Bill Text: MN HF2108 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Estate and gift taxes unified; base, rate, administrative, and procedural provisions modified; and penalties imposed.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2014-02-25 - Introduction and first reading, referred to Taxes [HF2108 Detail]
Download: Minnesota-2013-HF2108-Introduced.html
1.2relating to taxation; unifying the estate and gift taxes; modifying base, rate,
1.3administrative, and procedural provisions of the taxes; imposing penalties;
1.4amending Minnesota Statutes 2012, sections 270C.585; 289A.01; 289A.10,
1.5subdivisions 2, 3, by adding a subdivision; 289A.18, subdivision 3, by adding
1.6a subdivision; 289A.19, subdivision 4, by adding a subdivision; 289A.20, by
1.7adding a subdivision; 289A.30, subdivision 2, by adding a subdivision; 289A.35;
1.8289A.38, subdivisions 6, 7; 289A.50, subdivision 1; 289A.56, subdivision 3;
1.9289A.60, subdivisions 1, 2; 291.03, by adding a subdivision; Minnesota Statutes
1.102013 Supplement, sections 289A.10, subdivision 1; 291.005, subdivision 1;
1.11291.03, subdivision 1; 292.16; 292.17, subdivision 1, by adding subdivisions;
1.12292.20; proposing coding for new law in Minnesota Statutes, chapters 291; 292;
1.13repealing Minnesota Statutes 2012, sections 291.03, subdivision 1b; 291.41;
1.14291.42; 291.43; 291.44; 291.45; 291.46; 291.47; Minnesota Statutes 2013
1.15Supplement, sections 291.03, subdivision 1c; 292.17, subdivisions 2, 3; 292.18;
1.16292.19; 292.21.
1.17BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.18 Section 1. Minnesota Statutes 2012, section 270C.585, is amended to read:
1.19270C.585 TRANSFEREE LIABILITY FOR ESTATE AND GIFT TAX.
1.20(a) The personal representative and person to whom property that is subject to
1.21taxation under chapter 291 is transferred, other than a bona fide purchaser, mortgagee, or
1.22lessee, is personally liable for that tax, until its payment, to the extent of the value of the
1.23property at the time of the transfer. Personal liability also does not extend to subsequent
1.24transferees from bona fide purchasers, mortgagees, and lessees.
1.25(b) The person to whom property that is subject to taxation under chapter 292 is
1.26transferred, other than a bona fide purchaser, mortgagee, or lessee, is personally liable
1.27for that tax, until its payment, to the extent of the value of the property at the time of the
1.28transfer. The personal representative, if required to file a gift tax return, is personally liable
1.29for that tax until its payment to the extent of the value of the probate property at the time
2.1of the decedent's death. Personal liability also does not extend to subsequent transferees
2.2from bona fide purchasers, mortgagees, and lessees.
2.3 Sec. 2. Minnesota Statutes 2012, section 289A.01, is amended to read:
2.4289A.01 APPLICATION OF CHAPTER.
2.5This chapter applies to laws administered by the commissioner under chapters 290,
2.6290A, 291, 292, and 297A, and sections298.01 and
298.015 .
2.7 Sec. 3. Minnesota Statutes 2013 Supplement, section 289A.10, subdivision 1, is
2.8amended to read:
2.9 Subdivision 1. Return required. In the case of a decedent who has an interest in
2.10property with a situs in Minnesota, the personal representative must submit a Minnesota
2.11estate tax return to the commissioner, on a form prescribed by the commissioner, if:
2.12(1) a federal estate tax return is required to be filed; or
2.13(2) the sum of the federal gross estate and federal adjusted taxable giftsmade within
2.14three years of the date of the decedent's death, as defined in section 2001(b) of the Internal
2.15Revenue Code, exceeds$1,000,000 $1,500,000.
2.16The return must contain a computation of the Minnesota estate tax due. The return
2.17must be signed by the personal representative.
2.18 Sec. 4. Minnesota Statutes 2012, section 289A.10, is amended by adding a subdivision
2.19to read:
2.20 Subd. 1b. Gift tax return required. Any individual who makes a taxable gift
2.21during the taxable year shall file a gift tax return on a form prescribed by the commissioner.
2.22If the donor dies before filing the return, the personal representative of the donor's estate
2.23shall file the return. If the donor becomes legally incompetent before filing the return, the
2.24guardian or conservator shall file the return.
2.25 Sec. 5. Minnesota Statutes 2012, section 289A.10, subdivision 2, is amended to read:
2.26 Subd. 2. Documents required. The commissioner may designate on thereturn
2.27 estate and gift tax returns the documents that are required to be filed together with the
2.28return to determine the computation of tax.
2.29 Sec. 6. Minnesota Statutes 2012, section 289A.10, subdivision 3, is amended to read:
2.30 Subd. 3. Definitions. For purposes of this section, the definitions contained in
2.31section sections
291.005 and 292.16 apply.
3.1 Sec. 7. Minnesota Statutes 2012, section 289A.18, subdivision 3, is amended to read:
3.2 Subd. 3. Estate tax returns. An estate tax return must be filed with the
3.3commissioner within nine months after the decedent's death.Except in the case of the
3.4estate of a decedent dying after December 31, 2009, and before December 17, 2010, then
3.5an estate tax return must be filed with the commissioner within nine months after the
3.6decedent's death; within the time provided by section
289A.19, subdivision 4; or before
3.7September 20, 2011; whichever is later.
3.8 Sec. 8. Minnesota Statutes 2012, section 289A.18, is amended by adding a subdivision
3.9to read:
3.10 Subd. 3b. Gift tax returns. Gift tax returns must be filed with the commissioner by
3.11the April 15 following the close of the calendar year during which the gift was made.
3.12 Sec. 9. Minnesota Statutes 2012, section 289A.19, subdivision 4, is amended to read:
3.13 Subd. 4. Estate tax returns. The time for filing an estate tax returnshall be is
3.14 extended foreither six months or. If an estate is required to file a federal estate tax
3.15return, the time for filing an estate tax return is extended by six months or the amount of
3.16time granted under section 6081 of the Internal Revenue Code to file the federal estate
3.17tax return, whichever is longer.
3.18 Sec. 10. Minnesota Statutes 2012, section 289A.19, is amended by adding a
3.19subdivision to read:
3.20 Subd. 4a. Gift tax returns. The time for filing a gift tax return is extended for
3.21the amount of time granted under section 6075 of the Internal Revenue Code to file the
3.22federal gift tax return.
3.23 Sec. 11. Minnesota Statutes 2012, section 289A.20, is amended by adding a
3.24subdivision to read:
3.25 Subd. 3b. Gift tax. Taxes imposed under chapter 292 must be paid by the April 15
3.26following the close of the calendar year during which the gift was made.
3.27 Sec. 12. Minnesota Statutes 2012, section 289A.30, subdivision 2, is amended to read:
3.28 Subd. 2. Estate tax. (a) Where good cause exists, the commissioner may extend the
3.29time for payment of estate tax for a period of not more than six months.
3.30(b) If an estate is required to file a federal estate tax return and an extension to pay
3.31the federal estate tax has been granted under section 6161 of the Internal Revenue Code,
4.1the time for payment of the estate tax without penalty is extended for that period. A
4.2taxpayer who owes at least $5,000 in taxes and who, under section 6161 or 6166 of the
4.3Internal Revenue Code has been granted an extension for payment of the tax shown on the
4.4return, may elect to pay the tax due to the commissioner in equal amounts at the same time
4.5as required for federal purposes. A taxpayer electing to pay the tax in installments shall
4.6defer a percentage of tax that does not exceed the percentage of federal tax deferred and
4.7must notify the commissioner in writing no later than nine months after the death of the
4.8person whose estate is subject to taxation. If the taxpayer fails to pay an installment on
4.9time, unless it is shown that the failure is due to reasonable cause, the election is revoked
4.10and the entire amount of unpaid tax plus accrued interest is due and payable 90 days after
4.11the date on which the installment was payable.
4.12 Sec. 13. Minnesota Statutes 2012, section 289A.30, is amended by adding a
4.13subdivision to read:
4.14 Subd. 3. Gift tax. (a) Where good cause exists, the commissioner may extend the
4.15time for payment of gift tax for a period of not more than six months.
4.16(b) If an individual is required to file a federal gift tax return and an extension to pay
4.17the federal gift tax has been granted under section 6161 of the Internal Revenue Code, the
4.18time for payment of the gift tax without penalty is extended for that period.
