Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 2000, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 394-S.F.No. 2655
An act relating to taxation; recodifying insurance tax
laws; providing for civil and criminal penalties;
appropriating money; amending Minnesota Statutes 1998,
sections 43A.316, subdivision 9; 43A.317, subdivision
8; 60A.19, subdivision 8; 60A.198, subdivision 3;
60A.208, subdivision 8; 60A.209, subdivision 3;
60C.17; 60E.04, subdivision 4; 60E.095; 61B.30,
subdivision 1; 62C.01, subdivision 3; 62E.10,
subdivision 1; 62E.13, subdivision 10; 62L.13,
subdivision 3; 62T.10; 64B.24; 71A.04, subdivision 1;
79.252, subdivision 4; 79.34, subdivision 1a; 176A.08;
290.35, subdivisions 2, 3, and 6; 295.58; and 424.165;
Minnesota Statutes 1999 Supplement, sections 43A.23,
subdivision 1; and 60A.19, subdivision 6; proposing
coding for new law as Minnesota Statutes, chapter
297I; repealing Minnesota Statutes 1998, sections
60A.15; 60A.152; 60A.198, subdivision 6; 60A.199,
subdivisions 2, 3, 4, 5, 6, 6a, 7, 8, 9, 10, and 11;
60A.209, subdivisions 4 and 5; 69.54; 69.55; 69.56;
69.57; 69.58; 69.59; 69.60; 69.61; 71A.04, subdivision
2; 299F.21; 299F.22; 299F.23; 299F.24; 299F.25; and
299F.26; Minnesota Rules, part 2765.1500, subpart 6.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
INSURANCE TAX RECODIFICATION
Section 1. [297I.01] [DEFINITIONS.]
Subdivision 1. [TERMS.] Unless the language or context
clearly indicates that a different meaning is intended, for the
purposes of this chapter, the following terms have the meanings
given them.
Subd. 2. [ASSOCIATION OR ASSOCIATIONS.] "Association" or
"associations" has the meaning given in section 60A.02,
subdivision 1a.
Subd. 3. [COMMISSIONER.] "Commissioner" means the
commissioner of revenue of the state of Minnesota.
Subd. 4. [COMMUNITY INTEGRATED SERVICE NETWORK.]
"Community integrated service network" has the meaning given in
section 62N.02, subdivision 4a.
Subd. 5. [COMPANY OR INSURANCE COMPANY.] "Company" or
"insurance company" has the meaning given in section 60A.02,
subdivision 4.
Subd. 6. [DEPARTMENT OF REVENUE.] "Department of revenue"
means the Minnesota department of revenue or commissioner of
revenue.
Subd. 7. [DOMESTIC.] "Domestic" has the meaning given in
section 60A.02, subdivision 5.
Subd. 8. [FOREIGN.] "Foreign" has the meaning given in
section 60A.02, subdivision 6.
Subd. 9. [GROSS PREMIUMS.] "Gross premiums" means total
premiums paid by policyholders and applicants of policies,
whether received in the form of money or other valuable
consideration, on property, persons, lives, interests and other
risks located, resident, or to be performed in this state, but
excluding consideration and premiums for reinsurance assumed
from other insurance companies. The term "gross premiums"
includes the total consideration paid to bail bond agents for
bail bonds. For title insurance companies, "gross premiums"
means the charge for title insurance made by a title insurance
company or its agents according to the company's rate filing
approved by the commissioner of commerce without a deduction for
commissions paid to or retained by the agent. Gross premiums of
a title insurance company does not include any other charge or
fee for abstracting, searching, or examining the title, or
escrow, closing, or other related services.
Subd. 10. [HEALTH MAINTENANCE ORGANIZATION.] "Health
maintenance organization" has the meaning given in section
62D.02, subdivision 4.
Subd. 11. [NONPROFIT HEALTH SERVICE PLAN CORPORATION.]
"Nonprofit health service plan corporation" has the meaning
given in section 62C.02, subdivision 6.
Subd. 12. [INSURANCE.] "Insurance" means the same as that
term is defined in section 60A.02, subdivision 3.
Subd. 13. [INSURANCE AGENT OR INSURANCE
AGENCY.] "Insurance agent or insurance agency" has the meaning
given in section 60A.02, subdivision 7.
Subd. 14. [RETURN PREMIUMS DEFINED.] "Return premiums"
means any dividend or any unused or unabsorbed portion of
premium deposit or assessment that is applied toward the payment
of any premium, premium deposit, or assessment due from the
policyholder or member upon a continuance or renewal of the
insurance on account of which the dividend was earned or premium
deposit or assessment paid. Return premiums also includes any
portion of premium returned by the company upon cancellation or
termination of a policy or membership, except surrender values
paid upon the cancellation and surrender of policies or
certificates of life insurance.
Subd. 15. [STATE.] "State" has the meaning given in
section 60A.02, subdivision 18.
Subd. 16. [TAXPAYER.] "Taxpayer" means any insurance
company, association, surplus lines licensee, automobile risk
self-insurer, or insured or any other person or entity required
to pay any amount due under this chapter.
Sec. 2. [297I.05] [TAX IMPOSED.]
Subdivision 1. [DOMESTIC AND FOREIGN COMPANIES.] Except as
otherwise provided in this section, a tax is imposed on every
domestic and foreign insurance company. The rate of tax is
equal to two percent of all gross premiums less return premiums
on all direct business received by the insurer or agents of the
insurer in Minnesota, in cash or otherwise, during the year.
Subd. 2. [TOWN AND FARMERS' MUTUAL INSURANCE.] A tax is
imposed on town and farmers' mutual insurance companies. The
rate of tax is equal to one percent of gross premiums less
return premiums on all direct business received by the insurer
or agents of the insurer in Minnesota, in cash or otherwise,
during the year.
Subd. 3. [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH
ASSETS OF $5,000,000 OR LESS AT THE END OF THE CALENDAR YEAR.] A
tax is imposed on mutual property and casualty companies with
assets of $5,000,000 or less at the end of the calendar year.
The rate of tax is equal to one percent of gross premiums less
return premiums on all direct business received by the insurer
or agents of the insurer in Minnesota, in cash or otherwise,
during the year.
Subd. 4. [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH
TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A
tax is imposed on mutual property and casualty companies that
had total assets greater than $5,000,000 at the end of the
calendar year but that had total assets less than $1,600,000,000
on December 31, 1989. The rate of tax is equal to:
(1) two percent of gross premiums less return premiums on
all direct business received by the insurer or agents of the
insurer in Minnesota for life insurance, in cash or otherwise,
during the year; and
(2) 1.26 percent of gross premiums less return premiums on
all other direct business received by the insurer or agents of
the insurer in Minnesota, in cash or otherwise, during the year.
Subd. 5. [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT
HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED
SERVICE NETWORKS.] (a) The commissioner of finance shall
determine the balance of the health care access fund on
September 1 of each year.
(b) If the commissioner of finance determines that there
will not be a structural deficit for the next state fiscal year,
no tax is imposed under this chapter on health maintenance
organizations, nonprofit health service plan corporations, and
community integrated service networks for the following calendar
year.
(c) If the commissioner of finance determines that there
will be a structural deficit in the fund for the next state
fiscal year, then the commissioner of finance, in consultation
with the commissioner of revenue, shall determine the amount
needed to eliminate the structural deficit, and a tax is imposed
for the next calendar year. The rate of tax is a percentage of
gross premiums less return premiums on all direct business
received by the insurer or agents of the insurer in Minnesota,
in cash or otherwise, during the year. The percentage rate is
one-quarter of one percent, one-half of one percent,
three-quarters of one percent, or one percent of the premiums,
whichever is the lowest rate that will produce sufficient
revenue to eliminate the projected structural deficit.
(d) The commissioner of finance shall publish in the State
Register by October 1 of each year the rate of tax to be imposed
for the following calendar year.
(e) In determining the structural balance of the health
care access fund for fiscal year 2001, the commissioner of
finance shall disregard the transfer amount from the health care
access fund to the general fund for expenditures associated with
the services provided to pregnant women and children under the
age of two enrolled in the MinnesotaCare program.
(f) In approving the premium rates as required in sections
62L.08, subdivision 8, and 62A.65, subdivision 3, the
commissioners of health and commerce shall ensure that to the
extent that the tax imposed under this subdivision is less than
one percent of gross premiums less return premiums, the premium
rate reflects the difference between the amount of tax imposed
and the amount that would have been collected if the rate was
one percent.
(g) The commissioner shall deposit all revenues, including
penalties and interest, collected under this chapter from health
maintenance organizations, community integrated service
networks, and nonprofit health service plan corporations in the
health care access fund. Refunds of overpayments of tax imposed
by this subdivision must be paid from the health care access
fund. There is annually appropriated from the health care
access fund to the commissioner the amount necessary to make any
refunds of the tax imposed under this subdivision.
Subd. 6. [FIRE MARSHAL TAX.] A tax is imposed on every
licensed company, including reciprocals or interinsurance
exchanges, doing business in this state, except farmers' mutual
fire insurance companies and township fire insurance companies.
The rate of tax is equal to one-half of one percent of the gross
fire premiums and assessments, less return premiums, on all
direct business received by the company in this state, or by its
agents for it, in cash or otherwise, during the year. "Gross
fire premiums and assessments" includes premiums on policies
covering fire risks only on automobiles, whether written under
floater form or otherwise.
Subd. 7. [SURPLUS LINES TAX.] (a) A tax is imposed on
surplus lines licensees. The rate of tax is equal to three
percent of the gross premiums less return premiums received by
the licensee minus any licensee association operating
assessments paid under section 60A.208.
(b) If surplus lines insurance placed by a surplus lines
licensee and taxed under this subdivision covers a subject of
insurance residing, located, or to be performed outside this
state, a proper pro rata portion of the entire premium payable
for all of that insurance must be allocated according to the
subjects of insurance residing, located, or to be performed in
this state.
Subd. 8. [INSURANCE PREMIUM TAX EQUIVALENT PAYMENT BY
AUTOMOBILE RISK SELF-INSURERS.] (a) The following terms, for the
purposes of this subdivision, have the meanings given them.
(1) "Automobile risks" means the risk of providing no-fault
insurance under sections 65B.41 to 65B.71.
(2) "Motor vehicle" has the meaning given in section
65B.43, subdivision 2.
(3) "Person" means an owner, as defined in section 65B.43,
subdivision 4, but does not include the state or a political
subdivision as defined in section 65B.43, subdivision 20.
(4) "Self-insurance" means the condition of qualifying as a
self-insurer by complying with section 65B.48, subdivisions 3
and 3a.
(5) "Self-insurer" means a person who has arranged
self-insurance for the automobile risks associated with the
person's motor vehicle.
(b) Every self-insurer who owns, leases, or operates a
motor vehicle required to be registered or licensed in this
state or principally garaged in this state for at least two
months in the calendar year shall pay an annual amount for each
vehicle of:
(1) $15 for a private passenger vehicle as defined in
section 65B.001, subdivision 3, or a utility vehicle as defined
in section 65B.001, subdivision 4, not including a taxi; or
(2) $25 for a taxi or any other self-insured vehicle not
covered by clause (1).
