Bill Text: MN HF10 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Taxable income subtraction allowed, corporate franchise tax rates reduced, and sales tax exemption allowed for capital equipment at time of purchase.
Spectrum: Partisan Bill (Republican 15-0)
Status: (Introduced - Dead) 2011-03-14 - Authors added Erickson and Myhra [HF10 Detail]
Download: Minnesota-2011-HF10-Introduced.html
1.2relating to taxation; allowing a subtraction for certain income; reducing corporate
1.3franchise tax rates; allowing sales tax exemption for capital equipment at time
1.4of purchase; amending Minnesota Statutes 2010, sections 290.01, subdivision
1.519b; 290.06, subdivision 1; 290.0921, subdivision 1; 297A.68, subdivision 5;
1.6297A.75, subdivisions 1, 2.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2010, section 290.01, subdivision 19b, is amended to
1.9read:
1.10 Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
1.11and trusts, there shall be subtracted from federal taxable income:
1.12 (1) net interest income on obligations of any authority, commission, or
1.13instrumentality of the United States to the extent includable in taxable income for federal
1.14income tax purposes but exempt from state income tax under the laws of the United States;
1.15 (2) if included in federal taxable income, the amount of any overpayment of income
1.16tax to Minnesota or to any other state, for any previous taxable year, whether the amount
1.17is received as a refund or as a credit to another taxable year's income tax liability;
1.18 (3) the amount paid to others, less the amount used to claim the credit allowed under
1.19section290.0674 , not to exceed $1,625 for each qualifying child in grades kindergarten
1.20to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
1.21transportation of each qualifying child in attending an elementary or secondary school
1.22situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
1.23resident of this state may legally fulfill the state's compulsory attendance laws, which
1.24is not operated for profit, and which adheres to the provisions of the Civil Rights Act
1.25of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
2.1tuition as defined in section290.0674, subdivision 1 , clause (1). As used in this clause,
2.2"textbooks" includes books and other instructional materials and equipment purchased
2.3or leased for use in elementary and secondary schools in teaching only those subjects
2.4legally and commonly taught in public elementary and secondary schools in this state.
2.5Equipment expenses qualifying for deduction includes expenses as defined and limited in
2.6section290.0674, subdivision 1 , clause (3). "Textbooks" does not include instructional
2.7books and materials used in the teaching of religious tenets, doctrines, or worship, the
2.8purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
2.9or materials for, or transportation to, extracurricular activities including sporting events,
2.10musical or dramatic events, speech activities, driver's education, or similar programs. No
2.11deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
2.12the qualifying child's vehicle to provide such transportation for a qualifying child. For
2.13purposes of the subtraction provided by this clause, "qualifying child" has the meaning
2.14given in section 32(c)(3) of the Internal Revenue Code;
2.15 (4) income as provided under section290.0802 ;
2.16 (5) to the extent included in federal adjusted gross income, income realized on
2.17disposition of property exempt from tax under section290.491 ;
2.18 (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
2.19of the Internal Revenue Code in determining federal taxable income by an individual
2.20who does not itemize deductions for federal income tax purposes for the taxable year, an
2.21amount equal to 50 percent of the excess of charitable contributions over $500 allowable
2.22as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
2.23under the provisions of Public Law 109-1 and Public Law 111-126;
2.24 (7) for individuals who are allowed a federal foreign tax credit for taxes that do not
2.25qualify for a credit under section290.06, subdivision 22 , an amount equal to the carryover
2.26of subnational foreign taxes for the taxable year, but not to exceed the total subnational
2.27foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
2.28"federal foreign tax credit" means the credit allowed under section 27 of the Internal
2.29Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
2.30under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
2.31the extent they exceed the federal foreign tax credit;
2.32 (8) in each of the five tax years immediately following the tax year in which an
2.33addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
2.34of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
2.35of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
2.36the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
3.1subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
3.2positive value of any net operating loss under section 172 of the Internal Revenue Code
3.3generated for the tax year of the addition. The resulting delayed depreciation cannot be
3.4less than zero;
3.5 (9) job opportunity building zone income as provided under section469.316 ;
3.6 (10) to the extent included in federal taxable income, the amount of compensation
