HF 4725

as introduced - 92nd Legislature (2021 - 2022) Posted on 03/31/2022 03:43pm

A bill for an act
relating to taxation; income and corporate franchise; creating a tax credit for
employer paid family leave; 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 [290.0687] SMALL BUSINESS TAX CREDITS FOR PAID FAMILY
LEAVE BENEFITS.
new text end

new text begin Subdivision 1. new text end

new text begin Employer tax credit. new text end

new text begin (a) A qualified employer is allowed a credit against
the taxes imposed under this chapter equal to the amount paid by the employer for paid
family leave benefits on behalf of a qualified employee.
new text end

new text begin (b) The credit allowed to an employer under this subdivision for a qualified employee
for a taxable year is limited to the lesser of the amounts listed in clauses (1) and (2), to the
extent not deducted in determining federal taxable income for corporate filers or federal
adjusted gross income for individual filers:
new text end

new text begin (1) $3,000; or
new text end

new text begin (2) the total amount paid by the qualified employer for paid family leave benefits on
behalf of a qualified employee.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

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

new text begin (b) "Armed forces" means members of the National Guard and Reserves;
new text end

new text begin (c) "Child" means a person who is:
new text end

new text begin (1) under 18 years of age, or 18 years of age or older and incapable of self-care because
of a mental or physical disability; and
new text end

new text begin (2) a biological, adopted, or foster son or daughter; a stepson or stepdaughter; a legal
ward; a son or daughter of a domestic partner; or a son or daughter of a person to whom the
employee stands in loco parentis.
new text end

new text begin (d) "Employee" has the meaning given in section 290.92, subdivision 1, clause (3).
new text end

new text begin (e) "Family leave" means leave for any of the following purposes:
new text end

new text begin (1) participating in providing care, including physical or psychological care, for a family
member of the employee made necessary by the family member's serious health condition;
new text end

new text begin (2) bonding with the employee's child during the first 12 months after the child's birth,
or the first 12 months after the placement of the child for adoption or foster care with the
employee; or
new text end

new text begin (3) addressing a qualifying exigency, as interpreted under the Family and Medical Leave
Act, United States Code, title 29, section 2612(a)(1)(e), and Code of Federal Regulations,
title 29, sections 825.126(a)(1) to (8), arising from the fact that the spouse, child, or parent
of the employee is on active duty or has been notified of an impending call or order to active
duty in the armed forces of the United States.
new text end

new text begin (f) "Family member" means a child, spouse, parent, or grandparent as defined in this
chapter.
new text end

new text begin (g) "Parent" means a biological, foster, or adoptive parent; a stepparent; a legal guardian;
or other person who stood in loco parentis to the employee when the employee was a child.
new text end

new text begin (h) "Qualified employee" means an employee who has been employed by the qualified
employer for one year or more.
new text end

new text begin (i) "Qualified employer" means an employer subject to the withholding requirements
under section 290.92, who:
new text end

new text begin (1) employs 50 or fewer employees in Minnesota; and
new text end

new text begin (2) pays family leave benefits for one or more qualified employees.
new text end

new text begin (j) "Serious health condition" means an illness, injury, impairment, or physical or mental
condition, including organ or tissue transplant or donation, that involves inpatient care in a
hospital, hospice, or residential health care facility, continuing treatment, or continuing
supervision by a health care provider as defined in an insurance policy. Continuing
supervision by a health care provider includes a period of incapacity that is permanent or
long term due to a condition for which treatment may not be effective and where the family
member is not receiving active treatment by a health care provider.
new text end

new text begin (k) "Tax imposed under this chapter" means the taxes imposed under sections 290.06,
290.091, and 290.0921, but excludes the fee under section 290.0922.
new text end

new text begin Subd. 3. new text end

new text begin Allocation; application; certification. new text end

new text begin (a) To qualify for a credit under this
section, a qualified employer must submit to the commissioner an application for a credit
in the form prescribed by the commissioner.
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;
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new text begin (2) state the amount of the credit for each qualified employer; and
new text end

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

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

new text begin (d) The commissioner must not issue allocation certificates for more than $50,000,000
of credits each year in which the credit is available under this section. If the entire amount
is not allocated in that taxable year, any remaining amount is available for allocation for
following taxable years until the entire allocation has been made, but the commissioner
must not award any credits for taxable years beginning after December 31, 2025, and any
unallocated amounts cancel on that date.
new text end

new text begin Subd. 4. new text end

new text begin Nonresidents and part-year residents. new text end

new text begin For a nonresident or part-year resident,
the credit must be allocated using the percentage calculated in section 290.06, subdivision
2c, paragraph (e).
new text end

new text begin Subd. 5. new text end

new text begin Partnerships; multiple owners. new text end

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

new text begin Subd. 6. new text end

new text begin Carryover. new text end

new text begin If the credit allowed under subdivision 1 exceeds the tax imposed
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 must be carried first to the earliest
taxable year to which the amount may be carried. The unused portion of the credit must be
carried to the following taxable year. No credit may be carried to a taxable year more than
five years after the taxable year in which the credit was earned.
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, 2022, and before January 1, 2026.
new text end