HF 3302

as introduced - 86th Legislature (2009 - 2010) Posted on 03/01/2010 10:23am

A bill for an act
relating to economic development; encouraging job creation; providing an angel
investment credit and a Minnesota business investment company credit; making
changes to various income tax provisions; limiting the level of budgeted spending
to the amount collected in the prior biennium; providing for interlocutory appeal
on the question of class certification; modifying the limitation provisions
governing merchant actions; modifying certain private remedies; modifying
environmental permitting and review provisions; requiring reports; appropriating
money; amending Minnesota Statutes 2008, sections 8.31, subdivision 3a, by
adding a subdivision; 115.07; 116D.04, subdivision 2a; 290.06, subdivision
1; 290.068; 290.0921, subdivisions 1, 3; 541.05; Minnesota Statutes 2009
Supplement, sections 290.01, subdivisions 19b, 19d; 290.06, subdivision 2c;
290.091, subdivision 2; proposing coding for new law in Minnesota Statutes,
chapters 116J; 290; 297I; 540; 541.

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

ARTICLE 1

ANGEL INVESTMENT TAX CREDIT

Section 1.

new text begin [116J.8737] ANGEL INVESTMENT 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 the purposes of this section, the following terms
have the meanings given.
new text end

new text begin (b) "Qualified small business" means a business that satisfies all of the following
conditions:
new text end

new text begin (1) the business has its headquarters in Minnesota;
new text end

new text begin (2) at least 51 percent of the business's employees are employed in Minnesota, and
51 percent of the business's total payroll is paid or incurred in the state;
new text end

new text begin (3) the business is engaged in, or is committed to engage in, innovation in Minnesota
in one of the following:
new text end

new text begin (i) using proprietary technology to add value to a product, process, or service in a
qualified high-technology field;
new text end

new text begin (ii) researching or developing a proprietary product, process, or service in a qualified
high-technology field;
new text end

new text begin (iii) researching, developing, or producing a new proprietary technology for use in
the fields of tourism, forestry, mining, or transportation; or
new text end

new text begin (iv) qualified green manufacturing;
new text end

new text begin (4) other than the activities specifically listed in clause (3), the business is not
engaged in real estate development, insurance, banking, lending, lobbying, political
consulting, information technology consulting, wholesale or retail trade, leisure,
hospitality, transportation, construction, ethanol production from corn, or professional
services provided by attorneys, accountants, business consultants, physicians, or health
care consultants;
new text end

new text begin (5) the business has fewer than 25 employees;
new text end

new text begin (6) if the business has five or more employees as measured on a full-time equivalent
basis, the business must pay its employees in excess of the first five annual wages at least
175 percent of the federal poverty guideline for the year for a family of four;
new text end

new text begin (7) the business has not been in operation for more than ten consecutive years;
new text end

new text begin (8) the business has not received more than $4,000,000 in qualifying investments
that have qualified for and received tax credits under this section;
new text end

new text begin (9) the business is not a member of a unitary group that employs more than 100
employees; and
new text end

new text begin (10) the business has not previously received private equity investments of more
than $2,000,000.
new text end

new text begin (c) "Qualified high-technology field" includes, but is not limited to, aerospace,
agricultural processing, alternative energy, environmental engineering, food technology,
cellulosic ethanol, information technology, materials science technology, nanotechnology,
telecommunications, biotechnology, medical device products, pharmaceuticals,
diagnostics, biologicals, and veterinary science.
new text end

new text begin (d) "Proprietary technology" means the technical innovations that are unique and
legally owned or licensed by a business and includes, without limitation, those innovations
that are patented, patent pending, a subject of trade secrets, or copyrighted.
new text end

new text begin (e) "Qualified green manufacturing" means a business whose primary business
activity is production of products, processes, methods, technologies, or services, excluding
consulting, intended to do one or more of the following:
new text end

new text begin (1) increase the use of energy from renewable sources, as defined in section
216B.1691;
new text end