3.7paid to members of the Minnesota National Guard or other reserve components of the
3.8United States military for active service performed in Minnesota, excluding compensation
3.9for services performed under the Active Guard Reserve (AGR) program. For purposes of
3.10this clause, "active service" means (i) state active service as defined in section190.05,
3.11subdivision 5a , clause (1); (ii) federally funded state active service as defined in section
3.12190.05, subdivision 5b
; or (iii) federal active service as defined in section
190.05,
3.13subdivision 5c , but "active service" excludes service performed in accordance with section
3.14190.08, subdivision 3
;
3.15 (11) to the extent included in federal taxable income, the amount of compensation
3.16paid to Minnesota residents who are members of the armed forces of the United States or
3.17United Nations for active duty performed outside Minnesota under United States Code,
3.18title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of
3.19the United Nations;
3.20 (12) an amount, not to exceed $10,000, equal to qualified expenses related to a
3.21qualified donor's donation, while living, of one or more of the qualified donor's organs
3.22to another person for human organ transplantation. For purposes of this clause, "organ"
3.23means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
3.24"human organ transplantation" means the medical procedure by which transfer of a human
3.25organ is made from the body of one person to the body of another person; "qualified
3.26expenses" means unreimbursed expenses for both the individual and the qualified donor
3.27for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
3.28may be subtracted under this clause only once; and "qualified donor" means the individual
3.29or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
3.30individual may claim the subtraction in this clause for each instance of organ donation for
3.31transplantation during the taxable year in which the qualified expenses occur;
3.32 (13) in each of the five tax years immediately following the tax year in which an
3.33addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
3.34shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
3.35addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
3.36case of a shareholder of a corporation that is an S corporation, minus the positive value of
4.1any net operating loss under section 172 of the Internal Revenue Code generated for the
4.2tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
4.3subtraction is not allowed under this clause;
4.4 (14) to the extent included in federal taxable income, compensation paid to a service
4.5member as defined in United States Code, title 10, section 101(a)(5), for military service
4.6as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2);
4.7 (15) international economic development zone income as provided under section
4.8469.325
;
4.9 (16) to the extent included in federal taxable income, the amount of national service
4.10educational awards received from the National Service Trust under United States Code,
4.11title 42, sections 12601 to 12604, for service in an approved Americorps National Service
4.12program;and
4.13(17) to the extent included in federal taxable income, discharge of indebtedness
4.14income resulting from reacquisition of business indebtedness included in federal taxable
4.15income under section 108(i) of the Internal Revenue Code. This subtraction applies only
4.16to the extent that the income was included in net income in a prior year as a result of the
4.17addition under section290.01, subdivision 19a , clause (16).; and
4.18(18) an amount not less than zero and not to exceed the applicable percentage
4.19multiplied by the distributive share of income or loss, as defined in sections 703(a) and
4.201366(a)(2) of the Internal Revenue Code, combined from all partnerships or S corporations
4.21in which the taxpayer materially participates, as defined in section 469(h) of the Internal
4.22Revenue Code, and that have employees or tangible property located in this state. As used
4.23in this clause, the "applicable percentage" is:
4.24(i) five percent for taxable year 2012;
4.25(ii) ten percent for taxable year 2013;
4.26(iii) 15 percent for taxable year 2014; and
4.27(iv) 20 percent for taxable years beginning after December 31, 2014.
4.28EFFECTIVE DATE.This section is effective for taxable years beginning after
4.29December 31, 2011.
4.30 Sec. 2. Minnesota Statutes 2010, section 290.06, subdivision 1, is amended to read:
4.31 Subdivision 1. Computation, corporations. The franchise tax imposed upon
4.32corporations shall be computed by applying to their taxable income the rate of:
4.33(1) 9.8 percent. for taxable years beginning before January 1, 2012;
4.34(2) 9.3 percent for taxable year 2012;
4.35(3) 8.8 percent for taxable year 2013;
5.1(4) 8.5 percent for taxable year 2014;
5.2(5) 7.8 percent for taxable year 2015;
5.3(6) 7.3 percent for taxable year 2016;
5.4(7) 6.8 percent for taxable year 2017;
5.5(8) 6.3 percent for taxable year 2018;
5.6(9) 5.8 percent for taxable year 2019;
5.7(10) 5.3 percent for taxable year 2020;
5.8(11) 4.8 percent for taxable years beginning after December 31, 2020.
5.9EFFECTIVE DATE.This section is effective for taxable years beginning after
5.10December 31, 2011.
