HF 1649

Introduction - 94th Legislature (2025 - 2026)

Posted on 02/27/2025 03:15 p.m.

A bill for an act
relating to taxation; corporate franchise and unitary taxation; requiring certain
foreign corporations to be treated as unitary with a shareholder; amending
Minnesota Statutes 2024, sections 290.0132, by adding subdivisions; 290.0134,
by adding subdivisions; 290.17, by adding subdivisions; 290.21, subdivision 9;
repealing Minnesota Statutes 2024, section 290.21, subdivision 10.

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

Section 1.

Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 36. new text end

new text begin Global intangible low-taxed income. new text end

new text begin The amount of global intangible
low-taxed income under section 951A of the Internal Revenue Code is a subtraction.
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, 2024.
new text end

Sec. 2.

Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 37. new text end

new text begin Subpart F income. new text end

new text begin For a shareholder of a controlled foreign corporation
treated as unitary under section 290.17, subdivision 4a, the amount of income included
under section 951 of the Internal Revenue Code is a subtraction.
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, 2024.
new text end

Sec. 3.

Minnesota Statutes 2024, section 290.0134, is amended by adding a subdivision
to read:

new text begin Subd. 21. new text end

new text begin Global intangible low-taxed income. new text end

new text begin The amount of global intangible
low-taxed income under section 951A of the Internal Revenue Code is a subtraction.
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, 2024.
new text end

Sec. 4.

Minnesota Statutes 2024, section 290.0134, is amended by adding a subdivision
to read:

new text begin Subd. 22. new text end

new text begin Subpart F income. new text end

new text begin For a shareholder of a controlled foreign corporation
treated as unitary under section 290.17, subdivision 4a, the amount of income included
under section 951 of the Internal Revenue Code is a subtraction.
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, 2024.
new text end

Sec. 5.

Minnesota Statutes 2024, section 290.17, is amended by adding a subdivision to
read:

new text begin Subd. 4a. new text end

new text begin Controlled foreign corporations. new text end

new text begin (a) For purposes of applying subdivision
4, a controlled foreign corporation as defined in section 957 of the Internal Revenue Code
is deemed to be a domestic corporation if:
new text end

new text begin (1) a United States shareholder of a controlled foreign corporation is required for the
taxable year to include in gross income the shareholder's global intangible low-taxed income
under section 951A of the Internal Revenue Code; and
new text end

new text begin (2) the controlled foreign corporation is a member of a unitary group.
new text end

new text begin (b) In the event the taxpayer fails to designate the controlled foreign corporation as a
member of a unitary group and the commissioner subsequently determines that the controlled
foreign corporation is a member of a unitary group, the commissioner's determination is
prima facie valid. The taxpayer subject to the determination has the burden of establishing
the incorrectness of the determination in any related action or proceeding.
new text end

new text begin (c) For purposes of imposing a tax under this chapter, the federal taxable income of a
controlled foreign corporation deemed to be a domestic corporation under this subdivision
must be computed as follows:
new text end

new text begin (1) a profit and loss statement must be prepared in the currency in which the books of
account of the controlled foreign corporation are regularly maintained;
new text end

new text begin (2) except as determined by the commissioner or otherwise allowed under the Internal
Revenue Code, adjustments must be made to the profit and loss statement to conform the
statement to the accounting principles generally accepted in the United States for the
preparation of those statements;
new text end

new text begin (3) adjustments must be made to the profit and loss statement to conform it to the tax
accounting standards required by the commissioner;
new text end

new text begin (4) unless otherwise authorized by the commissioner, the apportionment factors and
profit and loss statement of each member of the combined group must be converted into
the currency in which the parent company maintains its books and records; and
new text end

new text begin (5) the taxpayer's apportionment factors and profit and loss statement must be expressed
in United States dollars.
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, 2024.
new text end

Sec. 6.

Minnesota Statutes 2024, section 290.17, is amended by adding a subdivision to
read:

new text begin Subd. 4b. new text end

new text begin Worldwide election. new text end

new text begin (a) Taxpayer members of a unitary group, of which one
or more members are deemed to be domestic corporations under subdivision 4a for the
taxable year, may elect to determine each of their apportioned shares of the net business
income or loss of the combined group under a worldwide election. Under the election,
taxpayer members must take into account the entire income and apportionment factors of
each member of the unitary group, regardless of the place where a member is incorporated
or formed. Corporations or other entities incorporated or formed outside of the United States
are subject to the requirements of subdivision 4a, paragraph (c), in reporting their income.
new text end

new text begin (b) A worldwide election is effective only if made on a timely filed, original return for
the tax year by each member of the unitary group subject to tax under this chapter.
new text end

new text begin (c) A worldwide election is binding for and applies to the taxable year it is made and
for the ten following taxable years.
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, 2024.
new text end

Sec. 7.

Minnesota Statutes 2024, section 290.17, is amended by adding a subdivision to
read:

new text begin Subd. 4c. new text end

new text begin Withdrawal; reinstitution. new text end

new text begin (a) The election under subdivision 4b, paragraph
(a), may be withdrawn:
new text end

new text begin (1) after expiration of the ten-year period in subdivision 4b, paragraph (c), provided that
the withdrawal is made in writing within one year after the expiration of the election; or
new text end

new text begin (2) prior to the expiration of the ten-year period, if the taxpayer members:
new text end

new text begin (i) file a written withdrawal request with the commissioner;
new text end

new text begin (ii) demonstrate that they would experience an extraordinary financial hardship due to
increased tax arising from unforeseen changes in this state's tax statutes, laws, or policies;
and
new text end

new text begin (iii) receive written permission from the commissioner approving the withdrawal, which
the commissioner may grant.
new text end

new text begin (b) A withdrawal made under paragraph (a) is binding for ten years. If no withdrawal
is properly made under paragraph (a), clause (1), the worldwide election is binding for an
additional ten taxable years. If the commissioner grants written permission to withdraw
under paragraph (a), clause (2), the commissioner must impose any requirement deemed
necessary to prevent evasion of tax or to clearly reflect income for the election period before
or after withdrawal.
new text end

new text begin (c) Notwithstanding the requirement binding withdrawal for ten years under paragraph
(b), the election may be reinstituted if the taxpayer members:
new text end

new text begin (1) file a written reinstitution request with the commissioner;
new text end

new text begin (2) demonstrate that they would experience an extraordinary hardship due to unforeseen
changes in this state's tax statutes, laws, or policies; and
new text end

new text begin (3) receive written permission from the commissioner approving the reinstitution, which
the commissioner may grant.
new text end

new text begin (d) A reinstitution under paragraph (c) is binding for a period of ten years. The withdrawal
provisions of paragraph (a) apply to a reinstitution under paragraph (c), and the provisions
of paragraph (c) apply to a reinstitution following a subsequent withdrawal.
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, 2024.
new text end

Sec. 8.

Minnesota Statutes 2024, section 290.21, subdivision 9, is amended to read:

Subd. 9.

Controlled foreign corporations.

new text begin For a shareholder of a controlled foreign
corporation not treated as unitary under section 290.17, subdivision 4a, new text end the net income of
a corporation that is included pursuant to section 951 of the Internal Revenue Code is
dividend income.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 9. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2024, section 290.21, subdivision 10, new text end new text begin is repealed.
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, 2024.
new text end

APPENDIX

Repealed Minnesota Statutes: 25-03679

290.21 DEDUCTIONS ALLOWED TO CORPORATIONS.

Subd. 10.

Global intangible low-taxed income.

Any amounts included in taxable income pursuant to section 951A of the Internal Revenue Code, are dividend income.