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HF 1905

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

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 03/17/2005

Current Version - as introduced

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A bill for an act
relating to taxation; income; allowing a credit for
contributions to prekindergarten scholarship granting
organizations; amending Minnesota Statutes 2004,
section 290.01, subdivision 19c; proposing coding for
new law in Minnesota Statutes, chapter 290.

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

Section 1.

Minnesota Statutes 2004, section 290.01,
subdivision 19c, is amended to read:


Subd. 19c.

Corporations; additions to federal taxable
income.

For corporations, there shall be added to federal
taxable income:

(1) the amount of any deduction taken for federal income
tax purposes for income, excise, or franchise taxes based on net
income or related minimum taxes, including but not limited to
the tax imposed under section 290.0922, paid by the corporation
to Minnesota, another state, a political subdivision of another
state, the District of Columbia, or any foreign country or
possession of the United States;

(2) interest not subject to federal tax upon obligations
of: the United States, its possessions, its agencies, or its
instrumentalities; the state of Minnesota or any other state,
any of its political or governmental subdivisions, any of its
municipalities, or any of its governmental agencies or
instrumentalities; the District of Columbia; or Indian tribal
governments;

(3) exempt-interest dividends received as defined in
section 852(b)(5) of the Internal Revenue Code;

(4) the amount of any net operating loss deduction taken
for federal income tax purposes under section 172 or 832(c)(10)
of the Internal Revenue Code or operations loss deduction under
section 810 of the Internal Revenue Code;

(5) the amount of any special deductions taken for federal
income tax purposes under sections 241 to 247 of the Internal
Revenue Code;

(6) losses from the business of mining, as defined in
section 290.05, subdivision 1, clause (a), that are not subject
to Minnesota income tax;

(7) the amount of any capital losses deducted for federal
income tax purposes under sections 1211 and 1212 of the Internal
Revenue Code;

(8) the exempt foreign trade income of a foreign sales
corporation under sections 921(a) and 291 of the Internal
Revenue Code;

(9) the amount of percentage depletion deducted under
sections 611 through 614 and 291 of the Internal Revenue Code;

(10) for certified pollution control facilities placed in
service in a taxable year beginning before December 31, 1986,
and for which amortization deductions were elected under section
169 of the Internal Revenue Code of 1954, as amended through
December 31, 1985, the amount of the amortization deduction
allowed in computing federal taxable income for those
facilities;

(11) the amount of any deemed dividend from a foreign
operating corporation determined pursuant to section 290.17,
subdivision 4, paragraph (g);

(12) the amount of any environmental tax paid under section
59(a) of the Internal Revenue Code;

(13) the amount of a partner's pro rata share of net income
which does not flow through to the partner because the
partnership elected to pay the tax on the income under section
6242(a)(2) of the Internal Revenue Code;

(14) the amount of net income excluded under section 114 of
the Internal Revenue Code;

(15) any increase in subpart F income, as defined in
section 952(a) of the Internal Revenue Code, for the taxable
year when subpart F income is calculated without regard to the
provisions of section 614 of Public Law 107-147; deleted text begin and
deleted text end

(16) 80 percent of the depreciation deduction allowed under
section 168(k) of the Internal Revenue Code. For purposes of
this clause, if the taxpayer has an activity that in the taxable
year generates a deduction for depreciation under section 168(k)
and the activity generates a loss for the taxable year that the
taxpayer is not allowed to claim for the taxable year, "the
depreciation allowed under section 168(k)" for the taxable year
is limited to excess of the depreciation claimed by the activity
under section 168(k) over the amount of the loss from the
activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year
are allowed, the depreciation under section 168(k) is allowednew text begin ;
and
new text end

new text begin (17) the amount deducted under section 170 of the Internal
Revenue Code that represents contributions to a prekindergarten
scholarship granting organization for which a credit is claimed
under section 290.0676
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, 2005.
new text end

Sec. 2.

new text begin [290.0676] CREDIT FOR CONTRIBUTIONS TO
SCHOLARSHIP GRANTING ORGANIZATIONS.
new text end

new text begin Subdivision 1. 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.
new text end

new text begin (b) "Statewide median family income" means median income
for a four-person family in Minnesota used by the United States
Department of Health and Human Services in administering the Low
Income Home Energy Assistance Program, as most recently
published in the Federal Register.
new text end

new text begin (c) A "qualified student" must be:
new text end

new text begin (1) younger than age seven, not yet enrolled in
kindergarten or first grade, and a Minnesota resident; and
new text end

new text begin (2) a member of a household with an income less than 75
percent of the statewide median family income.
new text end

new text begin (d) A "qualified prekindergarten educational program" must:
new text end

