HF 3908

as introduced - 89th Legislature (2015 - 2016) Posted on 04/14/2016 12:46pm

A bill for an act
relating to taxation; income and corporate franchise; providing a tax credit for
certain employers; proposing coding for new law in Minnesota Statutes, chapter
290.

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

Section 1.

new text begin [290.0694] TAX CREDIT FOR EMPLOYERS OF LOW-INCOME
MEMBERS OF COMMUNITIES OF COLOR.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following
definitions apply.
new text end

new text begin (b) "Qualified employee" means an employee as defined in section 290.92,
subdivision 1, who meets the following criteria:
new text end

new text begin (1) the employee is a resident of Minnesota on the date of hire;
new text end

new text begin (2) the employee is paid wages as defined in section 290.92, subdivision 1;
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new text begin (3) the employee's wages are attributable to Minnesota under section 290.191,
subdivision 12;
new text end

new text begin (4) the employee is an individual from a community of color residing in a
low-income area, as defined under section 116M.14; and
new text end

new text begin (5) the employee is employed by the qualified employer for at least six continuous
months from the date of hire.
new text end

new text begin (c) "Qualified employee" does not include:
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new text begin (1) any employee who bears any of the relationships to the employer described in
subparagraphs (A) to (G) of section 152(d)(2) of the Internal Revenue Code;
new text end

new text begin (2) if the employer is a corporation, an employee who owns, directly or indirectly,
more than 50 percent in value of the outstanding stock of the corporation, or if the
employer is an entity other than a corporation, an employee who owns, directly or
indirectly, more than 50 percent of the capital and profits interests in the entity, as
determined with the application of section 267(c) of the Internal Revenue Code; or
new text end

new text begin (3) if the employer is an estate or trust, any employee who is a fiduciary of the estate
or trust, or is an individual who bears any of the relationships described in subparagraphs
(A) to (G) of section 152(d)(2) of the Internal Revenue Code to a grantor, beneficiary,
or fiduciary of the estate or trust.
new text end

new text begin (d) "Qualified employer" means an employer that:
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new text begin (1) hired a qualified employee; and
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new text begin (2) qualifies as a small business under this subdivision.
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new text begin (e) "Date of hire" means the day that the qualified employee begins performing
services as an employee of the qualified employer.
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new text begin (f) "Small business" means a business entity organized for profit with its headquarters
in Minnesota that employs not more than 60 full-time equivalent employees at any
time during the taxable year, including but not limited to any individual, partnership,
corporation, joint venture, association, or cooperative. If another business owns at least 20
percent of the small business, then the sum of the number of full-time equivalent employees
employed by the small business and the number of full-time equivalent employees
employed by any other business that owns at least 20 percent of the small business must
not be more than 50 full-time equivalent employees at any time during the taxable year.
new text end

new text begin Subd. 2. new text end

new text begin Credit for hiring low-income members of communities of color. new text end

new text begin A
qualified employer required to file a return under section 289A.08, subdivision 1, 2, or 3,
who hires a qualified employee is allowed a credit against the tax imposed by this chapter
equal to ... percent of the wages paid to the qualified employee during the taxable year,
but the amount of the credit must not exceed $........ per qualified employee in a taxable
year. The credit is limited to the liability for tax under this chapter for the taxable year. A
qualified employer is not eligible for the credit if the qualified employer currently employs
or has previously employed the qualified employee. The commissioner shall prescribe the
manner in which the credit must be claimed.
new text end

new text begin Subd. 3. new text end

new text begin Flow-through entities. new text end

new text begin Credits granted to a partnership, limited liability
company taxed as a partnership, S corporation, or multiple owners of a business are passed
through to the partners, members, shareholders, or owners, respectively, pro rata to each
partner, member, shareholder, or owner based on the partner's, member's, shareholder's, or
owner's share of the entity's assets or as specially allocated in the entity's organizational
documents, as of the last day of the taxable year.
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, 2016.
new text end