4.19 Sec. 14. Minnesota Statutes 2012, section 289A.35, is amended to read:
4.20289A.35 ASSESSMENTS ON RETURNS.
4.21(a) The commissioner may audit and adjust the taxpayer's computation of federal
4.22taxable income, items of federal tax preferences, or federal credit amounts to make them
4.23conform with the provisions of chapter 290 or section298.01 . If a return has been filed,
4.24the commissioner shall enter the liability reported on the return and may make any audit
4.25or investigation that is considered necessary.
4.26(b) The commissioner may audit and adjust the taxpayer's computation of tax under
4.27chapter chapters 291 and 292. In the case of a return filed pursuant to section
289A.10 ,
4.28the commissioner shall notify the estate no later than nine months after the filing date,
4.29as provided by section289A.38, subdivision 2 , whether the return is under examination
4.30or the return has been processed as filed.
4.31 Sec. 15. Minnesota Statutes 2012, section 289A.38, subdivision 6, is amended to read:
5.1 Subd. 6. Omission in excess of 25 percent. Additional taxes may be assessed
5.2within 6-1/2 years after the due date of the return or the date the return was filed,
5.3whichever is later, if:
5.4(1) the taxpayer omits from gross income an amount properly includable in it that is
5.5in excess of 25 percent of the amount of gross income stated in the return;
5.6(2) the taxpayer omits from a sales, use, or withholding tax return an amount of taxes
5.7in excess of 25 percent of the taxes reported in the return;or
5.8(3) the taxpayer omits from the gross estate assets in excess of 25 percent of the
5.9gross estate reported in the return.; or
5.10(4) the taxpayer omits from Minnesota taxable gifts the value of gifts in excess of 25
5.11percent of the value of Minnesota taxable gifts reported on the return.
5.12 Sec. 16. Minnesota Statutes 2012, section 289A.38, subdivision 7, is amended to read:
5.13 Subd. 7. Federal tax changes. If the amount of income, items of tax preference,
5.14deductions, or credits for any year of a taxpayer, or the wages paid by a taxpayer for
5.15any period, as reported to the Internal Revenue Service is changed or corrected by the
5.16commissioner of Internal Revenue or other officer of the United States or other competent
5.17authority, or where a renegotiation of a contract or subcontract with the United States
5.18results in a change in income, items of tax preference, deductions, credits, or withholding
5.19tax, or, in the case of estate or gift tax, where there are adjustments to the taxable estate or
5.20taxable gifts, the taxpayer shall report the change or correction or renegotiation results
5.21in writing to the commissioner. The report must be submitted within 180 days after the
5.22final determination and must be in the form of either an amended Minnesota estate, gift
5.23 withholding tax, corporate franchise tax, or income tax return conceding the accuracy of
5.24the federal determination or a letter detailing how the federal determination is incorrect
5.25or does not change the Minnesota tax. An amended Minnesota income tax return must
5.26be accompanied by an amended property tax refund return, if necessary. A taxpayer
5.27filing an amended federal tax return must also file a copy of the amended return with the
5.28commissioner of revenue within 180 days after filing the amended return.
5.29 Sec. 17. Minnesota Statutes 2012, section 289A.50, subdivision 1, is amended to read:
5.30 Subdivision 1. General right to refund. (a) Subject to the requirements of this
5.31section and section289A.40 , a taxpayer who has paid a tax in excess of the taxes lawfully
5.32due and who files a written claim for refund will be refunded or credited the overpayment
5.33of the tax determined by the commissioner to be erroneously paid.
6.1(b) The claim must specify the name of the taxpayer, the date when and the period
6.2for which the tax was paid, the kind of tax paid, the amount of the tax that the taxpayer
6.3claims was erroneously paid, the grounds on which a refund is claimed, and other
6.4information relative to the payment and in the form required by the commissioner. An
6.5income tax, estate tax, gift tax, or corporate franchise tax return, or amended return
6.6claiming an overpayment constitutes a claim for refund.
6.7(c) When, in the course of an examination, and within the time for requesting a
6.8refund, the commissioner determines that there has been an overpayment of tax, the
6.9commissioner shall refund or credit the overpayment to the taxpayer and no demand
6.10is necessary. If the overpayment exceeds $1, the amount of the overpayment must
6.11be refunded to the taxpayer. If the amount of the overpayment is less than $1, the
6.12commissioner is not required to refund. In these situations, the commissioner does not
6.13have to make written findings or serve notice by mail to the taxpayer.
6.14(d) If the amount allowable as a credit for withholding, estimated taxes, or dependent
6.15care exceeds the tax against which the credit is allowable, the amount of the excess is
6.16considered an overpayment. The refund allowed by section290.06, subdivision 23 , is also
6.17considered an overpayment. The requirements of section270C.33 do not apply to the
6.18refunding of such an overpayment shown on the original return filed by a taxpayer.
6.19(e) If the entertainment tax withheld at the source exceeds by $1 or more the taxes,
6.20penalties, and interest reported in the return of the entertainment entity or imposed by
6.21section290.9201 , the excess must be refunded to the entertainment entity. If the excess is
6.22less than $1, the commissioner need not refund that amount.
6.23(f) If the surety deposit required for a construction contract exceeds the liability of
6.24the out-of-state contractor, the commissioner shall refund the difference to the contractor.
6.25(g) An action of the commissioner in refunding the amount of the overpayment does
6.26not constitute a determination of the correctness of the return of the taxpayer.
6.27(h) There is appropriated from the general fund to the commissioner of revenue the
6.28amount necessary to pay refunds allowed under this section.
6.29 Sec. 18. Minnesota Statutes 2012, section 289A.56, subdivision 3, is amended to read:
6.30 Subd. 3. Withholding tax, entertainer withholding tax, withholding from
6.31payments to out-of-state contractors, estate tax, gift tax, and sales tax overpayments.
6.32When a refund is due for overpayments of withholding tax, entertainer withholding tax, or
6.33withholding from payments to out-of-state contractors, interest is computed from the date
6.34of payment to the date the refund is paid or credited. For purposes of this subdivision, the
6.35date of payment is the later of the date the tax was finally due or was paid.
7.1For the purposes of computing interest on estate tax refunds, interest is paid from
7.2the later of the date of overpayment, the date the estate tax return is due, or the date the
7.3original estate tax return is filed to the date the refund is paid.
7.4For the purposes of computing interest on gift tax refunds, interest is paid from the
7.5later of the date of overpayment, the date the gift tax return is due, or the date the original
7.6gift tax return is filed to the date the refund is paid.
7.7For purposes of computing interest on sales and use tax refunds, interest is paid from
7.8the date of payment to the date the refund is paid or credited, if the refund claim includes a
7.9detailed schedule reflecting the tax periods covered in the claim. If the refund claim
7.10submitted does not include a detailed schedule reflecting the tax periods covered in the
7.11claim, interest is computed from the date the claim was filed.
7.12 Sec. 19. Minnesota Statutes 2012, section 289A.60, subdivision 1, is amended to read:
7.13 Subdivision 1. Penalty for failure to pay tax. (a) If a corporate franchise,
7.14fiduciary income, mining company, estate, gift, partnership, S corporation, or nonresident
7.15entertainer tax is not paid within the time specified for payment, a penalty of six percent
7.16is added to the unpaid tax, except that if a corporation or mining company meets the
7.17requirements of section289A.19, subdivision 2 , the penalty is not imposed.
7.18(b) For the taxes listed in paragraph (a), in addition to the penalty in that paragraph,
7.19whether imposed or not, if a return or amended return is filed after the due date, without
7.20regard to extensions, and any tax reported as remaining due is not remitted with the return
7.21or amended return, a penalty of five percent of the tax not paid is added to the tax. If the
7.22commissioner issues an order assessing additional tax for a tax listed in paragraph (a),
7.23and the tax is not paid within 60 days after the mailing of the order or, if appealed, within
7.2460 days after final resolution of the appeal, a penalty of five percent of the unpaid tax
7.25is added to the tax.
7.26(c) If an individual income tax is not paid within the time specified for payment, a
7.27penalty of four percent is added to the unpaid tax. There is a presumption of reasonable
7.28cause for the late payment if the individual: (i) pays by the due date of the return at
7.29least 90 percent of the amount of tax, after credits other than withholding and estimated
7.30payments, shown owing on the return; (ii) files the return within six months after the due
7.31date; and (iii) pays the remaining balance of the reported tax when the return is filed.
