Bill Text: MN SF60 | 2011-2012 | 87th Legislature | Engrossed

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Bill Title: State finance appropriation reductions for higher education, department of human services (DHS), state (executive) agency general fund recipients, constitutional offices, and legislature; political contribution refund repeal; local government aid (LGA), property tax refund, and sustainable forest incentive modifications; federal tax conformance

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2011-02-02 - HF substituted on General Orders HF130 [SF60 Detail]

Download: Minnesota-2011-SF60-Engrossed.html

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A bill for an act

relating to state government finance; making appropriation reductions for fiscal
year 2011, policy changes, and appropriation reductions for fiscal years 2012 and
2013; making changes to tax aids and credits and reducing payments; conforming
to certain changes in the Internal Revenue Code;amending Minnesota Statutes
2010, sections 256B.766; 270A.03, subdivision 7; 273.1384, subdivision 6, by
adding a subdivision; 289A.02, subdivision 7; 289A.50, subdivision 1; 290.01,
subdivisions 6, 19, 19a, 19c, 31; 290A.03, subdivisions 11, 13, 15; 290C.07;
477A.0124, by adding a subdivision; 477A.013, subdivision 9, by adding a
subdivision; 477A.03; Laws 2010, First Special Session chapter 1, article 5,
sections 4; 5; repealing Minnesota Statutes 2010, sections 10A.322, subdivision
4; 13.4967, subdivision 2; 290.06, subdivision 23.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

HIGHER EDUCATION

    Section 1. Laws 2010, First Special Session chapter 1, article 5, section 4, is amended
to read:

Sec. 4. BOARD OF TRUSTEES OF THE MINNESOTA STATE COLLEGES AND UNIVERSITIES

$

-0-

$

(50,000,000)

$2,079,000 of the reduction in 2011 is from
the central offices and shared services unit
appropriation. None of these reductions may
be charged back or allocated to the campuses.
$47,921,000 of the reduction in 2011
is from the operations and maintenance
appropriation.
For fiscal years 2012 and 2013, the base for
operations and maintenance is $580,802,000
$532,881,000 each year.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Laws 2010, First Special Session chapter 1, article 5, section 5, is amended to
read:

Sec. 5. BOARD OF REGENTS OF THE UNIVERSITY OF MINNESOTA

Subdivision 1.Total Appropriation

$

-0-

$

(50,000,000)

The appropriation reductions for each
purpose are shown in the following
subdivisions.

Subd. 2.Operations and Maintenance

-0-

(44,606,000)

For fiscal years 2012 and 2013, the base for
operations and maintenance is $578,370,000
$533,764,000 each year.

Subd. 3.Special Appropriations

(a) Agriculture and Extension Service

-0-

(3,858,000)

(b) Health Sciences

-0-

(389,000)

$26,000 of the 2011 reduction is from the St.
Cloud family practice residency program.

(c) Institute of Technology

-0-

(102,000)

(d) System Special

-0-

(454,000)

(e) University of Minnesota and Mayo Foundation Partnership

-0-

(591,000)

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

ARTICLE 2

HUMAN SERVICES

    Section 1. Minnesota Statutes 2010, section 256B.766, is amended to read:
256B.766 REIMBURSEMENT FOR BASIC CARE SERVICES.
(a) Effective for services provided on or after July 1, 2009, total payments for basic
care services, shall be reduced by three percent, except that for the period July 1, 2009,
through June 30, 2011, total payments shall be reduced by 4.5 percent for the medical
assistance and general assistance medical care programs, prior to third-party liability and
spenddown calculation. Effective July 1, 2010, the commissioner shall classify physical
therapy services, occupational therapy services, and speech-language pathology and
related services as basic care services. The reduction in this paragraph shall apply to
physical therapy services, occupational therapy services, and speech-language pathology
and related services provided on or after July 1, 2010.
(b) Payments made to managed care plans and county-based purchasing plans shall
be reduced for services provided on or after October 1, 2009, to reflect the reduction
effective July 1, 2009, and payments made to the plans shall be reduced effective October
1, 2010, to reflect the reduction effective July 1, 2010.
(c) This section does not apply to physician and professional services, inpatient
hospital services, family planning services, mental health services, dental services,
prescription drugs, medical transportation, federally qualified health centers, rural health
centers, Indian health services, and Medicare cost-sharing.
EFFECTIVE DATE.This section is effective the day following final enactment.