(c) A self-insurer who is more than six months delinquent
in paying the amount due under this subdivision must be referred
by the commissioner to the commissioner of commerce for action.
That action may include revocation of the self-insured's
self-insurer status.
(d) The amount paid under this subdivision must be
deposited into the general fund to the credit of the account
from which the police state aid provided for in sections 69.011
to 69.051 is payable.
Subd. 9. [TAX ON PERSONS, FIRMS, OR CORPORATIONS LICENSED
TO PROCURE INSURANCE FROM UNLICENSED FOREIGN COMPANIES.] (a) A
tax is imposed on any person, firm, or corporation licensed
under section 60A.19, subdivision 8. The rate of tax is equal
to two percent of gross premiums paid in the year less return
premiums received in the year.
(b)(1) Money collected under this subdivision must be paid
to a municipality or a fire department relief association if:
(i) the money is attributable to fire, lightning, or
sprinkler insurance premiums paid by an owner to insure
property; and
(ii) the property is in a municipality that has an
organized fire department, a partly paid fire department, or a
volunteer fire department.
The money must be paid to the municipality where the insured
property is located, or to the municipality's fire department
relief association. The money to be paid includes penalties and
interest collected because a property owner failed to pay on
time the taxes due under this subdivision.
(2) This paragraph does not apply to taxes paid under this
subdivision that are attributable to premiums paid on property
if:
(i) the property is owned and occupied exclusively as a
homestead, and the owner carries insurance on the property; or
(ii) the property is exempt under section 550.37 and the
owner carries insurance on the property.
Subd. 10. [TAX ON PERSONS, FIRMS, OR CORPORATIONS
PROCURING INSURANCE FROM AN INELIGIBLE COMPANY.] (a) A tax is
imposed on each insured in this state who procures, causes to be
procured, or continues or renews insurance with an ineligible
surplus lines insurer or any self-insurer in this state who
procures or continues excess of loss, catastrophe, or other
insurance upon a subject of insurance resident, located, or to
be performed within this state, other than insurance procured
pursuant to section 60A.201 or 60A.209, subdivision 1, equal to
two percent of gross premiums less return premiums paid for such
insurance.
(b) If the insurance described in paragraph (a) also covers
a subject of insurance residing, located, or to be performed
outside this state, for the purposes of this subdivision, a
proper pro rata portion of the entire premium payable for all of
that insurance must be allocated according to the subjects of
insurance residing, located, or to be performed in this state.
(c) For the purposes of this subdivision, insurance placed
with an ineligible surplus lines insurer is considered to be
procured, continued, or renewed in this state if:
(1) it was procured through negotiations occurring in whole
or in part within or from outside this state;
(2) it was procured by an application made in whole or in
part within or from outside this state; or
(3) premiums for it are paid from within this state
directly or indirectly, in whole or in part.
Subd. 11. [RETALIATORY PROVISIONS.] (a) If any other state
or country imposes any taxes, fines, deposits, penalties,
licenses, or fees upon any insurance companies of this state and
their agents doing business in another state or country that are
in addition to or in excess of those imposed by the laws of this
state upon foreign insurance companies and their agents doing
business in this state, the same taxes, fines, deposits,
penalties, licenses, and fees are imposed upon every similar
insurance company of that state or country and their agents
doing or applying to do business in this state.
(b) If any conditions precedent to the right to do business
in any other state or country are imposed by the laws of that
state or country, beyond those imposed upon foreign companies by
the laws of this state, the same conditions precedent are
imposed upon every similar insurance company of that state or
country and their agents doing or applying to do business in
that state.
(c) For purposes of this subdivision, "taxes, fines,
deposits, penalties, licenses, or fees" means an amount of money
that is deposited in the general revenue fund of the state or
other similar fund in another state or country and is not
dedicated to a special purpose or use or money deposited in the
general revenue fund of the state or other similar fund in
another state or country and appropriated to the commissioner of
commerce or insurance for the operation of the department of
commerce or other similar agency with jurisdiction over
insurance. Taxes, fines, deposits, penalties, licenses, or fees
do not include:
(1) special purpose obligations or assessments imposed in
connection with particular kinds of insurance, including but not
limited to assessments imposed in connection with residual
market mechanisms; or
(2) assessments made by the insurance guaranty association,
life and health guarantee association, or similar association.
(d) This subdivision applies to taxes imposed under
subdivisions 1, 3, 4, 6, and 12, paragraph (a), clauses (1) and
(3).
(e) This subdivision does not apply to insurance companies
organized or domiciled in a state or country, the laws of which
do not impose retaliatory taxes, fines, deposits, penalties,
licenses, or fees or which grant, on a reciprocal basis,
exemptions from retaliatory taxes, fines, deposits, penalties,
licenses, or fees to insurance companies domiciled in this state.
Subd. 12. [OTHER ENTITIES.] (a) A tax is imposed equal to
two percent of:
(1) gross premiums less return premiums written for risks
resident or located in Minnesota by a risk retention group;
(2) gross premiums less return premiums received by an
attorney in fact acting in accordance with chapter 71A;
(3) gross premiums less return premiums received pursuant
to assigned risk policies and contracts of coverage under
chapter 79;
(4) the direct funded premium received by the reinsurance
association under section 79.34 from self-insurers approved
under section 176.181 and political subdivisions that
self-insure;
(5) gross premiums less return premiums received by a
nonprofit health service plan corporation authorized under
chapter 62C; and
(6) gross premiums less return premiums paid to an insurer
other than a licensed insurance company or a surplus lines
licensee for coverage of risks resident or located in Minnesota
by a purchasing group or any members of the purchasing group to
a broker or agent for the purchasing group.
(b) A tax is imposed on the state fund mutual insurance
company established under chapter 176A. The tax must be
computed in the same manner as mutual insurance companies under
subdivisions 1, 3, and 4.
(c) A tax is imposed on a joint self-insurance plan
operating under chapter 60F. The rate of tax is equal to two
percent of the total amount of claims paid during the fund year,
with no deduction for claims wholly or partially reimbursed
through stop-loss insurance.
(d) A tax is imposed on a joint self-insurance plan
operating under chapter 62H. The rate of tax is equal to two
percent of the total amount of claims paid during the fund's
fiscal year, with no deduction for claims wholly or partially
reimbursed through stop-loss insurance.
(e) A tax is imposed equal to the tax imposed under section
297I.05, subdivision 5, on the gross premiums less return
premiums on all coverages received by an accountable provider
network or agents of an accountable provider network in
Minnesota, in cash or otherwise, during the year.
Subd. 13. [FUNDS DEPOSITED INTO GENERAL FUND.] Unless
otherwise specified in this chapter, all amounts collected by
the commissioner under this chapter must be deposited in the
general fund.
Sec. 3. [297I.10] [SURCHARGE ON PREMIUMS TO RESTORE
DEFICIENCY IN SPECIAL FUND.]
Subdivision 1. [CITIES OF THE FIRST CLASS.] (a) The
commissioner shall order and direct a surcharge to be collected
of two percent of the fire, lightning, and sprinkler leakage
gross premiums, less return premiums, on all direct business
received by any licensed foreign or domestic fire insurance
company on property in a city of the first class, or by its
agents for it, in cash or otherwise.
(b) By July 31 and December 31 of each year the
commissioner of finance shall pay to the relief association in
each city a warrant for an amount equal to the total amount of
the surcharge on the premiums collected within the city since
the previous payment.
(c) The treasurer of the relief association shall place the
money received under this subdivision in the special fund of the
relief association.
Subd. 2. [CITY OF THE SECOND CLASS.] (a) Upon receiving
certification from a city of the second class pursuant to
section 424.165, the commissioner shall direct a surcharge to be
collected of two percent of the fire, lightning, and sprinkler
leakage gross premiums, less return premiums, on all direct
business received by any foreign or domestic fire insurance
company on property in such city of the second class, or by its
agents for it, in cash or otherwise.
(b) The board of trustees of a firefighter's relief
association of the city of the second class that has sent
certification to the commissioner under paragraph (a) must
notify the commissioner as soon as the balance in their special
fund equals $50,000. Upon receiving notice from the
association, the commissioner shall notify the insurers subject
to the surcharge that the surcharge is discontinued effective 15
days after the balance reached $50,000.
(c) By September 1 and March 1 of each year, the
commissioner of finance shall pay to the firefighter's relief
association of each city of the second class a warrant for an
amount equal to the total amount of the surcharge on the
premiums collected within the city since the previous payment.
(d) The treasurer of the firefighter's relief association
shall place the money received under this subdivision in the
special fund of the relief association.
Subd. 3. [APPROPRIATION.] The amount necessary to make the
payments required under this section is appropriated to the
commissioner of finance from the general fund.
Sec. 4. [297I.15] [EXEMPTIONS FROM TAX]
Subdivision 1. [GOVERNMENT PAYMENTS.] Premiums under
medical assistance, general assistance medical care, the
MinnesotaCare program, and the Minnesota comprehensive health
insurance plan and all payments, revenues, and reimbursements
received from the federal government for medicare-related
coverage as defined in section 62A.31, subdivision 3, are not
subject to tax under this chapter.
Subd. 2. [MINNESOTA EMPLOYEES INSURANCE PROGRAM.] To the
extent that the Minnesota employees insurance program under
section 43A.317 operates as a self-insured group, the premiums
paid to the program are exempt from the taxes imposed under this
chapter, but are subject to a Minnesota comprehensive health
association assessment under section 62E.11.
Subd. 3. [PUBLIC EMPLOYEES INSURANCE PROGRAM.] Premiums
paid to the public employees insurance program under section
43A.316 are exempt from the taxes imposed under this chapter.
Subd. 4. [PREMIUMS PAID TO HEALTH CARRIERS BY STATE.] A
health carrier as defined in section 62A.011 is exempt from the
taxes imposed under this chapter on premiums paid to it by the
state.
Subd. 5. [MINNESOTA INSURANCE GUARANTY ASSOCIATION.] The
Minnesota insurance guaranty association under chapter 60C is
exempt from the taxes imposed under this chapter.
Subd. 6. [MINNESOTA LIFE AND HEALTH GUARANTY ASSOCIATION.]
The Minnesota life and health guaranty association under chapter
61B is exempt from the taxes imposed under this chapter.
Subd. 7. [MINNESOTA COMPREHENSIVE HEALTH ASSOCIATION.] The
Minnesota comprehensive health association under chapter 62E is
exempt from the taxes imposed under this chapter.
Subd. 8. [WRITING CARRIER FOR THE COMPREHENSIVE HEALTH
INSURANCE PLAN.] Premiums received by the writing carrier for
the comprehensive health insurance plan established under
section 62E.10 in connection with that plan are exempt from the
taxes imposed under this chapter.
Subd. 9. [HEALTH COVERAGE REINSURANCE ASSOCIATION.] The
health coverage reinsurance association under chapter 62L is
exempt from the taxes imposed under this chapter.