7.32(d) If the commissioner issues an order assessing additional individual income tax,
7.33and the tax is not paid within 60 days after the mailing of the order or, if appealed, within
7.3460 days after final resolution of the appeal, a penalty of four percent of the unpaid tax
7.35is added to the tax.
8.1(e) If a withholding or sales or use tax is not paid within the time specified for
8.2payment, a penalty must be added to the amount required to be shown as tax. The penalty
8.3is five percent of the tax not paid on or before the date specified for payment of the tax
8.4if the failure is for not more than 30 days, with an additional penalty of five percent of
8.5the amount of tax remaining unpaid during each additional 30 days or fraction of 30 days
8.6during which the failure continues, not exceeding 15 percent in the aggregate.
8.7 Sec. 20. Minnesota Statutes 2012, section 289A.60, subdivision 2, is amended to read:
8.8 Subd. 2. Penalty for failure to make and file return. (a) If a taxpayer fails to make
8.9and file a tax return within the time prescribed, including an extension, or fails to file an
8.10individual income tax return within six months after the due date, a penaltyof equal to
8.11the greater of:
8.12(1) five percent of the amount of tax not paid by the end of that period; or
8.13(2) the amount under paragraph (b) is added to the tax.
8.14(b) If an individual fails to make and file a gift tax return within the time prescribed,
8.15including an extension, and the amount of the Minnesota taxable gift equals or exceeds
8.16$100,000, a penalty equal to the lesser of five percent of:
8.17(1) the Minnesota taxable gift; or
8.18(2) the amount of the individual's net worth that exceeds $1,500,000, or $3,000,000
8.19in combined net worth for a married couple.
8.20The maximum penalty under this paragraph is limited to $25,000.
8.21(c) For purposes of this subdivision, "net worth" means the sum of the following
8.22amounts owned by the individual donor (or the sum of the amounts owned by either or
8.23both spouses in the case of a married couple) at the close of the taxable year in which
8.24the gift was made:
8.25(1) the fair market value of marketable securities, as defined in section 731(c)(2)(A)
8.26of the Internal Revenue Code; and
8.27(2) the lesser of the fair market value or the adjusted basis, as defined in section 1011
8.28of the Internal Revenue Code, of property, other than marketable securities.
8.29 Sec. 21. Minnesota Statutes 2013 Supplement, section 291.005, subdivision 1, is
8.30amended to read:
8.31 Subdivision 1. Scope. Unless the context otherwise clearly requires, the following
8.32terms used in this chapter shall have the following meanings:
8.33 (1) "Commissioner" means the commissioner of revenue or any person to whom the
8.34commissioner has delegated functions under this chapter.
9.1 (2) "Federal gross estate" means the gross estate of a decedent as required to be valued
9.2and otherwise determined for federal estate tax purposes under the Internal Revenue Code.
9.3 (3) "Internal Revenue Code" means the United States Internal Revenue Code of
9.41986, as amended through January 3, 2013, but without regard to the provisions of section
9.52011, paragraph (f), of the Internal Revenue Code.
9.6 (4)"Minnesota adjusted taxable estate" means federal adjusted taxable estate as
9.7defined by section 2011(b)(3) of the Internal Revenue Code, plus
9.8(i) the amount of deduction for state death taxes allowed under section 2058 of the
9.9Internal Revenue Code;
9.10(ii) the amount of taxable gifts, as defined in section
292.16, and made by the
9.11decedent within three years of the decedent's date of death; less
9.12(iii)(A) the value of qualified small business property under section
291.03,
9.13subdivision 9
, and the value of qualified farm property under section
291.03, subdivision
9.1410
, or (B) $4,000,000, whichever is less.
9.15(5) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
9.16excludingtherefrom any property included therein in the estate which has its situs outside
9.17Minnesota, and (b) includingtherein any property omitted from the federal gross estate
9.18which is includabletherein in the estate, has its situs in Minnesota, and was not disclosed
9.19to federal taxing authorities.
9.20(6) (5) "Nonresident decedent" means an individual whose domicile at the time
9.21of death was not in Minnesota.
9.22(7) (6) "Personal representative" means the executor, administrator or other person
9.23appointed by the court to administer and dispose of the property of the decedent. If there
9.24is no executor, administrator or other person appointed, qualified, and acting within this
9.25state, then any person in actual or constructive possession of any property having a situs in
9.26this state which is included in the federal gross estate of the decedent shall be deemed
9.27to be a personal representative to the extent of the property and the Minnesota estate tax
9.28due with respect to the property.
9.29(8) (7) "Resident decedent" means an individual whose domicile at the time of
9.30death was in Minnesota.
9.31(9) (8) "Situs of property" means, with respect to:
9.32 (i) real property, the state or country in which it is located;
9.33 (ii) tangible personal property, the state or country in which it was normally kept
9.34or located at the time of the decedent's death or for a gift of tangible personal property
9.35within three years of death, the state or country in which it was normally kept or located
9.36when the gift was executed;and
10.1 (iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue
10.2Code, owned by a nonresident decedent and that is normally kept or located in this state
10.3because it is on loan to an organization, qualifying as exempt from taxation under section
10.4501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is
10.5deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and
10.6 (iv) intangible personal property, the state or country in which the decedent was
10.7domiciled at death or for a gift of intangible personal propertywithin three years of death,
10.8the state or country in which the decedent was domiciled when the gift was executed.
10.9 For a nonresidentdecedent with an ownership interest in a pass-through entity with
10.10assets that include real or tangible personal property, situs of the real or tangible personal
10.11property, including qualified works of art, is determined as if the pass-through entity does
10.12not exist and the real or tangible personal property is personally owned by the decedent.
10.13If the pass-through entity is owned by a person or persons in addition to the decedent,
10.14ownership of the property is attributed to the decedent in proportion to the decedent's
10.15capital ownership share of the pass-through entity.
10.16(10) (9) "Pass-through entity" includes the following:
10.17(i) an entity electing S corporation status under section 1362 of the Internal Revenue
10.18Code;
10.19(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;
10.20(iii) a single-member limited liability company or similar entity, regardless of
10.21whether it is taxed as an association or is disregarded for federal income tax purposes
10.22under Code of Federal Regulations, title 26, section301.7701 -3; or
10.23(iv) a trust to the extent the property is includible in the decedent's federal gross estate.
10.24 Sec. 22. [291.016] MINNESOTA TAXABLE ESTATE.
10.25 Subdivision 1. General. For purposes of the tax under this chapter, the Minnesota
10.26taxable estate equals the federal taxable estate as provided under section 2051 of the Internal
10.27Revenue Code, without regard to whether the estate is subject to the federal estate tax:
10.28(1) increased by the additions under subdivision 2; and
10.29(2) decreased by the subtraction under subdivision 3.
10.30 Subd. 2. Additions. The following amounts, to the extent deducted in computing
10.31the federal taxable estate, must be added in computing the Minnesota taxable estate:
10.32(1) the amount of the deduction for state death taxes allowed under section 2058 of
10.33the Internal Revenue Code;
10.34(2) the amount of the deduction for foreign death taxes allowed under section
10.352053(d) of the Internal Revenue Code;
11.1(3) the aggregate amount of all taxable gifts as defined in section 292.16 and made
11.2by the decedent after June 30, 2013; and
11.3(4) the amount of any tax paid by the decedent or the estate under chapter 292 during
11.4the three-year period ending on the date of the decedent's death.
11.5 Subd. 3. Subtraction. The value of qualified small business property under section
11.6291.03 and the value of qualified farm property under section 291.03, subdivision 10, or
11.7$3,500,000, whichever is less, may be subtracted in computing the Minnesota taxable
11.8estate but must not reduce the Minnesota taxable estate to less than zero.
