1.1 	A bill for an act
1.2 	relating to taxation; making changes to aids, credits, and payments;amending 
1.3 	Minnesota Statutes 2010, sections 270A.03, subdivision 7; 273.1384, subdivision 
1.4 	6, by adding a subdivision; 289A.50, subdivision 1; 290.01, subdivision 6; 
1.5 	290A.03, subdivisions 11, 13; 290C.07; 477A.0124, by adding a subdivision; 
1.6 	477A.013, subdivision 9, by adding a subdivision; 477A.03; repealing Minnesota 
1.7 	Statutes 2010, sections 10A.322, subdivision 4; 13.4967, subdivision 2; 290.06, 
1.8 	subdivision 23.
1.9 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.10 	Section 1. Minnesota Statutes 2010, section 270A.03, subdivision 7, is amended to 
1.11 	read:
1.12 		Subd. 7.Refund. "Refund" means an individual income tax refund or political 
1.13 	contribution refund, pursuant to chapter 290, or a property tax credit or refund, pursuant to 
1.14 	chapter 290A, or a sustainable forest tax payment to a claimant under chapter 290C.
1.15 	For purposes of this chapter, lottery prizes, as set forth in section 349A.08, 
1.16 	subdivision 8, and amounts granted to persons by the legislature on the recommendation 
1.17 	of the joint senate-house of representatives Subcommittee on Claims shall be treated 
1.18 	as refunds.
1.19 	In the case of a joint property tax refund payable to spouses under chapter 290A, 
1.20 	the refund shall be considered as belonging to each spouse in the proportion of the total 
1.21 	refund that equals each spouse's proportion of the total income determined under section 
1.22 	290A.03, subdivision 3. In the case of a joint income tax refund under chapter 289A, the 
1.23 	refund shall be considered as belonging to each spouse in the proportion of the total 
1.24 	refund that equals each spouse's proportion of the total taxable income determined under 
1.25 	section 290.01, subdivision 29. The commissioner shall remit the entire refund to the 
1.26 	claimant agency, which shall, upon the request of the spouse who does not owe the debt, 
2.1 	determine the amount of the refund belonging to that spouse and refund the amount to 
2.2 	that spouse. For court fines, fees, and surcharges and court-ordered restitution under 
2.3 	section 611A.04, subdivision 2, the notice provided by the commissioner of revenue under 
2.4 	section 270A.07, subdivision 2, paragraph (b), serves as the appropriate legal notice 
2.5 	to the spouse who does not owe the debt.

2.6 	EFFECTIVE DATE. This section is effective for refund claims based on 
2.7 	contributions made after June 30, 2011.

2.8 	Sec. 2. Minnesota Statutes 2010, section 273.1384, subdivision 6, is amended to read:
2.9 		Subd. 6.Credit reduction; towns. In 2011 and each year thereafter, the market 
2.10 	value credit reimbursement amount for each taxing jurisdiction town determined under 
2.11 	this section is reduced by the dollar amount of the reduction in market value credit 
2.12 	reimbursements for that taxing jurisdiction town in 2010 due to the reductions under 
2.13 	section 477A.0133. No taxing jurisdiction's town's market value credit reimbursements 
2.14 	are reduced to less than zero under this subdivision. The commissioner of revenue shall 
2.15 	pay the annual market value credit reimbursement amounts, after reduction under this 
2.16 	subdivision, to the affected taxing jurisdictions towns as provided in this section.

2.17 	EFFECTIVE DATE. This section is effective for credit reimbursements in 2011 
2.18 	and thereafter.

2.19 	Sec. 3. Minnesota Statutes 2010, section 273.1384, is amended by adding a subdivision 
2.20 	to read:
2.21 		Subd. 7.Credit reductions and limitation; counties and cities. (a) In 2011 and 
2.22 	2012, the market value credit reimbursement payment to each county and city authorized 
2.23 	under subdivision 4 may not exceed the reimbursement payment received by the county 
2.24 	or city for taxes payable in 2010. 
2.25 	(b) In 2013 and each year thereafter, the market value credit reimbursement amount 
2.26 	for each city and county determined under this section is reduced by the dollar amount of 
2.27 	the reduction in market value credit reimbursements for that city or county in 2010 due 
2.28 	to the reductions under section 477A.0133. No taxing jurisdiction's market value credit 
2.29 	reimbursements are reduced to less than zero under this subdivision. The commissioner of 
2.30 	revenue shall pay the annual market value credit reimbursement amounts, after reduction 
2.31 	under this subdivision, to the affected city or county as provided in this section.