Subd. 10. [PREMIUMS PAID TO FRATERNAL BENEFIT SOCIETIES.]
Premiums paid to fraternal benefit societies pursuant to chapter
64B are exempt from the taxes imposed under this chapter.
Sec. 5. [297I.20] [GUARANTY ASSOCIATION ASSESSMENT
OFFSET.]
(a) An insurance company may offset against its premium tax
liability to this state any amount paid for assessments made for
insolvencies which occur after July 31, 1994, under sections
60C.01 to 60C.22; and any amount paid for assessments made after
July 31, 1994, under Minnesota Statutes 1992, sections 61B.01 to
61B.16, or under sections 61B.18 to 61B.32 as follows:
(1) Each such assessment shall give rise to an amount of
offset equal to 20 percent of the amount of the assessment for
each of the five calendar years following the year in which the
assessment was paid.
(2) The amount of offset initially determined for each
taxable year is the sum of the amounts determined under clause
(1) for that taxable year.
(b)(1) Each year the commissioner shall compare total
guaranty association assessments levied over the preceding five
calendar years to the sum of all premium tax and corporate
franchise tax revenues collected from insurance companies,
without reduction for any guaranty association assessment offset
in the preceding calendar year, referred to in this subdivision
as "preceding year insurance tax revenues."
(2) If total guaranty association assessments levied over
the preceding five years exceed the preceding year insurance tax
revenues, insurance companies must be allowed only a
proportionate part of the premium tax offset calculated under
paragraph (a) for the current calendar year.
(3) The proportionate part of the premium tax offset
allowed in the current calendar year is determined by
multiplying the amount calculated under paragraph (a) by a
fraction. The numerator of the fraction equals the preceding
year insurance tax revenues, and its denominator equals total
guaranty association assessments levied over the preceding
five-year period.
(4) The proportionate part of the premium tax offset that
is not allowed must be carried forward to subsequent tax years
and added to the amount of premium tax offset calculated under
paragraph (a) prior to application of the limitation imposed by
this paragraph.
(5) Any amount carried forward from prior years must be
allowed before allowance of the offset for the current year
calculated under paragraph (a).
(6) The premium tax offset limitation must be calculated
separately for (i) insurance companies subject to assessment
under sections 60C.01 to 60C.22, and (ii) insurance companies
subject to assessment under Minnesota Statutes 1992, sections
61B.01 to 61B.16, or 61B.18 to 61B.32.
(7) When the premium tax offset is limited by this
provision, the commissioner shall notify affected insurance
companies on a timely basis for purposes of completing premium
and corporate franchise tax returns.
(8) The guaranty associations created under sections 60C.01
to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16,
and 61B.18 to 61B.32, shall provide the commissioner with the
necessary information on guaranty association assessments.
(c)(1) If the offset determined by the application of
paragraphs (a) and (b) exceeds the greater of the insurance
company's premium tax liability under this section or its
corporate franchise tax liability under chapter 290 prior to
allowance of the credit for premium taxes, then the insurance
company may carry forward the excess, referred to in this
subdivision as the "carryforward credit" to subsequent taxable
years.
(2) The carryforward credit is allowed as an offset against
premium tax liability for the first succeeding year to the
extent that the premium tax liability for that year exceeds the
amount of the allowable offset for the year determined under
paragraphs (a) and (b).
(3) The carryforward credit must be reduced, but not below
zero, by the greater of the amount of the carryforward credit
allowed as an offset against the premium tax under this
paragraph or the amount of the carryforward credit allowed as an
offset against the insurance company's corporate franchise tax
liability under section 290.35, subdivision 6, paragraph (d).
The remainder, if any, of the carryforward credit must be
carried forward to succeeding taxable years until the entire
carryforward credit has been credited against the insurance
company's liability for premium tax under this chapter and
corporate franchise tax under chapter 290 if applicable for that
taxable year.
(d) When an insurer has offset against taxes its payment of
an assessment of the Minnesota life and health guaranty
association, and the association pays the insurer a refund with
respect to the assessment under Minnesota Statutes 1992, section
61B.07, subdivision 6, or 61B.24, subdivision 6, then the refund
reduces the insurer's carryforward credit under paragraph (c).
If the refund exceeds the amount of the carryforward credit, the
excess amount must be repaid to the state by the insurers to the
extent of the offset in the manner the commissioner requires.
Sec. 6. [297I.25] [INFORMATION RETURNS.]
Subdivision 1. [LICENSED BROKERS OR AGENTS OF RISK
RETENTION GROUPS.] To the extent licensed agents or brokers are
utilized in accordance with section 60E.12, they shall report to
the commissioner the premiums received for direct business for
risks resident or located within this state which the licensees
have placed with or on behalf of a risk retention group not
chartered in this state.
Subd. 2. [FIRETOWN AND POLICE PREMIUM REPORTS.] To the
extent required by section 69.021, each insurer shall file with
the commissioner a Minnesota firetown premium report and
Minnesota aid to police premium report.
Sec. 7. [297I.30] [DUE DATES FOR FILING RETURNS.]
Subdivision 1. [GENERAL RULE.] On or before March 1, every
insurer subject to taxation under section 297I.05, subdivisions
1 to 6, and 12, paragraphs (a), clauses (1) to (5), (b), and
(e), shall file an annual return for the preceding calendar year
setting forth such information as the commissioner may
reasonably require on forms prescribed by the commissioner.
Subd. 2. [SURPLUS LINES LICENSEES AND PURCHASING
GROUPS.] On or before February 15 and August 15 of each year,
every surplus lines licensee subject to taxation under section
297I.05, subdivision 7, and every purchasing group or member of
a purchasing group subject to tax under section 297I.05,
subdivision 12, paragraph (a), clause (6), shall file a return
with the commissioner for the preceding six-month period ending
December 31, or June 30, setting forth any information the
commissioner reasonably prescribes on forms prescribed by the
commissioner.
Subd. 3. [AUTOMOBILE RISK SELF-INSURERS.] On or before
July 1 of each year, every self-insurer subject to taxation
under section 297I.05, subdivision 8, shall file a return with
the commissioner for the preceding calendar year setting forth
any information the commissioner reasonably requires on forms
prescribed by the commissioner.
Subd. 4. [PERSONS, FIRMS, OR CORPORATIONS LICENSED TO
PROCURE INSURANCE FROM UNLICENSED FOREIGN COMPANIES.] On or
before 30 days following the expiration date of a license issued
under section 297I.05, subdivision 9, a person, firm, or
corporation licensed to obtain insurance from a company not
authorized to do business in Minnesota shall file a return with
the commissioner for the preceding 12-month period setting forth
any information the commissioner reasonably requires on forms
prescribed by the commissioner.
Subd. 5. [JOINT SELF-INSURANCE PLANS.] On or before 60
days following the conclusion of their fiscal year, a plan
subject to tax under 297I.05, subdivision 12, paragraph (c) or
(d), shall file a return with the commissioner for the preceding
fiscal year setting forth any information the commissioner
reasonably requires on forms prescribed by the commissioner.
Subd. 6. [PERSONS, FIRMS, OR CORPORATIONS PROCURING
INSURANCE FROM AN UNLICENSED FOREIGN COMPANY.] Within 30 days
after the date the insurance was procured, continued, or
renewed, a taxpayer required to pay the tax under section
297I.05, subdivision 10, shall file a return setting forth any
information the commissioner reasonably requires on forms
prescribed by the commissioner.
Subd. 7. [SURCHARGE.] (a)(1) By April 30 of each year,
every company required to pay the surcharge under section
297I.10, subdivision 1, shall file a return for the five-month
period ending March 31 setting forth any information the
commissioner reasonably requires on forms prescribed by the
commissioner.
(2) By June 30 of each year, every company required to pay
the surcharge under section 297I.10, subdivision 1, shall file a
return for the two-month period ending May 31 setting forth any
information the commissioner reasonably requires on forms
prescribed by the commissioner.
(3) By November 30 of each year, every company required to
pay the surcharge under section 297I.10, subdivision 1, shall
file a return for the five-month period ending October 31
setting forth any information the commissioner reasonably
requires on forms prescribed by the commissioner.
(b) By February 15 and August 15 of each year, every
company required to pay a surcharge under section 297I.10,
subdivision 2, must file a return for the preceding six-month
period ending December 31 and June 30.
Sec. 8. [297I.35] [PAYMENT OF TAX.]
Subdivision 1. [GENERAL RULE.] All taxes and surcharges
imposed under this chapter must be paid to the commissioner by
the date that the return must be filed under section 297I.30.
Subd. 2. [ELECTRONIC FUNDS TRANSFER.] If the aggregate
amount of tax and surcharges due under this chapter during a
calendar year is equal to or exceeds $120,000, or if the
taxpayer is required to make payment of any other tax to the
commissioner by means of electronic funds transfer as defined in
section 336.4A-104, paragraph (a), then all tax and surcharge
payments in the subsequent calendar year must be paid by means
of a funds transfer as defined in section 336.4A-104, paragraph
(a). The funds transfer payment date, as defined in section
336.4A-104, must be on or before the date the payment is due.
If the date the payment is due is not a funds transfer business
day, as defined in section 336.4A-105, paragraph (a), clause
(4), the payment date must be on or before the funds transfer
business day next following the date the payment is due.
Sec. 9. [297I.40] [ESTIMATED TAX.]
Subdivision 1. [REQUIREMENT TO PAY.] On or before April 1,
June 1, and December 1 of each year, every taxpayer subject to
tax under section 297I.05, subdivisions 1 to 6, and 12,
paragraphs (a), clauses (1) to (5), (b), and (e), must pay to
the commissioner an installment equal to one-third of the
insurer's total estimated tax for the current year.
Subd. 2. [AMOUNT OF REQUIRED INSTALLMENT.] The amount of
any required installment is one-third of the lesser of
(1) 80 percent of the tax imposed for the current year, or
(2) 100 percent of the tax paid for the previous year.
Subd. 3. [NO ADDITION TO TAX WHERE THE TAX IS SMALL.] No
addition to tax is imposed if the total tax for the current tax
year is $500 or less.
Subd. 4. [ADDITION TO TAX.] (a) In case of any
underpayment of installments by an insurer, there is added to,
and collected as part of, the tax for the taxable year an amount
determined at the rate specified in section 270.75 upon the
amount of underpayment.
(b) The amount of the underpayment is the excess of: (1)
the amount of the installment; over (2) the amount, if any, of
the installment paid on or before the last date prescribed for
payment.
(c) The period of the underpayment runs from the date the
installment was required to be paid to the earlier of:
(1) March 1 of the year following the close of the taxable
year; or
(2) with respect to any portion of the underpayment, the
date on which that portion is paid. For purposes of this
clause, a payment of estimated tax on any installment date is
considered a payment of any previous underpayment only to the
extent the payment exceeds the amount of the installment
required to be made on that date.
