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HF 1720

as introduced - 92nd Legislature (2021 - 2022) Posted on 04/15/2021 09:36pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to taxation; individual income and corporate franchise; providing a credit
for railroad reconstruction or replacement expenditures; amending Minnesota
Statutes 2020, section 297I.20, by adding a subdivision; 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 [290.0693] SHORT LINE RAILROAD INFRASTRUCTURE
MODERNIZATION CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purpose of this section, the following terms have the
meanings given them.
new text end

new text begin (b) "Eligible taxpayer" means any railroad that is classified by the United States Surface
Transportation Board as a Class II or Class III railroad.
new text end

new text begin (c) "Eligible transferee" means any taxpayer subject to tax under this chapter or chapter
297I.
new text end

new text begin (c) "Qualified railroad reconstruction or replacement expenditures" means gross
expenditures in the taxable year for maintenance, reconstruction, or replacement of railroad
infrastructure, including track, roadbed, bridges, industrial leads and sidings, and track-related
structures owned or leased by a Class II or Class III railroad in Minnesota as of January 1,
2021. Qualified railroad reconstruction or replacement expenditures also includes new
construction of industrial leads, switches, spurs and sidings and extensions of existing sidings
in Minnesota by a Class II or Class III railroad.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed; limitation; carryover. new text end

new text begin (a) An eligible taxpayer is allowed a
credit against the tax due under this chapter equal to 50 percent of the taxpayer's qualified
railroad reconstruction or replacement expenditures.
new text end

new text begin (b) A taxpayer's credit under this section may not exceed the lesser of:
new text end

new text begin (1) the taxpayer's liability for tax under this chapter; or
new text end

new text begin (2) the amount equal to $5,000 multiplied by the number of miles of railroad track owned
or leased within the state by the eligible taxpayer as of the close of the taxable year for
which the credit is claimed.
new text end

new text begin (c) If the amount of the credit determined under this section for any taxable year exceeds
the limitation under paragraph (b), the excess is a credit carryover to each of the five
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
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 must not exceed the taxpayer's liability
for tax less the credit for the taxable year.
new text end

new text begin Subd. 3. new text end

new text begin Transferability; written agreement required; credit certificate. new text end

new text begin (a) An
eligible taxpayer may transfer the credit allowed under this section by written agreement
to an eligible transferee at any time during the five years following the taxable year in which
the qualified expenditures are incurred.
new text end

new text begin (b) The eligible taxpayer and the eligible transferee must jointly file a copy of the written
transfer agreement with the commissioner within 30 days of the transfer. The written
agreement must contain the name, address, and taxpayer identification number of the parties
to the transfer; the taxable year the eligible taxpayer incurred the qualified expenditures;
the amount of credit being transferred; and the taxable year or years for which the transferred
credit maybe claimed.
new text end

new text begin (c) The commissioner must issue a credit certificate to the transferee within 30 days of
the joint filing of a copy of the written transfer agreement with the commissioner.
new text end

new text begin Subd. 4. new text end

new text begin Partnerships; multiple owners. new text end

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

new text begin Subd. 5. new text end

new text begin Allocation for nonresidents and part-year residents. new text end

new text begin For a nonresident or
part-year resident, the credit determined under this section must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).
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, 2020.
new text end

Sec. 2.

Minnesota Statutes 2020, section 297I.20, is amended by adding a subdivision to
read:


new text begin Subd. 4. new text end

new text begin Short line railroad infrastructure modernization credit. new text end

new text begin A taxpayer may
claim a credit against the premiums tax imposed under this chapter equal to the amount
indicated on the credit certificate statement issued to the company under section 290.0693.
If the amount of the credit exceeds the taxpayer's liability for tax 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 for the taxable year 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. This credit does not affect the calculation of fire state aid under
section 477B.03 and police state aid under section 477C.03.
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, 2020.
new text end