1.1 	A bill for an act
1.2 	relating to taxation; providing for tax reductions to middle class families; closing 
1.3 	loopholes; providing tax fairness; appropriating money; amending Minnesota 
1.4 	Statutes 2014, sections 16D.08, subdivision 2; 270.80, subdivisions 1, 2, 3, 4, 
1.5 	by adding subdivisions; 270.81, subdivisions 1, 3, by adding a subdivision; 
1.6 	270.82; 270.83, subdivisions 1, 2; 270.84; 270.86; 270.87; 270C.03, subdivision 
1.7 	1; 270C.33, subdivision 6; 272.02, subdivision 9; 275.025, subdivisions 1, 
1.8 	4; 289A.60, by adding a subdivision; 290.01, subdivision 4a, by adding 
1.9 	a subdivision; 290.067, subdivisions 1, 2, 2b, 3; 290.0671, subdivision 1; 
1.10 	290.0674, subdivision 2, by adding a subdivision; 290.068, subdivision 2; 
1.11 	290.17, subdivision 4; 290.191, subdivision 5; 290.21, subdivision 4; 290A.03, 
1.12 	subdivision 13; 290B.03, subdivision 1; 290B.04, subdivision 1; 291.03, 
1.13 	by adding a subdivision; 296A.01, subdivision 12; 296A.08, subdivision 2; 
1.14 	297A.815, subdivision 3; 297A.94; 297H.04, subdivision 2; proposing coding 
1.15 	for new law in Minnesota Statutes, chapter 270C; repealing Minnesota Statutes 
1.16 	2014, sections 270.81, subdivision 4; 270.83, subdivision 3; 290.067, subdivision 
1.17 	2a; Minnesota Rules, parts 8106.0100, subparts 1, 2, 3, 4, 5, 6, 7, 8, 10, 12, 13, 
1.18 	14, 17, 17a, 18, 19, 20, 21; 8106.0300, subparts 1, 3; 8106.0400; 8106.0500; 
1.19 	8106.0600; 8106.0700; 8106.0800; 8106.9900.
1.20 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.21 	ARTICLE 1
1.22 	CHILD AND DEPENDENT CARE CREDIT

1.23 	Section 1. Minnesota Statutes 2014, section 290.067, subdivision 1, is amended to read:
1.24 		Subdivision 1.Amount of credit. (a) A taxpayer may take as a credit against the 
1.25 	tax due from the taxpayer and a spouse, if any, imposed under this chapter an amount 
1.26 	equal to the sum of dependent care creditfor which the taxpayer is eligible pursuant 
1.27 	to the provisions of section 21 of the Internal Revenue Code subject to the limitations 
1.28 	provided in subdivision 2 except that credits calculated under paragraphs (b), (d), and 
1.29 	(e). In determining whether the child qualified as a dependent expenses were paid to 
2.1 	care for a qualifying individual, income received as a Minnesota family investment 
2.2 	program grant or allowance to or on behalf of the child individual must not be taken 
2.3 	into account in determining whether the child individual received more than half of the 
2.4 	child's individual's support from the taxpayer, and the provisions of section 32(b)(1)(D) of 
2.5 	the Internal Revenue Code do not apply.
2.6 	(b) A taxpayer who incurs actual employment-related expenses may take as a 
2.7 	credit against the tax imposed under this chapter an amount equal to the dependent care 
2.8 	credit for which the taxpayer is eligible pursuant to the provisions of section 21 of the 
2.9 	Internal Revenue Code.
2.10 	(c) A taxpayer who elects to claim a credit under paragraph (d) or (e) may claim 
2.11 	a credit under paragraph (b) only for employment-related expenses paid to care for 
2.12 	qualifying individuals other than the child for whom deemed expenses were used to claim 
2.13 	the credit under paragraph (d) or (e).
2.14 	(b) If a child who has not attained the age of six years at the close of the taxable year 
2.15 	is cared for at a licensed family day care home operated by the child's parent, the taxpayer 
2.16 	is deemed to have paid employment-related expenses. (d) In lieu of the credit under 
2.17 	paragraph (b), a taxpayer who operates a licensed family day care home may elect to claim 
2.18 	as a credit against the tax imposed under this chapter an amount equal to the dependent 
2.19 	care credit for which the taxpayer is eligible pursuant to the provisions of section 21 
2.20 	of the Internal Revenue Code calculated using deemed expenses rather than actual 
2.21 	employment-related expenses paid. If the child is 16 months old or younger at the close of 
2.22 	the taxable year, the amount of deemed expenses deemed to have been paid equals are equal 
2.23 	to the maximum limit amount of employment-related expenses incurred during the taxable 
2.24 	year that may be taken into account for one qualified qualifying individual under section 
2.25 	21(c) and (d) of the Internal Revenue Code. If the child is older than 16 months of age but 
2.26 	has not attained the age of six years at the close of the taxable year, the amount of deemed
2.27 	expenses deemed to have been paid equals are equal to the amount the licensee would 
2.28 	charge for the care of a child of the same age for the same number of hours of care. If the 
2.29 	child has attained the age of six at the close of the taxable year, deemed expenses are zero.
2.30 	(c) If (e) In lieu of the credit under paragraph (b), a married couple may elect to 
2.31 	claim a credit against the tax imposed under this chapter as computed under paragraph 
2.32 	(f), if the married couple:
2.33 	(1) has a child who has not attained the age of one year at the close of the taxable year;
2.34 	(2) files a joint tax return for the taxable year; and
2.35 	(3) does not participate in a dependent care assistance program as defined in section 
2.36 	129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid 
3.1 	for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of 
3.2 	(i) the combined earned income of the couple or (ii) the amount of the maximum limit for 
3.3 	one qualified individual under section 21(c) and (d) of the Internal Revenue Code will 
3.4 	be deemed to be the employment related expense paid for that child. The earned income 
3.5 	limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed 
3.6 	amount. These deemed amounts apply regardless of whether any employment-related 
3.7 	expenses have been paid.; and
3.8 	(4) does not operate a licensed family day care center home.
3.9 	(f) A married couple meeting the requirements of paragraph (e) is allowed a credit 
3.10 	against the tax imposed under this chapter equal to the dependent care for which the couple 
3.11 	is eligible pursuant to section 21 of the Internal Revenue Code calculated using deemed 
3.12 	expenses rather than actual employment-related expenses paid. For purposes of this 
3.13 	paragraph, deemed expenses are the lesser of (i) the combined earned income of the couple 
3.14 	or (ii) the maximum amount of employment-related expenses incurred during the taxable 
3.15 	year that may be taken into account for one qualifying individual under section 21(c) and 
3.16 	(d) of the Internal Revenue Code or for two qualifying individuals for a taxpayer with two 
3.17 	children who have not attained the age of one. The earned income limitation of section 
3.18 	21(d) of the Internal Revenue Code does not apply to this deemed amount. These deemed 
3.19 	amounts apply regardless of whether any employment-related expenses have been paid.
3.20 	(d) (g) If the taxpayer is not required and does not file a federal individual income 
3.21 	tax return for the tax year, or if the taxpayer does file a federal return but does not claim a 
3.22 	federal dependent care credit, no credit is allowed for any amount paid to any person unless:
3.23 	(1) the name, address, and taxpayer identification number of the person are included 
3.24 	on the return claiming the credit; or
3.25 	(2) if the person is an organization described in section 501(c)(3) of the Internal 
3.26 	Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, 
3.27 	the name and address of the person are included on the return claiming the credit.
3.28 	In the case of a failure to provide the information required under the preceding sentence, 
3.29 	the preceding sentence does not apply if it is shown that the taxpayer exercised due 
3.30 	diligence in attempting to provide the information required.
3.31 	(e) (h) In the case of a nonresident, part-year resident, or a person who has earned 
3.32 	income not subject to tax under this chapter including earned income excluded pursuant to 
3.33 	section 290.01, subdivision 19b, clause (9), the credit determined under this section 21 
3.34 	of the Internal Revenue Code must be allocated based on the ratio by which the earned 
3.35 	income of the claimant and the claimant's spouse from Minnesota sources bears to the 
3.36 	total earned income of the claimant and the claimant's spouse.
4.1 	(f) (i) For residents of Minnesota, the subtractions for military pay under section 
4.2 	290.01, subdivision 19b, clauses (10) and (11), are not considered "earned income not 
4.3 	subject to tax under this chapter."
4.4 	(g) (j) For residents of Minnesota, the exclusion of combat pay under section 112 
4.5 	of the Internal Revenue Code is not considered "earned income not subject to tax under 
4.6 	this chapter."
4.7 	(k) For the purposes of this section, the terms "qualifying individual" and 
4.8 	"employment-related expenses" have the meanings given in section 21 of the Internal 
4.9 	Revenue Code.

4.10 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
4.11 	December 31, 2014.

4.12 	Sec. 2. Minnesota Statutes 2014, section 290.067, subdivision 2, is amended to read:
4.13 		Subd. 2.Limitations. The credit for expenses incurred for the care of each 
4.14 	dependent shall not exceed $720 in any taxable year, and the total credit for all dependents 
4.15 	of a claimant shall not exceed $1,440 in a taxable year. The maximum total credit shall 
4.16 	be reduced according to the amount of the income of the claimant and a spouse, if any, 
4.17 	as follows:
4.18 	income up to $18,040, $720 maximum for one dependent, $1,440 for all dependents;
4.19 	income over $18,040, the maximum credit for one dependent shall be reduced by 
4.20 	$18 for every $350 of additional income, $36 for all dependents.
4.21 	The commissioner shall construct and make available to taxpayers tables showing 
4.22 	the amount of the credit at various levels of income and expenses. The tables shall follow 
4.23 	the schedule contained in this subdivision, except that the commissioner may graduate the 
4.24 	transitions between expenses and income brackets.
4.25 	(a) The maximum credit under subdivision 1, paragraph (b), is:
4.26 	(1) $1,050 for a taxpayer with employment-related expenses for one qualifying 
4.27 	individual;
4.28 	(2) $2,100 for a taxpayer with employment-related expenses for two or more 
4.29 	qualifying individuals;
4.30 	(3) $1,050 for a taxpayer who elects to claim a credit under subdivision 1, paragraph 
4.31 	(d) or (e), if that credit is based on deemed expenses for one child; and
4.32 	(4) $0 for a taxpayer who elects to claim a credit under subdivision 1, paragraph (d) 
4.33 	or (e), if that credit is based on deemed expenses for two or more children.
4.34 	(b) The maximum credit under subdivision 1, paragraphs (d) and (e), is:
4.35 	(1) $720 for a taxpayer with deemed expenses for one child; and
5.1 	(2) $1,440 for a taxpayer with deemed expenses for two or more children.
5.2 	(c) For a taxpayer who claims a credit under subdivision 1, paragraph (b), who 
5.3 	has federal adjusted gross income as defined in the Internal Revenue Code in excess of 
5.4 	$100,000, the credit under subdivision 1, paragraph (b), is equal to the lesser of:
5.5 	(1) the credit calculated under subdivision 1, paragraph (b); or
5.6 	(2) $600 minus five percent of federal adjusted gross income in excess of $100,000 
5.7 	for a taxpayer with one qualifying individual, or $1,200 minus five percent of federal 
5.8 	gross adjusted income in excess of $100,000 for a taxpayer with two or more qualifying 
5.9 	individuals, but in no case is the credit less than zero.
5.10 	(d) For a taxpayer who elects to claim the credit under subdivision 1, paragraph 
5.11 	(d) or (e), with federal adjusted gross income as defined in the Internal Revenue Code 
5.12 	in excess of $25,000, the credit is equal to the lesser of:
5.13 	(1) the credit calculated under subdivision 1, paragraph (d) or (e); or
5.14 	(2) $720 minus five percent of federal adjusted gross income in excess of $25,000 
5.15 	for a taxpayer with one qualifying individual, or $1,440 minus five percent of federal 
5.16 	gross adjusted income in excess of $25,000 for a taxpayer with two or more qualifying 
5.17 	individuals, but in no case is the credit less than zero.

5.18 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
5.19 	December 31, 2014.

5.20 	Sec. 3. Minnesota Statutes 2014, section 290.067, subdivision 2b, is amended to read:
5.21 		Subd. 2b.Inflation adjustment. The commissioner shall adjust the dollar amount 
5.22 	of the income threshold at which the maximum credit begins to be reduced under 
5.23 	subdivision 2 by the percentage determined pursuant to the provisions of section 1(f) of 
5.24 	the Internal Revenue Code, except that in section 1(f)(3)(B) the word "1999" "2014" shall 
5.25 	be substituted for the word "1992." For 2001 2016, the commissioner shall then determine 
5.26 	the percent change from the 12 months ending on August 31, 1999 2014, to the 12 months 
5.27 	ending on August 31, 2000 2015, and in each subsequent year, from the 12 months ending 
5.28 	on August 31, 1999 2014, to the 12 months ending on August 31 of the year preceding the 
5.29 	taxable year. The determination of the commissioner pursuant to this subdivision must not 
5.30 	be considered a "rule" and is not subject to the Administrative Procedure Act contained in 
5.31 	chapter 14. The threshold amount as adjusted must be rounded to the nearest $10 amount. 
5.32 	If the amount ends in $5, the amount is rounded up to the nearest $10 amount.