Subd. 5. [DEFINITION OF TAX.] The term "tax" as used in
this section means the tax imposed by section 297I.05,
subdivisions 1 to 6, and 12, paragraphs (a), clauses (1) to (5),
(b), and (e), without regard to the retaliatory provisions of
section 297I.05, subdivision 11, and the offset in section
297I.20.
Subd. 6. [FAILURE TO PAY ESTIMATED TAX.] When an insurer
does not make any payments, the period of the underpayment runs
from the three installment dates set forth in subdivision 1 to
whichever of the periods in subdivision 4, paragraph (c), is the
earlier.
Subd. 7. [APRIL ESTIMATED PAYMENT.] A taxpayer who claims
a refund of an overpayment on an original return may elect to
have all or any portion of the overpayment applied as a credit
to the April 1 estimated tax payment for the year following the
year of the return. The credit is considered applied on April
1. Notwithstanding section 297I.80, the amount credited does
not bear interest.
Sec. 10. [297I.45] [ASSESSMENTS.]
The commissioner shall make determinations, corrections,
and assessments with respect to taxes and surcharges, including
interest, additions to tax, and penalties. To determine the
accuracy of a return, or in fixing liability for a tax or
surcharge, the commissioner may make reasonable examinations or
investigations of the taxpayer's records and accounts. If a
taxpayer fails to file a required return, the commissioner, from
information in the commissioner's possession or obtainable by
the commissioner, may make a return for the taxpayer.
Sec. 11. [297I.50] [ORDER OF ASSESSMENT.]
Subdivision 1. [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO
TAXPAYER.] (a) When a return has been filed and the commissioner
determines that the tax or surcharge disclosed by the return is
different than the tax or surcharge determined by the
examination, the commissioner shall send an order of assessment
to the taxpayer. When no return has been filed, the
commissioner may make a return for the taxpayer under section
297I.45 or may send an order of assessment under this
subdivision. The order must explain the basis for the
assessment and must explain the taxpayer's appeal rights. An
order of assessment is final when made but may be reconsidered
by the commissioner under section 297I.95.
(b) If a tax payment meets the requirements of this
paragraph, the penalty under section 297I.85, subdivision 2, is
not imposed, and the commissioner may not take any collection
action, including the filing of liens under section 270.69.
To meet the requirements, the taxpayer must first file a
return for the tax or surcharge type on which the order is based
and then pay the amount shown on the order within the following
time limits:
(1) If the taxpayer files an administrative appeal under
section 297I.95 or a tax court appeal under chapter 271, and if
the appeal is based on a constitutional challenge to the tax,
the payment must be made within 60 days after final
determination of the appeal.
(2) If the appeal is not based on a constitutional
challenge, the payment must be made when the decision of the tax
court is made.
(3) If the taxpayer does not file an appeal, the payment
must be made within 60 days after the date the order is mailed
to the taxpayer by the commissioner.
Subd. 2. [ERRONEOUS REFUNDS.] An erroneous refund is
considered an underpayment of tax or surcharge on the date
made. An assessment of a deficiency arising out of an erroneous
refund may be made at any time within two years from the making
of the refund. If part of the refund was induced by fraud or
misrepresentation of a material fact, the assessment may be made
at any time.
Subd. 3. [ASSESSMENT PRESUMED VALID.] A return or
assessment of tax or surcharge made by the commissioner is prima
facie correct and valid. The taxpayer has the burden of
establishing its incorrectness or invalidity in any related
action or proceeding.
Subd. 4. [AGGREGATE REFUND OR ASSESSMENT.] The
commissioner, on examining returns of a taxpayer for more than
one year or period, may issue one order covering the period
under examination that reflects the aggregate refund or
additional tax or surcharge due.
Subd. 5. [SUFFICIENCY OF NOTICE.] An order of assessment,
sent postage prepaid by United States mail to the taxpayer at
the taxpayer's last known address, is sufficient even if a
corporation has terminated its existence, unless the department
has been provided with a new address by a party authorized to
received notices of assessment.
Sec. 12. [297I.55] [EXAMINATIONS; AUDITS AND COLLECTIONS.]
Subdivision 1. [EXAMINATION OF TAXPAYER.] To determine the
accuracy of a return or report, or in fixing liability under
this chapter, or for the purpose of collection, the commissioner
may make reasonable examinations or investigations of a
taxpayer's place of business; tangible personal property;
equipment, computer systems and facilities; and pertinent books,
records, papers, vouchers, computer printouts, accounts, and
documents.
Subd. 2. [ACCESS TO RECORDS OF OTHER PERSONS IN CONNECTION
WITH EXAMINATION OF TAXPAYER.] When conducting an investigation
or an audit of a taxpayer, or for the purpose of collection, the
commissioner may, except where privileged by law, examine the
relevant records and files of any state agency as well as any
person, business, institution, financial institution, agency of
the United States government, or agency of any other state where
permitted by statute, agreement, or reciprocity. The
commissioner may compel production of these records by subpoena.
A subpoena may be served directly by the commissioner.
Subd. 3. [POWER TO COMPEL TESTIMONY.] In the
administration of this chapter, the commissioner may:
(1) administer oaths or affirmations and compel by subpoena
the attendance of witnesses, testimony, and the production of a
person's pertinent books, records, papers, or other data for
inspection and copying; and
(2) examine under oath or affirmation any person regarding
the business of any taxpayer concerning any relevant matter
incident to the administration of this chapter. The fees of
witnesses required by the commissioner to attend a hearing are
equal to those allowed to witnesses appearing before courts of
this state. The fees must be paid in the manner provided for
the payment of other expenses incident to the administration of
state tax law.
Subd. 4. [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY
IS KNOWN.] An investigation may extend to a person that the
commissioner determines has access to information that may be
relevant to the examination or investigation. When a subpoena
requiring the production of records as described in subdivision
2 is served on a third-party recordkeeper, written notice of the
subpoena must be mailed to the taxpayer and to any other person
who is identified in the subpoena. The notices must be given
within three days of the day on which the subpoena is served.
Notice to the taxpayer required by this section is sufficient if
it is mailed to the last address on record with the commissioner.
The provisions of this subdivision relating to notice to
the taxpayer or other parties identified in the subpoena do not
apply if there is reasonable cause to believe that the giving of
notice may lead to attempts to conceal, destroy, or alter
records or assets relevant to the examination, to prevent the
communication of information from other persons through
intimidation, bribery, or collusion, or to flee to avoid
prosecution, testifying, or production of records.
Subd. 5. [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY
IS NOT KNOWN.] A subpoena that does not identify the person or
persons whose tax or surcharge liability is being investigated
may be served only if:
(1) the subpoena relates to the investigation of a
particular person or ascertainable group or class of persons;
(2) there is a reasonable basis for believing that the
person or group or class of persons may fail or may have failed
to comply with laws administered by the commissioner;
(3) the information sought to be obtained from the
examination of the records, and the identity of the person or
persons with respect to whose liability the subpoena is issued,
is not readily available from other sources;
(4) the subpoena is clear and specific concerning the
information sought to be obtained; and
(5) the information sought to be obtained is limited solely
to the scope of the investigation.
When a subpoena does not identify the person or persons
with respect to whose tax or surcharge liability the subpoena is
issued, the party served with the subpoena may petition for a
determination concerning whether the commissioner has complied
with clauses (1) to (5) and thus whether the subpoena is
enforceable. The petitions must be to the district court in
which the party is located. The petition must be filed within
20 days after service of the subpoena. If the party served does
not petition within the time prescribed, the subpoena has the
effect of a court order.
Subd. 6. [REQUEST BY TAXPAYER FOR SUBPOENA.] When the
commissioner has the power to issue a subpoena for investigative
or auditing purposes, the commissioner shall honor a reasonable
request by the taxpayer to issue a subpoena on the taxpayer's
behalf, if in connection with the investigation or audit.
Subd. 7. [APPLICATION TO COURT FOR ENFORCEMENT OF
SUBPOENA.] Disobedience of subpoenas issued under this section
is punishable by the district court of the district in which the
party served with the subpoena is located, in the same manner as
contempt of the district court.
Subd. 8. [COST OF PRODUCTION OF RECORDS.] The cost of
producing records of a third party required by a subpoena must
be paid by the taxpayer, if the taxpayer requests the subpoena
to be issued, or if the taxpayer has the records available but
has refused to provide them to the commissioner. In other cases
where the taxpayer cannot produce records and the commissioner
then initiates a subpoena for third-party records, the
commissioner shall pay the reasonable cost of producing the
records. The commissioner may later assess the reasonable costs
against the taxpayer if the records contribute to the
determination of an assessment of tax or surcharge against the
taxpayer.
Sec. 13. [297I.60] [CLAIMS FOR REFUND.]
Subdivision 1. [GENERAL RIGHT TO REFUND.] (a) Subject to
the requirements of this section and section 297I.70, if a
taxpayer has paid a tax or surcharge in excess of the amount due
and files a written claim for refund, the commissioner shall
refund or credit the overpayment determined by the commissioner
to be erroneously paid.
(b) The claim must specify the name of the taxpayer, the
date when and the period for which the tax or surcharge was
paid, the kind of tax or surcharge paid, the amount that the
taxpayer claims was erroneously paid, the grounds on which a
refund is claimed, and other information relative to the payment.
The claim must be in the form required by the commissioner. A
return or amended return claiming an overpayment constitutes a
claim for refund.
(c) The commissioner shall determine the amount of refund,
if any, that is due, and notify the taxpayer of the
determination as soon as practicable after a claim has been
filed. Notice must be mailed to the taxpayer at the address
stated upon the return or claim for refund.
(d) If the amount of tax or surcharge paid by the taxpayer
exceeds the amount of tax or surcharge imposed on the taxpayer,
the amount of excess is considered an overpayment even if in
fact there was no liability with respect to which the amount was
paid.
(e) When in the course of an examination and within the
time for requesting a refund, the commissioner determines that
there has been an overpayment of tax or surcharge, the
commissioner shall refund or credit the amount of the
overpayment to the taxpayer and no return is necessary.
(f) Notwithstanding any law to the contrary, the
commissioner is not required to refund or credit any overpayment
of less than one dollar.
(g) There is appropriated to the commissioner the amounts
necessary to make refunds required by this section. The funds
are appropriated from the same fund to which the tax or
surcharge being refunded was originally deposited.
Subd. 2. [REMEDIES.] (a) If the taxpayer is notified that
the refund claim is denied in whole or in part, the taxpayer may
contest the denial by:
(1) filing an administrative appeal with the commissioner
under section 297I.95;
(2) filing an appeal in tax court within 60 days of the
date of the notice of denial; or
(3) filing an action in the district court to recover the
refund.
(b) An action in the district court must be brought within 18
months following the date of the notice of denial. An action
for refund of tax or surcharge must be brought in the district
court of the district in which lies the taxpayer's principal
place of business or in the district court for Ramsey county.
If a taxpayer files a claim for refund and the commissioner has
not issued a denial of the claim, the taxpayer may bring an
action in the district court or the tax court at any time after
the expiration of six months of the time the claim was filed.
Sec. 14. [297I.65] [LIMITATIONS OF TIME FOR ASSESSMENT OF
TAX.]