2.32 	EFFECTIVE DATE. This section is effective for credit reimbursements in 2011 
2.33 	and thereafter.

3.1 	Sec. 4. Minnesota Statutes 2010, section 289A.50, subdivision 1, is amended to read:
3.2 		Subdivision 1.General right to refund. (a) Subject to the requirements of this 
3.3 	section and section 289A.40, a taxpayer who has paid a tax in excess of the taxes lawfully 
3.4 	due and who files a written claim for refund will be refunded or credited the overpayment 
3.5 	of the tax determined by the commissioner to be erroneously paid.
3.6 	(b) The claim must specify the name of the taxpayer, the date when and the period 
3.7 	for which the tax was paid, the kind of tax paid, the amount of the tax that the taxpayer 
3.8 	claims was erroneously paid, the grounds on which a refund is claimed, and other 
3.9 	information relative to the payment and in the form required by the commissioner. An 
3.10 	income tax, estate tax, or corporate franchise tax return, or amended return claiming an 
3.11 	overpayment constitutes a claim for refund.
3.12 	(c) When, in the course of an examination, and within the time for requesting a 
3.13 	refund, the commissioner determines that there has been an overpayment of tax, the 
3.14 	commissioner shall refund or credit the overpayment to the taxpayer and no demand 
3.15 	is necessary. If the overpayment exceeds $1, the amount of the overpayment must 
3.16 	be refunded to the taxpayer. If the amount of the overpayment is less than $1, the 
3.17 	commissioner is not required to refund. In these situations, the commissioner does not 
3.18 	have to make written findings or serve notice by mail to the taxpayer.
3.19 	(d) If the amount allowable as a credit for withholding, estimated taxes, or dependent 
3.20 	care exceeds the tax against which the credit is allowable, the amount of the excess is 
3.21 	considered an overpayment. The refund allowed by section 290.06, subdivision 23, is also 
3.22 	considered an overpayment. The requirements of section 270C.33 do not apply to the 
3.23 	refunding of such an overpayment shown on the original return filed by a taxpayer.
3.24 	(e) If the entertainment tax withheld at the source exceeds by $1 or more the taxes, 
3.25 	penalties, and interest reported in the return of the entertainment entity or imposed by 
3.26 	section 290.9201, the excess must be refunded to the entertainment entity. If the excess is 
3.27 	less than $1, the commissioner need not refund that amount.
3.28 	(f) If the surety deposit required for a construction contract exceeds the liability of 
3.29 	the out-of-state contractor, the commissioner shall refund the difference to the contractor.
3.30 	(g) An action of the commissioner in refunding the amount of the overpayment does 
3.31 	not constitute a determination of the correctness of the return of the taxpayer.
3.32 	(h) There is appropriated from the general fund to the commissioner of revenue the 
3.33 	amount necessary to pay refunds allowed under this section.

3.34 	EFFECTIVE DATE. This section is effective for refund claims based on 
3.35 	contributions made after June 30, 2011.

4.1 	Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 6, is amended to read:
4.2 		Subd. 6.Taxpayer. The term "taxpayer" means any person or corporation subject to 
4.3 	a tax imposed by this chapter. For purposes of section 290.06, subdivision 23, the term 
4.4 	"taxpayer" means an individual eligible to vote in Minnesota under section 201.014.