new text begin (2) increase the energy efficiency of the electric utility-producing infrastructure
system or to increase energy conservation related to electricity or other utility use, as
provided in sections 216B.2401 and 216B.241;
new text end

new text begin (3) monitor, protect, restore, and preserve the quality of surface waters; and
new text end

new text begin (4) expand use of biofuels, including expanding the feasibility or reducing the cost
of producing biofuels or the types of equipment, machinery, and vehicles that can use
biofuels.
new text end

new text begin (f) "Qualified taxpayer" means an accredited investor, within the meaning of
Regulation D of the Securities and Exchange Commission, Code of Federal Regulations,
title 17, section 230.501(a), who:
new text end

new text begin (1) does not own, control, or hold power to vote 20 percent or more of the outstanding
securities of the qualified small business in which the eligible investment is proposed; or
new text end

new text begin (2) does not receive more than 50 percent of the taxpayer's gross annual income from
the qualified small business in which the eligible investment is proposed.
new text end

new text begin A member of the family of a taxpayer disqualified by this subdivision is not eligible
for a credit under this section.
new text end

new text begin (g)(1) "Qualified angel investment network fund" means a pooled investment fund
that:
new text end

new text begin (i) invests in qualified small businesses;
new text end

new text begin (ii) is organized as a pass-through entity; and
new text end

new text begin (iii) has at least three separate investors, all of whom are qualified taxpayers
as defined in paragraph (f), and that own no more than 50 percent of the outstanding
ownership interests in the fund; and
new text end

new text begin (2) for purposes of determining the number of investors and the ownership interest
of an investor under this paragraph, the ownership interests of an investor include those of
the investor's family, and any corporation, limited liability company, partnership, or trust
in which the investor or the investor's family has a controlling equity interest or exercises
management control. Investments in the fund may consist of equity investments or notes
that pay interest or other fixed amounts, or any combination of both.
new text end

new text begin (h) "Qualified investment" means either a cash investment of a minimum of:
new text end

new text begin (1) $10,000 in a calendar year by a qualified taxpayer; or
new text end

new text begin (2) $50,000 in a calendar year by a qualified angel investment network fund.
new text end

new text begin The qualified investment in a qualified small business must be in exchange
for common stock, a partnership or membership interest, preferred stock, debt with
mandatory conversion to equity, or an equivalent ownership interest as determined by
the commissioner.
new text end

new text begin (i) "Family" means a family member within the meaning of the Internal Revenue
Code, section 267(c)(4).
new text end

new text begin Subd. 2. new text end

new text begin Certification of small businesses. new text end

new text begin (a) Businesses may apply to the
commissioner for certification as a qualified small business. The application must be in the
form and be made under the procedures specified by the commissioner, accompanied by
an application fee of $150. The application for certification must be made available on the
department's Web site by August 1, 2010. Applications for subsequent years' certification
must be made available on the department's Web site by November 1 of the preceding
year. Application fees collected are appropriated to the commissioner to be used for
personnel and administrative expenses related to administering the program.
new text end

new text begin (b) A business seeking certification must submit an application for each taxable
year for which the business desires certification. If a qualified small business receives
a qualified investment for which tax credits are allocated, the business must annually
submit a certified small business report in the form required by the commissioner with
the required fee no later than February 1 for the two years subsequent to the last qualified
investment. Failure to file an annual report as required under this subdivision results in a
fine of $500 and revocation of certification.
new text end

new text begin (c) The commissioner must maintain a list of businesses certified under this
subdivision and make the list accessible to the public on the department's Web site.
new text end

new text begin Subd. 3. new text end

new text begin Certification of qualified taxpayers. new text end

new text begin (a) Taxpayers may apply to the
commissioner for certification as a qualified taxpayer. The application must be in the
form and be made under the procedures specified by the commissioner, accompanied by
an application fee of $350. The application for certification of qualified taxpayers must
be made available on the department's Web site by August 1, 2010. Applications for
subsequent years' certification must be made available on the department's Web site by
November 1 of the preceding year. Application fees are appropriated to the commissioner
for personnel and administrative expenses related to administering the program.
new text end

