient surgical center under chapter 144; and (2) urgent care.  For purposes of this subdivision, "urgent care" means health services furnished to a person whose medical condition is sufficiently acute to require treatment unavailable through, or inappropriate to be provided by, a clinic or physician's office, but not so acute as to require treatment in a hospital emergency room.


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(c) Sales, except for those listed in paragraph (d), to a critical access dental provider are exempt, if the items purchased are used in providing critical access dental care services.  For the purposes of this subdivision, "critical access dental provider" means a dentist or dental clinic that qualifies under section 256B.76, subdivision 4, paragraph (b), and, in the previous calendar year, had no more than 15 percent of its patients covered by private dental insurance.

 

(d) This exemption does not apply to the following products and services:

 

(1) purchases made by a clinic, physician's office, or any other medical facility not operating as a hospital, outpatient surgical center, qualifying medical facility, or critical access dental provider, even though the clinic, office, or facility may be owned and operated by a hospital, outpatient surgical center, qualifying medical facility, or critical access dental provider;

 

(2) sales under section 297A.61, subdivision 3, paragraph (g), clause (2), and prepared food, candy, and soft drinks;

 

(3) building and construction materials used in constructing buildings or facilities that will not be used principally by the hospital, outpatient surgical center, qualifying medical facility, or critical access dental provider;

 

(4) building, construction, or reconstruction materials purchased by a contractor or a subcontractor as a part of a lump-sum contract or similar type of contract with a guaranteed maximum price covering both labor and materials for use in the construction, alteration, or repair of a hospital, outpatient surgical center, qualifying medical facility, or critical access dental provider; or

 

(5) the leasing of a motor vehicle as defined in section 297B.01, subdivision 11.

 

(e) A limited liability company also qualifies for exemption under this subdivision if (1) it consists of a sole member that would qualify for the exemption, and (2) the items purchased qualify for the exemption.

 

(f) An entity that contains both a hospital and a nonprofit unit may claim this exemption on purchases made for both the hospital and nonprofit unit provided that:

 

(1) the nonprofit unit would have qualified for exemption under subdivision 4; and

 

(2) the items purchased would have qualified for the exemption.

 

(g) Sales, except for those listed in paragraph (d), to a qualifying medical facility are exempt, if the items are purchased or used in providing medical services.  For purposes of this subdivision, "qualifying medical facility" means a medical facility as defined in section 469.1812, subdivision 2a, that has been granted an abatement of the state general tax under section 469.1817.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.

 

Sec. 12.  Minnesota Statutes 2017 Supplement, section 297A.70, subdivision 20, is amended to read:

 

Subd. 20.  Ice arenas and rinks.  Sales to organizations that exist primarily for the purpose of operating ice arenas or rinks that are (1) part of either the Duluth Heritage Sports Center or the David M. Thaler Sports Center; and (2) are used for youth and high school programs, are exempt if the organization is a private, nonprofit corporation exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.


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Sec. 13.  Minnesota Statutes 2016, section 297A.70, is amended by adding a subdivision to read:

 

Subd. 21.  Lawful gambling equipment.  The lease or purchase of gambling equipment, as defined in section 349.12, subdivision 18, by an organization licensed to conduct lawful gambling under chapter 349 is exempt.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.

 

Sec. 14.  Minnesota Statutes 2016, section 297A.70, is amended by adding a subdivision to read:

 

Subd. 22.  Nonprofit conservation clubs.  Sales to nonprofit conservation clubs are exempt.  For purposes of this subdivision, a "nonprofit conservation club" means an organization exempt under section 501(c)(3) of the Internal Revenue Code that provides instruction, training, and facilities for shooting handguns or rifles.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.

 

Sec. 15.  Minnesota Statutes 2016, section 297A.71, is amended by adding a subdivision to read:

 

Subd. 51.  Public safety facilities.  Materials and supplies used in and equipment incorporated into construction or remodeling of the following public safety facilities are exempt:

 

(1) the construction of a new fire station, which includes firefighting and public safety training facilities, in the city of Inver Grove Heights;

 

(2) the construction of a new fire station or the remodeling and expansion of an existing fire station in the city of Virginia;

 

(3) the construction of a new fire station on the campus of the Minnetonka City Hall; and

 

(4) the remodeling and expansion of an existing police and fire station in Minnetonka to accommodate its use as a police station.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after the day following final enactment and before January 1, 2021.

 

Sec. 16.  Minnesota Statutes 2016, section 297A.71, is amended by adding a subdivision to read:

 

Subd. 52.  Second Harvest Heartland.  Materials and supplies used or consumed in and equipment incorporated into construction and rehabilitation of the Second Harvest Heartland regional charitable food warehouse, distribution, and office facility in Hennepin County are exempt.  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 297A.75.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after January 1, 2018, and before January 1, 2022.


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Sec. 17.  Minnesota Statutes 2016, section 297A.71, is amended by adding a subdivision to read:

 

Subd. 53.  Nonprofit snowmobile clubs.  Building materials and supplies used by a nonprofit snowmobile club to construct, reconstruct, or maintain or improve state or grant-in-aid snowmobile trails are exempt.  A nonprofit snowmobile club is eligible for the exemption under this subdivision if it received, in the current year or in the previous three-year period, a state grant-in-aid grant administered by the Department of Natural Resources by applying for the grant with a local unit of government sponsor.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.

 

Sec. 18.  Minnesota Statutes 2016, section 297A.71, is amended by adding a subdivision to read:

 

Subd. 54.  Medical facility in underserved area.  Materials and supplies used or consumed in, and equipment incorporated into, the construction or improvement of real property that has been granted an abatement of the state general tax under section 469.1817 are exempt.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.

 

Sec. 19.  Minnesota Statutes 2016, section 297A.71, is amended by adding a subdivision to read:

 

Subd. 55.  Properties destroyed by fire.  Building materials and supplies used in, and equipment incorporated into, the construction or replacement of real property affected by, and capital equipment to replace equipment destroyed in, the fire on March 11, 2018, in the city of Mazeppa are exempt.  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 297A.75.  For purposes of this subdivision, "capital equipment" includes durable equipment used in a restaurant for food storage, preparation, and serving.

 

EFFECTIVE DATE.  This section is effective retroactively for sales and purchases made after March 11, 2018, and before January 1, 2021.

 

Sec. 20.  Minnesota Statutes 2016, section 297A.71, is amended by adding a subdivision to read:

 

Subd. 56.  Former Duluth Central High School.  Materials and supplies used in and equipment incorporated into a private redevelopment project on the site of the former Duluth Central High School are exempt, provided the resulting development is subject to property taxes.  The tax must be imposed and collected as if the rate under section 297A.62 applied and then refunded in the manner provided in section 297A.75.  The commissioner must not pay more than $5,000,000 in refunds for purchases exempt under this section.  Refunds must be processed and issued in the order that complete and accurate applications are received by the commissioner.

 

EFFECTIVE DATE.  This section is effective retroactively for sales and purchases made after June 30, 2018, and before January 1, 2020.

 

Sec. 21.  Minnesota Statutes 2017 Supplement, section 297A.75, subdivision 1, is amended to read:

 

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) building materials for an agricultural processing facility exempt under section 297A.71, subdivision 13;

 

(2) building materials for mineral production facilities exempt under section 297A.71, subdivision 14;


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(3) building materials for correctional facilities under section 297A.71, subdivision 3;

 

(4) building materials used in a residence for disabled veterans exempt under section 297A.71, subdivision 11;

 

(5) elevators and building materials exempt under section 297A.71, subdivision 12;

 

(6) materials and supplies for qualified low-income housing under section 297A.71, subdivision 23;

 

(7) materials, supplies, and equipment for municipal electric utility facilities under section 297A.71, subdivision 35;

 

(8) equipment and materials used for the generation, transmission, and distribution of electrical energy and an aerial camera package exempt under section 297A.68, subdivision 37;

 

(9) commuter rail vehicle and repair parts under section 297A.70, subdivision 3, paragraph (a), clause (10);

 

(10) materials, supplies, and equipment for construction or improvement of projects and facilities under section 297A.71, subdivision 40;

 

(11) materials, supplies, and equipment for construction, improvement, or expansion of:

 

(i) an aerospace defense manufacturing facility exempt under Minnesota Statutes 2014, section 297A.71, subdivision 42;

 

(ii) a biopharmaceutical manufacturing facility exempt under section 297A.71, subdivision 45;

 

(iii) a research and development facility exempt under Minnesota Statutes 2014, section 297A.71, subdivision 46; and

 

(iv) an industrial measurement manufacturing and controls facility exempt under Minnesota Statutes 2014, section 297A.71, subdivision 47;

 

(12) enterprise information technology equipment and computer software for use in a qualified data center exempt under section 297A.68, subdivision 42;

 

(13) materials, supplies, and equipment for qualifying capital projects under section 297A.71, subdivision 44, paragraph (a), clause (1), and paragraph (b);

 

(14) items purchased for use in providing critical access dental services exempt under section 297A.70, subdivision 7, paragraph (c);

 

(15) items and services purchased under a business subsidy agreement for use or consumption primarily in greater Minnesota exempt under section 297A.68, subdivision 44;

 

(16) building materials, equipment, and supplies for constructing or replacing real property exempt under section 297A.71, subdivision subdivisions 49 and 55; and

 

(17) building materials, equipment, and supplies for constructing or replacing real property exempt under section 297A.71, subdivision 50, paragraph (b).;


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(18) materials, equipment, and supplies for a regional charitable food warehouse, distribution, and office facility exempt under section 297A.71, subdivision 52; and

 

(19) materials and supplies used in and equipment incorporated into a private redevelopment project exempt under section 297A.71, subdivision 56.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.

 

Sec. 22.  Minnesota Statutes 2017 Supplement, section 297A.75, subdivision 2, is amended to read:

 

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), (2), and (14), the applicant must be the purchaser;

 

(2) for subdivision 1, clause (3), the applicant must be the governmental subdivision;

 

(3) for subdivision 1, clause (4), the applicant must be the recipient of the benefits provided in United States Code, title 38, chapter 21;

 

(4) for subdivision 1, clause (5), the applicant must be the owner of the homestead property;

 

(5) for subdivision 1, clause (6), the owner of the qualified low-income housing project;

 

(6) for subdivision 1, clause (7), the applicant must be a municipal electric utility or a joint venture of municipal electric utilities;

 

(7) for subdivision 1, clauses (8), (11), (12), and (15), the owner of the qualifying business;

 

(8) for subdivision 1, clauses (9), (10), and (13), the applicant must be the governmental entity that owns or contracts for the project or facility; and

 

(9) for subdivision 1, clause (16), clauses (16) to (19), the applicant must be the owner or developer of the building or project; and.

 

(10) for subdivision 1, clause (17), the applicant must be the owner or developer of the building or project.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.

 

Sec. 23.  Minnesota Statutes 2017 Supplement, section 297A.75, subdivision 3, is amended to read:

 

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, clauses (3) to (13) or (15) to (17) (19), 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 sections 289A.40 and 289A.50 apply to refunds under this section.

 

(b) An applicant may not file more than two applications per calendar year for refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.

 

EFFECTIVE DATE.  This section is effective for sales and purchases made after June 30, 2018.


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Sec. 24.  Minnesota Statutes 2017 Supplement, section 297E.02, subdivision 3, is amended to read:

 

Subd. 3.  Collection; disposition.  (a) Taxes imposed by this section are due and payable to the commissioner when the gambling tax return is required to be filed.  Distributors must file their monthly sales figures with the commissioner on a form prescribed by the commissioner.  Returns covering the taxes imposed under this section must be filed with the commissioner on or before the 20th day of the month following the close of the previous calendar month.  The commissioner shall prescribe the content, format, and manner of returns or other documents pursuant to section 270C.30.  The proceeds, along with the revenue received from all license fees and other fees under sections 349.11 to 349.191, 349.211, and 349.213, must be paid to the commissioner of management and budget for deposit in the general fund.

 

(b) The sales tax imposed by chapter 297A on the sale of pull-tabs and tipboards by the distributor is imposed on the retail sales price.  The retail sale of pull-tabs or tipboards by the organization is exempt from taxes imposed by chapter 297A and is exempt from all local taxes and license fees except a fee authorized under section 349.16, subdivision 8.

 

(c) One-half of one percent of the revenue deposited in the general fund under paragraph (a), is appropriated to the commissioner of human services for the compulsive gambling treatment program established under section 245.98.  One-half of one percent of the revenue deposited in the general fund under paragraph (a), is appropriated to the commissioner of human services for a grant to the state affiliate recognized by the National Council on Problem Gambling to increase public awareness of problem gambling, education and training for individuals and organizations providing effective treatment services to problem gamblers and their families, and research relating to problem gambling.  Money appropriated by this paragraph must supplement and must not replace existing state funding for these programs.

 

EFFECTIVE DATE.  This section is effective July 1, 2018.

 

Sec. 25.  Laws 2017, First Special Session chapter 1, article 3, section 32, the effective date, is amended to read:

 

EFFECTIVE DATE.  Paragraph (a) is effective retroactively for sales and purchases made after September 30, 2016, and before January 1, 2019 2022.  Paragraph (b) is effective for sales and purchases made after September 30, 2016, and before July 1, 2017.

 

EFFECTIVE DATE.  This section is effective the day following final enactment.

 

Sec. 26.  MUNICIPALLY OWNED WATER TREATMENT FACILITY; CITY OF ELKO NEW MARKET.

 

Subdivision 1.  Exemption.  Materials and supplies used in and equipment incorporated into a water treatment facility owned and operated by the city of Elko New Market are exempt from taxation under Minnesota Statutes, chapter 297A, regardless of whether purchased by the city or a contractor, subcontractor, or builder.  All purchases for this facility must be made after June 1, 2014, and before June 1, 2016.

 

Subd. 2.  Refund.  The tax on purchases exempt under subdivision 1 must be imposed and collected as if the rate under Minnesota Statutes, section 297A.62, applied, and then refunded in the manner provided in Minnesota Statutes, section 297A.75.  The applicant must be the city of Elko New Market.  If sales tax has been paid on sales and purchases exempt under this section prior to the effective date of this section, the city of Elko New Market may apply directly to the commissioner of revenue for a refund.  The application must be in the form and manner required by the commissioner and provide sufficient information so the commissioner can verify the amount paid.  If the tax was paid by a contractor, subcontractor, or builder, 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.  Interest must be paid on the refund at the rate in Minnesota Statutes, section 270C.405, from 90 days after the refund claim is filed with the commissioner.


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Subd. 3.  Appropriation.  The amount required to make the refunds under this section is appropriated to the commissioner of revenue.

 

EFFECTIVE DATE.  This section is effective retroactively for purchases made after June 1, 2014, and before June 1, 2016.

 

Sec. 27.  SALES TAX RATE ADJUSTMENT IF TAX IS IMPOSED ON REMOTE SELLERS.

 

Subdivision 1.  Definitions.  (a) For purposes of this subdivision, the following terms have the meanings given.

 

(b) "Day the state begins enforcing a duty to collect and remit sales tax on retailers without a physical presence in this state, and marketplace providers under Minnesota Statutes, section 297A.66, subdivision 4," means the earliest of:

 

(i) the first day of a calendar quarter at least 60 days after a decision is made by the United States Supreme Court modifying its decision in Quill Corp. v. North Dakota, 504 U.S. 298 (1992) so that a state may require retailers without a physical presence in the state to collect and remit sales tax; or

 

(ii) the first day of a calendar quarter at least 60 days after a federal law​ is enacted authorizing a state to impose a requirement to collect and remit sales tax on​ retailers without a physical presence in the state.

 

Subd. 2.  Rate adjustment.  (a) The commissioner of revenue must make an adjustment to the sales tax rates in Minnesota Statutes, section 297A.62, subdivisions 1 and 1a, effective for the first day of the calendar quarter beginning 15 months after the day the state begins enforcing a duty to collect and remit sales tax on retailers without a physical presence in this state, and marketplace providers under Minnesota Statutes, section 297A.66, subdivision 4.  The adjustment must be equal to the reduction necessary to make the total collections under the sales tax revenue neutral as calculated in paragraph (b).

 

(b) The adjustment factor for each tax rate must be equal to the ratio by which:

 

(1) the revenues collected under Minnesota Statutes, chapter 297A, in the 12-month period immediately preceding the day the state begins enforcing a duty to collect and remit sales tax on retailers without a physical presence in this state, and marketplace providers under Minnesota Statutes, section 297A.66, subdivision 4, multiplied by the projected growth rate in sales tax revenues between the same 12-month period and the time period in clause (2), calculated from data used in preparing the February 2018 forecast; compared to

 

(2) the revenues collected under Minnesota Statutes, chapter 297A, in the 12-month period beginning on the day the state begins enforcing a duty to collect and remit sales tax on retailers without a physical presence in this state, and marketplace providers under Minnesota Statutes, section 297A.66, subdivision 4.  The ratio cannot be less than one.

 

(c) The adjusted rates must be rounded to the nearest one thousandth of one percent and are effective for the first calendar quarter at least 15 months after the day the state begins enforcing a duty to collect and remit sales tax on retailers without a physical presence in this state, and marketplace providers under Minnesota Statutes, section 297A.66, subdivision 4.  The commissioner of revenue must publish the new tax rates in the State Register at least 30 days prior to the rate change going into effect.