Sec. 2. DEPARTMENT OF HUMAN SERVICES

				APPROPRIATIONS
				Available for the Year
				Ending June 30
					2012		2013

Subdivision 1.Total appropriation.

$

(19,659,000)

(19,659,000)

The appropriation reductions for each
purpose are shown in the following
subdivisions. The appropriation reductions
shown are to previously established general
fund bases for the following programs.

Subd. 2.Children and Economic Assistance Grants

(a) Children and Community Services Grants

(13,659,000)

(13,659,000)

(b) General Assistance Grants

(5,267,000)

(5,267,000)

Emergency General Assistance. This
reduction is to reduce the general fund base
for emergency general assistance in fiscal
years 2012 and 2013.

(c) Minnesota Supplemental Aid Grants

(733,000)

(733,000)

Emergency Minnesota Supplemental Aid.
This reduction is to reduce the general fund
base for emergency Minnesota supplemental
aid in fiscal years 2012 and 2013.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 3

2011 REDUCTIONS

    Section 1. FISCAL YEAR 2011 REDUCTIONS.
(a) By March 31, 2011, the commissioner of management and budget must allocate
a reduction of $125,000,000 for the fiscal year ending June 30, 2011, to general fund
appropriations made to executive branch agencies as defined in Minnesota Statutes,
section 16A.011, subdivision 12a. Reductions in fiscal year 2011 appropriations cancel to
the general fund. Executive branch agencies must cooperate with the commissioner of
management and budget in developing and implementing these reductions.
(b) The commissioner may not reduce appropriations for:
(1) general education programs under Minnesota Statutes, section 126C.10, and
special education programs under Minnesota Statutes, sections 125A.76 and 125A.79;
(2) enlistment incentives provided by the adjutant general;
(3) the state soldiers' assistance program under Minnesota Statutes, section 197.03;
(4) the county veterans service office grant program under Minnesota Statutes,
section 197.608;
(5) the higher education grant program under Minnesota Statutes, section 136A.121;
(6) flood and tornado disaster relief in Laws 2010, Second Special Session chapter 1,
article 1, section 3, and article 2, section 3, for use by the commissioner of public safety;
(7) local government flood relief grants in Laws 2010, Second Special Session
chapter 1, article 1, section 5;
(8) the job skills partnership program under Minnesota Statutes, chapter 116L;
(9) the vocational rehabilitation program under Minnesota Statutes, chapter 268A;
and
(10) the facilities division of the Department of Corrections.
The commissioner may not further reduce appropriations to the Board of Trustees
of the Minnesota State Colleges and Universities or to the Board of Regents of the
University of Minnesota below the reduction in Laws 2010, First Special Session
chapter 1, article 5, sections 4 and 5. In allocating the reductions the commissioner
must consider appropriation amounts carried forward from fiscal 2010 into fiscal year
2011. The commissioner must report to the chairs and ranking minority members of the
senate Finance Committee and the house of representatives Ways and Means Committee
regarding the amount of reductions in spending by each agency and program under this
section.
(c) Reductions in this section apply to fiscal year 2011 only.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. REDUCTIONS, LEGISLATURE, CONSTITUTIONAL OFFICERS.
    Subdivision 1. Reductions. Appropriations for fiscal year 2011 made in Laws 2009,
chapter 101, article 1, are reduced by the amount listed in this section. Reductions in
this section apply to fiscal year 2011 only.
    Subd. 2. Senate. $72,000.
    Subd. 3. House of representatives. $96,000.
    Subd. 4. State auditor. $41,000.
    Subd. 5. Attorney general. $500,000.
    Subd. 6. Secretary of state. $127,000.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 4