Subdivision 1. [GENERAL RULE.] Except as otherwise
provided, the amount of taxes or surcharges assessable must be
assessed within three and one-half years after the date the
return is filed.
Subd. 2. [FILING DATE.] For purposes of this section, a
return filed before the last day prescribed by law for filing
the return is considered to be filed on the last day.
Subd. 3. [FALSE OR FRAUDULENT RETURN.] Notwithstanding the
limitation under subdivision 1, the tax or surcharge may be
assessed at any time if a false or fraudulent return is filed or
when a taxpayer fails to file a return.
Sec. 15. [297I.70] [LIMITATION ON CLAIMS FOR REFUND.]
Except as provided in section 297I.75, a claim for refund
of an overpayment must be filed within 3-1/2 years from the date
prescribed for filing the return, or one year from the date of
an order assessing tax or surcharge, or one year from the date
of a return filed by the commissioner, upon payment in full of
the tax, surcharge, penalties, and interest shown on the order
or return made by the commissioner, whichever period expires
later. Claims for refund filed after the 3-1/2-year period but
within the one-year period are limited to the amount of tax,
surcharge, penalties, and interest on the order or return made
by the commissioner and to issues determined by the order or
return made by the commissioner.
Sec. 16. [297I.75] [CONSENT TO EXTEND TIME.]
If before the expiration of the time prescribed in sections
297I.65 and 297I.70 for the assessment of tax or surcharge or
the filing of a claim for refund, the commissioner and the
taxpayer have consented in writing to the assessment or filing
of a claim for refund after that time, the tax or surcharge may
be assessed at any time before the expiration of the agreed-upon
period and a claim for refund may be paid at any time before the
expiration of the agreed-upon period plus six months. The
period may be extended by later agreements in writing before the
expiration of the period previously agreed upon.
Sec. 17. [297I.80] [INTEREST.]
Subdivision 1. [PAYABLE TO THE COMMISSIONER.] (a) When
interest is required under this section, interest is computed at
the rate specified in section 270.75.
(b) If a tax or surcharge is not paid within the time named
by law for payment, the unpaid tax or surcharge bears interest
from the date the tax or surcharge should have been paid until
the date the tax or surcharge is paid.
(c) Whenever a taxpayer is liable for additional tax or
surcharge because of a redetermination by the commissioner or
other reason, the additional tax or surcharge bears interest
from the time the tax or surcharge should have been paid until
the date the tax or surcharge is paid.
(d) A penalty bears interest from the date the return or
payment was required to be filed or paid to the date of payment
of the penalty.
Subd. 2. [ON OVERPAYMENTS.] (a) When interest is required
under this section, interest is computed at the rate specified
in section 270.76.
(b) Interest on an overpayment is computed from the date of
the payment of the tax or surcharge until the date the refund is
made. For purposes of this subdivision, any payment made before
the last day prescribed by law to make the payment, including
any estimated tax payments, is considered paid on the last day
prescribed by law for the payment. A return filed before the
due date is considered as filed on the due date.
Sec. 18. [297I.85] [CIVIL PENALTIES.]
Subdivision 1. [LATE FILING PENALTY.] If a taxpayer fails
to file a return within the time prescribed, a penalty of five
percent of the amount of tax or surcharge not timely paid is
added to the tax or surcharge.
Subd. 2. [LATE PAYMENT PENALTY.] If a taxpayer fails to
pay a tax or surcharge within the time specified for payment a
penalty must be added to the amount required to be shown as tax
or surcharge. The penalty is five percent of the tax or
surcharge not paid on or before the date specified for payment
of the tax or surcharge if the failure is for not more than 30
days, with an additional penalty of five percent of the amount
of tax or surcharge remaining unpaid during each additional 30
days or fraction of 30 days during which the failure continues,
not exceeding 15 percent in the aggregate.
Subd. 3. [INTENT TO EVADE.] If a taxpayer, with intent to
evade the tax or surcharge imposed by this chapter fails to file
any return required by this chapter, or with such intent files a
false or fraudulent return, a penalty is imposed on the
taxpayer. The penalty is equal to 50 percent of the tax or
surcharge, less amounts paid by the taxpayer on the basis of the
false or fraudulent return and is due for the period to which
the return related.
Subd. 4. [NEGLIGENCE OR INTENTIONAL DISREGARD;
PENALTY.] If any part of an additional assessment is due to
negligence or intentional disregard of the statute or a rule but
without intent to defraud, there is added to the tax or
surcharge a penalty equal to ten percent of the additional
assessment.
Subd. 5. [PAYMENT OF PENALTIES.] The penalties imposed by
this section must be collected and paid in the same manner as
taxes.
Subd. 6. [PENALTIES ARE ADDITIONAL.] The civil penalties
imposed by this section are in addition to the criminal
penalties imposed by this chapter.
Subd. 7. [PENALTY FOR FAILURE TO MAKE PAYMENT BY
ELECTRONIC FUNDS TRANSFER.] In addition to other applicable
penalties imposed by this section, if the commissioner notifies
the taxpayer that payments are required to be made by means of
electronic funds transfer, and the payments are made by some
other means, a penalty is imposed. The amount of the penalty is
equal to five percent of each payment that should have been paid
electronically. The penalty may be abated under the abatement
procedures prescribed in section 270.07, subdivision 6, if the
failure to pay electronically is due to reasonable cause.
Sec. 19. [297I.90] [CRIMINAL PENALTIES.]
Subdivision 1. [PENALTIES FOR KNOWING FAILURE TO FILE OR
PAY; WILLFUL EVASION.] (a) If a person is required to file with
the commissioner a return, report, or other document, and that
person fails to file it when required and does so knowingly,
rather than accidentally, inadvertently, or negligently, that
person is guilty of a gross misdemeanor.
(b) If a person is required to file with the commissioner a
return, report, or other document, and that person willfully
attempts in any manner to evade or defeat a tax or surcharge by
failing to file it when required, that person is guilty of a
felony.
(c) If a person is required to pay or to collect and remit
a tax or surcharge, and that person knowingly, rather than
accidentally, inadvertently, or negligently fails to do so when
required, that person is guilty of a gross misdemeanor.
(d) If a person is required to pay or to collect and remit
a tax or surcharge, and that person willfully attempts to evade
or defeat a tax or surcharge by failing to do so when required,
that person is guilty of a felony.
Subd. 2. [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A
person who files with the commissioner a return, report, or
other document known by the person to be fraudulent or false
concerning a material matter is guilty of a felony.
(b) A person who knowingly aids or assists in, or advises
in the preparation or presentation of a return, report, or other
document that is fraudulent or false concerning a material
matter, whether or not the falsity or fraud committed is with
the knowledge or consent of the person authorized or required to
present the return, report, or other document, is guilty of a
felony.
Sec. 20. [297I.95] [ADMINISTRATIVE APPEALS.]
Subdivision 1. [TAXPAYER RIGHT TO RECONSIDERATION.] A
taxpayer may obtain the commissioner's reconsideration of an
order assessing tax or surcharge, a denial of a request for
abatement of penalty or interest, or a denial of a claim for
refund by filing an administrative appeal under subdivision 4.
No reconsideration is allowed under this section if the action
taken by the commissioner is the outcome of an administrative
appeal.
Subd. 2. [APPEAL BY TAXPAYER.] A taxpayer who wishes to
seek administrative review must follow the procedures in
subdivision 4.
Subd. 3. [NOTICE DATE.] For purposes of this section, the
term "notice date" means the date of the order adjusting the tax
or surcharge or order denying a request for abatement, or, in
the case of a denied refund, the date of the notice of denial.
Subd. 4. [TIME AND CONTENT FOR ADMINISTRATIVE
APPEAL.] Within 60 days after the notice date, the taxpayer must
file a written appeal with the commissioner. The appeal need
not be in any particular form but must contain the following
information:
(1) name and address of the taxpayer;
(2) if a corporation, the state of incorporation of the
taxpayer, and the principal place of business of the
corporation;
(3) the Minnesota identification number or social security
number of the taxpayer;
(4) the type of tax or surcharge involved;
(5) the date;
(6) the tax years or periods involved and the amount of tax
or surcharge involved for each year or period;
(7) the findings in the notice that the taxpayer disputes;
(8) a summary statement that the taxpayer relies on for
each exception; and
(9) the taxpayer's signature or signature of the taxpayer's
duly authorized agent.
Subd. 5. [EXTENSIONS.] When requested in writing and
within the time allowed for filing an administrative appeal, the
commissioner may extend the time for filing an appeal for a
period not more than 30 days after the expiration of the 60 days
after the notice date.
Subd. 6. [DETERMINATION OF APPEAL.] Based on applicable
law and available information, the commissioner shall determine
whether the appeal is valid. The commissioner shall find the
appeal valid in whole, valid in part, or invalid, and shall
notify the taxpayer of the decision. This notice must be in
writing and must state the reasons for the determination.
Subd. 7. [AGREEMENT DETERMINING TAX LIABILITY.] When it
appears to be in the best interests of the state, the
commissioner may settle any taxes, surcharges, penalties, or
interest that the commissioner has under consideration by virtue
of an appeal filed under this section. An agreement must be in
writing and signed by the commissioner and the taxpayer, or by
the taxpayer's representative authorized by the taxpayer to
enter into an agreement. The agreement is final and, except
upon a showing of fraud, malfeasance, or misrepresentation of a
material fact, the case must not be reopened as to the matters
agreed upon.
Subd. 8. [APPEAL OF AN ADMINISTRATIVE DETERMINATION.]
After deciding an appeal, the commissioner shall issue an order
reflecting that decision. The order must be issued
notwithstanding any statute of limitations for making
assessments or other determinations. If the statute of
limitations for making assessments or other determinations would
have expired before the issuance of this order, except for this
section, the order is limited to issues or matters contained in
the appealed determination. The order is appealable to the
Minnesota tax court under section 271.06.
Subd. 9. [APPEAL WHERE NO DETERMINATION.] If the
commissioner does not make a determination within six months
after the filing of an administrative appeal, the taxpayer may
appeal to tax court.
Subd. 10. [EXEMPTION FROM ADMINISTRATIVE PROCEDURE
ACT.] This section is not subject to the contested case
procedures of chapter 14.
Sec. 21. [PURPOSE.]
It is the intent of the legislature to simplify Minnesota's
insurance tax laws by consolidating and recodifying tax
administration and compliance provisions now contained
throughout Minnesota Statutes, chapter 60A, and elsewhere. Due
to the complexity of the recodification, prior provisions are
repealed on the effective date of the new provisions. The
repealed provisions, however, remain in effect until superseded
by the analogous provision in the new law.
Sec. 22. [EFFECTIVE DATES.]
Sections 1 and 16 are effective January 1, 2001.
Sections 2 to 9 and 18 are effective for returns, taxes,
surcharges, and estimated payments required to be filed or paid
for tax years beginning on or after January 1, 2001.
Sections 10 to 12 are effective for assessments made and
examinations and audits commenced on or after January 1, 2001.