new text begin (b) A qualified taxpayer seeking certification must submit an application for each
taxable year in which the qualified taxpayer seeks certification. If a qualified taxpayer
receives tax credits under this section, a qualified taxpayer must submit an angel investor
annual report in the form required by the commissioner with the required fee no later than
February 1 of each year for two years subsequent to the last allocation of tax credits.
Failure to file an angel investor annual report as required under this subdivision results
in the revocation of tax credits. Once a qualified taxpayer has filed the required annual
reports and accompanying fees for two subsequent years following allocation of tax
credits and complied with all other requirements for that allocation, the tax credits are
no longer subject to revocation.
new text end

new text begin Subd. 4. new text end

new text begin Certification of qualified angel investment network funds. new text end

new text begin (a)
Angel investment network funds may apply to the commissioner of employment and
economic development for certification as a qualified angel investment network fund.
The application must be in the form and be made under the procedures specified by
the commissioner, accompanied by an application fee of $1,000. The application for
certification of qualified angel investor network funds must be made available on the
department's Web site by August 1, 2010. Applications for subsequent years' certification
must be made available by November 1 of the preceding year. Application fees collected
are appropriated to the commissioner to be used for personnel and administrative expenses
related to administering the program.
new text end

new text begin (b) A qualified angel investment network fund seeking certification must submit an
application for each taxable year for which the angel investment network fund seeks
certification. If any member of a qualified angel investment network fund receives tax
credits under this section for qualified investments made by the fund, the qualified angel
investment network fund must annually submit an angel investor annual report in the
form required by the commissioner with the required fee no later than February 1 of
each year for two years subsequent to the last allocation of credits. Failure to file an
angel investor annual report as required under this subdivision results in revocation of
tax credits. Once a qualified angel investment network fund has filed the required annual
reports and accompanying fees for two subsequent years following allocation of tax
credits and complied with all other requirements for that allocation, the tax credits are
no longer subject to revocation.
new text end

new text begin new text end

new text begin Subd. 5. new text end

new text begin Credit allowed. new text end

new text begin (a) A qualified taxpayer or angel investor network fund is
allowed a credit for investment in a qualified small business in the amount determined
by the certification allocated by the commissioner against the tax imposed by chapter
290. The commissioner must not allocate more than $5,000,000 in credits to qualified
taxpayers or angel investment network funds in calendar year 2010, and not more than
$10,000,000 in credits in calendar year 2011 and each calendar year thereafter. Any
portion of a year's credits that is not allocated by the commissioner does not cancel and
may be carried forward to the subsequent year until all credits have been allocated.
Applications for tax investment credits must be made available on the department's
Web site by September 1, 2010, and the department must begin accepting applications
by September 1, 2010. Applications for subsequent years must be made available by
November 1 of the preceding year.
new text end

new text begin (b) Tax investment credits must be allocated to qualified taxpayers or angel investor
network funds in the order that the tax credit request applications are filed with the
department. The investment specified in the application must be made within 60 days of
the allocation of the credits. If the investment is not made within 60 days, the credits are
deemed revoked. A qualified taxpayer or angel investor network fund that fails to invest
as specified in the application, within 60 days from allocation of the credits, must notify
the department of the failure to invest within five business days of the expiration of the
60-day investment period.
new text end

new text begin (c) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. In the event that two or more qualified
taxpayers or angel investment network funds file tax credit request applications on the
same day, and the aggregate amount of credit allocation claims exceeds the aggregate limit
of credit under this section or the lesser amount of credits that remain unallocated on that
day, then the credits must be allocated among the qualified taxpayers or angel investment
network funds who filed on that day on a pro rata basis with respect to the amounts claimed.
The pro rata allocation for any one qualified taxpayer or angel investment network fund is
the product obtained by multiplying a fraction, the numerator of which is the amount of
the credit allocation claim filed on behalf of a qualified taxpayer and the denominator of
which is the total of all credit allocation claims filed on behalf of all applicants on that day,
by the amount of credits that remain unallocated on that day for the fiscal year.
new text end

