Bill Text: MN HF2480 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Income and corporate franchise taxation foreign source income preferences eliminated, foreign royalties subtraction repealed, domestic corporations definition expanded; JOBZ tax benefits and apportionment of income modified; corporate franchise tax rates reduced; foreign operating corporations and mail order businesses special apportionment formula repealed; and school aid payment and property tax recognition shifts repaid.
Spectrum: Partisan Bill (Democrat 12-0)
Status: (Introduced - Dead) 2012-04-30 - Author added Loeffler [HF2480 Detail]
Download: Minnesota-2011-HF2480-Introduced.html
1.2relating to the financing and operation of state government; income and corporate
1.3franchise taxation; eliminating the preferences for foreign source income;
1.4repealing the subtraction for foreign royalties; expanding the definition of
1.5domestic corporations to include certain foreign corporations incorporated
1.6or doing business in tax havens; modifying JOBZ tax benefits; reducing the
1.7corporate franchise tax rates; modifying the apportionment of income; repealing
1.8foreign operating corporations; repealing the special apportionment formula for
1.9certain mail order businesses; repaying the school aid payment and property tax
1.10recognition shifts;amending Minnesota Statutes 2010, sections 127A.45, by
1.11adding a subdivision; 289A.08, subdivision 3; 290.01, subdivisions 5, 19d, 29,
1.12by adding a subdivision; 290.17, subdivision 4; 290.191, subdivisions 2, 3, 5;
1.13469.315; 469.319, subdivision 4; Minnesota Statutes 2011 Supplement, sections
1.14123B.75, subdivision 5; 290.01, subdivision 19c; repealing Minnesota Statutes
1.152010, sections 290.01, subdivision 6b; 290.06, subdivision 29; 290.0921,
1.16subdivision 7; 290.191, subdivision 4; 469.317; 469.318.
1.17BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.20 Section 1. Minnesota Statutes 2010, section 289A.08, subdivision 3, is amended to
1.21read:
1.22 Subd. 3. Corporations. (a) A corporation that is subject to the state's jurisdiction to
1.23tax under section290.014, subdivision 5 , must file a return, except that a foreign operating
1.24corporation as defined in section
290.01, subdivision 6b, is not required to file a return.
1.25(b) Members of a unitary business that are required to file a combined report on one
1.26return must designate a member of the unitary business to be responsible for tax matters,
1.27including the filing of returns, the payment of taxes, additions to tax, penalties, interest,
1.28or any other payment, and for the receipt of refunds of taxes or interest paid in excess of
2.1taxes lawfully due. The designated member must be a member of the unitary business that
2.2is filing the single combined report and either:
2.3(1) a corporation that is subject to the taxes imposed by chapter 290; or
2.4(2) a corporation that is not subject to the taxes imposed by chapter 290:
2.5(i) Such corporation consents by filing the return as a designated member under this
2.6clause to remit taxes, penalties, interest, or additions to tax due from the members of the
2.7unitary business subject to tax, and receive refunds or other payments on behalf of other
2.8members of the unitary business. The member designated under this clause is a "taxpayer"
2.9for the purposes of this chapter and chapter 270C, and is liable for any liability imposed
2.10on the unitary business under this chapter and chapter 290.
2.11(ii) If the state does not otherwise have the jurisdiction to tax the member designated
2.12under this clause, consenting to be the designated member does not create the jurisdiction
2.13to impose tax on the designated member, other than as described in item (i).
2.14(iii) The member designated under this clause must apply for a business tax account
2.15identification number.
2.16(c) The commissioner shall adopt rules for the filing of one return on behalf of the
2.17members of an affiliated group of corporations that are required to file a combined report.
2.18All members of an affiliated group that are required to file a combined report must file one
2.19return on behalf of the members of the group under rules adopted by the commissioner.
2.20(d) If a corporation claims on a return that it has paid tax in excess of the amount of
2.21taxes lawfully due, that corporation must include on that return information necessary for
2.22payment of the tax in excess of the amount lawfully due by electronic means.
2.23EFFECTIVE DATE.This section is effective for returns filed for taxable years
2.24beginning after December 31, 2011.
2.25 Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 5, is amended to read:
2.26 Subd. 5. Domestic corporation. The term "domestic" when applied to a corporation
2.27means a corporation:
2.28(1) created or organized in the United States, or under the laws of the United States
2.29or of any state, the District of Columbia, or any political subdivision of any of the
2.30foregoing but not including the Commonwealth of Puerto Rico, or any possession of
2.31the United States;
2.32(2) which qualifies as a DISC, as defined in section 992(a) of the Internal Revenue
2.33Code;or
2.34(3) which qualifies as a FSC, as defined in section 922 of the Internal Revenue Code.;
2.35 (4) which is incorporated in a tax haven;
3.1 (5) which is engaged in activity in a tax haven sufficient for the tax haven to impose
3.2a net income tax under United States constitutional standards and section 290.015, and
3.3which reports that 20 percent or more of its income is attributable to business in the tax
3.4haven; or
3.5 (6) which has the average of its property, payroll, and sales factors, as defined under
3.6section 290.191, within the 50 states of the United States and the District of Columbia, of
3.720 percent or more.
3.8EFFECTIVE DATE.This section is effective for returns filed for taxable years
3.9beginning after December 31, 2011.
3.10 Sec. 3. Minnesota Statutes 2010, section 290.01, is amended by adding a subdivision
3.11to read:
3.12 Subd. 5c. Tax haven. (a) "Tax haven" means the following foreign jurisdictions,
3.13unless the listing of the jurisdiction does not apply under paragraph (b):
3.14(1) Andorra;
3.15(2) Anguilla;
3.16(3) Antigua and Barbuda;
3.17(4) Aruba;
3.18(5) Bahamas;
3.19(6) Bahrain;
3.20(7) Belize;
3.21(8) British Virgin Islands;
3.22(9) Cayman Islands;
3.23(10) Cook Islands;
3.24(11) Costa Rica;
3.25(12) Dominica;
3.26(13) Gibraltar;
3.27(14) Grenada;
3.28(15) Guernsey-Sark-Alderney;
3.29(16) Jersey;
3.30(17) Jordan;
3.31(18) Lebanon;
3.32(19) Liberia;
3.33(20) Liechtenstein;
3.34(21) Maldives;
3.35(22) Marshall Islands;
4.1(23) Monaco;
4.2(24) Montserrat;
4.3(25) Nauru;
4.4(26) Netherlands Antilles;
4.5(27) Niue;
4.6(28) Panama;
4.7(29) St. Kitts and Nevis;
4.8(30) St. Lucia;
4.9(31) St. Vincent and Grenadines;
4.10(32) Tonga;
4.11(33) Turks and Caicos; and
4.12(34) Vanuatu.
4.13(b) A foreign jurisdiction's listing under paragraph (a) does not apply to the first
4.14taxable year after the United States enters into a tax treaty or other agreement with the
4.15foreign jurisdiction that provides for prompt, obligatory, and automatic exchange of
4.16information with the United States government relevant to enforcing the provisions of
4.17federal tax laws and the treaty or other agreement was in effect for the taxable year.
4.18EFFECTIVE DATE.This section is effective for returns filed for taxable years
4.19beginning after December 31, 2011.
4.20 Sec. 4. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19c, is
4.21amended to read:
4.22 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
4.23there shall be added to federal taxable income:
4.24 (1) the amount of any deduction taken for federal income tax purposes for income,
4.25excise, or franchise taxes based on net income or related minimum taxes, including but not
4.26limited to the tax imposed under section290.0922 , paid by the corporation to Minnesota,
4.27another state, a political subdivision of another state, the District of Columbia, or any
4.28foreign country or possession of the United States;
4.29 (2) interest not subject to federal tax upon obligations of: the United States, its
4.30possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
4.31state, any of its political or governmental subdivisions, any of its municipalities, or any
4.32of its governmental agencies or instrumentalities; the District of Columbia; or Indian
4.33tribal governments;
4.34 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
4.35Revenue Code;
5.1 (4) the amount of any net operating loss deduction taken for federal income tax
5.2purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
5.3deduction under section 810 of the Internal Revenue Code;
5.4 (5) the amount of any special deductions taken for federal income tax purposes
5.5under sections 241 to 247 and 965 of the Internal Revenue Code;
5.6 (6) losses from the business of mining, as defined in section290.05, subdivision 1 ,
5.7clause (a), that are not subject to Minnesota income tax;
5.8 (7) the amount of any capital losses deducted for federal income tax purposes under
5.9sections 1211 and 1212 of the Internal Revenue Code;
5.10 (8) the exempt foreign trade income of a foreign sales corporation under sections
5.11921(a) and 291 of the Internal Revenue Code;
5.12 (9) the amount of percentage depletion deducted under sections 611 through 614 and
5.13291 of the Internal Revenue Code;
5.14 (10) for certified pollution control facilities placed in service in a taxable year
5.15beginning before December 31, 1986, and for which amortization deductions were elected
5.16under section 169 of the Internal Revenue Code of 1954, as amended through December
5.1731, 1985, the amount of the amortization deduction allowed in computing federal taxable
5.18income for those facilities;
5.19(11) the amount of any deemed dividend from a foreign operating corporation
5.20determined pursuant to section
290.17, subdivision 4, paragraph (g). The deemed dividend
5.21shall be reduced by the amount of the addition to income required by clauses (20), (21),
5.22(22), and (23);
5.23(12) (11) the amount of a partner's pro rata share of net income which does not flow
5.24through to the partner because the partnership elected to pay the tax on the income under
5.25section 6242(a)(2) of the Internal Revenue Code;
5.26(13) (12) the amount of net income excluded under section 114 of the Internal
5.27Revenue Code;
5.28(14) (13) any increase in subpart F income, as defined in section 952(a) of the
5.29Internal Revenue Code, for the taxable year when subpart F income is calculated without
5.30regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
5.31(15) (14) 80 percent of the depreciation deduction allowed under section
5.32168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
5.33the taxpayer has an activity that in the taxable year generates a deduction for depreciation
5.34under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
5.35year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
5.36allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
6.1of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
6.2over the amount of the loss from the activity that is not allowed in the taxable year. In
6.3succeeding taxable years when the losses not allowed in the taxable year are allowed, the
6.4depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
6.5(16) (15) 80 percent of the amount by which the deduction allowed by section 179 of
6.6the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
6.7Revenue Code of 1986, as amended through December 31, 2003;
6.8(17) (16) to the extent deducted in computing federal taxable income, the amount of
6.9the deduction allowable under section 199 of the Internal Revenue Code;
6.10(18) (17) for taxable years beginning before January 1, 2013, the exclusion allowed
6.11under section 139A of the Internal Revenue Code for federal subsidies for prescription
6.12drug plans;
6.13(19) (18) the amount of expenses disallowed under section
290.10, subdivision 2 ;
6.14(20) an amount equal to the interest and intangible expenses, losses, and costs paid,
6.15accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
6.16of a corporation that is a member of the taxpayer's unitary business group that qualifies
6.17as a foreign operating corporation. For purposes of this clause, intangible expenses and
6.18costs include:
6.19(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
6.20use, maintenance or management, ownership, sale, exchange, or any other disposition of
6.21intangible property;
6.22(ii) losses incurred, directly or indirectly, from factoring transactions or discounting
6.23transactions;
6.24(iii) royalty, patent, technical, and copyright fees;
6.25(iv) licensing fees; and
6.26(v) other similar expenses and costs.