TAX AIDS AND CREDITS

    Section 1. Minnesota Statutes 2010, section 270A.03, subdivision 7, is amended to
read:
    Subd. 7. Refund. "Refund" means an individual income tax refund or political
contribution refund, pursuant to chapter 290, or a property tax credit or refund, pursuant to
chapter 290A, or a sustainable forest tax payment to a claimant under chapter 290C.
For purposes of this chapter, lottery prizes, as set forth in section 349A.08,
subdivision 8 , and amounts granted to persons by the legislature on the recommendation
of the joint senate-house of representatives Subcommittee on Claims shall be treated
as refunds.
In the case of a joint property tax refund payable to spouses under chapter 290A,
the refund shall be considered as belonging to each spouse in the proportion of the total
refund that equals each spouse's proportion of the total income determined under section
290A.03, subdivision 3 . In the case of a joint income tax refund under chapter 289A, the
refund shall be considered as belonging to each spouse in the proportion of the total
refund that equals each spouse's proportion of the total taxable income determined under
section 290.01, subdivision 29. The commissioner shall remit the entire refund to the
claimant agency, which shall, upon the request of the spouse who does not owe the debt,
determine the amount of the refund belonging to that spouse and refund the amount to
that spouse. For court fines, fees, and surcharges and court-ordered restitution under
section 611A.04, subdivision 2, the notice provided by the commissioner of revenue under
section 270A.07, subdivision 2, paragraph (b), serves as the appropriate legal notice
to the spouse who does not owe the debt.
EFFECTIVE DATE.This section is effective for refund claims based on
contributions made after June 30, 2011.

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

    Sec. 3. Minnesota Statutes 2010, section 273.1384, is amended by adding a subdivision
to read:
    Subd. 7. Credit reductions and limitation; counties and cities. (a) In 2011 and
2012, the market value credit reimbursement payment to each county and city authorized
under subdivision 4 may not exceed the reimbursement payment received by the county
or city for taxes payable in 2010.
(b) In 2013 and each year thereafter, the market value credit reimbursement amount
for each city and county determined under this section is reduced by the dollar amount of
the reduction in market value credit reimbursements for that city or county in 2010 due
to the reductions under sections 477A.0133 and 477A.0134. No taxing jurisdiction's
market value credit reimbursements are reduced to less than zero under this subdivision.
The commissioner of revenue shall pay the annual market value credit reimbursement
amounts, after reduction under this subdivision, to the affected city or county as provided
in this section.
EFFECTIVE DATE.This section is effective for credit reimbursements in 2011
and thereafter.