new text begin (d) The commissioner must notify the commissioner of revenue of every credit
allocated and every credit revoked under this section.
new text end

new text begin Subd. 6. new text end

new text begin Annual reports. new text end

new text begin (a) By February 1 of each year for two years subsequent
to the last allocation of credits, qualified small businesses, qualified taxpayers, and
qualified angel investment network funds must submit an annual report and a filing fee of
$100. All report fees collected are appropriated to the commissioner for personnel and
administrative expense related to administering the program.
new text end

new text begin (b) Qualified small businesses must certify to the department in the form required by
the commissioner that it satisfies the following requirements:
new text end

new text begin (1) the business has its headquarters in Minnesota;
new text end

new text begin (2) at least 51 percent of the business's employees are employed in Minnesota, and
51 percent of the business's total payroll is paid or incurred in the state;
new text end

new text begin (3) that the business is engaged in, or is committed to engage in, innovation in
Minnesota as defined under subdivision 1; and
new text end

new text begin (4) that the business meets the payroll requirements in subdivision 1, paragraph
(b), clause (6).
new text end

new text begin (c) Qualified taxpayers must certify to the department in the form required by the
commissioner that the investor satisfies the following requirements:
new text end

new text begin (1) the taxpayer continues to meet the requirements of subdivision 1, paragraph
(f); and
new text end

new text begin (2) that the taxpayer continues to remain invested in the qualified small business as
required by section 290.0692, subdivision 3.
new text end

new text begin (d) Qualified angel investment network funds must certify to the department in the
form required by the commissioner that the investor satisfies the following requirements:
new text end

new text begin (1) the taxpayer continues to meet the requirements of subdivision 1, paragraph
(g); and
new text end

new text begin (2) that the angel investment network fund continues to remain invested in the
qualified small business as required by section 290.0692, subdivision 3.
new text end

new text begin Subd. 7. new text end

new text begin Rulemaking exception. new text end

new text begin The commissioner's actions in establishing
procedures and requirements and in making determinations and certifications to administer
this section are not a rule for purposes of chapter 14, are not subject to the Administrative
Procedure Act contained in chapter 14, and are not subject to section 14.386.
new text end

new text begin Subd. 8. new text end

new text begin Report. new text end

new text begin Beginning in 2011, the commissioner must annually report by
March 15 to the chairs of the committees having jurisdiction over taxes and economic
development in the senate and the house of representatives on the tax credits issued under
this section. The report must include:
new text end

new text begin (1) the number and amount of the credits issued;
new text end

new text begin (2) the recipients of the credits;
new text end

new text begin (3) the number and type of each business certified as a qualified small business;
new text end

new text begin (4) to the extent determinable, the total amount of investment generated by these
credits; and
new text end

new text begin (5) any other information relevant to evaluating the effect of these credits.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

new text begin [290.0692] ANGEL INVESTMENT CREDIT; CREDIT ALLOWED;
LIMITATIONS; HOLDING PERIOD; CARRYOVER.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin A qualified taxpayer is allowed a credit against the
tax imposed under this chapter for investments made in the year in a qualified small
business as defined under section 116J.8737. The credit equals 25 percent of the qualified
taxpayer's investment in the business, but not to exceed the lesser of:
new text end

new text begin (1) the liability for tax under this chapter, including the applicable alternative
minimum tax, but excluding the minimum fee under section 290.0922; and
new text end

new text begin (2) the amount of the certificate provided to the qualified taxpayer under section
116J.8737.
new text end

new text begin Subd. 2. new text end

new text begin Limitations. new text end

new text begin No taxpayer may receive more than $125,000 in credits
under this section in any one year.
new text end

new text begin Subd. 3. new text end

new text begin Holding periods. new text end

new text begin The credit is allowed only for investments for which a
credit has been allocated by the commissioner of employment and economic development
under section 116J.8737. Any credit taken by a taxpayer must be repaid, and any unused
credits must be canceled, if the investment in the qualified small business is not held for at
least three years. The three-year holding period does not apply if:
new text end

