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Minnesota Legislature

Office of the Revisor of Statutes

HF 2386

as introduced - 91st Legislature (2019 - 2020) Posted on 03/27/2019 01:30pm

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

Bill Text Versions

Engrossments
Introduction Posted on 03/11/2019

Current Version - as introduced

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A bill for an act
relating to taxation; income; allowing a refundable credit for donations to certain
youth intervention organizations; appropriating money; 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] YOUTH INTERVENTION DONATION TAX CREDIT.
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) "Donation" means a contribution to a qualified youth intervention organization that
is a charitable contribution for the taxable year within the meaning of section 170 of the
Internal Revenue Code.
new text end

new text begin (c) "Pass-through entity" means a corporation that for the applicable taxable year is
treated as an S corporation or a general partnership, limited partnership, limited liability
partnership, trust, or limited liability company and which for the applicable taxable year is
not taxed as a corporation under this chapter.
new text end

new text begin (d) "Qualified youth intervention organization" or "qualified organization" means an
entity that:
new text end

new text begin (1) has been granted an exemption from the federal income tax as an organization
described in section 501(c)(3) of the Internal Revenue Code;
new text end

new text begin (2) is primarily engaged in providing youth intervention services; and
new text end

new text begin (3) has an approved application under subdivision 5 and has not been subsequently
barred from participating in the program.
new text end

new text begin (e) "Youth intervention services" means providing community-based services intended
and designed to help at-risk youth develop into productive and contributing adults. "At-risk
youth" means an individual, ages six to 21, who is subject to one or more of the following
risk factors:
new text end

new text begin (1) the youth has been subject to sexual, physical, emotional, or verbal abuse;
new text end

new text begin (2) the youth has been neglected, including not receiving adequate food or emotional
support;
new text end

new text begin (3) the youth, a parent, or a caregiver is addicted to or abuses alcohol or drugs;
new text end

new text begin (4) the family is subject to serious stress or conflict, including single parent families,
marital conflict, or divorce;
new text end

new text begin (5) has family income low enough to qualify for the free and reduced-price school lunch
program, as used in section 126C.05, subdivision 16;
new text end

new text begin (6) the youth, a parent, or a caregiver has been involved in the criminal justice system;
new text end

new text begin (7) the youth or a parent is or recently has been homeless; or
new text end

new text begin (8) the youth or a parent has chronic health or mental health issues.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) A taxpayer who has been issued a credit certificate under
subdivision 3 is allowed a youth intervention donation tax credit against the taxes due under
this chapter, excluding the tax under section 290.0922. The credit equals 50 percent of the
amount donated during the taxable year to the qualified organization designated on the
taxpayer's credit certificate. No credit is allowed for a donation made before the taxpayer
was issued a credit certificate under subdivision 3 or in an amount exceeding that specified
by the credit certificate.
new text end

new text begin (b) A taxpayer must provide a copy of the receipt provided by the qualified organization
when claiming the credit for the donation if requested by the commissioner.
new text end

new text begin Subd. 3. new text end

new text begin Application for credit certificate; limitations. new text end

new text begin (a) The commissioner must
make applications for tax credits available on the department's website annually by January
1 of the taxable year in which the credit will be claimed.
new text end

new text begin (b) To be allowed a credit under this section, a taxpayer must apply to the commissioner
for a youth intervention tax credit certificate. The application must be in the form and manner
specified by the commissioner and must designate the qualified organization to which the
taxpayer intends to make a donation and indicate the amount of credit applied for. The
commissioner must begin accepting applications for a taxable year on January 1 of the
taxable year. The commissioner must issue tax credit certificates under this section on a
first-come, first-served basis until the maximum statewide credit amount has been reached.
The certificate must list the qualified organization the taxpayer designated on the application
and the maximum dollar amount of the credit allowed. The maximum statewide credit
amount is $5,000,000 per taxable year.
new text end

new text begin (c) The commissioner must not issue a tax credit certificate:
new text end

new text begin (1) for an amount greater than the limits that apply under paragraph (d);
new text end

new text begin (2) for contributions to an organization that is no longer a qualified organization; or
new text end

new text begin (3) that would result in issuance of a total amount of certificates for the taxable year
greater than the annual maximum set in paragraph (b).
new text end

new text begin (d) The maximum amount of tax credit certificates that may be issued to an applicant
for donations to each qualified organization for a calendar year is limited to:
new text end

new text begin (1) $10,000 for a married joint filer;
new text end

new text begin (2) $5,000 for any other individual filer;
new text end

new text begin (3) $50,000 for a corporation subject to tax under section 290.06, subdivision 1; or
new text end