    Sec. 4. Minnesota Statutes 2010, section 289A.50, subdivision 1, is amended to read:
    Subdivision 1. General right to refund. (a) Subject to the requirements of this
section and section 289A.40, a taxpayer who has paid a tax in excess of the taxes lawfully
due and who files a written claim for refund will be refunded or credited the overpayment
of the tax determined by the commissioner to be erroneously paid.
(b) The claim must specify the name of the taxpayer, the date when and the period
for which the tax was paid, the kind of tax paid, the amount of the tax that the taxpayer
claims was erroneously paid, the grounds on which a refund is claimed, and other
information relative to the payment and in the form required by the commissioner. An
income tax, estate tax, or corporate franchise tax return, or amended return claiming an
overpayment constitutes a claim for refund.
(c) When, in the course of an examination, and within the time for requesting a
refund, the commissioner determines that there has been an overpayment of tax, the
commissioner shall refund or credit the overpayment to the taxpayer and no demand
is necessary. If the overpayment exceeds $1, the amount of the overpayment must
be refunded to the taxpayer. If the amount of the overpayment is less than $1, the
commissioner is not required to refund. In these situations, the commissioner does not
have to make written findings or serve notice by mail to the taxpayer.
(d) If the amount allowable as a credit for withholding, estimated taxes, or dependent
care exceeds the tax against which the credit is allowable, the amount of the excess is
considered an overpayment. The refund allowed by section 290.06, subdivision 23, is also
considered an overpayment. The requirements of section 270C.33 do not apply to the
refunding of such an overpayment shown on the original return filed by a taxpayer.
(e) If the entertainment tax withheld at the source exceeds by $1 or more the taxes,
penalties, and interest reported in the return of the entertainment entity or imposed by
section 290.9201, the excess must be refunded to the entertainment entity. If the excess is
less than $1, the commissioner need not refund that amount.
(f) If the surety deposit required for a construction contract exceeds the liability of
the out-of-state contractor, the commissioner shall refund the difference to the contractor.
(g) An action of the commissioner in refunding the amount of the overpayment does
not constitute a determination of the correctness of the return of the taxpayer.
(h) There is appropriated from the general fund to the commissioner of revenue the
amount necessary to pay refunds allowed under this section.
EFFECTIVE DATE.This section is effective for refund claims based on
contributions made after June 30, 2011.

    Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 6, is amended to read:
    Subd. 6. Taxpayer. The term "taxpayer" means any person or corporation subject to
a tax imposed by this chapter. For purposes of section 290.06, subdivision 23, the term
"taxpayer" means an individual eligible to vote in Minnesota under section 201.014.
EFFECTIVE DATE.This section is effective for refund claims based on
contributions made after June 30, 2011.

    Sec. 6. Minnesota Statutes 2010, section 290A.03, subdivision 11, is amended to read:
    Subd. 11. Rent constituting property taxes. "Rent constituting property taxes"
means 19 15 percent of the gross rent actually paid in cash, or its equivalent, or the portion
of rent paid in lieu of property taxes, in any calendar year by a claimant for the right
of occupancy of the claimant's Minnesota homestead in the calendar year, and which
rent constitutes the basis, in the succeeding calendar year of a claim for relief under this
chapter by the claimant.
EFFECTIVE DATE.This section is effective for claims based on rent paid in
2010 and following years.

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

    Sec. 8. Minnesota Statutes 2010, section 290C.07, is amended to read:
290C.07 CALCULATION OF INCENTIVE PAYMENT.
    (a) An approved claimant under the sustainable forest incentive program is eligible
to receive an annual payment. Subject to the limitation contained in paragraph (b), the
payment shall equal the greater of:
    (1) the difference between the property tax that would be paid on the land using the
previous year's statewide average total township tax rate and a class rate of one percent, if
the land were valued at (i) the average statewide managed forest land market value per
acre calculated under section 290C.06, and (ii) the average statewide managed forest land
current use value per acre calculated under section 290C.02, subdivision 5; or
    (2) two-thirds of the property tax amount determined by using the previous year's
statewide average total township tax rate, the estimated market value per acre as calculated
in section 290C.06, and a class rate of one percent, provided that the payment shall be
no less than $7 $7.75 per acre for each acre enrolled in the sustainable forest incentive
program.
(b) The annual payment under this section per each Social Security number or state
or federal business tax identification number must not exceed $100,000.
EFFECTIVE DATE.This section is effective for payments in calendar year 2011
and thereafter.

