HF 470

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:37am

A bill for an act
relating to taxation; income; amending participation fee and program fee
requirements; allowing a credit for contributions to prekindergarten scholarship
granting organizations; amending Minnesota Statutes 2008, sections 124D.13,
subdivision 6; 124D.15, subdivision 12; 290.01, subdivision 19c; proposing
coding for new law in Minnesota Statutes, chapter 290.

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

Section 1.

Minnesota Statutes 2008, section 124D.13, subdivision 6, is amended to
read:

Subd. 6.

Participants' fees.

A district must establish a reasonable sliding fee scale new text begin ,
and must accept education scholarships funded by contributions that qualify for the tax
credit in section 290.0678, new text end but it shall waive the fee for a participant new text begin who does not have a
scholarship and is new text end unable to pay.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2008, section 124D.15, subdivision 12, is amended to read:

Subd. 12.

Program fees.

A district must adopt a sliding fee schedule based on a
family's income new text begin , and must accept education scholarships funded by contributions that
qualify for the tax credit in section 290.0678, new text end but must waive a fee for a participant new text begin who
does not have a scholarship and is new text end unable to pay.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2008, 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 section 103 of Public Law 109-222;

(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) 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) 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; deleted text begin and
deleted text end

(24) for taxable years beginning after December 31, 2006, and before January 1,
2008, 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 new text begin ; and
new text end

new text begin (25) the amount deducted under section 170 of the Internal Revenue Code that
represents contributions to a prekindergarten scholarship granting organization for which
a credit is claimed under section 290.0678 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, 2008.
new text end

Sec. 4.

new text begin [290.0678] CREDIT FOR CONTRIBUTIONS TO SCHOLARSHIP
GRANTING ORGANIZATIONS.
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) "Statewide median family income" means median income for a four-person
family in Minnesota used by the United States Department of Health and Human Services
in administering the Low Income Home Energy Assistance Program, as most recently
published in the Federal Register.
new text end

new text begin (c) A "qualified student" must be:
new text end

new text begin (1) younger than age seven, not yet enrolled in kindergarten or first grade, and a
Minnesota resident; and
new text end

new text begin (2) a member of a household with an income less than 75 percent of the statewide
median family income.
new text end

new text begin (d) A "qualified prekindergarten educational program" must:
new text end

new text begin (1) be one of the following:
new text end

new text begin (i) a prekindergarten program established by a school district under chapter 124D;
new text end

new text begin (ii) a preschool, nursery school, or early childhood development program licensed
by the Department of Human Services and accredited by the National Association for the
Education of Young Children or National Early Childhood Program Accreditation;
new text end

new text begin (iii) a Montessori program affiliated with or accredited by the American Montessori
Society or American Montessori International;
new text end

new text begin (iv) an early childhood family education program under section 124D.13; or
new text end

new text begin (v) a school readiness program under section 124D.15; and
new text end

new text begin (2) accept education scholarship funds granted under this section in payment of
tuition for a qualified student under paragraph (c) enrolled in the program.
new text end

new text begin (e) "Prekindergarten scholarship granting organization" or "preK SGO" means a
charitable organization that is exempt from federal taxation under section 501(c)(3) of
the Internal Revenue Code, is registered with the attorney general's office, and is certified
by the commissioner of education as meeting the criteria of this paragraph. To qualify as
a preK SGO, the charitable organization:
new text end

new text begin (1) must allocate at least 85 percent of its annual revenue for education scholarship
funds to children to allow them to attend any qualified prekindergarten educational
program of their parents' choice;
new text end

new text begin (2) must not restrict the availability of scholarships to students of one program;
new text end

new text begin (3) may not charge a fee of any kind to students under consideration for a scholarship;
new text end

new text begin (4) must require a qualified prekindergarten educational program receiving payment
of tuition through a scholarship grant funded by contributions qualifying for the tax credit
under subdivision 3 awarded by a preK SGO to an enrolled student of the program to
sign an agreement that it will not use different admissions standards for a student with a
scholarship grant from a preK SGO;
new text end

new text begin (5) must agree to annually report to the Department of Education on:
new text end

new text begin (i) the number of students awarded scholarship grants funded by contributions
under the tax credit program;
new text end

new text begin (ii) the total amount of scholarship grant dollars awarded from contributions under
the tax credit program;
new text end

new text begin (iii) the total number of programs attended by scholarship grant recipients;
new text end

new text begin (iv) the total amount of contributions received under the tax credit program; and
new text end

new text begin (v) the percentage of contributions received under the tax credit program that was
provided as scholarship grants to families; and
new text end

new text begin (6) must provide the Department of Education with the same annual report that the
organization must provide the attorney general's office under section 309.53, subdivision 1.
new text end

new text begin Subd. 2. new text end

new text begin Commissioner of education. new text end

new text begin The commissioner of education:
new text end

new text begin (1) must maintain a list of preK SGO's;
new text end

new text begin (2) must make the list available on the Department of Education's Web site and
by other means;
new text end

new text begin (3) must develop an application process for preK SGO's to be recorded as qualifying
by the Department of Education under this section;
new text end

new text begin (4) may remove an organization from the list of qualifying preK SGO's, after
notifying the organization and providing an opportunity for a public hearing, for reasons
of the organization's financial mismanagement or violation of the law; and
new text end

new text begin (5) must develop a process for preK SGO's to annually report to the Department
of Education as specified in this section.
new text end

new text begin Subd. 3. new text end

new text begin Credit allowed. new text end

new text begin A corporation is allowed a credit against the corporate
franchise tax due under this chapter equal to 50 percent of the amount contributed to a
prekindergarten scholarship granting organization. The maximum credit allowed any
corporation in a taxable year is $100,000. The credit may not be claimed for contributions
designated for the use of a specific student. The credit for the taxable year may not
exceed the corporation's liability for tax. The commissioner of revenue shall prescribe the
manner in which the credit may be claimed. This may include allowing the credit only as
a separately processed claim for refund.
new text end

new text begin Subd. 4. new text end

new text begin Application for credit certificate. new text end

new text begin A corporation shall apply to the
Department of Education for a tax credit certificate. A corporation shall receive a tax credit
certificate under this section if the preK SGO appears on the list of qualifying preK SGO's
maintained by the Department of Education. Tax credit certificates under this section shall
be made available by the Department of Education on a first-come, first-served basis until
the maximum statewide credit amount has been reached. The statewide credit maximum
amount is $....... in fiscal year 2010 and $....... in fiscal year 2011. A contribution by
a corporation to a preK SGO shall be made no later than 60 days following written
notification of the approval of an application. The commissioner of education shall issue
the tax credit certificate in the amount of one-half of the amount contributed to the preK
SGO after the corporation has made the contribution to the preK SGO. The commissioner
of education shall not issue a tax credit certificate for an amount greater than $100,000.
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, 2008.
new text end