 

(d) After the commissioner of revenue publishes the new tax rates in the State Register, the revisor of statutes must update the tax rates in Minnesota Statutes, section 297A.62, subdivisions 1 and 1a, in the next edition of Minnesota Statutes.

 

EFFECTIVE DATE.  This section is effective the day following final enactment.


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ARTICLE 4

PROPERTY TAXES

 

Section 1.  Minnesota Statutes 2016, section 272.02, subdivision 49, is amended to read:

 

Subd. 49.  Agricultural historical society property.  Property is exempt from taxation if it is owned by a nonprofit charitable or educational organization that qualifies for exemption under section 501(c)(3) of the Internal Revenue Code and meets the following criteria:

 

(1) the property is primarily used for storing and exhibiting tools, equipment, and artifacts useful in providing an understanding of local or regional agricultural history.  Primary use is determined each year based on the number of days the property is used solely for storage and exhibition purposes;

 

(2) the property is limited to a maximum of 20 40 acres per owner per county, but includes the land and any taxable structures, fixtures, and equipment on the land;

 

(3) the property is not used for a revenue-producing activity for more than ten days in each calendar year; and

 

(4) the property is not used for residential purposes on either a temporary or permanent basis.

 

EFFECTIVE DATE.  This section is effective for assessments beginning in 2018.

 

Sec. 2.  Minnesota Statutes 2016, section 272.02, is amended by adding a subdivision to read:

 

Subd. 102.  Licensed child care facility.  Property used as a licensed child care facility that accepts families participating in the child care assistance program under chapter 119B, and that is owned and operated as part of their mission by a church organization that qualifies for tax exemption under section 272.02, subdivision 6, is exempt.  For the purposes of this subdivision, "licensed child care facility" means a child care center licensed under Minnesota Rules, chapter 9503, or a facility used to provide licensed family day care or group family day care as defined under Minnesota Rules, chapter 9502.

 

EFFECTIVE DATE.  This section is effective beginning with assessment year 2018, for taxes payable in 2019.

 

Sec. 3.  Minnesota Statutes 2016, section 273.124, subdivision 8, is amended to read:

 

Subd. 8.  Homestead owned by or leased to family farm corporation, joint farm venture, limited liability company, or partnership.  (a) Each family farm corporation; each joint family farm venture; and each limited liability company or partnership which operates a family farm; is entitled to class 1b under section 273.13, subdivision 22, paragraph (b), or class 2a assessment for one homestead occupied by a shareholder, member, or partner thereof who is residing on the land, and actively engaged in farming of the land owned by the family farm corporation, joint family farm venture, limited liability company, or partnership.  Homestead treatment applies even if:

 

(1) legal title to the property is in the name of the family farm corporation, joint family farm venture, limited liability company, or partnership, and not in the name of the person residing on it.; or

 

(2) the family farm is operated by a family farm corporation, joint family farm venture, partnership, or limited liability company other than the family farm corporation, joint family farm venture, partnership, or limited liability company that owns the land, provided that:


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(i) the shareholder, member, or partner of the family farm corporation, joint family farm venture, partnership, or limited liability company that owns the land and that is residing on and actively engaged in farming the land is a shareholder, member, or partner of the family farm corporation, joint family farm venture, partnership, or limited liability company that is operating the farm;

 

(ii) each shareholder, member, or partner of the family farm corporation, joint family farm venture, partnership, or limited liability company that is operating the farm is also a shareholder, member, or partner of the family farm corporation, joint family farm venture, partnership, or limited liability company that owns the land; and

 

(iii) a majority of the shareholders, members, or partners of each family farm corporation, joint family farm venture, partnership, or limited liability company are persons or spouses of persons who are related to each other within the second degree of kindred according to the rules of civil law.

 

"Family farm corporation," "family farm," and "partnership operating a family farm" have the meanings given in section 500.24, except that the number of allowable shareholders, members, or partners under this subdivision shall not exceed 12.  "Limited liability company" has the meaning contained in sections 322B.03, subdivision 28, or 322C.0102, subdivision 12, and 500.24, subdivision 2, paragraphs (l) and (m).  "Joint family farm venture" means a cooperative agreement among two or more farm enterprises authorized to operate a family farm under section 500.24.

 

(b) In addition to property specified in paragraph (a), any other residences owned by family farm corporations, joint family farm ventures, limited liability companies, or partnerships described in paragraph (a) which are located on agricultural land and occupied as homesteads by its shareholders, members, or partners who are actively engaged in farming on behalf of that corporation, joint farm venture, limited liability company, or partnership must also be assessed as class 2a property or as class 1b property under section 273.13.

 

(c) Agricultural property that is owned by a member, partner, or shareholder of a family farm corporation or joint family farm venture, limited liability company operating a family farm, or by a partnership operating a family farm and leased to the family farm corporation, limited liability company, partnership, or joint farm venture, as defined in paragraph (a), is eligible for classification as class 1b or class 2a under section 273.13, if the owner is actually residing on the property, and is actually engaged in farming the land on behalf of that corporation, joint farm venture, limited liability company, or partnership.  This paragraph applies without regard to any legal possession rights of the family farm corporation, joint family farm venture, limited liability company, or partnership under the lease.

 

(d) Nonhomestead agricultural property that is owned by a family farm corporation, joint farm venture, limited liability company, or partnership; and located not farther than four townships or cities, or combination thereof, from agricultural land that is owned, and used for the purposes of a homestead by an individual who is a shareholder, member, or partner of the corporation, venture, company, or partnership; is entitled to receive the first tier homestead classification rate on any remaining market value in the first homestead class tier that is in excess of the market value of the shareholder's, member's, or partner's class 2 agricultural homestead property, if the owner, or someone acting on the owner's behalf notifies the county assessor by July 1 that the property may be eligible under this paragraph for the current assessment year, for taxes payable in the following year.  As used in this paragraph, "agricultural property" means property classified as 2a under section 273.13, along with any contiguous property classified as 2b under section 273.13, if the contiguous 2a and 2b properties are under the same ownership.

 

EFFECTIVE DATE.  This section is effective for assessments beginning in 2018.


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Sec. 4.  Minnesota Statutes 2016, section 273.124, subdivision 14, is amended to read:

 

Subd. 14.  Agricultural homesteads; special provisions.  (a) Real estate of less than ten acres that is the homestead of its owner must be classified as class 2a under section 273.13, subdivision 23, paragraph (a), if:

 

(1) the parcel on which the house is located is contiguous on at least two sides to (i) agricultural land, (ii) land owned or administered by the United States Fish and Wildlife Service, or (iii) land administered by the Department of Natural Resources on which in lieu taxes are paid under sections 477A.11 to 477A.14;

 

(2) its owner also owns a noncontiguous parcel of agricultural land that is at least 20 acres;

 

(3) the noncontiguous land is located not farther than four townships or cities, or a combination of townships or cities from the homestead; and

 

(4) the agricultural use value of the noncontiguous land and farm buildings is equal to at least 50 percent of the market value of the house, garage, and one acre of land.

 

Homesteads initially classified as class 2a under the provisions of this paragraph shall remain classified as class 2a, irrespective of subsequent changes in the use of adjoining properties, as long as the homestead remains under the same ownership, the owner owns a noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use value qualifies under clause (4).  Homestead classification under this paragraph is limited to property that qualified under this paragraph for the 1998 assessment.

 

(b)(i) Agricultural property shall be classified as the owner's homestead, to the same extent as other agricultural homestead property, if all of the following criteria are met:

 

(1) the agricultural property consists of at least 40 acres including undivided government lots and correctional 40's;

 

(2) the owner, the owner's spouse, or a grandchild, child, sibling, or parent of the owner or of the owner's spouse, is actively farming the agricultural property, either on the person's own behalf as an individual or on behalf of a partnership operating a family farm, family farm corporation, joint family farm venture, or limited liability company of which the person is a partner, shareholder, or member;

 

(3) both the owner of the agricultural property and the person who is actively farming the agricultural property under clause (2), are Minnesota residents;

 

(4) neither the owner nor the spouse of the owner claims another agricultural homestead in Minnesota; and

 

(5) neither the owner nor the person actively farming the agricultural property lives farther than four townships or cities, or a combination of four townships or cities, from the agricultural property, except that if the owner or the owner's spouse is required to live in employer-provided housing, the owner or owner's spouse, whichever is actively farming the agricultural property, may live more than four townships or cities, or combination of four townships or cities from the agricultural property.

 

The relationship under this paragraph may be either by blood or marriage.

 

(ii) Agricultural property held by a trustee under a trust is eligible for agricultural homestead classification under this paragraph if the qualifications in clause (i) are met, except that "owner" means the grantor of the trust.


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(iii) Property containing the residence of an owner who owns qualified property under clause (i) shall be classified as part of the owner's agricultural homestead, if that property is also used for noncommercial storage or drying of agricultural crops.

 

(iv) (iii) As used in this paragraph, "agricultural property" means class 2a property and any class 2b property that is contiguous to and under the same ownership as the class 2a property.

 

(c) Noncontiguous land shall be included as part of a homestead under section 273.13, subdivision 23, paragraph (a), only if the homestead is classified as class 2a and the detached land is located in the same township or city, or not farther than four townships or cities or combination thereof from the homestead.  Any taxpayer of these noncontiguous lands must notify the county assessor that the noncontiguous land is part of the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer must also notify the assessor of the other county.

 

(d) Agricultural land used for purposes of a homestead and actively farmed by a person holding a vested remainder interest in it must be classified as a homestead under section 273.13, subdivision 23, paragraph (a).  If agricultural land is classified class 2a, any other dwellings on the land used for purposes of a homestead by persons holding vested remainder interests who are actively engaged in farming the property, and up to one acre of the land surrounding each homestead and reasonably necessary for the use of the dwelling as a home, must also be assessed class 2a.

 

(e) Agricultural land and buildings that were class 2a homestead property under section 273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain classified as agricultural homesteads for subsequent assessments if:

 

(1) the property owner abandoned the homestead dwelling located on the agricultural homestead as a result of the April 1997 floods;

 

(2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman, or Wilkin;

 

(3) the agricultural land and buildings remain under the same ownership for the current assessment year as existed for the 1997 assessment year and continue to be used for agricultural purposes;

 

(4) the dwelling occupied by the owner is located in Minnesota and is within 30 miles of one of the parcels of agricultural land that is owned by the taxpayer; and

 

(5) the owner notifies the county assessor that the relocation was due to the 1997 floods, and the owner furnishes the assessor any information deemed necessary by the assessor in verifying the change in dwelling.  Further notifications to the assessor are not required if the property continues to meet all the requirements in this paragraph and any dwellings on the agricultural land remain uninhabited.

 

(f) Agricultural land and buildings that were class 2a homestead property under section 273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain classified agricultural homesteads for subsequent assessments if:

 

(1) the property owner abandoned the homestead dwelling located on the agricultural homestead as a result of damage caused by a March 29, 1998, tornado;

 

(2) the property is located in the county of Blue Earth, Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice;

 

(3) the agricultural land and buildings remain under the same ownership for the current assessment year as existed for the 1998 assessment year;


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(4) the dwelling occupied by the owner is located in this state and is within 50 miles of one of the parcels of agricultural land that is owned by the taxpayer; and

 

(5) the owner notifies the county assessor that the relocation was due to a March 29, 1998, tornado, and the owner furnishes the assessor any information deemed necessary by the assessor in verifying the change in homestead dwelling.  For taxes payable in 1999, the owner must notify the assessor by December 1, 1998.  Further notifications to the assessor are not required if the property continues to meet all the requirements in this paragraph and any dwellings on the agricultural land remain uninhabited.

 

(g) Agricultural property of a family farm corporation, joint family farm venture, family farm limited liability company, or partnership operating a family farm as described under subdivision 8 shall be classified homestead, to the same extent as other agricultural homestead property, if all of the following criteria are met:

 

(1) the property consists of at least 40 acres including undivided government lots and correctional 40's;

 

(2) a shareholder, member, or partner of that entity is actively farming the agricultural property;

 

(3) that shareholder, member, or partner who is actively farming the agricultural property is a Minnesota resident;

 

(4) neither that shareholder, member, or partner, nor the spouse of that shareholder, member, or partner claims another agricultural homestead in Minnesota; and

 

(5) that shareholder, member, or partner does not live farther than four townships or cities, or a combination of four townships or cities, from the agricultural property.

 

Homestead treatment applies under this paragraph even if:

 

(i) the shareholder, member, or partner of that entity is actively farming the agricultural property on the shareholder's, member's, or partner's own behalf; or

 

(ii) the family farm is operated by a family farm corporation, joint family farm venture, partnership, or limited liability company other than the family farm corporation, joint family farm venture, partnership, or limited liability company that owns the land, provided that:

 

(A) the shareholder, member, or partner of the family farm corporation, joint family farm venture, partnership, or limited liability company that owns the land that is actively farming the land is a shareholder, member, or partner of the family farm corporation, joint family farm venture, partnership, or limited liability company that is operating the farm;

 

(B) each shareholder, member, or partner of the family farm corporation, joint family farm venture, partnership, or limited liability company that is operating the farm is also a shareholder, member, or partner of the family farm corporation, joint family farm venture, partnership, or limited liability company that owns the land; and

 

(C) a majority of the shareholders, members, or partners of each family farm corporation, joint family farm venture, partnership, or limited liability company are persons or spouses of persons who are related to each other within the second degree of kindred according to the rules of civil law.

 

Homestead treatment applies under this paragraph for property leased to a family farm corporation, joint farm venture, limited liability company, or partnership operating a family farm if legal title to the property is in the name of an individual who is a member, shareholder, or partner in the entity.


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(h) To be eligible for the special agricultural homestead under this subdivision, an initial full application must be submitted to the county assessor where the property is located.  Owners and the persons who are actively farming the property shall be required to complete only a one-page abbreviated version of the application in each subsequent year provided that none of the following items have changed since the initial application:

 

(1) the day-to-day operation, administration, and financial risks remain the same;

 

(2) the owners and the persons actively farming the property continue to live within the four townships or city criteria and are Minnesota residents;

 

(3) the same operator of the agricultural property is listed with the Farm Service Agency;

 

(4) a Schedule F or equivalent income tax form was filed for the most recent year;

 

(5) the property's acreage is unchanged; and

 

(6) none of the property's acres have been enrolled in a federal or state farm program since the initial application.

 

The owners and any persons who are actively farming the property must include the appropriate Social Security numbers, and sign and date the application.  If any of the specified information has changed since the full application was filed, the owner must notify the assessor, and must complete a new application to determine if the property continues to qualify for the special agricultural homestead.  The commissioner of revenue shall prepare a standard reapplication form for use by the assessors.

 

(i) Agricultural land and buildings that were class 2a homestead property under section 273.13, subdivision 23, paragraph (a), for the 2007 assessment shall remain classified agricultural homesteads for subsequent assessments if:

 

(1) the property owner abandoned the homestead dwelling located on the agricultural homestead as a result of damage caused by the August 2007 floods;

 

(2) the property is located in the county of Dodge, Fillmore, Houston, Olmsted, Steele, Wabasha, or Winona;

 

(3) the agricultural land and buildings remain under the same ownership for the current assessment year as existed for the 2007 assessment year;

 

(4) the dwelling occupied by the owner is located in this state and is within 50 miles of one of the parcels of agricultural land that is owned by the taxpayer; and

 

(5) the owner notifies the county assessor that the relocation was due to the August 2007 floods, and the owner furnishes the assessor any information deemed necessary by the assessor in verifying the change in homestead dwelling.  For taxes payable in 2009, the owner must notify the assessor by December 1, 2008.  Further notifications to the assessor are not required if the property continues to meet all the requirements in this paragraph and any dwellings on the agricultural land remain uninhabited.

 

(j) Agricultural land and buildings that were class 2a homestead property under section 273.13, subdivision 23, paragraph (a), for the 2008 assessment shall remain classified as agricultural homesteads for subsequent assessments if:

 

(1) the property owner abandoned the homestead dwelling located on the agricultural homestead as a result of the March 2009 floods;

 

(2) the property is located in the county of Marshall;


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(3) the agricultural land and buildings remain under the same ownership for the current assessment year as existed for the 2008 assessment year and continue to be used for agricultural purposes;

 

(4) the dwelling occupied by the owner is located in Minnesota and is within 50 miles of one of the parcels of agricultural land that is owned by the taxpayer; and

 

(5) the owner notifies the county assessor that the relocation was due to the 2009 floods, and the owner furnishes the assessor any information deemed necessary by the assessor in verifying the change in dwelling.  Further notifications to the assessor are not required if the property continues to meet all the requirements in this paragraph and any dwellings on the agricultural land remain uninhabited.

 

EFFECTIVE DATE.  This section is effective beginning for property taxes payable in 2019.

 

Sec. 5.  Minnesota Statutes 2016, section 273.124, subdivision 21, is amended to read:

 

Subd. 21.  Trust property; homestead.  Real or personal property, including agricultural property, held by a trustee under a trust is eligible for classification as homestead property if the property satisfies the requirements of paragraph (a), (b), (c), or (d), or (e).

 

(a) The grantor or surviving spouse of the grantor of the trust occupies and uses the property as a homestead.