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

6.1 	Sec. 4. Minnesota Statutes 2014, section 290.067, subdivision 3, is amended to read:
6.2 		Subd. 3.Credit to be refundable. If the amount of credit which a claimant 
6.3 	would be eligible to receive pursuant to this subdivision section exceeds the claimant's 
6.4 	tax liability under chapter 290, the excess amount of the credit shall be refunded to the 
6.5 	claimant by the commissioner of revenue.

6.6 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
6.7 	December 31, 2014.

6.8 	Sec. 5. Minnesota Statutes 2014, section 290.0674, subdivision 2, is amended to read:
6.9 		Subd. 2.Limitations. (a) For claimants with income not greater than $33,500, the 
6.10 	maximum credit allowed for a family is $1,000 multiplied by the number of qualifying 
6.11 	children in kindergarten through grade 12 in the family. The maximum credit for families 
6.12 	with one qualifying child in kindergarten through grade 12 is reduced by $1 for each $4 of 
6.13 	household income over $33,500, and the maximum credit for families with two or more 
6.14 	qualifying children in kindergarten through grade 12 is reduced by $2 for each $4 of 
6.15 	household income over $33,500, but in no case is the credit less than zero.
6.16 	For purposes of this section "income" has the meaning given in section 290.067, 
6.17 	subdivision 2a. In the case of a married claimant, a credit is not allowed unless a joint 
6.18 	income tax return is filed.
6.19 	(b) For a nonresident or part-year resident, the credit determined under subdivision 1 
6.20 	and the maximum credit amount in paragraph (a) must be allocated using the percentage 
6.21 	calculated in section 290.06, subdivision 2c, paragraph (e).

6.22 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
6.23 	December 31, 2014.

6.24 	Sec. 6. Minnesota Statutes 2014, section 290.0674, is amended by adding a subdivision 
6.25 	to read:
6.26 		Subd. 2a.Income defined. (a) For purposes of this section, "income" means the 
6.27 	sum of the following:
6.28 	(1) federal adjusted gross income as defined in the Internal Revenue Code; and
6.29 	(2) the sum of the following amounts to the extent not included in clause (1):
6.30 	(i) all nontaxable income;
6.31 	(ii) the amount of a passive activity loss that is not disallowed as a result of section 
6.32 	469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity 
6.33 	loss carryover allowed under section 469(b) of the Internal Revenue Code;
7.1 	(iii) an amount equal to the total of any discharge of qualified farm indebtedness 
7.2 	of a solvent individual excluded from gross income under section 108(g) of the Internal 
7.3 	Revenue Code;
7.4 	(iv) cash public assistance and relief;
7.5 	(v) any pension or annuity (including railroad retirement benefits, all payments 
7.6 	received under the federal Social Security Act, Supplemental Security Income, and 
7.7 	veterans benefits), which was not exclusively funded by the claimant or spouse, or which 
7.8 	was funded exclusively by the claimant or spouse and which funding payments were 
7.9 	excluded from federal adjusted gross income in the years when the payments were made;
7.10 	(vi) interest received from the federal or state government or any instrumentality 
7.11 	or political subdivision thereof;
7.12 	(vii) workers' compensation;
7.13 	(viii) nontaxable strike benefits;
7.14 	(ix) the gross amounts of payments received in the nature of disability income or 
7.15 	sick pay as a result of accident, sickness, or other disability, whether funded through 
7.16 	insurance or otherwise;
7.17 	(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of 
7.18 	1986, as amended through December 31, 1995;
7.19 	(xi) contributions made by the claimant to an individual retirement account, 
7.20 	including a qualified voluntary employee contribution; simplified employee pension plan; 
7.21 	self-employed retirement plan; cash or deferred arrangement plan under section 401(k) 
7.22 	of the Internal Revenue Code; or deferred compensation plan under section 457 of the 
7.23 	Internal Revenue Code, to the extent the sum of amounts exceeds the retirement base 
7.24 	amount for the claimant and spouse;
7.25 	(xii) nontaxable scholarship or fellowship grants;
7.26 	(xiii) the amount of the deduction allowed under section 199 of the Internal Revenue 
7.27 	Code;
7.28 	(xiv) the amount of the deduction allowed under section 220 or 223 of the Internal 
7.29 	Revenue Code;
7.30 	(xv) the amount deducted for tuition expenses under section 222 of the Internal 
7.31 	Revenue Code; and
7.32 	(xvi) the amount deducted for certain expenses of elementary and secondary school 
7.33 	teachers under section 62(a)(2)(D) of the Internal Revenue Code.
7.34 	In the case of an individual who files an income tax return on a fiscal year basis, the 
7.35 	term "federal adjusted gross income" shall mean federal adjusted gross income reflected 
7.36 	in the fiscal year ending in the calendar year. Federal adjusted gross income shall not be 
8.1 	reduced by the amount of a net operating loss carryback or carryforward or a capital loss 
8.2 	carryback or carryforward allowed for the year.
8.3 	(b) For purposes of this section, "income" does not include:
8.4 	(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
8.5 	(2) amounts of any pension or annuity that was exclusively funded by the claimant 
8.6 	or spouse and which funding payments were not excluded from federal adjusted gross 
8.7 	income in the years when the payments were made;
8.8 	(3) surplus food or other relief in kind supplied by a governmental agency;
8.9 	(4) relief granted under chapter 290A;
8.10 	(5) child support payments received under a temporary or final decree of dissolution 
8.11 	or legal separation; or
8.12 	(6) restitution payments received by eligible individuals and excludable interest as 
8.13 	defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 
8.14 	2001, Public Law 107-16.

8.15 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
8.16 	December 31, 2014.

8.17 	Sec. 7.  REPEALER.
 8.18 	Minnesota Statutes 2014, section 290.067, subdivision 2a, is repealed.

8.19 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
8.20 	December 31, 2014.

8.21 	ARTICLE 2
8.22 	RAILROAD RECODIFICATION

8.23 	Section 1. Minnesota Statutes 2014, section 270.80, subdivision 1, is amended to read:
8.24 		Subdivision 1.Applicability. The following words and phrases when used 
8.25 	in sections 270.80 273.3712 to 270.87 273.3719, unless the context clearly indicates 
8.26 	otherwise, have the meanings ascribed to them in this section.

8.27 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
8.28 	thereafter.

8.29 	Sec. 2. Minnesota Statutes 2014, section 270.80, subdivision 2, is amended to read:
8.30 		Subd. 2.Railroad company. "Railroad company" means:
9.1 	(1) any company which as a common carrier operates a railroad or a line or lines of 
9.2 	railway railroad situated within or partly within Minnesota; or
9.3 	(2) any company owning or operating, other than as a common carrier, a railway 
9.4 	principally used for transportation of taconite concentrates from the plant at which the 
9.5 	taconite concentrates are produced in shipping form to a point of consumption or port 
9.6 	for shipment beyond the state; or
9.7 	(3) any company that produces concentrates from taconite and transports that 
9.8 	taconite in the course of the concentrating process and before the concentrating process is 
9.9 	completed to a concentrating plant located within the state over a railroad that is not a 
9.10 	common carrier and shall does not use a common carrier or taconite railroad company as 
9.11 	defined in clause (2) for the movement of the concentrate to a point of consumption or 
9.12 	port for shipment beyond the state.

9.13 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
9.14 	thereafter.

9.15 	Sec. 3. Minnesota Statutes 2014, section 270.80, subdivision 3, is amended to read:
9.16 		Subd. 3.Operating property. "Operating property" means all property owned 
9.17 	or used by a railroad company in the performance of railroad transportation services, 
9.18 	including without limitation franchises, rights-of-way, bridges, trestles, shops, docks, 
9.19 	wharves, buildings and structures, but not limited to, roads, locomotives, freight cars, 
9.20 	and improvements on leased property. Operating property is listed and assessed by the 
9.21 	commissioner where the property is located.

9.22 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
9.23 	thereafter.

9.24 	Sec. 4. Minnesota Statutes 2014, section 270.80, subdivision 4, is amended to read:
9.25 		Subd. 4.Nonoperating property. "Nonoperating property" means and includes all 
9.26 	property other than property defined in subdivision 3. Nonoperating property shall include
9.27 	includes real property which that is leased or rented or available for lease or rent to any 
9.28 	person which that is not a railroad company. Vacant land shall be presumed to be available 
9.29 	for lease or rent if it has not been used as operating property for a period of one year 
9.30 	immediately preceding the valuation date. Nonoperating property also includes land which
9.31 	that is not necessary and integral to the performance of railroad transportation services 
9.32 	and which that is not used on a regular and continual basis in the performance of these 
9.33 	services. Nonoperating property also includes that portion of a general corporation office 
10.1 	building and its proportionate share of land which that is not used for railway railroad
10.2 	operation or purpose. Nonoperating property is assessed by the local or county assessor.

10.3 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
10.4 	thereafter.

10.5 	Sec. 5. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
10.6 	to read:
10.7 		Subd. 6.Company. "Company" means any corporation, limited liability company, 
10.8 	association, partnership, trust, estate, fiduciary, public or private organization of any kind, 
10.9 	or any other legal entity.

10.10 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
10.11 	thereafter.

10.12 	Sec. 6. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
10.13 	to read:
10.14 		Subd. 7.Unit value. "Unit value" means the value of the whole integrated system 
10.15 	of a railroad company operating as a going concern without regard to the value of its 
10.16 	component parts.

10.17 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
10.18 	thereafter.

10.19 	Sec. 7. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
10.20 	to read:
10.21 		Subd. 8.Book depreciation. "Book depreciation" means the accumulated 
10.22 	depreciation shown by a railroad company on its books or allowed to the company by 
10.23 	the Surface Transportation Board.

10.24 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
10.25 	thereafter.

10.26 	Sec. 8. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
10.27 	to read:
10.28 		Subd. 9.Equalization. "Equalization" means the adjustment of the estimated value 
10.29 	of railroad operating property to the apparent sales ratio of commercial and industrial 
10.30 	property.

11.1 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
11.2 	thereafter.

11.3 	Sec. 9. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
11.4 	to read:
11.5 		Subd. 10.Exempt property. "Exempt property" means property which is 
11.6 	nontaxable for ad valorem tax purposes under Minnesota Statutes, including personal 
11.7 	property exempt from taxation under chapter 272.

11.8 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
11.9 	thereafter.

11.10 	Sec. 10. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
11.11 	to read:
11.12 		Subd. 11.Original cost. "Original cost" means the amount paid for an asset by the 
11.13 	current owner as recorded on the railroad's books or allowed by the Surface Transportation 
11.14 	Board.

11.15 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
11.16 	thereafter.

11.17 	Sec. 11. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
11.18 	to read:
11.19 		Subd. 12.System. "System" means the total property, real and personal, of a 
11.20 	railroad, that is used in its railroad operations.

11.21 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
11.22 	thereafter.

11.23 	Sec. 12. Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision 
11.24 	to read:
11.25 		Subd. 14.Minnesota allocated value. "Minnesota allocated value" means the value 
11.26 	of a railroad company's operating property that is assigned to Minnesota for tax purposes.

11.27 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
11.28 	thereafter.

11.29 	Sec. 13. Minnesota Statutes 2014, section 270.81, subdivision 1, is amended to read:
12.1 		Subdivision 1.Valuation of operating property. The operating property of every 
12.2 	railroad company doing business in Minnesota shall be valued by the commissioner in the 
12.3 	manner prescribed by sections 270.80 273.3712 to 270.87 273.3719.

12.4 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
12.5 	thereafter.

12.6 	Sec. 14. Minnesota Statutes 2014, section 270.81, subdivision 3, is amended to read:
12.7 		Subd. 3.Determination of type of property. (a) The commissioner shall have has
12.8 	exclusive primary jurisdiction to determine what whether railroad property is operating 
12.9 	property and what is or nonoperating property. In making such the determination, the 
12.10 	commissioner shall may solicit information and opinions from outside the department 
12.11 	and afford all interested persons an opportunity to submit data or views on the subject 
12.12 	in writing or orally.
12.13 	(b) Local and county assessors may submit written requests to the commissioner, 
12.14 	asking for a determination of the nature of specific whether property owned by a 
12.15 	railroad and located within their assessing jurisdiction is operating or nonoperating. Any 
12.16 	determination made by the commissioner may be appealed by the assessor to the Tax Court 
12.17 	pursuant to chapter 271. The requests must be submitted by April 1 of the assessing year. 
12.18 	The commissioner must send the assessor a written determination by May 1. Assessors may 
12.19 	appeal determinations made by the commissioner to the Tax Court pursuant to chapter 271.

12.20 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
12.21 	thereafter.

