HF 993

as introduced - 90th Legislature (2017 - 2018) Posted on 02/13/2017 01:27pm

A bill for an act
relating to taxation; income and corporate franchise; providing a tax credit for
certain employers; 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 CREDIT FOR EMPLOYERS OF LOW-INCOME
MEMBERS OF COMMUNITIES OF COLOR.
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 definitions
apply.
new text end

new text begin (b) "Qualified employee" means an employee as defined in section 290.92, subdivision
1, who meets the following criteria:
new text end

new text begin (1) the employee is a resident of Minnesota on the date of hire;
new text end

new text begin (2) the employee is paid wages as defined in section 290.92, subdivision 1;
new text end

new text begin (3) the employee's wages are attributable to Minnesota under section 290.191, subdivision
12;
new text end

new text begin (4) the employee is an individual from a community of color residing in a low-income
area, as defined under section 116M.14; and
new text end

new text begin (5) the employee is employed by the qualified employer for at least six continuous
months from the date of hire.
new text end

new text begin (c) "Qualified employee" does not include:
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new text begin (1) any employee who bears any of the relationships to the employer described in
subparagraphs (A) to (G) of section 152(d)(2) of the Internal Revenue Code;
new text end

new text begin (2) if the employer is a corporation, an employee who owns, directly or indirectly, more
than 50 percent in value of the outstanding stock of the corporation, or if the employer is
an entity other than a corporation, an employee who owns, directly or indirectly, more than
50 percent of the capital and profits interests in the entity, as determined with the application
of section 267(c) of the Internal Revenue Code; or
new text end

new text begin (3) if the employer is an estate or trust, any employee who is a fiduciary of the estate or
trust, or is an individual who bears any of the relationships described in subparagraphs (A)
to (G) of section 152(d)(2) of the Internal Revenue Code to a grantor, beneficiary, or fiduciary
of the estate or trust.
new text end

new text begin (d) "Qualified employer" means an employer that:
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new text begin (1) hired a qualified employee; and
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new text begin (2) qualifies as a small business under this subdivision.
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new text begin (e) "Date of hire" means the day that the qualified employee begins performing services
as an employee of the qualified employer.
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new text begin (f) "Small business" means a business entity organized for profit with its headquarters
in Minnesota that employs not more than 60 full-time equivalent employees at any time
during the taxable year, including but not limited to any individual, partnership, corporation,
joint venture, association, or cooperative. If another business owns at least 20 percent of
the small business, then the sum of the number of full-time equivalent employees employed
by the small business and the number of full-time equivalent employees employed by any
other business that owns at least 20 percent of the small business must not be more than 50
full-time equivalent employees at any time during the taxable year.
new text end

new text begin Subd. 2. new text end

new text begin Credit for hiring low-income members of communities of color. new text end

new text begin A qualified
employer required to file a return under section 289A.08, subdivision 1, 2, or 3, who hires
a qualified employee is allowed a credit against the tax imposed by this chapter equal to ...
percent of the wages paid to the qualified employee during the taxable year, but the amount
of the credit must not exceed $........ per qualified employee in a taxable year. The credit is
limited to the liability for tax under this chapter for the taxable year. A qualified employer
is not eligible for the credit if the qualified employer currently employs or has previously
employed the qualified employee. The commissioner shall prescribe the manner in which
the credit must be claimed.
new text end

new text begin Subd. 3. new text end

new text begin Flow-through entities. new text end

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