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Minnesota Legislature

Office of the Revisor of Statutes

HF 320

1st Engrossment - 90th Legislature (2017 - 2018) Posted on 03/08/2017 12:38pm

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

Current Version - 1st Engrossment

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7.1

A bill for an act
relating to taxation; allowing a tax credit for certain contributions for higher
education scholarships; appropriating money; requiring reports; amending
Minnesota Statutes 2016, section 13.4967, by adding a subdivision; proposing
coding for new law in Minnesota Statutes, chapters 116J; 290.

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

Section 1.

Minnesota Statutes 2016, section 13.4967, is amended by adding a subdivision
to read:


new text begin Subd. 9. new text end

new text begin Scholarship build credit. new text end

new text begin Data related to scholarship build credit certifications
and allocations are classified in section 116J.8739.
new text end

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.

new text begin [116J.8739] SCHOLARSHIP BUILD CREDIT.
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 terms have
the meanings given.
new text end

new text begin (b) "Board" means the Board of Trustees of the Minnesota State Colleges and Universities
(MnSCU).
new text end

new text begin (c) "Contribution" means a contribution to a foundation affiliated with a state college
or university designated for use by an eligible department or program that is either:
new text end

new text begin (1) a cash contribution to be used to award undergraduate scholarships; or
new text end

new text begin (2) an in-kind contribution of equipment that the eligible department or program accepts
for use in its course of study.
new text end

new text begin (d) "Economic development region" or "EDR" means a development region defined in
section 462.385.
new text end

new text begin (e) "Eligible department or program" means a department or program at a state college
or university that educates students for employment in a high-demand occupation.
new text end

new text begin (f) "High-demand occupation" means a standard occupational classification major group
for which the job vacancy rate in an economic development region is greater than the job
vacancy rate in the economic development region for all occupations, as determined by the
commissioner based on data reported in the Job Vacancy Survey.
new text end

new text begin (g) "Job vacancy rate" means the job vacancy rate for the fourth quarter of the preceding
calendar year as reported in the Job Vacancy Survey.
new text end

new text begin (h) "Pass-through entity" means a corporation that for the applicable taxable year is
treated as an S-corporation or a general partnership, limited partnership, limited liability
partnership, trust, or limited liability company that, for the applicable taxable year, is not
taxed as a corporation under chapter 290.
new text end

new text begin (i) "Qualified taxpayer" means a taxpayer who has been certified by the commissioner
under subdivision 3.
new text end

new text begin (j) "Standard Occupational Classification" or "SOC" means the 2010 Standard
Occupational Classification adopted by the United States Bureau of Labor Statistics.
new text end

new text begin (k) "SOC major group" means a group of standard occupational classifications designated
by a two-digit SOC code.
new text end

new text begin (l) "State college or university" means a college or university operated by the Board of
Trustees of the Minnesota State Colleges and Universities.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) A qualified taxpayer is eligible for a credit equal to 50
percent of each contribution. The maximum credit allowed in any taxable year for a cash
contribution is $2,000. The maximum credit allowed in any taxable year for an in-kind
contribution is $4,000. The commissioner must not allocate more than $10,000,000 in credits
to qualified taxpayers for taxable years beginning after December 31, 2017, and must not
allocate more than $50,000 in credits to any one qualified taxpayer in any taxable year. Any
portion of a taxable year's credits that is not allocated by the commissioner does not cancel
and may be carried forward to subsequent taxable years until all credits have been allocated.
new text end

new text begin (b) In order for a contribution to be eligible for a tax credit, the qualified taxpayer who
makes the contribution must have been allocated a tax credit before making the contribution.
new text end

new text begin Subd. 3. new text end

new text begin Certification of qualified taxpayers and allocations of credits. new text end

new text begin (a) A business
may apply to the commissioner for certification as a qualified taxpayer and to be allocated
a tax credit for a taxable year. The application must be made available on the department's
Web site by November 1 of the preceding year. Businesses must submit applications to the
commissioner by March 15 of the taxable year in which the credit is claimed.
new text end