12.22 	Sec. 15. Minnesota Statutes 2014, section 270.81, is amended by adding a subdivision 
12.23 	to read:
12.24 		Subd. 6.Deduction for nonoperating and exempt property. Property that was part 
12.25 	of the system, but is nonoperating property, or that is exempt from ad valorem taxation, is 
12.26 	excluded from the Minnesota allocated value under section 273.3718, subdivision 1a. Only 
12.27 	qualifying property located in Minnesota may be deducted from the Minnesota allocated 
12.28 	value. The commissioner must deduct the market value of the property to be excluded. This 
12.29 	must be calculated by multiplying the book value of the property by the market-to-book 
12.30 	ratio of the unit. The company has the burden of proof to establish that property should 
12.31 	be excluded from the Minnesota allocated value. The railroad company must submit 
12.32 	schedules of exempt or nonoperating property as the commissioner may require. The 
12.33 	remaining amount after this deduction is the Minnesota apportionable market value.

13.1 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
13.2 	thereafter.

13.3 	Sec. 16. Minnesota Statutes 2014, section 270.82, is amended to read:
13.4 	270.82 REPORTS OF RAILROAD COMPANIES.
13.5 		Subdivision 1.Annual report required. Before March 31, every railroad company 
13.6 	doing business in Minnesota shall annually must file with the commissioner on or before 
13.7 	March 31 a an annual report under oath setting forth the information prescribed by the 
13.8 	commissioner to enable the commissioner to make the valuation and equalization required 
13.9 	by sections 270.80 273.3712 to 270.87. 273.3719. The commissioner shall prescribe the 
13.10 	content, format, and manner of the report pursuant to section 270C.30. If a report is made 
13.11 	by electronic means, the taxpayer's signature is defined pursuant to section 270C.304, 
13.12 	except that a "law administered by the commissioner" includes the property tax laws.
13.13 		Subd. 2.Extension of time. If the commissioner for good determines that there is 
13.14 	reasonable cause, the commissioner may extend the time for filing the report required by 
13.15 	subdivision 1 for up to 15 days the time for filing the report required by subdivision 1.
13.16 		Subd. 3.Amended reports. A railroad company may file an amended report to 
13.17 	correct or add information to the original report. Amended reports must be filed with 
13.18 	the commissioner by April 30.
13.19 		Subd. 4.Failure to file reports. (a) The commissioner may make the valuation 
13.20 	provided for by sections 273.3712 to 237.3719, according to the commissioner's best 
13.21 	judgment based on available information, if any railroad company does not:
13.22 	(1) make the report required by this section;
13.23 	(2) permit an inspection and examination of its property, records, books, accounts, 
13.24 	or other papers when requested by the commissioner; or
13.25 	(3) appear before the commissioner or a person appointed under 273.3715, when 
13.26 	required to do so.
13.27 	(b) If the commissioner makes the valuation pursuant to paragraph (a), the 
13.28 	commissioner's valuation is final. Notwithstanding any other law to the contrary, 
13.29 	the commissioner's valuation made pursuant to this subdivision is not appealable 
13.30 	administratively.

13.31 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
13.32 	thereafter.

13.33 	Sec. 17. Minnesota Statutes 2014, section 270.83, subdivision 1, is amended to read:
14.1 		Subdivision 1.Powers of commissioner. The commissioner shall have has the 
14.2 	power to examine or cause to be examined any books, papers, records, or memoranda 
14.3 	relevant to the determination of the valuation of operating property as herein provided. 
14.4 	The commissioner shall have the further power to may require the attendance of any 
14.5 	person having knowledge or information in the premises concerning the valuation of the 
14.6 	operating property, to compel the production of books, papers, records, or memoranda by 
14.7 	persons so required to attend, to take testimony on matters material to such determination
14.8 	determine the valuation of operating property and administer oaths or affirmations.

14.9 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
14.10 	thereafter.

14.11 	Sec. 18. Minnesota Statutes 2014, section 270.83, subdivision 2, is amended to read:
14.12 		Subd. 2.Appointment of persons; subpoenas. For the purpose of making such 
14.13 	examinations, The commissioner may appoint such persons as the commissioner may 
14.14 	deem deems necessary to make the examinations described in subdivision 1. Such 
14.15 	persons shall have the rights and powers of the examining of Persons appointed may 
14.16 	examine books, papers, records or memoranda, and of subpoenaing subpoena witnesses, 
14.17 	administering administer oaths and affirmations, and taking of take testimony, which are 
14.18 	conferred upon the commissioner hereby. The court administrator of any court of record, 
14.19 	upon demand of any such person appointed, shall issue a subpoena for the attendance of 
14.20 	any witness or the production of any books, papers, records, or memoranda before such 
14.21 	person. The commissioner may also issue subpoenas for the appearance of witnesses 
14.22 	before the commissioner or before such persons. Disobedience of subpoenas so issued 
14.23 	shall be punished by the district court of the district in which the subpoena is issued for a 
14.24 	contempt of the district court. Failure to comply with a subpoena shall be punished in the 
14.25 	same manner as contempt of the district court.

14.26 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
14.27 	thereafter.

14.28 	Sec. 19. Minnesota Statutes 2014, section 270.84, is amended to read:
14.29 	270.84 ANNUAL VALUATION OF OPERATING PROPERTY.
14.30 		Subdivision 1.Annual valuation; rules. (a) Before July 1, the commissioner 
14.31 	shall annually between March 31 and May 31 make a determination of must determine
14.32 	the fair market value of the operating property of every railroad company doing business 
14.33 	in this state as of January 2 of the year in which the valuation is made. In making 
15.1 	this determination, The commissioner shall must employ generally accepted appraisal 
15.2 	principles and practices which may include the unit method of determining value., and 
15.3 	approaches approved by the Western States Association of Tax Administrators, National 
15.4 	Conference of Unit Valuation States, and the International Association of Assessing 
15.5 	Officers.
15.6 	(b) The unit value of railroad property is the reconciled value considering the cost, 
15.7 	income, and market approaches under subdivisions 1a, 1b, and 1c. Each approach must 
15.8 	be weighted in accordance with the reliability of the information and the commissioner's 
15.9 	judgment.
15.10 		Subd. 1a.Cost approach. (a) The commissioner may use the cost approach, 
15.11 	including but not limited to original cost less book depreciation and replacement cost 
15.12 	less depreciation.
15.13 	(b) Book depreciation is allowed as a deduction from an original cost model. Book 
15.14 	depreciation is assumed to include all forms of appraisal depreciation.
15.15 	(c) Explicitly calculated appraisal depreciation, including physical, functional, and 
15.16 	external obsolescence, is allowed as a deduction from the replacement cost model.
15.17 		Subd. 1b.Income approach. (a) The commissioner may use the income approach, 
15.18 	including but not limited to direct capitalization models and yield capitalization models.
15.19 	(b) The yield rate is calculated using market data on selected comparable companies 
15.20 	in the band of investment method.
15.21 	(1) Discounted cash flows is a yield capitalization model that calculates the present 
15.22 	value of explicit cash flow forecasts capitalized using the yield rate, plus revision to stable 
15.23 	growth yield capitalization after the period of explicit forecasts.
15.24 	(2) Stable growth yield capitalization is a yield capitalization model that calculates 
15.25 	the present value of anticipated future cash flows, capitalized using the yield rate and 
15.26 	considering growth.
15.27 	(c) Direct capitalization is the expected net operating income for the following year, 
15.28 	divided by the direct capitalization rate. The direct capitalization rate is calculated by 
15.29 	using direct market observations from comparable sales or using market earning-to-price 
15.30 	information in the band of investment method.
15.31 		Subd. 1c.Market approach. The commissioner may use the market approach, 
15.32 	including but not limited to a sales comparison model, a stock and debt model, or other 
15.33 	market models that are available and reliable.
15.34 		Subd. 2.Notice. The commissioner, after determining the fair market value of the 
15.35 	operating property of each railroad company, shall give notice to must notify the railroad 
15.36 	company of the valuation by first class mail, overnight delivery, or messenger service.

16.1 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
16.2 	thereafter.

16.3 	Sec. 20. Minnesota Statutes 2014, section 270.86, is amended to read:
16.4 	270.86 APPORTIONMENT AND EQUALIZATION OF VALUATION.
16.5 		Subdivision 1.Apportionment of value. Upon determining After allocating to 
16.6 	Minnesota the fair market value of the operating property of each railroad company, the 
16.7 	commissioner shall must apportion such the value to the respective counties and to the 
16.8 	taxing districts therein in conformity with fair and reasonable rules and standards to be 
16.9 	established by the commissioner pursuant to notice and hearing, except as provided in 
16.10 	section 270.81. In establishing such rules and standards the commissioner may consider 
16.11 	(a) the physical situs of all station houses, depots, docks, wharves, and other buildings and 
16.12 	structures with an original cost in excess of $10,000; (b) the proportion that the length and 
16.13 	type of all the tracks used by the railroad in such county and taxing district bears to the 
16.14 	length and type of all the track used in the state; and (c) other facts as will result in a fair 
16.15 	and equitable apportionment of value the operating parcels in Minnesota.
16.16 	The apportioned market value of each company's operating parcel in Minnesota is 
16.17 	the current original cost of each parcel as of the last assessment date plus original cost 
16.18 	of new construction minus the original cost of property retired since the last assessment 
16.19 	date. The total Minnesota apportionable market value of the railroad is divided by the 
16.20 	total current original cost of the railroad in Minnesota to determine a percentage. The 
16.21 	resulting percentage is multiplied by the current original cost of each parcel to determine 
16.22 	the apportioned market value of each parcel.
16.23 		Subd. 1a.Allocation of value. (a) After the market value of operating property has 
16.24 	been estimated, the portion of value that is attributable to Minnesota must be determined 
16.25 	by calculating an allocation percentage using factors relevant to the industry segment of 
16.26 	the railroad company. The allocation percentage must be multiplied by the value of the 
16.27 	operating property to determine the Minnesota allocated value.
16.28 	(b) The Minnesota allocated value is determined by averaging the following factors:
16.29 	(1) miles of railroad track operated in Minnesota divided by miles of railroad track 
16.30 	operated in all states;
16.31 	(2) ton miles of revenue freight transported in Minnesota divided by ton miles of 
16.32 	revenue freight transported in all states;
16.33 	(3) gross revenues from transportation operations within Minnesota divided by gross 
16.34 	revenues from transportation operations in all states; and
17.1 	(4) cost of railroad property in Minnesota divided by cost of railroad property in 
17.2 	all states.
17.3 	(c) Each of the available factors must be weighted equally.
17.4 		Subd. 2.Equalized valuation. After making the apportionment provided in 
17.5 	subdivision 1, the commissioner shall must determine the equalized valuation of the 
17.6 	operating property in each county by applying to the apportioned value an estimated 
17.7 	current year median sales ratio for all commercial and industrial property in that county. 
17.8 	If the commissioner decides determines that there are insufficient sales to determine a 
17.9 	median commercial-industrial sales ratio, an estimated current year countywide median 
17.10 	sales ratio for all property shall must be applied to the apportioned value. No equalization 
17.11 	shall Equalization must not be made to the market value of the operating property if the 
17.12 	median sales ratio determined pursuant to this subdivision is within five at least 90 but less 
17.13 	than 105 percent of the assessment ratio of the railroad operating property.

17.14 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
17.15 	thereafter.

17.16 	Sec. 21. Minnesota Statutes 2014, section 270.87, is amended to read:
17.17 	270.87 CERTIFICATION TO COUNTY ASSESSORS.
17.18 	After making an annual determination of the equalized fair market value of the 
17.19 	operating property of each company in each of the respective counties, and in the taxing 
17.20 	districts therein, The commissioner shall must certify the equalized fair market value of 
17.21 	the operating property to the county assessor on or before June 30 August 1. The equalized 
17.22 	fair market value of the operating property of the railroad company in the county and the 
17.23 	taxing districts therein is the value on which taxes must be levied and collected in the 
17.24 	same manner as on the commercial and industrial property of such county and the taxing 
17.25 	districts therein in the counties and taxing districts. If the commissioner determines that 
17.26 	the equalized fair market value certified on or before June 30 August 1 is in error, the 
17.27 	commissioner may issue a corrected certification on or before August 31 October 1. The 
17.28 	commissioner may correct errors that are merely clerical in nature until December 31.

17.29 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
17.30 	thereafter.

17.31 	Sec. 22. Minnesota Statutes 2014, section 272.02, subdivision 9, is amended to read:
18.1 		Subd. 9.Personal property; exceptions. Except for the taxable personal property 
18.2 	enumerated below, all personal property and the property described in section 272.03, 
18.3 	subdivision 1, paragraphs (c) and (d), shall be exempt.
18.4 	The following personal property shall be taxable:
18.5 	(a) personal property which is part of an electric generating, transmission, or 
18.6 	distribution system or a pipeline system transporting or distributing water, gas, crude 
18.7 	oil, or petroleum products or mains and pipes used in the distribution of steam or hot or 
18.8 	chilled water for heating or cooling buildings and structures;
18.9 	(b) railroad docks and wharves which are part of thepersonal property that is part of 
18.10 	the operating property of a railroad company as defined in section 270.80 273.3712;
18.11 	(c) personal property defined in section 272.03, subdivision 2, clause (3);
18.12 	(d) leasehold or other personal property interests which are taxed pursuant to section 
18.13 	272.01, subdivision 2; 273.124, subdivision 7; or 273.19, subdivision 1; or any other law 
18.14 	providing the property is taxable as if the lessee or user were the fee owner;
18.15 	(e) manufactured homes and sectional structures, including storage sheds, decks, 
18.16 	and similar removable improvements constructed on the site of a manufactured home, 
18.17 	sectional structure, park trailer or travel trailer as provided in section 273.125, subdivision 
18.18 	8, paragraph (f); and
18.19 	(f) flight property as defined in section 270.071.