4.5 	EFFECTIVE DATE. This section is effective for refund claims based on 
4.6 	contributions made after June 30, 2011.

4.7 	Sec. 6. Minnesota Statutes 2010, section 290A.03, subdivision 11, is amended to read:
4.8 		Subd. 11.Rent constituting property taxes. "Rent constituting property taxes" 
4.9 	means 19 15 percent of the gross rent actually paid in cash, or its equivalent, or the portion 
4.10 	of rent paid in lieu of property taxes, in any calendar year by a claimant for the right 
4.11 	of occupancy of the claimant's Minnesota homestead in the calendar year, and which 
4.12 	rent constitutes the basis, in the succeeding calendar year of a claim for relief under this 
4.13 	chapter by the claimant.

4.14 	EFFECTIVE DATE. This section is effective for claims based on rent paid in 
4.15 	2010 and following years.

4.16 	Sec. 7. Minnesota Statutes 2010, section 290A.03, subdivision 13, is amended to read:
4.17 		Subd. 13.Property taxes payable. "Property taxes payable" means the property tax 
4.18 	exclusive of special assessments, penalties, and interest payable on a claimant's homestead 
4.19 	after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2, 
4.20 	and any other state paid property tax credits in any calendar year, and after any refund 
4.21 	claimed and allowable under section 290A.04, subdivision 2h, that is first payable in 
4.22 	the year that the property tax is payable. In the case of a claimant who makes ground 
4.23 	lease payments, "property taxes payable" includes the amount of the payments directly 
4.24 	attributable to the property taxes assessed against the parcel on which the house is located. 
4.25 	No apportionment or reduction of the "property taxes payable" shall be required for the 
4.26 	use of a portion of the claimant's homestead for a business purpose if the claimant does not 
4.27 	deduct any business depreciation expenses for the use of a portion of the homestead in the 
4.28 	determination of federal adjusted gross income. For homesteads which are manufactured 
4.29 	homes as defined in section 273.125, subdivision 8, and for homesteads which are park 
4.30 	trailers taxed as manufactured homes under section 168.012, subdivision 9, "property 
4.31 	taxes payable" shall also include 19 15 percent of the gross rent paid in the preceding 
4.32 	year for the site on which the homestead is located. When a homestead is owned by 
4.33 	two or more persons as joint tenants or tenants in common, such tenants shall determine 
5.1 	between them which tenant may claim the property taxes payable on the homestead. If 
5.2 	they are unable to agree, the matter shall be referred to the commissioner of revenue 
5.3 	whose decision shall be final. Property taxes are considered payable in the year prescribed 
5.4 	by law for payment of the taxes.
5.5 	In the case of a claim relating to "property taxes payable," the claimant must have 
5.6 	owned and occupied the homestead on January 2 of the year in which the tax is payable 
5.7 	and (i) the property must have been classified as homestead property pursuant to section 
5.8 	273.124, on or before December 15 of the assessment year to which the "property taxes 
5.9 	payable" relate; or (ii) the claimant must provide documentation from the local assessor 
5.10 	that application for homestead classification has been made on or before December 15 
5.11 	of the year in which the "property taxes payable" were payable and that the assessor has 
5.12 	approved the application.

5.13 	EFFECTIVE DATE. This section is effective for claims based on rent paid in 
5.14 	2010 and following years.

5.15 	Sec. 8. Minnesota Statutes 2010, section 290C.07, is amended to read:
5.16 	290C.07 CALCULATION OF INCENTIVE PAYMENT.
5.17 	An approved claimant under the sustainable forest incentive program is eligible to 
5.18 	receive an annual payment. The payment shall equal the greater of:
5.19 	(1) the difference between the property tax that would be paid on the land using the 
5.20 	previous year's statewide average total township tax rate and a class rate of one percent, if 
5.21 	the land were valued at (i) the average statewide managed forest land market value per 
5.22 	acre calculated under section 290C.06, and (ii) the average statewide managed forest land 
5.23 	current use value per acre calculated under section 290C.02, subdivision 5; or
5.24 	(2) two-thirds of the property tax amount determined by using the previous year's 
5.25 	statewide average total township tax rate, the estimated market value per acre as calculated 
5.26 	in section 290C.06, and a class rate of one percent, provided that the payment shall be 
5.27 	no less than $7 $7.75 per acre for each acre enrolled in the sustainable forest incentive 
5.28 	program.

