HF 1975

as introduced - 92nd Legislature (2021 - 2022) Posted on 04/13/2021 10:53am

A bill for an act
relating to taxation; modifying individual income and corporate franchise
provisions; proposing a film production credit; allowing the credit to be transferable
to offset insurance premiums taxes; amending Minnesota Statutes 2020, sections
290.06, by adding a subdivision; 297I.20, by adding a subdivision; proposing
coding for new law in Minnesota Statutes, chapter 116U.

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

Section 1.

new text begin [116U.27] FILM PRODUCTION CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Allocation certificate" means a certificate issued by the commissioner to a taxpayer
upon receipt of an initial application for a credit for a project that has not yet been completed.
new text end

new text begin (c) "Application" means the application for a credit under subdivision 4.
new text end

new text begin (d) "Commissioner" means the commissioner of employment and economic development.
new text end

new text begin (e) "Credit certificate" means a certificate issued by the commissioner upon submission
of the cost verification report in subdivision 4, paragraph (e).
new text end

new text begin (f) "Eligible production costs" has the meaning given in section 116U.26, paragraph (b),
clause (1).
new text end

new text begin (g) "Film" has the meaning given in section 116U.26, paragraph (b), clause (2).
new text end

new text begin (h) "Project" means a film:
new text end

new text begin (1) that includes the promotion of Minnesota;
new text end

new text begin (2) for which the taxpayer has expended at least $1,000,000 in the taxable year for
eligible production costs; and
new text end

new text begin (3) to the extent practicable, that employs Minnesota residents.
new text end

new text begin (i) "Promotion of Minnesota" or "promotion" means visible display of the term "produced
in Minnesota" or "filmed in Minnesota" in the film.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin A taxpayer is eligible for a credit equal to 25 percent of eligible
production costs paid in a taxable year. A taxpayer may only claim a credit if the taxpayer
was issued a credit certificate under subdivision 4.
new text end

new text begin Subd. 3. new text end

new text begin Credit assignable. new text end

new text begin A taxpayer who is eligible for a credit under this subdivision
may assign the credit, in whole or in part, to another taxpayer, who is then allowed the credit
under section 290.06, subdivision 39, or 297I.20, subdivision 4. An assignment is not valid
unless the assignee notifies the commissioner within 30 days of the date that the assignment
is made. The commissioner shall prescribe the forms necessary for notifying the
commissioner of the assignment of a credit certificate and for claiming a credit by assignment.
A credit must be assigned for at least 75 percent of the credit amount subject to assignment.
new text end

new text begin Subd. 4. new text end

new text begin Applications; allocations. new text end

new text begin (a) To qualify for a credit under this section, a
taxpayer must submit to the commissioner an initial application for a credit in the form
prescribed by the commissioner, in consultation with the commissioner of revenue.
new text end

new text begin (b) Upon approving an application for a credit that meets the requirements of this section,
the commissioner shall issue allocation certificates that:
new text end

new text begin (1) verify eligibility for the credit;
new text end

new text begin (2) state the amount of credit anticipated for the eligible project, with the credit amount
equal to 25 percent of eligible project costs; and
new text end

new text begin (3) state the taxable year in which the credit is allocated.
new text end

new text begin The commissioner must consult with Minnesota Film and Television prior to issuing an
allocation certificate.
new text end

new text begin (c) The commissioner must not issue allocation certificates for more than $25,000,000
of credits each year. If the entire amount is not allocated in that taxable year, any remaining
amount is available for allocation for the four following taxable years until the entire
allocation has been made. The commissioner must not award any credits for taxable years
beginning after December 31, 2030, and any unallocated amounts cancel on that date.
new text end

new text begin (d) The commissioner must allocate credits on a first-come, first-served basis.
new text end

new text begin (e) Upon completion of a project, the taxpayer shall submit to the commissioner a report
prepared by an independent certified public accountant licensed in the state of Minnesota
to verify the amount of eligible production costs related to the project. The report must be
prepared in accordance with generally accepted accounting principles. Upon receipt and
review of the cost verification report, the commissioner shall determine the final amount
of eligible production costs and issue a credit certificate to the taxpayer. The credit may not
exceed the anticipated credit amount on the allocation certificate. If the credit is less than
the anticipated amount on the allocation credit, the difference is returned to the amount
available for allocation under paragraph (c). To claim the credit under section 290.06,
subdivision 39, or 297I.20, subdivision 4, a taxpayer must include a copy of the certificate
as part of the taxpayer's return.
new text end