6.27For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
6.28applications, trade names, trademarks, service marks, copyrights, mask works, trade
6.29secrets, and similar types of intangible assets.
6.30This clause does not apply to any item of interest or intangible expenses or costs paid,
6.31accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
6.32to such item of income to the extent that the income to the foreign operating corporation
6.33is income from sources without the United States as defined in subtitle A, chapter 1,
6.34subchapter N, part 1, of the Internal Revenue Code;
6.35(21) except as already included in the taxpayer's taxable income pursuant to clause
6.36(20), any interest income and income generated from intangible property received or
7.1accrued by a foreign operating corporation that is a member of the taxpayer's unitary
7.2group. For purposes of this clause, income generated from intangible property includes:
7.3(i) income related to the direct or indirect acquisition, use, maintenance or
7.4management, ownership, sale, exchange, or any other disposition of intangible property;
7.5(ii) income from factoring transactions or discounting transactions;
7.6(iii) royalty, patent, technical, and copyright fees;
7.7(iv) licensing fees; and
7.8(v) other similar income.
7.9For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
7.10applications, trade names, trademarks, service marks, copyrights, mask works, trade
7.11secrets, and similar types of intangible assets.
7.12This clause does not apply to any item of interest or intangible income received or accrued
7.13by a foreign operating corporation with respect to such item of income to the extent that
7.14the income is income from sources without the United States as defined in subtitle A,
7.15chapter 1, subchapter N, part 1, of the Internal Revenue Code;
7.16(22) the dividends attributable to the income of a foreign operating corporation that
7.17is a member of the taxpayer's unitary group in an amount that is equal to the dividends
7.18paid deduction of a real estate investment trust under section 561(a) of the Internal
7.19Revenue Code for amounts paid or accrued by the real estate investment trust to the
7.20foreign operating corporation;
7.21(23) the income of a foreign operating corporation that is a member of the taxpayer's
7.22unitary group in an amount that is equal to gains derived from the sale of real or personal
7.23property located in the United States;
7.24(24) (19) for taxable years beginning before January 1, 2010, the additional amount
7.25allowed as a deduction for donation of computer technology and equipment under section
7.26170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and
7.27(25) (20) discharge of indebtedness income resulting from reacquisition of business
7.28indebtedness and deferred under section 108(i) of the Internal Revenue Code.
7.29EFFECTIVE DATE.This section is effective for taxable years beginning after
7.30December 31, 2011.
7.31 Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
7.32 Subd. 19d. Corporations; modifications decreasing federal taxable income. For
7.33corporations, there shall be subtracted from federal taxable income after the increases
7.34provided in subdivision 19c:
8.1 (1) the amount of foreign dividend gross-up added to gross income for federal
8.2income tax purposes under section 78 of the Internal Revenue Code;
8.3 (2) the amount of salary expense not allowed for federal income tax purposes due to
8.4claiming the work opportunity credit under section 51 of the Internal Revenue Code;
8.5 (3) any dividend (not including any distribution in liquidation) paid within the
8.6taxable year by a national or state bank to the United States, or to any instrumentality of
8.7the United States exempt from federal income taxes, on the preferred stock of the bank
8.8owned by the United States or the instrumentality;
8.9 (4) amounts disallowed for intangible drilling costs due to differences between
8.10this chapter and the Internal Revenue Code in taxable years beginning before January
8.111, 1987, as follows:
8.12 (i) to the extent the disallowed costs are represented by physical property, an amount
8.13equal to the allowance for depreciation under Minnesota Statutes 1986, section290.09,
8.14subdivision 7 , subject to the modifications contained in subdivision 19e; and
8.15 (ii) to the extent the disallowed costs are not represented by physical property, an
8.16amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
8.17290.09, subdivision 8
;
8.18 (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
8.19Internal Revenue Code, except that:
8.20 (i) for capital losses incurred in taxable years beginning after December 31, 1986,
8.21capital loss carrybacks shall not be allowed;
8.22 (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
8.23a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
8.24allowed;
8.25 (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
8.26capital loss carryback to each of the three taxable years preceding the loss year, subject to
8.27the provisions of Minnesota Statutes 1986, section290.16 , shall be allowed; and
8.28 (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
8.29a capital loss carryover to each of the five taxable years succeeding the loss year to the
8.30extent such loss was not used in a prior taxable year and subject to the provisions of
8.31Minnesota Statutes 1986, section290.16 , shall be allowed;
8.32 (6) an amount for interest and expenses relating to income not taxable for federal
8.33income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
8.34expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
8.35291 of the Internal Revenue Code in computing federal taxable income;
9.1 (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
9.2which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
9.3reasonable allowance for depletion based on actual cost. In the case of leases the deduction
9.4must be apportioned between the lessor and lessee in accordance with rules prescribed
9.5by the commissioner. In the case of property held in trust, the allowable deduction must
9.6be apportioned between the income beneficiaries and the trustee in accordance with the
9.7pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
9.8of the trust's income allocable to each;
9.9 (8) for certified pollution control facilities placed in service in a taxable year
9.10beginning before December 31, 1986, and for which amortization deductions were elected
9.11under section 169 of the Internal Revenue Code of 1954, as amended through December
9.1231, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
9.131986, section290.09, subdivision 7 ;
9.14 (9) amounts included in federal taxable income that are due to refunds of income,
9.15excise, or franchise taxes based on net income or related minimum taxes paid by the
9.16corporation to Minnesota, another state, a political subdivision of another state, the
9.17District of Columbia, or a foreign country or possession of the United States to the extent
9.18that the taxes were added to federal taxable income undersection 290.01, subdivision 19c,
9.19clause (1), in a prior taxable year;
9.20(10) 80 percent of royalties, fees, or other like income accrued or received from a
9.21foreign operating corporation or a foreign corporation which is part of the same unitary
9.22business as the receiving corporation, unless the income resulting from such payments or
9.23accruals is income from sources within the United States as defined in subtitle A, chapter
9.241, subchapter N, part 1, of the Internal Revenue Code;
9.25(11) (10) income or gains from the business of mining as defined in section
290.05,
9.26subdivision 1 , clause (a), that are not subject to Minnesota franchise tax;
9.27(12) (11) the amount of disability access expenditures in the taxable year which are
9.28not allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue
9.29Code;
9.30(13) (12) the amount of qualified research expenses not allowed for federal income
9.31tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
9.32that the amount exceeds the amount of the credit allowed under section290.068 ;
9.33(14) (13) the amount of salary expenses not allowed for federal income tax purposes
9.34due to claiming the Indian employment credit under section 45A(a) of the Internal
9.35Revenue Code;
10.1(15) (14) for a corporation whose foreign sales corporation, as defined in section
10.2922 of the Internal Revenue Code, constituted a foreign operating corporation during any
10.3taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
10.4claiming the deduction under section290.21, subdivision 4 , for income received from
10.5the foreign operating corporation, an amount equal to1.23 multiplied by the amount of
10.6income excluded under section 114 of the Internal Revenue Code, provided the income is
10.7not income of a foreign operating company;
10.8(16) (15) any decrease in subpart F income, as defined in section 952(a) of the
10.9Internal Revenue Code, for the taxable year when subpart F income is calculated without
10.10regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
10.11(17) (16) in each of the five tax years immediately following the tax year in which an
10.12addition is required under subdivision 19c, clause(15) (14), an amount equal to one-fifth
10.13of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
10.14amount of the addition made by the taxpayer under subdivision 19c, clause(15) (14). The
10.15resulting delayed depreciation cannot be less than zero;
10.16(18) (17) in each of the five tax years immediately following the tax year in which an
10.17addition is required under subdivision 19c, clause(16) (15), an amount equal to one-fifth
10.18of the amount of the addition; and
10.19(19) (18) to the extent included in federal taxable income, discharge of indebtedness
10.20income resulting from reacquisition of business indebtedness included in federal taxable
10.21income under section 108(i) of the Internal Revenue Code. This subtraction applies only
10.22to the extent that the income was included in net income in a prior year as a result of the
10.23addition undersection 290.01, subdivision 19c, clause (25) (20).
10.24EFFECTIVE DATE.This section is effective for taxable years beginning after
10.25December 31, 2011.