5.11 Sec. 3. Minnesota Statutes 2010, section 290.0921, subdivision 1, is amended to read:
5.12 Subdivision 1. Tax imposed. In addition to the taxes computed under this chapter
5.13without regard to this section, the franchise tax imposed on corporations includes a tax
5.14equal to the excess, if any, for the taxable year of:
5.15(1)(i) 5.8 percent of Minnesota alternative minimum taxable income for taxable
5.16years beginning before January 1, 2012;
5.17(ii) 5.5 percent of Minnesota alternative minimum taxable income for taxable year
5.182012;
5.19(iii) 5.2 percent of Minnesota alternative minimum taxable income for taxable year
5.202013;
5.21(iv) 4.9 percent of Minnesota alternative minimum taxable income for taxable year
5.222014;
5.23(v) 4.6 percent of Minnesota alternative minimum taxable income for taxable year
5.242015;
5.25(vi) 4.3 percent of Minnesota alternative minimum taxable income for taxable year
5.262016;
5.27(vii) four percent of Minnesota alternative minimum taxable income for taxable
5.28year 2017;
5.29(viii) 3.7 percent of Minnesota alternative minimum taxable income for taxable
5.30year 2018;
5.31(ix) 3.4 percent of Minnesota alternative minimum taxable income for taxable year
5.322019;
5.33(x) 3.1 percent of Minnesota alternative minimum taxable income for taxable year
5.342020;
6.1(xi) 2.8 percent of Minnesota alternative minimum taxable income for taxable years
6.2beginning after December 31, 2020; over
6.3(2) the tax imposed under section290.06, subdivision 1 , without regard to this
6.4section.
6.5EFFECTIVE DATE.This section is effective for taxable years beginning after
6.6December 31, 2011.
6.7 Sec. 4. Minnesota Statutes 2010, section 297A.68, subdivision 5, is amended to read:
6.8 Subd. 5. Capital equipment. (a) Capital equipment is exempt.The tax must be
6.9imposed and collected as if the rate under section
297A.62, subdivision 1, applied, and
6.10then refunded in the manner provided in section
297A.75.
6.11"Capital equipment" means machinery and equipment purchased or leased, and used
6.12in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
6.13or refining tangible personal property to be sold ultimately at retail if the machinery and
6.14equipment are essential to the integrated production process of manufacturing, fabricating,
6.15mining, or refining. Capital equipment also includes machinery and equipment
6.16used primarily to electronically transmit results retrieved by a customer of an online
6.17computerized data retrieval system.
6.18(b) Capital equipment includes, but is not limited to:
6.19(1) machinery and equipment used to operate, control, or regulate the production
6.20equipment;
6.21(2) machinery and equipment used for research and development, design, quality
6.22control, and testing activities;
6.23(3) environmental control devices that are used to maintain conditions such as
6.24temperature, humidity, light, or air pressure when those conditions are essential to and are
6.25part of the production process;
6.26(4) materials and supplies used to construct and install machinery or equipment;
6.27(5) repair and replacement parts, including accessories, whether purchased as spare
6.28parts, repair parts, or as upgrades or modifications to machinery or equipment;
6.29(6) materials used for foundations that support machinery or equipment;
6.30(7) materials used to construct and install special purpose buildings used in the
6.31production process;
6.32(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
6.33as part of the delivery process regardless if mounted on a chassis, repair parts for
6.34ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
7.1(9) machinery or equipment used for research, development, design, or production
7.2of computer software.
7.3(c) Capital equipment does not include the following:
7.4(1) motor vehicles taxed under chapter 297B;
7.5(2) machinery or equipment used to receive or store raw materials;
7.6(3) building materials, except for materials included in paragraph (b), clauses (6)
7.7and (7);
7.8(4) machinery or equipment used for nonproduction purposes, including, but not
7.9limited to, the following: plant security, fire prevention, first aid, and hospital stations;
7.10support operations or administration; pollution control; and plant cleaning, disposal of
7.11scrap and waste, plant communications, space heating, cooling, lighting, or safety;
7.12(5) farm machinery and aquaculture production equipment as defined by section
7.13297A.61, subdivisions 12 and 13
;
7.14(6) machinery or equipment purchased and installed by a contractor as part of an
7.15improvement to real property;
7.16(7) machinery and equipment used by restaurants in the furnishing, preparing, or
7.17serving of prepared foods as defined in section297A.61, subdivision 31 ;
7.18(8) machinery and equipment used to furnish the services listed in section297A.61,
7.19subdivision 3 , paragraph (g), clause (6), items (i) to (vi) and (viii);
7.20(9) machinery or equipment used in the transportation, transmission, or distribution
7.21of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
7.22tanks, mains, or other means of transporting those products. This clause does not apply to
7.23machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
7.24239.77
; or
7.25(10) any other item that is not essential to the integrated process of manufacturing,
7.26fabricating, mining, or refining.
