Bill Text: MN HF129 | 2011-2012 | 87th Legislature | Engrossed
Bill Title: Tax aids and credits changes made and payments reduced, and changes conformed in the Internal Revenue Code.
Sponsorship: Partisan Bill (Republican 3)
Status: (Introduced - Dead) 2011-01-20 - Committee report, to pass as amended and re-refer to Ways and Means [HF129 Detail]
Download: Minnesota-2011-HF129-Engrossed.html
1.2relating to state government finance; making changes to tax aids and credits
1.3and reducing payments; conforming to certain changes in the Internal Revenue
1.4Code;amending Minnesota Statutes 2010, sections 270A.03, subdivision 7;
1.5273.1384, subdivision 6; 289A.02, subdivision 7; 289A.50, subdivision 1;
1.6290.01, subdivisions 6, 19, 19a, 19c, 31; 290A.03, subdivisions 11, 13, 15;
1.7290C.07; 477A.013, subdivision 9; 477A.03; proposing coding for new law in
1.8Minnesota Statutes, chapter 477A; repealing Minnesota Statutes 2010, sections
1.910A.322, subdivision 4; 13.4967, subdivision 2; 290.06, subdivision 23.
1.10BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.13 Section 1. Minnesota Statutes 2010, section 270A.03, subdivision 7, is amended to
1.14read:
1.15 Subd. 7. Refund. "Refund" means an individual income tax refundor political
1.16contribution refund, pursuant to chapter 290, or a property tax credit or refund, pursuant to
1.17chapter 290A, or a sustainable forest tax payment to a claimant under chapter 290C.
1.18For purposes of this chapter, lottery prizes, as set forth in section349A.08,
1.19subdivision 8 , and amounts granted to persons by the legislature on the recommendation
1.20of the joint senate-house of representatives Subcommittee on Claims shall be treated
1.21as refunds.
1.22In the case of a joint property tax refund payable to spouses under chapter 290A,
1.23the refund shall be considered as belonging to each spouse in the proportion of the total
1.24refund that equals each spouse's proportion of the total income determined under section
1.25290A.03, subdivision 3
. In the case of a joint income tax refund under chapter 289A, the
1.26refund shall be considered as belonging to each spouse in the proportion of the total
2.1refund that equals each spouse's proportion of the total taxable income determined under
2.2section290.01, subdivision 29 . The commissioner shall remit the entire refund to the
2.3claimant agency, which shall, upon the request of the spouse who does not owe the debt,
2.4determine the amount of the refund belonging to that spouse and refund the amount to
2.5that spouse. For court fines, fees, and surcharges and court-ordered restitution under
2.6section611A.04, subdivision 2 , the notice provided by the commissioner of revenue under
2.7section270A.07, subdivision 2 , paragraph (b), serves as the appropriate legal notice
2.8to the spouse who does not owe the debt.
2.9EFFECTIVE DATE.This section is effective for refund claims based on
2.10contributions made after June 30, 2011.
2.11 Sec. 2. Minnesota Statutes 2010, section 273.1384, subdivision 6, is amended to read:
2.12 Subd. 6. Credit reduction. In 2011 and each year thereafter, the market value
2.13credit reimbursement amount for each taxing jurisdiction determined under this section is
2.14reduced by the dollar amount of the reduction in market value credit reimbursements for
2.15that taxing jurisdiction in 2010 due to the reductions undersection sections
477A.0133
2.16and 477A.0134 . No taxing jurisdiction's market value credit reimbursements are reduced
2.17to less than zero under this subdivision. The commissioner of revenue shall pay the annual
2.18market value credit reimbursement amounts, after reduction under this subdivision, to the
2.19affected taxing jurisdictions as provided in this section.
2.20EFFECTIVE DATE.This section is effective the day following final enactment.
2.21 Sec. 3. Minnesota Statutes 2010, section 289A.50, subdivision 1, is amended to read:
2.22 Subdivision 1. General right to refund. (a) Subject to the requirements of this
2.23section and section289A.40 , a taxpayer who has paid a tax in excess of the taxes lawfully
2.24due and who files a written claim for refund will be refunded or credited the overpayment
2.25of the tax determined by the commissioner to be erroneously paid.
2.26(b) The claim must specify the name of the taxpayer, the date when and the period
2.27for which the tax was paid, the kind of tax paid, the amount of the tax that the taxpayer
2.28claims was erroneously paid, the grounds on which a refund is claimed, and other
2.29information relative to the payment and in the form required by the commissioner. An
2.30income tax, estate tax, or corporate franchise tax return, or amended return claiming an
2.31overpayment constitutes a claim for refund.
2.32(c) When, in the course of an examination, and within the time for requesting a
2.33refund, the commissioner determines that there has been an overpayment of tax, the
3.1commissioner shall refund or credit the overpayment to the taxpayer and no demand
3.2is necessary. If the overpayment exceeds $1, the amount of the overpayment must
3.3be refunded to the taxpayer. If the amount of the overpayment is less than $1, the
3.4commissioner is not required to refund. In these situations, the commissioner does not
3.5have to make written findings or serve notice by mail to the taxpayer.
3.6(d) If the amount allowable as a credit for withholding, estimated taxes, or dependent
3.7care exceeds the tax against which the credit is allowable, the amount of the excess is
3.8considered an overpayment.The refund allowed by section
290.06, subdivision 23, is also
3.9considered an overpayment. The requirements of section
270C.33 do not apply to the
3.10refunding of such an overpayment shown on the original return filed by a taxpayer.
3.11(e) If the entertainment tax withheld at the source exceeds by $1 or more the taxes,
3.12penalties, and interest reported in the return of the entertainment entity or imposed by
3.13section290.9201 , the excess must be refunded to the entertainment entity. If the excess is
3.14less than $1, the commissioner need not refund that amount.
3.15(f) If the surety deposit required for a construction contract exceeds the liability of
3.16the out-of-state contractor, the commissioner shall refund the difference to the contractor.
3.17(g) An action of the commissioner in refunding the amount of the overpayment does
3.18not constitute a determination of the correctness of the return of the taxpayer.
3.19(h) There is appropriated from the general fund to the commissioner of revenue the
3.20amount necessary to pay refunds allowed under this section.
3.21EFFECTIVE DATE.This section is effective for refund claims based on
3.22contributions made after June 30, 2011.
3.23 Sec. 4. Minnesota Statutes 2010, section 290.01, subdivision 6, is amended to read:
3.24 Subd. 6. Taxpayer. The term "taxpayer" means any person or corporation subject to
3.25a tax imposed by this chapter.For purposes of section
290.06, subdivision 23, the term
3.26"taxpayer" means an individual eligible to vote in Minnesota under section
201.014.
3.27EFFECTIVE DATE.This section is effective for refund claims based on
3.28contributions made after June 30, 2011.
3.29 Sec. 5. Minnesota Statutes 2010, section 290A.03, subdivision 11, is amended to read:
3.30 Subd. 11. Rent constituting property taxes. "Rent constituting property taxes"
3.31means19 15 percent of the gross rent actually paid in cash, or its equivalent, or the portion
3.32of rent paid in lieu of property taxes, in any calendar year by a claimant for the right
3.33of occupancy of the claimant's Minnesota homestead in the calendar year, and which
4.1rent constitutes the basis, in the succeeding calendar year of a claim for relief under this
4.2chapter by the claimant.
4.3EFFECTIVE DATE.This section is effective for claims based on rent paid in
4.42010 and following years.