 

(b) A relative or surviving relative of the grantor who meets the requirements of subdivision 1, paragraph (c), in the case of residential real estate; or subdivision 1, paragraph (d), in the case of agricultural property, occupies and uses the property as a homestead.

 

(c) A family farm corporation, joint farm venture, limited liability company, or partnership operating a family farm in which the grantor or the grantor's surviving spouse is a shareholder, member, or partner rents the property; and, either (1) a shareholder, member, or partner of the corporation, joint farm venture, limited liability company, or partnership occupies and uses the property as a homestead; or (2) the property is at least 40 acres, including undivided government lots and correctional 40's, and a shareholder, member, or partner of the tenant-entity is actively farming the property on behalf of the corporation, joint farm venture, limited liability company, or partnership.

 

(d) A person who has received homestead classification for property taxes payable in 2000 on the basis of an unqualified legal right under the terms of the trust agreement to occupy the property as that person's homestead and who continues to use the property as a homestead; or, a person who received the homestead classification for taxes payable in 2005 under paragraph (c) who does not qualify under paragraph (c) for taxes payable in 2006 or thereafter but who continues to qualify under paragraph (c) as it existed for taxes payable in 2005.

 

(e) The qualifications under subdivision 14, paragraph (b), clause (i), are met.  For purposes of this paragraph, "owner" means the grantor of the trust or the surviving spouse of the grantor.

 

(f) For purposes of this subdivision, the following terms have the meanings given them:

 

(1) "agricultural property" means the house, garage, other farm buildings and structures, and agricultural land;

 

(2) "agricultural land" has the meaning given in section 273.13, subdivision 23, except that the phrases "owned by same person" or "under the same ownership" as used in that subdivision mean and include contiguous tax parcels owned by:


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(i) an individual and a trust of which the individual, the individual's spouse, or the individual's deceased spouse is the grantor; or

 

(ii) different trusts of which the grantors of each trust are any combination of an individual, the individual's spouse, or the individual's deceased spouse; and

 

For purposes of this subdivision, (3) "grantor" is defined as means the person creating or establishing a testamentary, inter Vivos, revocable or irrevocable trust by written instrument or through the exercise of a power of appointment.

 

(g) Noncontiguous land is included as part of a homestead under this subdivision, only if the homestead is classified as class 2a, as defined in section 273.13, subdivision 23, and the detached land is located in the same township or city, or not farther than four townships or cities or combination thereof from the homestead.  Any taxpayer of these noncontiguous lands must notify the county assessor by December 15 for taxes payable in the following year that the noncontiguous land is part of the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer must also notify the assessor of the other county.

 

EFFECTIVE DATE.  This section is effective beginning for property taxes payable in 2019.

 

Sec. 6.  Minnesota Statutes 2016, section 273.124, is amended by adding a subdivision to read:

 

Subd. 23.  Fractional homesteads.  In the case of property that is classified as part homestead and part nonhomestead solely because not all the owners occupy or farm the property, not all the owners have qualifying relatives occupying or farming the property, or not all the spouses of owners occupy the property, the portions of property classified as part homestead and part nonhomestead must correspond to the ownership percentages that each owner has in the property, as determined by the land records in the county recorder's office or registrar of titles.  If the ownership percentages of each owner cannot be determined by reference to the land records, the portions of property classified as part homestead and part nonhomestead must correspond to the ownership percentages each owner would have if they each owned an equal share of the property.

 

EFFECTIVE DATE.  This section is effective for assessments beginning in 2018.

 

Sec. 7.  Minnesota Statutes 2017 Supplement, section 273.13, subdivision 22, is amended to read:

 

Subd. 22.  Class 1.  (a) Except as provided in subdivision 23 and in paragraphs (b) and (c), real estate which is residential and used for homestead purposes is class 1a.  In the case of a duplex or triplex in which one of the units is used for homestead purposes, the entire property is deemed to be used for homestead purposes.  The market value of class 1a property must be determined based upon the value of the house, garage, and land.

 

The first $500,000 of market value of class 1a property has a net classification rate of one percent of its market value; and the market value of class 1a property that exceeds $500,000 has a classification rate of 1.25 percent of its market value.

 

(b) Class 1b property includes homestead real estate or homestead manufactured homes used for the purposes of a homestead by:

 

(1) any person who is blind as defined in section 256D.35, or the blind person and the blind person's spouse;

 

(2) any person who is permanently and totally disabled or by the disabled person and the disabled person's spouse; or


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(3) the surviving spouse of a permanently and totally disabled veteran homesteading a property classified under this paragraph for taxes payable in 2008.

 

Property is classified and assessed under clause (2) only if the government agency or income-providing source certifies, upon the request of the homestead occupant, that the homestead occupant satisfies the disability requirements of this paragraph, and that the property is not eligible for the valuation exclusion under subdivision 34.

 

Property is classified and assessed under paragraph (b) only if the commissioner of revenue or the county assessor certifies that the homestead occupant satisfies the requirements of this paragraph.

 

Permanently and totally disabled for the purpose of this subdivision means a condition which is permanent in nature and totally incapacitates the person from working at an occupation which brings the person an income.  The first $50,000 market value of class 1b property has a net classification rate of .45 percent of its market value.  The remaining market value of class 1b property is classified as class 1a or class 2a property, whichever is appropriate.

 

(c) Class 1c property is commercial use real and personal property that abuts public water as defined in section 103G.005, subdivision 15, or abuts a state trail administered by the Department of Natural Resources, and is devoted to temporary and seasonal residential occupancy for recreational purposes but not devoted to commercial purposes for more than 250 days in the year preceding the year of assessment, and that includes a portion used as a homestead by the owner, which includes a dwelling occupied as a homestead by a shareholder of a corporation that owns the resort, a partner in a partnership that owns the resort, or a member of a limited liability company that owns the resort even if, whether the title to the homestead is held by the corporation, partnership, or limited liability company, or by a shareholder of a corporation that owns the resort, a partner in a partnership that owns the resort, or a member of a limited liability company that owns the resort.  For purposes of this paragraph, property is devoted to a commercial purpose on a specific day if any portion of the property, excluding the portion used exclusively as a homestead, is used for residential occupancy and a fee is charged for residential occupancy.  Class 1c property must contain three or more rental units.  A "rental unit" is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site equipped with water and electrical hookups for recreational vehicles.  Class 1c property must provide recreational activities such as the rental of ice fishing houses, boats and motors, snowmobiles, downhill or cross‑country ski equipment; provide marina services, launch services, or guide services; or sell bait and fishing tackle.  Any unit in which the right to use the property is transferred to an individual or entity by deeded interest, or the sale of shares or stock, no longer qualifies for class 1c even though it may remain available for rent.  A camping pad offered for rent by a property that otherwise qualifies for class 1c is also class 1c, regardless of the term of the rental agreement, as long as the use of the camping pad does not exceed 250 days.  If the same owner owns two separate parcels that are located in the same township, and one of those properties is classified as a class 1c property and the other would be eligible to be classified as a class 1c property if it was used as the homestead of the owner, both properties will be assessed as a single class 1c property; for purposes of this sentence, properties are deemed to be owned by the same owner if each of them is owned by a limited liability company, and both limited liability companies have the same membership.  The portion of the property used as a homestead is class 1a property under paragraph (a).  The remainder of the property is classified as follows:  the first $600,000 of market value is tier I, the next $1,700,000 of market value is tier II, and any remaining market value is tier III.  The classification rates for class 1c are:  tier I, 0.50 percent; tier II, 1.0 percent; and tier III, 1.25 percent.  Owners of real and personal property devoted to temporary and seasonal residential occupancy for recreation purposes in which all or a portion of the property was devoted to commercial purposes for not more than 250 days in the year preceding the year of assessment desiring classification as class 1c, must submit a declaration to the assessor designating the cabins or units occupied for 250 days or less in the year preceding the year of assessment by January 15 of the assessment year.  Those cabins or units and a proportionate share of the land on which they are located must be designated as class 1c as otherwise provided.  The remainder of the cabins or units and a proportionate share of the land on which they are located must be designated as class 3a commercial.  The owner of property desiring designation as class 1c property must provide guest registers or other records demonstrating that the units for which class 1c designation is sought were not occupied for more than 250 days in the year preceding the assessment if so requested.  The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility operated on a commercial basis not directly related to temporary and seasonal residential occupancy for recreation purposes does not qualify for class 1c.

 

(d) Class 1d property includes structures that meet all of the following criteria:


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(1) the structure is located on property that is classified as agricultural property under section 273.13, subdivision 23;

 

(2) the structure is occupied exclusively by seasonal farm workers during the time when they work on that farm, and the occupants are not charged rent for the privilege of occupying the property, provided that use of the structure for storage of farm equipment and produce does not disqualify the property from classification under this paragraph;

 

(3) the structure meets all applicable health and safety requirements for the appropriate season; and

 

(4) the structure is not salable as residential property because it does not comply with local ordinances relating to location in relation to streets or roads.

 

The market value of class 1d property has the same classification rates as class 1a property under paragraph (a).

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2019.

 

Sec. 8.  Minnesota Statutes 2017 Supplement, section 273.13, subdivision 23, is amended to read:

 

Subd. 23.  Class 2.  (a) An agricultural homestead consists of class 2a agricultural land that is homesteaded, along with any class 2b rural vacant land that is contiguous to the class 2a land under the same ownership.  The market value of the house and garage and immediately surrounding one acre of land has the same classification rates as class 1a or 1b property under subdivision 22.  The value of the remaining land including improvements up to the first tier valuation limit of agricultural homestead property has a classification rate of 0.5 percent of market value.  The remaining property over the first tier has a classification rate of one percent of market value.  For purposes of this subdivision, the "first tier valuation limit of agricultural homestead property" and "first tier" means the limit certified under section 273.11, subdivision 23.

 

(b) Class 2a agricultural land consists of parcels of property, or portions thereof, that are agricultural land and buildings.  Class 2a property has a classification rate of one percent of market value, unless it is part of an agricultural homestead under paragraph (a).  Class 2a property must also include any property that would otherwise be classified as 2b, but is interspersed with class 2a property, including but not limited to sloughs, wooded wind shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback requirement, and other similar land that is impractical for the assessor to value separately from the rest of the property or that is unlikely to be able to be sold separately from the rest of the property.

 

An assessor may classify the part of a parcel described in this subdivision that is used for agricultural purposes as class 2a and the remainder in the class appropriate to its use.

 

(c) Class 2b rural vacant land consists of parcels of property, or portions thereof, that are unplatted real estate, rural in character and not used for agricultural purposes, including land used for growing trees for timber, lumber, and wood and wood products, that is not improved with a structure.  The presence of a minor, ancillary nonresidential structure as defined by the commissioner of revenue does not disqualify the property from classification under this paragraph.  Any parcel of 20 acres or more improved with a structure that is not a minor, ancillary nonresidential structure must be split-classified, and ten acres must be assigned to the split parcel containing the structure.  Class 2b property has a classification rate of one percent of market value unless it is part of an agricultural homestead under paragraph (a), or qualifies as class 2c under paragraph (d).

 

(d) Class 2c managed forest land consists of no less than 20 and no more than 1,920 acres statewide per taxpayer that is being managed under a forest management plan that meets the requirements of chapter 290C, but is not enrolled in the sustainable forest resource management incentive program.  It has a classification rate of .65 percent, provided that the owner of the property must apply to the assessor in order for the property to initially qualify for the reduced rate and provide the information required by the assessor to verify that the property qualifies for the reduced


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rate.  If the assessor receives the application and information before May 1 in an assessment year, the property qualifies beginning with that assessment year.  If the assessor receives the application and information after April 30 in an assessment year, the property may not qualify until the next assessment year.  The commissioner of natural resources must concur that the land is qualified.  The commissioner of natural resources shall annually provide county assessors verification information on a timely basis.  The presence of a minor, ancillary nonresidential structure as defined by the commissioner of revenue does not disqualify the property from classification under this paragraph.

 

(e) Agricultural land as used in this section means:

 

(1) contiguous acreage of ten acres or more, used during the preceding year for agricultural purposes; or

 

(2) contiguous acreage used during the preceding year for an intensive livestock or poultry confinement operation, provided that land used only for pasturing or grazing does not qualify under this clause.

 

"Agricultural purposes" as used in this section means the raising, cultivation, drying, or storage of agricultural products for sale, or the storage of machinery or equipment used in support of agricultural production by the same farm entity.  For a property to be classified as agricultural based only on the drying or storage of agricultural products, the products being dried or stored must have been produced by the same farm entity as the entity operating the drying or storage facility.  "Agricultural purposes" also includes (i) enrollment in a local conservation program or the Reinvest in Minnesota program under sections 103F.501 to 103F.535 or the federal Conservation Reserve Program as contained in Public Law 99-198 or a similar state or federal conservation program if the property was classified as agricultural (i) (A) under this subdivision for taxes payable in 2003 because of its enrollment in a qualifying program and the land remains enrolled or (ii) (B) in the year prior to its enrollment, or (ii) use of land, not to exceed the greater of three acres or ten percent of the total land area, to provide environmental benefits such as buffer strips, old growth forest restoration or retention, or retention ponds to prevent soil erosion.  For purposes of this section, a "local conservation program" means a program administered by a town, statutory or home rule charter city, or county, including a watershed district, water management organization, or soil and water conservation district, in which landowners voluntarily enroll land and receive incentive payments equal to at least $50 per acre in exchange for use or other restrictions placed on the land.  In order for property to qualify under the local conservation program provision, a taxpayer must apply to the assessor by February 1 of the assessment year and must submit the information required by the assessor, including but not limited to a copy of the program requirements, the specific agreement between the land owner and the local agency, if applicable, and a map of the conservation area.  Agricultural classification shall not be based upon the market value of any residential structures on the parcel or contiguous parcels under the same ownership.

 

"Agricultural purposes" also includes land consisting of a holding pond designed to prevent runoff onto a divided four-lane expressway that is located at least 150 feet above the expressway, as certified by the local soil and water conservation district in accordance with USDA Field Office Technical Guide conservation practice standards, provided that the land is located outside the metropolitan area as defined in section 473.121, and was classified as agricultural in assessment year 2017.

 

"Contiguous acreage," for purposes of this paragraph, means all of, or a contiguous portion of, a tax parcel as described in section 272.193, or all of, or a contiguous portion of, a set of contiguous tax parcels under that section that are owned by the same person.

 

(f) Agricultural land under this section also includes:

 

(1) contiguous acreage that is less than ten acres in size and exclusively used in the preceding year for raising or cultivating agricultural products; or


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(2) contiguous acreage that contains a residence and is less than 11 acres in size, if the contiguous acreage exclusive of the house, garage, and surrounding one acre of land was used in the preceding year for one or more of the following three uses:

 

(i) for an intensive grain drying or storage operation, or for intensive machinery or equipment storage activities used to support agricultural activities on other parcels of property operated by the same farming entity;

 

(ii) as a nursery, provided that only those acres used intensively to produce nursery stock are considered agricultural land; or

 

(iii) for intensive market farming; for purposes of this paragraph, "market farming" means the cultivation of one or more fruits or vegetables or production of animal or other agricultural products for sale to local markets by the farmer or an organization with which the farmer is affiliated.

 

"Contiguous acreage," for purposes of this paragraph, means all of a tax parcel as described in section 272.193, or all of a set of contiguous tax parcels under that section that are owned by the same person.

 

(g) Land shall be classified as agricultural even if all or a portion of the agricultural use of that property is the leasing to, or use by another person for agricultural purposes.

 

Classification under this subdivision is not determinative for qualifying under section 273.111.

 

(h) The property classification under this section supersedes, for property tax purposes only, any locally administered agricultural policies or land use restrictions that define minimum or maximum farm acreage.

 

(i) The term "agricultural products" as used in this subdivision includes production for sale of:

 

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, bees, and apiary products by the owner;

 

(2) aquacultural products for sale and consumption, as defined under section 17.47, if the aquaculture occurs on land zoned for agricultural use;

 

(3) the commercial boarding of horses, which may include related horse training and riding instruction, if the boarding is done on property that is also used for raising pasture to graze horses or raising or cultivating other agricultural products as defined in clause (1);

 

(4) property which is owned and operated by nonprofit organizations used for equestrian activities, excluding racing;

 

(5) game birds and waterfowl bred and raised (i) on a game farm licensed under section 97A.105, provided that the annual licensing report to the Department of Natural Resources, which must be submitted annually by March 30 to the assessor, indicates that at least 500 birds were raised or used for breeding stock on the property during the preceding year and that the owner provides a copy of the owner's most recent schedule F; or (ii) for use on a shooting preserve licensed under section 97A.115;

 

(6) insects primarily bred to be used as food for animals;

 

(7) trees, grown for sale as a crop, including short rotation woody crops, and not sold for timber, lumber, wood, or wood products; and


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(8) maple syrup taken from trees grown by a person licensed by the Minnesota Department of Agriculture under chapter 28A as a food processor.