Section 13 is effective for claims for refunds filed on or
after January 1, 2001.
Section 14 is effective for assessments that have not been
made as of the day following final enactment. The time period
for making such assessments is the time period prescribed in the
enacted section or one year after the day following final
enactment, whichever is greater.
Section 15 is effective for claims for refund which have
not been filed as of the day following final enactment and in
which the time period for filing the claim has not expired under
the provisions in effect prior to the day following final
enactment. The time period for filing such claims is the time
period prescribed in the enacted sections, or one year after the
day following final enactment, whichever is greater.
Section 17 is effective for all amounts due on or after
January 1, 2001.
Section 19 is effective for crimes committed on or after
January 1, 2001.
Section 20 is effective for assessments made or refund
claims or abatements denied on or after January 1, 2001.
ARTICLE 2
TECHNICAL CHANGES
Section 1. Minnesota Statutes 1999 Supplement, section
43A.23, subdivision 1, is amended to read:
Subdivision 1. [GENERAL.] The commissioner is authorized
to request bids from carriers or to negotiate with carriers and
to enter into contracts with carriers which in the judgment of
the commissioner are best qualified to underwrite and service
the benefit plans. Contracts entered into with carriers are not
subject to the requirements of sections 16C.16 to 16C.19. The
commissioner may negotiate premium rates and coverage provisions
with all carriers licensed under chapters 62A, 62C, and 62D.
The commissioner may also negotiate reasonable restrictions to
be applied to all carriers under chapters 62A, 62C, and 62D.
Contracts to underwrite the benefit plans must be bid or
negotiated separately from contracts to service the benefit
plans, which may be awarded only on the basis of competitive
bids. The commissioner shall consider the cost of the plans,
conversion options relating to the contracts, service
capabilities, character, financial position, and reputation of
the carriers, and any other factors which the commissioner deems
appropriate. Each benefit contract must be for a uniform term
of at least one year, but may be made automatically renewable
from term to term in the absence of notice of termination by
either party. The commissioner shall, to the extent feasible,
make hospital and medical benefits available from at least one
carrier licensed to do business pursuant to each of chapters
62A, 62C, and 62D. The commissioner need not provide health
maintenance organization services to an employee who resides in
an area which is not served by a licensed health maintenance
organization. The commissioner may refuse to allow a health
maintenance organization to continue as a carrier. The
commissioner may elect not to offer all three types of carriers
if there are no bids or no acceptable bids by that type of
carrier or if the offering of additional carriers would result
in substantial additional administrative costs. A carrier
licensed under chapter 62A is exempt from the tax taxes imposed
by section 60A.15 chapter 297I on premiums paid to it by the
state.
All self-insured hospital and medical service products must
comply with coverage mandates, data reporting, and consumer
protection requirements applicable to the licensed carrier
administering the product, had the product been insured,
including chapters 62J, 62M, and 62Q. Any self-insured products
that limit coverage to a network of providers or provide
different levels of coverage between network and nonnetwork
providers shall comply with section 62D.123 and geographic
access standards for health maintenance organizations adopted by
the commissioner of health in rule under chapter 62D.
Sec. 2. Minnesota Statutes 1998, section 43A.316,
subdivision 9, is amended to read:
Subd. 9. [INSURANCE TRUST FUND.] The insurance trust fund
in the state treasury consists of deposits of the premiums
received from employers participating in the program and
transfers before July 1, 1994, from the excess contributions
holding account established by section 353.65, subdivision 7.
All money in the fund is appropriated to the commissioner to pay
insurance premiums, approved claims, refunds, administrative
costs, and other related service costs. Premiums paid by
employers to the fund are exempt from the tax taxes imposed by
sections 60A.15 and 60A.198 chapter 297I. The commissioner
shall reserve an amount of money to cover the estimated costs of
claims incurred but unpaid. The state board of investment shall
invest the money according to section 11A.24. Investment income
and losses attributable to the fund must be credited to the fund.
Sec. 3. Minnesota Statutes 1998, section 43A.317,
subdivision 8, is amended to read:
Subd. 8. [PREMIUMS.] (a) [PAYMENTS.] Employers enrolled in
the program shall pay premiums according to terms established by
the commissioner. If an employer fails to make the required
payments, the commissioner may cancel coverage and pursue other
civil remedies.
(b) [RATING METHOD.] The commissioner shall determine the
premium rates and rating method for the program. The rating
method for eligible small employers must meet or exceed the
requirements of chapter 62L. The rating methods must recover in
premiums all of the ongoing costs for state administration and
for maintenance of a premium stability and claim fluctuation
reserve. On June 30, 1999, after paying all necessary and
reasonable expenses, the commissioner must apply up to
$2,075,000 of any remaining balance in the Minnesota employees'
insurance trust fund to repayment of any amounts drawn or
expended for this program from the health care access fund.
(c) [TAXES AND ASSESSMENTS.] To the extent that the program
operates as a self-insured group, the premiums paid to the
program are not subject to the premium taxes imposed by sections
60A.15 and 60A.198 chapter 297I, but the program is subject to a
Minnesota comprehensive health association assessment under
section 62E.11.
Sec. 4. Minnesota Statutes 1999 Supplement, section
60A.19, subdivision 6, is amended to read:
Subd. 6. [RETALIATORY PROVISIONS.] (1) When by the laws of
any other state or country any taxes, fines, deposits,
penalties, licenses, or fees, in addition to or in excess of
those imposed by the laws of this state upon foreign insurance
companies and their agents doing business in this state, are
imposed on insurance companies of this state and their agents
doing business in that state or country, or when any conditions
precedent to the right to do business in that state are imposed
by the laws thereof, beyond those imposed upon these foreign
companies by the laws of this state, the same taxes, fines,
deposits, penalties, licenses, fees, and conditions precedent
shall be imposed upon every similar insurance company of that
state or country and their agents doing or applying to do
business in this state so long as these foreign laws remain in
force. Special purpose obligations or assessments, including
assessments by an insurance guaranty association, joint
underwriting association or similar organization, or assessments
imposed in connection with particular kinds of insurance, are
not taxes, licenses, or fees as these terms are used in this
section.
(2) In the event that a domestic insurance company, after
complying with all reasonable laws and rulings of any other
state or country, is refused permission by that state or country
to transact business therein after the commissioner of commerce
of Minnesota has determined that that company is solvent and
properly managed and after the commissioner has so certified to
the proper authority of that other state or country, then, and
in every such case, the commissioner may forthwith suspend or
cancel the certificate of authority of every insurance company
organized under the laws of that other state or country to the
extent that it insures, or seeks to insure, in this state
against any of the risks or hazards which that domestic company
seeks to insure against in that other state or country. Without
limiting the application of the foregoing provision, it is
hereby determined that any law or ruling of any other state or
country which prescribes to a Minnesota domestic insurance
company the premium rate or rates for life insurance issued or
to be issued outside that other state or country shall not be
reasonable.
(3) (2) This section does not apply to insurance companies
organized or domiciled in a state or country, the laws of which
do not impose retaliatory taxes, fines, deposits, penalties,
licenses, or fees or which grant, on a reciprocal basis,
exemptions from retaliatory taxes, fines, deposits, penalties,
licenses, or fees to insurance companies domiciled in this state.
Sec. 5. Minnesota Statutes 1998, section 60A.19,
subdivision 8, is amended to read:
Subd. 8. [INSURANCE FROM UNLICENSED FOREIGN COMPANIES.]
Any person, firm, or corporation desiring to obtain insurance
upon any property, interests, or risks of any nature other than
life insurance in this state in companies not authorized to do
business therein shall give bond to the commissioner of commerce
in such sum as the commissioner shall deem reasonable, with
satisfactory resident sureties, conditioned that the obligors,
on the expiration of a license to obtain such insurance, shall
pay to the commissioner of revenue, for the use of the state, a
tax of two percent upon the gross premiums paid by the
licensee in the state must agree to file with the commissioner
of revenue all returns required under chapter 297I and pay to
the commissioner of revenue any amounts required to be paid
under chapter 297I. Thereupon Upon that agreement, the
commissioner of commerce shall issue such a license, good for
one year, and all. Insurance procured thereunder shall be
lawful and under the license is valid and the provisions of all
the policies thereof shall be deemed are considered to be in
accordance, and construed as if identical in effect, with the
standard policy prescribed by the laws of this state and. The
insurers may enter the state to perform any act necessary or
proper in the conduct of the business. This bond may be
enforced by the commissioner of commerce in the commissioner's
name in any district court. The licensee shall file with the
commissioner of commerce on June 30 and December 31 annually a
verified statement of the aggregate premiums paid and returned
premiums received on account of such insurance.
The commissioner of revenue, or duly authorized agents, may
conduct investigations, inquiries, and hearings to enforce the
tax imposed by this subdivision and, in connection with those
investigations, inquiries, and hearings, the commissioner and
duly authorized agents have all the powers conferred by section
270.06.
Sec. 6. Minnesota Statutes 1998, section 60A.198,
subdivision 3, is amended to read:
Subd. 3. [PROCEDURE FOR OBTAINING LICENSE.] A person
licensed as an agent in this state pursuant to other law may
obtain a surplus lines license by doing the following:
(a) filing an application in the form and with the
information the commissioner may reasonably require to determine
the ability of the applicant to act in accordance with sections
60A.195 to 60A.209;
(b) maintaining an agent's license in this state;
(c) delivering to the commissioner a financial guarantee
bond from a surety acceptable to the commissioner for the
greater of the following:
(1) $5,000; or
(2) the largest semiannual surplus lines premium tax
liability incurred by the applicant in the immediately preceding
five years;
(d) agreeing to file with the commissioner of revenue no
later than February 15 and August 15 annually, a sworn statement
of the charges for insurance procured or placed and the amounts
returned on the insurance canceled under the license for the
preceding six-month period ending December 31 and June 30
respectively, and at the time of the filing of this statement,
paying the commissioner a tax on premiums equal to three percent
of the total written premiums less cancellations; all returns
required by chapter 297I and paying to the commissioner of
revenue all amounts required under chapter 297I; and
(e) (d) paying a fee as prescribed by section 60K.06,
subdivision 2, paragraph (a), clause (4); and.
(f) paying penalties imposed under section 289A.60,
subdivision 1, as it relates to withholding and sales or use
taxes, if the tax due under clause (d) is not timely paid.
Sec. 7. Minnesota Statutes 1998, section 60A.208,
subdivision 8, is amended to read:
Subd. 8. [OPERATING ASSESSMENT.] (a) Upon request from the
association, the commissioner may approve the levy of an
assessment of not more than one-half of one percent of premiums
charged pursuant to sections 60A.195 to 60A.209 for operation of
the association to the extent that the operation relieves the
commissioner of duties otherwise required of the commissioner
pursuant to sections 60A.195 to 60A.209. Any assessment so
approved may be subtracted from the premium tax owed by the
licensee under chapter 297I.
(b) The association may revoke the membership and the
commissioner may revoke the license in this state, of any
licensee who fails to pay an assessment when due, if the
assessment has been approved by the commissioner.