18.20 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
18.21 	thereafter.

18.22 	Sec. 23. Minnesota Statutes 2014, section 275.025, subdivision 1, is amended to read:
18.23 		Subdivision 1.Levy amount. The state general levy is levied against 
18.24 	commercial-industrial property and seasonal residential recreational property, as defined in 
18.25 	this section. The state general levy base amount is $592,000,000 $889,600,000 for taxes 
18.26 	payable in 2002 2016. For taxes payable in subsequent years, the levy base amount is 
18.27 	increased each year by multiplying the levy base amount for the prior year by the sum 
18.28 	of one plus the rate of increase, if any, in the implicit price deflator for government 
18.29 	consumption expenditures and gross investment for state and local governments prepared 
18.30 	by the Bureau of Economic Analysts of the United States Department of Commerce for 
18.31 	the 12-month period ending March 31 of the year prior to the year the taxes are payable. 
18.32 	The tax under this section is not treated as a local tax rate under section 469.177 and is not 
18.33 	the levy of a governmental unit under chapters 276A and 473F.
18.34 	The commissioner shall increase or decrease the preliminary or final rate for a year 
18.35 	as necessary to account for errors and tax base changes that affected a preliminary or final 
19.1 	rate for either of the two preceding years. Adjustments are allowed to the extent that the 
19.2 	necessary information is available to the commissioner at the time the rates for a year must 
19.3 	be certified, and for the following reasons:
19.4 	(1) an erroneous report of taxable value by a local official;
19.5 	(2) an erroneous calculation by the commissioner; and
19.6 	(3) an increase or decrease in taxable value for commercial-industrial or seasonal 
19.7 	residential recreational property reported on the abstracts of tax lists submitted under 
19.8 	section 275.29 that was not reported on the abstracts of assessment submitted under 
19.9 	section 270C.89 for the same year.
19.10 	The commissioner may, but need not, make adjustments if the total difference in the tax 
19.11 	levied for the year would be less than $100,000.

19.12 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
19.13 	thereafter.

19.14 	Sec. 24. Minnesota Statutes 2014, section 275.025, subdivision 4, is amended to read:
19.15 		Subd. 4.Apportionment and levy of state general tax. Ninety-five 95.1 percent of 
19.16 	the state general tax must be levied by applying a uniform rate to all commercial-industrial 
19.17 	tax capacity and five 4.9 percent of the state general tax must be levied by applying a 
19.18 	uniform rate to all seasonal residential recreational tax capacity. On or before October 1 
19.19 	each year, the commissioner of revenue shall certify the preliminary state general levy 
19.20 	rates to each county auditor that must be used to prepare the notices of proposed property 
19.21 	taxes for taxes payable in the following year. By January 1 of each year, the commissioner 
19.22 	shall certify the final state general levy rate to each county auditor that shall be used 
19.23 	in spreading taxes.

19.24 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
19.25 	thereafter.

19.26 	Sec. 25. APPROPRIATIONS.
 19.27 	The following sums are appropriated from the general fund to the agency to 
19.28 	implement the provisions of this article as follows: $266,000 in fiscal year 2016, $14,000 
19.29 	in fiscal year 2017, $13,000 in fiscal year 2018, and $11,000 in fiscal year 2019. The sums 
19.30 	indicated in this section for fiscal years 2016, 2017, and 2018 are onetime appropriations 
19.31 	and are not added to the agency's permanent base. The sum indicated in this section for 
19.32 	fiscal year 2019 shall become part of the agency's base.

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

20.2 	Sec. 26. REVISOR'S INSTRUCTION.
 20.3 	The revisor of statutes shall renumber the provisions of Minnesota Statutes listed 
20.4 	in column A to the references listed in column B. The revisor shall also make necessary 
20.5 	cross-reference changes in Minnesota Statutes and Minnesota Rules consistent with 
20.6 	renumbering.

20.7		Column A
	Column B
	
20.8		270.80
	273.3712
	
20.9		270.81
	273.3713
	
20.10		270.82
	273.3714
	
20.11		270.83
	273.3715
	
20.12		270.84
	273.3716
	
20.13		270.85
	273.3717
	
20.14		270.86
	273.3718
	
20.15		270.87
	273.3719

20.16 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
20.17 	thereafter.

20.18 	Sec. 27.  REPEALER.
 20.19 	Minnesota Statutes 2014, sections 270.81, subdivision 4; and 270.83, subdivision 3,
20.20 	and Minnesota Rules, parts 8106.0100, subparts 1, 2, 3, 4, 5, 6, 7, 8, 10, 12, 13, 14, 17, 
20.21 	17a, 18, 19, 20, and 21; 8106.0300, subparts 1 and 3; 8106.0400; 8106.0500; 8106.0600; 
20.22 	8106.0700; 8106.0800; and 8106.9900, are repealed.

20.23 	EFFECTIVE DATE. This section is effective for assessment year 2016 and 
20.24 	thereafter.

20.25 	ARTICLE 3
20.26 	CORPORATE TAX REFORM

20.27 	Section 1. Minnesota Statutes 2014, section 16D.08, subdivision 2, is amended to read:
20.28 		Subd. 2.Powers. (a) In addition to the collection remedies available to private 
20.29 	collection agencies in this state, the commissioner, with legal assistance from the attorney 
20.30 	general, may utilize any statutory authority granted to a referring agency for purposes of 
20.31 	collecting debt owed to that referring agency. The commissioner may also use the tax 
20.32 	collection remedies in sections 270C.03, subdivision 1, clause (8) (9), 270C.31, 270C.32, 
20.33 	270C.52, subdivisions 2 and 3, 270C.63, 270C.65, and 270C.67 to 270C.72. A debtor 
21.1 	may take advantage of any administrative or appeal rights contained in the listed sections. 
21.2 	For administrative and appeal rights for nontax debts, references to administrative 
21.3 	appeals or to the taxpayer rights advocate shall be construed to be references to the case 
21.4 	reviewer, references to Tax Court shall be construed to mean district court, and offers 
21.5 	in compromise shall be submitted to the referring agency. A debtor who qualifies for 
21.6 	cancellation of collection costs under section 16D.11, subdivision 3, clause (1), can apply 
21.7 	to the commissioner for reduction or release of a continuous wage levy, if the debtor 
21.8 	establishes that the debtor needs all or a portion of the wages being levied upon to pay 
21.9 	for essential living expenses, such as food, clothing, shelter, medical care, or expenses 
21.10 	necessary for maintaining employment. The commissioner's determination not to reduce 
21.11 	or release a continuous wage levy is appealable to district court. The word "tax" or "taxes" 
21.12 	when used in the tax collection statutes listed in this subdivision also means debts referred 
21.13 	under this chapter.
21.14 	(b) Before using the tax collection remedies listed in this subdivision, notice and 
21.15 	demand for payment of the amount due must be given to the person liable for the payment 
21.16 	or collection of the debt at least 30 days prior to the use of the remedies. The notice must 
21.17 	be sent to the person's last known address and must include a brief statement that sets forth 
21.18 	in simple and nontechnical terms the amount and source of the debt, the nature of the 
21.19 	available collection remedies, and remedies available to the debtor.

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

21.21 	Sec. 2. Minnesota Statutes 2014, section 270C.03, subdivision 1, is amended to read:
21.22 		Subdivision 1.Powers and duties. The commissioner shall have and exercise 
21.23 	the following powers and duties:
21.24 	(1) administer and enforce the assessment and collection of taxes;
21.25 	(2) make determinations, corrections, and assessments with respect to taxes, 
21.26 	including interest, additions to taxes, and assessable penalties;
21.27 	(3) disallow the tax effects of a transaction that does not have economic substance;
21.28 	(3) (4) use statistical or other sampling techniques consistent with generally accepted 
21.29 	auditing standards in examining returns or records and making assessments;
21.30 	(4) (5) investigate the tax laws of other states and countries, and formulate and 
21.31 	submit to the legislature such legislation as the commissioner may deem expedient 
21.32 	to prevent evasions of state revenue laws and to secure just and equal taxation and 
21.33 	improvement in the system of state revenue laws;
21.34 	(5) (6) consult and confer with the governor upon the subject of taxation, the 
21.35 	administration of the laws in regard thereto, and the progress of the work of the 
22.1 	department, and furnish the governor, from time to time, such assistance and information 
22.2 	as the governor may require relating to tax matters;
22.3 	(6) (7) execute and administer any agreement with the secretary of the treasury or the 
22.4 	Bureau of Alcohol, Tobacco, Firearms and Explosives in the Department of Justice of the 
22.5 	United States or a representative of another state regarding the exchange of information 
22.6 	and administration of the state revenue laws;
22.7 	(7) (8) require town, city, county, and other public officers to report information 
22.8 	as to the collection of taxes received from licenses and other sources, and such other 
22.9 	information as may be needful in the work of the commissioner, in such form as the 
22.10 	commissioner may prescribe;
22.11 	(8) (9) authorize the use of unmarked motor vehicles to conduct seizures or criminal 
22.12 	investigations pursuant to the commissioner's authority;
22.13 	(9) (10) authorize the participation in audits performed by the Multistate Tax 
22.14 	Commission. For the purposes of chapter 270B, the Multistate Tax Commission will be 
22.15 	considered to be a state for the purposes of auditing corporate sales, excise, and income 
22.16 	tax returns;
22.17 	(10) (11) maintain toll-free telephone access for taxpayer assistance for calls from 
22.18 	locations within the state; and
22.19 	(11) (12) exercise other powers and authority and perform other duties required of or 
22.20 	imposed upon the commissioner by law.

22.21 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
22.22 	December 31, 2014.

22.23 	Sec. 3. Minnesota Statutes 2014, section 270C.33, subdivision 6, is amended to read:
22.24 		Subd. 6.Assessment presumed valid. (a) A return or assessment of tax made 
22.25 	by the commissioner is prima facie correct and valid. The taxpayer has the burden of 
22.26 	establishing its incorrectness or invalidity in any related action or proceeding.
22.27 	(b) To overcome the presumption that an order of the commissioner that disallows 
22.28 	the tax effects of a transaction because the commissioner determined the transaction 
22.29 	does not have economic substance pursuant to section 270.03, subdivision 1, clause (3), 
22.30 	is prima facie correct and valid, the taxpayer must prove the transaction has economic 
22.31 	substance with clear and convincing evidence.

22.32 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
22.33 	December 31, 2014.

23.1 	Sec. 4. [270C.331] ECONOMIC SUBSTANCE.
23.2 		Subdivision 1.Economic substance. (a) For the purposes of disallowing the 
23.3 	tax effects of a transaction that does not have substance pursuant to section 270C.03, 
23.4 	subdivision 1, clause (3), a transaction shall be treated as having economic substance 
23.5 	only if:
23.6 	(1) the transaction changes in a meaningful way, apart from tax effects, the taxpayer's 
23.7 	economic position; and
23.8 	(2) the taxpayer has a substantial purpose, apart from tax effects, for entering into 
23.9 	the transaction.
23.10 	(b) In determining whether the requirements of paragraph (a), clauses (1) and (2), 
23.11 	are met, the potential for profit of a transaction shall be taken into account only if the 
23.12 	present value of the reasonable expected pretax profit from the transaction is substantial in 
23.13 	relation to the present value of the expected net tax benefits that would be allowed if the 
23.14 	transaction was respected. Fees and other transaction expenses shall be taken into account 
23.15 	as expenses in determining pretax profit.
23.16 	(c) For the purposes of paragraph (a), clause (2), achieving a financial accounting 
23.17 	benefit shall not be taken into account as a purpose for entering into a transaction if the 
23.18 	origin of such financial accounting benefit is a reduction of federal, state, or local tax.
23.19 		Subd. 2.Apart from tax effects. For purposes of this section, "apart from tax 
23.20 	effects" means without regard to the state and local tax effects arising from the application 
23.21 	of the laws of any state or local unit of government to the form of the transaction, the 
23.22 	federal tax effects, or both.
23.23 		Subd. 3.Transaction. For purposes of this section and section 270C.03, subdivision 
23.24 	1, clause (3), "transaction" includes a series of transactions.
23.25 		Subd. 4.Personal transactions of individuals. In the case of an individual, 
23.26 	subdivision 1 shall only apply to transactions entered into in connection with the trade or 
23.27 	business activity engaged in for the production of income.

23.28 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
23.29 	December 31, 2014.