new text begin (1) the investment by the qualified taxpayer becomes worthless before the end
of the three-year period;
new text end

new text begin (2) 80 percent or more of the assets of the qualified small business is sold before
the end of the three-year period;
new text end

new text begin (3) the qualified small business is sold before the end of the three-year period; or
new text end

new text begin (4) the qualified small business's common stock begins trading on a public exchange
before the end of the three-year period.
new text end

new text begin Subd. 4. new text end

new text begin Proportional credits. new text end

new text begin Each pass-through entity must provide each
investor a statement indicating the investor's share of the credit amount certified to the
pass-through entity based on its share of the pass-through entity's assets at the time of
the qualified investment.
new text end

new text begin Subd. 5. new text end

new text begin Carryover. new text end

new text begin If the amount of the credit under this subdivision for any
taxable year exceeds the liability for tax, the excess is a credit carryover to each of the ten
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. The amount of the unused credit that may be added under this subdivision may
not exceed the taxpayer's liability for tax less the credit for the taxable year.
new text end

new text begin Subd. 6. new text end

new text begin Transfer of credits. new text end

new text begin Any taxpayer who has not had liability under this
chapter for the immediate past three taxable years and does not have anticipated liability
for the current taxable year may transfer the entirety of the credit to any natural person of
net worth, as defined in the Code of Federal Regulations, title 17, section 230.501(a). No
person is entitled to a refund for the interest created under this subdivision. Only the full
credit for any one taxpayer may be transferred and the interest may be transferred only one
time. A credit acquired by transfer is subject to the limitations prescribed in this section.
Documentation of any credit acquired by transfer must be provided by the taxpayer in
the form required by the commissioner.
new text end

new text begin Subd. 7. new text end

new text begin Audit powers. new text end

new text begin Notwithstanding the certification eligibility issued by the
commissioner of employment and economic development under section 116J.8737, the
commissioner may utilize any audit and examination powers under chapters 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 investments made after July
1, 2010, for taxable years beginning after December 31, 2009, and only applies to
investments for which a credit has been allocated by the commissioner of employment and
economic development.
new text end

ARTICLE 2

MINNESOTA BUSINESS INVESTMENT COMPANY CREDIT

Section 1.

new text begin [116J.665] MINNESOTA BUSINESS INVESTMENT COMPANY
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) "Affiliate" means:
new text end

new text begin (1) any person who, directly or indirectly, beneficially owns, controls, or holds
power to vote 15 percent or more of the outstanding voting securities or other voting
ownership interest of a Minnesota business investment company or insurance company; or
new text end

new text begin (2) any person, 15 percent or more of whose outstanding voting securities or other
voting ownership interests are directly or indirectly beneficially owned, controlled, or held
with power to vote by a Minnesota business investment company or insurance company.
new text end

new text begin Notwithstanding this subdivision, an investment by a participating investor in a
Minnesota business investment company pursuant to an allocation of premium tax credits
under this section does not cause that Minnesota business investment company to become
an affiliate of that participating investor.
new text end

new text begin (c) "Allocation date" means the date on which credits under section 297I.23 are
allocated to the participating investors of a Minnesota business investment company
under this section.
new text end

new text begin (d) "Designated capital" means an amount of money that:
new text end

new text begin (1) is invested by a participating investor in a Minnesota business investment
company; and
new text end

new text begin (2) fully funds the purchase price of either or both participating investor's equity
interest in a Minnesota business investment company or a qualified debt instrument issued
by a Minnesota business investment company.
new text end

new text begin (e) "Minnesota business investment company" means a partnership, corporation,
trust, or limited liability company, organized on a for-profit basis, that:
new text end

new text begin (1) has its principal office located or is headquartered in Minnesota;
new text end

new text begin (2) has as its primary business activity the investment of cash in qualified businesses;
and
new text end

new text begin (3) is certified by the Department of Employment and Economic Development as
meeting the criteria in this section.
new text end

new text begin (f) "Participating investor" means any insurance company as defined in section
60A.02, subdivision 4, excluding health maintenance organizations, that contributes
designated capital pursuant to this section.
new text end