7.27(d) For purposes of this subdivision:
7.28(1) "Equipment" means independent devices or tools separate from machinery but
7.29essential to an integrated production process, including computers and computer software,
7.30used in operating, controlling, or regulating machinery and equipment; and any subunit or
7.31assembly comprising a component of any machinery or accessory or attachment parts of
7.32machinery, such as tools, dies, jigs, patterns, and molds.
7.33(2) "Fabricating" means to make, build, create, produce, or assemble components or
7.34property to work in a new or different manner.
7.35(3) "Integrated production process" means a process or series of operations through
7.36which tangible personal property is manufactured, fabricated, mined, or refined. For
8.1purposes of this clause, (i) manufacturing begins with the removal of raw materials
8.2from inventory and ends when the last process prior to loading for shipment has been
8.3completed; (ii) fabricating begins with the removal from storage or inventory of the
8.4property to be assembled, processed, altered, or modified and ends with the creation
8.5or production of the new or changed product; (iii) mining begins with the removal of
8.6overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
8.7ends when the last process before stockpiling is completed; and (iv) refining begins with
8.8the removal from inventory or storage of a natural resource and ends with the conversion
8.9of the item to its completed form.
8.10(4) "Machinery" means mechanical, electronic, or electrical devices, including
8.11computers and computer software, that are purchased or constructed to be used for the
8.12activities set forth in paragraph (a), beginning with the removal of raw materials from
8.13inventory through completion of the product, including packaging of the product.
8.14(5) "Machinery and equipment used for pollution control" means machinery and
8.15equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
8.16described in paragraph (a).
8.17(6) "Manufacturing" means an operation or series of operations where raw materials
8.18are changed in form, composition, or condition by machinery and equipment and which
8.19results in the production of a new article of tangible personal property. For purposes of
8.20this subdivision, "manufacturing" includes the generation of electricity or steam to be
8.21sold at retail.
8.22(7) "Mining" means the extraction of minerals, ores, stone, or peat.
8.23(8) "Online data retrieval system" means a system whose cumulation of information
8.24is equally available and accessible to all its customers.
8.25(9) "Primarily" means machinery and equipment used 50 percent or more of the time
8.26in an activity described in paragraph (a).
8.27(10) "Refining" means the process of converting a natural resource to an intermediate
8.28or finished product, including the treatment of water to be sold at retail.
8.29(11) This subdivision does not apply to telecommunications equipment as
8.30provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
8.31for telecommunications services.
8.32EFFECTIVE DATE.This section is effective for sales and purchases made after
8.33June 30, 2011.
8.34 Sec. 5. Minnesota Statutes 2010, section 297A.75, subdivision 1, is amended to read:
9.1 Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the
9.2following exempt items must be imposed and collected as if the sale were taxable and the
9.3rate under section297A.62, subdivision 1 , applied. The exempt items include:
9.4(1) capital equipment exempt under section
297A.68, subdivision 5;
9.5(2) (1) building materials for an agricultural processing facility exempt under section
9.6297A.71, subdivision 13
;
9.7(3) (2) building materials for mineral production facilities exempt under section
9.8297A.71, subdivision 14
;
9.9(4) (3) building materials for correctional facilities under section
297A.71,
9.10subdivision 3 ;
9.11(5) (4) building materials used in a residence for disabled veterans exempt under
9.12section297A.71, subdivision 11 ;
9.13(6) (5) elevators and building materials exempt under section
297A.71, subdivision
9.1412 ; or
9.15(7) (6) building materials for the Long Lake Conservation Center exempt under
9.16section297A.71, subdivision 17 ;
9.17(8) (7) materials and supplies for qualified low-income housing under section
9.18297A.71, subdivision 23
;
9.19(9) (8) materials, supplies, and equipment for municipal electric utility facilities
9.20under section297A.71, subdivision 35 ;
9.21(10) (9) equipment and materials used for the generation, transmission, and
9.22distribution of electrical energy and an aerial camera package exempt under section
9.23297A.68
, subdivision 37;
9.24(11) (10) tangible personal property and taxable services and construction materials,
9.25supplies, and equipment exempt under section297A.68 , subdivision 41;
9.26(12) (11) commuter rail vehicle and repair parts under section
297A.70, subdivision
9.273, clause (11);
9.28(13) (12) materials, supplies, and equipment for construction or improvement of
9.29projects and facilities under section297A.71, subdivision 40 ;
9.30(14) (13) materials, supplies, and equipment for construction or improvement of a
9.31meat processing facility exempt under section297A.71, subdivision 41 ; and
9.32(15) (14) materials, supplies, and equipment for construction, improvement, or
9.33expansion of an aerospace defense manufacturing facility exempt under section297A.71,
9.34subdivision 42.