4.5 Sec. 6. Minnesota Statutes 2010, section 290A.03, subdivision 13, is amended to read:
4.6 Subd. 13. Property taxes payable. "Property taxes payable" means the property tax
4.7exclusive of special assessments, penalties, and interest payable on a claimant's homestead
4.8after deductions made under sections273.135 ,
273.1384 ,
273.1391 ,
273.42, subdivision 2 ,
4.9and any other state paid property tax credits in any calendar year, and after any refund
4.10claimed and allowable under section290A.04, subdivision 2h , that is first payable in
4.11the year that the property tax is payable. In the case of a claimant who makes ground
4.12lease payments, "property taxes payable" includes the amount of the payments directly
4.13attributable to the property taxes assessed against the parcel on which the house is located.
4.14No apportionment or reduction of the "property taxes payable" shall be required for the
4.15use of a portion of the claimant's homestead for a business purpose if the claimant does not
4.16deduct any business depreciation expenses for the use of a portion of the homestead in the
4.17determination of federal adjusted gross income. For homesteads which are manufactured
4.18homes as defined in section273.125, subdivision 8 , and for homesteads which are park
4.19trailers taxed as manufactured homes under section168.012, subdivision 9 , "property
4.20taxes payable" shall also include19 15 percent of the gross rent paid in the preceding
4.21year for the site on which the homestead is located. When a homestead is owned by
4.22two or more persons as joint tenants or tenants in common, such tenants shall determine
4.23between them which tenant may claim the property taxes payable on the homestead. If
4.24they are unable to agree, the matter shall be referred to the commissioner of revenue
4.25whose decision shall be final. Property taxes are considered payable in the year prescribed
4.26by law for payment of the taxes.
4.27In the case of a claim relating to "property taxes payable," the claimant must have
4.28owned and occupied the homestead on January 2 of the year in which the tax is payable
4.29and (i) the property must have been classified as homestead property pursuant to section
4.30273.124
, on or before December 15 of the assessment year to which the "property taxes
4.31payable" relate; or (ii) the claimant must provide documentation from the local assessor
4.32that application for homestead classification has been made on or before December 15
4.33of the year in which the "property taxes payable" were payable and that the assessor has
4.34approved the application.
5.1EFFECTIVE DATE.This section is effective for claims based on rent paid in
5.22010 and following years.
5.3 Sec. 7. Minnesota Statutes 2010, section 290C.07, is amended to read:
5.4290C.07 CALCULATION OF INCENTIVE PAYMENT.
5.5 (a) An approved claimant under the sustainable forest incentive program is eligible
5.6to receive an annual payment. Subject to the limitation contained in paragraph (b), the
5.7payment shall equal the greater of:
5.8 (1) the difference between the property tax that would be paid on the land using the
5.9previous year's statewide average total township tax rate and a class rate of one percent, if
5.10the land were valued at (i) the average statewide managed forest land market value per
5.11acre calculated under section290C.06 , and (ii) the average statewide managed forest land
5.12current use value per acre calculated under section290C.02, subdivision 5 ; or
5.13 (2) two-thirds of the property tax amount determined by using the previous year's
5.14statewide average total township tax rate, the estimated market value per acre as calculated
5.15in section290C.06 , and a class rate of one percent, provided that the payment shall be no
5.16less than $7 per acre for each acre enrolled in the sustainable forest incentive program.
5.17(b) The annual payment under this section per each Social Security number or state
5.18or federal business tax identification number must not exceed $100,000.
5.19EFFECTIVE DATE.This section is effective for payments in calendar year 2011
5.20and thereafter.
5.21 Sec. 8. Minnesota Statutes 2010, section 477A.013, subdivision 9, is amended to read:
5.22 Subd. 9. City aid distribution. (a) In calendar year 2009 and thereafter, each
5.23city shall receive an aid distribution equal to the sum of (1) the city formula aid under
5.24subdivision 8, and (2) its city aid base.
5.25 (b) For aids payable in2011 2012 only, the total aid in the previous year for any
5.26city shall mean the amount of aid it was certified to receive for aids payable in2010
5.272011 under this section minus the amount of its aid reduction under section477A.0134
5.28477A.0135. For aids payable in2012 2013 and thereafter, the total aid in the previous
5.29year for any city means the amount of aid it was certified to receive under this section in
5.30the previous payable year.
5.31 (c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed
5.32the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
5.33plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
6.1aid for any city with a population of 2,500 or more may not be less than its total aid under
6.2this section in the previous year minus the lesser of $10 multiplied by its population, or ten
6.3percent of its net levy in the year prior to the aid distribution.
6.4 (d) For aids payable in 2010 and thereafter, the total aid for a city with a population
6.5less than 2,500 must not be less than the amount it was certified to receive in the
6.6previous year minus the lesser of $10 multiplied by its population, or five percent of its
6.72003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a
6.8population less than 2,500 must not be less than what it received under this section in the
6.9previous year unless its total aid in calendar year 2008 was aid under section477A.011 ,
6.10subdivision 36, paragraph (s), in which case its minimum aid is zero.
6.11 (e) A city's aid loss under this section may not exceed $300,000 in any year in
6.12which the total city aid appropriation under section477A.03, subdivision 2a , is equal or
6.13greater than the appropriation under that subdivision in the previous year, unless the
6.14city has an adjustment in its city net tax capacity under the process described in section
6.15469.174, subdivision 28
.
6.16 (f) If a city's net tax capacity used in calculating aid under this section has decreased
6.17in any year by more than 25 percent from its net tax capacity in the previous year due to
6.18property becoming tax-exempt Indian land, the city's maximum allowed aid increase
6.19under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
6.20year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
6.21resulting from the property becoming tax exempt.
6.22EFFECTIVE DATE.This section is effective for aids payable in calendar year
6.232012 and thereafter.
6.24 Sec. 9. [477A.0135] 2011 REDUCTIONS; COUNTIES AND CITIES.
6.25The commissioner of revenue must compute and apply reductions to each county's
6.26aid under section 477A.0124 and each city's aid under section 477A.013, subdivision 9,
6.27for 2011 under this section. The reduction is equal to 48.5358 percent of each county's
6.28total county program aid reductions and 91.53216 percent of each city's local government
6.29aid reductions for aids payable in 2010 under sections 477A.0133 and 477A.0134. The
6.30reduction shall be limited to (1) the amount a county is certified to receive in aid in 2011
6.31under section 477A.0124 and (2) the amount a city is certified to receive in aid in 2011
6.32under section 477A.013, subdivision 9.
6.33EFFECTIVE DATE.This section is effective for aids payable in calendar year
6.342011.
7.1 Sec. 10. Minnesota Statutes 2010, section 477A.03, is amended to read:
7.2477A.03 APPROPRIATION.
7.3 Subd. 2. Annual appropriation. A sum sufficient to discharge the duties imposed
7.4by sections477A.011 to
477A.014 is annually appropriated from the general fund to the
7.5commissioner of revenue.
7.6 Subd. 2a. Cities. For aids payable in2011 2012 and thereafter, the total aid paid
7.7under section477A.013, subdivision 9 , is $527,100,646 $426,438,012.
7.8 Subd. 2b. Counties. (a) For aids payable in2011 2012 and thereafter, the total aid
7.9payable under section477A.0124, subdivision 3 , is $96,395,000 $80,795,000. Each
7.10calendar year, $500,000 shall be retained by the commissioner of revenue to make
7.11reimbursements to the commissioner of management and budget for payments made
7.12under section611.27 . For calendar year 2004, the amount shall be in addition to the
7.13payments authorized under section477A.0124, subdivision 1 . For calendar year 2005
7.14and subsequent years, the amount shall be deducted from the appropriation under
7.15this paragraph. The reimbursements shall be to defray the additional costs associated
7.16with court-ordered counsel under section611.27 . Any retained amounts not used for
7.17reimbursement in a year shall be included in the next distribution of county need aid
7.18that is certified to the county auditors for the purpose of property tax reduction for the
7.19next taxes payable year.