 

(j) If a parcel used for agricultural purposes is also used for commercial or industrial purposes, including but not limited to:

 

(1) wholesale and retail sales;

 

(2) processing of raw agricultural products or other goods;

 

(3) warehousing or storage of processed goods; and

 

(4) office facilities for the support of the activities enumerated in clauses (1), (2), and (3),

 

the assessor shall classify the part of the parcel used for agricultural purposes as class 1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its use.  The grading, sorting, and packaging of raw agricultural products for first sale is considered an agricultural purpose.  A greenhouse or other building where horticultural or nursery products are grown that is also used for the conduct of retail sales must be classified as agricultural if it is primarily used for the growing of horticultural or nursery products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of those products.  Use of a greenhouse or building only for the display of already grown horticultural or nursery products does not qualify as an agricultural purpose.

 

(k) The assessor shall determine and list separately on the records the market value of the homestead dwelling and the one acre of land on which that dwelling is located.  If any farm buildings or structures are located on this homesteaded acre of land, their market value shall not be included in this separate determination.

 

(l) Class 2d airport landing area consists of a landing area or public access area of a privately owned public use airport.  It has a classification rate of one percent of market value.  To qualify for classification under this paragraph, a privately owned public use airport must be licensed as a public airport under section 360.018.  For purposes of this paragraph, "landing area" means that part of a privately owned public use airport properly cleared, regularly maintained, and made available to the public for use by aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing or navigational aids.  A landing area also includes land underlying both the primary surface and the approach surfaces that comply with all of the following:

 

(i) the land is properly cleared and regularly maintained for the primary purposes of the landing, taking off, and taxiing of aircraft; but that portion of the land that contains facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;

 

(ii) the land is part of the airport property; and

 

(iii) the land is not used for commercial or residential purposes.

 

The land contained in a landing area under this paragraph must be described and certified by the commissioner of transportation.  The certification is effective until it is modified, or until the airport or landing area no longer meets the requirements of this paragraph.  For purposes of this paragraph, "public access area" means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival and departure building in connection with the airport.

 

(m) Class 2e consists of land with a commercial aggregate deposit that is not actively being mined and is not otherwise classified as class 2a or 2b, provided that the land is not located in a county that has elected to opt-out of the aggregate preservation program as provided in section 273.1115, subdivision 6.  It has a classification rate of


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one percent of market value.  To qualify for classification under this paragraph, the property must be at least ten contiguous acres in size and the owner of the property must record with the county recorder of the county in which the property is located an affidavit containing:

 

(1) a legal description of the property;

 

(2) a disclosure that the property contains a commercial aggregate deposit that is not actively being mined but is present on the entire parcel enrolled;

 

(3) documentation that the conditional use under the county or local zoning ordinance of this property is for mining; and

 

(4) documentation that a permit has been issued by the local unit of government or the mining activity is allowed under local ordinance.  The disclosure must include a statement from a registered professional geologist, engineer, or soil scientist delineating the deposit and certifying that it is a commercial aggregate deposit.

 

For purposes of this section and section 273.1115, "commercial aggregate deposit" means a deposit that will yield crushed stone or sand and gravel that is suitable for use as a construction aggregate; and "actively mined" means the removal of top soil and overburden in preparation for excavation or excavation of a commercial deposit.

 

(n) When any portion of the property under this subdivision or subdivision 22 begins to be actively mined, the owner must file a supplemental affidavit within 60 days from the day any aggregate is removed stating the number of acres of the property that is actively being mined.  The acres actively being mined must be (1) valued and classified under subdivision 24 in the next subsequent assessment year, and (2) removed from the aggregate resource preservation property tax program under section 273.1115, if the land was enrolled in that program.  Copies of the original affidavit and all supplemental affidavits must be filed with the county assessor, the local zoning administrator, and the Department of Natural Resources, Division of Land and Minerals.  A supplemental affidavit must be filed each time a subsequent portion of the property is actively mined, provided that the minimum acreage change is five acres, even if the actual mining activity constitutes less than five acres.

 

(o) The definitions prescribed by the commissioner under paragraphs (c) and (d) are not rules and are exempt from the rulemaking provisions of chapter 14, and the provisions in section 14.386 concerning exempt rules do not apply.

 

EFFECTIVE DATE.  This section is effective for assessment year 2018 and thereafter.

 

Sec. 9.  Minnesota Statutes 2017 Supplement, section 273.13, subdivision 25, is amended to read:

 

Subd. 25.  Class 4.  (a) Class 4a is residential real estate containing four or more units and used or held for use by the owner or by the tenants or lessees of the owner as a residence for rental periods of 30 days or more, excluding property qualifying for class 4d.  Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other than hospitals exempt under section 272.02, and contiguous property used for hospital purposes, without regard to whether the property has been platted or subdivided.  The market value of class 4a property has a classification rate of 1.25 percent.

 

(b) Class 4b includes:

 

(1) residential real estate containing less than four units that does not qualify as class 4bb, other than seasonal residential recreational property;

 

(2) manufactured homes not classified under any other provision;


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(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead farm classified under subdivision 23, paragraph (b) containing two or three units; and

 

(4) unimproved property that is classified residential as determined under subdivision 33.

 

The market value of class 4b property has a classification rate of 1.25 percent.

 

(c) Class 4bb includes:

 

(1) nonhomestead residential real estate containing one unit, other than seasonal residential recreational property;

 

(2) a single family dwelling, garage, and surrounding one acre of property on a nonhomestead farm classified under subdivision 23, paragraph (b); and

 

(3) a condominium-type storage unit having an individual property identification number that is not used for a commercial purpose.

 

Class 4bb property has the same classification rates as class 1a property under subdivision 22.

 

Property that has been classified as seasonal residential recreational property at any time during which it has been owned by the current owner or spouse of the current owner does not qualify for class 4bb.

 

(d) Class 4c property includes:

 

(1) except as provided in subdivision 22, paragraph (c), real and personal property devoted to commercial temporary and seasonal residential occupancy for recreation purposes, for not more than 250 days in the year preceding the year of assessment.  For purposes of this clause, property is devoted to a commercial purpose on a specific day if any portion of the property is used for residential occupancy, and a fee is charged for residential occupancy.  Class 4c property under this clause must contain three or more rental units.  A "rental unit" is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site equipped with water and electrical hookups for recreational vehicles.  A camping pad offered for rent by a property that otherwise qualifies for class 4c under this clause is also class 4c under this clause regardless of the term of the rental agreement, as long as the use of the camping pad does not exceed 250 days.  In order for a property to be classified under this clause, either:  (i) the business located on the property must provide recreational activities, at least 40 percent of the annual gross lodging receipts related to the property must be from business conducted during 90 consecutive days, and either (A) at least 60 percent of all paid bookings by lodging guests during the year must be for periods of at least two consecutive nights; or (B) at least 20 percent of the annual gross receipts must be from charges for providing recreational activities, or; (ii) the business must contain 20 or fewer rental units, and must be located in a township or a city with a population of 2,500 or less located outside the metropolitan area, as defined under section 473.121, subdivision 2, that contains a portion of a state trail administered by the Department of Natural Resources; or (iii) the facility must consist of no more than five sleeping rooms and must provide an area or areas to prepare meals and to conduct indoor craft or hobby activities.  For purposes of item (i)(A), a paid booking of five or more nights shall be counted as two bookings.  Class 4c property also includes commercial use real property used exclusively for recreational purposes in conjunction with other class 4c property classified under this clause and devoted to temporary and seasonal residential occupancy for recreational purposes, up to a total of two acres, provided the property is not devoted to commercial recreational use for more than 250 days in the year preceding the year of assessment and is located within two miles of the class 4c property with which it is used.  In order for a property to qualify for classification under this clause, the owner must submit a declaration to the assessor designating the cabins or units occupied for 250 days or less in the year preceding the year of assessment by January 15 of the assessment year.  Those cabins or units and a proportionate share of the land on which they are located must be designated class 4c under this clause as otherwise provided.  The remainder of the cabins or units and a


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proportionate share of the land on which they are located will be designated as class 3a.  The owner of property desiring designation as class 4c property under this clause must provide guest registers or other records demonstrating that the units for which class 4c designation is sought were not occupied for more than 250 days in the year preceding the assessment if so requested.  The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility operated on a commercial basis not directly related to temporary and seasonal residential occupancy for recreation purposes does not qualify for class 4c.  For the purposes of this paragraph, "recreational activities" means renting ice fishing houses, boats and motors, snowmobiles, downhill or cross-country ski equipment; providing marina services, launch services, or guide services; or selling bait and fishing tackle;

 

(2) qualified property used as a golf course if:

 

(i) it is open to the public on a daily fee basis.  It may charge membership fees or dues, but a membership fee may not be required in order to use the property for golfing, and its green fees for golfing must be comparable to green fees typically charged by municipal courses; and

 

(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

 

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction with the golf course is classified as class 3a property;

 

(3) real property up to a maximum of three acres of land owned and used by a nonprofit community service oriented organization and not used for residential purposes on either a temporary or permanent basis, provided that:

 

(i) the property is not used for a revenue-producing activity for more than six days in the calendar year preceding the year of assessment; or

 

(ii) the organization makes annual charitable contributions and donations at least equal to the property's previous year's property taxes and the property is allowed to be used for public and community meetings or events for no charge, as appropriate to the size of the facility.

 

For purposes of this clause:

 

(A) "charitable contributions and donations" has the same meaning as lawful gambling purposes under section 349.12, subdivision 25, excluding those purposes relating to the payment of taxes, assessments, fees, auditing costs, and utility payments;

 

(B) "property taxes" excludes the state general tax;

 

(C) a "nonprofit community service oriented organization" means any corporation, society, association, foundation, or institution organized and operated exclusively for charitable, religious, fraternal, civic, or educational purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal Revenue Code; and

 

(D) "revenue-producing activities" shall include but not be limited to property or that portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling alley, a retail store, gambling conducted by organizations licensed under chapter 349, an insurance business, or office or other space leased or rented to a lessee who conducts a for-profit enterprise on the premises.


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Any portion of the property not qualifying under either item (i) or (ii) is class 3a.  The use of the property for social events open exclusively to members and their guests for periods of less than 24 hours, when an admission is not charged nor any revenues are received by the organization shall not be considered a revenue-producing activity.

 

The organization shall maintain records of its charitable contributions and donations and of public meetings and events held on the property and make them available upon request any time to the assessor to ensure eligibility.  An organization meeting the requirement under item (ii) must file an application by May 1 with the assessor for eligibility for the current year's assessment.  The commissioner shall prescribe a uniform application form and instructions;

 

(4) postsecondary student housing of not more than one acre of land that is owned by a nonprofit corporation organized under chapter 317A and is used exclusively by a student cooperative, sorority, or fraternity for on-campus housing or housing located within two miles of the border of a college campus;

 

(5)(i) manufactured home parks as defined in section 327.14, subdivision 3, excluding manufactured home parks described in items (ii) and (iii), (ii) manufactured home parks as defined in section 327.14, subdivision 3, that are described in section 273.124, subdivision 3a, and (iii) class I manufactured home parks as defined in section 327C.01, subdivision 13;

 

(6) real property that is actively and exclusively devoted to indoor fitness, health, social, recreational, and related uses, is owned and operated by a not-for-profit corporation, and is located within the metropolitan area as defined in section 473.121, subdivision 2;

 

(7) a leased or privately owned noncommercial aircraft storage hangar not exempt under section 272.01, subdivision 2, and the land on which it is located, provided that:

 

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan Airports Commission, or group thereof; and

 

(ii) the land lease, or any ordinance or signed agreement restricting the use of the leased premise, prohibits commercial activity performed at the hangar.

 

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must be filed by the new owner with the assessor of the county where the property is located within 60 days of the sale;

 

(8) a privately owned noncommercial aircraft storage hangar not exempt under section 272.01, subdivision 2, and the land on which it is located, provided that:

 

(i) the land abuts a public airport; and

 

(ii) the owner of the aircraft storage hangar provides the assessor with a signed agreement restricting the use of the premises, prohibiting commercial use or activity performed at the hangar; and

 

(9) residential real estate, a portion of which is used by the owner for homestead purposes, and that is also a place of lodging, if all of the following criteria are met:

 

(i) rooms are provided for rent to transient guests that generally stay for periods of 14 or fewer days;

 

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated in the basic room rate;


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(iii) meals are not provided to the general public except for special events on fewer than seven days in the calendar year preceding the year of the assessment; and

 

(iv) the owner is the operator of the property.

 

The market value subject to the 4c classification under this clause is limited to five rental units.  Any rental units on the property in excess of five, must be valued and assessed as class 3a.  The portion of the property used for purposes of a homestead by the owner must be classified as class 1a property under subdivision 22;

 

(10) real property up to a maximum of three acres and operated as a restaurant as defined under section 157.15, subdivision 12, provided it:  (i) is located on a lake as defined under section 103G.005, subdivision 15, paragraph (a), clause (3); and (ii) is either devoted to commercial purposes for not more than 250 consecutive days, or receives at least 60 percent of its annual gross receipts from business conducted during four consecutive months.  Gross receipts from the sale of alcoholic beverages must be included in determining the property's qualification under item (ii).  The property's primary business must be as a restaurant and not as a bar.  Gross receipts from gift shop sales located on the premises must be excluded.  Owners of real property desiring 4c classification under this clause must submit an annual declaration to the assessor by February 1 of the current assessment year, based on the property's relevant information for the preceding assessment year;

 

(11) lakeshore and riparian property and adjacent land, not to exceed six acres, used as a marina, as defined in section 86A.20, subdivision 5, which is made accessible to the public and devoted to recreational use for marina services.  The marina owner must annually provide evidence to the assessor that it provides services, including lake or river access to the public by means of an access ramp or other facility that is either located on the property of the marina or at a publicly owned site that abuts the property of the marina.  No more than 800 feet of lakeshore may be included in this classification.  Buildings used in conjunction with a marina for marina services, including but not limited to buildings used to provide food and beverage services, fuel, boat repairs, or the sale of bait or fishing tackle, are classified as class 3a property; and

 

(12) real and personal property devoted to noncommercial temporary and seasonal residential occupancy for recreation purposes.

 

Class 4c property has a classification rate of 1.5 percent of market value, except that (i) each parcel of noncommercial seasonal residential recreational property under clause (12) has the same classification rates as class 4bb property, (ii) manufactured home parks assessed under clause (5), item (i), have the same classification rate as class 4b property, the market value of manufactured home parks assessed under clause (5), item (ii), have a classification rate of 0.75 percent if more than 50 percent of the lots in the park are occupied by shareholders in the cooperative corporation or association and a classification rate of one percent if 50 percent or less of the lots are so occupied, and class I manufactured home parks as defined in section 327C.01, subdivision 13, have a classification rate of 1.0 percent, (iii) commercial-use seasonal residential recreational property and marina recreational land as described in clause (11), has a classification rate of one percent for the first $500,000 of market value, and 1.25 percent for the remaining market value, (iv) the market value of property described in clause (4) has a classification rate of one percent, (v) the market value of property described in clauses (2), (6), and (10) has a classification rate of 1.25 percent, (vi) that portion of the market value of property in clause (9) qualifying for class 4c property has a classification rate of 1.25 percent, and (vii) property qualifying for classification under clause (3) that is owned or operated by a congressionally chartered veterans organization has a classification rate of one percent.  The commissioner of veterans affairs must provide a list of congressionally chartered veterans organizations to the commissioner of revenue by June 30, 2017, and by January 1, 2018, and each year thereafter.

 

(e) Class 4d property is qualifying low-income rental housing certified to the assessor by the Housing Finance Agency under section 273.128, subdivision 3.  If only a portion of the units in the building qualify as low-income rental housing units as certified under section 273.128, subdivision 3, only the proportion of qualifying units to the


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total number of units in the building qualify for class 4d.  The remaining portion of the building shall be classified by the assessor based upon its use.  Class 4d also includes the same proportion of land as the qualifying low-income rental housing units are to the total units in the building.  For all properties qualifying as class 4d, the market value determined by the assessor must be based on the normal approach to value using normal unrestricted rents.

 

(f) The first tier of market value of class 4d property has a classification rate of 0.75 percent.  The remaining value of class 4d property has a classification rate of 0.25 percent.  For the purposes of this paragraph, the "first tier of market value of class 4d property" means the market value of each housing unit up to the first tier limit.  For the purposes of this paragraph, all class 4d property value must be assigned to individual housing units.  The first tier limit is $100,000 for assessment year 2014.  For subsequent years, the limit is adjusted each year by the average statewide change in estimated market value of property classified as class 4a and 4d under this section for the previous assessment year, excluding valuation change due to new construction, rounded to the nearest $1,000, provided, however, that the limit may never be less than $100,000.  Beginning with assessment year 2015, the commissioner of revenue must certify the limit for each assessment year by November 1 of the previous year.

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2019.

 

Sec. 10.  Minnesota Statutes 2017 Supplement, section 273.13, subdivision 34, is amended to read:

 

Subd. 34.  Homestead of disabled veteran or family caregiver.  (a) All or a portion of the market value of property owned by a veteran and serving as the veteran's homestead under this section is excluded in determining the property's taxable market value if the veteran has a service-connected disability of 70 percent or more as certified by the United States Department of Veterans Affairs.  To qualify for exclusion under this subdivision, the veteran must have been honorably discharged from the United States armed forces, as indicated by United States Government Form DD214 or other official military discharge papers.

 

(b)(1) For a disability rating of 70 percent or more, $150,000 of market value is excluded, except as provided in clause (2); and

 

(2) for a total (100 percent) and permanent disability, $300,000 of market value is excluded.