Sec. 8. Minnesota Statutes 1998, section 60A.209,
subdivision 3, is amended to read:
Subd. 3. [DUTY TO REPORT.] Each insured in this state who
procures, causes to be procured, or continues or renews
insurance with an ineligible surplus lines insurer or any
self-insurer in this state who procures or continues excess of
loss, catastrophe, or other insurance upon a subject of
insurance resident, located, or to be performed within this
state, other than insurance procured pursuant to section 60A.201
or subdivision 1 shall file a written report regarding the
insurance with the commissioner of revenue on forms prescribed
by the commissioner of revenue and furnished to the insured upon
request. The report shall be filed within 30 days after the
date the insurance was procured, continued, or renewed and shall
be accompanied by the tax on the premiums of two percent. The
report shall show all of the following:
(a) The name and address of the insured;
(b) The name and address of the insurer;
(c) The subject of the insurance;
(d) A general description of the coverage;
(e) The amount of premium currently charged for the
insurance; and
(f) Any additional pertinent information reasonably
requested by the commissioner of revenue must file with the
commissioner of revenue all returns and pay to the commissioner
of revenue all amounts required under chapter 297I.
Sec. 9. Minnesota Statutes 1998, section 60C.17, is
amended to read:
60C.17 [TAX EXEMPTION.]
The association is exempt from payment of all taxes imposed
under chapter 297I and all fees and all other taxes levied by
this state or any of its subdivisions except taxes levied on
real or personal property.
Sec. 10. Minnesota Statutes 1998, section 60E.04,
subdivision 4, is amended to read:
Subd. 4. [TAXATION.] (a) Each risk retention group is
liable for the payment of premium taxes and taxes on premiums of
direct business for risks resident or located within this state,
and shall report to the commissioner of revenue the net premiums
written for risks resident or located within this state. The
risk retention group shall be subject to taxation, and any
applicable taxation-related fines and penalties, on the same
basis as a foreign admitted insurer must file with the
commissioner of revenue all returns and pay to the commissioner
of revenue all amounts required under chapter 297I.
(b) To the extent licensed agents or brokers are utilized
pursuant to in accordance with section 60E.12, they shall report
to the commissioner of revenue the premiums for direct business
for risks resident or located within this state which the
licensees have placed with or on behalf of a risk retention
group not chartered in this state.
(c) To the extent that insurance agents or brokers are
utilized pursuant to in accordance with section 60E.12, each
agent or broker shall keep a complete and separate record of all
policies procured from each risk retention group, which shall
must be open to examination by the commissioner, as provided in
section 60A.031 and by the commissioner of revenue. These
records shall must, for each policy and each kind of insurance
provided, include the following:
(1) the limit of liability;
(2) the time period covered;
(3) the effective date;
(4) the name of the risk retention group which issued the
policy;
(5) the gross premium charged; and
(6) the amount of return premiums, if any.
Sec. 11. Minnesota Statutes 1998, section 60E.095, is
amended to read:
60E.095 [PURCHASING GROUP TAXATION.]
Premium taxes and taxes on premiums paid for coverage of
risks resident or located in this state by a purchasing group or
any members of the purchasing groups shall be:
(1) imposed at the same rate and subject to the same
interest, fines, and penalties as that applicable to premium
taxes and taxes on premiums paid for similar coverage from a
similar insurance source by other insureds; and
(2) paid first by the insurance source, and if not by the
source by the agent or broker for the purchasing group, and if
not by the agent or broker then by the purchasing group, and if
not by the purchasing group then by each of its members group
must be paid to the commissioner of revenue as provided in
chapter 297I.
Sec. 12. Minnesota Statutes 1998, section 61B.30,
subdivision 1, is amended to read:
Subdivision 1. [STATE FEES AND TAXES.] The association is
exempt from payment of all taxes imposed under chapter 297I and
all fees and all other taxes levied by this state or its
subdivisions, except taxes levied on real property.
Sec. 13. Minnesota Statutes 1998, section 62C.01,
subdivision 3, is amended to read:
Subd. 3. [SCOPE.] Every foreign or domestic nonprofit
corporation organized for the purpose of establishing or
operating a health service plan in Minnesota whereby health
services are provided to subscribers to the plan under a
contract with the corporation shall be subject to and governed
by Laws 1971, chapter 568, and shall not be subject to the laws
of this state relating to insurance, except section 60A.15 the
gross premiums tax provisions contained in chapter 297I and as
otherwise specifically provided. Laws 1971, chapter 568 shall
apply to all health service plan corporations incorporated after
August 1, 1971, and to all existing health service plan
corporations, except as otherwise provided. Nothing in sections
62C.01 to 62C.23 shall apply to prepaid group practice plans. A
prepaid group practice plan is any plan or arrangement other
than a service plan, whereby health services are rendered to
certain patients by providers who devote their professional
effort primarily to members or patients of the plan, and whereby
the recipients of health services pay for the services on a
regular, periodic basis, not on a fee for service basis.
Sec. 14. Minnesota Statutes 1998, section 62E.10,
subdivision 1, is amended to read:
Subdivision 1. [CREATION; TAX EXEMPTION.] There is
established a comprehensive health association to promote the
public health and welfare of the state of Minnesota with
membership consisting of all insurers; self-insurers;
fraternals; joint self-insurance plans regulated under chapter
62H; the Minnesota employees insurance program established in
section 43A.317, effective July 1, 1993; health maintenance
organizations; and community integrated service networks
licensed or authorized to do business in this state. The
comprehensive health association shall be is exempt from
taxation the taxes imposed under the chapter 297I and any other
laws of this state and all property owned by the
association shall be is exempt from taxation.
Sec. 15. Minnesota Statutes 1998, section 62E.13,
subdivision 10, is amended to read:
Subd. 10. [PREMIUMS NOT SUBJECT TO TAX.] Premiums received
by the writing carrier for the comprehensive health insurance
plan are exempt from the provisions of section 60A.15 taxes
imposed under chapter 297I.
Sec. 16. Minnesota Statutes 1998, section 62L.13,
subdivision 3, is amended to read:
Subd. 3. [EXEMPTIONS.] The association, its transactions,
and all property owned by it are exempt from taxation under the
laws of this state or any of its subdivisions, including, but
not limited to, premiums taxes imposed under chapter 297I,
income tax, sales tax, use tax, and property tax. The
association may seek exemption from payment of all fees and
taxes levied by the federal government. Except as otherwise
provided in this chapter, the association is not subject to the
provisions of chapters 13, 60A, 62A to 62H, and section
471.705. The association is not a public employer and is not
subject to the provisions of chapters 179A and 353. The board
of directors and health carriers who are members of the
association are exempt from sections 325D.49 to 325D.66 in the
performance of their duties as directors and members of the
association.
Sec. 17. Minnesota Statutes 1998, section 62T.10, is
amended to read:
62T.10 [MINNESOTACARE TAX.]
An accountable provider network is subject to the premium
tax established in section 60A.15 and must pay installments as
described in section 60A.15, subdivision 1, paragraph (d) shall
file with the commissioner of revenue all returns and pay to the
commissioner of revenue all amounts required under chapter 297I.
Sec. 18. Minnesota Statutes 1998, section 64B.24, is
amended to read:
64B.24 [TAXATION.]
Fraternal benefit societies are declared to be charitable
institutions, and the property held and used for lodge purposes,
and the funds of these societies shall be exempt from taxation
under the general tax or revenue laws of this state, except that
the real estate of the society shall be taxable. Insurance
premiums paid to a fraternal benefit society are exempt from the
taxes imposed under chapter 297I.
Sec. 19. Minnesota Statutes 1998, section 71A.04,
subdivision 1, is amended to read:
Subdivision 1. [PREMIUM TAX.] The attorney-in-fact, in
lieu of all taxes, state, county, and municipal, shall pay to
the state with the filing of each annual report on or before
March 1 as an annual license fee two percent of the gross
premiums or deposits for the preceding calendar year, deducting
all amounts returned to subscribers or credited to their
accounts; and the attorney shall pay a filing fee of $2 shall
file with the commissioner of revenue all returns and pay to the
commissioner of revenue all amounts required under chapter 297I.
Sec. 20. Minnesota Statutes 1998, section 79.252,
subdivision 4, is amended to read:
Subd. 4. [RESPONSIBILITIES.] Assigned risk policies and
contracts of coverage shall be are subject to premium tax
pursuant to section 60A.15 taxation under chapter 297I, and
special compensation fund assessments pursuant to under
Minnesota Statutes 1990, section 176.131, subdivision 10. The
assigned risk plan shall be a member of the reinsurance
association for the purposes of sections 79.34 to 79.40 and may
select either retention limit provided in section 79.34,
subdivision 2.
Sec. 21. Minnesota Statutes 1998, section 79.34,
subdivision 1a, is amended to read:
Subd. 1a. [GROSS PREMIUMS TAX.] The direct funded premium
premiums received by the reinsurance association is from
self-insurers approved under section 176.181 and political
subdivisions that self-insure are subject to the gross premium
tax imposed by section 60A.15 taxation under chapter 297I. Only
direct funded premium payments made to the reinsurance
association by self-insurers approved pursuant to section
176.181 and each political subdivision that self-insures shall
be subject to the gross premiums tax.
Sec. 22. Minnesota Statutes 1998, section 176A.08, is
amended to read:
176A.08 [EXEMPTION FROM AND APPLICABILITY OF CERTAIN LAWS.]
The fund shall not be considered a state agency for any
purpose including, but not limited to, chapters 13, 15, 15A, and
43A. However, the fund shall be subject to sections 179A.01 to
179A.25. The insurance operations of the fund are subject to
all of the provisions of chapters 60A and 60B. The commissioner
of commerce has the same powers with respect to the board as the
commissioner has with respect to a private workers' compensation
insurer under chapters 60A and 60B. The fund is considered an
insurer for the purposes of chapters 60C, 72A, 79, and 176. The
fund is subject to the same tax liability as a mutual insurance
company in this state pursuant to section 60A.15 under chapter
297I. As a condition of its authority to transact business in
this state the fund shall be a member of the workers'
compensation reinsurance association and is bound by its plan of
operation.
Sec. 23. Minnesota Statutes 1998, section 290.35,
subdivision 2, is amended to read:
Subd. 2. [APPORTIONMENT OF TAXABLE NET INCOME.] The
commissioner shall compute therefrom the taxable net income of
such companies by assigning to this state that proportion
thereof which the gross premiums collected by them during the
taxable year from old and new business within this state bears
to the total gross premiums collected by them during that year
from their entire old and new business, including reinsurance
premiums; provided, the commissioner shall add to the taxable
net income so apportioned to this state the amount of any taxes
on premiums paid by the company by virtue of any law of this
state (other than the surcharge on premiums imposed by sections
69.54 to 69.56 section 297I.10 and the surcharge imposed by
section 168A.40, subdivision 3) which shall have been deducted
from gross income by the company in arriving at its total net
income under the provisions of such act of Congress.
