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Minnesota Legislature

Office of the Revisor of Statutes

HF 315

1st Engrossment - 90th Legislature (2017 - 2018) Posted on 02/06/2017 03:52pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 1st Engrossment

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A bill for an act
relating to taxation; individual income and corporate franchise; allowing tax credits
for parental leave costs; 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 [290.0682] TAX CREDITS FOR PARENTAL LEAVE.
new text end

new text begin Subdivision 1. new text end

new text begin Employer tax credit for paid leave. new text end

new text begin (a) A qualified employer is allowed
a credit against the taxes imposed under this chapter equal to 25 percent of the amount of
wages paid to qualifying employees during any period in which the qualifying employees
are on parental leave. Wages are limited to wages that are subject to withholding under
section 290.92.
new text end

new text begin (b) The credit allowed to an employer under this subdivision for a qualifying employee
for a taxable year is limited to the lesser of:
new text end

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

new text begin (2) 25 percent of the product of:
new text end

new text begin (i) the wages normally paid to the qualifying employee per hour, or fraction of an hour,
for services performed for the employer; and
new text end

new text begin (ii) the number of hours, or fraction of an hour, for which parental leave is taken.
new text end

new text begin (c) For a qualifying employee who is not paid on an hourly basis, wages must be prorated
to an hourly basis under instructions established by the commissioner.
new text end

new text begin (d) The amount of parental leave that may be taken into account for a qualifying employee
for any taxable year cannot exceed six weeks.
new text end

new text begin Subd. 2. new text end

new text begin Employee tax credit. new text end

new text begin (a) An eligible employee is allowed a credit against the
taxes imposed under this chapter equal to 25 percent of the eligible employee's forgone
wages for the period of the unpaid parental leave.
new text end

new text begin (b) For purposes of this subdivision, "forgone wages" means the number of weeks of
unpaid leave taken, not to exceed six weeks, multiplied by the lesser of:
new text end

new text begin (1) the greater of the total wages received by the eligible employee in the immediately
preceding taxable year or in the current taxable year, divided by 52; or
new text end

new text begin (2) $1,000 multiplied by the index value under paragraph (e) for the county in which
the eligible employee resides when taking the unpaid leave.
new text end

new text begin (c) For purposes of this subdivision, "unpaid parental leave" or "unpaid leave" means a
period of parental leave for which an employee receives no wages or other compensation
and has no self-employment earnings.
new text end

new text begin (d) For purposes of this subdivision, "week" means a period consisting of seven
consecutive calendar days.
new text end

new text begin (e) The commissioner must determine index values for purposes of the calculations
under paragraph (b) using information on the weekly rate for the 75th percentile for infants
from the most recent child care market rate survey prepared by the commissioner of human
services under section 119B.02, subdivision 7, that is available by July 15 of the calendar
year in which the taxable year begins. The index amount for a county equals the rate for
the family child care price cluster for the county, divided by the rate for the median price
cluster. The commissioner shall publish the index values by county on the department's
Web site and in the instructions for the appropriate tax return and forms. The commissioner's
determination is not a rule and is not subject to the Administrative Procedure Act in chapter
14 including section 14.386.
new text end

new text begin Subd. 3. 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 unless the context clearly indicates otherwise.
new text end

new text begin (b) "Eligible employee" means an employee who:
new text end

new text begin (1) is not employed by a qualifying employer claiming a credit under this section;
new text end

new text begin (2) takes a period of unpaid parental leave of at least one week during the taxable year;
and
new text end

new text begin (3) was a full-time employee for a minimum of nine out of the 12 months preceding the
date at which the unpaid leave began.
new text end

new text begin (c) "Employee" has the meaning given in section 177.23.
new text end

new text begin (d) "Full-time employee" means an employee expected to work an annual average of
30 or more hours per week.
new text end

new text begin (e) "Parental leave" means leave for any purpose described in United State Code, title
29, section 2612, subsection (a), paragraph (1), subparagraph (A) or (B), whether the leave
is provided under the requirement of the federal Family and Medical Leave Act of 1993 or
by a policy of the employer. Parental leave excludes any leave provided as paid vacation
leave, personal leave, or medical or sick leave as those terms are used in United State Code,
title 29, section 2612, subsection (d), paragraph (2).
new text end

new text begin (f) "Qualified employer" means an employer who has in place a policy that provides:
new text end

new text begin (1) all qualifying full-time employees with not less than two weeks of annual paid
parental leave; and
new text end

new text begin (2) all qualifying employees who are not full-time employees with an amount of annual
paid parental leave that bears the same ratio to two weeks as:
new text end

new text begin (i) the number of hours the employee is expected to work during any week, bears to:
new text end

new text begin (ii) the number of hours an equivalent qualifying full-time employee is expected to work
during the week; and
new text end

new text begin (3) that the rate of payment under the program is not less than 100 percent of the wages
normally paid to the employee for services performed for the employer.
new text end

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

new text begin (h) "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 (i) "Wages" means wages as defined in section 290.92.
new text end

new text begin Subd. 4. new text end

new text begin Carryover; refundability; appropriation. new text end

new text begin (a) 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 (b) If the credit allowed under subdivision 2 exceeds the liability for tax, the commissioner
shall pay the excess as a refund to the eligible employee. An amount sufficient to pay the
refunds required by this paragraph is appropriated from the general fund to the commissioner.
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, except that the credit under:
new text end

new text begin (1) subdivision 1 applies beginning for wages paid after June 30, 2017; and
new text end

new text begin (2) subdivision 2 applies beginning for unpaid leaves taken after June 30, 2017.
new text end