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S.F. No. 1487 - Creating Silica Sand Extraction & Processing Taxes; Increasing Aggregate Tax
 
Author: Senator Matt Schmit
 
Prepared By: Eric S. Silvia, Senate Counsel (651/296-1771)
 
Date: April 8, 2013



 

S.F. 1487 authorizes two taxes on the extraction and processing of fractured silica sand and increases the aggregate tax imposed by some counties on the excavation or importing of aggregate material.

Section 1 [Definitions] defines terms relating to silica sand mining including ‘extraction’ (commercial excavation or commercial mining of fracturing sand) and ‘washing’ (treatment of fracturing sand to remove impurities such as sand and clay to prepare the sand for use in hydraulic fracturing).

Section 2 [Tax Imposed] creates an extraction tax and a processing tax. The taxes imposed are due on or before the 20th day of the month following the close of the previous calendar month.

  • Extraction Tax – A tax of $1 per ton is imposed on any person who extracts fracturing sand in Minnesota. All revenue collected is credited to a special account in the general fund and is appropriated to the Environmental Quality Board.
  • Processing Tax – A tax of 3 percent of the market value of fracturing sand processed is imposed on any person engaged in washing or processing fracturing sand in Minnesota.  All revenue is credited to a special account in the general fund and appropriated in equal amounts to: (1) the commissioner of transportation to be allocated equally to counties with active fracturing sand mines for road maintenance; (2) the commissioner of natural resources to acquire land or interests in land; and (3) the Board of Water & Soil Resources to acquire permanent easements that prevent commercial fracturing sand mining in wellhead protection areas.

Section 3 [Registration; Reporting; Filing Requirements] requires that a person who extracts or processes fracturing sand must register with the commissioner of revenue and must file a report showing the amount of sand extracted or processed monthly on or before the 20th day of the month following the month in which the sand was extracted or processed.

Section 4 [Limitations on Time for Assessment of Tax] requires that the amount of taxes assessable must be assessed within 3 ½ years after the date the return is filed. Additional taxes may be assessed if the taxpayer omits from a return taxes exceeding 25 percent of the taxes reported. Provisions relating to refunds for overpayment or suspension of collection due to bankruptcy are also stated.

Section 5 [Civil Penalties] establishes civil penalties for failure to timely pay the tax, failing to make and file the requisite return as well as additional penalties for intentional disregard of law, filing a false or fraudulent return and for repeat offenders.

Section 6 [Criminal Penalties] establishes criminal penalties, in addition to the civil penalties found in Section 5, for failing to file reports, pay taxes, and for providing false information on returns, reports or other documents.

Section 7 [Interest] establishes a schedule for interest payments relating to late payments, additional assessments due to a redetermination by the commissioner, or erroneous refunds.

Section 8 [Aggregate Tax; Tax Imposed] increases the aggregate tax imposed in some counties to 43 cents per cubic yard or 30 cents per ton for aggregate material excavated in the county or aggregate material imported into the county.

Effective the day following final enactment.

 

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