new text begin (b) To receive certification as a qualified taxpayer, a business must in the previous or
current calendar year have had or must anticipate having at least one job vacancy that
requires a postsecondary degree or certificate in a high-demand occupation for the EDR in
which the business is located. A business may apply for one credit for each job vacancy,
subject to the annual limit established in subdivision 2.
new text end

new text begin (c) The application must be in the form and be made under the procedures specified by
the commissioner. The commissioner must structure the application to allow a business to
apply for multiple credits with a single application. The application must include the
following elements for each credit certification request:
new text end

new text begin (1) a description of the job vacancy or anticipated job vacancy;
new text end

new text begin (2) the foundation to which the business contemplates making a contribution and the
eligible department or program for which the contribution would be designated;
new text end

new text begin (3) if the contribution will be cash or in-kind; and
new text end

new text begin (4) the amount or value of the contribution contemplated.
new text end

new text begin (d) By April 15 of the taxable year in which the credit is claimed, the commissioner, in
consultation with the board, must determine for each credit application the job gap for the
EDR in which the business of the qualified taxpayer is located, which equals the difference
between:
new text end

new text begin (1) the job vacancy rate for the high-demand occupation for which the eligible academic
department or program designated to receive the contribution educates students; and
new text end

new text begin (2) the job vacancy rate for all occupations.
new text end

new text begin (e) The commissioner must prioritize applications and allocate credits based on the job
gap determination, with credits first allocated to applications with the highest job gap.
new text end

new text begin (f) By April 30 of the taxable year in which the credit is claimed, the commissioner, in
consultation with the board, must prioritize applications and allocate credits to qualified
taxpayers in order to maximize contributions to eligible departments and programs that
educate students for employment in the highest demand occupations, as determined based
on job vacancy rates. The commissioner must also notify qualified taxpayers who are not
allocated credits, and must notify applicants who are determined to not meet the requirements
for being a qualified taxpayer.
new text end

new text begin Subd. 4. new text end

new text begin Credit certificates. new text end

new text begin (a) A qualified taxpayer who is allocated a credit must
make the contribution specified in the application by October 15 of the taxable year in which
the credit is claimed. A qualified taxpayer must notify the commissioner when a contribution
for which a credit was allocated has been made, and the taxable year in which the contribution
was made. After receiving notification that the contribution was made, the commissioner
must issue a credit certificate for the taxable year in which the contribution was made to
the qualified taxpayer.
new text end

new text begin (b) If the contribution is not made by October 15, the credit allocation is canceled and
available for reallocation following the prioritization determined under subdivision 3. A
qualified taxpayer who fails to make the contribution specified in the application by October
15 must notify the commissioner of the failure to make the contribution within five business
days of October 15.
new text end

new text begin (c) The commissioner must notify the commissioner of revenue of credit certificates
issued under this section.
new text end

new text begin Subd. 5. new text end

new text begin Data privacy. new text end

new text begin Data contained in an application submitted to the commissioner
under subdivision 2, 3, or 4 are nonpublic data, or private data on individuals, as defined
in section 13.02, subdivision 9 or 12, except that for each credit certificate issued under
subdivision 4, the following data items are public:
new text end

new text begin (1) the EDR in which the qualified taxpayer is located;
new text end

new text begin (2) the occupation in which the qualified taxpayer had a job vacancy;
new text end

new text begin (3) the amount of the credit certificate issued;
new text end

new text begin (4) the amount of the contribution; and
new text end

new text begin (5) the name of the foundation to which the contribution was made and the eligible
department or program to which the contribution was designated.
new text end

new text begin Subd. 6. new text end

new text begin Report to legislature. new text end

new text begin Beginning in 2019, the commissioner, in consultation
with the board, must annually provide a written report by March 15 to the chairs and ranking
minority members of the legislative committees having jurisdiction over higher education,
jobs and economic development, and taxes, in compliance with sections 3.195 and 3.197,
on the tax credits allowed under this section. The report must include:
new text end

new text begin (1) the number and amount of the contributions to each foundation that result in credits;
new text end