5.29 	EFFECTIVE DATE. This section is effective for payments in calendar year 2011 
5.30 	and thereafter.

5.31 	Sec. 9. Minnesota Statutes 2010, section 477A.0124, is amended by adding a 
5.32 	subdivision to read:
6.1 		Subd. 6.Aid payments in 2011 and 2012. Notwithstanding total aids calculated or 
6.2 	certified for 2011 under subdivisions 3, 4, and 5, for 2011 and 2012, each county shall 
6.3 	receive an aid distribution under this section equal to the lesser of (1) the total amount of 
6.4 	aid it received under this section in 2010 after the reductions under Minnesota Statutes, 
6.5 	sections 477A.0133 and 477A.0134, or (2) the total amount the county is certified to 
6.6 	receive in 2011 under subdivisions 3 to 5.

6.7 	EFFECTIVE DATE. This section is effective for aids payable in calendar year 
6.8 	2011 and 2012.

6.9 	Sec. 10. Minnesota Statutes 2010, section 477A.013, subdivision 9, is amended to read:
6.10 		Subd. 9.City aid distribution. (a) In calendar year 2009 and thereafter, each 
6.11 	city shall receive an aid distribution equal to the sum of (1) the city formula aid under 
6.12 	subdivision 8, and (2) its city aid base.
6.13 	(b) For aids payable in 2011 2013 only, the total aid in the previous year for any 
6.14 	city shall mean the amount of aid it was certified to receive for aids payable in 2010 2011
6.15 	under this section minus the amount of its aid reduction under section477A.0134. For aids 
6.16 	payable in 2012 2014 and thereafter, the total aid in the previous year for any city means 
6.17 	the amount of aid it was certified to receive under this section in the previous payable year.
6.18 	(c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed 
6.19 	the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution 
6.20 	plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total 
6.21 	aid for any city with a population of 2,500 or more may not be less than its total aid under 
6.22 	this section in the previous year minus the lesser of $10 multiplied by its population, or ten 
6.23 	percent of its net levy in the year prior to the aid distribution.
6.24 	(d) For aids payable in 2010 and thereafter, the total aid for a city with a population 
6.25 	less than 2,500 must not be less than the amount it was certified to receive in the 
6.26 	previous year minus the lesser of $10 multiplied by its population, or five percent of its 
6.27 	2003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a 
6.28 	population less than 2,500 must not be less than what it received under this section in the 
6.29 	previous year unless its total aid in calendar year 2008 was aid under section 477A.011, 
6.30 	subdivision 36, paragraph (s), in which case its minimum aid is zero.
6.31 	(e) A city's aid loss under this section may not exceed $300,000 in any year in 
6.32 	which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or 
6.33 	greater than the appropriation under that subdivision in the previous year, unless the 
6.34 	city has an adjustment in its city net tax capacity under the process described in section 
6.35 	469.174, subdivision 28.
7.1 	(f) If a city's net tax capacity used in calculating aid under this section has decreased 
7.2 	in any year by more than 25 percent from its net tax capacity in the previous year due to 
7.3 	property becoming tax-exempt Indian land, the city's maximum allowed aid increase 
7.4 	under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the 
7.5 	year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease 
7.6 	resulting from the property becoming tax exempt.

7.7 	EFFECTIVE DATE. This section is effective for aids payable in calendar year 
7.8 	2012 and thereafter.

7.9 	Sec. 11. Minnesota Statutes 2010, section 477A.013, is amended by adding a 
7.10 	subdivision to read:
7.11 		Subd. 11.Aid payments in 2011 and 2012. Notwithstanding aids calculated or 
7.12 	certified for 2011 under subdivision 9, for 2011 and 2012, each city shall receive an aid 
7.13 	distribution under this section equal to the lesser of (1) the total amount of aid it received 
7.14 	under this section in 2010 after the reductions under sections 477A.0133 and 477A.0134, 
7.15 	and reduced by the amount of payments made under section 477A.011, subdivision 
7.16 	36, paragraphs (y) and (z), or (2) the amount it was certified to receive in 2011 under 
7.17 	subdivision 9. In 2011 only, a city that qualifies for the aid base adjustment under section 
7.18 	477A.011, subdivision 36, paragraph (aa), shall receive the amount that it was certified to 
7.19 	receive in 2011. In 2012, a city that qualifies for the aid base adjustment under section 
7.20 	477A.011, subdivision 36, paragraph (aa), shall receive the amount that it was certified 
7.21 	to receive in 2011, minus the aid base adjustment provided under section 477A.011, 
7.22 	subdivision 36, paragraph (aa).