7.20 (b) For aids payable in2011 2012 and thereafter, the total aid under section
7.21477A.0124, subdivision 4
, is $101,309,575 $84,909,575. The commissioner of
7.22management and budget shall bill the commissioner of revenue for the cost of preparation
7.23of local impact notes as required by section3.987 , not to exceed $207,000 in fiscal year
7.242004 and thereafter. The commissioner of education shall bill the commissioner of
7.25revenue for the cost of preparation of local impact notes for school districts as required by
7.26section3.987 , not to exceed $7,000 in fiscal year 2004 and thereafter. The commissioner
7.27of revenue shall deduct the amounts billed under this paragraph from the appropriation
7.28under this paragraph. The amounts deducted are appropriated to the commissioner of
7.29management and budget and the commissioner of education for the preparation of local
7.30impact notes.
7.31EFFECTIVE DATE.This section is effective for aids payable in calendar year
7.322012 and thereafter.
7.33 Sec. 11. ADMINISTRATION OF PROPERTY TAX REFUND CLAIMS; 2011.
8.1In administering sections 5 and 6 for claims for refunds submitted using 19 percent
8.2of gross rent as rent constituting property taxes under prior law, the commissioner shall
8.3recalculate and pay the refund amounts using 15 percent of gross rent. The commissioner
8.4shall notify the claimant that the recalculation was mandated by action of the 2011
8.5Legislature.
8.6EFFECTIVE DATE.This section is effective the day following final enactment.
8.7 Sec. 12. REPEALER.
8.8(a) Minnesota Statutes 2010, sections 10A.322, subdivision 4; and 13.4967,
8.9subdivision 2, are repealed.
8.10(b) Minnesota Statutes 2010, section 290.06, subdivision 23, is repealed.
8.11EFFECTIVE DATE.Paragraph (a) is effective the day following final enactment.
8.12Paragraph (b) is effective for refund claims based on contributions made after June 30,
8.132011.
8.16 Section 1. Minnesota Statutes 2010, section 289A.02, subdivision 7, is amended to
8.17read:
8.18 Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, "Internal
8.19Revenue Code" means the Internal Revenue Code of 1986, as amended throughMarch 18,
8.202010 September 27, 2010.
8.21EFFECTIVE DATE.This section is effective the day after final enactment.
8.22 Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19, is amended to read:
8.23 Subd. 19. Net income. The term "net income" means the federal taxable income,
8.24as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
8.25date named in this subdivision, incorporating the federal effective dates of changes to the
8.26Internal Revenue Code and any elections made by the taxpayer in accordance with the
8.27Internal Revenue Code in determining federal taxable income for federal income tax
8.28purposes, and with the modifications provided in subdivisions 19a to 19f.
8.29 In the case of a regulated investment company or a fund thereof, as defined in section
8.30851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
9.1company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
9.2except that:
9.3 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
9.4Revenue Code does not apply;
9.5 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
9.6Revenue Code must be applied by allowing a deduction for capital gain dividends and
9.7exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
9.8Revenue Code; and
9.9 (3) the deduction for dividends paid must also be applied in the amount of any
9.10undistributed capital gains which the regulated investment company elects to have treated
9.11as provided in section 852(b)(3)(D) of the Internal Revenue Code.
9.12 The net income of a real estate investment trust as defined and limited by section
9.13856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
9.14taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
9.15 The net income of a designated settlement fund as defined in section 468B(d) of
9.16the Internal Revenue Code means the gross income as defined in section 468B(b) of the
9.17Internal Revenue Code.
9.18 The Internal Revenue Code of 1986, as amended throughMarch 18, 2010 September
9.1927, 2010, shall be in effect for taxable years beginning after December 31, 1996. The
9.20provisions of the act of January 22, 2010, Public Law 111-126, to accelerate the benefits
9.21for charitable cash contributions for the relief of victims of the Haitian earthquake, are
9.22effective at the same time it became effective for federal purposes and apply to the
9.23subtraction under subdivision 19b, clause (6).
9.24 Except as otherwise provided, references to the Internal Revenue Code in
9.25subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
9.26the applicable year.
9.27EFFECTIVE DATE.This section is effective the day after final enactment.
9.28 Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19a, is amended to read:
9.29 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
9.30trusts, there shall be added to federal taxable income:
9.31 (1)(i) interest income on obligations of any state other than Minnesota or a political
9.32or governmental subdivision, municipality, or governmental agency or instrumentality
9.33of any state other than Minnesota exempt from federal income taxes under the Internal
9.34Revenue Code or any other federal statute; and
10.1 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
10.2Code, except:
10.3(A) the portion of the exempt-interest dividends exempt from state taxation under
10.4the laws of the United States; and
10.5(B) the portion of the exempt-interest dividends derived from interest income
10.6on obligations of the state of Minnesota or its political or governmental subdivisions,
10.7municipalities, governmental agencies or instrumentalities, but only if the portion of the
10.8exempt-interest dividends from such Minnesota sources paid to all shareholders represents
10.995 percent or more of the exempt-interest dividends, including any dividends exempt
10.10under subitem (A), that are paid by the regulated investment company as defined in section
10.11851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
10.12defined in section 851(g) of the Internal Revenue Code, making the payment; and
10.13 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
10.14government described in section 7871(c) of the Internal Revenue Code shall be treated as
10.15interest income on obligations of the state in which the tribe is located;
10.16 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid
10.17or accrued within the taxable year under this chapter and the amount of taxes based on
10.18net income paid, sales and use, motor vehicle sales, or excise taxes paid to any other
10.19state or to any province or territory of Canada, to the extent allowed as a deduction
10.20under section 63(d) of the Internal Revenue Code, but the addition may not be more
10.21than the amount by which the itemized deductions as allowed under section 63(d) of
10.22the Internal Revenue Code exceeds the amount of the standard deduction as defined in
10.23section 63(c) of the Internal Revenue Code, disregarding the amounts allowed under
10.24sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code. For the purpose of
10.25this paragraph, the disallowance of itemized deductions under section 68 of the Internal
10.26Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise taxes are
10.27the last itemized deductions disallowed;
10.28 (3) the capital gain amount of a lump-sum distribution to which the special tax under
10.29section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
10.30 (4) the amount of income taxes paid or accrued within the taxable year under this
10.31chapter and taxes based on net income paid to any other state or any province or territory
10.32of Canada, to the extent allowed as a deduction in determining federal adjusted gross
10.33income. For the purpose of this paragraph, income taxes do not include the taxes imposed
10.34by sections290.0922, subdivision 1 , paragraph (b),
290.9727 ,
290.9728 , and
290.9729 ;
11.1 (5) the amount of expense, interest, or taxes disallowed pursuant to section290.10
11.2other than expenses or interest used in computing net interest income for the subtraction
11.3allowed under subdivision 19b, clause (1);
11.4 (6) the amount of a partner's pro rata share of net income which does not flow
11.5through to the partner because the partnership elected to pay the tax on the income under
11.6section 6242(a)(2) of the Internal Revenue Code;
11.7 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
11.8Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
11.9in the taxable year generates a deduction for depreciation under section 168(k) and the
11.10activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
11.11the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
11.12limited to excess of the depreciation claimed by the activity under section 168(k) over the
11.13amount of the loss from the activity that is not allowed in the taxable year. In succeeding
11.14taxable years when the losses not allowed in the taxable year are allowed, the depreciation
11.15under section 168(k) is allowed;
11.16 (8) for taxable years beginning before January 1, 2011, 80 percent of the amount by
11.17which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
11.18deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
11.19through December 31, 2003;
11.20 (9) to the extent deducted in computing federal taxable income, the amount of the
11.21deduction allowable under section 199 of the Internal Revenue Code;
11.22 (10) for taxable years beginning before January 1, 2013, the exclusion allowed
11.23under section 139A of the Internal Revenue Code for federal subsidies for prescription
11.24drug plans;
11.25(11) the amount of expenses disallowed under section 290.10, subdivision 2;
11.26 (12) the amount deducted for qualified tuition and related expenses under section
11.27222 of the Internal Revenue Code, to the extent deducted from gross income;
11.28 (13) the amount deducted for certain expenses of elementary and secondary school
11.29teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
11.30from gross income;
11.31(14) the additional standard deduction for property taxes payable that is allowable
11.32under section 63(c)(1)(C) of the Internal Revenue Code;
11.33(15) the additional standard deduction for qualified motor vehicle sales taxes
11.34allowable under section 63(c)(1)(E) of the Internal Revenue Code;
11.35(16) discharge of indebtedness income resulting from reacquisition of business
11.36indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
12.1(17) the amount of unemployment compensation exempt from tax under section
12.285(c) of the Internal Revenue Code.