 

(c) If a disabled veteran qualifying for a valuation exclusion under paragraph (b), clause (2), predeceases the veteran's spouse, and if upon the death of the veteran the spouse holds the legal or beneficial title to the homestead and permanently resides there, the exclusion shall carry over to the benefit of the veteran's spouse for the current taxes payable year and for eight additional taxes payable years or until such time as the spouse remarries, or sells, transfers, or otherwise disposes of the property, whichever comes first, except as otherwise provided in paragraph (n).  Qualification under this paragraph requires an application under paragraph (h), and a spouse must notify the assessor if there is a change in the spouse's marital status, ownership of the property, or use of the property as a permanent residence.

 

(d) If the spouse of a member of any branch or unit of the United States armed forces who dies due to a service‑connected cause while serving honorably in active service, as indicated on United States Government Form DD1300 or DD2064, holds the legal or beneficial title to a homestead and permanently resides there, the spouse is entitled to the benefit described in paragraph (b), clause (2), for eight taxes payable years, or until such time as the spouse remarries or sells, transfers, or otherwise disposes of the property, whichever comes first, except as otherwise provided in paragraph (n).

 

(e) If a veteran meets the disability criteria of paragraph (a) but does not own property classified as homestead in the state of Minnesota, then the homestead of the veteran's primary family caregiver, if any, is eligible for the exclusion that the veteran would otherwise qualify for under paragraph (b).


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(f) In the case of an agricultural homestead, only the portion of the property consisting of the house and garage and immediately surrounding one acre of land qualifies for the valuation exclusion under this subdivision.

 

(g) A property qualifying for a valuation exclusion under this subdivision is not eligible for the market value exclusion under subdivision 35, or classification under subdivision 22, paragraph (b).

 

(h) To qualify for a valuation exclusion under this subdivision a property owner must apply to the assessor by July 1 December 15 of the first assessment year for which the exclusion is sought.  For an application received after July 1 December 15, the exclusion shall become effective for the following assessment year.  Except as provided in paragraph (c), the owner of a property that has been accepted for a valuation exclusion must notify the assessor if there is a change in ownership of the property or in the use of the property as a homestead.  When a property qualifying for a market value exclusion under this subdivision is sold or transferred, the exclusion must be removed for taxes payable in the following year, provided that the new owner may file a claim for an exclusion if eligible.

 

(i) A first-time application by a qualifying spouse for the market value exclusion under paragraph (d) must be made any time within two years of the death of the service member.

 

(j) For purposes of this subdivision:

 

(1) "active service" has the meaning given in section 190.05;

 

(2) "own" means that the person's name is present as an owner on the property deed;

 

(3) "primary family caregiver" means a person who is approved by the secretary of the United States Department of Veterans Affairs for assistance as the primary provider of personal care services for an eligible veteran under the Program of Comprehensive Assistance for Family Caregivers, codified as United States Code, title 38, section 1720G; and

 

(4) "veteran" has the meaning given the term in section 197.447.

 

(k) If a veteran dying after December 31, 2011, did not apply for or receive the exclusion under paragraph (b), clause (2), before dying, the veteran's spouse is entitled to the benefit under paragraph (b), clause (2), for eight taxes payable years or until the spouse remarries or sells, transfers, or otherwise disposes of the property, except as otherwise provided in paragraph (n), if:

 

(1) the spouse files a first-time application within two years of the death of the service member or by June 1, 2019, whichever is later;

 

(2) upon the death of the veteran, the spouse holds the legal or beneficial title to the homestead and permanently resides there;

 

(3) the veteran met the honorable discharge requirements of paragraph (a); and

 

(4) the United States Department of Veterans Affairs certifies that:

 

(i) the veteran met the total (100 percent) and permanent disability requirement under paragraph (b), clause (2); or

 

(ii) the spouse has been awarded dependency and indemnity compensation.


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(l) The purpose of this provision of law providing a level of homestead property tax relief for gravely disabled veterans, their primary family caregivers, and their surviving spouses is to help ease the burdens of war for those among our state's citizens who bear those burdens most heavily.

 

(m) By July 1, the county veterans service officer must certify the disability rating and permanent address of each veteran receiving the benefit under paragraph (b) to the assessor.

 

(n) A spouse who received the benefit in paragraph (c), (d), or (k) but no longer holds the legal or beneficial title to the property may continue to receive the exclusion for a property other than the property for which the exclusion was initially granted until the spouse remarries or sells, transfers, or otherwise disposes of the property, provided that:

 

(1) the spouse applies under paragraph (h) for the continuation of the exclusion allowed under this paragraph;

 

(2) the spouse holds the legal or beneficial title to the property for which the continuation of the exclusion is sought under this paragraph, and permanently resides there;

 

(3) the estimated market value of the property for which the exclusion is sought under this paragraph is less than or equal to the estimated market value of the property that first received the exclusion, based on the value of each property on the date of the sale of the property that first received the exclusion; and

 

(4) the spouse has not previously received the benefit under this paragraph for a property other than the property for which the exclusion is sought.

 

The exclusion for a spouse under this paragraph and paragraph (c), (d), or (k) may not exceed a total of eight taxes payable years.

 

EFFECTIVE DATE.  This section is effective beginning with assessments in 2018, for taxes payable in 2019.

 

Sec. 11.  Minnesota Statutes 2016, section 273.13, subdivision 35, is amended to read:

 

Subd. 35.  Homestead market value exclusion.  (a) Prior to determining a property's net tax capacity under this section, property classified as class 1a or 1b under subdivision 22, and the portion of property classified as class 2a under subdivision 23 consisting of the house, garage, and surrounding one acre of land, shall be eligible for a market value exclusion as determined under paragraph (b).

 

(b) For a homestead valued at $76,000 or less, the exclusion is 40 percent of market value.  For a homestead valued between $76,000 and $413,800, the exclusion is $30,400 minus nine percent of the valuation over $76,000.  For a homestead valued at $413,800 or more, there is no valuation exclusion.  The valuation exclusion shall be rounded to the nearest whole dollar, and may not be less than zero.

 

(c) Any valuation exclusions or adjustments under section 273.11 shall be applied prior to determining the amount of the valuation exclusion under this subdivision.

 

(d) In the case of a property that is classified as part homestead and part nonhomestead, (i) the exclusion shall apply only to the homestead portion of the property, but (ii) if a portion of a property is classified as nonhomestead solely because not all the owners occupy the property, not all the owners have qualifying relatives occupying the property, or solely because not all the spouses of owners occupy the property, the exclusion amount shall be initially computed as if that nonhomestead portion were also in the homestead class and then prorated to the owner‑occupant's percentage of ownership, as determined by section 273.124, subdivision 23.  For the purpose of this section, when an owner-occupant's spouse does not occupy the property, the percentage of ownership for the owner-occupant spouse is one-half of the couple's ownership percentage.

 

EFFECTIVE DATE.  This section is effective for taxes payable in 2019 and thereafter.


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Sec. 12.  Minnesota Statutes 2017 Supplement, section 273.1384, subdivision 2, is amended to read:

 

Subd. 2.  Agricultural homestead market value credit.  Property classified as agricultural homestead under section 273.13, subdivision 23, paragraph (a), is eligible for an agricultural credit.  The credit is computed using the property's agricultural credit market value, defined for this purpose as the property's market value excluding the market value of the house, garage, and immediately surrounding one acre of land.  The credit is equal to 0.3 percent of the first $115,000 of the property's agricultural credit market value plus 0.1 percent of the property's agricultural credit market value in excess of $115,000, subject to a maximum credit of $490.  In the case of property that is classified as part homestead and part nonhomestead solely because not all the owners occupy or farm the property, not all the owners have qualifying relatives occupying or farming the property, or solely because not all the spouses of owners occupy the property, the credit is computed on the amount of agricultural credit market value corresponding to the owner-occupant's percentage of homestead.  the percentage of homestead is equal to 100 divided by the number of owners of the property, or, in the case of a trust, the number of grantors of the trust that owns the property ownership, as determined by section 273.124, subdivision 23.

 

EFFECTIVE DATE.  This section is effective for taxes payable in 2019 and thereafter.

 

Sec. 13.  Minnesota Statutes 2016, section 275.025, is amended by adding a subdivision to read:

 

Subd. 6.  Natural gas pipeline.  (a) Personal property that is part of an intrastate natural gas transportation or distribution pipeline system is exempt from the state general levy if:

 

(1) construction of the pipeline system began after January 1, 2018; and

 

(2) the property is located in an area:

 

(i) outside the seven-county metropolitan area, as defined in section 473.121, subdivision 3; and

 

(ii) in which households or businesses lacked access to natural gas distribution systems as of January 1, 2018.

 

(b) The exemption under this subdivision applies for a period not to exceed 12 years, provided that once a property no longer qualifies, it may not subsequently qualify for the exemption under this subdivision.

 

(c) The net tax capacity of property defined under this subdivision must be included in the definition of commercial-industrial tax capacity for the purpose of determining the state general levy tax rate under subdivision 4.

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2020.

 

Sec. 14.  Minnesota Statutes 2016, section 275.025, is amended by adding a subdivision to read:

 

Subd. 7.  Medical facility in underserved area.  The state general levy for any property qualifying under section 469.1817 is abated.  The net tax capacity of the property must be included in the definition of commercial‑industrial tax capacity for the purposes of determining the state general levy tax rate under subdivision 4.

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2019.

 

Sec. 15.  Minnesota Statutes 2016, section 282.01, subdivision 6, is amended to read:

 

Subd. 6.  Duties of commissioner after sale.  (a) When any sale has been made by the county auditor under sections 282.01 to 282.13, the auditor shall immediately certify to the commissioner of revenue such information relating to such sale, on such forms as the commissioner of revenue may prescribe as will enable the commissioner


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of revenue to prepare an appropriate deed if the sale is for cash, or keep necessary records if the sale is on terms; and not later than October 31 of each year the county auditor shall submit to the commissioner of revenue a statement of all instances wherein any payment of principal, interest, or current taxes on lands held under certificate, due or to be paid during the preceding calendar years, are still outstanding at the time such certificate is made.  When such statement shows that a purchaser or the purchaser's assignee is in default, the commissioner of revenue may instruct the county board of the county in which the land is located to cancel said certificate of sale in the manner provided by subdivision 5, provided that upon recommendation of the county board, and where the circumstances are such that the commissioner of revenue after investigation is satisfied that the purchaser has made every effort reasonable to make payment of both the annual installment and said taxes, and that there has been no willful neglect on the part of the purchaser in meeting these obligations, then the commissioner of revenue may extend the time for the payment for such period as the commissioner may deem warranted, not to exceed one year.  On payment in full of the purchase price, appropriate conveyance in fee, in such form as may be prescribed by the attorney general, shall be issued by the commissioner of revenue, which conveyance must be recorded by the county and shall have the force and effect of a patent from the state subject to easements and restrictions of record at the date of the tax judgment sale, including, but without limitation, permits for telephone and electric power lines either by underground cable or conduit or otherwise, sewer and water lines, highways, railroads, and pipe lines for gas, liquids, or solids in suspension.

 

(b) The commissioner of revenue shall issue an appropriate conveyance in fee (1) upon the approval from the county auditor, or (2) when approval from the county auditor is given based upon written confirmation from a licensed closing agent, title insurer, or title insurance agent as specified in section 82.641.  For purposes of this paragraph, "written confirmation" means a written commitment or approval that the funding for the conveyance is held in an escrow account available for disbursement upon delivery of a conveyance.  The conveyance issued by the commissioner of revenue shall not be effective as a conveyance until it is recorded.  The conveyance shall be issued to the county auditor where the land is located.  Upon receipt of the conveyance, the county auditor shall hold the conveyance until the conveyance is requested from a licensed closing agent, title insurer, or title insurance agent to settle and close on the conveyance.  If a request for the conveyance is not made within 30 days of the date the conveyance is issued by the commissioner of revenue, the county auditor shall return the conveyance to the commissioner.  If the conveyance is delivered to the licensed closing agent, title insurer, or title insurance agent and the closing does not occur within ten days of the request, the licensed closing agent, title insurer, or title insurance agent shall immediately return the conveyance to the county auditor and, upon receipt, the county auditor shall return the conveyance to the commissioner of revenue.  The commissioner of revenue shall cancel and destroy all conveyances returned by the county auditor pursuant to this subdivision.  The licensed closing agent, title insurer, or title insurance agent must promptly record the conveyance after the closing and must deliver an attested or certified copy to the county auditor and to the grantee or grantees named on the conveyance.

 

EFFECTIVE DATE.  This section is effective the day following final enactment.

 

Sec. 16.  Minnesota Statutes 2016, section 469.171, subdivision 4, is amended to read:

 

Subd. 4.  Restriction.  The tax reductions provided by this section shall not apply to (1) a facility the primary purpose of which is one of the following:  retail food and beverage services, automobile sales or service, or the provision of recreation or entertainment, or a private or commercial golf course, country club, massage parlor, tennis club, skating facility including roller skating, skateboard, and ice skating, racquet sports facility, including any handball or racquetball court, hot tub facility, suntan facility, or racetrack; (2) property of a public utility; (3) property used in the operation of a financial institution; (4) property owned by a fraternal or veterans' organization; or (5) property of a business operating under a franchise agreement that requires the business to be located in the state; except that tax reductions may be provided to a retail food or beverage facility or an automobile sales or service facility, or a business a retail food or beverage facility operating under a franchise agreement that requires the business to be located in this state except for such a franchised retail food or beverage facility.

 

EFFECTIVE DATE.  This section is effective the day following final enactment and confirms the legislative intent of the amendment made by Laws 2012, chapter 294, article 2, section 25.


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Sec. 17.  Minnesota Statutes 2016, section 469.1812, subdivision 1, is amended to read:

 

Subdivision 1.  Scope.  For purposes of sections 469.1812 to 469.1815 469.1817, the following terms have the meanings given.

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2019.

 

Sec. 18.  Minnesota Statutes 2016, section 469.1812, is amended by adding a subdivision to read:

 

Subd. 2a.  Medical facility.  "Medical facility" means:

 

(1) an office, clinic, building, or portion of a building, the primary use of which is the provision of primary or specialty health care services to patients on an outpatient basis, by one or more state-licensed or registered health care providers;

 

(2) a birth center licensed under section 144.615;

 

(3) a hospital licensed under sections 144.50 to 144.56;

 

(4) an urgent care clinic which provides treatment for medical conditions that are not life-threatening or potentially permanently disabling and do not require critical or emergency interventions; or

 

(5) an outpatient surgical center licensed under section 144.55.

 

EFFECTIVE DATE.  This section is effective the day following final enactment for taxes payable beginning in 2019 and for sales and purchases made after June 30, 2018.

 

Sec. 19.  Minnesota Statutes 2016, section 469.1812, is amended by adding a subdivision to read:

 

Subd. 2b.  Medically underserved county.  "Medically underserved county" means a county, any portion of which is designated by the federal secretary of health and human services as a medically underserved area or medically underserved population, as defined under Code of Federal Regulations, title 42, section 51C.102.  By December 15 of each year, the commissioner of health must certify to the commissioner of revenue the counties that are medically underserved.  By December 31 of each year, the commissioner of revenue must certify the list of medically underserved counties to county assessors, for assessments in the following year.

 

EFFECTIVE DATE.  This section is effective beginning with assessment year 2018 for taxes payable in 2019.  For assessment year 2018, the certification required to be made by the commissioner of health must be made by June 1, 2018, and the certification required to be made by the commissioner of revenue must be made by June 15, 2018.

 

Sec. 20.  [469.1817] MEDICALLY UNDERSERVED TAX ABATEMENT AREAS.

 

Subdivision 1.  Qualification.  The state general tax under section 275.025 must be abated for any property or portion thereof containing a medical facility that has been granted an abatement under section 469.1813, provided that:

 

(1) the facility is located in a medically underserved county at the time the abatement resolution is adopted;

 

(2) the facility is not located in a metropolitan county as defined under section 473.121, subdivision 4;


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(3) the resolution of one or more governing bodies granting the abatement specifies that the facility addresses an underserved need for medical services in the area; and

 

(4) both the county and the city or town are abating all taxes on the property containing the facility for at least 15 years.

 

Subd. 2.  Duration.  The state general tax is abated for 15 years.

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2019.

 

Sec. 21.  Minnesota Statutes 2016, section 473H.08, subdivision 1, is amended to read:

 

Subdivision 1.  Till expiration started.  Agricultural preserves shall continue until either the landowner or, the authority, or a state agency or governmental unit initiates expiration as provided in this section.

 

EFFECTIVE DATE.  This section is effective the day following final enactment and applies to any agricultural preserve where the previously required eight-year termination period under Minnesota Statutes, section 473H.08, has not yet expired.

 

Sec. 22.  Minnesota Statutes 2016, section 473H.08, is amended by adding a subdivision to read:

 

Subd. 3a.  Expiration for park and trail purposes.  (a) An agricultural preserve expires immediately when a state agency or other governmental unit purchases the property or obtains an easement over the property for the purpose of creating or expanding a public trail or public park.  This subdivision applies only to the portion of the agricultural preserve acquired for trail or park purposes, and any portion of the property not acquired for trail or park purposes shall remain an agricultural preserve.

