HF 1869

as introduced - 87th Legislature (2011 - 2012) Posted on 02/10/2012 12:17pm

A bill for an act
relating to taxation; allowing a credit for hiring long-term unemployed
individuals; 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] CREDIT FOR HIRING LONG-TERM UNEMPLOYED.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin An employer is allowed a credit against the tax
imposed under this chapter equal to 40 percent of the qualified wages paid or incurred by
the employer during the taxable year to qualified long-term unemployed individuals.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

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

new text begin (b) "Qualified long-term unemployed individual" means any individual who was not
a student for at least six months during the one-year period ending on the hiring date and
is certified by the commissioner of employment and economic development as either:
new text end

new text begin (1) having aggregate periods of unemployment during the two-year period ending
on the hiring date which equal or exceed 12 months; or
new text end

new text begin (2) receiving unemployment compensation under state or federal law for not less
than 12 months during the two-year period ending on the hiring date.
new text end

new text begin (c) "Qualified wages" means, with respect to any individual, wages attributable to
service rendered during the one-year period beginning with the day the individual begins
work for the employer, but not to exceed $10,000 per year.
new text end

new text begin (d) "Student" means an individual enrolled at least half time in a program that leads
to a degree, certificate, or other recognized educational credential for at least six months
whether or not consecutive during the one-year period ending on the hiring date.
new text end

new text begin (e) "Wages" has the meaning given by section 3306(b) of the Internal Revenue Code
(determined without regard to any dollar limitation contained in that section), except
that it does not include:
new text end

new text begin (1) any amounts paid or incurred by an employer for any period to any individual
for whom the employer receives federally funded payments for on-the-job training of
the individual for that period; or
new text end

new text begin (2) any payments made to the employer (however utilized by the employer)
with respect to the individual for that taxable year under a program established under
section 482(e) of the Social Security Act (relating to work supplementation payments
to employers).
new text end

new text begin Subd. 3. new text end

new text begin Certain wages ineligible. new text end

new text begin (a) No credit is allowed under subdivision
1 for wages paid to an individual when:
new text end

new text begin (1) the individual is a dependent of the taxpayer pursuant to section 152(d)(2)(H) of
the Internal Revenue Code, or bears any of the relationships described in subparagraphs
(A) to (G) of section 152(d)(2) of the Internal Revenue Code to the taxpayer;
new text end

new text begin (2) the taxpayer is a corporation and the individual owns, directly or indirectly, more
than 50 percent in value of the outstanding stock of the corporation, or, the taxpayer is
an entity other than a corporation and the individual 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) the taxpayer is an estate or trust and the individual 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 (b) No credit is allowed under subdivision 1 for wages paid to an individual if,
before the hiring date of the individual, the individual had been employed by the employer
at any time.
new text end

new text begin Subd. 4. new text end

new text begin Individuals not meeting minimum employment periods. new text end

new text begin (a) For an
individual who has performed at least 120 hours, but less than 400 hours, of service for the
employer, subdivision 1 must be applied by substituting "25 percent" for "40 percent."
new text end

new text begin (b) No credit is allowed under subdivision 1 for wages with respect to any individual
unless the individual has performed at least 120 hours of service for the employer.
new text end

new text begin Subd. 5. new text end

new text begin Treatment of successor employers; treatment of employees performing
services for other persons. new text end

new text begin (a) For a successor employer referred to in section 3306
(b)(1) of the Internal Revenue Code, the determination of the amount of the credit under
this section for wages paid by the successor employer are made in the same manner as if
the predecessor employer referred to in that section paid the wages.
new text end

new text begin (b) No credit is allowed under this section for remuneration paid by an employer to
an employee for services performed by the employee for another person unless the amount
reasonably expected to be received by the employer for the services from the other person
exceeds the remuneration paid by the employer to the employee for the services.
new text end

new text begin Subd. 6. new text end

new text begin Partnerships and S corporations. new text end

new text begin Credits granted to a partnership, a
limited liability company taxed as a partnership, or an S corporation are passed through
to the partners, members, or shareholders respectively, pro rata in proportion to each
partner's, member's, or shareholder's share of the entity's income.
new text end

new text begin Subd. 7. new text end

new text begin Limitation; carryover. new text end

new text begin (a) The credit may not exceed the liability for tax
imposed under section 290.06, subdivision 1 or 2c, for the taxable year reduced by the sum
of the nonrefundable credits allowed under this chapter. For a partner in a partnership or a
shareholder in an S corporation, the credit allowed for the taxable year must not exceed
the lesser of the amount determined under the preceding sentence for the taxable year or
an amount (separately computed with respect to the partner's or shareholder's interest in
the partnership or S corporation) equal to the amount of tax attributable to that portion
of taxable income which is allocable or apportionable to the partner's or shareholder's
interest in the partnership or S corporation.
new text end

new text begin (b) If the amount of the credit determined under this section for any taxable year
exceeds the limitation under paragraph (a), the excess is 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 and then to each successive year to which the credit may be carried. The amount of
the unused credit which may be added under this paragraph shall not exceed the taxpayer's
liability for tax less the credit for the taxable year.
new text end

new text begin Subd. 8. new text end

new text begin Expiration. new text end

new text begin The credit expires effective for wages paid in taxable years
beginning after December 31, 2014.
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, 2011.
new text end