HF 1369

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; providing for a regional
investment credit; amending Minnesota Statutes 2004,
section 290.06, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2004, section 290.06, is
amended by adding a subdivision to read:

new text begin Subd. 32. new text end

new text begin Regional investment credit. new text end

new text begin (a) A credit is
allowed against the tax imposed by this chapter for investment
in a qualifying regional investment fund. The credit equals 25
percent of the taxpayer's investment made in the fund for the
taxable year, but not to exceed the least of:
new text end

new text begin (1) the liability for tax under this chapter, including the
applicable alternative minimum tax, but excluding the minimum
fee under section 290.0922;
new text end

new text begin (2) the amount of the certificate under paragraph (c)
provided to taxpayer by the fund; and
new text end

new text begin (3) $....... ($....... in the case of a married couple
filing a joint return and $....... in the case of a C
corporation).
new text end

new text begin (b) For purposes of this subdivision, the following
requirements apply.
new text end

new text begin (1) A regional investment fund means a pooled investment
fund that invests in qualifying small businesses located in the
region of the state that is the focus of the fund. A minimum of
two-thirds of the governing body of the fund must be residents
of the region. Investments in the fund may consist of equity
investments or notes that pay interest or other fixed amounts or
any combination of both, as the fund's governing body determines
appropriate. The fund must allocate at least 50 percent of the
funds it invests to qualified small businesses that meet local
community needs, such as the production of goods and services
for markets within the region.
new text end

new text begin (2) To be a qualifying small business, a business must
satisfy either of the following requirements:
new text end

new text begin (i) its annual revenues for the most recent taxable year
that ended before the fund invested in the business may not
exceed $.......; or
new text end

new text begin (ii)(A) it may not employ more than 50 full-time equivalent
employees when the investment was made; and
new text end

new text begin (B) 51 percent of the ownership interests in the business,
excluding any equity interest of the fund, must be held by
residents of the region; and
new text end

new text begin (C) the business must pay wages and benefits, measured on a
full-time equivalent basis, to 75 percent or more of its
employees equal to 175 percent of the federal poverty level for
a family of four.
new text end

new text begin (c) Regional investment funds may apply to the commissioner
of employment and economic development for certification as a
qualified regional investment fund. The application must be in
the form and made under the procedures specified by the
commissioner of employment and economic development. The
commissioner of employment and economic development may certify
up to ten funds and provide certificates entitling investors in
the fund to credits under this subdivision of up to $250,000 for
each. Of the ten funds, the commissioner may designate no more
than three funds that serve more than 15 Minnesota counties. In
awarding certificates under this paragraph, the commissioner of
employment and economic development shall seek to certify funds
that are broadly dispersed across the entire state. No more
than 25 percent of the certificates may be issued to funds that
permit investments in businesses located in the metropolitan
area, as defined in section 473.121, subdivision 2. The
commissioner of employment and economic development may not
issue a total amount of certificates for all funds of more than
$........
new text end

new text begin (d) The commissioner of employment and economic development
shall enter an agreement with each fund awarded credit
certificates under paragraph (c). This agreement must include
the fund's agreement to comply with the requirements of this
subdivision, as well as the specific manner in which the fund
agrees to satisfy the requirement to allocate at least 20
percent of its investments to qualified small businesses that
meet local community needs.
new text end

new text begin (e) If the amount of the credit under this subdivision for
any taxable year exceeds the limitations under paragraph (a),
clause (1), the excess is a credit carryover to each of the 15
succeeding taxable years. The entire amount of the excess
unused credit for the taxable year must be carried first to the
earliest of the taxable years 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 EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2005,
for taxable years beginning after December 31, 2004, and only
applies to investments made after the fund has been certified by
the commissioner of employment and economic development.
new text end