23.30 	Sec. 5. Minnesota Statutes 2014, section 289A.60, is amended by adding a subdivision 
23.31 	to read:
23.32 		Subd. 27a.Noneconomic substance transaction understatement penalty. (a) If a 
23.33 	transaction is disallowed pursuant to section 270C.03, subdivision 1, clause (3), a penalty 
23.34 	equal to 20 percent of the amount of the disclosed noneconomic substance transaction 
23.35 	understatement must be added to the tax. This subdivision applies to any income or item 
24.1 	of income that is attributable to any transaction disallowed pursuant to section 270C.03, 
24.2 	subdivision 1, clause (3).
24.3 	(b) If a transaction is disallowed pursuant to section 270C.03, subdivision 1, clause 
24.4 	(3), a penalty equal to 40 percent of the amount of the undisclosed noneconomic substance 
24.5 	transaction understatement must be added to the tax. This subdivision applies to any 
24.6 	income or item of income that is attributable to any transaction disallowed pursuant to 
24.7 	section 270C.03, subdivision 1, clause (3).
24.8 	(c) For purposes of this subdivision, the term "disclosed noneconomic substance 
24.9 	transaction" means a transaction that fails to meet the criteria for having economic 
24.10 	substance as described in section 270C.03, subdivision 1, clause (3), with respect to which 
24.11 	the relevant facts affecting tax treatment are adequately disclosed in the return or in a 
24.12 	statement attached to the return.
24.13 	(d) For purposes of this subdivision, the term "undisclosed noneconomic substance 
24.14 	transaction" means a transaction that fails to meet the criteria for having economic 
24.15 	substance as described in section 270C.03, subdivision 1, clause (3), with respect to which 
24.16 	the relevant facts affecting tax treatment are not adequately disclosed in the return or in a 
24.17 	statement attached to the return.
24.18 	(e) For purposes of this subdivision, if amendments or supplements to a return of 
24.19 	tax are filed after the date the taxpayer is first contacted by the commissioner regarding 
24.20 	examination of the return, the amendments or supplements may not be taken into account 
24.21 	to reduce the noneconomic substance transaction understatement.
24.22 	(f) For purposes of this subdivision, "understatement" means the product of:
24.23 	(1) the amount of increase, if any, in taxable income that results from a difference 
24.24 	between the proper tax treatment of an item to which section 270C.03, subdivision 1, clause 
24.25 	(3), applies and the taxpayer's treatment of that item as shown on the taxpayer's tax return. 
24.26 	For the purposes of this paragraph, any reduction of the excess of deductions allowed for 
24.27 	the taxable year over gross income for that year, and any reduction in the amount of 
24.28 	capital losses which would, without regard to section 1211 of the Internal Revenue Code, 
24.29 	be allowed for that year, must be treated as an increase in taxable income; and
24.30 	(2) the highest rate of tax imposed on the taxpayer under section 290.06, determined 
24.31 	without regard to the understatement.
24.32 	(g) If the noneconomic substance transaction understatement penalty is imposed 
24.33 	under this subdivision, the penalties imposed under subdivision 27 do not apply.

24.34 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
24.35 	December 31, 2014.

25.1 	Sec. 6. Minnesota Statutes 2014, section 290.01, subdivision 4a, is amended to read:
25.2 		Subd. 4a.Financial institution. (a) "Financial institution" means:
25.3 	(1) a holding company any corporation or other business entity registered (i) under 
25.4 	state law as a bank holding company; (ii) under the federal Bank Holding Company Act 
25.5 	of 1956, as amended; or (iii) as a savings and loan holding company under the federal 
25.6 	National Housing Act, as amended;
25.7 	(2) any regulated financial corporation; or a national bank organized and existing 
25.8 	as a national bank association pursuant to the provisions of United States Code, title 
25.9 	12, chapter 2;
25.10 	(3) any other corporation organized under the laws of the United States or organized 
25.11 	under the laws of this state or any other state or country that is carrying on the business of 
25.12 	a financial institution. a savings association or federal savings bank as defined in United 
25.13 	States Code, title 12, section 1813(b)(1);
25.14 	(4) any bank or thrift institution incorporated or organized under the laws of any state;
25.15 	(5) any corporation organized under United States Code, title 12, sections 611 to 631;
25.16 	(6) any agency or branch of a foreign depository as defined under United States 
25.17 	Code, title 12, section 3101;
25.18 	(7) any corporation or other business entity that is more than 50 percent owned, 
25.19 	directly or indirectly, by any person or business entity described in clauses (1) to (6), other 
25.20 	than an insurance company taxable under chapter 297I;
25.21 	(8) a corporation or other business entity that derives more than 50 percent of its 
25.22 	total gross income for financial accounting purposes from finance leases. For the purposes 
25.23 	of this clause, "gross income" is the average from the current tax year and immediately 
25.24 	preceding two years and excludes gross income from incidental or occasional transactions. 
25.25 	For purposes of this clause, "finance lease" means any lease transaction which is the 
25.26 	functional equivalent of an extension of credit, and that transfers substantially all of the 
25.27 	benefits and risks incident to the ownership of property, including any direct financing 
25.28 	lease or leverage lease that meets the criteria of Financial Accounting Standards Board 
25.29 	Statement No. 13, accounting for leases, or any other lease that is accounted for as 
25.30 	financing by a lessor under generally accepted accounting principles; or
25.31 	(9) any other person or business entity, other than an insurance company taxable under 
25.32 	chapter 297I, which derives more than 50 percent of its gross income from activities that an 
25.33 	entity described in clauses (2) to (6), or (8), is authorized to transact. For the purposes of 
25.34 	this clause, gross income does not include income from nonrecurring, extraordinary items.
25.35 	(b) "Holding company" means any corporation registered under the Federal Bank 
25.36 	Holding Company Act of 1956, as amended, or registered as a savings and loan holding 
26.1 	company under the Federal National Housing Act, as amended, or a federal savings 
26.2 	bank holding company. The commissioner is authorized to exclude any person from the 
26.3 	application of paragraph (a), clause (9), if the person proves by clear and convincing 
26.4 	evidence that the person's income-producing activity is not in substantial competition with 
26.5 	any person described in paragraph (a), clauses (2) to (6), or (8).
26.6 	(c) "Regulated financial corporation" means an institution, the deposits or accounts 
26.7 	of which are insured under the Federal Deposit Insurance Act or by the Federal Savings 
26.8 	and Loan Insurance Corporation, any institution which is a member of a Federal Home 
26.9 	Loan Bank, any other bank or thrift institution incorporated or organized under the laws of 
26.10 	any state or any foreign country which is engaged in the business of receiving deposits, 
26.11 	any corporation organized under the provisions of United States Code, title 12, sections 
26.12 	611 to 631 (Edge Act Corporations), and any agency of a foreign depository as defined in 
26.13 	United States Code, title 12, section 3101.
26.14 	(d) "Business of a financial institution" means:
26.15 	(1) the business that any corporation organized under the authority of the United 
26.16 	States or organized under the laws of this state or any other state or country does or has 
26.17 	authority to do which is substantially similar to the business which a corporation may be 
26.18 	created to do under chapters 46 to 55 or any business which a corporation is authorized 
26.19 	to do by those laws; or
26.20 	(2) the business that any corporation organized under the authority of the United 
26.21 	States or organized under the laws of this state or any other state or country does or has 
26.22 	authority to do if the corporation derives more than 50 percent of its gross income from 
26.23 	lending activities (including discounting obligations) in substantial competition with the 
26.24 	businesses described in clause (1). For purposes of this clause, the computation of the gross 
26.25 	income of a corporation does not include income from nonrecurring, extraordinary items.

26.26 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
26.27 	December 31, 2014.

26.28 	Sec. 7. Minnesota Statutes 2014, section 290.01, is amended by adding a subdivision 
26.29 	to read:
26.30 		Subd. 19i.Accelerated recognition of certain installment sale gains. (a) For the 
26.31 	purposes of this subdivision, the following definitions apply:
26.32 	(1) "realized" means realized as defined by section 1001(b) of the Internal Revenue 
26.33 	Code;
26.34 	(2) "installment sale" means any installment sale under section 453 of the Internal 
26.35 	Revenue Code, and any other sale which is reported utilizing a method of accounting 
27.1 	authorized under subchapter E of the Internal Revenue Code, which allows taxpayers to 
27.2 	delay reporting or recognition of a realized gain until a future year; and
27.3 	(3) "allocable amount" means the full amount to be apportioned to Minnesota under 
27.4 	section 291.191, or the full amount to be assigned under section 290.17.
27.5 	(b) In the case of a nonresident individual or a person who becomes a nonresident 
27.6 	individual during the tax year, net income includes the allocable amount realized upon a 
27.7 	sale of the assets of, or the sale of any interest in, an S corporation or partnership which 
27.8 	operated in Minnesota during the taxable year of sale, including any income or gain to be 
27.9 	recognized in future years pursuant to an installment sale method of reporting under the 
27.10 	Internal Revenue Code.
27.11 	(c) An individual who becomes a nonresident of Minnesota in any year after an 
27.12 	installment sale is required to recognize the full amount of any income or gain not 
27.13 	recognized in a prior year on the individual's final Minnesota resident tax return.
27.14 	(d) Notwithstanding paragraphs (b) and (c), taxpayers may elect to defer the 
27.15 	recognition of installment sale gains by making an election under this paragraph. The 
27.16 	election must be filed on a form prescribed by the commissioner and must be filed by 
27.17 	the due date of the individual tax return, including any extension. Electing taxpayers 
27.18 	are required to:
27.19 	(1) file Minnesota tax returns in all subsequent years when gains from the installment 
27.20 	sale are recognized and reported to the Internal Revenue Service;
27.21 	(2) allocate gains to the state of Minnesota as though the gains were incurred in the 
27.22 	year of sale under section 290.191 or 290.17; and
27.23 	(3) include all relevant federal tax documents reporting the installment sale with 
27.24 	subsequent Minnesota tax returns.
27.25 	(e) Income or gain recognized for Minnesota purposes under paragraphs (b) and (c) 
27.26 	and subjected to tax, is excluded from net income in future years.

27.27 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
27.28 	December 31, 2014.

27.29 	Sec. 8. Minnesota Statutes 2014, section 290.068, subdivision 2, is amended to read:
27.30 		Subd. 2.Definitions. For purposes of this section, the following terms have the 
27.31 	meanings given.
27.32 	(a) "Qualified research expenses" means (i) qualified research expenses and basic 
27.33 	research payments as defined in section 41(b) and (e) of the Internal Revenue Code, except 
27.34 	it does not include expenses incurred for qualified research or basic research conducted 
27.35 	outside the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue 
28.1 	Code; and (ii) contributions to a nonprofit corporation established and operated pursuant 
28.2 	to the provisions of chapter 317A for the purpose of promoting the establishment and 
28.3 	expansion of business in this state, provided the contributions are invested by the nonprofit 
28.4 	corporation for the purpose of providing funds for small, technologically innovative 
28.5 	enterprises in Minnesota during the early stages of their development.
28.6 	(b) "Qualified research" means qualified research as defined in section 41(d) of the 
28.7 	Internal Revenue Code, except that the term does not include qualified research conducted 
28.8 	outside the state of Minnesota.
28.9 	(c) "Base amount" means base amount as defined in section 41(c) of the Internal 
28.10 	Revenue Code, except that the average annual gross receipts must be calculated using 
28.11 	Minnesota sales or receipts under section 290.191 and the definitions contained in clauses 
28.12 	(a) and (b) shall apply. If there are inadequate records or the records are unavailable to 
28.13 	compute or verify the base percentage, a fixed base percentage of 16 percent must be used.

28.14 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
28.15 	December 31, 2014.