10.26 Sec. 6. Minnesota Statutes 2010, section 290.01, subdivision 29, is amended to read:
10.27 Subd. 29. Taxable income. The term "taxable income" means:
10.28(1) for individuals, estates, and trusts, the same as taxable net income; and
10.29(2) for corporations, the taxable net income less:
10.30(i) the net operating loss deduction under section290.095 ; and
10.31(ii) the dividends received deduction under section290.21, subdivision 4 ; plus
10.32(iii)the exemption for operating in a job opportunity building zone under section
10.33469.317;
10.34(iv) the exemption for operating in a biotechnology and health sciences industry
10.35zone under section469.337 ; and
11.1(v) (iv) the exemption for operating in an international economic development
11.2zone under section469.326 .
11.3EFFECTIVE DATE.This section is effective for taxable years beginning after
11.4December 31, 2011.
11.5 Sec. 7. Minnesota Statutes 2010, section 290.17, subdivision 4, is amended to read:
11.6 Subd. 4. Unitary business principle. (a) If a trade or business conducted wholly
11.7within this state or partly within and partly without this state is part of a unitary business,
11.8the entire income of the unitary business is subject to apportionment pursuant to section
11.9290.191
. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
11.10business is considered to be derived from any particular source and none may be allocated
11.11to a particular place except as provided by the applicable apportionment formula. The
11.12provisions of this subdivision do not apply to business income subject to subdivision 5,
11.13income of an insurance company, or income of an investment company determined under
11.14section290.36 .
11.15(b) The term "unitary business" means business activities or operations which
11.16result in a flow of value between them. The term may be applied within a single legal
11.17entity or between multiple entities and without regard to whether each entity is a sole
11.18proprietorship, a corporation, a partnership or a trust.
11.19(c) Unity is presumed whenever there is unity of ownership, operation, and use,
11.20evidenced by centralized management or executive force, centralized purchasing,
11.21advertising, accounting, or other controlled interaction, but the absence of these
11.22centralized activities will not necessarily evidence a nonunitary business. Unity is also
11.23presumed when business activities or operations are of mutual benefit, dependent upon or
11.24contributory to one another, either individually or as a group.
11.25(d) Where a business operation conducted in Minnesota is owned by a business
11.26entity that carries on business activity outside the state different in kind from that
11.27conducted within this state, and the other business is conducted entirely outside the state, it
11.28is presumed that the two business operations are unitary in nature, interrelated, connected,
11.29and interdependent unless it can be shown to the contrary.
11.30(e) Unity of ownership is not deemed to exist when a corporation is involved unless
11.31that corporation is a member of a group of two or more business entities and more than 50
11.32percent of the voting stock of each member of the group is directly or indirectly owned
11.33by a common owner or by common owners, either corporate or noncorporate, or by one
11.34or more of the member corporations of the group. For this purpose, the term "voting
12.1stock" shall include membership interests of mutual insurance holding companies formed
12.2under section66A.40 .
12.3(f) The net income and apportionment factors under section290.191 or
290.20 of
12.4foreign corporations and other foreign entities which are part of a unitary business shall
12.5not be included in the net income or the apportionment factors of the unitary business.
12.6A foreign corporation or other foreign entity which is required to file a return under this
12.7chapter shall file on a separate return basis.The net income and apportionment factors
12.8under section
290.191 or
290.20 of foreign operating corporations shall not be included in
12.9the net income or the apportionment factors of the unitary business except as provided in
12.10paragraph (g). The provisions of this paragraph are not severable from the provisions of
12.11section 290.01, subdivision 5, clauses (4) to (6); if any of those provisions are found to be
12.12unconstitutional, the provisions of this paragraph are void for the respective taxable years.
12.13(g) The adjusted net income of a foreign operating corporation shall be deemed to
12.14be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
12.15proportion to each shareholder's ownership, with which such corporation is engaged in
12.16a unitary business. Such deemed dividend shall be treated as a dividend under section
12.17290.21, subdivision 4.
12.18Dividends actually paid by a foreign operating corporation to a corporate shareholder
12.19which is a member of the same unitary business as the foreign operating corporation shall
12.20be eliminated from the net income of the unitary business in preparing a combined report
12.21for the unitary business. The adjusted net income of a foreign operating corporation
12.22shall be its net income adjusted as follows:
12.23(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
12.24Rico, or a United States possession or political subdivision of any of the foregoing shall
12.25be a deduction; and
12.26(2) the subtraction from federal taxable income for payments received from foreign
12.27corporations or foreign operating corporations under section
290.01, subdivision 19d,
12.28clause (10), shall not be allowed.
12.29If a foreign operating corporation incurs a net loss, neither income nor deduction
12.30from that corporation shall be included in determining the net income of the unitary
12.31business.
12.32(h) (g) For purposes of determining the net income of a unitary business and the
12.33factors to be used in the apportionment of net income pursuant to section290.191 or
12.34290.20
, there must be included only the income and apportionment factors of domestic
12.35corporations or other domestic entitiesother than foreign operating corporations that are
12.36determined to be part of the unitary business pursuant to this subdivision, notwithstanding
13.1that foreign corporations or other foreign entities might be included in the unitary
13.2business, except that foreign corporations or other foreign entities that are included on a
13.3federal income tax return must be included on the combined report. Income of a foreign
13.4partnership or other foreign entity treated as a partnership included in federal taxable
13.5income, as defined in section 63 of the Internal Revenue Code of 1986, as amended
13.6through the date named in section 290.01, subdivision 19, and the proportionate amount of
13.7apportionment factors, must be included in the combined report.
13.8(i) (h) Deductions for expenses, interest, or taxes otherwise allowable under
13.9this chapter that are connected with or allocable against dividends, deemed dividends
13.10described in paragraph (g), or royalties, fees, or other like income described in section
13.11290.01, subdivision 19d, clause (10), shall not be disallowed.
13.12(j) (i) Each corporation or other entity, except a sole proprietorship, that is part of
13.13a unitary business must file combined reports as the commissioner determines. On the
13.14reports, all intercompany transactions between entities included pursuant to paragraph
13.15(h) (g) must be eliminated and the entire net income of the unitary business determined in
13.16accordance with this subdivision is apportioned among the entities by using each entity's
13.17Minnesota factors for apportionment purposes in the numerators of the apportionment
13.18formula and the total factors for apportionment purposes of all entities included pursuant
13.19to paragraph(h) (g) in the denominators of the apportionment formula. All sales of the
13.20unitary business made within Minnesota pursuant to section 290.191 or 290.20 must be
13.21included on the separate combined report of a corporation that is a member of the unitary
13.22business and is subject to the jurisdiction of this state to impose tax under this chapter.
13.23(k) (j) If a corporation has been divested from a unitary business and is included in a
13.24combined report for a fractional part of the common accounting period of the combined
13.25report:
13.26(1) its income includable in the combined report is its income incurred for that part
13.27of the year determined by proration or separate accounting; and
13.28(2) its sales, property, and payroll included in the apportionment formula must
13.29be prorated or accounted for separately.
13.30EFFECTIVE DATE.This section is effective for returns filed for taxable years
13.31beginning after December 31, 2011.
13.32 Sec. 8. Minnesota Statutes 2010, section 290.191, subdivision 2, is amended to read:
13.33 Subd. 2. Apportionment formula of general application.(a) Except for those
13.34trades or businesses required to use a different formula under subdivision 3 or section
13.35290.36
, and for those trades or businesses that receive permission to use some other
14.1method under section290.20 or under subdivision 4, a trade or business required to
14.2apportion its net income must apportion its income to this state on the basis of the
14.3percentage obtained by taking the sum of the following percentages and dividing by three:
14.4(1)the percent for the sales factor under paragraph (b) of the percentage which
14.5the sales made within this state in connection with the trade or business during the tax
14.6period are of the total sales wherever made in connection with the trade or business during
14.7the tax period;
14.8(2)the percent for the property factor under paragraph (b) of the percentage which
14.9the total tangible property used by the taxpayer in this state in connection with the trade or
14.10business during the tax period is of the total tangible property, wherever located, used by
14.11the taxpayer in connection with the trade or business during the tax period; and
14.12(3)the percent for the payroll factor under paragraph (b) of the percentage which
14.13the taxpayer's total payrolls paid or incurred in this state or paid in respect to labor
14.14performed in this state in connection with the trade or business during the tax period are
14.15of the taxpayer's total payrolls paid or incurred in connection with the trade or business
14.16during the tax period.
14.17(b) For purposes of paragraph (a) and subdivision 3, the following percentages apply
14.18for the taxable years specified:
14.29EFFECTIVE DATE.This section is effective for taxable years beginning after
14.30December 31, 2011.
14.31 Sec. 9. Minnesota Statutes 2010, section 290.191, subdivision 3, is amended to read:
14.32 Subd. 3. Apportionment formula for financial institutions. Except for an
14.33investment company required to apportion its income under section290.36 , a financial
14.34institution that is required to apportion its net income must apportion its net income to
14.35this state on the basis of the percentage obtained by taking the sum of the following
14.36percentages and dividing by three:
15.1(1)the percent for the sales factor under subdivision 2, paragraph (b), of the
15.2percentage which the receipts from within this state in connection with the trade or
15.3business during the tax period are of the total receipts in connection with the trade or
15.4business during the tax period, from wherever derived;
15.5(2)the percent for the property factor under subdivision 2, paragraph (b), of the
15.6percentage which the sum of the total tangible property used by the taxpayer in this
15.7state and the intangible property owned by the taxpayer and attributed to this state in
15.8connection with the trade or business during the tax period is of the sum of the total
15.9tangible property, wherever located, used by the taxpayer and the intangible property
15.10owned by the taxpayer and attributed to all states in connection with the trade or business
15.11during the tax period; and
15.12(3)the percent for the payroll factor under subdivision 2, paragraph (b), of the
15.13percentage which the taxpayer's total payrolls paid or incurred in this state or paid in
15.14respect to labor performed in this state in connection with the trade or business during
15.15the tax period are of the taxpayer's total payrolls paid or incurred in connection with
15.16the trade or business during the tax period.