7.23 	EFFECTIVE DATE. This section is effective for aids payable in calendar years 
7.24 	2011 and 2012.

7.25 	Sec. 12. Minnesota Statutes 2010, section 477A.03, is amended to read:
7.26 	477A.03 APPROPRIATION.
7.27 		Subd. 2.Annual appropriation. A sum sufficient to discharge the duties imposed 
7.28 	by sections 477A.011 to 477A.014 is annually appropriated from the general fund to the 
7.29 	commissioner of revenue.
7.30 		Subd. 2a.Cities. For aids payable in 2011 2013 and thereafter, the total aid paid 
7.31 	under section 477A.013, subdivision 9, is $527,100,646.
7.32 		Subd. 2b.Counties. (a) For aids payable in 2011 2013 and thereafter, the total aid 
7.33 	payable under section 477A.0124, subdivision 3, is $96,395,000. Each calendar year, 
8.1 	$500,000 shall be retained by the commissioner of revenue to make reimbursements to 
8.2 	the commissioner of management and budget for payments made under section 611.27. 
8.3 	For calendar year 2004, the amount shall be in addition to the payments authorized 
8.4 	under section 477A.0124, subdivision 1. For calendar year 2005 and subsequent 
8.5 	years, the amount shall be deducted from the appropriation under this paragraph. The 
8.6 	reimbursements shall be to defray the additional costs associated with court-ordered 
8.7 	counsel under section 611.27. Any retained amounts not used for reimbursement in a year 
8.8 	shall be included in the next distribution of county need aid that is certified to the county 
8.9 	auditors for the purpose of property tax reduction for the next taxes payable year.
8.10 	(b) For aids payable in 2011 2013 and thereafter, the total aid under section 
8.11 	477A.0124, subdivision 4, is $101,309,575. The commissioner of management and 
8.12 	budget shall bill the commissioner of revenue for the cost of preparation of local impact 
8.13 	notes as required by section 3.987, not to exceed $207,000 in fiscal year 2004 and 
8.14 	thereafter. The commissioner of education shall bill the commissioner of revenue for the 
8.15 	cost of preparation of local impact notes for school districts as required by section 3.987, 
8.16 	not to exceed $7,000 in fiscal year 2004 and thereafter. The commissioner of revenue 
8.17 	shall deduct the amounts billed under this paragraph from the appropriation under this 
8.18 	paragraph. The amounts deducted are appropriated to the commissioner of management 
8.19 	and budget and the commissioner of education for the preparation of local impact notes.

8.20 	EFFECTIVE DATE. This section is effective for aids payable in calendar year 
8.21 	2012 and thereafter.

8.22 	Sec. 13. ADMINISTRATION OF PROPERTY TAX REFUND CLAIMS; 2011.
 8.23 	In administering sections 6 and 7 for claims for refunds submitted using 19 percent 
8.24 	of gross rent as rent constituting property taxes under prior law, the commissioner shall 
8.25 	recalculate and pay the refund amounts using 15 percent of gross rent. The commissioner 
8.26 	shall notify the claimant that the recalculation was mandated by action of the 2011 
8.27 	Legislature.

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

8.29 	Sec. 14.  REPEALER.
 8.30 	(a) Minnesota Statutes 2010, sections 10A.322, subdivision 4; and 13.4967, 
8.31 	subdivision 2, are repealed.
8.32 	(b) Minnesota Statutes 2010, section 290.06, subdivision 23, is repealed.

9.1 	EFFECTIVE DATE. Paragraph (a) is effective the day following final enactment. 
9.2 	Paragraph (b) is effective for refund claims based on contributions made after June 30, 
9.3 	2011.