12.3EFFECTIVE DATE.This section is effective for taxable years beginning after
12.4December 31, 2009.
12.5 Sec. 4. Minnesota Statutes 2010, section 290.01, subdivision 19c, is amended to read:
12.6 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
12.7there shall be added to federal taxable income:
12.8 (1) the amount of any deduction taken for federal income tax purposes for income,
12.9excise, or franchise taxes based on net income or related minimum taxes, including but not
12.10limited to the tax imposed under section290.0922 , paid by the corporation to Minnesota,
12.11another state, a political subdivision of another state, the District of Columbia, or any
12.12foreign country or possession of the United States;
12.13 (2) interest not subject to federal tax upon obligations of: the United States, its
12.14possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
12.15state, any of its political or governmental subdivisions, any of its municipalities, or any
12.16of its governmental agencies or instrumentalities; the District of Columbia; or Indian
12.17tribal governments;
12.18 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
12.19Revenue Code;
12.20 (4) the amount of any net operating loss deduction taken for federal income tax
12.21purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
12.22deduction under section 810 of the Internal Revenue Code;
12.23 (5) the amount of any special deductions taken for federal income tax purposes
12.24under sections 241 to 247 and 965 of the Internal Revenue Code;
12.25 (6) losses from the business of mining, as defined in section290.05, subdivision 1 ,
12.26clause (a), that are not subject to Minnesota income tax;
12.27 (7) the amount of any capital losses deducted for federal income tax purposes under
12.28sections 1211 and 1212 of the Internal Revenue Code;
12.29 (8) the exempt foreign trade income of a foreign sales corporation under sections
12.30921(a) and 291 of the Internal Revenue Code;
12.31 (9) the amount of percentage depletion deducted under sections 611 through 614 and
12.32291 of the Internal Revenue Code;
12.33 (10) for certified pollution control facilities placed in service in a taxable year
12.34beginning before December 31, 1986, and for which amortization deductions were elected
12.35under section 169 of the Internal Revenue Code of 1954, as amended through December
13.131, 1985, the amount of the amortization deduction allowed in computing federal taxable
13.2income for those facilities;
13.3 (11) the amount of any deemed dividend from a foreign operating corporation
13.4determined pursuant to section290.17, subdivision 4 , paragraph (g). The deemed dividend
13.5shall be reduced by the amount of the addition to income required by clauses (20), (21),
13.6(22), and (23);
13.7 (12) the amount of a partner's pro rata share of net income which does not flow
13.8through to the partner because the partnership elected to pay the tax on the income under
13.9section 6242(a)(2) of the Internal Revenue Code;
13.10 (13) the amount of net income excluded under section 114 of the Internal Revenue
13.11Code;
13.12 (14) any increase in subpart F income, as defined in section 952(a) of the Internal
13.13Revenue Code, for the taxable year when subpart F income is calculated without regard to
13.14the provisions of Division C, title III, section 303(b) of Public Law 110-343;
13.15 (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
13.16and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
13.17has an activity that in the taxable year generates a deduction for depreciation under
13.18section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
13.19that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
13.20under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
13.21depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
13.22amount of the loss from the activity that is not allowed in the taxable year. In succeeding
13.23taxable years when the losses not allowed in the taxable year are allowed, the depreciation
13.24under section 168(k)(1)(A) and (k)(4)(A) is allowed;
13.25 (16) for taxable years beginning before January 1, 2011, 80 percent of the amount by
13.26which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
13.27deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
13.28through December 31, 2003;
13.29 (17) to the extent deducted in computing federal taxable income, the amount of the
13.30deduction allowable under section 199 of the Internal Revenue Code;
13.31 (18) for taxable years beginning before January 1, 2013, the exclusion allowed
13.32under section 139A of the Internal Revenue Code for federal subsidies for prescription
13.33drug plans;
13.34 (19) the amount of expenses disallowed under section290.10, subdivision 2 ;
13.35 (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
13.36accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
14.1of a corporation that is a member of the taxpayer's unitary business group that qualifies
14.2as a foreign operating corporation. For purposes of this clause, intangible expenses and
14.3costs include:
14.4 (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
14.5use, maintenance or management, ownership, sale, exchange, or any other disposition of
14.6intangible property;
14.7 (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
14.8transactions;
14.9 (iii) royalty, patent, technical, and copyright fees;
14.10 (iv) licensing fees; and
14.11 (v) other similar expenses and costs.
14.12For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
14.13applications, trade names, trademarks, service marks, copyrights, mask works, trade
14.14secrets, and similar types of intangible assets.
14.15This clause does not apply to any item of interest or intangible expenses or costs paid,
14.16accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
14.17to such item of income to the extent that the income to the foreign operating corporation
14.18is income from sources without the United States as defined in subtitle A, chapter 1,
14.19subchapter N, part 1, of the Internal Revenue Code;
14.20 (21) except as already included in the taxpayer's taxable income pursuant to clause
14.21(20), any interest income and income generated from intangible property received or
14.22accrued by a foreign operating corporation that is a member of the taxpayer's unitary
14.23group. For purposes of this clause, income generated from intangible property includes:
14.24 (i) income related to the direct or indirect acquisition, use, maintenance or
14.25management, ownership, sale, exchange, or any other disposition of intangible property;
14.26 (ii) income from factoring transactions or discounting transactions;
14.27 (iii) royalty, patent, technical, and copyright fees;
14.28 (iv) licensing fees; and
14.29 (v) other similar income.
14.30For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
14.31applications, trade names, trademarks, service marks, copyrights, mask works, trade
14.32secrets, and similar types of intangible assets.
14.33This clause does not apply to any item of interest or intangible income received or accrued
14.34by a foreign operating corporation with respect to such item of income to the extent that
15.1the income is income from sources without the United States as defined in subtitle A,
15.2chapter 1, subchapter N, part 1, of the Internal Revenue Code;
15.3 (22) the dividends attributable to the income of a foreign operating corporation that
15.4is a member of the taxpayer's unitary group in an amount that is equal to the dividends
15.5paid deduction of a real estate investment trust under section 561(a) of the Internal
15.6Revenue Code for amounts paid or accrued by the real estate investment trust to the
15.7foreign operating corporation;
15.8 (23) the income of a foreign operating corporation that is a member of the taxpayer's
15.9unitary group in an amount that is equal to gains derived from the sale of real or personal
15.10property located in the United States;
15.11 (24) the additional amount allowed as a deduction for donation of computer
15.12technology and equipment under section 170(e)(6) of the Internal Revenue Code, to the
15.13extent deducted from taxable income; and
15.14(25) discharge of indebtedness income resulting from reacquisition of business
15.15indebtedness and deferred under section 108(i) of the Internal Revenue Code.