11.9 Sec. 23. Minnesota Statutes 2013 Supplement, section 291.03, subdivision 1, is
11.10amended to read:
11.11 Subdivision 1. Tax amount. (a) In the case of a resident decedent, the tax imposed
11.12shall be an amount equal to the proportion of the maximum credit for state death taxes
11.13computed under section 2011 of the Internal Revenue Code, but using Minnesota adjusted
11.14taxable estate instead of federal adjusted taxable estate, as the Minnesota gross estate bears
11.15to the value of the federal gross estate. The tax is reduced by:
11.16(1) the gift tax paid by the decedent under section
292.17 on gifts included in the
11.17Minnesota adjusted taxable estate and not subtracted as qualified farm or small business
11.18property; and
11.19(2) any credit allowed under subdivision 1c. under this subdivision must be
11.20computed by applying to the Minnesota taxable estate the following schedule of rates:
11.30 (b) In the case of a nonresident decedent, the tax determined under this subdivision
11.31mustnot be greater than the sum of the following amounts multiplied by a fraction, the
11.32numerator of which is the Minnesota gross estate and the denominator of which is the
11.33federal gross estate: be computed as provided under paragraph (a) and then multiplied
11.34by a fraction, the numerator of which is the value of the Minnesota gross estate plus the
11.35aggregate amount of all Minnesota taxable gifts as defined in section 292.16 and made
11.36by the decedent after June 30, 2013, and the denominator of which is the federal gross
12.1estate plus the value of taxable gifts as defined in section 292.16 and made by the decedent
12.2after June 30, 2013.
12.3(1) the rates and brackets under section 2001(c) of the Internal Revenue Code
12.4multiplied by the sum of:
12.5(i) the taxable estate, as defined under section 2051 of the Internal Revenue Code; plus
12.6(ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue
12.7Code; less
12.8(iii) the lesser of (A) the sum of the value of qualified small business property
12.9under subdivision 9, and the value of qualified farm property under subdivision 10, or
12.10(B) $4,000,000; less
12.11(2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue
12.12Code; and less
12.13(3) the federal credit allowed under section 2010 of the Internal Revenue Code.
12.14(c) For purposes of this subdivision, "Internal Revenue Code" means the Internal
12.15Revenue Code of 1986, as amended through December 31, 2000.
12.16 Sec. 24. Minnesota Statutes 2012, section 291.03, is amended by adding a subdivision
12.17to read:
12.18 Subd. 1d. Elections. (a) For the purposes of this section, the value of the Minnesota
12.19taxable estate is determined by taking into account the deduction available under section
12.202056(b) of the Internal Revenue Code. An election under section 2056(b) of the Internal
12.21Revenue Code may be made for state estate tax purposes regardless of whether the
12.22election is made for federal estate tax purposes. The value of the gross estate includes
12.23the value of any property in which the decedent had a qualifying income interest for life
12.24for which an election was made under this subdivision.
12.25(b) Except for an election made under section 2056(b) of the Internal Revenue Code,
12.26no federal election is allowable in computing the tax under this chapter unless the estate is
12.27required to file a federal estate tax return, the election is made on the federal estate tax
12.28return, and the election is allowed under federal law.
12.29 Sec. 25. [291.031] CREDITS.
12.30 Subdivision 1. Gift tax credit. A credit is allowed against the tax imposed under
12.31this chapter for gift tax paid by the decedent under section 292.17 on gifts included in the
12.32Minnesota taxable estate and not subtracted as qualified small business or farm property.
12.33 Subd. 2. Resident decedent tax credit. The estate of a resident decedent is allowed
12.34a credit against the tax due under this section equal to the lesser of:
13.1(1) the amount of estate or inheritance tax paid by the estate to another state that is
13.2attributable to property with a situs outside of Minnesota; or
13.3(2) the amount of tax paid under this chapter attributable to that property.
13.4 Subd. 3. Nonresident decedent tax credit. (a) The estate of a nonresident decedent
13.5that is subject to tax under this chapter on the value of Minnesota situs property held in
13.6a pass-through entity is allowed a credit against the tax due under this section equal to
13.7the lesser of:
13.8(1) the amount of estate or inheritance tax paid to another state that is attributable to
13.9the Minnesota situs property held in the pass-through entity; or
13.10(2) the amount of tax paid under this chapter attributable to the Minnesota situs
13.11property held in the pass-through entity.
13.12(b) The amount of tax attributable to the Minnesota situs property held in the
13.13pass-through entity must be determined by the increase in the estate or inheritance tax that
13.14results from including the market value of the property in the estate or treating the value
13.15as a taxable inheritance to the recipient of the property.
13.16 Sec. 26. Minnesota Statutes 2013 Supplement, section 292.16, is amended to read:
13.17292.16 DEFINITIONS.
13.18(a) For purposes of this chapter, the following definitions apply.
13.19(b) The definitions of terms defined in section291.005 apply.
13.20(c) "Minnesota taxable gifts" means taxable gifts, including any gifts that were not
13.21disclosed to federal tax authorities, after:
13.22(1) excluding taxable gifts of any property with its situs outside Minnesota made by
13.23a nonresident;
13.24(2) including taxable gifts of any property with its situs in Minnesota made by
13.25a nonresident; and
13.26(3) including taxable gifts of any property made by a resident.
13.27(d) "Nonresident" means an individual whose domicile at the time of transfer of
13.28the property by gift was not in Minnesota.
13.29(e) "Resident"has the meaning given in section
290.01, subdivision 7, paragraph
13.30(a) means an individual whose domicile at the time of transfer of the property by gift
13.31was in Minnesota.
13.32(d) (f) "Taxable gifts" means:
13.33(1) the transfers by gift which are included in taxable gifts for federal gift tax
13.34purposes under the following sections of the Internal Revenue Code:
13.35(i) section 2501(a)(4);
14.1(ii) section 2503;
14.2(ii) (iii) sections 2511 to 2514; and
14.3(iii) (iv) sections 2516 to 2519;
14.4(v) section 529; and
14.5(vi) section 530; plus
14.6(2) for a transfer that includes a "qualified interest," as defined in section 2702 of
14.7the Internal Revenue Code, consisting of a term interest of less than ten years, excluding
14.8any life interest, or for which the value of the qualified interest reduces the value of the
14.9gift to zero, in the calendar year the term interest ends other than as a result of the death
14.10of the grantor, the lesser of the following:
14.11(i) the fair market value of the remaining property after the final transfer is made to the
14.12grantor or the spouse of the grantor less any tax paid under this chapter on the transfer; or
14.13(ii) the value of the qualified interest as disclosed on the federal gift tax return; less
14.14(2) (3) the deductions allowed in sections 2522 to 2524 of the Internal Revenue Code.
14.15 Sec. 27. Minnesota Statutes 2013 Supplement, section 292.17, subdivision 1, is
14.16amended to read:
14.17 Subdivision 1. Imposition.(a) For each calendar year, a tax is imposed on the
14.18transfer of property by gift by anyindividual resident or nonresident in an amount equal to
14.19ten percent of the amount of the taxable gift determined under this chapter.
14.20(b) The donor is liable for payment of the tax. If the gift tax is not paid when due,
14.21the donee of any gift is personally liable for the tax to the extent of the value of the gift.
14.22 Sec. 28. Minnesota Statutes 2013 Supplement, section 292.17, is amended by adding a
14.23subdivision to read:
14.24 Subd. 1a. Rate of tax. The tax imposed for each calendar year is computed by
14.25applying to the aggregate of Minnesota taxable gifts made by the donor during the donor's
14.26lifetime the following schedule of rates:
15.1 Sec. 29. Minnesota Statutes 2013 Supplement, section 292.17, is amended by adding a
15.2subdivision to read:
15.3 Subd. 4. Application of federal rules. In administering the tax under this chapter,
15.4the commissioner shall apply the provisions of sections 2701 to 2704 of the Internal
15.5Revenue Code. The words "secretary or his delegate," as used in those sections of the
15.6Internal Revenue Code, mean the commissioner.
15.7 Sec. 30. Minnesota Statutes 2013 Supplement, section 292.17, is amended by adding a
15.8subdivision to read:
15.9 Subd. 5. Elections. (a) For purposes of this section, the value of the Minnesota
15.10taxable gift is determined by taking into account the deduction available under section
15.112523(f) of the Internal Revenue Code. An election under section 2523(f) of the Internal
15.12Revenue Code may be made for Minnesota gift tax purposes regardless of whether the
15.13election is made for federal gift tax purposes. The value of the Minnesota taxable estate
15.14includes the value of any property in which the decedent had a qualifying income interest
15.15for life for which an election was made under this subdivision.
15.16(b) Except for an election made under section 2523(f) of the Internal Revenue Code,
15.17no federal election is allowable in computing the tax under this chapter unless the donor is
15.18required to file a federal gift tax return, the election is made on the federal gift tax return,
15.19and the election is allowed under federal law.
15.20 Sec. 31. [292.181] CREDITS.
15.21 Subdivision 1. Gift tax credit. A credit is allowed against the tax imposed on the
15.22donor under this chapter for gift tax paid on gifts included in Minnesota taxable gifts on
15.23a prior return.