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

    Sec. 10. Minnesota Statutes 2010, section 477A.013, subdivision 9, is amended to read:
    Subd. 9. City aid distribution. (a) In calendar year 2009 and thereafter, each
city shall receive an aid distribution equal to the sum of (1) the city formula aid under
subdivision 8, and (2) its city aid base.
    (b) For aids payable in 2011 2013 only, the total aid in the previous year for any
city shall mean the amount of aid it was certified to receive for aids payable in 2010 2012
under this section minus the amount of its aid reduction under section 477A.0134. For aids
payable in 2012 2014 and thereafter, the total aid in the previous year for any city means
the amount of aid it was certified to receive under this section in the previous payable year.
    (c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed
the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
aid for any city with a population of 2,500 or more may not be less than its total aid under
this section in the previous year minus the lesser of $10 multiplied by its population, or ten
percent of its net levy in the year prior to the aid distribution.
    (d) For aids payable in 2010 and thereafter, the total aid for a city with a population
less than 2,500 must not be less than the amount it was certified to receive in the
previous year minus the lesser of $10 multiplied by its population, or five percent of its
2003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a
population less than 2,500 must not be less than what it received under this section in the
previous year unless its total aid in calendar year 2008 was aid under section 477A.011,
subdivision 36, paragraph (s), in which case its minimum aid is zero.
    (e) A city's aid loss under this section may not exceed $300,000 in any year in
which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or
greater than the appropriation under that subdivision in the previous year, unless the
city has an adjustment in its city net tax capacity under the process described in section
469.174, subdivision 28 .
    (f) If a city's net tax capacity used in calculating aid under this section has decreased
in any year by more than 25 percent from its net tax capacity in the previous year due to
property becoming tax-exempt Indian land, the city's maximum allowed aid increase
under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
resulting from the property becoming tax exempt.
EFFECTIVE DATE.This section is effective for aids payable in calendar year
2012 and thereafter.

    Sec. 11. Minnesota Statutes 2010, section 477A.013, is amended by adding a
subdivision to read:
    Subd. 11. Aid payments in 2011 and 2012. Notwithstanding aids calculated or
certified for 2011 under subdivision 9, for 2011 and 2012, each city shall receive an aid
distribution under this section equal to the lesser of (1) the total amount of aid it received
under this section in 2010 after the reductions under sections 477A.0133 and 477A.0134,
and reduced by the amount of payments made under section 477A.011, subdivision 36,
paragraphs (y) and (z), and, for 2011 only, increased by the aid base adjustment under
section 477A.011, subdivision 36, paragraph (aa), or (2) the amount it was certified to
receive in 2011 under subdivision 9.
EFFECTIVE DATE.This section is effective for aids payable in calendar years
2011 and 2012.

    Sec. 12. Minnesota Statutes 2010, section 477A.03, is amended to read:
477A.03 APPROPRIATION.
    Subd. 2. Annual appropriation. A sum sufficient to discharge the duties imposed
by sections 477A.011 to 477A.014 is annually appropriated from the general fund to the
commissioner of revenue.
    Subd. 2a. Cities. For aids payable in 2011 2013 and thereafter, the total aid paid
under section 477A.013, subdivision 9, is $527,100,646 $426,438,012.
    Subd. 2b. Counties. (a) For aids payable in 2011 2013 and thereafter, the total aid
payable under section 477A.0124, subdivision 3, is $96,395,000 $80,795,000. Each
calendar year, $500,000 shall be retained by the commissioner of revenue to make
reimbursements to the commissioner of management and budget for payments made
under section 611.27. For calendar year 2004, the amount shall be in addition to the
payments authorized under section 477A.0124, subdivision 1. For calendar year 2005
and subsequent years, the amount shall be deducted from the appropriation under
this paragraph. The reimbursements shall be to defray the additional costs associated
with court-ordered counsel under section 611.27. Any retained amounts not used for
reimbursement in a year shall be included in the next distribution of county need aid
that is certified to the county auditors for the purpose of property tax reduction for the
next taxes payable year.
    (b) For aids payable in 2011 2013 and thereafter, the total aid under section
477A.0124, subdivision 4 , is $101,309,575 $84,909,575. The commissioner of
management and budget shall bill the commissioner of revenue for the cost of preparation
of local impact notes as required by section 3.987, not to exceed $207,000 in fiscal year
2004 and thereafter. The commissioner of education shall bill the commissioner of
revenue for the cost of preparation of local impact notes for school districts as required by
section 3.987, not to exceed $7,000 in fiscal year 2004 and thereafter. The commissioner
of revenue shall deduct the amounts billed under this paragraph from the appropriation
under this paragraph. The amounts deducted are appropriated to the commissioner of
management and budget and the commissioner of education for the preparation of local
impact notes.
EFFECTIVE DATE.This section is effective for aids payable in calendar year
2012 and thereafter.