 

(b) The acquiring state agency or governmental unit shall give notice to the authority as provided in subdivision 5.  The notice must specify the portion of the property being removed from the agricultural preserve and the date on which that portion expires.

 

EFFECTIVE DATE.  This section is effective the day following final enactment and applies to any agricultural preserve where the previously required eight-year termination period under Minnesota Statutes, section 473H.08, has not yet expired.

 

Sec. 23.  Minnesota Statutes 2016, section 473H.08, subdivision 4, is amended to read:

 

Subd. 4.  Notice to others.  Upon receipt of the notice provided in subdivision 2 or 3a, or upon notice served by the authority as provided in subdivision 3, the authority shall forward the original notice to the county recorder for recording, or to the registrar of titles if the land is registered, and shall notify the county auditor, county assessor, the Metropolitan Council, and the county soil and water conservation district of the date of expiration.  Designation as an agricultural preserve and all benefits and limitations accruing through sections 473H.02 to 473H.17 for the preserve shall cease on the date of expiration.  The restrictive covenant contained in the application shall terminate on the date of expiration.

 

EFFECTIVE DATE.  This section is effective the day following final enactment and applies to any agricultural preserve where the previously required eight-year termination period under Minnesota Statutes, section 473H.08, has not yet expired.


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Sec. 24.  Laws 2008, chapter 366, article 5, section 33, the effective date, as amended by Laws 2013, chapter 143, article 4, section 35, is amended to read:

 

EFFECTIVE DATE.  This section is effective for taxes levied in 2008, payable in 2009, and is repealed effective for taxes levied in 2018 2023, payable in 2019 2024, and thereafter.

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2019.

 

Sec. 25.  ABATEMENT; NONPROFIT PROPERTY.

 

Property taxes payable in 2018 are abated for property that:

 

(1) is located in a city of the first class;

 

(2) contains a structure of between 9,000 and 10,000 square feet originally built in 1937;

 

(3) is owned by an institution of purely public charity exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code; and

 

(4) is developed and operated as a nonprofit community mental health center.

 

EFFECTIVE DATE.  This section is effective for taxes payable in 2018.

 

ARTICLE 5

PROPERTY TAX REFORM

 

Section 1.  Minnesota Statutes 2016, section 123A.455, subdivision 1, is amended to read:

 

Subdivision 1.  Definitions.  "Split residential property parcel" means a parcel of real estate that is located within the boundaries of more than one school district and that is classified as residential property under:

 

(1) section 273.13, subdivision 22, paragraph (a) or (b);

 

(2) section 273.13, subdivision 25, paragraph (b), clause (1); or

 

(3) section 273.13, subdivision 25, paragraph (c).

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2020.

 

Sec. 2.  Minnesota Statutes 2016, section 126C.01, subdivision 3, is amended to read:

 

Subd. 3.  Referendum market value.  "Referendum market value" means the market value of all taxable property, excluding property classified as class 2, 4c(4), or 4c(12) or 4h under section 273.13.  The portion of class 2a property consisting of the house, garage, and surrounding one acre of land of an agricultural homestead is included in referendum market value.  For the purposes of this subdivision, in the case of class 1a, 1b, or 2a property qualifying for the exclusion under section 273.13, subdivision 35, "market value" means the value prior to the exclusion under section 273.13, subdivision 35.  Any class of property, or any portion of a class of property, that is included in the definition of referendum market value and that has a classification rate of less than one percent under section 273.13 shall have a referendum market value equal to its market value times its classification rate, multiplied by 100.

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2020.


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Sec. 3.  Minnesota Statutes 2016, section 270.12, subdivision 2, is amended to read:

 

Subd. 2.  Meeting dates; duties.  The board shall meet annually between April 15 May 1 and June 30 July 1 at the office of the commissioner of revenue and examine and compare the returns of the assessment of the property in the several counties, and equalize the same so that all the taxable property in the state shall be assessed at its market value, subject to the following rules:

 

(1) The board shall add to or deduct from the aggregate valuation of the real property of every county, which the board believes to be valued below or above its market value in money, such percent as will bring the same to its market value;

 

(2) If the board believes the valuation for a part of a class determined by a range of market value under clause (6) or otherwise, a class, or classes of the real property of any town or district in any county, or the valuation for a part of a class, a class, or classes of the real property of any county not in towns or cities, should be raised or reduced, without raising or reducing the other real property of such county, or without raising or reducing it in the same ratio, the board may add to, or take from, the valuation of a part of a class, a class, or classes in any one or more of such towns or cities, or of the property not in towns or cities, such percent as the board believes will raise or reduce the same to its market value;

 

(3) The board shall add to or take from the aggregate valuation of any part of a class, a class, or classes of personal property of any county, town, or city, which the board believes to be valued below or above the market value thereof, such percent as will raise the same to its market value;

 

(4) The board shall not reduce the aggregate valuation of all the property of the state, as returned by the several county auditors, more than one percent on the whole valuation thereof;

 

(5) When it would be of assistance in equalizing values the board may require any county auditor to furnish statements showing assessments of real and personal property of any individuals, firms, or corporations within the county.  The board shall consider and equalize such assessments and may increase the assessment of individuals, firms, or corporations above the amount returned by the county board of equalization when it shall appear to be undervalued, first giving notice to such persons of the intention of the board so to do, which notice shall fix a time and place of hearing.  The board shall not decrease any such assessment below the valuation placed by the county board of equalization;

 

(6) In equalizing values pursuant to this section, the board shall utilize a 12-month assessment/sales ratio study conducted by the Department of Revenue containing only sales that are filed in the county auditor's office under section 272.115, by November 1 of the previous year and that occurred between October 1 of the year immediately preceding the previous year and September 30 of the previous year.

 

The assessment/sales ratio study may separate the values of residential property into market value categories.  The board may adjust the market value categories and the number of categories as necessary to create an adequate sample size for each market value category.  The board may determine the adequate sample size.  To the extent practicable, the methodology used in preparing the assessment/sales ratio study must be consistent with the most recent Standard on Assessment Sales Ratio Studies published by the Assessment Standards Committee of the International Association of Assessing Officers.  The board may determine the geographic area used in preparing the study to accurately equalize values.  A sales ratio study separating residential property into market value categories may not be used as the basis for a petition under chapter 278.


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The sales prices used in the study must be discounted for terms of financing.  The board shall use the median ratio as the statistical measure of the level of assessment for any particular category of property; and

 

(7) The board shall receive from each county the estimated market values on the assessment date falling within the study period for all parcels by a medium as prescribed by the commissioner of revenue.

 

EFFECTIVE DATE.  This section is effective beginning with assessments in 2020.

 

Sec. 4.  Minnesota Statutes 2016, section 270.12, subdivision 3, is amended to read:

 

Subd. 3.  Jurisdictions in two or more counties.  When a taxing jurisdiction lies in two or more counties, if the sales ratio studies prepared by the Department of Revenue show that the average levels of assessment in the several portions of the taxing jurisdictions in the different counties differ by more than five percent, the board may order the apportionment of the levy.  When the sales ratio studies prepared by the Department of Revenue show that the average levels of assessment in the several portions of the taxing jurisdictions in the different counties differ by more than ten percent, the board shall order the apportionment of the levy unless (a) the proportion of total adjusted tax capacity in one of the counties is less than ten percent of the total adjusted tax capacity in the taxing jurisdiction and the average level of assessment in that portion of the taxing jurisdiction is the level which differs by more than five percent from the assessment level in any one of the other portions of the taxing jurisdiction; (b) significant changes have been made in the level of assessment in the taxing jurisdiction which have not been reflected in the sales ratio study, and those changes alter the assessment levels in the portions of the taxing jurisdiction so that the assessment level now differs by five percent or less; or (c) commercial, industrial, mineral, or public utility property predominates in one county within the taxing jurisdiction and another class of property predominates in another county within that same taxing jurisdiction.  If one or more of these factors are present, the board may order the apportionment of the levy.

 

Notwithstanding any other provision, the levy for the Metropolitan Mosquito Control District, Metropolitan Council, metropolitan transit district, and metropolitan transit area must be apportioned without regard to the percentage difference.

 

If, pursuant to this subdivision, the board apportions the levy, then that levy apportionment among the portions in the different counties shall be made in the same proportion as the adjusted tax capacity as determined by the commissioner in each portion is to the total adjusted tax capacity of the taxing jurisdiction.

 

For the purposes of this section, the average level of assessment in a taxing jurisdiction or portion thereof shall be the aggregate assessment sales ratio.  Tax capacities as determined by the commissioner shall be the tax capacities as determined for the year preceding the year in which the levy to be apportioned is levied.

 

Actions pursuant to this subdivision shall be commenced subsequent to the annual meeting on April 15 May 1 of the State Board of Equalization, but notice of the action shall be given to the affected jurisdiction and the appropriate county auditors by the following June 30 July 1.

 

Apportionment of a levy pursuant to this subdivision shall be considered as a remedy to be taken after equalization pursuant to subdivision 2, and when equalization within the jurisdiction would disturb equalization within other jurisdictions of which the several portions of the jurisdiction in question are a part.

 

EFFECTIVE DATE.  This section is effective beginning with assessments in 2020.


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Sec. 5.  Minnesota Statutes 2016, section 270.96, subdivision 1, is amended to read:

 

Subdivision 1.  Assessors.  Each assessor shall notify the county auditor of the contamination value under section 270.91 by the separate tax rate categories under subdivisions 2, 3, and 4 for each parcel of property within the assessor's jurisdiction.  The assessor shall provide notice of the contamination value to the property owner by the later of June May 1 of the assessment year or 30 days after the reduction in market value is finally granted.

 

EFFECTIVE DATE.  This section is effective beginning with assessments in 2020.

 

Sec. 6.  Minnesota Statutes 2016, section 270C.91, is amended to read:

 

270C.91 RECORD OF PROCEEDINGS CHANGING NET TAX CAPACITY; DUTIES OF COUNTY AUDITOR.

 

A record of all proceedings of the commissioner affecting any change in the net tax capacity of any property, as revised by the State Board of Equalization, shall be kept by the commissioner and a copy thereof, duly certified, shall be mailed each year to the auditor of each county wherein such property is situated, on or before June 30 July 1 or 30 days after submission of the abstract required by section 270C.89, whichever is later.  This record shall specify the amounts or amount, or both, added to or deducted from the net tax capacity of the real property of each of the several towns and cities, and of the real property not in towns or cities, also the percent or amount of both, added to or deducted from the several classes of personal property in each of the towns and cities, and also the amount added to or deducted from the assessment of any person.  The county auditor shall add to or deduct from such tract or lot, or portion thereof, of any real property in the county the required percent or amount, or both, on the net tax capacity thereof as it stood after equalized by the county board, adding in each case a fractional sum of 50 cents or more, and deducting in each case any fractional sum of less than 50 cents, so that no net tax capacity of any separate tract or lot shall contain any fraction of a dollar; and add to, or deduct from, the several classes of personal property in the county the required percent or amount, or both, on the net tax capacity thereof as it stood after equalized by the county board, adding or deducting in manner aforesaid any fractional sum so that no net tax capacity of any separate class of personal property shall contain a fraction of a dollar, and add to or deduct from assessment of any person, as they stood after equalization by the county board, the required amounts to agree with the assessments as returned by the commissioner.

 

EFFECTIVE DATE.  This section is effective beginning with assessments in 2020.

 

Sec. 7.  Minnesota Statutes 2017 Supplement, section 271.21, subdivision 2, is amended to read:

 

Subd. 2.  Jurisdiction.  At the election of the taxpayer, the Small Claims Division shall have jurisdiction only in the following matters:

 

(a) cases involving valuation, assessment, or taxation of real or personal property, if:

 

(i) the issue is a denial of a current year application for the homestead classification for the taxpayer's property;

 

(ii) only one parcel is included in the petition, the entire parcel is classified as homestead class 1a or 1b 1 under section 273.13, and the parcel contains no more than one dwelling unit;

 

(iii) the entire property is classified as agricultural homestead class 2a or 1b, a portion of which may be classified as homestead class 1, under section 273.13; or

 

(iv) the assessor's estimated market value of the property included in the petition is less than $300,000; or


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(b) any case not involving valuation, assessment, or taxation of real and personal property in which the amount in controversy does not exceed $15,000, including penalty and interest.

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2020.

 

Sec. 8.  Minnesota Statutes 2016, section 272.025, subdivision 3, is amended to read:

 

Subd. 3.  Filing dates.  (a) The statement required by subdivision 1, paragraph (a), must be filed with the assessor by February May 1 of the assessment year, however, any taxpayer who has filed the statement required by subdivision 1 more than 12 months prior to February 1, 1983, or February 1 of each third year after 1983, shall file a statement by February 1, 1983, and by February May 1 of each third year thereafter.

 

(b) For churches and houses of worship, and property solely used for educational purposes by academies, colleges, universities, or seminaries of learning, no statement is required after the statement filed for the assessment year in which the exemption began.

 

(c) This section does not apply to existing churches and houses of worship, and property solely used for educational purposes by academies, colleges, universities, or seminaries of learning that were exempt for taxes payable in 2011.

 

EFFECTIVE DATE.  This section is effective beginning with assessments in 2020.

 

Sec. 9.  Minnesota Statutes 2016, section 273.11, subdivision 12, is amended to read:

 

Subd. 12.  Community land trusts.  (a) A community land trust, as defined under chapter 462A, is (i) a community-based nonprofit corporation organized under chapter 317A, which qualifies for tax exempt status under 501(c)(3), or (ii) a "city" as defined in section 462C.02, subdivision 6, which has received funding from the Minnesota housing finance agency for purposes of the community land trust program.  The Minnesota Housing Finance Agency shall set the criteria for community land trusts.

 

(b) All occupants of a community land trust building must have a family income of less than 80 percent of the greater of (1) the state median income, or (2) the area or county median income, as most recently determined by the Department of Housing and Urban Development.  Before the community land trust can rent or sell a unit to an applicant, the community land trust shall verify to the satisfaction of the administering agency or the city that the family income of each person or family applying for a unit in the community land trust building is within the income criteria provided in this paragraph.  The administering agency or the city shall verify to the satisfaction of the county assessor that the occupant meets the income criteria under this paragraph.  The property tax benefits under paragraph (c) shall be granted only to property owned or rented by persons or families within the qualifying income limits.  The family income criteria and verification is only necessary at the time of initial occupancy in the property.

 

(c) A unit which is owned by the occupant and used as a homestead by the occupant qualifies for homestead treatment as class 1a 1 under section 273.13, subdivision 22.  A unit which is rented by the occupant and used as a homestead by the occupant shall be class 4a or 4b nonhomestead class 1 property, under section 273.13, subdivision 25, whichever is applicable.  Any remaining portion of the property not used for residential purposes shall be classified by the assessor in the appropriate class based upon the use of that portion of the property owned by the community land trust.  The land upon which the building is located shall be assessed at the same classification rate as the units within the building, provided that if the building contains some units assessed as homestead class 1a 1 and some units assessed as class 4a or 4b nonhomestead class 1, the market value of the land will be assessed in the same proportions as the value of the building.

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2020.


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Sec. 10.  Minnesota Statutes 2016, section 273.1115, subdivision 2, is amended to read:

 

Subd. 2.  Requirement.  Real estate is entitled to valuation under this section only if all of the following requirements are met:

 

(1) the property is classified as class 1a, 1b 1, 2a, or 2b property under section 273.13, subdivisions 22 and 23, or the property is classified as class 2e under section 273.13, subdivision 23, and immediately before being classified as class 2e was classified as class 1a or 1b 1;

 

(2) the property is at least ten contiguous acres, when the application is filed under subdivision 3;

 

(3) the owner has filed a completed application for deferment as specified in subdivision 3 with the county assessor in the county in which the property is located;

 

(4) there are no delinquent taxes on the property; and

 

(5) a covenant on the land restricts its use as provided in subdivision 3, clause (4).

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2020.

 

Sec. 11.  Minnesota Statutes 2016, section 273.112, subdivision 6, is amended to read:

 

Subd. 6.  Application.  Application for deferment of taxes and assessment under this section shall be made at least 60 days prior to January 2 by November 1 of the year prior to each year for which deferment of taxes and assessment is sought.  Such application shall be filed with the assessor of the taxing district in which the real property is located on such form as may be prescribed by the commissioner of revenue.  The assessor may require proof by affidavit or other written verification that the property qualifies under subdivision 3.  In the case of property operated by private clubs pursuant to subdivision 3, clause (c)(3), in order to qualify for valuation and tax deferment under this section, the taxpayer must submit to the assessor proof by affidavit or other written verification that the bylaws or rules and regulations of the club meet the eligibility requirements provided under this section.  The signed affidavit or other written verification shall be sufficient demonstration of eligibility for the assessor unless the county attorney determines otherwise.

 

The county assessor shall refer any question regarding the eligibility for valuation and deferment under this section to the county attorney for advice and opinion under section 388.051, subdivision 1.  Upon request of the county attorney, the taxpayer shall furnish information that the county attorney considers necessary in order to determine eligibility under this section.

 

Real estate is not entitled to valuation and deferment under this section unless the county assessor has filed with the assessor's tax records prior to October 16 1 a statement that the application has been accepted.

 

EFFECTIVE DATE.  This section is effective beginning with assessments in 2020.