15.24 Subd. 2. Nonresident tax credit. (a) A nonresident who is subject to tax under this
15.25chapter on the value of Minnesota situs property held in a pass-through entity is allowed a
15.26credit against the tax due under this section equal to the lesser of:
15.27(1) the amount of gift tax paid to another state that is attributable to the Minnesota
15.28situs property held in the pass-through entity; or
15.29(2) the amount of tax paid under this chapter attributable to the Minnesota situs
15.30property held in the pass-through entity.
15.31(b) The amount of tax attributable to the Minnesota situs property held in the
15.32pass-through entity must be determined by the increase in the gift tax that results from
15.33including the market value of the property in the value of Minnesota taxable gifts.
16.1 Sec. 32. Minnesota Statutes 2013 Supplement, section 292.20, is amended to read:
16.2292.20 APPRAISAL OF PROPERTY; DECLARATION BY DONOR.
16.3The commissioner may require the donor or the donee to show the property subject
16.4to the tax under section292.17 to the commissioner upon demand and may employ
16.5a suitable person to appraise the property. The donor shall submit a declaration, in a
16.6form prescribed by the commissioner and including any certification required by the
16.7commissioner, that the property shown by the donor on the gift tax return includes all of
16.8the property transferred by gift for the calendar year and not deductible under section
16.9292.16
, paragraph (d) (f), clause (2).
16.10 Sec. 33. REPEALER.
16.11Minnesota Statutes 2012, sections 291.03, subdivision 1b; 291.41; 291.42; 291.43;
16.12291.44; 291.45; 291.46; and 291.47, are repealed.
16.13Minnesota Statutes 2013 Supplement, sections 291.03, subdivision 1c; 292.17,
16.14subdivisions 2 and 3; 292.18; 292.19; and 292.21, are repealed.
1.3administrative, and procedural provisions of the taxes; imposing penalties;
1.4amending Minnesota Statutes 2012, sections 270C.585; 289A.01; 289A.10,
1.5subdivisions 2, 3, by adding a subdivision; 289A.18, subdivision 3, by adding
1.6a subdivision; 289A.19, subdivision 4, by adding a subdivision; 289A.20, by
1.7adding a subdivision; 289A.30, subdivision 2, by adding a subdivision; 289A.35;
1.8289A.38, subdivisions 6, 7; 289A.50, subdivision 1; 289A.56, subdivision 3;
1.9289A.60, subdivisions 1, 2; 291.03, by adding a subdivision; Minnesota Statutes
1.102013 Supplement, sections 289A.10, subdivision 1; 291.005, subdivision 1;
1.11291.03, subdivision 1; 292.16; 292.17, subdivision 1, by adding subdivisions;
1.12292.20; proposing coding for new law in Minnesota Statutes, chapters 291; 292;
1.13repealing Minnesota Statutes 2012, sections 291.03, subdivision 1b; 291.41;
1.14291.42; 291.43; 291.44; 291.45; 291.46; 291.47; Minnesota Statutes 2013
1.15Supplement, sections 291.03, subdivision 1c; 292.17, subdivisions 2, 3; 292.18;
1.16292.19; 292.21.
1.17BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.18 Section 1. Minnesota Statutes 2012, section 270C.585, is amended to read:
1.19270C.585 TRANSFEREE LIABILITY FOR ESTATE AND GIFT TAX.
1.20(a) The personal representative and person to whom property that is subject to
1.21taxation under chapter 291 is transferred, other than a bona fide purchaser, mortgagee, or
1.22lessee, is personally liable for that tax, until its payment, to the extent of the value of the
1.23property at the time of the transfer. Personal liability also does not extend to subsequent
1.24transferees from bona fide purchasers, mortgagees, and lessees.
1.25(b) The person to whom property that is subject to taxation under chapter 292 is
1.26transferred, other than a bona fide purchaser, mortgagee, or lessee, is personally liable
1.27for that tax, until its payment, to the extent of the value of the property at the time of the
1.28transfer. The personal representative, if required to file a gift tax return, is personally liable
1.29for that tax until its payment to the extent of the value of the probate property at the time
2.1of the decedent's death. Personal liability also does not extend to subsequent transferees
2.2from bona fide purchasers, mortgagees, and lessees.
2.3 Sec. 2. Minnesota Statutes 2012, section 289A.01, is amended to read:
2.4289A.01 APPLICATION OF CHAPTER.
2.5This chapter applies to laws administered by the commissioner under chapters 290,
2.6290A, 291, 292, and 297A, and sections
2.7 Sec. 3. Minnesota Statutes 2013 Supplement, section 289A.10, subdivision 1, is
2.8amended to read:
2.9 Subdivision 1. Return required. In the case of a decedent who has an interest in
2.10property with a situs in Minnesota, the personal representative must submit a Minnesota
2.11estate tax return to the commissioner, on a form prescribed by the commissioner, if:
2.12(1) a federal estate tax return is required to be filed; or
2.13(2) the sum of the federal gross estate and federal adjusted taxable gifts
2.14
2.15Revenue Code, exceeds
2.16The return must contain a computation of the Minnesota estate tax due. The return
2.17must be signed by the personal representative.
2.18 Sec. 4. Minnesota Statutes 2012, section 289A.10, is amended by adding a subdivision
2.19to read:
2.20 Subd. 1b. Gift tax return required. Any individual who makes a taxable gift
2.21during the taxable year shall file a gift tax return on a form prescribed by the commissioner.
2.22If the donor dies before filing the return, the personal representative of the donor's estate
2.23shall file the return. If the donor becomes legally incompetent before filing the return, the
2.24guardian or conservator shall file the return.
2.25 Sec. 5. Minnesota Statutes 2012, section 289A.10, subdivision 2, is amended to read:
2.26 Subd. 2. Documents required. The commissioner may designate on the
2.27 estate and gift tax returns the documents that are required to be filed together with the
2.28return to determine the computation of tax.
2.29 Sec. 6. Minnesota Statutes 2012, section 289A.10, subdivision 3, is amended to read:
2.30 Subd. 3. Definitions. For purposes of this section, the definitions contained in
2.31
3.1 Sec. 7. Minnesota Statutes 2012, section 289A.18, subdivision 3, is amended to read:
3.2 Subd. 3. Estate tax returns. An estate tax return must be filed with the
3.3commissioner within nine months after the decedent's death.
3.4
3.5
3.6
3.7
3.8 Sec. 8. Minnesota Statutes 2012, section 289A.18, is amended by adding a subdivision
3.9to read:
3.10 Subd. 3b. Gift tax returns. Gift tax returns must be filed with the commissioner by
3.11the April 15 following the close of the calendar year during which the gift was made.
3.12 Sec. 9. Minnesota Statutes 2012, section 289A.19, subdivision 4, is amended to read:
3.13 Subd. 4. Estate tax returns. The time for filing an estate tax return
3.14 extended for
3.15return, the time for filing an estate tax return is extended by six months or the amount of
3.16time granted under section 6081 of the Internal Revenue Code to file the federal estate
3.17tax return, whichever is longer.
3.18 Sec. 10. Minnesota Statutes 2012, section 289A.19, is amended by adding a
3.19subdivision to read:
3.20 Subd. 4a. Gift tax returns. The time for filing a gift tax return is extended for
3.21the amount of time granted under section 6075 of the Internal Revenue Code to file the
3.22federal gift tax return.
3.23 Sec. 11. Minnesota Statutes 2012, section 289A.20, is amended by adding a
3.24subdivision to read:
3.25 Subd. 3b. Gift tax. Taxes imposed under chapter 292 must be paid by the April 15
3.26following the close of the calendar year during which the gift was made.
3.27 Sec. 12. Minnesota Statutes 2012, section 289A.30, subdivision 2, is amended to read:
3.28 Subd. 2. Estate tax. (a) Where good cause exists, the commissioner may extend the
3.29time for payment of estate tax for a period of not more than six months.
3.30(b) If an estate is required to file a federal estate tax return and an extension to pay
3.31the federal estate tax has been granted under section 6161 of the Internal Revenue Code,
4.1the time for payment of the estate tax without penalty is extended for that period. A
4.2taxpayer who owes at least $5,000 in taxes and who, under section 6161 or 6166 of the
4.3Internal Revenue Code has been granted an extension for payment of the tax shown on the
4.4return, may elect to pay the tax due to the commissioner in equal amounts at the same time
4.5as required for federal purposes. A taxpayer electing to pay the tax in installments shall
4.6defer a percentage of tax that does not exceed the percentage of federal tax deferred and
4.7must notify the commissioner in writing no later than nine months after the death of the
4.8person whose estate is subject to taxation. If the taxpayer fails to pay an installment on
4.9time, unless it is shown that the failure is due to reasonable cause, the election is revoked
4.10and the entire amount of unpaid tax plus accrued interest is due and payable 90 days after
4.11the date on which the installment was payable.