15.16EFFECTIVE DATE.This section is effective for taxable years beginning after
15.17December 31, 2009.
15.18 Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 31, is amended to read:
15.19 Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, "Internal
15.20Revenue Code" means the Internal Revenue Code of 1986, as amended throughMarch
15.2118, 2010 September 27, 2010. Internal Revenue Code also includes any uncodified
15.22provision in federal law that relates to provisions of the Internal Revenue Code that are
15.23incorporated into Minnesota law.
15.24EFFECTIVE DATE.This section is effective the day following final enactment
15.25except that the changes incorporated by federal changes are effective at the same time as
15.26the changes were effective for federal purposes.
15.27 Sec. 6. Minnesota Statutes 2010, section 290A.03, subdivision 15, is amended to read:
15.28 Subd. 15. Internal Revenue Code. "Internal Revenue Code" means the Internal
15.29Revenue Code of 1986, as amended throughMarch 18, 2010 September 27, 2010.
15.30EFFECTIVE DATE.This section is effective for property tax refunds based on
15.31property taxes payable on or after December 31, 2010, and rent paid on or after December
15.3231, 2009.
16.1 Sec. 7. CORRECTED FORM W-2 NOT REQUIRED.
16.2Employers who have prepared and distributed form W-2, wage and tax statement,
16.3for tax year 2010, that reported to employees the amount of health coverage provided to
16.4adult children under age 27 includable in net income under prior law, are not required to
16.5prepare and distribute corrected tax year 2010 form W-2.
1.3and reducing payments; conforming to certain changes in the Internal Revenue
1.4Code;amending Minnesota Statutes 2010, sections 270A.03, subdivision 7;
1.5273.1384, subdivision 6; 289A.02, subdivision 7; 289A.50, subdivision 1;
1.6290.01, subdivisions 6, 19, 19a, 19c, 31; 290A.03, subdivisions 11, 13, 15;
1.7290C.07; 477A.013, subdivision 9; 477A.03; proposing coding for new law in
1.8Minnesota Statutes, chapter 477A; repealing Minnesota Statutes 2010, sections
1.910A.322, subdivision 4; 13.4967, subdivision 2; 290.06, subdivision 23.
1.10BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.13 Section 1. Minnesota Statutes 2010, section 270A.03, subdivision 7, is amended to
1.14read:
1.15 Subd. 7. Refund. "Refund" means an individual income tax refund
1.16
1.17chapter 290A, or a sustainable forest tax payment to a claimant under chapter 290C.
1.18For purposes of this chapter, lottery prizes, as set forth in section
1.19subdivision 8
1.20of the joint senate-house of representatives Subcommittee on Claims shall be treated
1.21as refunds.
1.22In the case of a joint property tax refund payable to spouses under chapter 290A,
1.23the refund shall be considered as belonging to each spouse in the proportion of the total
1.24refund that equals each spouse's proportion of the total income determined under section
1.26refund shall be considered as belonging to each spouse in the proportion of the total
2.1refund that equals each spouse's proportion of the total taxable income determined under
2.2section
2.3claimant agency, which shall, upon the request of the spouse who does not owe the debt,
2.4determine the amount of the refund belonging to that spouse and refund the amount to
2.5that spouse. For court fines, fees, and surcharges and court-ordered restitution under
2.6section
2.7section
2.8to the spouse who does not owe the debt.
2.9EFFECTIVE DATE.This section is effective for refund claims based on
2.10contributions made after June 30, 2011.
2.11 Sec. 2. Minnesota Statutes 2010, section 273.1384, subdivision 6, is amended to read:
2.12 Subd. 6. Credit reduction. In 2011 and each year thereafter, the market value
2.13credit reimbursement amount for each taxing jurisdiction determined under this section is
2.14reduced by the dollar amount of the reduction in market value credit reimbursements for
2.15that taxing jurisdiction in 2010 due to the reductions under
2.16and 477A.0134
2.17to less than zero under this subdivision. The commissioner of revenue shall pay the annual
2.18market value credit reimbursement amounts, after reduction under this subdivision, to the
2.19affected taxing jurisdictions as provided in this section.
2.20EFFECTIVE DATE.This section is effective the day following final enactment.
2.21 Sec. 3. Minnesota Statutes 2010, section 289A.50, subdivision 1, is amended to read:
2.22 Subdivision 1. General right to refund. (a) Subject to the requirements of this
2.23section and section
2.24due and who files a written claim for refund will be refunded or credited the overpayment
2.25of the tax determined by the commissioner to be erroneously paid.
2.26(b) The claim must specify the name of the taxpayer, the date when and the period
2.27for which the tax was paid, the kind of tax paid, the amount of the tax that the taxpayer
2.28claims was erroneously paid, the grounds on which a refund is claimed, and other
2.29information relative to the payment and in the form required by the commissioner. An
2.30income tax, estate tax, or corporate franchise tax return, or amended return claiming an
2.31overpayment constitutes a claim for refund.
2.32(c) When, in the course of an examination, and within the time for requesting a
2.33refund, the commissioner determines that there has been an overpayment of tax, the
3.1commissioner shall refund or credit the overpayment to the taxpayer and no demand
3.2is necessary. If the overpayment exceeds $1, the amount of the overpayment must
3.3be refunded to the taxpayer. If the amount of the overpayment is less than $1, the
3.4commissioner is not required to refund. In these situations, the commissioner does not
3.5have to make written findings or serve notice by mail to the taxpayer.
3.6(d) If the amount allowable as a credit for withholding, estimated taxes, or dependent
3.7care exceeds the tax against which the credit is allowable, the amount of the excess is
3.8considered an overpayment.
3.9
3.10refunding of such an overpayment shown on the original return filed by a taxpayer.
3.11(e) If the entertainment tax withheld at the source exceeds by $1 or more the taxes,
3.12penalties, and interest reported in the return of the entertainment entity or imposed by
3.13section
3.14less than $1, the commissioner need not refund that amount.
3.15(f) If the surety deposit required for a construction contract exceeds the liability of
3.16the out-of-state contractor, the commissioner shall refund the difference to the contractor.
3.17(g) An action of the commissioner in refunding the amount of the overpayment does
3.18not constitute a determination of the correctness of the return of the taxpayer.
3.19(h) There is appropriated from the general fund to the commissioner of revenue the
3.20amount necessary to pay refunds allowed under this section.
3.21EFFECTIVE DATE.This section is effective for refund claims based on
3.22contributions made after June 30, 2011.
3.23 Sec. 4. Minnesota Statutes 2010, section 290.01, subdivision 6, is amended to read:
3.24 Subd. 6. Taxpayer. The term "taxpayer" means any person or corporation subject to
3.25a tax imposed by this chapter.
3.26
3.27EFFECTIVE DATE.This section is effective for refund claims based on
3.28contributions made after June 30, 2011.
3.29 Sec. 5. Minnesota Statutes 2010, section 290A.03, subdivision 11, is amended to read:
3.30 Subd. 11. Rent constituting property taxes. "Rent constituting property taxes"
3.31means
3.32of rent paid in lieu of property taxes, in any calendar year by a claimant for the right
3.33of occupancy of the claimant's Minnesota homestead in the calendar year, and which
4.1rent constitutes the basis, in the succeeding calendar year of a claim for relief under this
4.2chapter by the claimant.