new text begin (g) "Person" means any natural person or entity, including, but not limited to, a
corporation, general or limited partnership, trust, or limited liability company.
new text end

new text begin (h)(1) "Qualified business" means a business that is independently owned and
operated and meets all of the following requirements:
new text end

new text begin (i) it is headquartered in Minnesota, its principal business operations are located in
this state, and at least 80 percent of its employees are located in Minnesota;
new text end

new text begin (ii) it has no more than 100 employees;
new text end

new text begin (iii) it is not engaged in:
new text end

new text begin (A) professional services provided by accountants, doctors, or lawyers;
new text end

new text begin (B) banking or lending;
new text end

new text begin (C) real estate development;
new text end

new text begin (D) insurance;
new text end

new text begin (E) oil and gas exploration;
new text end

new text begin (F) direct gambling activities;
new text end

new text begin (G) retail sales; or
new text end

new text begin (H) making loans to or investments in a Minnesota business investment company
or an affiliate; and
new text end

new text begin (iv) it is not a franchise of and has no financial relationship with a Minnesota business
investment company or any affiliate of a Minnesota business investment company prior to
a Minnesota business investment company's first qualified investment in the business;
new text end

new text begin (2) a business classified as a qualified business at the time of the first qualified
investment in the business remains classified as a qualified business and may receive
continuing qualified investments from any Minnesota business investment company.
Continuing investments constitute qualified investments even though the business may not
meet the definition of a qualified business at the time of the continuing investments.
new text end

new text begin (i) "Qualified debt instrument" means a debt instrument issued by a Minnesota
business investment company which meets all of the following criteria:
new text end

new text begin (1) it is issued at par value or a premium; and
new text end

new text begin (2) it has an original maturity date of at least four years from the date of issuance,
and a repayment schedule which is not faster than a level principal amortization over
four years.
new text end

new text begin (j) "Qualified distribution" means any distribution or payment made by a Minnesota
business investment company in connection with any of the following:
new text end

new text begin (1) costs and expenses of forming, syndicating, and organizing the Minnesota
business investment company, including fees paid for professional services, and the costs
of financing and insuring the obligations of a Minnesota business investment company,
provided no payment is made to a participating investor;
new text end

new text begin (2) an annual management fee not to exceed one percent of designated capital on
an annual basis to offset the costs and expenses of managing and operating a Minnesota
business investment company;
new text end

new text begin (3) reasonable and necessary fees in accordance with industry custom for ongoing
professional services, including, but not limited to, legal and accounting services related
to the operation of a Minnesota business investment company, not including lobbying or
governmental relations;
new text end

new text begin (4) any increase or projected increase in federal or state taxes, including penalties
and related interest of the equity owners of a Minnesota business investment company
resulting from the earnings or other tax liability of a Minnesota business investment
company to the extent that the increase is related to the ownership, management, or
operation of a Minnesota business investment company.
new text end

new text begin (5) Payments of principal and interest to holders of qualified debt instruments issued
by a Minnesota business investment company may be made without restriction whatsoever.
new text end

new text begin (k) "Qualified investment" means the investment of money by a Minnesota
business investment company in a qualified business for the purchase of any debt,
debt participation, equity, or hybrid security of any nature and description whatsoever,
including a debt instrument or security that has the characteristics of debt but that provides
for conversion into equity or equity participation instruments such as options or warrants.
Any repayment of a qualified investment prior to one year from the date of issuance shall
result in the amount of the qualified investment being reduced by 50 percent for purposes
of the cumulative investment requirement in subdivision 8, paragraph (d).
new text end

new text begin (l) "State premium tax liability" means any liability incurred by an insurance
company under chapter 297I or in the case of a repeal or a rate reduction by the state of
the liability imposed by chapter 297I, any other tax liability imposed upon an insurance
company by the state, other than the tax imposed on taxpayers under section 290.05.
new text end