4.12 Sec. 13. Minnesota Statutes 2012, section 289A.30, is amended by adding a
4.13subdivision to read:
4.14 Subd. 3. Gift tax. (a) Where good cause exists, the commissioner may extend the
4.15time for payment of gift tax for a period of not more than six months.
4.16(b) If an individual is required to file a federal gift tax return and an extension to pay
4.17the federal gift tax has been granted under section 6161 of the Internal Revenue Code, the
4.18time for payment of the gift tax without penalty is extended for that period.
4.19 Sec. 14. Minnesota Statutes 2012, section 289A.35, is amended to read:
4.20289A.35 ASSESSMENTS ON RETURNS.
4.21(a) The commissioner may audit and adjust the taxpayer's computation of federal
4.22taxable income, items of federal tax preferences, or federal credit amounts to make them
4.23conform with the provisions of chapter 290 or section
4.24the commissioner shall enter the liability reported on the return and may make any audit
4.25or investigation that is considered necessary.
4.26(b) The commissioner may audit and adjust the taxpayer's computation of tax under
4.27
4.28the commissioner shall notify the estate no later than nine months after the filing date,
4.29as provided by section
4.30or the return has been processed as filed.
4.31 Sec. 15. Minnesota Statutes 2012, section 289A.38, subdivision 6, is amended to read:
5.1 Subd. 6. Omission in excess of 25 percent. Additional taxes may be assessed
5.2within 6-1/2 years after the due date of the return or the date the return was filed,
5.3whichever is later, if:
5.4(1) the taxpayer omits from gross income an amount properly includable in it that is
5.5in excess of 25 percent of the amount of gross income stated in the return;
5.6(2) the taxpayer omits from a sales, use, or withholding tax return an amount of taxes
5.7in excess of 25 percent of the taxes reported in the return;
5.8(3) the taxpayer omits from the gross estate assets in excess of 25 percent of the
5.9gross estate reported in the return
5.10(4) the taxpayer omits from Minnesota taxable gifts the value of gifts in excess of 25
5.11percent of the value of Minnesota taxable gifts reported on the return.
5.12 Sec. 16. Minnesota Statutes 2012, section 289A.38, subdivision 7, is amended to read:
5.13 Subd. 7. Federal tax changes. If the amount of income, items of tax preference,
5.14deductions, or credits for any year of a taxpayer, or the wages paid by a taxpayer for
5.15any period, as reported to the Internal Revenue Service is changed or corrected by the
5.16commissioner of Internal Revenue or other officer of the United States or other competent
5.17authority, or where a renegotiation of a contract or subcontract with the United States
5.18results in a change in income, items of tax preference, deductions, credits, or withholding
5.19tax, or, in the case of estate or gift tax, where there are adjustments to the taxable estate or
5.20taxable gifts, the taxpayer shall report the change or correction or renegotiation results
5.21in writing to the commissioner. The report must be submitted within 180 days after the
5.22final determination and must be in the form of either an amended Minnesota estate, gift
5.23 withholding tax, corporate franchise tax, or income tax return conceding the accuracy of
5.24the federal determination or a letter detailing how the federal determination is incorrect
5.25or does not change the Minnesota tax. An amended Minnesota income tax return must
5.26be accompanied by an amended property tax refund return, if necessary. A taxpayer
5.27filing an amended federal tax return must also file a copy of the amended return with the
5.28commissioner of revenue within 180 days after filing the amended return.
5.29 Sec. 17. Minnesota Statutes 2012, section 289A.50, subdivision 1, is amended to read:
5.30 Subdivision 1. General right to refund. (a) Subject to the requirements of this
5.31section and section
5.32due and who files a written claim for refund will be refunded or credited the overpayment
5.33of the tax determined by the commissioner to be erroneously paid.
6.1(b) The claim must specify the name of the taxpayer, the date when and the period
6.2for which the tax was paid, the kind of tax paid, the amount of the tax that the taxpayer
6.3claims was erroneously paid, the grounds on which a refund is claimed, and other
6.4information relative to the payment and in the form required by the commissioner. An
6.5income tax, estate tax, gift tax, or corporate franchise tax return, or amended return
6.6claiming an overpayment constitutes a claim for refund.
6.7(c) When, in the course of an examination, and within the time for requesting a
6.8refund, the commissioner determines that there has been an overpayment of tax, the
6.9commissioner shall refund or credit the overpayment to the taxpayer and no demand
6.10is necessary. If the overpayment exceeds $1, the amount of the overpayment must
6.11be refunded to the taxpayer. If the amount of the overpayment is less than $1, the
6.12commissioner is not required to refund. In these situations, the commissioner does not
6.13have to make written findings or serve notice by mail to the taxpayer.
6.14(d) If the amount allowable as a credit for withholding, estimated taxes, or dependent
6.15care exceeds the tax against which the credit is allowable, the amount of the excess is
6.16considered an overpayment. The refund allowed by section
6.17considered an overpayment. The requirements of section
6.18refunding of such an overpayment shown on the original return filed by a taxpayer.
6.19(e) If the entertainment tax withheld at the source exceeds by $1 or more the taxes,
6.20penalties, and interest reported in the return of the entertainment entity or imposed by
6.21section
6.22less than $1, the commissioner need not refund that amount.
6.23(f) If the surety deposit required for a construction contract exceeds the liability of
6.24the out-of-state contractor, the commissioner shall refund the difference to the contractor.
6.25(g) An action of the commissioner in refunding the amount of the overpayment does
6.26not constitute a determination of the correctness of the return of the taxpayer.
6.27(h) There is appropriated from the general fund to the commissioner of revenue the
6.28amount necessary to pay refunds allowed under this section.
6.29 Sec. 18. Minnesota Statutes 2012, section 289A.56, subdivision 3, is amended to read:
6.30 Subd. 3. Withholding tax, entertainer withholding tax, withholding from
6.31payments to out-of-state contractors, estate tax, gift tax, and sales tax overpayments.
6.32When a refund is due for overpayments of withholding tax, entertainer withholding tax, or
6.33withholding from payments to out-of-state contractors, interest is computed from the date
6.34of payment to the date the refund is paid or credited. For purposes of this subdivision, the
6.35date of payment is the later of the date the tax was finally due or was paid.
7.1For the purposes of computing interest on estate tax refunds, interest is paid from
7.2the later of the date of overpayment, the date the estate tax return is due, or the date the
7.3original estate tax return is filed to the date the refund is paid.
7.4For the purposes of computing interest on gift tax refunds, interest is paid from the
7.5later of the date of overpayment, the date the gift tax return is due, or the date the original
7.6gift tax return is filed to the date the refund is paid.
7.7For purposes of computing interest on sales and use tax refunds, interest is paid from
7.8the date of payment to the date the refund is paid or credited, if the refund claim includes a
7.9detailed schedule reflecting the tax periods covered in the claim. If the refund claim
7.10submitted does not include a detailed schedule reflecting the tax periods covered in the
7.11claim, interest is computed from the date the claim was filed.
7.12 Sec. 19. Minnesota Statutes 2012, section 289A.60, subdivision 1, is amended to read:
7.13 Subdivision 1. Penalty for failure to pay tax. (a) If a corporate franchise,
7.14fiduciary income, mining company, estate, gift, partnership, S corporation, or nonresident
7.15entertainer tax is not paid within the time specified for payment, a penalty of six percent
7.16is added to the unpaid tax, except that if a corporation or mining company meets the
7.17requirements of section
7.18(b) For the taxes listed in paragraph (a), in addition to the penalty in that paragraph,
7.19whether imposed or not, if a return or amended return is filed after the due date, without
7.20regard to extensions, and any tax reported as remaining due is not remitted with the return
7.21or amended return, a penalty of five percent of the tax not paid is added to the tax. If the
7.22commissioner issues an order assessing additional tax for a tax listed in paragraph (a),
7.23and the tax is not paid within 60 days after the mailing of the order or, if appealed, within
7.2460 days after final resolution of the appeal, a penalty of five percent of the unpaid tax
7.25is added to the tax.