15.17EFFECTIVE DATE.This section is effective for taxable years beginning after
15.18December 31, 2011.
15.19 Sec. 10. Minnesota Statutes 2010, section 290.191, subdivision 5, is amended to read:
15.20 Subd. 5. Determination of sales factor. For purposes of this section, the following
15.21rules apply in determining the sales factor.
15.22 (a) The sales factor includes all sales, gross earnings, or receipts received in the
15.23ordinary course of the business, except that the following types of income are not included
15.24in the sales factor:
15.25 (1) interest;
15.26 (2) dividends;
15.27 (3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
15.28 (4) sales of property used in the trade or business, except sales of leased property of
15.29a type which is regularly sold as well as leased;
15.30 (5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
15.31Code or sales of stock; and
15.32 (6) royalties, fees, or other like income of a type which qualify for a subtraction from
15.33federal taxable income under section290.01, subdivision 19d(10) .
15.34 (b) Sales of tangible personal property are made within this state if the property is
15.35received by a purchaser at a point within this state, and the taxpayer is taxable in this state,
16.1regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination
16.2of the property.
16.3 (c) Tangible personal property delivered to a common or contract carrier or foreign
16.4vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
16.5regardless of f.o.b. point or other conditions of the sale.
16.6 (d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
16.7fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
16.8licensed by a state or political subdivision to resell this property only within the state of
16.9ultimate destination, the sale is made in that state.
16.10 (e)Sales made by or through a corporation that is qualified as a domestic
16.11international sales corporation under section 992 of the Internal Revenue Code are not
16.12considered to have been made within this state. Notwithstanding paragraphs (b) to (d),
16.13sales of tangible personal property are in this state if the property is shipped from an office,
16.14store, warehouse, factory, or other place of storage in this state and the purchaser is the
16.15United States government or the taxpayer is not taxable in the state of the purchaser.
16.16 (f) Sales, rents, royalties, and other income in connection with real property is
16.17attributed to the state in which the property is located.
16.18 (g) Receipts from the lease or rental of tangible personal property, including finance
16.19leases and true leases, must be attributed to this state if the property is located in this
16.20state and to other states if the property is not located in this state. Receipts from the
16.21lease or rental of moving property including, but not limited to, motor vehicles, rolling
16.22stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
16.23factor to the extent that the property is used in this state. The extent of the use of moving
16.24property is determined as follows:
16.25 (1) A motor vehicle is used wholly in the state in which it is registered.
16.26 (2) The extent that rolling stock is used in this state is determined by multiplying
16.27the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
16.28which is the miles traveled within this state by the leased or rented rolling stock and the
16.29denominator of which is the total miles traveled by the leased or rented rolling stock.
16.30 (3) The extent that an aircraft is used in this state is determined by multiplying the
16.31receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
16.32the number of landings of the aircraft in this state and the denominator of which is the
16.33total number of landings of the aircraft.
16.34 (4) The extent that a vessel, mobile equipment, or other mobile property is used in
16.35the state is determined by multiplying the receipts from the lease or rental of the property
17.1by a fraction, the numerator of which is the number of days during the taxable year the
17.2property was in this state and the denominator of which is the total days in the taxable year.
17.3 (h) Royalties and other income not described in paragraph (a), clause (6), received
17.4for the use of or for the privilege of using intangible property, including patents,
17.5know-how, formulas, designs, processes, patterns, copyrights, trade names, service names,
17.6franchises, licenses, contracts, customer lists, or similar items, must be attributed to the
17.7state in which the property is used by the purchaser. If the property is used in more
17.8than one state, the royalties or other income must be apportioned to this state pro rata
17.9according to the portion of use in this state. If the portion of use in this state cannot be
17.10determined, the royalties or other income must be excluded from both the numerator
17.11and the denominator. Intangible property is used in this state if the purchaser uses the
17.12intangible property or the rights therein in the regular course of its business operations in
17.13this state, regardless of the location of the purchaser's customers.
17.14 (i) Sales of intangible property are made within the state in which the property is
17.15used by the purchaser. If the property is used in more than one state, the sales must be
17.16apportioned to this state pro rata according to the portion of use in this state. If the
17.17portion of use in this state cannot be determined, the sale must be excluded from both the
17.18numerator and the denominator of the sales factor. Intangible property is used in this
17.19state if the purchaser used the intangible property in the regular course of its business
17.20operations in this state.
17.21 (j) Receipts from the performance of services must be attributed to the state where
17.22the services are received. For the purposes of this section, receipts from the performance
17.23of services provided to a corporation, partnership, or trust may only be attributed to a state
17.24where it has a fixed place of doing business. If the state where the services are received is
17.25not readily determinable or is a state where the corporation, partnership, or trust receiving
17.26the service does not have a fixed place of doing business, the services shall be deemed
17.27to be received at the location of the office of the customer from which the services were
17.28ordered in the regular course of the customer's trade or business. If the ordering office
17.29cannot be determined, the services shall be deemed to be received at the office of the
17.30customer to which the services are billed. If the taxpayer is not taxable in the state of the
17.31purchaser, the sale is attributable to this state if the greater proportion of the service is
17.32performed in this state.
17.33 (k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts
17.34from management, distribution, or administrative services performed by a corporation
17.35or trust for a fund of a corporation or trust regulated under United States Code, title 15,
17.36sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of
18.1the fund resides. Under this paragraph, receipts for services attributed to shareholders are
18.2determined on the basis of the ratio of: (1) the average of the outstanding shares in the
18.3fund owned by shareholders residing within Minnesota at the beginning and end of each
18.4year; and (2) the average of the total number of outstanding shares in the fund at the
18.5beginning and end of each year. Residence of the shareholder, in the case of an individual,
18.6is determined by the mailing address furnished by the shareholder to the fund. Residence
18.7of the shareholder, when the shares are held by an insurance company as a depositor for
18.8the insurance company policyholders, is the mailing address of the policyholders. In
18.9the case of an insurance company holding the shares as a depositor for the insurance
18.10company policyholders, if the mailing address of the policyholders cannot be determined
18.11by the taxpayer, the receipts must be excluded from both the numerator and denominator.
18.12Residence of other shareholders is the mailing address of the shareholder.
18.13EFFECTIVE DATE.This section is effective for taxable years beginning after
18.14December 31, 2011.
18.15 Sec. 11. Minnesota Statutes 2010, section 469.315, is amended to read:
18.16469.315 TAX INCENTIVES AVAILABLE IN ZONES.
18.17Qualified businesses that operate in a job opportunity building zone, individuals who
18.18invest in a qualified business that operates in a job opportunity building zone, and property
18.19located in a job opportunity building zone qualify for:
18.20(1) exemption from individual income taxes as provided under section469.316 ;
18.21(2)exemption from corporate franchise taxes as provided under section
469.317;
18.22(3) exemption from the state sales and use tax and any local sales and use taxes on
18.23qualifying purchases as provided in section297A.68, subdivision 37 ;
18.24(4) (3) exemption from the state sales tax on motor vehicles and any local sales tax
18.25on motor vehicles as provided under section297B.03 ;
18.26(5) (4) exemption from the property tax as provided in section
272.02, subdivision
18.2764 ; and
18.28(6) (5) exemption from the wind energy production tax under section
272.029,
18.29subdivision 7 ; and.
18.30(7) the jobs credit allowed under section
469.318, except that a qualified business
18.31located in a create automotive recovery zone is not eligible for the credit under section
18.32469.318 but is eligible for the credit under section
469.3181.
18.33EFFECTIVE DATE.This section is effective for taxable years beginning after
18.34December 31, 2011.
19.1 Sec. 12. Minnesota Statutes 2010, section 469.319, subdivision 4, is amended to read:
19.2 Subd. 4. Repayment procedures. (a) For the repayment of taxes imposed under
19.3chapter 290 or 297A or local taxes collected pursuant to section297A.99 , a business must
19.4file an amended return with the commissioner of revenue and pay any taxes required
19.5to be repaid within 30 days after becoming subject to repayment under this section.
19.6The amount required to be repaid is determined by calculating the tax for the period or
19.7periods for which repayment is required without regard to the exemptions and credits
19.8allowed under section469.315 .
19.9 (b) For the repayment of taxes imposed under chapter 297B, a business must pay any
19.10taxes required to be repaid to the motor vehicle registrar, as agent for the commissioner of
19.11revenue, within 30 days after becoming subject to repayment under this section.
19.12 (c) For the repayment of property taxes, the county auditor shall prepare a tax
19.13statement for the business, applying the applicable tax extension rates for each payable
19.14year and provide a copy to the business and to the taxpayer of record. The business must
19.15pay the taxes to the county treasurer within 30 days after receipt of the tax statement. The
19.16business or the taxpayer of record may appeal the valuation and determination of the
19.17property tax to the Tax Court within 30 days after receipt of the tax statement.
19.18 (d) The provisions of chapters 270C and 289A relating to the commissioner's
19.19authority to audit, assess, and collect the tax and to hear appeals are applicable to the
19.20repayment required under paragraphs (a) and (b). The commissioner may impose civil
19.21penalties as provided in chapter 289A, and the additional tax and penalties are subject to
19.22interest at the rate provided in section270C.40 , from 30 days after becoming subject to
19.23repayment under this section until the date the tax is paid.
19.24 (e) If a property tax is not repaid under paragraph (c), the county treasurer shall
19.25add the amount required to be repaid to the property taxes assessed against the property
19.26for payment in the year following the year in which the auditor provided the statement
19.27under paragraph (c).
19.28 (f) For determining the tax required to be repaid, a reduction of a state or local
19.29sales or use tax is deemed to have been received on the date that the good or service was
19.30purchased or first put to a taxable use. In the case of an income tax or franchise tax,
19.31including the credit payable under section
469.318, a reduction of tax is deemed to have
19.32been received for the two most recent tax years that have ended prior to the date that the
19.33business became subject to repayment under this section. In the case of a property tax, a
19.34reduction of tax is deemed to have been received for the taxes payable in the year that
19.35the business became subject to repayment under this section and for the taxes payable in
19.36the prior year.