28.16 	Sec. 9. Minnesota Statutes 2014, section 290.17, subdivision 4, is amended to read:
28.17 		Subd. 4.Unitary business principle. (a) If a trade or business conducted wholly 
28.18 	within this state or partly within and partly without this state is part of a unitary business, 
28.19 	the entire income of the unitary business is subject to apportionment pursuant to section 
28.20 	290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary 
28.21 	business is considered to be derived from any particular source and none may be allocated 
28.22 	to a particular place except as provided by the applicable apportionment formula. The 
28.23 	provisions of this subdivision do not apply to business income subject to subdivision 5, 
28.24 	income of an insurance company, or income of an investment company determined under 
28.25 	section 290.36.
28.26 	(b) The term "unitary business" means business activities or operations which 
28.27 	result in a flow of value between them. The term may be applied within a single legal 
28.28 	entity or between multiple entities and without regard to whether each entity is a sole 
28.29 	proprietorship, a corporation, a partnership or a trust.
28.30 	(c) Unity is presumed whenever there is unity of ownership, operation, and use, 
28.31 	evidenced by centralized management or executive force, centralized purchasing, 
28.32 	advertising, accounting, or other controlled interaction, but the absence of these 
28.33 	centralized activities will not necessarily evidence a nonunitary business. Unity is also 
28.34 	presumed when business activities or operations are of mutual benefit, dependent upon or 
28.35 	contributory to one another, either individually or as a group.
29.1 	(d) Where a business operation conducted in Minnesota is owned by a business 
29.2 	entity that carries on business activity outside the state different in kind from that 
29.3 	conducted within this state, and the other business is conducted entirely outside the state, it 
29.4 	is presumed that the two business operations are unitary in nature, interrelated, connected, 
29.5 	and interdependent unless it can be shown to the contrary.
29.6 	(e) Unity of ownership does not exist when two or more corporations are involved 
29.7 	unless more than 50 percent of the voting stock of each corporation is directly or indirectly 
29.8 	owned by a common owner or by common owners, either corporate or noncorporate, or 
29.9 	by one or more of the member corporations of the group. For this purpose, the term 
29.10 	"voting stock" shall include membership interests of mutual insurance holding companies 
29.11 	formed under section 66A.40.
29.12 	(f) The net income and apportionment factors under section 290.191 or 290.20 of 
29.13 	foreign corporations and other foreign entities which are part of a unitary business shall 
29.14 	not be included in the net income or the apportionment factors of the unitary business; 
29.15 	except that the income and apportionment factors of a foreign entity, other than an entity 
29.16 	treated as a C corporation for federal income tax purposes, that are included in the federal 
29.17 	taxable income, as defined in section 63 of the Internal Revenue Code as amended through 
29.18 	the date named in section 290.01, subdivision 19, of a domestic corporation, domestic 
29.19 	entity, or individual must be included in determining net income and the factors to be used 
29.20 	in the apportionment of net income pursuant to section 290.191 or 290.20. A foreign 
29.21 	corporation or other foreign entity which is not included on a combined report and which 
29.22 	is required to file a return under this chapter shall file on a separate return basis.
29.23 	(g) For purposes of determining the net income of a unitary business and the factors 
29.24 	to be used in the apportionment of net income pursuant to section 290.191 or 290.20, there 
29.25 	must be included only the income and apportionment factors of domestic corporations 
29.26 	or other domestic entities that are determined to be part of the unitary business pursuant 
29.27 	to this subdivision, notwithstanding that foreign corporations or other foreign entities 
29.28 	might be included in the unitary business; except that the income and apportionment 
29.29 	factors of a foreign entity, other than an entity treated as a C corporation for federal 
29.30 	income tax purposes, that is included in the federal taxable income, as defined in section 
29.31 	63 of the Internal Revenue Code as amended through the date named in section 290.01, 
29.32 	subdivision 19, of a domestic corporation, domestic entity, or individual must be included 
29.33 	in determining net income and the factors to be used in the apportionment of net income 
29.34 	pursuant to section 290.191 or 290.20.
29.35 	(h) Each corporation or other entity, except a sole proprietorship, that is part of a 
29.36 	unitary business must file combined reports as the commissioner determines. On the 
30.1 	reports, all intercompany transactions between entities included pursuant to paragraph 
30.2 	(g) must be eliminated and the entire net income of the unitary business determined in 
30.3 	accordance with this subdivision is apportioned among the entities by using each entity's 
30.4 	Minnesota factors for apportionment purposes in the numerators of the apportionment 
30.5 	formula and the total factors for apportionment purposes of all entities included pursuant 
30.6 	to paragraph (g) in the denominators of the apportionment formula. Except as otherwise 
30.7 	provided by paragraph (f), all sales of the unitary business made within this state pursuant 
30.8 	to section 290.191 or 290.20 must be included on the combined report of a corporation or 
30.9 	other entity that is a member of the unitary business and is subject to the jurisdiction of 
30.10 	this state to impose tax under this chapter.
30.11 	(i) If a corporation has been divested from a unitary business and is included in a 
30.12 	combined report for a fractional part of the common accounting period of the combined 
30.13 	report:
30.14 	(1) its income includable in the combined report is its income incurred for that part 
30.15 	of the year determined by proration or separate accounting; and
30.16 	(2) its sales, property, and payroll included in the apportionment formula must 
30.17 	be prorated or accounted for separately.
30.18 	(j) For purposes of this subdivision, "insurance company" means any company that is:
30.19 	(1) licensed to engage in the business of insurance in Minnesota pursuant to chapter 
30.20 	60A; or
30.21 	(2) domiciled and licensed to engage in the business of insurance in another state 
30.22 	or country that imposes retaliatory taxes, and that does not grant, on a reciprocal basis, 
30.23 	exemption from such retaliatory taxes to insurance companies or their agents domiciled 
30.24 	in Minnesota.
30.25 	(k) For the purposes of this subdivision, "retaliatory taxes" means taxes imposed on 
30.26 	insurance companies organized in another state or country that result from the fact that an 
30.27 	insurance company organized in the taxing jurisdiction and doing business in the other 
30.28 	jurisdiction is subject to taxes, fines, deposits, penalties, licenses, or fees in an amount 
30.29 	exceeding that imposed by the taxing jurisdiction upon an insurance company organized in 
30.30 	the other state or country and doing business to the same extent in the taxing jurisdiction.

30.31 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
30.32 	December 31, 2014.

30.33 	Sec. 10. Minnesota Statutes 2014, section 290.191, subdivision 5, is amended to read:
30.34 		Subd. 5.Determination of sales factor. For purposes of this section, the following 
30.35 	rules apply in determining the sales factor.
31.1 	(a) The sales factor includes all sales, gross earnings, or receipts received in the 
31.2 	ordinary course of the business, except that the following types of income are not included 
31.3 	in the sales factor:
31.4 	(1) interest;
31.5 	(2) dividends;
31.6 	(3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
31.7 	(4) sales of property used in the trade or business, except sales of leased property of 
31.8 	a type which is regularly sold as well as leased; and
31.9 	(5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue 
31.10 	Code or sales of stock.; and
31.11 	(6) sales of derivatives including, but not limited to, swaps, options, futures, and 
31.12 	forwards.
31.13 	(b) Sales of tangible personal property are made within this state if the property is 
31.14 	received by a purchaser at a point within this state, regardless of the f.o.b. point, other 
31.15 	conditions of the sale, or the ultimate destination of the property.
31.16 	(c) Tangible personal property delivered to a common or contract carrier or foreign 
31.17 	vessel for delivery to a purchaser in another state or nation is a sale in that state or nation, 
31.18 	regardless of f.o.b. point or other conditions of the sale.
31.19 	(d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine, 
31.20 	fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is 
31.21 	licensed by a state or political subdivision to resell this property only within the state of 
31.22 	ultimate destination, the sale is made in that state.
31.23 	(e) Sales made by or through a corporation that is qualified as a domestic 
31.24 	international sales corporation under section 992 of the Internal Revenue Code are not 
31.25 	considered to have been made within this state.
31.26 	(f) Sales, rents, royalties, and other income in connection with real property is 
31.27 	attributed to the state in which the property is located.
31.28 	(g) Receipts from the lease or rental of tangible personal property, including finance 
31.29 	leases and true leases, must be attributed to this state if the property is located in this 
31.30 	state and to other states if the property is not located in this state. Receipts from the 
31.31 	lease or rental of moving property including, but not limited to, motor vehicles, rolling 
31.32 	stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts 
31.33 	factor to the extent that the property is used in this state. The extent of the use of moving 
31.34 	property is determined as follows:
31.35 	(1) A motor vehicle is used wholly in the state in which it is registered.
32.1 	(2) The extent that rolling stock is used in this state is determined by multiplying 
32.2 	the receipts from the lease or rental of the rolling stock by a fraction, the numerator of 
32.3 	which is the miles traveled within this state by the leased or rented rolling stock and the 
32.4 	denominator of which is the total miles traveled by the leased or rented rolling stock.
32.5 	(3) The extent that an aircraft is used in this state is determined by multiplying the 
32.6 	receipts from the lease or rental of the aircraft by a fraction, the numerator of which is 
32.7 	the number of landings of the aircraft in this state and the denominator of which is the 
32.8 	total number of landings of the aircraft.
32.9 	(4) The extent that a vessel, mobile equipment, or other mobile property is used in 
32.10 	the state is determined by multiplying the receipts from the lease or rental of the property 
32.11 	by a fraction, the numerator of which is the number of days during the taxable year the 
32.12 	property was in this state and the denominator of which is the total days in the taxable year.
32.13 	(h) Royalties and other income received for the use of or for the privilege of using 
32.14 	intangible property, including patents, know-how, formulas, designs, processes, patterns, 
32.15 	copyrights, trade names, service names, franchises, licenses, contracts, customer lists, or 
32.16 	similar items, must be attributed to the state in which the property is used by the purchaser. 
32.17 	If the property is used in more than one state, the royalties or other income must be 
32.18 	apportioned to this state pro rata according to the portion of use in this state. If the portion 
32.19 	of use in this state cannot be determined, the royalties or other income must be excluded 
32.20 	from both the numerator and the denominator. Intangible property is used in this state if 
32.21 	the purchaser uses the intangible property or the rights therein in the regular course of its 
32.22 	business operations in this state, regardless of the location of the purchaser's customers.
32.23 	(i) Sales of intangible property are made within the state in which the property is 
32.24 	used by the purchaser. If the property is used in more than one state, the sales must be 
32.25 	apportioned to this state pro rata according to the portion of use in this state. If the 
32.26 	portion of use in this state cannot be determined, the sale must be excluded from both the 
32.27 	numerator and the denominator of the sales factor. Intangible property is used in this 
32.28 	state if the purchaser used the intangible property in the regular course of its business 
32.29 	operations in this state.
32.30 	(j) Receipts from the performance of services must be attributed to the state where 
32.31 	the services are received. For the purposes of this section, receipts from the performance 
32.32 	of services provided to a corporation, partnership, or trust may only be attributed to a state 
32.33 	where it has a fixed place of doing business. If the state where the services are received is 
32.34 	not readily determinable or is a state where the corporation, partnership, or trust receiving 
32.35 	the service does not have a fixed place of doing business, the services shall be deemed 
32.36 	to be received at the location of the office of the customer from which the services were 
33.1 	ordered in the regular course of the customer's trade or business. If the ordering office 
33.2 	cannot be determined, the services shall be deemed to be received at the office of the 
33.3 	customer to which the services are billed.
33.4 	(k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts 
33.5 	from management, distribution, or administrative services performed by a corporation 
33.6 	or trust for a fund of a corporation or trust regulated under United States Code, title 15, 
33.7 	sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of 
33.8 	the fund resides. Under this paragraph, receipts for services attributed to shareholders are 
33.9 	determined on the basis of the ratio of: (1) the average of the outstanding shares in the 
33.10 	fund owned by shareholders residing within Minnesota at the beginning and end of each 
33.11 	year; and (2) the average of the total number of outstanding shares in the fund at the 
33.12 	beginning and end of each year. Residence of the shareholder, in the case of an individual, 
33.13 	is determined by the mailing address furnished by the shareholder to the fund. Residence 
33.14 	of the shareholder, when the shares are held by an insurance company as a depositor for 
33.15 	the insurance company policyholders, is the mailing address of the policyholders. In 
33.16 	the case of an insurance company holding the shares as a depositor for the insurance 
33.17 	company policyholders, if the mailing address of the policyholders cannot be determined 
33.18 	by the taxpayer, the receipts must be excluded from both the numerator and denominator. 
33.19 	Residence of other shareholders is the mailing address of the shareholder.

33.20 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
33.21 	December 31, 2014.