9.35EFFECTIVE DATE.This section is effective for sales and purchases made after
9.36June 30, 2011.
10.1 Sec. 6. Minnesota Statutes 2010, section 297A.75, subdivision 2, is amended to read:
10.2 Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the
10.3commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
10.4must be paid to the applicant. Only the following persons may apply for the refund:
10.5 (1) for subdivision 1, clauses (1)to (3) and (2), the applicant must be the purchaser;
10.6 (2) for subdivision 1, clauses(4) (3) and (7) (6), the applicant must be the
10.7governmental subdivision;
10.8 (3) for subdivision 1, clause(5) (4), the applicant must be the recipient of the
10.9benefits provided in United States Code, title 38, chapter 21;
10.10 (4) for subdivision 1, clause(6) (5), the applicant must be the owner of the
10.11homestead property;
10.12 (5) for subdivision 1, clause(8) (7), the owner of the qualified low-income housing
10.13project;
10.14 (6) for subdivision 1, clause(9) (8), the applicant must be a municipal electric utility
10.15or a joint venture of municipal electric utilities;
10.16 (7) for subdivision 1, clauses(10), (11), (14), and (15) (9), (10), (13), and (14),
10.17the owner of the qualifying business; and
10.18 (8) for subdivision 1, clauses (11) and (12)and (13), the applicant must be the
10.19governmental entity that owns or contracts for the project or facility.
10.20EFFECTIVE DATE.This section is effective for sales and purchases made after
10.21June 30, 2011.
1.3franchise tax rates; allowing sales tax exemption for capital equipment at time
1.4of purchase; amending Minnesota Statutes 2010, sections 290.01, subdivision
1.519b; 290.06, subdivision 1; 290.0921, subdivision 1; 297A.68, subdivision 5;
1.6297A.75, subdivisions 1, 2.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2010, section 290.01, subdivision 19b, is amended to
1.9read:
1.10 Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
1.11and trusts, there shall be subtracted from federal taxable income:
1.12 (1) net interest income on obligations of any authority, commission, or
1.13instrumentality of the United States to the extent includable in taxable income for federal
1.14income tax purposes but exempt from state income tax under the laws of the United States;
1.15 (2) if included in federal taxable income, the amount of any overpayment of income
1.16tax to Minnesota or to any other state, for any previous taxable year, whether the amount
1.17is received as a refund or as a credit to another taxable year's income tax liability;
1.18 (3) the amount paid to others, less the amount used to claim the credit allowed under
1.19section
1.20to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
1.21transportation of each qualifying child in attending an elementary or secondary school
1.22situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
1.23resident of this state may legally fulfill the state's compulsory attendance laws, which
1.24is not operated for profit, and which adheres to the provisions of the Civil Rights Act
1.25of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
2.1tuition as defined in section
2.2"textbooks" includes books and other instructional materials and equipment purchased
2.3or leased for use in elementary and secondary schools in teaching only those subjects
2.4legally and commonly taught in public elementary and secondary schools in this state.