20.1 (g) The commissioner may assess the repayment of taxes under paragraph (d) any
20.2time within two years after the business becomes subject to repayment under subdivision
20.31, or within any period of limitations for the assessment of tax under section289A.38 ,
20.4whichever period is later. The county auditor may send the statement under paragraph
20.5(c) any time within three years after the business becomes subject to repayment under
20.6subdivision 1.
20.7 (h) A business is not entitled to any income tax or franchise tax benefits, including
20.8refundable credits, for any part of the year in which the business becomes subject to
20.9repayment under this section nor for any year thereafter. Property is not exempt from tax
20.10under section272.02, subdivision 64 , for any taxes payable in the year following the year
20.11in which the property became subject to repayment under this section nor for any year
20.12thereafter. A business is not eligible for any sales tax benefits beginning with goods
20.13or services purchased or first put to a taxable use on the day that the business becomes
20.14subject to repayment under this section.
20.15EFFECTIVE DATE.This section is effective for taxable years beginning after
20.16December 31, 2011.
20.17 Sec. 13. REPEALER.
20.18Minnesota Statutes 2010, sections 290.01, subdivision 6b; 290.06, subdivision 29;
20.19290.0921, subdivision 7; 290.191, subdivision 4; 469.317; and 469.318, are repealed.
20.20EFFECTIVE DATE.This section is effective for returns filed for taxable years
20.21beginning after December 31, 2011.
20.24 Section 1. Minnesota Statutes 2011 Supplement, section 123B.75, subdivision 5, is
20.25amended to read:
20.26 Subd. 5. Levy recognition.(a) For fiscal years 2009 and 2010, in June of each
20.27year, the school district must recognize as revenue, in the fund for which the levy was
20.28made, the lesser of:
20.29(1) the sum of May, June, and July school district tax settlement revenue received in
20.30that calendar year, plus general education aid according to section
126C.13, subdivision
20.314
, received in July and August of that calendar year; or
20.32(2) the sum of:
21.1(i) 31 percent of the referendum levy certified according to section
126C.17, in
21.2calendar year 2000; and
21.3(ii) the entire amount of the levy certified in the prior calendar year according to
21.4section
124D.86, subdivision 4, for school districts receiving revenue under sections
21.5124D.86, subdivision 3, clauses (1), (2), and (3);
126C.41, subdivisions 1, 2, paragraph
21.6(a), and 3
, paragraphs (b), (c), and (d);
126C.43, subdivision 2;
126C.457; and
126C.48,
21.7subdivision 6
; plus
21.8(iii) zero percent of the amount of the levy certified in the prior calendar year for the
21.9school district's general and community service funds, plus or minus auditor's adjustments,
21.10not including the levy portions that are assumed by the state, that remains after subtracting
21.11the referendum levy certified according to section
126C.17 and the amount recognized
21.12according to item (ii).
21.13(b) (a) For fiscal year 2011 and later years, in June of each year, the school district
21.14must recognize as revenue, in the fund for which the levy was made, the lesser of:
21.15(1) the sum of May, June, and July school district tax settlement revenue received in
21.16that calendar year, plus general education aid according to section126C.13, subdivision
21.174, received in July and August of that calendar year; or
21.18(2) the sum of:
21.19(i) the greater of 48.6 percent of the referendum levy certified according to section
21.20126C.17
in the prior calendar year, or 31 percent of the referendum levy certified
21.21according to section126C.17 in calendar year 2000; plus
21.22(ii) the entire amount of the levy certified in the prior calendar year according to
21.23section124D.4531 ,
124D.86, subdivision 4 , for school districts receiving revenue under
21.24sections124D.86, subdivision 3 , clauses (1), (2), and (3);
126C.41, subdivisions 1 , 2,
21.25paragraph (a), and 3, paragraphs (b), (c), and (d);126C.43, subdivision 2 ; and
126C.48 ,
21.26subdivision 6; plus
21.27(iii) 48.6 percent of the amount of the levy certified in the prior calendar year for the
21.28school district's general and community service funds, plus or minus auditor's adjustments,
21.29that remains after subtracting the referendum levy certified according to section126C.17
21.30and the amount recognized according to item (ii).
21.31(b) The levy recognition percentage under paragraph (a), clause (2), must be lowered
21.32to the nearest one-tenth of a percentage allowed by the amount of the certified revenue
21.33remaining after the application of revenue under section 127A.45, subdivision 17, until
21.34such time as the levy recognition percentage is lowered to zero.
21.35EFFECTIVE DATE.This section is effective the day following final enactment.
22.1 Sec. 2. Minnesota Statutes 2010, section 127A.45, is amended by adding a subdivision
22.2to read:
22.3 Subd. 18. Shift repayment. On July 1 of each year, the commissioner of revenue
22.4must certify to the commissioner of education the estimated amount of revenue raised
22.5under article 1 during the current calendar year. The commissioner of education must
22.6increase the aid payment percentage under subdivision 2 to the lesser of 90 or the amount
22.7funded by the certified revenue amount. Once the aid payment percentage is restored
22.8to 90, any additional certified revenue amount must be used to lower the property tax
22.9recognition shift under section 123B.75, subdivision 5.
22.10EFFECTIVE DATE.This section is effective the day following final enactment.
1.3franchise taxation; eliminating the preferences for foreign source income;
1.4repealing the subtraction for foreign royalties; expanding the definition of
1.5domestic corporations to include certain foreign corporations incorporated
1.6or doing business in tax havens; modifying JOBZ tax benefits; reducing the
1.7corporate franchise tax rates; modifying the apportionment of income; repealing
1.8foreign operating corporations; repealing the special apportionment formula for
1.9certain mail order businesses; repaying the school aid payment and property tax
1.10recognition shifts;amending Minnesota Statutes 2010, sections 127A.45, by
1.11adding a subdivision; 289A.08, subdivision 3; 290.01, subdivisions 5, 19d, 29,
1.12by adding a subdivision; 290.17, subdivision 4; 290.191, subdivisions 2, 3, 5;
1.13469.315; 469.319, subdivision 4; Minnesota Statutes 2011 Supplement, sections
1.14123B.75, subdivision 5; 290.01, subdivision 19c; repealing Minnesota Statutes
1.152010, sections 290.01, subdivision 6b; 290.06, subdivision 29; 290.0921,
1.16subdivision 7; 290.191, subdivision 4; 469.317; 469.318.
1.17BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.20 Section 1. Minnesota Statutes 2010, section 289A.08, subdivision 3, is amended to
1.21read:
1.22 Subd. 3. Corporations. (a) A corporation that is subject to the state's jurisdiction to
1.23tax under section
1.24
1.25(b) Members of a unitary business that are required to file a combined report on one
1.26return must designate a member of the unitary business to be responsible for tax matters,
1.27including the filing of returns, the payment of taxes, additions to tax, penalties, interest,
1.28or any other payment, and for the receipt of refunds of taxes or interest paid in excess of
2.1taxes lawfully due. The designated member must be a member of the unitary business that
2.2is filing the single combined report and either:
2.3(1) a corporation that is subject to the taxes imposed by chapter 290; or
2.4(2) a corporation that is not subject to the taxes imposed by chapter 290:
2.5(i) Such corporation consents by filing the return as a designated member under this
2.6clause to remit taxes, penalties, interest, or additions to tax due from the members of the
2.7unitary business subject to tax, and receive refunds or other payments on behalf of other
2.8members of the unitary business. The member designated under this clause is a "taxpayer"
2.9for the purposes of this chapter and chapter 270C, and is liable for any liability imposed
2.10on the unitary business under this chapter and chapter 290.
2.11(ii) If the state does not otherwise have the jurisdiction to tax the member designated
2.12under this clause, consenting to be the designated member does not create the jurisdiction
2.13to impose tax on the designated member, other than as described in item (i).
2.14(iii) The member designated under this clause must apply for a business tax account
2.15identification number.
2.16(c) The commissioner shall adopt rules for the filing of one return on behalf of the
2.17members of an affiliated group of corporations that are required to file a combined report.
2.18All members of an affiliated group that are required to file a combined report must file one
2.19return on behalf of the members of the group under rules adopted by the commissioner.
2.20(d) If a corporation claims on a return that it has paid tax in excess of the amount of
2.21taxes lawfully due, that corporation must include on that return information necessary for
2.22payment of the tax in excess of the amount lawfully due by electronic means.
2.23EFFECTIVE DATE.This section is effective for returns filed for taxable years
2.24beginning after December 31, 2011.
2.25 Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 5, is amended to read:
2.26 Subd. 5. Domestic corporation. The term "domestic" when applied to a corporation
2.27means a corporation:
2.28(1) created or organized in the United States, or under the laws of the United States
2.29or of any state, the District of Columbia, or any political subdivision of any of the
2.30foregoing but not including the Commonwealth of Puerto Rico, or any possession of
2.31the United States;
2.32(2) which qualifies as a DISC, as defined in section 992(a) of the Internal Revenue
2.33Code;
2.34(3) which qualifies as a FSC, as defined in section 922 of the Internal Revenue Code
2.35 (4) which is incorporated in a tax haven;
3.1 (5) which is engaged in activity in a tax haven sufficient for the tax haven to impose
3.2a net income tax under United States constitutional standards and section 290.015, and
3.3which reports that 20 percent or more of its income is attributable to business in the tax
3.4haven; or
3.5 (6) which has the average of its property, payroll, and sales factors, as defined under
3.6section 290.191, within the 50 states of the United States and the District of Columbia, of
3.720 percent or more.
3.8EFFECTIVE DATE.This section is effective for returns filed for taxable years
3.9beginning after December 31, 2011.