    Sec. 13. ADMINISTRATION OF PROPERTY TAX REFUND CLAIMS; 2011.
In administering sections 6 and 7 for claims for refunds submitted using 19 percent
of gross rent as rent constituting property taxes under prior law, the commissioner shall
recalculate and pay the refund amounts using 15 percent of gross rent. The commissioner
shall notify the claimant that the recalculation was mandated by action of the 2011
legislature.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 14. REPEALER.
(a) Minnesota Statutes 2010, sections 10A.322, subdivision 4; and 13.4967,
subdivision 2, are repealed.
(b) Minnesota Statutes 2010, section 290.06, subdivision 23, is repealed.
EFFECTIVE DATE.Paragraph (a) is effective the day following final enactment.
Paragraph (b) is effective for refund claims based on contributions made after June 30,
2011.

ARTICLE 5

FEDERAL UPDATE

    Section 1. Minnesota Statutes 2010, section 289A.02, subdivision 7, is amended to
read:
    Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through March 18,
2010 September 27, 2010.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19, is amended to read:
    Subd. 19. Net income. The term "net income" means the federal taxable income,
as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
date named in this subdivision, incorporating the federal effective dates of changes to the
Internal Revenue Code and any elections made by the taxpayer in accordance with the
Internal Revenue Code in determining federal taxable income for federal income tax
purposes, and with the modifications provided in subdivisions 19a to 19f.
    In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:
    (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;
    (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
Revenue Code must be applied by allowing a deduction for capital gain dividends and
exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
Revenue Code; and
    (3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.
    The net income of a real estate investment trust as defined and limited by section
856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
    The net income of a designated settlement fund as defined in section 468B(d) of
the Internal Revenue Code means the gross income as defined in section 468B(b) of the
Internal Revenue Code.
    The Internal Revenue Code of 1986, as amended through March 18, 2010 September
27, 2010, shall be in effect for taxable years beginning after December 31, 1996. The
provisions of the act of January 22, 2010, Public Law 111-126, to accelerate the benefits
for charitable cash contributions for the relief of victims of the Haitian earthquake, are
effective at the same time it became effective for federal purposes and apply to the
subtraction under subdivision 19b, clause (6).
    Except as otherwise provided, references to the Internal Revenue Code in
subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
the applicable year.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19a, is amended to read:
    Subd. 19a. Additions to federal taxable income. For individuals, estates, and
trusts, there shall be added to federal taxable income:
    (1)(i) interest income on obligations of any state other than Minnesota or a political
or governmental subdivision, municipality, or governmental agency or instrumentality
of any state other than Minnesota exempt from federal income taxes under the Internal
Revenue Code or any other federal statute; and
    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
Code, except:
(A) the portion of the exempt-interest dividends exempt from state taxation under
the laws of the United States; and
(B) the portion of the exempt-interest dividends derived from interest income
on obligations of the state of Minnesota or its political or governmental subdivisions,
municipalities, governmental agencies or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to all shareholders represents