2.5Equipment expenses qualifying for deduction includes expenses as defined and limited in
2.6section
2.7books and materials used in the teaching of religious tenets, doctrines, or worship, the
2.8purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
2.9or materials for, or transportation to, extracurricular activities including sporting events,
2.10musical or dramatic events, speech activities, driver's education, or similar programs. No
2.11deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
2.12the qualifying child's vehicle to provide such transportation for a qualifying child. For
2.13purposes of the subtraction provided by this clause, "qualifying child" has the meaning
2.14given in section 32(c)(3) of the Internal Revenue Code;
2.15 (4) income as provided under section
2.16 (5) to the extent included in federal adjusted gross income, income realized on
2.17disposition of property exempt from tax under section
2.18 (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
2.19of the Internal Revenue Code in determining federal taxable income by an individual
2.20who does not itemize deductions for federal income tax purposes for the taxable year, an
2.21amount equal to 50 percent of the excess of charitable contributions over $500 allowable
2.22as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
2.23under the provisions of Public Law 109-1 and Public Law 111-126;
2.24 (7) for individuals who are allowed a federal foreign tax credit for taxes that do not
2.25qualify for a credit under section
2.26of subnational foreign taxes for the taxable year, but not to exceed the total subnational
2.27foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
2.28"federal foreign tax credit" means the credit allowed under section 27 of the Internal
2.29Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
2.30under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
2.31the extent they exceed the federal foreign tax credit;
2.32 (8) in each of the five tax years immediately following the tax year in which an
2.33addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
2.34of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
2.35of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
2.36the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
3.1subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
3.2positive value of any net operating loss under section 172 of the Internal Revenue Code
3.3generated for the tax year of the addition. The resulting delayed depreciation cannot be
3.4less than zero;
3.5 (9) job opportunity building zone income as provided under section
3.6 (10) to the extent included in federal taxable income, the amount of compensation
3.7paid to members of the Minnesota National Guard or other reserve components of the
3.8United States military for active service performed in Minnesota, excluding compensation
3.9for services performed under the Active Guard Reserve (AGR) program. For purposes of
3.10this clause, "active service" means (i) state active service as defined in section
3.11subdivision 5a
3.13subdivision 5c
3.15 (11) to the extent included in federal taxable income, the amount of compensation
3.16paid to Minnesota residents who are members of the armed forces of the United States or
3.17United Nations for active duty performed outside Minnesota under United States Code,
3.18title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of
3.19the United Nations;
3.20 (12) an amount, not to exceed $10,000, equal to qualified expenses related to a
3.21qualified donor's donation, while living, of one or more of the qualified donor's organs
3.22to another person for human organ transplantation. For purposes of this clause, "organ"
3.23means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
3.24"human organ transplantation" means the medical procedure by which transfer of a human
3.25organ is made from the body of one person to the body of another person; "qualified
3.26expenses" means unreimbursed expenses for both the individual and the qualified donor
3.27for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
3.28may be subtracted under this clause only once; and "qualified donor" means the individual
3.29or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
3.30individual may claim the subtraction in this clause for each instance of organ donation for
3.31transplantation during the taxable year in which the qualified expenses occur;
3.32 (13) in each of the five tax years immediately following the tax year in which an
3.33addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
3.34shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
3.35addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
3.36case of a shareholder of a corporation that is an S corporation, minus the positive value of
4.1any net operating loss under section 172 of the Internal Revenue Code generated for the
4.2tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
4.3subtraction is not allowed under this clause;
4.4 (14) to the extent included in federal taxable income, compensation paid to a service
4.5member as defined in United States Code, title 10, section 101(a)(5), for military service
4.6as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2);
4.7 (15) international economic development zone income as provided under section
4.9 (16) to the extent included in federal taxable income, the amount of national service
4.10educational awards received from the National Service Trust under United States Code,
4.11title 42, sections 12601 to 12604, for service in an approved Americorps National Service
4.12program;
4.13(17) to the extent included in federal taxable income, discharge of indebtedness
4.14income resulting from reacquisition of business indebtedness included in federal taxable
4.15income under section 108(i) of the Internal Revenue Code. This subtraction applies only
4.16to the extent that the income was included in net income in a prior year as a result of the
4.17addition under section
4.18(18) an amount not less than zero and not to exceed the applicable percentage
4.19multiplied by the distributive share of income or loss, as defined in sections 703(a) and
4.201366(a)(2) of the Internal Revenue Code, combined from all partnerships or S corporations
4.21in which the taxpayer materially participates, as defined in section 469(h) of the Internal
4.22Revenue Code, and that have employees or tangible property located in this state. As used
4.23in this clause, the "applicable percentage" is:
4.24(i) five percent for taxable year 2012;
4.25(ii) ten percent for taxable year 2013;
4.26(iii) 15 percent for taxable year 2014; and
4.27(iv) 20 percent for taxable years beginning after December 31, 2014.
4.28EFFECTIVE DATE.This section is effective for taxable years beginning after
4.29December 31, 2011.
4.30 Sec. 2. Minnesota Statutes 2010, section 290.06, subdivision 1, is amended to read:
4.31 Subdivision 1. Computation, corporations. The franchise tax imposed upon
4.32corporations shall be computed by applying to their taxable income the rate of:
4.33(1) 9.8 percent
4.34(2) 9.3 percent for taxable year 2012;
4.35(3) 8.8 percent for taxable year 2013;
5.1(4) 8.5 percent for taxable year 2014;
5.2(5) 7.8 percent for taxable year 2015;
5.3(6) 7.3 percent for taxable year 2016;
5.4(7) 6.8 percent for taxable year 2017;
5.5(8) 6.3 percent for taxable year 2018;
5.6(9) 5.8 percent for taxable year 2019;
5.7(10) 5.3 percent for taxable year 2020;
5.8(11) 4.8 percent for taxable years beginning after December 31, 2020.