3.10 Sec. 3. Minnesota Statutes 2010, section 290.01, is amended by adding a subdivision
3.11to read:
3.12 Subd. 5c. Tax haven. (a) "Tax haven" means the following foreign jurisdictions,
3.13unless the listing of the jurisdiction does not apply under paragraph (b):
3.14(1) Andorra;
3.15(2) Anguilla;
3.16(3) Antigua and Barbuda;
3.17(4) Aruba;
3.18(5) Bahamas;
3.19(6) Bahrain;
3.20(7) Belize;
3.21(8) British Virgin Islands;
3.22(9) Cayman Islands;
3.23(10) Cook Islands;
3.24(11) Costa Rica;
3.25(12) Dominica;
3.26(13) Gibraltar;
3.27(14) Grenada;
3.28(15) Guernsey-Sark-Alderney;
3.29(16) Jersey;
3.30(17) Jordan;
3.31(18) Lebanon;
3.32(19) Liberia;
3.33(20) Liechtenstein;
3.34(21) Maldives;
3.35(22) Marshall Islands;
4.1(23) Monaco;
4.2(24) Montserrat;
4.3(25) Nauru;
4.4(26) Netherlands Antilles;
4.5(27) Niue;
4.6(28) Panama;
4.7(29) St. Kitts and Nevis;
4.8(30) St. Lucia;
4.9(31) St. Vincent and Grenadines;
4.10(32) Tonga;
4.11(33) Turks and Caicos; and
4.12(34) Vanuatu.
4.13(b) A foreign jurisdiction's listing under paragraph (a) does not apply to the first
4.14taxable year after the United States enters into a tax treaty or other agreement with the
4.15foreign jurisdiction that provides for prompt, obligatory, and automatic exchange of
4.16information with the United States government relevant to enforcing the provisions of
4.17federal tax laws and the treaty or other agreement was in effect for the taxable year.
4.18EFFECTIVE DATE.This section is effective for returns filed for taxable years
4.19beginning after December 31, 2011.
4.20 Sec. 4. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19c, is
4.21amended to read:
4.22 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
4.23there shall be added to federal taxable income:
4.24 (1) the amount of any deduction taken for federal income tax purposes for income,
4.25excise, or franchise taxes based on net income or related minimum taxes, including but not
4.26limited to the tax imposed under section
4.27another state, a political subdivision of another state, the District of Columbia, or any
4.28foreign country or possession of the United States;
4.29 (2) interest not subject to federal tax upon obligations of: the United States, its
4.30possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
4.31state, any of its political or governmental subdivisions, any of its municipalities, or any
4.32of its governmental agencies or instrumentalities; the District of Columbia; or Indian
4.33tribal governments;
4.34 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
4.35Revenue Code;
5.1 (4) the amount of any net operating loss deduction taken for federal income tax
5.2purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
5.3deduction under section 810 of the Internal Revenue Code;
5.4 (5) the amount of any special deductions taken for federal income tax purposes
5.5under sections 241 to 247 and 965 of the Internal Revenue Code;
5.6 (6) losses from the business of mining, as defined in section
5.7clause (a), that are not subject to Minnesota income tax;
5.8 (7) the amount of any capital losses deducted for federal income tax purposes under
5.9sections 1211 and 1212 of the Internal Revenue Code;
5.10 (8) the exempt foreign trade income of a foreign sales corporation under sections
5.11921(a) and 291 of the Internal Revenue Code;
5.12 (9) the amount of percentage depletion deducted under sections 611 through 614 and
5.13291 of the Internal Revenue Code;
5.14 (10) for certified pollution control facilities placed in service in a taxable year
5.15beginning before December 31, 1986, and for which amortization deductions were elected
5.16under section 169 of the Internal Revenue Code of 1954, as amended through December
5.1731, 1985, the amount of the amortization deduction allowed in computing federal taxable
5.18income for those facilities;
5.19
5.20
5.21
5.22
5.23
5.24through to the partner because the partnership elected to pay the tax on the income under
5.25section 6242(a)(2) of the Internal Revenue Code;
5.26
5.27Revenue Code;
5.28
5.29Internal Revenue Code, for the taxable year when subpart F income is calculated without
5.30regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
5.31
5.32168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
5.33the taxpayer has an activity that in the taxable year generates a deduction for depreciation
5.34under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
5.35year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
5.36allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
6.1of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
6.2over the amount of the loss from the activity that is not allowed in the taxable year. In
6.3succeeding taxable years when the losses not allowed in the taxable year are allowed, the
6.4depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
6.5
6.6the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
6.7Revenue Code of 1986, as amended through December 31, 2003;
6.8
6.9the deduction allowable under section 199 of the Internal Revenue Code;
6.10
6.11under section 139A of the Internal Revenue Code for federal subsidies for prescription
6.12drug plans;
6.13
6.14
6.15
6.16
6.17
6.18
6.19
6.20
6.21
6.22
6.23
6.24
6.25
6.26
6.27
6.28
6.29
6.30
6.31
6.32
6.33
6.34
6.35
6.36
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
7.11
7.12
7.13
7.14
7.15
7.16
7.17
7.18
7.19
7.20
7.21
7.22
7.23
7.24
7.25allowed as a deduction for donation of computer technology and equipment under section
7.26170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and
7.27
7.28indebtedness and deferred under section 108(i) of the Internal Revenue Code.
7.29EFFECTIVE DATE.This section is effective for taxable years beginning after
7.30December 31, 2011.
7.31 Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
7.32 Subd. 19d. Corporations; modifications decreasing federal taxable income. For
7.33corporations, there shall be subtracted from federal taxable income after the increases
7.34provided in subdivision 19c:
8.1 (1) the amount of foreign dividend gross-up added to gross income for federal
8.2income tax purposes under section 78 of the Internal Revenue Code;
8.3 (2) the amount of salary expense not allowed for federal income tax purposes due to
8.4claiming the work opportunity credit under section 51 of the Internal Revenue Code;
8.5 (3) any dividend (not including any distribution in liquidation) paid within the
8.6taxable year by a national or state bank to the United States, or to any instrumentality of
8.7the United States exempt from federal income taxes, on the preferred stock of the bank
8.8owned by the United States or the instrumentality;
8.9 (4) amounts disallowed for intangible drilling costs due to differences between
8.10this chapter and the Internal Revenue Code in taxable years beginning before January
8.111, 1987, as follows:
8.12 (i) to the extent the disallowed costs are represented by physical property, an amount
8.13equal to the allowance for depreciation under Minnesota Statutes 1986, section
8.14subdivision 7
8.15 (ii) to the extent the disallowed costs are not represented by physical property, an
8.16amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
8.18 (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
8.19Internal Revenue Code, except that:
8.20 (i) for capital losses incurred in taxable years beginning after December 31, 1986,
8.21capital loss carrybacks shall not be allowed;
8.22 (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
8.23a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
8.24allowed;
8.25 (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
8.26capital loss carryback to each of the three taxable years preceding the loss year, subject to
8.27the provisions of Minnesota Statutes 1986, section
8.28 (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
8.29a capital loss carryover to each of the five taxable years succeeding the loss year to the
8.30extent such loss was not used in a prior taxable year and subject to the provisions of
8.31Minnesota Statutes 1986, section
8.32 (6) an amount for interest and expenses relating to income not taxable for federal
8.33income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
8.34expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
8.35291 of the Internal Revenue Code in computing federal taxable income;
9.1 (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
9.2which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
9.3reasonable allowance for depletion based on actual cost. In the case of leases the deduction
9.4must be apportioned between the lessor and lessee in accordance with rules prescribed
9.5by the commissioner. In the case of property held in trust, the allowable deduction must
9.6be apportioned between the income beneficiaries and the trustee in accordance with the
9.7pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
9.8of the trust's income allocable to each;
9.9 (8) for certified pollution control facilities placed in service in a taxable year
9.10beginning before December 31, 1986, and for which amortization deductions were elected
9.11under section 169 of the Internal Revenue Code of 1954, as amended through December
9.1231, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
9.131986, section
9.14 (9) amounts included in federal taxable income that are due to refunds of income,
9.15excise, or franchise taxes based on net income or related minimum taxes paid by the
9.16corporation to Minnesota, another state, a political subdivision of another state, the
9.17District of Columbia, or a foreign country or possession of the United States to the extent
9.18that the taxes were added to federal taxable income under
9.19clause (1), in a prior taxable year;
9.20
9.21
9.22
9.23
9.24
9.25
9.26subdivision 1
9.27
9.28not allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue
9.29Code;
9.30
9.31tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
9.32that the amount exceeds the amount of the credit allowed under section
9.33
9.34due to claiming the Indian employment credit under section 45A(a) of the Internal
9.35Revenue Code;
10.1
10.2922 of the Internal Revenue Code, constituted a foreign operating corporation during any
10.3taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
10.4claiming the deduction under section
10.5the foreign operating corporation, an amount equal to
10.6income excluded under section 114 of the Internal Revenue Code, provided the income is
10.7not income of a foreign operating company;
10.8
10.9Internal Revenue Code, for the taxable year when subpart F income is calculated without
10.10regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
10.11
10.12addition is required under subdivision 19c, clause
10.13of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
10.14amount of the addition made by the taxpayer under subdivision 19c, clause
10.15resulting delayed depreciation cannot be less than zero;
10.16
10.17addition is required under subdivision 19c, clause
10.18of the amount of the addition; and
10.19
10.20income resulting from reacquisition of business indebtedness included in federal taxable
10.21income under section 108(i) of the Internal Revenue Code. This subtraction applies only
10.22to the extent that the income was included in net income in a prior year as a result of the
10.23addition under
10.24EFFECTIVE DATE.This section is effective for taxable years beginning after
10.25December 31, 2011.