7.26(c) If an individual income tax is not paid within the time specified for payment, a
7.27penalty of four percent is added to the unpaid tax. There is a presumption of reasonable
7.28cause for the late payment if the individual: (i) pays by the due date of the return at
7.29least 90 percent of the amount of tax, after credits other than withholding and estimated
7.30payments, shown owing on the return; (ii) files the return within six months after the due
7.31date; and (iii) pays the remaining balance of the reported tax when the return is filed.
7.32(d) If the commissioner issues an order assessing additional individual income tax,
7.33and the tax is not paid within 60 days after the mailing of the order or, if appealed, within
7.3460 days after final resolution of the appeal, a penalty of four percent of the unpaid tax
7.35is added to the tax.
8.1(e) If a withholding or sales or use tax is not paid within the time specified for
8.2payment, a penalty must be added to the amount required to be shown as tax. The penalty
8.3is five percent of the tax not paid on or before the date specified for payment of the tax
8.4if the failure is for not more than 30 days, with an additional penalty of five percent of
8.5the amount of tax remaining unpaid during each additional 30 days or fraction of 30 days
8.6during which the failure continues, not exceeding 15 percent in the aggregate.
8.7 Sec. 20. Minnesota Statutes 2012, section 289A.60, subdivision 2, is amended to read:
8.8 Subd. 2. Penalty for failure to make and file return. (a) If a taxpayer fails to make
8.9and file a tax return within the time prescribed, including an extension, or fails to file an
8.10individual income tax return within six months after the due date, a penalty
8.11the greater of:
8.12(1) five percent of the amount of tax not paid by the end of that period; or
8.13(2) the amount under paragraph (b) is added to the tax.
8.14(b) If an individual fails to make and file a gift tax return within the time prescribed,
8.15including an extension, and the amount of the Minnesota taxable gift equals or exceeds
8.16$100,000, a penalty equal to the lesser of five percent of:
8.17(1) the Minnesota taxable gift; or
8.18(2) the amount of the individual's net worth that exceeds $1,500,000, or $3,000,000
8.19in combined net worth for a married couple.
8.20The maximum penalty under this paragraph is limited to $25,000.
8.21(c) For purposes of this subdivision, "net worth" means the sum of the following
8.22amounts owned by the individual donor (or the sum of the amounts owned by either or
8.23both spouses in the case of a married couple) at the close of the taxable year in which
8.24the gift was made:
8.25(1) the fair market value of marketable securities, as defined in section 731(c)(2)(A)
8.26of the Internal Revenue Code; and
8.27(2) the lesser of the fair market value or the adjusted basis, as defined in section 1011
8.28of the Internal Revenue Code, of property, other than marketable securities.
8.29 Sec. 21. Minnesota Statutes 2013 Supplement, section 291.005, subdivision 1, is
8.30amended to read:
8.31 Subdivision 1. Scope. Unless the context otherwise clearly requires, the following
8.32terms used in this chapter shall have the following meanings:
8.33 (1) "Commissioner" means the commissioner of revenue or any person to whom the
8.34commissioner has delegated functions under this chapter.
9.1 (2) "Federal gross estate" means the gross estate of a decedent as required to be valued
9.2and otherwise determined for federal estate tax purposes under the Internal Revenue Code.
9.3 (3) "Internal Revenue Code" means the United States Internal Revenue Code of
9.41986, as amended through January 3, 2013
9.5
9.6 (4)
9.7
9.8
9.9
9.10
9.11
9.12
9.13
9.14
9.15
9.16excluding
9.17Minnesota, and (b) including
9.18which is includable
9.19to federal taxing authorities.
9.20
9.21of death was not in Minnesota.
9.22
9.23appointed by the court to administer and dispose of the property of the decedent. If there
9.24is no executor, administrator or other person appointed, qualified, and acting within this
9.25state, then any person in actual or constructive possession of any property having a situs in
9.26this state which is included in the federal gross estate of the decedent shall be deemed
9.27to be a personal representative to the extent of the property and the Minnesota estate tax
9.28due with respect to the property.
9.29
9.30death was in Minnesota.
9.31
9.32 (i) real property, the state or country in which it is located;
9.33 (ii) tangible personal property, the state or country in which it was normally kept
9.34or located at the time of the decedent's death or for a gift of tangible personal property
9.35
9.36when the gift was executed;
10.1 (iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue
10.2Code, owned by a nonresident decedent and that is normally kept or located in this state
10.3because it is on loan to an organization, qualifying as exempt from taxation under section
10.4501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is
10.5deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and
10.6 (iv) intangible personal property, the state or country in which the decedent was
10.7domiciled at death or for a gift of intangible personal property
10.8the state or country in which the decedent was domiciled when the gift was executed.
10.9 For a nonresident
10.10assets that include real or tangible personal property, situs of the real or tangible personal
10.11property, including qualified works of art, is determined as if the pass-through entity does
10.12not exist and the real or tangible personal property is personally owned by the decedent.
10.13If the pass-through entity is owned by a person or persons in addition to the decedent,
10.14ownership of the property is attributed to the decedent in proportion to the decedent's
10.15capital ownership share of the pass-through entity.
10.16
10.17(i) an entity electing S corporation status under section 1362 of the Internal Revenue
10.18Code;
10.19(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;
10.20(iii) a single-member limited liability company or similar entity, regardless of
10.21whether it is taxed as an association or is disregarded for federal income tax purposes
10.22under Code of Federal Regulations, title 26, section
10.23(iv) a trust to the extent the property is includible in the decedent's federal gross estate.
10.24 Sec. 22. [291.016] MINNESOTA TAXABLE ESTATE.
10.25 Subdivision 1. General. For purposes of the tax under this chapter, the Minnesota
10.26taxable estate equals the federal taxable estate as provided under section 2051 of the Internal
10.27Revenue Code, without regard to whether the estate is subject to the federal estate tax:
10.28(1) increased by the additions under subdivision 2; and
10.29(2) decreased by the subtraction under subdivision 3.
10.30 Subd. 2. Additions. The following amounts, to the extent deducted in computing
10.31the federal taxable estate, must be added in computing the Minnesota taxable estate:
10.32(1) the amount of the deduction for state death taxes allowed under section 2058 of
10.33the Internal Revenue Code;
10.34(2) the amount of the deduction for foreign death taxes allowed under section
10.352053(d) of the Internal Revenue Code;
11.1(3) the aggregate amount of all taxable gifts as defined in section 292.16 and made
11.2by the decedent after June 30, 2013; and
11.3(4) the amount of any tax paid by the decedent or the estate under chapter 292 during
11.4the three-year period ending on the date of the decedent's death.
11.5 Subd. 3. Subtraction. The value of qualified small business property under section
11.6291.03 and the value of qualified farm property under section 291.03, subdivision 10, or
11.7$3,500,000, whichever is less, may be subtracted in computing the Minnesota taxable
11.8estate but must not reduce the Minnesota taxable estate to less than zero.
11.9 Sec. 23. Minnesota Statutes 2013 Supplement, section 291.03, subdivision 1, is
11.10amended to read:
11.11 Subdivision 1. Tax amount. (a) In the case of a resident decedent, the tax imposed
11.12
11.13
11.14
11.15
11.16
11.17
11.18
11.19
11.20computed by applying to the Minnesota taxable estate the following schedule of rates:
| Amount of the Minnesota taxable estate |
Rate of tax |
| Not over $1,500,000 |
None |
| Over $1,500,000, but not over $4,000,000 |
12 percent of the excess over $1,500,000 |
| Over $4,000,000, but not over $6,000,000 |
$300,000, plus 14 percent of the excess over $4,000,000 |
| Over $6,000,000, but not over $10,000,000 |
$580,000, plus 16 percent of the excess over $6,000,000 |
| Over $10,000,000 |
$1,220,000, plus 18 percent of the excess over $10,000,000 |
11.31must
11.32
11.33
11.34by a fraction, the numerator of which is the value of the Minnesota gross estate plus the
11.35aggregate amount of all Minnesota taxable gifts as defined in section 292.16 and made
11.36by the decedent after June 30, 2013, and the denominator of which is the federal gross
12.1estate plus the value of taxable gifts as defined in section 292.16 and made by the decedent
12.2after June 30, 2013.