5.9EFFECTIVE DATE.This section is effective for taxable years beginning after
5.10December 31, 2011.
5.11 Sec. 3. Minnesota Statutes 2010, section 290.0921, subdivision 1, is amended to read:
5.12 Subdivision 1. Tax imposed. In addition to the taxes computed under this chapter
5.13without regard to this section, the franchise tax imposed on corporations includes a tax
5.14equal to the excess, if any, for the taxable year of:
5.15(1)(i) 5.8 percent of Minnesota alternative minimum taxable income for taxable
5.16years beginning before January 1, 2012;
5.17(ii) 5.5 percent of Minnesota alternative minimum taxable income for taxable year
5.182012;
5.19(iii) 5.2 percent of Minnesota alternative minimum taxable income for taxable year
5.202013;
5.21(iv) 4.9 percent of Minnesota alternative minimum taxable income for taxable year
5.222014;
5.23(v) 4.6 percent of Minnesota alternative minimum taxable income for taxable year
5.242015;
5.25(vi) 4.3 percent of Minnesota alternative minimum taxable income for taxable year
5.262016;
5.27(vii) four percent of Minnesota alternative minimum taxable income for taxable
5.28year 2017;
5.29(viii) 3.7 percent of Minnesota alternative minimum taxable income for taxable
5.30year 2018;
5.31(ix) 3.4 percent of Minnesota alternative minimum taxable income for taxable year
5.322019;
5.33(x) 3.1 percent of Minnesota alternative minimum taxable income for taxable year
5.342020;
6.1(xi) 2.8 percent of Minnesota alternative minimum taxable income for taxable years
6.2beginning after December 31, 2020; over
6.3(2) the tax imposed under section
6.4section.
6.5EFFECTIVE DATE.This section is effective for taxable years beginning after
6.6December 31, 2011.
6.7 Sec. 4. Minnesota Statutes 2010, section 297A.68, subdivision 5, is amended to read:
6.8 Subd. 5. Capital equipment. (a) Capital equipment is exempt.
6.9
6.10
6.11"Capital equipment" means machinery and equipment purchased or leased, and used
6.12in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
6.13or refining tangible personal property to be sold ultimately at retail if the machinery and
6.14equipment are essential to the integrated production process of manufacturing, fabricating,
6.15mining, or refining. Capital equipment also includes machinery and equipment
6.16used primarily to electronically transmit results retrieved by a customer of an online
6.17computerized data retrieval system.
6.18(b) Capital equipment includes, but is not limited to:
6.19(1) machinery and equipment used to operate, control, or regulate the production
6.20equipment;
6.21(2) machinery and equipment used for research and development, design, quality
6.22control, and testing activities;
6.23(3) environmental control devices that are used to maintain conditions such as
6.24temperature, humidity, light, or air pressure when those conditions are essential to and are
6.25part of the production process;
6.26(4) materials and supplies used to construct and install machinery or equipment;
6.27(5) repair and replacement parts, including accessories, whether purchased as spare
6.28parts, repair parts, or as upgrades or modifications to machinery or equipment;
6.29(6) materials used for foundations that support machinery or equipment;
6.30(7) materials used to construct and install special purpose buildings used in the
6.31production process;
6.32(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
6.33as part of the delivery process regardless if mounted on a chassis, repair parts for
6.34ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
7.1(9) machinery or equipment used for research, development, design, or production
7.2of computer software.
7.3(c) Capital equipment does not include the following:
7.4(1) motor vehicles taxed under chapter 297B;
7.5(2) machinery or equipment used to receive or store raw materials;
7.6(3) building materials, except for materials included in paragraph (b), clauses (6)
7.7and (7);
7.8(4) machinery or equipment used for nonproduction purposes, including, but not
7.9limited to, the following: plant security, fire prevention, first aid, and hospital stations;
7.10support operations or administration; pollution control; and plant cleaning, disposal of
7.11scrap and waste, plant communications, space heating, cooling, lighting, or safety;
7.12(5) farm machinery and aquaculture production equipment as defined by section
7.14(6) machinery or equipment purchased and installed by a contractor as part of an
7.15improvement to real property;
7.16(7) machinery and equipment used by restaurants in the furnishing, preparing, or
7.17serving of prepared foods as defined in section
7.18(8) machinery and equipment used to furnish the services listed in section
7.19subdivision 3
7.20(9) machinery or equipment used in the transportation, transmission, or distribution
7.21of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
7.22tanks, mains, or other means of transporting those products. This clause does not apply to
7.23machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
7.25(10) any other item that is not essential to the integrated process of manufacturing,
7.26fabricating, mining, or refining.