new text begin (4) the amount equal to $5,000 multiplied by the total number of members, partners, or
shareholders of the entity for pass-through entities.
new text end

new text begin Subd. 4. new text end

new text begin Responsibilities of qualified organization. new text end

new text begin (a) An entity that is eligible to be
a qualified organization must apply to the commissioner by September 15 of the year
preceding the year in which it will first receive donations for which credits may be claimed.
The application must be in the form and manner prescribed by the commissioner. The
application must:
new text end

new text begin (1) demonstrate to the commissioner that the organization is exempt from the federal
income tax under section 501(c)(3) of the Internal Revenue Code; and
new text end

new text begin (2) attest that the organization provides youth intervention services.
new text end

new text begin (b) A qualified organization must provide to taxpayers who make donations a receipt
on a form approved by the commissioner and must make the documentation available to
the commissioner on request.
new text end

new text begin (c) A qualified organization must, by June 1 of each year following a year in which it
receives donations, provide the following information to the commissioner:
new text end

new text begin (1) financial information that demonstrates the financial viability of the qualified
organization, if it received donations of $150,000 or more during the year;
new text end

new text begin (2) documentation that it has used amounts received as donations to provide youth
intervention services; and
new text end

new text begin (3) the total number and total dollar amount of donations received from taxpayers for
which credit certificates were provided.
new text end

new text begin Subd. 5. new text end

new text begin Responsibilities of commissioner. new text end

new text begin (a) The commissioner must make
applications for an entity to be approved as a qualified organization for a taxable year
available on the department's website by August 1 of the year preceding the taxable year in
which the credit will be claimed. The commissioner must approve an application that
provides the documentation required in subdivision 4, paragraph (a), within 60 days of
receiving the application. The commissioner must notify an organization that provides
incomplete documentation and the organization may resubmit its application within 30 days.
new text end

new text begin (b) By November 15 of each year, the commissioner must post on the department's
website the names and addresses of qualified organizations for the next taxable year. The
commissioner must regularly update the names and addresses of any qualified organizations
that have been barred from participating in the program. The commissioner must prescribe
a standardized format for:
new text end

new text begin (1) a receipt to be issued by a qualified organization to a taxpayer to indicate the value
of a donation received; and
new text end

new text begin (2) qualified organizations to report the information required under subdivision 4,
paragraph (c).
new text end

new text begin (c) The commissioner may conduct either a financial review or audit of a qualified
organization upon finding evidence of fraud or intentional misreporting. If the commissioner
determines that the qualified organization committed fraud or intentionally misreported
information, the qualified organization is barred from further program participation.
new text end

new text begin (d) The commissioner may contract with a private entity to carry out some or all of the
commissioner's responsibilities under paragraphs (a) and (b). The contracting entity must
be an entity that is exempt from federal income taxation under section 501(c)(3) of the
Internal Revenue Code and that has experience in providing or evaluating the provision of
youth intervention services. If the commissioner contracts with a private entity to certify
qualified organizations, the entity may charge a fee of up to $250 per application for
certifications to offset its costs.
new text end

new text begin Subd. 6. new text end

new text begin Credit refundable; appropriation. new text end

new text begin (a) If the amount of credit which the
claimant is eligible to receive under this section exceeds the claimant's tax liability under
this chapter, the commissioner shall refund the excess to the claimant.
new text end

new text begin (b) An amount sufficient to pay the refunds required by this section is appropriated to
the commissioner from the general fund.
new text end

new text begin Subd. 7. new text end

new text begin Proportional credits. new text end

new text begin A pass-through entity must provide each shareholder,
partner, or member a statement indicating the individual's share of the credit amount certified
to the entity based on its share of the pass-through entity's income for the taxable year.
new text end

new text begin Subd. 8. new text end

new text begin Audit powers. new text end

new text begin Notwithstanding the certification eligibility issued by the
commissioner under this section, the commissioner may utilize any audit and examination
powers under chapter 270C or 289A to the extent necessary to verify that the taxpayer is
eligible for the credit and to assess for the amount of any improperly claimed credit.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for donations made and credits allowed
in taxable years beginning after December 31, 2019.
new text end

Sec. 2. new text beginAPPROPRIATION; ADMINISTRATIVE COSTS.
new text end

new text begin $100,000 in fiscal year 2020 is appropriated from the general fund to the commissioner
of revenue for the cost of implementing and administering the youth intervention donation
tax credit. This amount is a onetime appropriation and is not added to the base budget.
new text end