(a) For purposes of determining the Minnesota apportionment
percentage, premiums from reinsurance contracts in connection
with property in or liability arising out of activity in, or in
connection with the lives or health of Minnesota residents shall
be assigned to Minnesota and premiums from reinsurance contracts
in connection with property in or liability arising out of
activity in, or in connection with the lives or health of
non-Minnesota residents shall be assigned outside of Minnesota.
Reinsurance premiums are presumed to be received for a Minnesota
risk and are assigned to Minnesota, if:
(1) the reinsurance contract is assumed for a company
domiciled in Minnesota; and
(2) the taxpayer, upon request of the commissioner, fails
to provide reliable records indicating the reinsured contract
covered non-Minnesota risks.
For purposes of this paragraph, "Minnesota risk" means coverage
in connection with property in or liability arising out of
activity in Minnesota, or in connection with the lives or health
of Minnesota residents.
(b) The apportionment method prescribed by paragraph (a)
shall be presumed to fairly and correctly determine the
taxpayer's taxable net income. If the method prescribed in
paragraph (a) does not fairly reflect all or any part of taxable
net income, the taxpayer may petition for or the commissioner
may require the determination of taxable net income by use of
another method if that method fairly reflects taxable net
income. A petition within the meaning of this section must be
filed by the taxpayer on such form as the commissioner shall
require.
Sec. 24. Minnesota Statutes 1998, section 290.35,
subdivision 3, is amended to read:
Subd. 3. [CREDIT.] An insurance company shall receive a
credit against the tax computed under sections 290.06,
subdivision 1, and 290.0921, equal to any taxes based on
premiums paid by it that are attributable to the period for
which the tax under this chapter is imposed by virtue of any law
of this state, other than the surcharge on premiums imposed by
sections 69.54 to 69.56 section 297I.10.
Sec. 25. Minnesota Statutes 1998, section 290.35,
subdivision 6, is amended to read:
Subd. 6. [GUARANTY ASSOCIATION ASSESSMENT OFFSET.] (a) An
insurance company may offset against its corporate franchise tax
liability under this chapter any amount paid pursuant to
assessments made for insolvencies which occur after July 31,
1994, under sections 60C.01 to 60C.22, and any amount paid
pursuant to assessments made after July 31, 1994, under
Minnesota Statutes 1992, sections 61B.01 to 61B.16, or sections
61B.18 to 61B.32, as follows:
(a) (1) Each such assessment shall give rise to an amount
of offset equal to 20 percent of the amount of the assessment
for each of the five calendar years following the year in which
the assessment was paid.
(b) (2) The amount of offset initially determined for each
taxable year is the sum of the amounts determined under
paragraph (a) clause (1) for that taxable year.
(c) (b)(1) Each year the commissioner of revenue shall
compare total guaranty association assessments levied over the
preceding five calendar years to the sum of all premium tax and
corporate franchise tax revenues collected from insurance
companies without reduction for any guaranty association
assessment offset, in the preceding calendar year, referred to
in this subdivision as "preceding year insurance tax revenues."
(2) If total guaranty association assessments levied over
the preceding five years exceed the preceding year insurance tax
revenues, insurance companies shall be are allowed only a
proportionate part of the corporate franchise tax offset
calculated under paragraph (b) (a) for the current calendar year.
(3) The proportionate part of the corporate franchise tax
offset allowed in the current calendar year is determined by
multiplying the amount calculated under paragraph (b) (a) by a
fraction, the numerator of which equals the preceding year
insurance tax revenues and the denominator of which equals total
guaranty association assessments levied over the preceding
five-year period.
(4) The proportionate part of the premium tax offset that
is not allowed shall must be carried forward to subsequent tax
years and added to the amount of corporate franchise tax offset
calculated under paragraph (b) (a) before application of the
limitation imposed by this paragraph.
(5) Any amount carried forward from prior years must be
allowed before allowance of the offset for the current year
calculated under paragraph (b) (a).
(6) The corporate franchise tax offset limitation must be
calculated separately for (1) insurance companies subject to
assessment under sections 60C.01 to 60C.22, and (2) insurance
companies subject to assessment under Minnesota Statutes 1992,
sections 61B.01 to 61B.16, or sections 61B.18 to 61B.32.
(7) When the corporate franchise tax offset is limited by
this provision, the commissioner of revenue will notify affected
insurance companies on a timely basis for purposes of completing
premium and corporate franchise tax returns.
(8) The guaranty associations created under sections 60C.01
to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16,
and sections 61B.18 to 61B.32, shall provide the commissioner of
revenue with the necessary information on guaranty association
assessments. The limitation in this paragraph is effective for
offsets allowable in 1999 and thereafter.
(d) (c)(1) If the offset determined by the application of
paragraphs (a) to (c) and (b) exceeds the greater of the
insurance company's corporate franchise tax liability under this
chapter prior to allowance of the credit provided by subdivision
3 or its premium tax liability under chapter 60A 297I, then the
insurance company may carry forward the excess, referred to in
this subdivision as the "carryforward credit," to subsequent
taxable years.
(2) The carryforward credit must be allowed as an offset
against corporate franchise tax liability for the first
succeeding year to the extent that the corporate franchise tax
liability for that year exceeds the amount of the allowable
offset for the year determined under paragraphs (a) to (c) and
(b).
(3) The carryforward credit shall must be reduced, but not
below zero, by the greater of the amount of the carryforward
credit allowed as an offset against the corporate franchise tax
pursuant to this paragraph or the amount of the carryforward
credit allowed as an offset against the insurance company's
premium tax liability under chapter 60A 297I pursuant to section
60A.15, subdivision 15, paragraph (d) 297I.20, paragraph (c).
The remainder, if any, of the carryforward credit must be
carried forward to succeeding taxable years until the entire
carryforward credit has been credited against the insurance
company's liability for corporate franchise tax under this
chapter and premium tax under chapter 60A 297I.
(e) (d) A refund paid by the Minnesota Life and Health
Insurance Guaranty Association to member insurers under
Minnesota Statutes 1992, section 61B.07, subdivision 6, or
section 61B.24, subdivision 6, with respect to an assessment
payment which has been offset against taxes shall reduce the
carryforward credit determined under paragraph (d) and, if the
refund exceeds the amount of the carryforward credit, shall be
repaid by the insurers to the extent of the offset to the state
in the manner the commissioner of revenue requires. When an
insurer has offset against taxes its payment of an assessment of
the Minnesota life and health guaranty association, and the
association pays the insurer a refund with respect to the
assessment under Minnesota Statutes 1992, section 61B.07,
subdivision 6, or 61B.24, subdivision 6, then the refund reduces
the insurer's carryforward credit under paragraph (c). If the
refund exceeds the amount of the carryforward credit, the excess
amount must be repaid to the state by the insurers to the extent
of the offset in the manner the commissioner requires.
Sec. 26. Minnesota Statutes 1998, section 295.58, is
amended to read:
295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.]
The commissioner shall deposit all revenues, including
penalties and interest, derived from the taxes imposed by
sections 295.50 to 295.57 and from the insurance premiums
tax imposed by section 297I.05, subdivision 5, on health
maintenance organizations, community integrated service
networks, and nonprofit health service plan corporations in the
health care access fund in the state treasury. Refunds of
overpayments must be paid from the health care access fund in
the state treasury. There is annually appropriated from the
health care access fund to the commissioner of revenue the
amount necessary to make any refunds required under section
295.54.
Sec. 27. Minnesota Statutes 1998, section 424.165, is
amended to read:
424.165 [SPECIAL FUND, MAINTENANCE.]
Subdivision 1. [SURCHARGE.] When the balance in the
special fund of any firefighter's relief association in any city
of the second class is less than $50,000 as determined by any
such association's board of trustees, which fact shall be duly
certified to by the state auditor, such board of trustees may
thereupon file its duly verified petition for relief,
accompanied by such certificate, with the commissioner of
revenue. The commissioner of revenue shall thereupon order and
direct a surcharge to be collected of two percent of the fire,
lightning and sprinkler leakage gross premiums, less return
premiums, on all direct business received by any foreign or
domestic fire insurance company on property in such city of the
second class, or by its agents for it, in cash or otherwise,
until the balance in the special funds of such relief
association amounts to $50,000 and for a period of 15 days
thereafter. As soon as the balance in said special fund amounts
to $50,000 the board of trustees of such relief association
shall certify that fact to the commissioner of revenue and the
commissioner of revenue shall forthwith issue an order ordering
and directing that the collection of such surcharge shall be
discontinued after the expiration of said 15-day period and
shall forthwith mail a copy of the order last mentioned to each
insurance company affected thereby. Said surcharge shall be due
and payable from such companies to the state treasurer in
semiannual installments on June 30 and December 31 of each
calendar year to be kept by the state treasurer in a separate
fund and if not paid within 30 days after such dates a penalty
of three percent shall accrue thereon and thereafter such sum
and penalty shall draw interest at the rate of one percent per
month until paid.
Subd. 2. [ISSUANCE OF WARRANT.] The commissioner of
finance on July 31, 1938, and semiannually thereafter, shall
issue and deliver to the treasurer of such relief association in
such city a warrant upon the state treasurer for an amount equal
to the total amount of said surcharge on said premiums within
such city theretofore so collected and transmitted to the state
treasurer by such insurance companies. Said warrants shall be
paid out of said separate fund hereinbefore provided for, and
the payment in each case shall be made to the treasurer of the
relief association presenting the warrant.
There is hereby appropriated to such firefighter's relief
association, from such fund or account in the state treasury to
which the money was credited, such sums as may, from time to
time, be necessary to pay these warrants.
Subd. 3. [FUNDS TO BE KEPT IN SPECIAL FUND.] The treasurer
of such relief association shall place the money received in
payment of any such warrant in the special fund of such relief
association.
Subd. 4. [EMERGENCY DECLARED TO EXIST.] An emergency
exists and this section shall be construed as a relief measure
for firefighter's relief associations in any city of the second
class.
When the balance in the special fund of any firefighter's
relief association in any city of the second class is less than
$50,000 as determined by the board of trustees of the
association, and as certified by the state auditor, the board of
trustees may file with the commissioner a request to impose the
surcharge on fire, lightning, and sprinkler leakage insurance
premiums authorized under section 297I.10, subdivision 2.
Sec. 28. [REPEALER.]
Minnesota Statutes 1998, sections 60A.15; 60A.152; 60A.198,
subdivision 6; 60A.199, subdivisions 2, 3, 4, 5, 6, 6a, 7, 8, 9,
10, and 11; 60A.209, subdivisions 4 and 5; 69.54; 69.55; 69.56;
69.57; 69.58; 69.59; 69.60; 69.61; 71A.04, subdivision 2;
299F.21; 299F.22; 299F.23; 299F.24; 299F.25; and 299F.26; and
Minnesota Rules, part 2765.1500, subpart 6, are repealed.
Sec. 29. [EFFECTIVE DATE.]
This article is effective January 1, 2001.
Presented to the governor April 11, 2000
Signed by the governor April 14, 2000, 2:11 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes