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10. New Commissioner. Former Faegre & Benson partner, Myron Frans, was appointed to serve as the Minnesota Commissioner of Revenue.
9. No "Amazon Law"– For Now. Bills were introduced to enact a so-called "Amazon law" under which internet sellers would have sales tax nexus because of online affiliate advertising activities. The bills did not pass, but will they be re-introduced in 2012?
8. Refunds Released. The Legislature repealed a 2010 law that directed the Commissioner of Revenue to postpone paying $152 million in corporate franchise tax and sales tax refunds.
7. Accommodation Intermediaries Taxed. Legislation was adopted requiring accommodation intermediaries (such as on-line hotel booking sites) to collect sales tax. However, the tax base is unclear. How will the Department enforce the new law?
6. No Income Tax Increase. The Legislature defeated Governor Mark Dayton's proposal for a fourth-tier personal income tax of 10.95 percent (starting at $150,000 of taxable income for married joint filers and $85,000 for single filers). The corporate rate also was unchanged.
5. Foreign Operating Companies Survive. The Legislature defeated the Governor's proposal to repeal the foreign royalty deduction and foreign operating corporation (i.e., 80-20 company) provisions.
4. Data Center Exemption. The Legislature enacted a sales tax exemption for technology equipment, computer software, and electricity used by a qualifying data center (i.e., one having at least 30,000 square feet with an initial investment of at least $50 million in a two-year period).
3. Software Installation. The installation of software is subject to Minnesota sales tax. The Department of Revenue construes the term "installation" broadly and, in the Department's 2011 technical bill, would have defined it to include configuration services. The bill did not pass, but will the Department continue to tax the array of services purchased in connection with ERP (and other) software? (Litigation on this issue is pending.)
2. No Contingent Fee Audits. The Legislature prohibited the Department from entering into contracts with outside vendors for contingent fee audits. The Department apparently was considering engaging a third-party transfer pricing consultant. Will it still do so?
1. No Economic Substance Rule. Last year, in the HMN case tried by Faegre & Benson, the Minnesota Supreme Court rejected the Department's contention that courts can override statutory law using the economic substance doctrine. Legislation to override HMN was introduced but defeated. Similar legislation has been introduced in past sessions. Will it eventually pass?