95 percent or more of the exempt-interest dividends, including any dividends exempt
under subitem (A), that are paid by the regulated investment company as defined in section
851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
defined in section 851(g) of the Internal Revenue Code, making the payment; and
    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
government described in section 7871(c) of the Internal Revenue Code shall be treated as
interest income on obligations of the state in which the tribe is located;
    (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid
or accrued within the taxable year under this chapter and the amount of taxes based on
net income paid, sales and use, motor vehicle sales, or excise taxes paid to any other
state or to any province or territory of Canada, to the extent allowed as a deduction
under section 63(d) of the Internal Revenue Code, but the addition may not be more
than the amount by which the itemized deductions as allowed under section 63(d) of
the Internal Revenue Code exceeds the amount of the standard deduction as defined in
section 63(c) of the Internal Revenue Code, disregarding the amounts allowed under
sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code. For the purpose of
this paragraph, the disallowance of itemized deductions under section 68 of the Internal
Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise taxes are
the last itemized deductions disallowed;
    (3) the capital gain amount of a lump-sum distribution to which the special tax under
section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
    (4) the amount of income taxes paid or accrued within the taxable year under this
chapter and taxes based on net income paid to any other state or any province or territory
of Canada, to the extent allowed as a deduction in determining federal adjusted gross
income. For the purpose of this paragraph, income taxes do not include the taxes imposed
by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
    (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
other than expenses or interest used in computing net interest income for the subtraction
allowed under subdivision 19b, clause (1);
    (6) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;
    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
in the taxable year generates a deduction for depreciation under section 168(k) and the
activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
limited to excess of the depreciation claimed by the activity under section 168(k) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k) is allowed;
    (8) for taxable years beginning before January 1, 2011, 80 percent of the amount by
which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
through December 31, 2003;
    (9) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code;
    (10) for taxable years beginning before January 1, 2013, the exclusion allowed
under section 139A of the Internal Revenue Code for federal subsidies for prescription
drug plans;
(11) the amount of expenses disallowed under section 290.10, subdivision 2;
    (12) the amount deducted for qualified tuition and related expenses under section
222 of the Internal Revenue Code, to the extent deducted from gross income;
    (13) the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
from gross income;
(14) the additional standard deduction for property taxes payable that is allowable
under section 63(c)(1)(C) of the Internal Revenue Code;
(15) the additional standard deduction for qualified motor vehicle sales taxes
allowable under section 63(c)(1)(E) of the Internal Revenue Code;
(16) discharge of indebtedness income resulting from reacquisition of business
indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
(17) the amount of unemployment compensation exempt from tax under section
85(c) of the Internal Revenue Code.
EFFECTIVE DATE.This section is effective for taxable years beginning after
December 31, 2009.