4.3EFFECTIVE DATE.This section is effective for claims based on rent paid in
4.42010 and following years.
4.5 Sec. 6. Minnesota Statutes 2010, section 290A.03, subdivision 13, is amended to read:
4.6 Subd. 13. Property taxes payable. "Property taxes payable" means the property tax
4.7exclusive of special assessments, penalties, and interest payable on a claimant's homestead
4.8after deductions made under sections
4.9and any other state paid property tax credits in any calendar year, and after any refund
4.10claimed and allowable under section
4.11the year that the property tax is payable. In the case of a claimant who makes ground
4.12lease payments, "property taxes payable" includes the amount of the payments directly
4.13attributable to the property taxes assessed against the parcel on which the house is located.
4.14No apportionment or reduction of the "property taxes payable" shall be required for the
4.15use of a portion of the claimant's homestead for a business purpose if the claimant does not
4.16deduct any business depreciation expenses for the use of a portion of the homestead in the
4.17determination of federal adjusted gross income. For homesteads which are manufactured
4.18homes as defined in section
4.19trailers taxed as manufactured homes under section
4.20taxes payable" shall also include
4.21year for the site on which the homestead is located. When a homestead is owned by
4.22two or more persons as joint tenants or tenants in common, such tenants shall determine
4.23between them which tenant may claim the property taxes payable on the homestead. If
4.24they are unable to agree, the matter shall be referred to the commissioner of revenue
4.25whose decision shall be final. Property taxes are considered payable in the year prescribed
4.26by law for payment of the taxes.
4.27In the case of a claim relating to "property taxes payable," the claimant must have
4.28owned and occupied the homestead on January 2 of the year in which the tax is payable
4.29and (i) the property must have been classified as homestead property pursuant to section
4.31payable" relate; or (ii) the claimant must provide documentation from the local assessor
4.32that application for homestead classification has been made on or before December 15
4.33of the year in which the "property taxes payable" were payable and that the assessor has
4.34approved the application.
5.1EFFECTIVE DATE.This section is effective for claims based on rent paid in
5.22010 and following years.
5.3 Sec. 7. Minnesota Statutes 2010, section 290C.07, is amended to read:
5.4290C.07 CALCULATION OF INCENTIVE PAYMENT.
5.5 (a) An approved claimant under the sustainable forest incentive program is eligible
5.6to receive an annual payment. Subject to the limitation contained in paragraph (b), the
5.7payment shall equal the greater of:
5.8 (1) the difference between the property tax that would be paid on the land using the
5.9previous year's statewide average total township tax rate and a class rate of one percent, if
5.10the land were valued at (i) the average statewide managed forest land market value per
5.11acre calculated under section
5.12current use value per acre calculated under section
5.13 (2) two-thirds of the property tax amount determined by using the previous year's
5.14statewide average total township tax rate, the estimated market value per acre as calculated
5.15in section
5.16less than $7 per acre for each acre enrolled in the sustainable forest incentive program.
5.17(b) The annual payment under this section per each Social Security number or state
5.18or federal business tax identification number must not exceed $100,000.
5.19EFFECTIVE DATE.This section is effective for payments in calendar year 2011
5.20and thereafter.
5.21 Sec. 8. Minnesota Statutes 2010, section 477A.013, subdivision 9, is amended to read:
5.22 Subd. 9. City aid distribution. (a) In calendar year 2009 and thereafter, each
5.23city shall receive an aid distribution equal to the sum of (1) the city formula aid under
5.24subdivision 8, and (2) its city aid base.
5.25 (b) For aids payable in
5.26city shall mean the amount of aid it was certified to receive for aids payable in
5.272011 under this section minus the amount of its aid reduction under section
5.28477A.0135. For aids payable in
5.29year for any city means the amount of aid it was certified to receive under this section in
5.30the previous payable year.
5.31 (c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed
5.32the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
5.33plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
6.1aid for any city with a population of 2,500 or more may not be less than its total aid under
6.2this section in the previous year minus the lesser of $10 multiplied by its population, or ten
6.3percent of its net levy in the year prior to the aid distribution.
6.4 (d) For aids payable in 2010 and thereafter, the total aid for a city with a population
6.5less than 2,500 must not be less than the amount it was certified to receive in the
6.6previous year minus the lesser of $10 multiplied by its population, or five percent of its
6.72003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a
6.8population less than 2,500 must not be less than what it received under this section in the
6.9previous year unless its total aid in calendar year 2008 was aid under section
6.10subdivision 36, paragraph (s), in which case its minimum aid is zero.
6.11 (e) A city's aid loss under this section may not exceed $300,000 in any year in
6.12which the total city aid appropriation under section
6.13greater than the appropriation under that subdivision in the previous year, unless the
6.14city has an adjustment in its city net tax capacity under the process described in section
6.16 (f) If a city's net tax capacity used in calculating aid under this section has decreased
6.17in any year by more than 25 percent from its net tax capacity in the previous year due to
6.18property becoming tax-exempt Indian land, the city's maximum allowed aid increase
6.19under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
6.20year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
6.21resulting from the property becoming tax exempt.
6.22EFFECTIVE DATE.This section is effective for aids payable in calendar year
6.232012 and thereafter.
6.24 Sec. 9. [477A.0135] 2011 REDUCTIONS; COUNTIES AND CITIES.
6.25The commissioner of revenue must compute and apply reductions to each county's
6.26aid under section 477A.0124 and each city's aid under section 477A.013, subdivision 9,
6.27for 2011 under this section. The reduction is equal to 48.5358 percent of each county's
6.28total county program aid reductions and 91.53216 percent of each city's local government
6.29aid reductions for aids payable in 2010 under sections 477A.0133 and 477A.0134. The
6.30reduction shall be limited to (1) the amount a county is certified to receive in aid in 2011
6.31under section 477A.0124 and (2) the amount a city is certified to receive in aid in 2011
6.32under section 477A.013, subdivision 9.
6.33EFFECTIVE DATE.This section is effective for aids payable in calendar year
6.342011.
7.1 Sec. 10. Minnesota Statutes 2010, section 477A.03, is amended to read:
7.2477A.03 APPROPRIATION.
7.3 Subd. 2. Annual appropriation. A sum sufficient to discharge the duties imposed
7.4by sections
7.5commissioner of revenue.
7.6 Subd. 2a. Cities. For aids payable in
7.7under section
7.8 Subd. 2b. Counties. (a) For aids payable in
7.9payable under section
7.10calendar year, $500,000 shall be retained by the commissioner of revenue to make
7.11reimbursements to the commissioner of management and budget for payments made
7.12under section
7.13payments authorized under section
7.14and subsequent years, the amount shall be deducted from the appropriation under
7.15this paragraph. The reimbursements shall be to defray the additional costs associated
7.16with court-ordered counsel under section
7.17reimbursement in a year shall be included in the next distribution of county need aid
7.18that is certified to the county auditors for the purpose of property tax reduction for the
7.19next taxes payable year.
7.20 (b) For aids payable in
7.22management and budget shall bill the commissioner of revenue for the cost of preparation
7.23of local impact notes as required by section
7.242004 and thereafter. The commissioner of education shall bill the commissioner of
7.25revenue for the cost of preparation of local impact notes for school districts as required by
7.26section
7.27of revenue shall deduct the amounts billed under this paragraph from the appropriation
7.28under this paragraph. The amounts deducted are appropriated to the commissioner of
7.29management and budget and the commissioner of education for the preparation of local
7.30impact notes.
7.31EFFECTIVE DATE.This section is effective for aids payable in calendar year
7.322012 and thereafter.
