HF 2366

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

A bill for an act
relating to education; providing tax credit for
scholarship granting organizations; amending Minnesota
Statutes 2004, section 290.01, subdivision 19c;
proposing coding for new law in Minnesota Statutes,
chapters 124D; 290.

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

Section 1.

new text begin [124D.98] 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 the purposes of this
section the following terms have the meanings given.
new text end

new text begin (b) "Federal poverty guidelines" mean the poverty
guidelines for the 48 contiguous states used by the United
States Department of Health and Human Services as most recently
published in the Federal Register.
new text end

new text begin (c) "Liability for tax" means the tax imposed under chapter
290 for the taxable year reduced by the sum of the nonrefundable
credits allowed under chapter 290.
new text end

new text begin (d) "Qualified school" means an elementary or secondary
nonpublic school, not including home schools, wherein a resident
of this state may legally fulfill the state's compulsory
attendance laws, which is accredited by an education accrediting
agency recognized by the Minnesota Nonpublic Education Council
under section 123B.445, paragraph (a), which is not operated for
profit, and which adheres to the provisions of the Civil Rights
Act of 1964 and chapter 363A.
new text end

new text begin (e) "Scholarship granting organization" or "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
section.
new text end

new text begin Subd. 2. new text end

new text begin Commissioner duties. new text end

new text begin The commissioner of
education:
new text end

new text begin (1) must maintain a list of 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 SGOs to be
certified by the Department of Education under this section;
new text end

new text begin (4) may remove an organization from the list of qualifying
SGOs, after notifying the organization and providing an
opportunity for a public hearing, if the organization has a
history of financial mismanagement or repeated violations of the
law;
new text end

new text begin (5) must develop a process for SGOs to annually report to
the department as described under this section; and
new text end

new text begin (6) may audit the scholarship funds of an SGO.
new text end

new text begin Subd. 3. new text end

new text begin Qualifications of an sgo. new text end

new text begin To qualify as a
scholarship granting organization, the charitable organization:
new text end

new text begin (1) must allocate at least 80 percent of its annual revenue
from contributions claimed for credit under section 290.0676,
subdivision 1, for education scholarship grants to children to
allow them to attend any qualified school of their parents'
choice;
new text end

new text begin (2) may only award scholarship grants funded by
contributions claimed for credit under section 290.0676,
subdivision 1, to students who are residents of Minnesota and
are from families with incomes equal to or less than 200 percent
of the federal poverty guidelines;
new text end

new text begin (3) must not restrict the availability of scholarships to
students of one school;
new text end

new text begin (4) may not charge a fee of any kind to students under
consideration for a scholarship;
new text end

new text begin (5) may only award scholarship grants funded by
contributions claimed for the tax credit to students who are not
enrolled in a nonpublic school during the school year in which
the students first apply for scholarship grants from an SGO;
new text end

new text begin (6) must require parents of a child awarded a scholarship
grant funded by contributions under the tax credit program to
sign a written notification authorizing their child's school to
release data about their child's performance on state
assessments, other standardized tests, or both to the SGO and
the department. The SGO and department would be required to
protect the privacy of individual student data and to report
academic achievement data for scholarship recipients to the
public only in the aggregate;
new text end

new text begin (7) must agree to annually report to the department:
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 schools 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 (8) must provide the department with the same annual report
that the organization is required to provide the attorney
general's office under section 309.53.
new text end

new text begin Subd. 4. new text end

new text begin Application for credit certificate. new text end

new text begin The
corporation shall apply to the Department of Education for a tax
credit certificate. A corporation shall receive a tax credit
certificate under section 290.0676 if the scholarship granting
organization (SGO) appears on the list of qualifying 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 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 SGO
after the corporation has made the contribution to the 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

Sec. 2.

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 allowed new 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 scholarship
granting organization for which a credit is claimed under
section 290.0676 new text end .

Sec. 3.

new text begin [290.0676] CREDIT FOR CONTRIBUTIONS TO
SCHOLARSHIP GRANTING ORGANIZATIONS.
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 scholarship granting organization under
section 124D.98. The maximum credit allowed 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 EFFECTIVE DATE. new text end

new text begin This section is effective for taxable
years beginning after December 31, 2005.
new text end