new text begin Subd. 2. new text end

new text begin Certification. new text end

new text begin (a) The department must provide a standardized format for
applying for the business investment credit under section 297I.23, and for certification as a
Minnesota business investment company.
new text end

new text begin (b) An applicant for certification as a Minnesota business investment company
is required to:
new text end

new text begin (1) file an application with the department that includes, without limitation, a
statement that the applicant has read and understands the requirements of this chapter;
new text end

new text begin (2) pay a nonrefundable application fee of $7,500 at the time of filing the application;
new text end

new text begin (3) submit as part of its application an audited balance sheet that contains an
unqualified opinion of an independent certified public accountant issued not more than 35
days before the application date that states that the applicant has an equity capitalization
of $500,000 or more in the form of unencumbered cash, marketable securities, or other
liquid assets; and
new text end

new text begin (4) have at least two principals or persons, at least one of which is primarily located
in Minnesota, employed or engaged to manage the funds who each have a minimum of
five years of money management experience in the venture capital or business industry.
new text end

new text begin (c) The department may certify partnerships, corporations, trusts, or limited liability
companies, organized on a for-profit basis, which submit an application to be designated as
a Minnesota business investment company if the applicant is located, headquartered, and
licensed or registered to conduct business in Minnesota, has as its primary business activity
the investment of cash in qualified businesses, and meets the other criteria in this section.
new text end

new text begin (d) The department must review the organizational documents of each applicant
for certification and the business history of each applicant and determine whether the
applicant has satisfied the requirements of this section.
new text end

new text begin (e) Within 45 days after the receipt of an application, the department must issue the
certification or refuse the certification and communicate in detail to the applicant the
grounds for refusal, including suggestions for the removal of such grounds.
new text end

new text begin (f) The department must begin accepting applications to become a Minnesota
business investment company as defined under section 297I.23 by August 1, 2010.
new text end

new text begin (g) All certification fees collected by the department under this chapter are
appropriated to the commissioner to be used for personnel and administrative expenses
related to administering the program.
new text end

new text begin Subd. 3. new text end

new text begin Requirements. new text end

new text begin (a) A participating investor or affiliate of a participating
investor must not, directly or indirectly:
new text end

new text begin (1) beneficially own, whether through rights, options, convertible interest, or
otherwise, 15 percent or more of the voting securities or other voting ownership interest of
a Minnesota business investment company;
new text end

new text begin (2) manage a Minnesota business investment company; or
new text end

new text begin (3) control the direction of investments for a Minnesota business investment
company.
new text end

new text begin (b) A Minnesota business investment company may obtain one or more guaranties,
indemnities, bonds, insurance policies, or other payment undertakings for the benefit
of its participating investors from any entity, except that in no case can more than one
participating investor of a Minnesota business investment company on an aggregate
basis with all affiliates of the participating investor be entitled to provide the guaranties,
indemnities, bonds, insurance policies, or other payment undertakings in favor of the
participating investors of a Minnesota business investment company and its affiliates in
this state.
new text end

new text begin (c) This subdivision does not preclude a participating investor or other party
from exercising its legal rights and remedies, including, without limitation, interim
management of a Minnesota business investment company, in the event that a Minnesota
business investment company is in default of its statutory obligations or its contractual
obligations to the participating investor or other party, or from monitoring a Minnesota
business investment company to ensure its compliance with this section or disallowing
any investments that have not been approved by the department.
new text end

new text begin (d) The department may contract with an independent third party to review,
investigate, and certify that the applications comply with this section.
new text end

new text begin Subd. 4. new text end

new text begin Aggregate limitations on investment tax credits; allocation. new text end

new text begin (a)
The aggregate amount of investment tax credits to be allocated to all participating
investors of Minnesota business investment companies under this section shall not exceed
$100,000,000. No Minnesota business investment company, on an aggregate basis with its
affiliates, may file credit allocation claims that exceed $100,000,000.
new text end