7.33 Sec. 11. ADMINISTRATION OF PROPERTY TAX REFUND CLAIMS; 2011.
8.1In administering sections 5 and 6 for claims for refunds submitted using 19 percent
8.2of gross rent as rent constituting property taxes under prior law, the commissioner shall
8.3recalculate and pay the refund amounts using 15 percent of gross rent. The commissioner
8.4shall notify the claimant that the recalculation was mandated by action of the 2011
8.5Legislature.
8.6EFFECTIVE DATE.This section is effective the day following final enactment.
8.7 Sec. 12. REPEALER.
8.8(a) Minnesota Statutes 2010, sections 10A.322, subdivision 4; and 13.4967,
8.9subdivision 2, are repealed.
8.10(b) Minnesota Statutes 2010, section 290.06, subdivision 23, is repealed.
8.11EFFECTIVE DATE.Paragraph (a) is effective the day following final enactment.
8.12Paragraph (b) is effective for refund claims based on contributions made after June 30,
8.132011.
8.16 Section 1. Minnesota Statutes 2010, section 289A.02, subdivision 7, is amended to
8.17read:
8.18 Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, "Internal
8.19Revenue Code" means the Internal Revenue Code of 1986, as amended through
8.20
8.21EFFECTIVE DATE.This section is effective the day after final enactment.
8.22 Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19, is amended to read:
8.23 Subd. 19. Net income. The term "net income" means the federal taxable income,
8.24as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
8.25date named in this subdivision, incorporating the federal effective dates of changes to the
8.26Internal Revenue Code and any elections made by the taxpayer in accordance with the
8.27Internal Revenue Code in determining federal taxable income for federal income tax
8.28purposes, and with the modifications provided in subdivisions 19a to 19f.
8.29 In the case of a regulated investment company or a fund thereof, as defined in section
8.30851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
9.1company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
9.2except that:
9.3 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
9.4Revenue Code does not apply;
9.5 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
9.6Revenue Code must be applied by allowing a deduction for capital gain dividends and
9.7exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
9.8Revenue Code; and
9.9 (3) the deduction for dividends paid must also be applied in the amount of any
9.10undistributed capital gains which the regulated investment company elects to have treated
9.11as provided in section 852(b)(3)(D) of the Internal Revenue Code.
9.12 The net income of a real estate investment trust as defined and limited by section
9.13856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
9.14taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
9.15 The net income of a designated settlement fund as defined in section 468B(d) of
9.16the Internal Revenue Code means the gross income as defined in section 468B(b) of the
9.17Internal Revenue Code.
9.18 The Internal Revenue Code of 1986, as amended through
9.1927, 2010, shall be in effect for taxable years beginning after December 31, 1996. The
9.20provisions of the act of January 22, 2010, Public Law 111-126, to accelerate the benefits
9.21for charitable cash contributions for the relief of victims of the Haitian earthquake, are
9.22effective at the same time it became effective for federal purposes and apply to the
9.23subtraction under subdivision 19b, clause (6).
9.24 Except as otherwise provided, references to the Internal Revenue Code in
9.25subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
9.26the applicable year.
9.27EFFECTIVE DATE.This section is effective the day after final enactment.
9.28 Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19a, is amended to read:
9.29 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
9.30trusts, there shall be added to federal taxable income:
9.31 (1)(i) interest income on obligations of any state other than Minnesota or a political
9.32or governmental subdivision, municipality, or governmental agency or instrumentality
9.33of any state other than Minnesota exempt from federal income taxes under the Internal
9.34Revenue Code or any other federal statute; and
10.1 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
10.2Code, except:
10.3(A) the portion of the exempt-interest dividends exempt from state taxation under
10.4the laws of the United States; and
10.5(B) the portion of the exempt-interest dividends derived from interest income
10.6on obligations of the state of Minnesota or its political or governmental subdivisions,
10.7municipalities, governmental agencies or instrumentalities, but only if the portion of the
10.8exempt-interest dividends from such Minnesota sources paid to all shareholders represents
10.995 percent or more of the exempt-interest dividends, including any dividends exempt
10.10under subitem (A), that are paid by the regulated investment company as defined in section
10.11851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
10.12defined in section 851(g) of the Internal Revenue Code, making the payment; and
10.13 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
10.14government described in section 7871(c) of the Internal Revenue Code shall be treated as
10.15interest income on obligations of the state in which the tribe is located;
10.16 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid
10.17or accrued within the taxable year under this chapter and the amount of taxes based on
10.18net income paid, sales and use, motor vehicle sales, or excise taxes paid to any other
10.19state or to any province or territory of Canada, to the extent allowed as a deduction
10.20under section 63(d) of the Internal Revenue Code, but the addition may not be more
10.21than the amount by which the itemized deductions as allowed under section 63(d) of
10.22the Internal Revenue Code exceeds the amount of the standard deduction as defined in
10.23section 63(c) of the Internal Revenue Code, disregarding the amounts allowed under
10.24sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code. For the purpose of
10.25this paragraph, the disallowance of itemized deductions under section 68 of the Internal
10.26Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise taxes are
10.27the last itemized deductions disallowed;
10.28 (3) the capital gain amount of a lump-sum distribution to which the special tax under
10.29section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
10.30 (4) the amount of income taxes paid or accrued within the taxable year under this
10.31chapter and taxes based on net income paid to any other state or any province or territory
10.32of Canada, to the extent allowed as a deduction in determining federal adjusted gross
10.33income. For the purpose of this paragraph, income taxes do not include the taxes imposed
10.34by sections
11.1 (5) the amount of expense, interest, or taxes disallowed pursuant to section
11.3allowed under subdivision 19b, clause (1);
11.4 (6) the amount of a partner's pro rata share of net income which does not flow
11.5through to the partner because the partnership elected to pay the tax on the income under
11.6section 6242(a)(2) of the Internal Revenue Code;
11.7 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
11.8Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
11.9in the taxable year generates a deduction for depreciation under section 168(k) and the
11.10activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
11.11the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
11.12limited to excess of the depreciation claimed by the activity under section 168(k) over the
11.13amount of the loss from the activity that is not allowed in the taxable year. In succeeding
11.14taxable years when the losses not allowed in the taxable year are allowed, the depreciation
11.15under section 168(k) is allowed;
11.16 (8) for taxable years beginning before January 1, 2011, 80 percent of the amount by
11.17which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
11.18deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
11.19through December 31, 2003;
11.20 (9) to the extent deducted in computing federal taxable income, the amount of the
11.21deduction allowable under section 199 of the Internal Revenue Code;
11.22 (10) for taxable years beginning before January 1, 2013, the exclusion allowed
11.23under section 139A of the Internal Revenue Code for federal subsidies for prescription
11.24drug plans;
11.25(11) the amount of expenses disallowed under section 290.10, subdivision 2;
11.26 (12) the amount deducted for qualified tuition and related expenses under section
11.27222 of the Internal Revenue Code, to the extent deducted from gross income;
11.28 (13) the amount deducted for certain expenses of elementary and secondary school
11.29teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
11.30from gross income;
11.31(14) the additional standard deduction for property taxes payable that is allowable
11.32under section 63(c)(1)(C) of the Internal Revenue Code;
11.33(15) the additional standard deduction for qualified motor vehicle sales taxes
11.34allowable under section 63(c)(1)(E) of the Internal Revenue Code;
11.35(16) discharge of indebtedness income resulting from reacquisition of business
11.36indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
12.1(17) the amount of unemployment compensation exempt from tax under section
12.285(c) of the Internal Revenue Code.
12.3EFFECTIVE DATE.This section is effective for taxable years beginning after
12.4December 31, 2009.