33.22 	Sec. 11. Minnesota Statutes 2014, section 290.21, subdivision 4, is amended to read:
33.23 		Subd. 4.Dividends received from another corporation. (a)(1) Eighty percent 
33.24 	of dividends received by a corporation during the taxable year from another corporation, 
33.25 	in which the recipient owns 20 percent or more of the stock, by vote and value, not 
33.26 	including stock described in section 1504(a)(4) of the Internal Revenue Code when the 
33.27 	corporate stock with respect to which dividends are paid does not constitute the stock in 
33.28 	trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not 
33.29 	constitute property held by the taxpayer primarily for sale to customers in the ordinary 
33.30 	course of the taxpayer's trade or business, or when the trade or business of the taxpayer 
33.31 	does not consist principally of the holding of the stocks and the collection of the income 
33.32 	and gains therefrom; and
33.33 	(2)(i) the remaining 20 percent of dividends if the dividends received are the stock in 
33.34 	an affiliated company transferred in an overall plan of reorganization and the dividend 
34.1 	is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as 
34.2 	amended through December 31, 1989;
34.3 	(ii) the remaining 20 percent of dividends if the dividends are received from a 
34.4 	corporation which is subject to tax under section 290.36 and which is a member of an 
34.5 	affiliated group of corporations as defined by the Internal Revenue Code and the dividend 
34.6 	is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as 
34.7 	amended through December 31, 1989, or is deducted under an election under section 
34.8 	243(b) of the Internal Revenue Code; or
34.9 	(iii) the remaining 20 percent of the dividends if the dividends are received from a 
34.10 	property and casualty insurer as defined under section 60A.60, subdivision 8, which is a 
34.11 	member of an affiliated group of corporations as defined by the Internal Revenue Code 
34.12 	and either: (A) the dividend is eliminated in consolidation under Treasury Regulation 
34.13 	1.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted 
34.14 	under an election under section 243(b) of the Internal Revenue Code.
34.15 	(b) Seventy percent of dividends received by a corporation during the taxable year 
34.16 	from another corporation in which the recipient owns less than 20 percent of the stock, 
34.17 	by vote or value, not including stock described in section 1504(a)(4) of the Internal 
34.18 	Revenue Code when the corporate stock with respect to which dividends are paid does not 
34.19 	constitute the stock in trade of the taxpayer, or does not constitute property held by the 
34.20 	taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or 
34.21 	business, or when the trade or business of the taxpayer does not consist principally of the 
34.22 	holding of the stocks and the collection of income and gain therefrom.
34.23 	(c) The dividend deduction provided in this subdivision shall be allowed only with 
34.24 	respect to dividends that are included in a corporation's Minnesota taxable net income 
34.25 	for the taxable year.
34.26 	The dividend deduction provided in this subdivision does not apply to a dividend 
34.27 	from a corporation which, for the taxable year of the corporation in which the distribution 
34.28 	is made or for the next preceding taxable year of the corporation, is a corporation exempt 
34.29 	from tax under section 501 of the Internal Revenue Code.
34.30 	The dividend deduction provided in this subdivision does not apply to a dividend 
34.31 	received from a real estate investment trust as defined in section 856 of the Internal 
34.32 	Revenue Code.
34.33 	The dividend deduction provided in this subdivision applies to the amount of 
34.34 	regulated investment company dividends only to the extent determined under section 
34.35 	854(b) of the Internal Revenue Code.
35.1 	The dividend deduction provided in this subdivision shall not be allowed with 
35.2 	respect to any dividend for which a deduction is not allowed under the provisions of 
35.3 	section 246(c) or 246A of the Internal Revenue Code.
35.4 	(d) If dividends received by a corporation that does not have nexus with Minnesota 
35.5 	under the provisions of Public Law 86-272 are included as income on the return of 
35.6 	an affiliated corporation permitted or required to file a combined report under section 
35.7 	290.17, subdivision 4, or 290.34, subdivision 2, then for purposes of this subdivision the 
35.8 	determination as to whether the trade or business of the corporation consists principally 
35.9 	of the holding of stocks and the collection of income and gains therefrom shall be made 
35.10 	with reference to the trade or business of the affiliated corporation having a nexus with 
35.11 	Minnesota.
35.12 	(e) The deduction provided by this subdivision does not apply if the dividends are 
35.13 	paid by a FSC as defined in section 922 of the Internal Revenue Code.
35.14 	(f) If one or more of the members of the unitary group whose income is included on 
35.15 	the combined report received a dividend, the deduction under this subdivision for each 
35.16 	member of the unitary business required to file a return under this chapter is the product 
35.17 	of: (1) 100 percent of the dividends received by members of the group; (2) the percentage 
35.18 	allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business 
35.19 	income apportionable to this state for the taxable year under section 290.191 or 290.20.

35.20 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
35.21 	December 31, 2014.

35.22 	ARTICLE 4
35.23 	MISCELLANEOUS

35.24 	Section 1. Minnesota Statutes 2014, section 290.0671, subdivision 1, is amended to read:
35.25 		Subdivision 1.Credit allowed. (a) An individual who is a resident of Minnesota is 
35.26 	allowed a credit against the tax imposed by this chapter equal to a percentage of earned 
35.27 	income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the 
35.28 	Internal Revenue Code.
35.29 	(b) For individuals with no qualifying children, the credit equals 2.10 percent of the 
35.30 	first $6,180 of earned income. The credit is reduced by 2.01 percent of earned income 
35.31 	or adjusted gross income, whichever is greater, in excess of $8,130, but in no case is 
35.32 	the credit less than zero.
35.33 	(c) For individuals with one qualifying child, the credit equals 9.35 percent of the 
35.34 	first $11,120 of earned income. The credit is reduced by 6.02 percent of earned income 
36.1 	or adjusted gross income, whichever is greater, in excess of $21,190, but in no case is 
36.2 	the credit less than zero.
36.3 	(d) For individuals with two or more qualifying children, the credit equals 11 percent 
36.4 	of the first $18,240 of earned income. The credit is reduced by 10.82 percent of earned 
36.5 	income or adjusted gross income, whichever is greater, in excess of $25,130, but in no 
36.6 	case is the credit less than zero.
36.7 	(e) For a nonresident or part-year resident, the credit must be allocated based on the 
36.8 	percentage calculated under section 290.06, subdivision 2c, paragraph (e).
36.9 	(f) For a person who was a resident for the entire tax year and has earned income 
36.10 	not subject to tax under this chapter, including income excluded under section 290.01, 
36.11 	subdivision 19b, clause (9), the credit must be allocated based on the ratio of federal 
36.12 	adjusted gross income reduced by the earned income not subject to tax under this chapter 
36.13 	over federal adjusted gross income. For purposes of this paragraph, the subtractions 
36.14 	for military pay under section 290.01, subdivision 19b, clauses (10) and (11), are not 
36.15 	considered "earned income not subject to tax under this chapter."
36.16 	For the purposes of this paragraph, the exclusion of combat pay under section 112 
36.17 	of the Internal Revenue Code is not considered "earned income not subject to tax under 
36.18 	this chapter."
36.19 	(g) For tax years beginning after December 31, 2007, and before December 31, 
36.20 	2010, and for tax years beginning after December 31, 2017, the $8,130 in paragraph (b), 
36.21 	the $21,190 in paragraph (c), and the $25,130 in paragraph (d), after being adjusted for 
36.22 	inflation under subdivision 7, are each increased by $3,000 for married taxpayers filing joint 
36.23 	returns. For tax years beginning after December 31, 2008, the commissioner shall annually 
36.24 	adjust the $3,000 by the percentage determined pursuant to the provisions of section 1(f) 
36.25 	of the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2007" shall be 
36.26 	substituted for the word "1992." For 2009, the commissioner shall then determine the 
36.27 	percent change from the 12 months ending on August 31, 2007, to the 12 months ending on 
36.28 	August 31, 2008, and in each subsequent year, from the 12 months ending on August 31, 
36.29 	2007, to the 12 months ending on August 31 of the year preceding the taxable year. The 
36.30 	earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the 
36.31 	amount ends in $5, the amount is rounded up to the nearest $10. The determination of the 
36.32 	commissioner under this subdivision is not a rule under the Administrative Procedure Act.
36.33 	(h)(1) For tax years beginning after December 31, 2012, and before January 1, 2014, 
36.34 	the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph (d), 
36.35 	after being adjusted for inflation under subdivision 7, are increased by $5,340 for married 
36.36 	taxpayers filing joint returns; and (2) for tax years beginning after December 31, 2013, and 
37.1 	before January 1, 2018, the $8,130 in paragraph (b), the $21,190 in paragraph (c), and the 
37.2 	$25,130 in paragraph (d), after being adjusted for inflation under subdivision 7, are each 
37.3 	increased by $5,000 for married taxpayers filing joint returns. For tax years beginning 
37.4 	after December 31, 2010, and before January 1, 2012, and for tax years beginning after 
37.5 	December 31, 2013, and before January 1, 2018, the commissioner shall annually adjust 
37.6 	the $5,000 by the percentage determined pursuant to the provisions of section 1(f) of 
37.7 	the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2008" shall be 
37.8 	substituted for the word "1992." For 2011, the commissioner shall then determine the 
37.9 	percent change from the 12 months ending on August 31, 2008, to the 12 months ending on 
37.10 	August 31, 2010, and in each subsequent year, from the 12 months ending on August 31, 
37.11 	2008, to the 12 months ending on August 31 of the year preceding the taxable year. The 
37.12 	earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the 
37.13 	amount ends in $5, the amount is rounded up to the nearest $10. The determination of the 
37.14 	commissioner under this subdivision is not a rule under the Administrative Procedure Act.
37.15 	(i) The commissioner shall construct tables showing the amount of the credit at 
37.16 	various income levels and make them available to taxpayers. The tables shall follow 
37.17 	the schedule contained in this subdivision, except that the commissioner may graduate 
37.18 	the transition between income brackets.

37.19 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
37.20 	December 31, 2014.

37.21 	Sec. 2. Minnesota Statutes 2014, section 290A.03, subdivision 13, is amended to read:
37.22 		Subd. 13.Property taxes payable. "Property taxes payable" means the property tax 
37.23 	exclusive of special assessments, penalties, and interest payable on a claimant's homestead 
37.24 	after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2, 
37.25 	and any other state paid property tax credits in any calendar year, and after any refund 
37.26 	claimed and allowable under section 290A.04, subdivision 2h, that is first payable in 
37.27 	the year that the property tax is payable. In the case of a claimant who makes ground 
37.28 	lease payments, "property taxes payable" includes the amount of the payments directly 
37.29 	attributable to the property taxes assessed against the parcel on which the house is located. 
37.30 	No apportionment or reduction of the "property taxes payable" shall be required for the 
37.31 	use of a portion of the claimant's homestead for a business purpose if the claimant does not 
37.32 	deduct any business depreciation expenses for the use of a portion of the homestead, or 
37.33 	elects to deduct expenses under section 280A of the Internal Revenue Code for a business 
37.34 	operated in a home, in the determination of federal adjusted gross income. For homesteads 
37.35 	which are manufactured homes as defined in section 273.125, subdivision 8, and for 
38.1 	homesteads which are park trailers taxed as manufactured homes under section 168.012, 
38.2 	subdivision 9, "property taxes payable" shall also include 17 percent of the gross rent paid 
38.3 	in the preceding year for the site on which the homestead is located. When a homestead 
38.4 	is owned by two or more persons as joint tenants or tenants in common, such tenants 
38.5 	shall determine between them which tenant may claim the property taxes payable on the 
38.6 	homestead. If they are unable to agree, the matter shall be referred to the commissioner of 
38.7 	revenue whose decision shall be final. Property taxes are considered payable in the year 
38.8 	prescribed by law for payment of the taxes.
38.9 	In the case of a claim relating to "property taxes payable," the claimant must have 
38.10 	owned and occupied the homestead on January 2 of the year in which the tax is payable 
38.11 	and (i) the property must have been classified as homestead property pursuant to section 
38.12 	273.124, on or before December 15 of the assessment year to which the "property taxes 
38.13 	payable" relate; or (ii) the claimant must provide documentation from the local assessor 
38.14 	that application for homestead classification has been made on or before December 15 
38.15 	of the year in which the "property taxes payable" were payable and that the assessor has 
38.16 	approved the application.

38.17 	EFFECTIVE DATE. This section is effective for refunds based on rent paid after 
38.18 	December 31, 2013, and property taxes payable after December 31, 2014.

38.19 	Sec. 3. Minnesota Statutes 2014, section 290B.03, subdivision 1, is amended to read:
38.20 		Subdivision 1.Program qualifications. The qualifications for the senior citizens' 
38.21 	property tax deferral program are as follows:
38.22 	(1) the property must be owned and occupied as a homestead by a person 65 years of 
38.23 	age or older. In the case of a married couple, at least one of the spouses must be at least 65 
38.24 	years old at the time the first property tax deferral is granted, regardless of whether the 
38.25 	property is titled in the name of one spouse or both spouses, or titled in another way that 
38.26 	permits the property to have homestead status, and the other spouse must be at least 62 
38.27 	years of age;
38.28 	(2) the total household income of the qualifying homeowners, as defined in section 
38.29 	290A.03, subdivision 5, for the calendar year preceding the year of the initial application 
38.30 	may not exceed $60,000;
38.31 	(3) the homestead must have been owned and occupied as the homestead of at least 
38.32 	one of the qualifying homeowners for at least 15 five years prior to the year the initial 
38.33 	application is filed;
38.34 	(4) there are no state or federal tax liens or judgment liens on the homesteaded 
38.35 	property;
39.1 	(5) there are no mortgages or other liens on the property that secure future advances, 
39.2 	except for those subject to credit limits that result in compliance with clause (6); and
39.3 	(6) the total unpaid balances of debts secured by mortgages and other liens on the 
39.4 	property, including unpaid and delinquent special assessments and interest and any 
39.5 	delinquent property taxes, penalties, and interest, but not including property taxes payable 
39.6 	during the year, does not exceed 75 percent of the assessor's estimated market value for 
39.7 	the year.

39.8 	EFFECTIVE DATE. This section is effective for applications for deferral of taxes 
39.9 	payable in 2016 and thereafter.