new text begin Subd. 5. new text end

new text begin Report required. new text end

new text begin By March 15, 2023, the commissioner, in consultation with
the commissioner of revenue, must provide a report to the chairs and ranking minority
members of the legislative committees with jurisdiction over economic development and
taxes. The report must comply with sections 3.195 and 3.197, and must detail the following:
new text end

new text begin (1) the amount of credits earned in each taxable year;
new text end

new text begin (2) the number of applications received and approved for the credit;
new text end

new text begin (3) the types of projects eligible for the credit;
new text end

new text begin (4) the total economic impact of the credit in Minnesota, including the number of jobs
resulting from the credit; and
new text end

new text begin (5) any other information the commissioner, in consultation with the commissioner of
revenue, deems necessary for purposes of claiming and administering the credit.
new text end

new text begin Subd. 6. new text end

new text begin Expiration. new text end

new text begin This section expires January 1, 2031, for taxable years beginning
after December 31, 2030.
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, 2020, and before January 1, 2031.
new text end

Sec. 2.

Minnesota Statutes 2020, section 290.06, is amended by adding a subdivision to
read:

new text begin Subd. 39. new text end

new text begin Film production credit. new text end

new text begin (a) A taxpayer may claim a credit against the tax
imposed by this chapter equal to the amount certified on a credit certificate under section
116U.27. The credit is subject to the limitations in paragraphs (e) and (f).
new text end

new text begin (b) The credit is limited to the liability for tax, as computed under this chapter, for the
taxable year. If the amount of the credit determined under this subdivision for any taxable
year exceeds this limitation, the excess is a film production credit carryover to each of the
five succeeding taxable years. The entire amount of the excess unused credit for the taxable
year is 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 that may be added under this paragraph must not exceed the taxpayer's liability
for tax, less any film production credit for the taxable year.
new text end

new text begin (c) Credits allowed to a partnership, a limited liability company taxed as a partnership,
or an S corporation are passed through to the partners, members, shareholders, or owners,
respectively, pro rata to each based on the partner's, member's, shareholder's, or owner's
share of the entity's assets, or as specially allocated in the organizational documents or any
other executed agreement, as of the last day of the taxable year.
new text end

new text begin (d) Notwithstanding the approval and certification by the commissioner of employment
and economic development under section 116U.27, the commissioner may utilize any audit
and examination powers under chapter 270C or 289A to the extent necessary to verify that
the taxpayer is eligible for the credit and to assess the amount of any improperly claimed
credit. The commissioner may only assess the original recipient of the credit certificate for
the amount of improperly claimed credits. The commissioner may not assess a credit
certificate transferee for any amount of improperly claimed credits, and a transferee's claim
for credit is not affected by the commissioner's assessment of improperly claimed credits
against the transferor.
new text end

new text begin (e) This subdivision expires January 1, 2031, for taxable years beginning after December
31, 2030.
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, 2020, and before January 1, 2031.
new text end

Sec. 3.

Minnesota Statutes 2020, section 297I.20, is amended by adding a subdivision to
read:

new text begin Subd. 4. new text end

new text begin Film production credit. new text end

new text begin (a) A taxpayer may claim a credit against the premiums
tax imposed under this chapter equal to the amount indicated on the credit certificate
statement issued to the company under section 116U.27. If the amount of the credit exceeds
the taxpayer's liability for tax under this chapter, the excess is a credit carryover to each of
the five succeeding taxable years. The entire amount of the excess unused credit for the
taxable year must 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. This credit
does not affect the calculation of fire state aid under section 477B.03 and police state aid
under section 477C.03.
new text end

new text begin (b) This subdivision expires January 1, 2031, for taxable years beginning after and
premiums received after December 31, 2030.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after and for
premiums received after December 31, 2020, and before January 1, 2031.
new text end