10.26 Sec. 6. Minnesota Statutes 2010, section 290.01, subdivision 29, is amended to read:
10.27 Subd. 29. Taxable income. The term "taxable income" means:
10.28(1) for individuals, estates, and trusts, the same as taxable net income; and
10.29(2) for corporations, the taxable net income less:
10.30(i) the net operating loss deduction under section
10.31(ii) the dividends received deduction under section
10.32(iii)
10.33
10.34
10.35zone under section
11.1
11.2zone under section
11.3EFFECTIVE DATE.This section is effective for taxable years beginning after
11.4December 31, 2011.
11.5 Sec. 7. Minnesota Statutes 2010, section 290.17, subdivision 4, is amended to read:
11.6 Subd. 4. Unitary business principle. (a) If a trade or business conducted wholly
11.7within this state or partly within and partly without this state is part of a unitary business,
11.8the entire income of the unitary business is subject to apportionment pursuant to section
11.10business is considered to be derived from any particular source and none may be allocated
11.11to a particular place except as provided by the applicable apportionment formula. The
11.12provisions of this subdivision do not apply to business income subject to subdivision 5,
11.13income of an insurance company, or income of an investment company determined under
11.14section
11.15(b) The term "unitary business" means business activities or operations which
11.16result in a flow of value between them. The term may be applied within a single legal
11.17entity or between multiple entities and without regard to whether each entity is a sole
11.18proprietorship, a corporation, a partnership or a trust.
11.19(c) Unity is presumed whenever there is unity of ownership, operation, and use,
11.20evidenced by centralized management or executive force, centralized purchasing,
11.21advertising, accounting, or other controlled interaction, but the absence of these
11.22centralized activities will not necessarily evidence a nonunitary business. Unity is also
11.23presumed when business activities or operations are of mutual benefit, dependent upon or
11.24contributory to one another, either individually or as a group.
11.25(d) Where a business operation conducted in Minnesota is owned by a business
11.26entity that carries on business activity outside the state different in kind from that
11.27conducted within this state, and the other business is conducted entirely outside the state, it
11.28is presumed that the two business operations are unitary in nature, interrelated, connected,
11.29and interdependent unless it can be shown to the contrary.
11.30(e) Unity of ownership is not deemed to exist when a corporation is involved unless
11.31that corporation is a member of a group of two or more business entities and more than 50
11.32percent of the voting stock of each member of the group is directly or indirectly owned
11.33by a common owner or by common owners, either corporate or noncorporate, or by one
11.34or more of the member corporations of the group. For this purpose, the term "voting
12.1stock" shall include membership interests of mutual insurance holding companies formed
12.2under section
12.3(f) The net income and apportionment factors under section
12.4foreign corporations and other foreign entities which are part of a unitary business shall
12.5not be included in the net income or the apportionment factors of the unitary business.
12.6A foreign corporation or other foreign entity which is required to file a return under this
12.7chapter shall file on a separate return basis.
12.8
12.9
12.10
12.11section 290.01, subdivision 5, clauses (4) to (6); if any of those provisions are found to be
12.12unconstitutional, the provisions of this paragraph are void for the respective taxable years.
12.13
12.14
12.15
12.16
12.17
12.18
12.19
12.20
12.21
12.22
12.23
12.24
12.25
12.26
12.27
12.28
12.29
12.30
12.31
12.32
12.33factors to be used in the apportionment of net income pursuant to section
12.35corporations or other domestic entities
12.36determined to be part of the unitary business pursuant to this subdivision, notwithstanding
13.1that foreign corporations or other foreign entities might be included in the unitary
13.2business, except that foreign corporations or other foreign entities that are included on a
13.3federal income tax return must be included on the combined report. Income of a foreign
13.4partnership or other foreign entity treated as a partnership included in federal taxable
13.5income, as defined in section 63 of the Internal Revenue Code of 1986, as amended
13.6through the date named in section 290.01, subdivision 19, and the proportionate amount of
13.7apportionment factors, must be included in the combined report.
13.8
13.9this chapter that are connected with or allocable against dividends
13.10
13.11
13.12
13.13a unitary business must file combined reports as the commissioner determines. On the
13.14reports, all intercompany transactions between entities included pursuant to paragraph
13.15
13.16accordance with this subdivision is apportioned among the entities by using each entity's
13.17Minnesota factors for apportionment purposes in the numerators of the apportionment
13.18formula and the total factors for apportionment purposes of all entities included pursuant
13.19to paragraph
13.20unitary business made within Minnesota pursuant to section 290.191 or 290.20 must be
13.21included on the separate combined report of a corporation that is a member of the unitary
13.22business and is subject to the jurisdiction of this state to impose tax under this chapter.
13.23
13.24combined report for a fractional part of the common accounting period of the combined
13.25report:
13.26(1) its income includable in the combined report is its income incurred for that part
13.27of the year determined by proration or separate accounting; and
13.28(2) its sales, property, and payroll included in the apportionment formula must
13.29be prorated or accounted for separately.
13.30EFFECTIVE DATE.This section is effective for returns filed for taxable years
13.31beginning after December 31, 2011.
13.32 Sec. 8. Minnesota Statutes 2010, section 290.191, subdivision 2, is amended to read:
13.33 Subd. 2. Apportionment formula of general application.
13.34trades or businesses required to use a different formula under subdivision 3 or section
14.1method under section
14.2apportion its net income must apportion its income to this state on the basis of the
14.3percentage obtained by taking the sum of the following percentages and dividing by three:
14.4(1)
14.5the sales made within this state in connection with the trade or business during the tax
14.6period are of the total sales wherever made in connection with the trade or business during
14.7the tax period;
14.8(2)
14.9the total tangible property used by the taxpayer in this state in connection with the trade or
14.10business during the tax period is of the total tangible property, wherever located, used by
14.11the taxpayer in connection with the trade or business during the tax period; and
14.12(3)
14.13the taxpayer's total payrolls paid or incurred in this state or paid in respect to labor
14.14performed in this state in connection with the trade or business during the tax period are
14.15of the taxpayer's total payrolls paid or incurred in connection with the trade or business
14.16during the tax period.
14.17
14.18
14.29EFFECTIVE DATE.This section is effective for taxable years beginning after
14.30December 31, 2011.
14.31 Sec. 9. Minnesota Statutes 2010, section 290.191, subdivision 3, is amended to read:
14.32 Subd. 3. Apportionment formula for financial institutions. Except for an
14.33investment company required to apportion its income under section
14.34institution that is required to apportion its net income must apportion its net income to
14.35this state on the basis of the percentage obtained by taking the sum of the following
14.36percentages and dividing by three:
15.1(1)
15.2percentage which the receipts from within this state in connection with the trade or
15.3business during the tax period are of the total receipts in connection with the trade or
15.4business during the tax period, from wherever derived;
15.5(2)
15.6percentage which the sum of the total tangible property used by the taxpayer in this
15.7state and the intangible property owned by the taxpayer and attributed to this state in
15.8connection with the trade or business during the tax period is of the sum of the total
15.9tangible property, wherever located, used by the taxpayer and the intangible property
15.10owned by the taxpayer and attributed to all states in connection with the trade or business
15.11during the tax period; and
15.12(3)
15.13percentage which the taxpayer's total payrolls paid or incurred in this state or paid in
15.14respect to labor performed in this state in connection with the trade or business during
15.15the tax period are of the taxpayer's total payrolls paid or incurred in connection with
15.16the trade or business during the tax period.
15.17EFFECTIVE DATE.This section is effective for taxable years beginning after
15.18December 31, 2011.
15.19 Sec. 10. Minnesota Statutes 2010, section 290.191, subdivision 5, is amended to read:
15.20 Subd. 5. Determination of sales factor. For purposes of this section, the following
15.21rules apply in determining the sales factor.
15.22 (a) The sales factor includes all sales, gross earnings, or receipts received in the
15.23ordinary course of the business, except that the following types of income are not included
15.24in the sales factor:
15.25 (1) interest;
15.26 (2) dividends;
15.27 (3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
15.28 (4) sales of property used in the trade or business, except sales of leased property of
15.29a type which is regularly sold as well as leased;
15.30 (5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
15.31Code or sales of stock; and
15.32 (6) royalties, fees, or other like income of a type which qualify for a subtraction from
15.33federal taxable income under section
15.34 (b) Sales of tangible personal property are made within this state if the property is
15.35received by a purchaser at a point within this state, and the taxpayer is taxable in this state,
16.1regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination
16.2of the property.
16.3 (c) Tangible personal property delivered to a common or contract carrier or foreign
16.4vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
16.5regardless of f.o.b. point or other conditions of the sale.
16.6 (d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
16.7fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
16.8licensed by a state or political subdivision to resell this property only within the state of
16.9ultimate destination, the sale is made in that state.
16.10 (e)
16.11
16.12
16.13sales of tangible personal property are in this state if the property is shipped from an office,
16.14store, warehouse, factory, or other place of storage in this state and the purchaser is the
16.15United States government or the taxpayer is not taxable in the state of the purchaser.
16.16 (f) Sales, rents, royalties, and other income in connection with real property is
16.17attributed to the state in which the property is located.
16.18 (g) Receipts from the lease or rental of tangible personal property, including finance
16.19leases and true leases, must be attributed to this state if the property is located in this
16.20state and to other states if the property is not located in this state. Receipts from the
16.21lease or rental of moving property including, but not limited to, motor vehicles, rolling
16.22stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
16.23factor to the extent that the property is used in this state. The extent of the use of moving
16.24property is determined as follows:
16.25 (1) A motor vehicle is used wholly in the state in which it is registered.
16.26 (2) The extent that rolling stock is used in this state is determined by multiplying
16.27the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
16.28which is the miles traveled within this state by the leased or rented rolling stock and the
16.29denominator of which is the total miles traveled by the leased or rented rolling stock.
16.30 (3) The extent that an aircraft is used in this state is determined by multiplying the
16.31receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
16.32the number of landings of the aircraft in this state and the denominator of which is the
16.33total number of landings of the aircraft.