39.10 	Sec. 4. Minnesota Statutes 2014, section 290B.04, subdivision 1, is amended to read:
39.11 		Subdivision 1.Initial application. (a) A taxpayer meeting the program 
39.12 	qualifications under section 290B.03 may apply to the commissioner of revenue for the 
39.13 	deferral of taxes. Applications are due on or before July November 1 for deferral of any 
39.14 	of the following year's property taxes. A taxpayer may apply in the year in which the 
39.15 	taxpayer becomes 65 years old, provided that no deferral of property taxes will be made 
39.16 	until the calendar year after the taxpayer becomes 65 years old. The application, which 
39.17 	shall be prescribed by the commissioner of revenue, shall include the following items and 
39.18 	any other information which the commissioner deems necessary:
39.19 	(1) the name, address, and Social Security number of the owner or owners;
39.20 	(2) a copy of the property tax statement for the current payable year for the 
39.21 	homesteaded property;
39.22 	(3) the initial year of ownership and occupancy as a homestead;
39.23 	(4) the owner's household income for the previous calendar year; and
39.24 	(5) information on any mortgage loans or other amounts secured by mortgages or 
39.25 	other liens against the property, for which purpose the commissioner may require the 
39.26 	applicant to provide a copy of the mortgage note, the mortgage, or a statement of the 
39.27 	balance owing on the mortgage loan provided by the mortgage holder. The commissioner 
39.28 	may require the appropriate documents in connection with obtaining and confirming 
39.29 	information on unpaid amounts secured by other liens.
39.30 	The application must state that program participation is voluntary. The application 
39.31 	must also state that the deferred amount depends directly on the applicant's household 
39.32 	income, and that program participation includes authorization for the annual deferred 
39.33 	amount, the cumulative deferral and interest that appear on each year's notice prepared by 
39.34 	the county under subdivision 6, is public data.
40.1 	The application must state that program participants may claim the property tax 
40.2 	refund based on the full amount of property taxes eligible for the refund, including any 
40.3 	deferred amounts. The application must also state that property tax refunds will be used to 
40.4 	offset any deferral and interest under this program, and that any other amounts subject to 
40.5 	revenue recapture under section 270A.03, subdivision 7, will also be used to offset any 
40.6 	deferral and interest under this program.
40.7 	(b) As part of the initial application process, the commissioner may require the 
40.8 	applicant to obtain at the applicant's own cost and submit:
40.9 	(1) if the property is registered property under chapter 508 or 508A, a copy of the 
40.10 	original certificate of title in the possession of the county registrar of titles (sometimes 
40.11 	referred to as "condition of register"); or
40.12 	(2) if the property is abstract property, a report prepared by a licensed abstracter 
40.13 	showing the last deed and any unsatisfied mortgages, liens, judgments, and state and 
40.14 	federal tax lien notices which were recorded on or after the date of that last deed with 
40.15 	respect to the property or to the applicant.
40.16 	The certificate or report under clauses (1) and (2) need not include references to 
40.17 	any documents filed or recorded more than 40 years prior to the date of the certification 
40.18 	or report. The certification or report must be as of a date not more than 30 days prior 
40.19 	to submission of the application.
40.20 	The commissioner may also require the county recorder or county registrar of the 
40.21 	county where the property is located to provide copies of recorded documents related to 
40.22 	the applicant or the property, for which the recorder or registrar shall not charge a fee. The 
40.23 	commissioner may use any information available to determine or verify eligibility under 
40.24 	this section. The household income from the application is private data on individuals as 
40.25 	defined in section 13.02, subdivision 12.

40.26 	EFFECTIVE DATE. This section is effective for applications for deferral of taxes 
40.27 	payable in 2016 and thereafter.

40.28 	Sec. 5. Minnesota Statutes 2014, section 291.03, is amended by adding a subdivision 
40.29 	to read:
40.30 		Subd. 12.Certain dispositions to government entities. Notwithstanding any 
40.31 	provision of this section, no taxpayer shall be disqualified for the subtraction provided 
40.32 	under section 291.016, subdivision 3, nor shall any taxpayer be liable for the recapture tax 
40.33 	provided in subdivision 11, solely because the state, any local government unit, or any 
40.34 	other entity that has the power of eminent domain acquires title or possession of the land 
40.35 	for a public purpose within the three-year holding period.

41.1 	EFFECTIVE DATE. This section is effective retroactively for estates of decedents 
41.2 	dying after June 30, 2011.

41.3 	Sec. 6. Minnesota Statutes 2014, section 296A.01, subdivision 12, is amended to read:
41.4 		Subd. 12.Compressed natural gas or CNG. "Compressed natural gas" or "CNG" 
41.5 	means natural gas, primarily methane, condensed under high pressure and stored in 
41.6 	specially designed storage tanks at between 2,000 and 3,600 pounds per square inch. 
41.7 	For purposes of this chapter, the energy content of CNG is considered to be 1,000 900
41.8 	BTUs per cubic foot.

41.9 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
41.10 	June 30, 2015.

41.11 	Sec. 7. Minnesota Statutes 2014, section 296A.08, subdivision 2, is amended to read:
41.12 		Subd. 2.Rate of tax. The special fuel excise tax is imposed at the following rates:
41.13 	(a) Liquefied petroleum gas or propane is taxed at the rate of 18.75 cents per gallon.
41.14 	(b) Liquefied natural gas is taxed at the rate of 15 cents per gallon.
41.15 	(c) Compressed natural gas is taxed at the rate of $2.174 $1.974 per thousand cubic 
41.16 	feet; or 25 cents per gasoline equivalent. For purposes of this paragraph, "gasoline 
41.17 	equivalent," as defined by the National Conference on Weights and Measures, is 5.66 
41.18 	pounds of natural gas or 126.67 cubic feet.
41.19 	(d) All other special fuel is taxed at the same rate as the gasoline excise tax as 
41.20 	specified in section 296A.07, subdivision 2. The tax is payable in the form and manner 
41.21 	prescribed by the commissioner.

41.22 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
41.23 	June 30, 2015.

41.24 	Sec. 8. Minnesota Statutes 2014, section 297A.815, subdivision 3, is amended to read:
41.25 		Subd. 3.Motor vehicle lease sales tax revenue. (a) For purposes of this subdivision, 
41.26 	"net revenue" means an amount equal to the revenues, including interest and penalties, 
41.27 	collected under this section, during the fiscal year; less $32,000,000 in each fiscal year.
41.28 	(b) On or before June 30 of each fiscal year, the commissioner of revenue shall 
41.29 	estimate the amount of the net revenue for the current fiscal year.
41.30 	(c) On or after July 1 of the subsequent fiscal year, the commissioner of management 
41.31 	and budget shall transfer the net revenue as estimated in paragraph (b) from the general 
41.32 	fund, as follows:
42.1 	(1) $9,000,000 annually until January 1, 2015, and 50 percent annually thereafter to 
42.2 	the county state-aid highway fund. Notwithstanding any other law to the contrary, the 
42.3 	commissioner of transportation shall allocate the funds transferred under this clause to the 
42.4 	counties in the metropolitan area, as defined in section 473.121, subdivision 4, excluding 
42.5 	the counties of Hennepin and Ramsey, so that each county shall receive of such amount 
42.6 	the percentage that its population, as defined in section 477A.011, subdivision 3, estimated 
42.7 	or established by July 15 of the year prior to the current calendar year, bears to the total 
42.8 	population of the counties receiving funds under this clause; and
42.9 	(2) the remainder to the greater Minnesota transit account.
42.10 	(d) The revenues deposited under this subdivision do not include the revenues, 
42.11 	including interest and penalties, generated by the sales tax imposed under section 
42.12 	297A.62, subdivision 1a, which must be deposited as provided under the Minnesota 
42.13 	Constitution, article XI, section 15.

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

42.15 	Sec. 9. Minnesota Statutes 2014, section 297A.94, is amended to read:
42.16 	297A.94 DEPOSIT OF REVENUES.
42.17 	(a) Except as provided in this section, the commissioner shall deposit the revenues, 
42.18 	including interest and penalties, derived from the taxes imposed by this chapter in the state 
42.19 	treasury and credit them to the general fund.
42.20 	(b) The commissioner shall deposit taxes in the Minnesota agricultural and economic 
42.21 	account in the special revenue fund if:
42.22 	(1) the taxes are derived from sales and use of property and services purchased for 
42.23 	the construction and operation of an agricultural resource project; and
42.24 	(2) the purchase was made on or after the date on which a conditional commitment 
42.25 	was made for a loan guaranty for the project under section 41A.04, subdivision 3.
42.26 	The commissioner of management and budget shall certify to the commissioner the date 
42.27 	on which the project received the conditional commitment. The amount deposited in 
42.28 	the loan guaranty account must be reduced by any refunds and by the costs incurred by 
42.29 	the Department of Revenue to administer and enforce the assessment and collection of 
42.30 	the taxes.
42.31 	(c) The commissioner shall deposit the revenues, including interest and penalties, 
42.32 	derived from the taxes imposed on sales and purchases included in section 297A.61, 
42.33 	subdivision 3, paragraph (g), clauses (1) and (4), in the state treasury, and credit them 
42.34 	as follows:
43.1 	(1) first to the general obligation special tax bond debt service account in each fiscal 
43.2 	year the amount required by section 16A.661, subdivision 3, paragraph (b); and
43.3 	(2) after the requirements of clause (1) have been met, the balance to the general fund.
43.4 	(d) The commissioner shall deposit the revenues, including interest and penalties, 
43.5 	collected under section 297A.64, subdivision 5, in the state treasury and credit them to the 
43.6 	general fund. By July 15 of each year the commissioner shall transfer to the highway user 
43.7 	tax distribution fund an amount equal to the excess fees collected under section 297A.64, 
43.8 	subdivision 5, for the previous calendar year.
43.9 	(e) 72.43 percent of the revenues, including interest and penalties, transmitted to 
43.10 	the commissioner under section 297A.65, must be deposited by the commissioner in the 
43.11 	state treasury as follows:
43.12 	(1) 50 percent of the receipts must be deposited in the heritage enhancement account 
43.13 	in the game and fish fund, and may be spent only on activities that improve, enhance, or 
43.14 	protect fish and wildlife resources, including conservation, restoration, and enhancement 
43.15 	of land, water, and other natural resources of the state;
43.16 	(2) 22.5 percent of the receipts must be deposited in the natural resources fund, and 
43.17 	may be spent only for state parks and trails;
43.18 	(3) 22.5 percent of the receipts must be deposited in the natural resources fund, and 
43.19 	may be spent only on metropolitan park and trail grants;
43.20 	(4) three percent of the receipts must be deposited in the natural resources fund, and 
43.21 	may be spent only on local trail grants; and
43.22 	(5) two percent of the receipts must be deposited in the natural resources fund, 
43.23 	and may be spent only for the Minnesota Zoological Garden, the Como Park Zoo and 
43.24 	Conservatory, and the Duluth Zoo.
43.25 	(f) The revenue dedicated under paragraph (e) may not be used as a substitute 
43.26 	for traditional sources of funding for the purposes specified, but the dedicated revenue 
43.27 	shall supplement traditional sources of funding for those purposes. Land acquired with 
43.28 	money deposited in the game and fish fund under paragraph (e) must be open to public 
43.29 	hunting and fishing during the open season, except that in aquatic management areas or 
43.30 	on lands where angling easements have been acquired, fishing may be prohibited during 
43.31 	certain times of the year and hunting may be prohibited. At least 87 percent of the money 
43.32 	deposited in the game and fish fund for improvement, enhancement, or protection of fish 
43.33 	and wildlife resources under paragraph (e) must be allocated for field operations.
43.34 	(g) The revenues deposited under paragraphs (a) to (f) in, transferred to, or credited 
43.35 	to a fund other than the general fund by a provision in this chapter do not include the 
43.36 	revenues, including interest and penalties, generated by the sales tax imposed under 
44.1 	section 297A.62, subdivision 1a, which must be deposited as provided under the 
44.2 	Minnesota Constitution, article XI, section 15.

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

44.4 	Sec. 10. Minnesota Statutes 2014, section 297H.04, subdivision 2, is amended to read:
44.5 		Subd. 2.Rate. (a) Commercial generators that generate nonmixed municipal 
44.6 	solid waste shall pay a solid waste management tax of 60 cents per noncompacted 
44.7 	cubic yard of periodic waste collection capacity purchased by the generator, based on 
44.8 	the size of the container for the nonmixed municipal solid waste, the actual volume, 
44.9 	or the weight-to-volume conversion schedule in paragraph (c). However, the tax must 
44.10 	be calculated by the waste management service provider using the same method for 
44.11 	calculating the waste management service fee so that both are calculated according to 
44.12 	container capacity, actual volume, or weight.
44.13 	(b) Notwithstanding section 297H.02, a residential generator that generates 
44.14 	nonmixed municipal solid waste shall pay a solid waste management tax in the same 
44.15 	manner as provided in paragraph (a).
44.16 	(c) The weight-to-volume conversion schedule for:
44.17 	(1) construction debris as defined in section 115A.03, subdivision 7, is one ton 
44.18 	equals 3.33 cubic yards, or $2 per ton equal to 60 cents per cubic yard. The commissioner 
44.19 	of revenue, after consultation with the commissioner of the Pollution Control Agency, 
44.20 	shall determine and may publish by notice a conversion schedule for construction debris;
44.21 	(2) industrial waste as defined in section 115A.03, subdivision 13a, is equal to 
44.22 	60 cents per cubic yard. The commissioner of revenue after consultation with the 
44.23 	commissioner of the Pollution Control Agency, shall determine, and may publish by 
44.24 	notice, a conversion schedule for various industrial wastes; and
44.25 	(3) infectious waste as defined in section 116.76, subdivision 12, and pathological 
44.26 	waste as defined in section 116.76, subdivision 14, is 150 pounds equals one cubic yard, or 
44.27 	60 cents per 150 pounds.

44.28 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
44.29 	June 30, 2015.

44.30 	Sec. 11. APPROPRIATION.
 44.31 	$35,000 for fiscal year 2016 is appropriated from the general fund to the 
44.32 	commissioner of revenue to carry out the provisions of section 1 of this article. This is a 
44.33 	onetime appropriation and is not added to the agency's permanent base.

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