 

Sec. 12.  Minnesota Statutes 2016, section 273.1231, subdivision 4, is amended to read:

 

Subd. 4.  Homestead property.  "Homestead property" means a homestead dwelling that is classified as class 1a, 1b, or 2a 1 property or a manufactured home or sectional home used as a homestead and taxed pursuant to section 273.125, subdivision 8, paragraph (b), (c), or (d).

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2020.


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Sec. 13.  Minnesota Statutes 2016, section 273.124, subdivision 1, is amended to read:

 

Subdivision 1.  General rule.  (a) Class 1 residential real estate under section 273.13, subdivision 22, that is occupied and used for the purposes of a homestead by its owner, who must be a Minnesota resident, is a residential homestead.  In the case of a duplex or triplex in which one of the units is used for homestead purposes, the entire property is deemed to be used for homestead purposes.

 

Agricultural land, as defined in section 273.13, subdivision 23, that is occupied and used as a homestead by its owner, who must be a Minnesota resident, is an agricultural homestead.

 

Dates for establishment of a homestead and homestead treatment provided to particular types of property are as provided in this section.

 

Property held by a trustee under a trust is eligible for homestead classification if the requirements under this chapter are satisfied.

 

The assessor shall require proof, as provided in subdivision 13, of the facts upon which classification as a homestead may be determined.  Notwithstanding any other law, the assessor may at any time require a homestead application to be filed in order to verify that any property classified as a homestead continues to be eligible for homestead status.  Notwithstanding any other law to the contrary, the Department of Revenue may, upon request from an assessor, verify whether an individual who is requesting or receiving homestead classification has filed a Minnesota income tax return as a resident for the most recent taxable year for which the information is available.

 

When there is a name change or a transfer of homestead property, the assessor may reclassify the property in the next assessment unless a homestead application is filed to verify that the property continues to qualify for homestead classification.

 

(b) For purposes of this section, homestead property shall include property which is used for purposes of the homestead but is separated from the homestead by a road, street, lot, waterway, or other similar intervening property.  The term "used for purposes of the homestead" shall include but not be limited to uses for gardens, garages, or other outbuildings commonly associated with a homestead, but shall not include vacant land held primarily for future development.  In order to receive homestead treatment for the noncontiguous property, the owner must use the property for the purposes of the homestead, and must apply to the assessor, both by the deadlines given in subdivision 9.  After initial qualification for the homestead treatment, additional applications for subsequent years are not required.

 

(c) Residential real estate that is occupied and used for purposes of a homestead by a relative of the owner is a homestead but only to the extent of the homestead treatment that would be provided if the related owner occupied the property.  For purposes of this paragraph and paragraph (g), "relative" means a parent, stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle, aunt, nephew, or niece.  This relationship may be by blood or marriage.  Property that has been classified as seasonal residential recreational property at any time during which it has been owned by the current owner or spouse of the current owner will not be reclassified as a homestead unless it is occupied as a homestead by the owner; this prohibition also applies to property that, in the absence of this paragraph, would have been classified as seasonal residential recreational property at the time when the residence was constructed.  Neither the related occupant nor the owner of the property may claim a property tax refund under chapter 290A for a homestead occupied by a relative.  In the case of a residence located on agricultural land, only the house, garage, and immediately surrounding one acre of land shall be classified as a homestead under this paragraph, except as provided in paragraph (d).


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(d) Agricultural property that is occupied and used for purposes of a homestead by a relative of the owner, is a homestead, only to the extent of the homestead treatment that would be provided if the related owner occupied the property, and only if all of the following criteria are met:

 

(1) the relative who is occupying the agricultural property is a grandchild, child, sibling, or parent of the owner of the agricultural property or of the spouse of the owner;

 

(2) the owner of the agricultural property must be a Minnesota resident;

 

(3) the owner of the agricultural property must not receive homestead treatment on any other agricultural property in Minnesota; and

 

(4) the owner of the agricultural property is limited to only one agricultural homestead per family under this paragraph.

 

Neither the related occupant nor the owner of the property may claim a property tax refund under chapter 290A for a homestead occupied by a relative qualifying under this paragraph.  For purposes of this paragraph, "agricultural property" means the house, garage, other farm buildings and structures, and agricultural land.

 

Application must be made to the assessor by the owner of the agricultural property to receive homestead benefits under this paragraph.  The assessor may require the necessary proof that the requirements under this paragraph have been met.

 

(e) In the case of property owned by a property owner who is married, the assessor must not deny homestead treatment in whole or in part if only one of the spouses occupies the property and the other spouse is absent due to:  (1) marriage dissolution proceedings, (2) legal separation, (3) employment or self-employment in another location, or (4) other personal circumstances causing the spouses to live separately, not including an intent to obtain two homestead classifications for property tax purposes.  To qualify under clause (3), the spouse's place of employment or self-employment must be at least 50 miles distant from the other spouse's place of employment, and the homesteads must be at least 50 miles distant from each other.

 

(f) The assessor must not deny homestead treatment in whole or in part if:

 

(1) in the case of a property owner who is not married, the owner is absent due to residence in a nursing home, boarding care facility, or an elderly assisted living facility property as defined in section 273.13, subdivision 25a, and the property is not otherwise occupied; or

 

(2) in the case of a property owner who is married, the owner or the owner's spouse or both are absent due to residence in a nursing home, boarding care facility, or an elderly assisted living facility property as defined in section 273.13, subdivision 25a, and the property is not occupied or is occupied only by the owner's spouse.

 

(g) If an individual is purchasing property with the intent of claiming it as a homestead and is required by the terms of the financing agreement to have a relative shown on the deed as a co-owner, the assessor shall allow a full homestead classification.  This provision only applies to first-time purchasers, whether married or single, or to a person who had previously been married and is purchasing as a single individual for the first time.  The application for homestead benefits must be on a form prescribed by the commissioner and must contain the data necessary for the assessor to determine if full homestead benefits are warranted.

 

(h) If residential or agricultural real estate is occupied and used for purposes of a homestead by a child of a deceased owner and the property is subject to jurisdiction of probate court, the child shall receive relative homestead classification under paragraph (c) or (d) to the same extent they would be entitled to it if the owner was still living, until the probate is completed.  For purposes of this paragraph, "child" includes a relationship by blood or by marriage.


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(i) If a single-family home, duplex, or triplex classified as either residential homestead or agricultural homestead is also used to provide licensed child care, the portion of the property used for licensed child care must be classified as a part of the homestead property.

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2020.

 

Sec. 14.  Minnesota Statutes 2016, section 273.124, subdivision 3a, is amended to read:

 

Subd. 3a.  Manufactured home park cooperative.  (a) When a manufactured home park is owned by a corporation or association organized under chapter 308A or 308B, and each person who owns a share or shares in the corporation or association is entitled to occupy a lot within the park, the corporation or association may claim homestead treatment for the park.  Each lot must be designated by legal description or number, and each lot is limited to not more than one-half acre of land.

 

(b) The manufactured home park shall be entitled to homestead treatment if all of the following criteria are met:

 

(1) the occupant or the cooperative corporation or association is paying the ad valorem property taxes and any special assessments levied against the land and structure either directly, or indirectly through dues to the corporation or association; and

 

(2) the corporation or association organized under chapter 308A or 308B is wholly owned by persons having a right to occupy a lot owned by the corporation or association.

 

(c) A charitable corporation, organized under the laws of Minnesota with no outstanding stock, and granted a ruling by the Internal Revenue Service for 501(c)(3) tax-exempt status, qualifies for homestead treatment with respect to a manufactured home park if its members hold residential participation warrants entitling them to occupy a lot in the manufactured home park.

 

(d) "Homestead treatment" under this subdivision means the classification rate provided for class 4c 1 property classified under section 273.13, subdivision 25, paragraph (d), clause (5), item (ii).  273.13, subdivision 22, and the homestead market value exclusion under section 273.13, subdivision 35, does not apply and the property taxes assessed against the park shall not be included in the determination of taxes payable for rent paid under section 290A.03.

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2020.

 

Sec. 15.  Minnesota Statutes 2016, section 273.124, subdivision 8, is amended to read:

 

Subd. 8.  Homestead owned by or leased to family farm corporation, joint farm venture, limited liability company, or partnership.  (a) Each family farm corporation; each joint family farm venture; and each limited liability company or partnership which operates a family farm; is entitled to class 1b under section 273.13, subdivision 22, paragraph (b), or class 2a assessment for one homestead occupied by a shareholder, member, or partner thereof who is residing on the land, and actively engaged in farming of the land owned by the family farm corporation, joint family farm venture, limited liability company, or partnership.  Homestead treatment applies even if:

 

(1) legal title to the property is in the name of the family farm corporation, joint family farm venture, limited liability company, or partnership, and not in the name of the person residing on it.; or

 

(2) the family farm is operated by a family farm corporation, joint family farm venture, partnership, or limited liability company other than the family farm corporation, joint family farm venture, partnership, or limited liability company that owns the land, provided that:


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(i) the shareholder, member, or partner of the family farm corporation, joint family farm venture, partnership, or limited liability company that owns the land and that is residing on and actively engaged in farming the land is a shareholder, member, or partner of the family farm corporation, joint family farm venture, partnership, or limited liability company that is operating the farm;

 

(ii) each shareholder, member, or partner of the family farm corporation, joint family farm venture, partnership, or limited liability company that is operating the farm is also a shareholder, member, or partner of the family farm corporation, joint family farm venture, partnership, or limited liability company that owns the land; and

 

(iii) a majority of the shareholders, members, or partners of each family farm corporation, joint family farm venture, partnership, or limited liability company are persons or spouses of persons who are related to each other within the second degree of kindred according to the rules of civil law.

 

"Family farm corporation," "family farm," and "partnership operating a family farm" have the meanings given in section 500.24, except that the number of allowable shareholders, members, or partners under this subdivision shall not exceed 12.  "Limited liability company" has the meaning contained in sections 322B.03, subdivision 28, or 322C.0102, subdivision 12, and 500.24, subdivision 2, paragraphs (l) and (m).  "Joint family farm venture" means a cooperative agreement among two or more farm enterprises authorized to operate a family farm under section 500.24.

 

(b) In addition to property specified in paragraph (a), any other residences owned by family farm corporations, joint family farm ventures, limited liability companies, or partnerships described in paragraph (a) which are located on agricultural land and occupied as homesteads by its shareholders, members, or partners who are actively engaged in farming on behalf of that corporation, joint farm venture, limited liability company, or partnership must also be assessed as class 2a property or as class 1b property under section 273.13.

 

(c) Agricultural property that is owned by a member, partner, or shareholder of a family farm corporation or joint family farm venture, limited liability company operating a family farm, or by a partnership operating a family farm and leased to the family farm corporation, limited liability company, partnership, or joint farm venture, as defined in paragraph (a), is eligible for classification as class 1b or class 2a under section 273.13, if the owner is actually residing on the property, and is actually engaged in farming the land on behalf of that corporation, joint farm venture, limited liability company, or partnership.  This paragraph applies without regard to any legal possession rights of the family farm corporation, joint family farm venture, limited liability company, or partnership under the lease.

 

(d) Nonhomestead agricultural property that is owned by a family farm corporation, joint farm venture, limited liability company, or partnership; and located not farther than four townships or cities, or combination thereof, from agricultural land that is owned, and used for the purposes of a homestead by an individual who is a shareholder, member, or partner of the corporation, venture, company, or partnership; is entitled to receive the first tier homestead classification rate on any remaining market value in the first homestead class tier that is in excess of the market value of the shareholder's, member's, or partner's class 2 agricultural homestead property, if the owner, or someone acting on the owner's behalf notifies the county assessor by July May 1 that the property may be eligible under this paragraph for the current assessment year, for taxes payable in the following year.  As used in this paragraph, "agricultural property" means property classified as 2a under section 273.13, along with any contiguous property classified as 2b under section 273.13, if the contiguous 2a and 2b properties are under the same ownership.

 

EFFECTIVE DATE.  This section is effective beginning with assessments in 2020.


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Sec. 16.  Minnesota Statutes 2016, section 273.124, subdivision 9, is amended to read:

 

Subd. 9.  Homestead established after assessment date.  Any property that was not used for the purpose of a homestead on the assessment date, but which was used for the purpose of a homestead on December 1 of a year, constitutes class 1 or class 2a.

 

Any taxpayer meeting the requirements of this subdivision must notify the county assessor, or the assessor who has the powers of the county assessor under section 273.063, in writing, by December 15 31 of the year of occupancy in order to qualify under this subdivision.  The assessor must not deny full homestead treatment to a property that is partially homesteaded on January 2 but occupied for the purpose of a full homestead on December 1 of a year.

 

The county assessor and the county auditor may make the necessary changes on their assessment and tax records to provide for proper homestead classification as provided in this subdivision.

 

If homestead classification has not been requested as of December 15 31, the assessor will classify the property as nonhomestead for the current assessment year for taxes payable in the following year, provided that the owner of any property qualifying under this subdivision, which has not been accorded the benefits of this subdivision, may be entitled to receive homestead classification by proper application as provided in section 375.192.

 

The county assessor may publish in a newspaper of general circulation within the county a notice requesting the public to file an application for homestead as soon as practicable after acquisition of a homestead, but no later than December 15.

 

The county assessor shall publish in a newspaper of general circulation within the county no later than December 1 of each year a notice informing the public of the requirement to file an application for homestead by December 15 31.

 

In the case of manufactured homes assessed as personal property, the homestead must be established, and a homestead classification requested, by May 29 1 of the assessment year.  The assessor may include information on these deadlines for manufactured homes assessed as personal property in the published notice or notices.

 

EFFECTIVE DATE.  This section is effective beginning with assessments in 2020.

 

Sec. 17.  Minnesota Statutes 2016, section 273.124, subdivision 17, is amended to read:

 

Subd. 17.  Owner-occupied motel property.  For purposes of class 1a 1 determinations, a homestead includes that portion of property defined as a motel under chapter 157, provided that the person residing in the motel property is using that property as a homestead, is part owner, and is actively engaged in the operation of the motel business.  Homestead treatment applies even if legal title to the property is in the name of a corporation or partnership and not in the name of the person residing in the motel.  The homestead is limited to that portion of the motel actually occupied by the person.

 

A taxpayer meeting the requirements of this subdivision must notify the county assessor, or the assessor who has the powers of the county assessor under section 273.063, in writing, in order to qualify under this subdivision for 1a homestead class 1 classification.

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2020.


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Sec. 18.  Minnesota Statutes 2016, section 273.125, subdivision 3, is amended to read:

 

Subd. 3.  Tax statements; penalties; collections.  Not later than July 15 1 in the year of assessment the county treasurer shall mail to the taxpayer a statement of tax due on a manufactured home.  The taxes are due on the last day of August, or 20 days after the postmark date on the envelope containing the property tax statement, whichever is later, except that if the tax exceeds $50, one-half of the amount due may be paid on August 31, or 20 days after the postmark date on the envelope containing the property tax statement, whichever is later, and the remainder on November 15.  Taxes remaining unpaid after the due date are delinquent, and a penalty of eight percent must be assessed and collected as part of the unpaid taxes.  The tax statement must contain a sentence notifying the taxpayer that the title to the manufactured home cannot be transferred unless the property taxes are paid.

 

EFFECTIVE DATE.  This section is effective beginning with assessments in 2020.

 

Sec. 19.  Minnesota Statutes 2016, section 273.128, subdivision 1, is amended to read:

 

Subdivision 1.  Requirement.  Low-income rental property classified as class 4d 4i under section 273.13, subdivision 25, is entitled to valuation under this section if at least 20 percent of the units in the rental housing property meet any of the following qualifications:

 

(1) the units are subject to a housing assistance payments contract under Section 8 of the United States Housing Act of 1937, as amended;

 

(2) the units are rent-restricted and income-restricted units of a qualified low-income housing project receiving tax credits under section 42(g) of the Internal Revenue Code;

 

(3) the units are financed by the Rural Housing Service of the United States Department of Agriculture and receive payments under the rental assistance program pursuant to section 521(a) of the Housing Act of 1949, as amended; or

 

(4) the units are subject to rent and income restrictions under the terms of financial assistance provided to the rental housing property by the federal government or the state of Minnesota, or a local unit of government, as evidenced by a document recorded against the property.

 

The restrictions must require assisted units to be occupied by residents whose household income at the time of initial occupancy does not exceed 60 percent of the greater of area or state median income, adjusted for family size, as determined by the United States Department of Housing and Urban Development.  The restriction must also require the rents for assisted units to not exceed 30 percent of 60 percent of the greater of area or state median income, adjusted for family size, as determined by the United States Department of Housing and Urban Development.

 

EFFECTIVE DATE.  This section is effective beginning for property taxes payable in 2020.

 

Sec. 20.  Minnesota Statutes 2017 Supplement, section 273.13, subdivision 22, is amended to read:

 

Subd. 22.  Class 1.  (a) Except as provided in subdivision 23 and in paragraphs (b) and (c), real estate which is residential and used for homestead purposes is class 1a.  In the case of a duplex or triplex in which one of the units is used for homestead purposes, the entire property is deemed to be used for homestead purposes.  The market value of class 1a property must be determined based upon the value of the house, garage, and land.