7.27(d) For purposes of this subdivision:
7.28(1) "Equipment" means independent devices or tools separate from machinery but
7.29essential to an integrated production process, including computers and computer software,
7.30used in operating, controlling, or regulating machinery and equipment; and any subunit or
7.31assembly comprising a component of any machinery or accessory or attachment parts of
7.32machinery, such as tools, dies, jigs, patterns, and molds.
7.33(2) "Fabricating" means to make, build, create, produce, or assemble components or
7.34property to work in a new or different manner.
7.35(3) "Integrated production process" means a process or series of operations through
7.36which tangible personal property is manufactured, fabricated, mined, or refined. For
8.1purposes of this clause, (i) manufacturing begins with the removal of raw materials
8.2from inventory and ends when the last process prior to loading for shipment has been
8.3completed; (ii) fabricating begins with the removal from storage or inventory of the
8.4property to be assembled, processed, altered, or modified and ends with the creation
8.5or production of the new or changed product; (iii) mining begins with the removal of
8.6overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
8.7ends when the last process before stockpiling is completed; and (iv) refining begins with
8.8the removal from inventory or storage of a natural resource and ends with the conversion
8.9of the item to its completed form.
8.10(4) "Machinery" means mechanical, electronic, or electrical devices, including
8.11computers and computer software, that are purchased or constructed to be used for the
8.12activities set forth in paragraph (a), beginning with the removal of raw materials from
8.13inventory through completion of the product, including packaging of the product.
8.14(5) "Machinery and equipment used for pollution control" means machinery and
8.15equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
8.16described in paragraph (a).
8.17(6) "Manufacturing" means an operation or series of operations where raw materials
8.18are changed in form, composition, or condition by machinery and equipment and which
8.19results in the production of a new article of tangible personal property. For purposes of
8.20this subdivision, "manufacturing" includes the generation of electricity or steam to be
8.21sold at retail.
8.22(7) "Mining" means the extraction of minerals, ores, stone, or peat.
8.23(8) "Online data retrieval system" means a system whose cumulation of information
8.24is equally available and accessible to all its customers.
8.25(9) "Primarily" means machinery and equipment used 50 percent or more of the time
8.26in an activity described in paragraph (a).
8.27(10) "Refining" means the process of converting a natural resource to an intermediate
8.28or finished product, including the treatment of water to be sold at retail.
8.29(11) This subdivision does not apply to telecommunications equipment as
8.30provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
8.31for telecommunications services.
8.32EFFECTIVE DATE.This section is effective for sales and purchases made after
8.33June 30, 2011.
8.34 Sec. 5. Minnesota Statutes 2010, section 297A.75, subdivision 1, is amended to read:
9.1 Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the
9.2following exempt items must be imposed and collected as if the sale were taxable and the
9.3rate under section
9.4
9.5
9.7
9.9
9.10subdivision 3
9.11
9.12section
9.13
9.1412
9.15
9.16section
9.17
9.19
9.20under section
9.21
9.22distribution of electrical energy and an aerial camera package exempt under section
9.24
9.25supplies, and equipment exempt under section
9.26
9.28
9.29projects and facilities under section
9.30
9.31meat processing facility exempt under section
9.32
9.33expansion of an aerospace defense manufacturing facility exempt under section
9.34subdivision
9.35EFFECTIVE DATE.This section is effective for sales and purchases made after
9.36June 30, 2011.
10.1 Sec. 6. Minnesota Statutes 2010, section 297A.75, subdivision 2, is amended to read:
10.2 Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the
10.3commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
10.4must be paid to the applicant. Only the following persons may apply for the refund:
10.5 (1) for subdivision 1, clauses (1)
10.6 (2) for subdivision 1, clauses
10.7governmental subdivision;
10.8 (3) for subdivision 1, clause
10.9benefits provided in United States Code, title 38, chapter 21;
10.10 (4) for subdivision 1, clause
10.11homestead property;
10.12 (5) for subdivision 1, clause
10.13project;
10.14 (6) for subdivision 1, clause
10.15or a joint venture of municipal electric utilities;
10.16 (7) for subdivision 1, clauses
10.17the owner of the qualifying business; and
10.18 (8) for subdivision 1, clauses (11) and (12)
10.19governmental entity that owns or contracts for the project or facility.
10.20EFFECTIVE DATE.This section is effective for sales and purchases made after
10.21June 30, 2011.