12.5 Sec. 4. Minnesota Statutes 2010, section 290.01, subdivision 19c, is amended to read:
12.6 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
12.7there shall be added to federal taxable income:
12.8 (1) the amount of any deduction taken for federal income tax purposes for income,
12.9excise, or franchise taxes based on net income or related minimum taxes, including but not
12.10limited to the tax imposed under section
12.11another state, a political subdivision of another state, the District of Columbia, or any
12.12foreign country or possession of the United States;
12.13 (2) interest not subject to federal tax upon obligations of: the United States, its
12.14possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
12.15state, any of its political or governmental subdivisions, any of its municipalities, or any
12.16of its governmental agencies or instrumentalities; the District of Columbia; or Indian
12.17tribal governments;
12.18 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
12.19Revenue Code;
12.20 (4) the amount of any net operating loss deduction taken for federal income tax
12.21purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
12.22deduction under section 810 of the Internal Revenue Code;
12.23 (5) the amount of any special deductions taken for federal income tax purposes
12.24under sections 241 to 247 and 965 of the Internal Revenue Code;
12.25 (6) losses from the business of mining, as defined in section
12.26clause (a), that are not subject to Minnesota income tax;
12.27 (7) the amount of any capital losses deducted for federal income tax purposes under
12.28sections 1211 and 1212 of the Internal Revenue Code;
12.29 (8) the exempt foreign trade income of a foreign sales corporation under sections
12.30921(a) and 291 of the Internal Revenue Code;
12.31 (9) the amount of percentage depletion deducted under sections 611 through 614 and
12.32291 of the Internal Revenue Code;
12.33 (10) for certified pollution control facilities placed in service in a taxable year
12.34beginning before December 31, 1986, and for which amortization deductions were elected
12.35under section 169 of the Internal Revenue Code of 1954, as amended through December
13.131, 1985, the amount of the amortization deduction allowed in computing federal taxable
13.2income for those facilities;
13.3 (11) the amount of any deemed dividend from a foreign operating corporation
13.4determined pursuant to section
13.5shall be reduced by the amount of the addition to income required by clauses (20), (21),
13.6(22), and (23);
13.7 (12) the amount of a partner's pro rata share of net income which does not flow
13.8through to the partner because the partnership elected to pay the tax on the income under
13.9section 6242(a)(2) of the Internal Revenue Code;
13.10 (13) the amount of net income excluded under section 114 of the Internal Revenue
13.11Code;
13.12 (14) any increase in subpart F income, as defined in section 952(a) of the Internal
13.13Revenue Code, for the taxable year when subpart F income is calculated without regard to
13.14the provisions of Division C, title III, section 303(b) of Public Law 110-343;
13.15 (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
13.16and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
13.17has an activity that in the taxable year generates a deduction for depreciation under
13.18section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
13.19that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
13.20under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
13.21depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
13.22amount of the loss from the activity that is not allowed in the taxable year. In succeeding
13.23taxable years when the losses not allowed in the taxable year are allowed, the depreciation
13.24under section 168(k)(1)(A) and (k)(4)(A) is allowed;
13.25 (16) for taxable years beginning before January 1, 2011, 80 percent of the amount by
13.26which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
13.27deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
13.28through December 31, 2003;
13.29 (17) to the extent deducted in computing federal taxable income, the amount of the
13.30deduction allowable under section 199 of the Internal Revenue Code;
13.31 (18) for taxable years beginning before January 1, 2013, the exclusion allowed
13.32under section 139A of the Internal Revenue Code for federal subsidies for prescription
13.33drug plans;
13.34 (19) the amount of expenses disallowed under section
13.35 (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
13.36accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
14.1of a corporation that is a member of the taxpayer's unitary business group that qualifies
14.2as a foreign operating corporation. For purposes of this clause, intangible expenses and
14.3costs include:
14.4 (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
14.5use, maintenance or management, ownership, sale, exchange, or any other disposition of
14.6intangible property;
14.7 (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
14.8transactions;
14.9 (iii) royalty, patent, technical, and copyright fees;
14.10 (iv) licensing fees; and
14.11 (v) other similar expenses and costs.
14.12For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
14.13applications, trade names, trademarks, service marks, copyrights, mask works, trade
14.14secrets, and similar types of intangible assets.
14.15This clause does not apply to any item of interest or intangible expenses or costs paid,
14.16accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
14.17to such item of income to the extent that the income to the foreign operating corporation
14.18is income from sources without the United States as defined in subtitle A, chapter 1,
14.19subchapter N, part 1, of the Internal Revenue Code;
14.20 (21) except as already included in the taxpayer's taxable income pursuant to clause
14.21(20), any interest income and income generated from intangible property received or
14.22accrued by a foreign operating corporation that is a member of the taxpayer's unitary
14.23group. For purposes of this clause, income generated from intangible property includes:
14.24 (i) income related to the direct or indirect acquisition, use, maintenance or
14.25management, ownership, sale, exchange, or any other disposition of intangible property;
14.26 (ii) income from factoring transactions or discounting transactions;
14.27 (iii) royalty, patent, technical, and copyright fees;
14.28 (iv) licensing fees; and
14.29 (v) other similar income.
14.30For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
14.31applications, trade names, trademarks, service marks, copyrights, mask works, trade
14.32secrets, and similar types of intangible assets.
14.33This clause does not apply to any item of interest or intangible income received or accrued
14.34by a foreign operating corporation with respect to such item of income to the extent that
15.1the income is income from sources without the United States as defined in subtitle A,
15.2chapter 1, subchapter N, part 1, of the Internal Revenue Code;
15.3 (22) the dividends attributable to the income of a foreign operating corporation that
15.4is a member of the taxpayer's unitary group in an amount that is equal to the dividends
15.5paid deduction of a real estate investment trust under section 561(a) of the Internal
15.6Revenue Code for amounts paid or accrued by the real estate investment trust to the
15.7foreign operating corporation;
15.8 (23) the income of a foreign operating corporation that is a member of the taxpayer's
15.9unitary group in an amount that is equal to gains derived from the sale of real or personal
15.10property located in the United States;
15.11 (24) the additional amount allowed as a deduction for donation of computer
15.12technology and equipment under section 170(e)(6) of the Internal Revenue Code, to the
15.13extent deducted from taxable income; and
15.14(25) discharge of indebtedness income resulting from reacquisition of business
15.15indebtedness and deferred under section 108(i) of the Internal Revenue Code.
15.16EFFECTIVE DATE.This section is effective for taxable years beginning after
15.17December 31, 2009.
15.18 Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 31, is amended to read:
15.19 Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, "Internal
15.20Revenue Code" means the Internal Revenue Code of 1986, as amended through
15.21
15.22provision in federal law that relates to provisions of the Internal Revenue Code that are
15.23incorporated into Minnesota law.
15.24EFFECTIVE DATE.This section is effective the day following final enactment
15.25except that the changes incorporated by federal changes are effective at the same time as
15.26the changes were effective for federal purposes.
15.27 Sec. 6. Minnesota Statutes 2010, section 290A.03, subdivision 15, is amended to read:
15.28 Subd. 15. Internal Revenue Code. "Internal Revenue Code" means the Internal
15.29Revenue Code of 1986, as amended through
15.30EFFECTIVE DATE.This section is effective for property tax refunds based on
15.31property taxes payable on or after December 31, 2010, and rent paid on or after December
15.3231, 2009.
16.1 Sec. 7. CORRECTED FORM W-2 NOT REQUIRED.
16.2Employers who have prepared and distributed form W-2, wage and tax statement,
16.3for tax year 2010, that reported to employees the amount of health coverage provided to
16.4adult children under age 27 includable in net income under prior law, are not required to
16.5prepare and distribute corrected tax year 2010 form W-2.