16.34 (4) The extent that a vessel, mobile equipment, or other mobile property is used in
16.35the state is determined by multiplying the receipts from the lease or rental of the property
17.1by a fraction, the numerator of which is the number of days during the taxable year the
17.2property was in this state and the denominator of which is the total days in the taxable year.
17.3 (h) Royalties and other income not described in paragraph (a), clause (6), received
17.4for the use of or for the privilege of using intangible property, including patents,
17.5know-how, formulas, designs, processes, patterns, copyrights, trade names, service names,
17.6franchises, licenses, contracts, customer lists, or similar items, must be attributed to the
17.7state in which the property is used by the purchaser. If the property is used in more
17.8than one state, the royalties or other income must be apportioned to this state pro rata
17.9according to the portion of use in this state. If the portion of use in this state cannot be
17.10determined, the royalties or other income must be excluded from both the numerator
17.11and the denominator. Intangible property is used in this state if the purchaser uses the
17.12intangible property or the rights therein in the regular course of its business operations in
17.13this state, regardless of the location of the purchaser's customers.
17.14 (i) Sales of intangible property are made within the state in which the property is
17.15used by the purchaser. If the property is used in more than one state, the sales must be
17.16apportioned to this state pro rata according to the portion of use in this state. If the
17.17portion of use in this state cannot be determined, the sale must be excluded from both the
17.18numerator and the denominator of the sales factor. Intangible property is used in this
17.19state if the purchaser used the intangible property in the regular course of its business
17.20operations in this state.
17.21 (j) Receipts from the performance of services must be attributed to the state where
17.22the services are received. For the purposes of this section, receipts from the performance
17.23of services provided to a corporation, partnership, or trust may only be attributed to a state
17.24where it has a fixed place of doing business. If the state where the services are received is
17.25not readily determinable or is a state where the corporation, partnership, or trust receiving
17.26the service does not have a fixed place of doing business, the services shall be deemed
17.27to be received at the location of the office of the customer from which the services were
17.28ordered in the regular course of the customer's trade or business. If the ordering office
17.29cannot be determined, the services shall be deemed to be received at the office of the
17.30customer to which the services are billed. If the taxpayer is not taxable in the state of the
17.31purchaser, the sale is attributable to this state if the greater proportion of the service is
17.32performed in this state.
17.33 (k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts
17.34from management, distribution, or administrative services performed by a corporation
17.35or trust for a fund of a corporation or trust regulated under United States Code, title 15,
17.36sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of
18.1the fund resides. Under this paragraph, receipts for services attributed to shareholders are
18.2determined on the basis of the ratio of: (1) the average of the outstanding shares in the
18.3fund owned by shareholders residing within Minnesota at the beginning and end of each
18.4year; and (2) the average of the total number of outstanding shares in the fund at the
18.5beginning and end of each year. Residence of the shareholder, in the case of an individual,
18.6is determined by the mailing address furnished by the shareholder to the fund. Residence
18.7of the shareholder, when the shares are held by an insurance company as a depositor for
18.8the insurance company policyholders, is the mailing address of the policyholders. In
18.9the case of an insurance company holding the shares as a depositor for the insurance
18.10company policyholders, if the mailing address of the policyholders cannot be determined
18.11by the taxpayer, the receipts must be excluded from both the numerator and denominator.
18.12Residence of other shareholders is the mailing address of the shareholder.
18.13EFFECTIVE DATE.This section is effective for taxable years beginning after
18.14December 31, 2011.
18.15 Sec. 11. Minnesota Statutes 2010, section 469.315, is amended to read:
18.16469.315 TAX INCENTIVES AVAILABLE IN ZONES.
18.17Qualified businesses that operate in a job opportunity building zone, individuals who
18.18invest in a qualified business that operates in a job opportunity building zone, and property
18.19located in a job opportunity building zone qualify for:
18.20(1) exemption from individual income taxes as provided under section
18.21(2)
18.22
18.23qualifying purchases as provided in section
18.24
18.25on motor vehicles as provided under section
18.26
18.2764
18.28
18.29subdivision 7
18.30
18.31
18.32
18.33EFFECTIVE DATE.This section is effective for taxable years beginning after
18.34December 31, 2011.
19.1 Sec. 12. Minnesota Statutes 2010, section 469.319, subdivision 4, is amended to read:
19.2 Subd. 4. Repayment procedures. (a) For the repayment of taxes imposed under
19.3chapter 290 or 297A or local taxes collected pursuant to section
19.4file an amended return with the commissioner of revenue and pay any taxes required
19.5to be repaid within 30 days after becoming subject to repayment under this section.
19.6The amount required to be repaid is determined by calculating the tax for the period or
19.7periods for which repayment is required without regard to the exemptions and credits
19.8allowed under section
19.9 (b) For the repayment of taxes imposed under chapter 297B, a business must pay any
19.10taxes required to be repaid to the motor vehicle registrar, as agent for the commissioner of
19.11revenue, within 30 days after becoming subject to repayment under this section.
19.12 (c) For the repayment of property taxes, the county auditor shall prepare a tax
19.13statement for the business, applying the applicable tax extension rates for each payable
19.14year and provide a copy to the business and to the taxpayer of record. The business must
19.15pay the taxes to the county treasurer within 30 days after receipt of the tax statement. The
19.16business or the taxpayer of record may appeal the valuation and determination of the
19.17property tax to the Tax Court within 30 days after receipt of the tax statement.
19.18 (d) The provisions of chapters 270C and 289A relating to the commissioner's
19.19authority to audit, assess, and collect the tax and to hear appeals are applicable to the
19.20repayment required under paragraphs (a) and (b). The commissioner may impose civil
19.21penalties as provided in chapter 289A, and the additional tax and penalties are subject to
19.22interest at the rate provided in section
19.23repayment under this section until the date the tax is paid.
19.24 (e) If a property tax is not repaid under paragraph (c), the county treasurer shall
19.25add the amount required to be repaid to the property taxes assessed against the property
19.26for payment in the year following the year in which the auditor provided the statement
19.27under paragraph (c).
19.28 (f) For determining the tax required to be repaid, a reduction of a state or local
19.29sales or use tax is deemed to have been received on the date that the good or service was
19.30purchased or first put to a taxable use. In the case of an income tax or franchise tax,
19.31
19.32been received for the two most recent tax years that have ended prior to the date that the
19.33business became subject to repayment under this section. In the case of a property tax, a
19.34reduction of tax is deemed to have been received for the taxes payable in the year that
19.35the business became subject to repayment under this section and for the taxes payable in
19.36the prior year.
20.1 (g) The commissioner may assess the repayment of taxes under paragraph (d) any
20.2time within two years after the business becomes subject to repayment under subdivision
20.31, or within any period of limitations for the assessment of tax under section
20.4whichever period is later. The county auditor may send the statement under paragraph
20.5(c) any time within three years after the business becomes subject to repayment under
20.6subdivision 1.
20.7 (h) A business is not entitled to any income tax or franchise tax benefits, including
20.8refundable credits, for any part of the year in which the business becomes subject to
20.9repayment under this section nor for any year thereafter. Property is not exempt from tax
20.10under section
20.11in which the property became subject to repayment under this section nor for any year
20.12thereafter. A business is not eligible for any sales tax benefits beginning with goods
20.13or services purchased or first put to a taxable use on the day that the business becomes
20.14subject to repayment under this section.
20.15EFFECTIVE DATE.This section is effective for taxable years beginning after
20.16December 31, 2011.
20.17 Sec. 13. REPEALER.
20.18Minnesota Statutes 2010, sections 290.01, subdivision 6b; 290.06, subdivision 29;
20.19290.0921, subdivision 7; 290.191, subdivision 4; 469.317; and 469.318, are repealed.
20.20EFFECTIVE DATE.This section is effective for returns filed for taxable years
20.21beginning after December 31, 2011.
20.24 Section 1. Minnesota Statutes 2011 Supplement, section 123B.75, subdivision 5, is
20.25amended to read:
20.26 Subd. 5. Levy recognition.
20.27
20.28
20.29
20.30
20.31
20.32
21.1
21.2
21.3
21.4
21.5
21.6
21.7
21.8
21.9
21.10
21.11
21.12
21.13
21.14must recognize as revenue, in the fund for which the levy was made, the lesser of:
21.15(1) the sum of May, June, and July school district tax settlement revenue received in
21.16that calendar year, plus general education aid according to section
21.18(2) the sum of:
21.19(i) the greater of 48.6 percent of the referendum levy certified according to section
21.21according to section
21.22(ii) the entire amount of the levy certified in the prior calendar year according to
21.23section
21.24sections
21.25paragraph (a), and 3, paragraphs (b), (c), and (d);
21.26subdivision 6; plus
21.27(iii) 48.6 percent of the amount of the levy certified in the prior calendar year for the
21.28school district's general and community service funds, plus or minus auditor's adjustments,
21.29that remains after subtracting the referendum levy certified according to section
21.30and the amount recognized according to item (ii).
21.31(b) The levy recognition percentage under paragraph (a), clause (2), must be lowered
21.32to the nearest one-tenth of a percentage allowed by the amount of the certified revenue
21.33remaining after the application of revenue under section 127A.45, subdivision 17, until
21.34such time as the levy recognition percentage is lowered to zero.
21.35EFFECTIVE DATE.This section is effective the day following final enactment.
22.1 Sec. 2. Minnesota Statutes 2010, section 127A.45, is amended by adding a subdivision
22.2to read:
22.3 Subd. 18. Shift repayment. On July 1 of each year, the commissioner of revenue
22.4must certify to the commissioner of education the estimated amount of revenue raised
22.5under article 1 during the current calendar year. The commissioner of education must
22.6increase the aid payment percentage under subdivision 2 to the lesser of 90 or the amount
22.7funded by the certified revenue amount. Once the aid payment percentage is restored
22.8to 90, any additional certified revenue amount must be used to lower the property tax
22.9recognition shift under section 123B.75, subdivision 5.
22.10EFFECTIVE DATE.This section is effective the day following final enactment.