    Sec. 4. Minnesota Statutes 2010, section 290.01, subdivision 19c, is amended to read:
    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
there shall be added to federal taxable income:
    (1) the amount of any deduction taken for federal income tax purposes for income,
excise, or franchise taxes based on net income or related minimum taxes, including but not
limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
another state, a political subdivision of another state, the District of Columbia, or any
foreign country or possession of the United States;
    (2) interest not subject to federal tax upon obligations of: the United States, its
possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
state, any of its political or governmental subdivisions, any of its municipalities, or any
of its governmental agencies or instrumentalities; the District of Columbia; or Indian
tribal governments;
    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
Revenue Code;
    (4) the amount of any net operating loss deduction taken for federal income tax
purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
deduction under section 810 of the Internal Revenue Code;
    (5) the amount of any special deductions taken for federal income tax purposes
under sections 241 to 247 and 965 of the Internal Revenue Code;
    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
clause (a), that are not subject to Minnesota income tax;
    (7) the amount of any capital losses deducted for federal income tax purposes under
sections 1211 and 1212 of the Internal Revenue Code;
    (8) the exempt foreign trade income of a foreign sales corporation under sections
921(a) and 291 of the Internal Revenue Code;
    (9) the amount of percentage depletion deducted under sections 611 through 614 and
291 of the Internal Revenue Code;
    (10) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, the amount of the amortization deduction allowed in computing federal taxable
income for those facilities;
    (11) the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
shall be reduced by the amount of the addition to income required by clauses (20), (21),
(22), and (23);
    (12) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;
    (13) the amount of net income excluded under section 114 of the Internal Revenue
Code;
    (14) any increase in subpart F income, as defined in section 952(a) of the Internal
Revenue Code, for the taxable year when subpart F income is calculated without regard to
the provisions of Division C, title III, section 303(b) of Public Law 110-343;
    (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
has an activity that in the taxable year generates a deduction for depreciation under
section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k)(1)(A) and (k)(4)(A) is allowed;
    (16) for taxable years beginning before January 1, 2011, 80 percent of the amount by
which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
through December 31, 2003;
    (17) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code;
    (18) for taxable years beginning before January 1, 2013, the exclusion allowed
under section 139A of the Internal Revenue Code for federal subsidies for prescription
drug plans;
    (19) the amount of expenses disallowed under section 290.10, subdivision 2;
    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
of a corporation that is a member of the taxpayer's unitary business group that qualifies
as a foreign operating corporation. For purposes of this clause, intangible expenses and
costs include:
    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
use, maintenance or management, ownership, sale, exchange, or any other disposition of
intangible property;
    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
transactions;
    (iii) royalty, patent, technical, and copyright fees;
    (iv) licensing fees; and
    (v) other similar expenses and costs.
For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.
This clause does not apply to any item of interest or intangible expenses or costs paid,
accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
to such item of income to the extent that the income to the foreign operating corporation
is income from sources without the United States as defined in subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code;
    (21) except as already included in the taxpayer's taxable income pursuant to clause
(20), any interest income and income generated from intangible property received or
accrued by a foreign operating corporation that is a member of the taxpayer's unitary
group. For purposes of this clause, income generated from intangible property includes:
    (i) income related to the direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other disposition of intangible property;
    (ii) income from factoring transactions or discounting transactions;
    (iii) royalty, patent, technical, and copyright fees;
    (iv) licensing fees; and
    (v) other similar income.
For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.
This clause does not apply to any item of interest or intangible income received or accrued
by a foreign operating corporation with respect to such item of income to the extent that
the income is income from sources without the United States as defined in subtitle A,
chapter 1, subchapter N, part 1, of the Internal Revenue Code;
    (22) the dividends attributable to the income of a foreign operating corporation that
is a member of the taxpayer's unitary group in an amount that is equal to the dividends
paid deduction of a real estate investment trust under section 561(a) of the Internal
Revenue Code for amounts paid or accrued by the real estate investment trust to the
foreign operating corporation;
    (23) the income of a foreign operating corporation that is a member of the taxpayer's
unitary group in an amount that is equal to gains derived from the sale of real or personal
property located in the United States;
    (24) the additional amount allowed as a deduction for donation of computer
technology and equipment under section 170(e)(6) of the Internal Revenue Code, to the
extent deducted from taxable income; and
(25) discharge of indebtedness income resulting from reacquisition of business
indebtedness and deferred under section 108(i) of the Internal Revenue Code.
EFFECTIVE DATE.This section is effective for taxable years beginning after
December 31, 2009.

    Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 31, is amended to read:
    Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through March
18, 2010 September 27, 2010. Internal Revenue Code also includes any uncodified
provision in federal law that relates to provisions of the Internal Revenue Code that are
incorporated into Minnesota law.
EFFECTIVE DATE.This section is effective the day following final enactment
except that the changes incorporated by federal changes are effective at the same time as
the changes were effective for federal purposes.

    Sec. 6. Minnesota Statutes 2010, section 290A.03, subdivision 15, is amended to read:
    Subd. 15. Internal Revenue Code. "Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended through March 18, 2010 September 27, 2010.
EFFECTIVE DATE.This section is effective for property tax refunds based on
property taxes payable on or after December 31, 2010, and rent paid on or after December
31, 2009.

    Sec. 7. CORRECTED FORM W-2 NOT REQUIRED.
Employers who have prepared and distributed form W-2, wage and tax statement,
for tax year 2010, that reported to employees the amount of health coverage provided to
adult children under age 27 includable in net income under prior law, are not required to
prepare and distribute corrected tax year 2010 form W-2.
EFFECTIVE DATE.This section is effective the day following final enactment.