SF 625

as introduced - 89th Legislature (2015 - 2016) Posted on 02/13/2015 09:30am

A bill for an act
relating to taxation; income and corporate franchise; providing for limited
refundability of the research credit; amending Minnesota Statutes 2014, section
290.068, subdivisions 2, 3, 6a.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 290.068, subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of this section, the following terms have the
meanings given.

(a) "Qualified research expenses" means (i) qualified research expenses and basic
research payments as defined in section 41(b) and (e) of the Internal Revenue Code, except
it does not include expenses incurred for qualified research or basic research conducted
outside the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue
Code; and (ii) contributions to a nonprofit corporation established and operated pursuant
to the provisions of chapter 317A for the purpose of promoting the establishment and
expansion of business in this state, provided the contributions are invested by the nonprofit
corporation for the purpose of providing funds for small, technologically innovative
enterprises in Minnesota during the early stages of their development.

(b) "Qualified research" means qualified research as defined in section 41(d) of the
Internal Revenue Code, except that the term does not include qualified research conducted
outside the state of Minnesota.

(c) "Base amount" means base amount as defined in section 41(c) of the Internal
Revenue Code, except that the average annual gross receipts must be calculated using
Minnesota sales or receipts under section 290.191 and the definitions contained in clauses
(a) and (b) shall apply.

new text begin (d) "Liability for tax" for purposes of this section means the sum of the tax imposed
under section 290.06, subdivisions 1 and 2c, for the taxable year reduced by the sum of
the nonrefundable credits allowed under this chapter, on all of the entities required to be
included on the combined report of the unitary business.
new text end

Sec. 2.

Minnesota Statutes 2014, section 290.068, subdivision 3, is amended to read:

Subd. 3.

Limitation; carryover.

(a) new text begin Except as provided in subdivision 6a,
paragraph (b), new text end the credit deleted text begin for a taxable year beginning before January 1, 2010, and after
December 31, 2012, deleted text end shall not exceed the liability for tax. deleted text begin "Liability for tax" for purposes
of this section means the sum of the tax imposed under section 290.06, subdivisions 1 and
2c, for the taxable year reduced by the sum of the nonrefundable credits allowed under
this chapter, on all of the entities required to be included on the combined report of the
unitary business. deleted text end If the amount of the credit allowed exceeds the liability for tax of the
taxpayer, but is allowed as a result of the liability for tax of other members of the unitary
group for the taxable year, the taxpayer must allocate the excess as a research credit
to another member of the unitary group.

(b) In the case of a corporation which is a partner in a partnership, the credit allowed
for the taxable year shall not exceed the lesser of the amount determined under paragraph
(a) for the taxable year or an amount (separately computed with respect to the corporation's
interest in the trade or business or entity) equal to the amount of tax attributable to that
portion of taxable income which is allocable or apportionable to the corporation's interest
in the trade or business or entity.

(c) If the amount of the credit determined under this section for any taxable year
exceeds the limitation under paragraph (a) or (b), including amounts new text begin allowed as a refund
under subdivision 6a, paragraph (b), or new text end allocated to other members of the unitary group,
the excess shall be a research credit carryover to each of the 15 succeeding taxable years.
The entire amount of the excess unused credit for the taxable year shall be carried first
to the earliest of the taxable years to which the credit may be carried and then to each
successive year to which the credit may be carried. The amount of the unused credit
which may be added under this clause shall not exceed the taxpayer's liability for tax
less the research credit for the taxable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 3.

Minnesota Statutes 2014, section 290.068, subdivision 6a, is amended to read:

Subd. 6a.

Credit to be refundable.

new text begin (a) new text end If the amount of credit allowed in this
section for qualified research expenses incurred in taxable years beginning after December
31, 2009, and before January 1, 2013, exceeds the taxpayer's tax liability under this
chapter, the commissioner shall refund the excess amount. The credit allowed for qualified
research expenses incurred in taxable years beginning after December 31, 2009, and before
January 1, 2013, must be used before any research credit earned under subdivision 3.

new text begin (b) If the amount of credit allowed in this section for qualified research expenses
incurred in taxable years beginning after December 31, 2014, exceeds the taxpayer's
liability for tax under this chapter by $....... or less, the commissioner shall refund the excess
amount. The limit includes any amount of tax under sections 290.0921 and 290.0922. The
credit allowed for qualified research expenses incurred in taxable years beginning before
January 1, 2015, must be used before any research credit earned under subdivision 3.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end