new text begin (1) be one of the following:
new text end

new text begin (i) a prekindergarten program established by a school
district under chapter 124D;
new text end

new text begin (ii) a preschool, nursery school, or early childhood
development program licensed by the Department of Human Services
and accredited by the National Association for the Education of
Young Children or National Early Childhood Program
Accreditation;
new text end

new text begin (iii) a Montessori program affiliated with or accredited by
the American Montessori Society or American Montessori
International; or
new text end

new text begin (iv) a child care program provided by a family day care
provider holding a current early childhood development
credential approved by the commissioner of human services; and
new text end

new text begin (2) accept education scholarship funds granted under this
section in payment of tuition for a qualified student under
paragraph (c) enrolled in the program.
new text end

new text begin (e) "Prekindergarten scholarship granting organization" or
"preK SGO" means a charitable organization that is exempt from
federal taxation under section 501(c)(3) of the Internal Revenue
Code, is registered with the attorney general's office, and is
certified by the commissioner of education as meeting the
criteria of this paragraph. To qualify as a preK SGO, the
charitable organization:
new text end

new text begin (1) must allocate at least 85 percent of its annual revenue
for education scholarship funds to children to allow them to
attend any qualified prekindergarten educational program of
their parents' choice;
new text end

new text begin (2) must not restrict the availability of scholarships to
students of one program;
new text end

new text begin (3) may not charge a fee of any kind to students under
consideration for a scholarship;
new text end

new text begin (4) must require a qualified prekindergarten educational
program receiving payment of tuition through a scholarship grant
funded by contributions qualifying for the tax credit under
subdivision 3 awarded by a preK SGO to an enrolled student of
the program to sign an agreement that it will not use different
admissions standards for a student with a scholarship grant from
a preK SGO;
new text end

new text begin (5) must agree to annually report to the Department of
Education on:
new text end

new text begin (i) the number of students awarded scholarship grants
funded by contributions under the tax credit program;
new text end

new text begin (ii) the total amount of scholarship grant dollars awarded
from contributions under the tax credit program;
new text end

new text begin (iii) the total number of programs attended by scholarship
grant recipients;
new text end

new text begin (iv) the total amount of contributions received under the
tax credit program; and
new text end

new text begin (v) the percentage of contributions received under the tax
credit program that was provided as scholarship grants to
families; and
new text end

new text begin (6) must provide the Department of Education with the same
annual report that the organization must provide the attorney
general's office under section 309.53, subdivision 1.
new text end

new text begin Subd. 2. new text end

new text begin Commissioner of education. new text end

new text begin The commissioner of
education:
new text end

new text begin (1) must maintain a list of preK SGOs;
new text end

new text begin (2) must make the list available on the Department of
Education's Web site and by other means;
new text end

new text begin (3) must develop an application process for preK SGOs to be
recorded as qualifying by the Department of Education under this
section;
new text end

new text begin (4) may remove an organization from the list of qualifying
preK SGOs, after notifying the organization and providing an
opportunity for a public hearing, for reasons of the
organization's financial mismanagement or violation of the law;
and
new text end

new text begin (5) must develop a process for preK SGOs to annually report
to the Department of Education as specified in this section.
new text end

new text begin Subd. 3. new text end

new text begin Credit allowed. new text end

new text begin A corporation is allowed a
credit against the corporate franchise tax due under this
chapter equal to 50 percent of the amount contributed to a
prekindergarten scholarship granting organization. The maximum
credit allowed any corporation in a taxable year is $100,000.
The credit may not be claimed for contributions designated for
the use of a specific student. The credit for the taxable year
may not exceed the corporation's liability for tax. The
commissioner of revenue shall prescribe the manner in which the
credit may be claimed. This may include allowing the credit
only as a separately processed claim for refund.
new text end

new text begin Subd. 4.new text end

new text begin Application for credit certificate.new text end

new text begin A
corporation shall apply to the Department of Education for a tax
credit certificate. A corporation shall receive a tax credit
certificate under this section if the preK SGO appears on the
list of qualifying preK SGOs maintained by the Department of
Education. Tax credit certificates under this section shall be
made available by the Department of Education on a first-come,
first-served basis until the maximum statewide credit amount has
been reached. The statewide credit maximum amount is $0 in
fiscal year 2006 and $3,500,000 in fiscal year 2007. A
contribution by a corporation to a preK SGO shall be made no
later than 60 days following written notification of the
approval of an application. The commissioner of education shall
issue the tax credit certificate in the amount of one-half of
the amount contributed to the preK SGO after the corporation has
made the contribution to the preK SGO. The commissioner of
education shall not issue a tax credit certificate for an amount
greater than $100,000.
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, 2005.
new text end