12.3
12.4
12.5
12.6
12.7
12.8
12.9
12.10
12.11
12.12
12.13
12.14
12.15
12.16 Sec. 24. Minnesota Statutes 2012, section 291.03, is amended by adding a subdivision
12.17to read:
12.18 Subd. 1d. Elections. (a) For the purposes of this section, the value of the Minnesota
12.19taxable estate is determined by taking into account the deduction available under section
12.202056(b) of the Internal Revenue Code. An election under section 2056(b) of the Internal
12.21Revenue Code may be made for state estate tax purposes regardless of whether the
12.22election is made for federal estate tax purposes. The value of the gross estate includes
12.23the value of any property in which the decedent had a qualifying income interest for life
12.24for which an election was made under this subdivision.
12.25(b) Except for an election made under section 2056(b) of the Internal Revenue Code,
12.26no federal election is allowable in computing the tax under this chapter unless the estate is
12.27required to file a federal estate tax return, the election is made on the federal estate tax
12.28return, and the election is allowed under federal law.
12.29 Sec. 25. [291.031] CREDITS.
12.30 Subdivision 1. Gift tax credit. A credit is allowed against the tax imposed under
12.31this chapter for gift tax paid by the decedent under section 292.17 on gifts included in the
12.32Minnesota taxable estate and not subtracted as qualified small business or farm property.
12.33 Subd. 2. Resident decedent tax credit. The estate of a resident decedent is allowed
12.34a credit against the tax due under this section equal to the lesser of:
13.1(1) the amount of estate or inheritance tax paid by the estate to another state that is
13.2attributable to property with a situs outside of Minnesota; or
13.3(2) the amount of tax paid under this chapter attributable to that property.
13.4 Subd. 3. Nonresident decedent tax credit. (a) The estate of a nonresident decedent
13.5that is subject to tax under this chapter on the value of Minnesota situs property held in
13.6a pass-through entity is allowed a credit against the tax due under this section equal to
13.7the lesser of:
13.8(1) the amount of estate or inheritance tax paid to another state that is attributable to
13.9the Minnesota situs property held in the pass-through entity; or
13.10(2) the amount of tax paid under this chapter attributable to the Minnesota situs
13.11property held in the pass-through entity.
13.12(b) The amount of tax attributable to the Minnesota situs property held in the
13.13pass-through entity must be determined by the increase in the estate or inheritance tax that
13.14results from including the market value of the property in the estate or treating the value
13.15as a taxable inheritance to the recipient of the property.
13.16 Sec. 26. Minnesota Statutes 2013 Supplement, section 292.16, is amended to read:
13.17292.16 DEFINITIONS.
13.18(a) For purposes of this chapter, the following definitions apply.
13.19(b) The definitions of terms defined in section
13.20(c) "Minnesota taxable gifts" means taxable gifts, including any gifts that were not
13.21disclosed to federal tax authorities, after:
13.22(1) excluding taxable gifts of any property with its situs outside Minnesota made by
13.23a nonresident;
13.24(2) including taxable gifts of any property with its situs in Minnesota made by
13.25a nonresident; and
13.26(3) including taxable gifts of any property made by a resident.
13.27(d) "Nonresident" means an individual whose domicile at the time of transfer of
13.28the property by gift was not in Minnesota.
13.29(e) "Resident"
13.30
13.31was in Minnesota.
13.32
13.33(1) the transfers by gift which are included in taxable gifts for federal gift tax
13.34purposes under the following sections of the Internal Revenue Code:
13.35(i) section 2501(a)(4);
14.1(ii) section 2503;
14.2
14.3
14.4(v) section 529; and
14.5(vi) section 530; plus
14.6(2) for a transfer that includes a "qualified interest," as defined in section 2702 of
14.7the Internal Revenue Code, consisting of a term interest of less than ten years, excluding
14.8any life interest, or for which the value of the qualified interest reduces the value of the
14.9gift to zero, in the calendar year the term interest ends other than as a result of the death
14.10of the grantor, the lesser of the following:
14.11(i) the fair market value of the remaining property after the final transfer is made to the
14.12grantor or the spouse of the grantor less any tax paid under this chapter on the transfer; or
14.13(ii) the value of the qualified interest as disclosed on the federal gift tax return; less
14.14
14.15 Sec. 27. Minnesota Statutes 2013 Supplement, section 292.17, subdivision 1, is
14.16amended to read:
14.17 Subdivision 1. Imposition.
14.18transfer of property by gift by any
14.19
14.20
14.21
14.22 Sec. 28. Minnesota Statutes 2013 Supplement, section 292.17, is amended by adding a
14.23subdivision to read:
14.24 Subd. 1a. Rate of tax. The tax imposed for each calendar year is computed by
14.25applying to the aggregate of Minnesota taxable gifts made by the donor during the donor's
14.26lifetime the following schedule of rates:
| Amount of the Minnesota taxable estate |
Rate of tax |
| Not over $1,500,000 |
None |
| Over $1,500,000, but not over $4,000,000 |
12 percent of the excess over $1,500,000 |
| Over $4,000,000, but not over $6,000,000 |
$300,000, plus 14 percent of the excess over $4,000,000 |
| Over $6,000,000, but not over $10,000,000 |
$580,000, plus 16 percent of the excess over $6,000,000 |
| Over $10,000,000 |
$1,220,000, plus 18 percent of the excess over $10,000,000 |
15.1 Sec. 29. Minnesota Statutes 2013 Supplement, section 292.17, is amended by adding a
15.2subdivision to read:
15.3 Subd. 4. Application of federal rules. In administering the tax under this chapter,
15.4the commissioner shall apply the provisions of sections 2701 to 2704 of the Internal
15.5Revenue Code. The words "secretary or his delegate," as used in those sections of the
15.6Internal Revenue Code, mean the commissioner.
15.7 Sec. 30. Minnesota Statutes 2013 Supplement, section 292.17, is amended by adding a
15.8subdivision to read:
15.9 Subd. 5. Elections. (a) For purposes of this section, the value of the Minnesota
15.10taxable gift is determined by taking into account the deduction available under section
15.112523(f) of the Internal Revenue Code. An election under section 2523(f) of the Internal
15.12Revenue Code may be made for Minnesota gift tax purposes regardless of whether the
15.13election is made for federal gift tax purposes. The value of the Minnesota taxable estate
15.14includes the value of any property in which the decedent had a qualifying income interest
15.15for life for which an election was made under this subdivision.
15.16(b) Except for an election made under section 2523(f) of the Internal Revenue Code,
15.17no federal election is allowable in computing the tax under this chapter unless the donor is
15.18required to file a federal gift tax return, the election is made on the federal gift tax return,
15.19and the election is allowed under federal law.
15.20 Sec. 31. [292.181] CREDITS.
15.21 Subdivision 1. Gift tax credit. A credit is allowed against the tax imposed on the
15.22donor under this chapter for gift tax paid on gifts included in Minnesota taxable gifts on
15.23a prior return.
15.24 Subd. 2. Nonresident tax credit. (a) A nonresident who is subject to tax under this
15.25chapter on the value of Minnesota situs property held in a pass-through entity is allowed a
15.26credit against the tax due under this section equal to the lesser of:
15.27(1) the amount of gift tax paid to another state that is attributable to the Minnesota
15.28situs property held in the pass-through entity; or
15.29(2) the amount of tax paid under this chapter attributable to the Minnesota situs
15.30property held in the pass-through entity.
15.31(b) The amount of tax attributable to the Minnesota situs property held in the
15.32pass-through entity must be determined by the increase in the gift tax that results from
15.33including the market value of the property in the value of Minnesota taxable gifts.
16.1 Sec. 32. Minnesota Statutes 2013 Supplement, section 292.20, is amended to read:
16.2292.20 APPRAISAL OF PROPERTY; DECLARATION BY DONOR.
16.3The commissioner may require the donor or the donee to show the property subject
16.4to the tax under section
16.5a suitable person to appraise the property. The donor shall submit a declaration, in a
16.6form prescribed by the commissioner and including any certification required by the
16.7commissioner, that the property shown by the donor on the gift tax return includes all of
16.8the property transferred by gift for the calendar year and not deductible under section
16.10 Sec. 33. REPEALER.
16.11Minnesota Statutes 2012, sections 291.03, subdivision 1b; 291.41; 291.42; 291.43;
16.12291.44; 291.45; 291.46; and 291.47, are repealed.
16.13Minnesota Statutes 2013 Supplement, sections 291.03, subdivision 1c; 292.17,
16.14subdivisions 2 and 3; 292.18; 292.19; and 292.21, are repealed.