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Class 1 property is residential real estate containing fewer than four dwelling units.  The first $500,000 of taxable market value of class 1a 1 property has a net classification rate of one percent of its market value;, and the taxable market value of class 1a 1 property that exceeds $500,000 has a classification rate of 1.25 percent of its market value.

 

(b) Class 1b property includes homestead real estate or homestead manufactured homes used for the purposes of a homestead by:

 

(1) any person who is blind as defined in section 256D.35, or the blind person and the blind person's spouse;

 

(2) any person who is permanently and totally disabled or by the disabled person and the disabled person's spouse; or

 

(3) the surviving spouse of a permanently and totally disabled veteran homesteading a property classified under this paragraph for taxes payable in 2008.

 

Property is classified and assessed under clause (2) only if the government agency or income-providing source certifies, upon the request of the homestead occupant, that the homestead occupant satisfies the disability requirements of this paragraph, and that the property is not eligible for the valuation exclusion under subdivision 34.

 

Property is classified and assessed under paragraph (b) only if the commissioner of revenue or the county assessor certifies that the homestead occupant satisfies the requirements of this paragraph.

 

Permanently and totally disabled for the purpose of this subdivision means a condition which is permanent in nature and totally incapacitates the person from working at an occupation which brings the person an income.  The first $50,000 market value of class 1b property has a net classification rate of .45 percent of its market value.  The remaining market value of class 1b property is classified as class 1a or class 2a property, whichever is appropriate.

 

(c) Class 1c property is commercial use real and personal property that abuts public water as defined in section 103G.005, subdivision 15, or abuts a state trail administered by the Department of Natural Resources, and is devoted to temporary and seasonal residential occupancy for recreational purposes but not devoted to commercial purposes for more than 250 days in the year preceding the year of assessment, and that includes a portion used as a homestead by the owner, which includes a dwelling occupied as a homestead by a shareholder of a corporation that owns the resort, a partner in a partnership that owns the resort, or a member of a limited liability company that owns the resort even if the title to the homestead is held by the corporation, partnership, or limited liability company.  For purposes of this paragraph, property is devoted to a commercial purpose on a specific day if any portion of the property, excluding the portion used exclusively as a homestead, is used for residential occupancy and a fee is charged for residential occupancy.  Class 1c property must contain three or more rental units.  A "rental unit" is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site equipped with water and electrical hookups for recreational vehicles.  Class 1c property must provide recreational activities such as the rental of ice fishing houses, boats and motors, snowmobiles, downhill or cross-country ski equipment; provide marina services, launch services, or guide services; or sell bait and fishing tackle.  Any unit in which the right to use the property is transferred to an individual or entity by deeded interest, or the sale of shares or stock, no longer qualifies for class 1c even though it may remain available for rent.  A camping pad offered for rent by a property that otherwise qualifies for class 1c is also class 1c, regardless of the term of the rental agreement, as long as the use of the camping pad does not exceed 250 days.  If the same owner owns two separate parcels that are located in the same township, and one of those properties is classified as a class 1c property and the other would be eligible to be classified as a class 1c property if it was used as the homestead of the owner, both properties will be assessed as a single class 1c property; for purposes of this sentence, properties are deemed to be owned by the same owner if each of them is owned by a limited liability company, and both limited liability companies have the same membership.  The portion of the property used as a homestead is class 1a property under paragraph (a).  The remainder of the property is


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classified as follows:  the first $600,000 of market value is tier I, the next $1,700,000 of market value is tier II, and any remaining market value is tier III.  The classification rates for class 1c are:  tier I, 0.50 percent; tier II, 1.0 percent; and tier III, 1.25 percent.  Owners of real and personal property devoted to temporary and seasonal residential occupancy for recreation purposes in which all or a portion of the property was devoted to commercial purposes for not more than 250 days in the year preceding the year of assessment desiring classification as class 1c, must submit a declaration to the assessor designating the cabins or units occupied for 250 days or less in the year preceding the year of assessment by January 15 of the assessment year.  Those cabins or units and a proportionate share of the land on which they are located must be designated as class 1c as otherwise provided.  The remainder of the cabins or units and a proportionate share of the land on which they are located must be designated as class 3a commercial.  The owner of property desiring designation as class 1c property must provide guest registers or other records demonstrating that the units for which class 1c designation is sought were not occupied for more than 250 days in the year preceding the assessment if so requested.  The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility operated on a commercial basis not directly related to temporary and seasonal residential occupancy for recreation purposes does not qualify for class 1c.

 

(d) Class 1d property includes structures that meet all of the following criteria:

 

(1) the structure is located on property that is classified as agricultural property under section 273.13, subdivision 23;

 

(2) the structure is occupied exclusively by seasonal farm workers during the time when they work on that farm, and the occupants are not charged rent for the privilege of occupying the property, provided that use of the structure for storage of farm equipment and produce does not disqualify the property from classification under this paragraph;

 

(3) the structure meets all applicable health and safety requirements for the appropriate season; and

 

(4) the structure is not salable as residential property because it does not comply with local ordinances relating to location in relation to streets or roads.

 

The market value of class 1d property has the same classification rates as class 1a property under paragraph (a).

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2020.

 

Sec. 21.  Minnesota Statutes 2017 Supplement, section 273.13, subdivision 23, is amended to read:

 

Subd. 23.  Class 2.  (a) An agricultural homestead consists of class 2a agricultural land and buildings that is are homesteaded, along with any class 2b rural vacant land that is contiguous to the class 2a land under the same ownership.  The market value of the house and garage and immediately surrounding one acre of land has the same classification rates as class 1a or 1b property under subdivision 22.  The value of the remaining land including improvements up to the first tier valuation limit of agricultural homestead property has a classification rate of 0.5 percent of market value.  The remaining property over the first tier has a classification rate of one percent of market value.  For purposes of this subdivision, the "first tier valuation limit of agricultural homestead property" and "first tier" means the limit certified under section 273.11, subdivision 23.

 

(b) Class 2a agricultural land consists of parcels of property, or portions thereof, that are agricultural land and buildings.  Class 2a property has a classification rate of one percent of market value, unless it is part of an agricultural homestead under paragraph (a).  Class 2a property must also include any property that would otherwise be classified as 2b, but is interspersed with class 2a property, including but not limited to sloughs, wooded wind shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback requirement, and other similar land that is impractical for the assessor to value separately from the rest of the property or that is unlikely to be able to be sold separately from the rest of the property.


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An assessor may classify the part of a parcel described in this subdivision that is used for agricultural purposes as class 2a and the remainder in the class appropriate to its use.

 

(c) Class 2b rural vacant land consists of parcels of property, or portions thereof, that are unplatted real estate, rural in character and not used for agricultural purposes, including land used for growing trees for timber, lumber, and wood and wood products, that is not improved with a structure.  The presence of a minor, ancillary nonresidential structure as defined by the commissioner of revenue does not disqualify the property from classification under this paragraph.  Any parcel of 20 acres or more improved with a structure that is not a minor, ancillary nonresidential structure must be split-classified, and ten acres must be assigned to the split parcel containing the structure.  Class 2b property has a classification rate of one percent of market value unless it is part of an agricultural homestead under paragraph (a), or qualifies as class 2c under paragraph (d).

 

(d) Class 2c managed forest land consists of no less than 20 and no more than 1,920 acres statewide per taxpayer that is being managed under a forest management plan that meets the requirements of chapter 290C, but is not enrolled in the sustainable forest resource management incentive program.  It has a classification rate of .65 percent, provided that the owner of the property must apply to the assessor in order for the property to initially qualify for the reduced rate and provide the information required by the assessor to verify that the property qualifies for the reduced rate.  If the assessor receives the application and information before May 1 in an assessment year, the property qualifies beginning with that assessment year.  If the assessor receives the application and information after April 30 in an assessment year, the property may not qualify until the next assessment year.  The commissioner of natural resources must concur that the land is qualified.  The commissioner of natural resources shall annually provide county assessors verification information on a timely basis.  The presence of a minor, ancillary nonresidential structure as defined by the commissioner of revenue does not disqualify the property from classification under this paragraph.

 

(e) Agricultural land as used in this section means:

 

(1) contiguous acreage of ten acres or more, used during the preceding year for agricultural purposes; or

 

(2) contiguous acreage used during the preceding year for an intensive livestock or poultry confinement operation, provided that land used only for pasturing or grazing does not qualify under this clause.

 

"Agricultural purposes" as used in this section means the raising, cultivation, drying, or storage of agricultural products for sale, or the storage of machinery or equipment used in support of agricultural production by the same farm entity.  For a property to be classified as agricultural based only on the drying or storage of agricultural products, the products being dried or stored must have been produced by the same farm entity as the entity operating the drying or storage facility.  "Agricultural purposes" also includes (i) enrollment in a local conservation program or the Reinvest in Minnesota program under sections 103F.501 to 103F.535 or the federal Conservation Reserve Program as contained in Public Law 99-198 or a similar state or federal conservation program if the property was classified as agricultural (i) (A) under this subdivision for taxes payable in 2003 because of its enrollment in a qualifying program and the land remains enrolled or (ii) (B) in the year prior to its enrollment, or (ii) use of land, not to exceed the greater of three acres or ten percent of the total land area, to provide environmental benefits such as buffer strips, old growth forest restoration or retention, or retention ponds to prevent soil erosion.  For purposes of this section, a "local conservation program" means a program administered by a town, statutory or home rule charter city, or county, including a watershed district, water management organization, or soil and water conservation district, in which landowners voluntarily enroll land and receive incentive payments equal to at least $50 per acre in exchange for use or other restrictions placed on the land.  In order for property to qualify under the local conservation program provision, a taxpayer must apply to the assessor by February 1 of the assessment year and


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must submit the information required by the assessor, including but not limited to a copy of the program requirements, the specific agreement between the land owner and the local agency, if applicable, and a map of the conservation area.  Agricultural classification shall not be based upon the market value of any residential structures on the parcel or contiguous parcels under the same ownership.

 

"Agricultural purposes" also includes land consisting of a holding pond designed to prevent runoff onto a divided four-lane expressway that is located at least 150 feet above the expressway, as certified by the local soil and water conservation district in accordance with USDA Field Office Technical Guide conservation practice standards, provided that the land is located outside the metropolitan area as defined in section 473.121, and was classified as agricultural in assessment year 2017.

 

"Contiguous acreage," for purposes of this paragraph, means all of, or a contiguous portion of, a tax parcel as described in section 272.193, or all of, or a contiguous portion of, a set of contiguous tax parcels under that section that are owned by the same person.

 

(f) Agricultural land under this section also includes:

 

(1) contiguous acreage that is less than ten acres in size and exclusively used in the preceding year for raising or cultivating agricultural products; or

 

(2) contiguous acreage that contains a residence and is less than 11 acres in size, if the contiguous acreage exclusive of the house, garage, and surrounding one acre of land was used in the preceding year for one or more of the following three uses:

 

(i) for an intensive grain drying or storage operation, or for intensive machinery or equipment storage activities used to support agricultural activities on other parcels of property operated by the same farming entity;

 

(ii) as a nursery, provided that only those acres used intensively to produce nursery stock are considered agricultural land; or

 

(iii) for intensive market farming; for purposes of this paragraph, "market farming" means the cultivation of one or more fruits or vegetables or production of animal or other agricultural products for sale to local markets by the farmer or an organization with which the farmer is affiliated.

 

"Contiguous acreage," for purposes of this paragraph, means all of a tax parcel as described in section 272.193, or all of a set of contiguous tax parcels under that section that are owned by the same person.

 

(g) Land shall be classified as agricultural even if all or a portion of the agricultural use of that property is the leasing to, or use by another person for agricultural purposes.

 

Classification under this subdivision is not determinative for qualifying under section 273.111.

 

(h) The property classification under this section supersedes, for property tax purposes only, any locally administered agricultural policies or land use restrictions that define minimum or maximum farm acreage.

 

(i) The term "agricultural products" as used in this subdivision includes production for sale of:

 

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, bees, and apiary products by the owner;


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(2) aquacultural products for sale and consumption, as defined under section 17.47, if the aquaculture occurs on land zoned for agricultural use;

 

(3) the commercial boarding of horses, which may include related horse training and riding instruction, if the boarding is done on property that is also used for raising pasture to graze horses or raising or cultivating other agricultural products as defined in clause (1);

 

(4) property which is owned and operated by nonprofit organizations used for equestrian activities, excluding racing;

 

(5) game birds and waterfowl bred and raised (i) on a game farm licensed under section 97A.105, provided that the annual licensing report to the Department of Natural Resources, which must be submitted annually by March 30 to the assessor, indicates that at least 500 birds were raised or used for breeding stock on the property during the preceding year and that the owner provides a copy of the owner's most recent schedule F; or (ii) for use on a shooting preserve licensed under section 97A.115;

 

(6) insects primarily bred to be used as food for animals;

 

(7) trees, grown for sale as a crop, including short rotation woody crops, and not sold for timber, lumber, wood, or wood products; and

 

(8) maple syrup taken from trees grown by a person licensed by the Minnesota Department of Agriculture under chapter 28A as a food processor.

 

(j) If a parcel used for agricultural purposes is also used for commercial or industrial purposes, including but not limited to:

 

(1) wholesale and retail sales;

 

(2) processing of raw agricultural products or other goods;

 

(3) warehousing or storage of processed goods; and

 

(4) office facilities for the support of the activities enumerated in clauses (1), (2), and (3),

 

the assessor shall classify the part of the parcel used for agricultural purposes as class 1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its use.  The grading, sorting, and packaging of raw agricultural products for first sale is considered an agricultural purpose.  A greenhouse or other building where horticultural or nursery products are grown that is also used for the conduct of retail sales must be classified as agricultural if it is primarily used for the growing of horticultural or nursery products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of those products.  Use of a greenhouse or building only for the display of already grown horticultural or nursery products does not qualify as an agricultural purpose.

 

(k) The assessor shall determine and list separately on the records the market value of the homestead dwelling and the one acre of land on which that dwelling is located.  If any farm buildings or structures are located on this homesteaded acre of land, their market value shall not be included in this separate determination.

 

(l) (k) Class 2d airport landing area consists of a landing area or public access area of a privately owned public use airport.  It has a classification rate of one percent of market value.  To qualify for classification under this paragraph, a privately owned public use airport must be licensed as a public airport under section 360.018.  For purposes of this paragraph, "landing area" means that part of a privately owned public use airport properly cleared,


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regularly maintained, and made available to the public for use by aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing or navigational aids.  A landing area also includes land underlying both the primary surface and the approach surfaces that comply with all of the following:

 

(i) the land is properly cleared and regularly maintained for the primary purposes of the landing, taking off, and taxiing of aircraft; but that portion of the land that contains facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;

 

(ii) the land is part of the airport property; and

 

(iii) the land is not used for commercial or residential purposes.

 

The land contained in a landing area under this paragraph must be described and certified by the commissioner of transportation.  The certification is effective until it is modified, or until the airport or landing area no longer meets the requirements of this paragraph.  For purposes of this paragraph, "public access area" means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival and departure building in connection with the airport.

 

(m) (l) Class 2e consists of land with a commercial aggregate deposit that is not actively being mined and is not otherwise classified as class 2a or 2b, provided that the land is not located in a county that has elected to opt-out of the aggregate preservation program as provided in section 273.1115, subdivision 6.  It has a classification rate of one percent of market value.  To qualify for classification under this paragraph, the property must be at least ten contiguous acres in size and the owner of the property must record with the county recorder of the county in which the property is located an affidavit containing:

 

(1) a legal description of the property;

 

(2) a disclosure that the property contains a commercial aggregate deposit that is not actively being mined but is present on the entire parcel enrolled;

 

(3) documentation that the conditional use under the county or local zoning ordinance of this property is for mining; and

 

(4) documentation that a permit has been issued by the local unit of government or the mining activity is allowed under local ordinance.  The disclosure must include a statement from a registered professional geologist, engineer, or soil scientist delineating the deposit and certifying that it is a commercial aggregate deposit.

 

For purposes of this section and section 273.1115, "commercial aggregate deposit" means a deposit that will yield crushed stone or sand and gravel that is suitable for use as a construction aggregate; and "actively mined" means the removal of top soil and overburden in preparation for excavation or excavation of a commercial deposit.

 

(n) (m) When any portion of the property under this subdivision or subdivision 22 begins to be actively mined, the owner must file a supplemental affidavit within 60 days from the day any aggregate is removed stating the number of acres of the property that is actively being mined.  The acres actively being mined must be (1) valued and classified under subdivision 24 in the next subsequent assessment year, and (2) removed from the aggregate resource preservation property tax program under section 273.1115, if the land was enrolled in that program.  Copies of the original affidavit and all supplemental affidavits must be filed with the county assessor, the local zoning administrator, and the Department of Natural Resources, Division of Land and Minerals.  A supplemental affidavit must be filed each time a subsequent portion of the property is actively mined, provided that the minimum acreage change is five acres, even if the actual mining activity constitutes less than five acres.


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(o) (n) The definitions prescribed by the commissioner under paragraphs (c) and (d) are not rules and are exempt from the rulemaking provisions of chapter 14, and the provisions in section 14.386 concerning exempt rules do not apply.

 

EFFECTIVE DATE.  This section is effective beginning with taxes payable in 2020.

 

Sec. 22.  Minnesota Statutes 2017 Supplement, section 273.13, subdivision 25, is amended to read: