HF 799

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:42am

A bill for an act
relating to taxation; providing an income tax credit for qualified business
ventures in Minnesota; amending Minnesota Statutes 2008, section 290.01, by
adding a subdivision.

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

Section 1.

Minnesota Statutes 2008, section 290.01, is amended by adding a
subdivision to read:

new text begin Subd. 33. new text end

new text begin Investment tax credit. new text end

new text begin (a) A credit is allowed against the tax imposed
by this chapter for a qualified taxpayer's investment in a qualified new business venture.
The credit equals 25 percent of the taxpayer's investment made in the business, but may
not exceed the least of:
new text end

new text begin (1) the liability for tax under this chapter, including the alternative minimum taxes in
sections 290.091 and 290.0921;
new text end

new text begin (2) $50,000 for an individual not part of a partnership; or
new text end

new text begin (3) $300,000 for a pass-through entity or C corporation.
new text end

new text begin (b) For purposes of this subdivision, "qualified taxpayer" means:
new text end

new text begin (1) an accredited investor within the meaning of Regulation D of the Securities and
Exchange Commission, Code of Federal Regulations, title 17, section 230.501(a), whether
part of a pass-through entity or not; and
new text end

new text begin (2) an accredited investor who does not own, control, or hold power to vote 20
percent or more of the outstanding securities of the qualified business venture in which the
eligible investment is proposed.
new text end

new text begin (c) For purposes of this paragraph, "commissioner" means the commissioner
of employment and economic development. Qualified taxpayers must apply to the
commissioner for certification. The application must be in the form and made under the
procedures specified by the commissioner. The commissioner may provide certificates
entitling qualified taxpayers to tax credits under this subdivision. The maximum amount
of credits for which the commissioner may issue certificates in each taxable year is
$6,000,000 in fiscal years 2010 to 2011, and $6,000,000 per biennium in each subsequent
biennium. In awarding certificates under this paragraph, the commissioner must award
them to qualified taxpayers in the order in which the applications are received. A credit
certificate is first available to be applied against a taxpayer's liability in the fourth taxable
year after the year in which the certificate is awarded.
new text end

new text begin (d) Each pass-through entity must provide each investor a statement indicating the
investor's share of the credit amount certified to the pass-through entity under paragraph
(c) based on its share of the pass-through entity's assets. The credit shall not exceed
$50,000 for each individual part of a pass-through entity.
new text end

new text begin (e) If the amount of the credit under this subdivision in any taxable year exceeds the
limitation under paragraph (a), clause (1), the excess is a credit carryover to each of the ten
succeeding years but may not exceed $50,000 for an individual not part of a partnership
and $300,000 for a pass-through entity or C corporation. The entire amount of the excess
unused credit must be carried first to the earliest of the taxable years to which the credit
may be carried, and then to each successive year to which the credit may be carried. The
amount of the unused credit that may be added under this paragraph may not exceed the
taxpayer's liability for tax less the credit for the taxable year.
new text end

new text begin (f) Unless otherwise provided under the rules of the Department of Employment and
Economic Development, a business is a qualified business venture for purposes of this
subdivision only if the business satisfies all of the following conditions:
new text end

new text begin (1) the business has its headquarters in Minnesota;
new text end

new text begin (2) at least 51 percent of the business's employees are employed in Minnesota;
new text end

new text begin (3) the business is engaged in, or is committed to engage in:
new text end

new text begin (i) using advanced technology to add value to a product, process, or service in a
qualified high-technology field or qualified biotechnology or medical device field;
new text end

new text begin (ii) conducting research in and development of a product, process, or service in a
qualified high-technology field or qualified biotechnology or medical device field;
new text end

new text begin (iii) developing a new product, process, or service in a qualified high-technology
field or qualified biotechnology or medical device field; or
new text end

new text begin (iv) qualified green manufacturing;
new text end

new text begin (4) the business is not engaged in real estate development, insurance, banking,
lending, lobbying, political consulting, information technology consulting, wholesale or
retail trade, leisure, hospitality, transportation, construction, ethanol production from
corn, or professional services provided by attorneys, accountants, business consultants,
physicians, or health care consultants;
new text end

new text begin (5) the business has fewer than 25 employees, and, if the business has more than five
employees, the business must pay at least 75 percent of its employees annual wages of at
least 175 percent of the federal poverty guideline for the year for a family of four, and
must pay any remaining employees annual wages of at least 110 percent of the federal
poverty guideline for a family of four;
new text end

new text begin (6) the business has not been in operation for more than ten consecutive years;
new text end

new text begin (7) the business has not received more than $1,000,000 in investments that have
qualified for and received tax credits under this section;
new text end

new text begin (8) the business has less than $2,000,000 in annual gross sales receipts;
new text end

new text begin (9) the business is not a subsidiary or an affiliate of a business that employs more
than 100 employees or has gross sales receipts for the previous year of more than
$1,000,000, computed by aggregating all of the employees and gross sales receipts of the
business entities affiliated with the business; and
new text end

new text begin (10) the business has not received private equity investments of more than
$2,000,000.
new text end

new text begin (g) For purposes of this subdivision, "qualified high-technology field" includes, but
is not limited to, aerospace, agricultural processing, alternative energy, environmental
engineering, food technology, cellulosic ethanol, information technology, materials
science technology, nanotechnology, and telecommunications, but excludes business
qualifying under the definitions in paragraphs (h) and (i).
new text end

new text begin (h) For purposes of this subdivision, "qualified biotechnology or medical device
field" means the business of manufacturing, processing, assembling, researching, or
developing biotechnology or medical device products, including biotechnology and
device products used in agriculture.
new text end

new text begin (i) For purposes of this subdivision, "qualified green manufacturing" means a
business whose primary business activity is production of products, processes, methods,
technologies, or services intended to do one or more of the following:
new text end

new text begin (1) increase the use of energy from renewable sources, as defined in section
216B.1691;
new text end

new text begin (2) increase the energy efficiency of the electric utility infrastructure system or to
increase energy conservation related to electricity use, as provided in sections 216B.2401
and 216B.241;
new text end

new text begin (3) reduce greenhouse gas emissions, as defined in section 216H.01, subdivision
2, or to mitigate greenhouse gas emissions through, but not limited to, carbon capture,
storage, or sequestration;
new text end

new text begin (4) monitor, protect, restore, and preserve the quality of surface waters; and
new text end

new text begin (5) expand use of biofuels, including expanding the feasibility or reducing the cost
of producing biofuels or the types of equipment, machinery, and vehicles that can use
biofuels.
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