new text begin (2) amounts contributed to foundations for use by academic programs and departments
grouped by industry type and EDR;
new text end

new text begin (3) the amount of credits awarded to qualified taxpayers grouped by industry type and
EDR;
new text end

new text begin (4) the number and dollar amount of credits that are allocated but for which the
commissioner did not issue a credit certificate because the taxpayer did not make a
contribution;
new text end

new text begin (5) program completion and job placement rates for students enrolled in eligible academic
programs and departments that received contributions that resulted in credits in the preceding
academic year and in the academic year that began in the calendar year preceding the first
taxable year in which the credit was allowed, with detail by industry type and EDR;
new text end

new text begin (6) the number and total dollar amount of scholarships or other assistance awarded by
each state college and university in the preceding academic year and in the academic year
that began in the calendar year preceding the first taxable year in which the credit was
allowed; and
new text end

new text begin (7) an assessment of the efficacy of the credit program at increasing the number of
students completing academic programs and accepting employment in high-demand
occupations.
new text end

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.

new text begin [290.0682] SCHOLARSHIP BUILD CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin A qualified taxpayer is allowed a credit against the tax
imposed under this chapter for each contribution made to a foundation of a state college or
university operated by the Board of Trustees of the Minnesota State Colleges and
Universities. The credit equals the amount and applies to the taxable year indicated on the
certificate provided under section 116J.8739, subdivision 3. The maximum credit allowed
in any taxable year for a cash contribution is $2,000. The maximum credit allowed in any
taxable year for an in-kind contribution is $4,000. The maximum cumulative credits allowed
for any one qualified taxpayer in a taxable year is $50,000.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, the terms defined in section 116J.8739
have the meanings given in that section.
new text end

new text begin Subd. 3. new text end

new text begin Proportional credits. new text end

new text begin Each pass-through entity must provide each shareowner
a statement indicating the shareowner's share of the credit amount certified to the
pass-through entity based on its share of the pass-through entity's capital assets at the time
of the contribution.
new text end

new text begin Subd. 4. new text end

new text begin Credit refundable; appropriation. new text end

new text begin If the amount of the credit under this
section for any taxable year exceeds the claimant's liability for tax under this chapter, the
commissioner shall refund the excess to the claimant. An amount sufficient to pay the
refunds required by this section is appropriated to the commissioner from the general fund.
new text end

new text begin Subd. 5. new text end

new text begin Audit powers. new text end

new text begin Notwithstanding the certification eligibility issued by the
commissioner of employment and economic development under section 116J.8739, the
commissioner may utilize any audit and examination powers under chapter 270C or 289A,
to the extent necessary to verify that the taxpayer is eligible for the credit and to assess for
the amount of any improperly claimed credit.
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, 2017.
new text end

Sec. 4. new text beginAPPROPRIATION.
new text end

new text begin $300,000 in fiscal year 2018 and $300,000 in fiscal year 2019 are appropriated from the
general fund to the commissioner of employment and economic development to administer
the credit in section 2.
new text end

Sec. 5. new text beginPURPOSE STATEMENT; TAX EXPENDITURES.
new text end

new text begin Subdivision 1. new text end

new text begin Authority. new text end

new text begin This section is intended to fulfill the requirement under
Minnesota Statutes, section 3.192, that a bill creating, renewing, or continuing a tax
expenditure provide a purpose for the tax expenditure and a standard or goal against which
its effectiveness may be measured.
new text end

new text begin Subd. 2. new text end

new text begin Scholarship build credit. new text end

new text begin The purpose of this tax credit is to encourage private
sector employers to make contributions, both cash and in-kind, to individual MnSCU campus
foundations. These contributions would allow MnSCU campus foundations to provide
scholarships to help students with the costs of attaining higher education program completion.
As more students complete programs, employers would be able to more easily fill jobs with
high employee demand. The effectiveness of this tax credit will be measured based on the
number of students who are helped to complete programs, and the number placed in jobs
with high employee demand.
new text end

new text begin EFFECTIVE DATE. new text end

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