new text begin (b) Credits must be allocated to participating investors in the order that the credit
allocation claims are filed with the department, provided that all credit allocation
claims filed with the department on the same day must be treated as having been filed
contemporaneously. Any credit allocation claims filed with the department prior to the
initial credit allocation claim filing date are deemed to have been filed on the initial credit
allocation claim filing date. The department must set the initial credit allocation claim
filing date not less than 120 days and not greater than 150 days after the department
begins accepting applications for certification.
new text end

new text begin (c) In the event that two or more Minnesota business investment companies file
credit allocation claims with the department on behalf of their respective participating
investors on the same day, and the aggregate amount of credit allocation claims exceeds
the aggregate limit of investment tax credits under this section or the lesser amount of
credits that remain unallocated on that day, then the department must allocate the credits
among the participating investors who filed on that day on a pro rata basis with respect
to the amounts claimed. The pro rata allocation for any one participating investor is the
product obtained by multiplying a fraction, the numerator of which is the amount of the
credit allocation claim filed on behalf of a participating investor and the denominator of
which is the total of all credit allocation claims filed on behalf of all participating investors
on that day, by the aggregate limit of credits under this section or the lesser amount of
credits that remain unallocated on that day.
new text end

new text begin (d) Within ten business days after the department receives a credit allocation claim
filed by a Minnesota business investment company on behalf of one or more of its
participating investors, the department must notify the Minnesota business investment
company of the amount of credits allocated to each of the participating investors of that
Minnesota business investment company. In the event a Minnesota business investment
company does not receive an investment of designated capital from each participating
investor required to earn the amount of credits allocated to the participating investor
within ten business days of the Minnesota business investment company's receipt of notice
of allocation, then it shall notify the department on or before the next business day, and
the credits allocated to the participating investor of the Minnesota business investment
company are forfeited. The department must then reallocate those forfeited credits among
the participating investors of the other Minnesota business investment companies on a pro
rata basis with respect to the credit allocation claims filed on behalf of the participating
investors. The commissioner is authorized, but not required, to levy a fine of not more than
$50,000 on any participating investor that does not invest the full amount of designated
capital required to fund the credits allocated to it by the department in accordance with the
credit allocation claim filed on its behalf.
new text end

new text begin (e) No participating investor, on an aggregate basis with its affiliates, may file an
allocation claim for more than 25 percent of the maximum amount of investment tax
credits authorized under this subdivision, regardless of whether the claim is made in
connection with one or more Minnesota business investment companies.
new text end

new text begin Subd. 5. new text end

new text begin Requirements for continuance of certification. new text end

new text begin (a) To maintain its
certification, a Minnesota business investment company must make qualified investments
as follows:
new text end

new text begin (1) within two years after the allocation date, a Minnesota business investment
company must invest an amount equal to at least 35 percent of its designated capital in
qualified investments; and
new text end

new text begin (2) within three years after the allocation date, a Minnesota business investment
company must invest an amount equal to at least 50 percent of its designated capital
in qualified investments.
new text end

new text begin (b) Prior to making a proposed qualified investment in a specific business, a
Minnesota business investment company must request from the department a written
determination that the proposed investment qualifies as a qualified investment in a
qualified business. The department must notify a Minnesota business investment company
within ten business days from the receipt of a request of its determination and an
explanation thereof. If the department fails to notify the Minnesota business investment
company of its determination within the ten-business-day period, the proposed investment
is deemed a qualified investment in a qualified business. If the department determines that
the proposed investment does not meet the definition of a qualified investment or qualified
business, or both, the department may nevertheless consider the proposed investment a
qualified investment and, if necessary, the business a qualified business, if the department
determines that the proposed investment furthers state economic development.
new text end

new text begin (c) All designated capital not invested in qualified investments by a Minnesota
business investment company shall be held or invested in such manner as the Minnesota
business investment company, in its discretion, deems appropriate. Designated capital
and proceeds of designated capital returned to a Minnesota business investment company
after being originally invested in qualified investments may be invested again in qualified
investments and the investment shall count toward the requirements of paragraph (a) with
respect to making investments of designated capital in qualified investments.
new text end

new text begin (d) If, within four years after its allocation date, a Minnesota business investment
company has not invested at least 60 percent of its designated capital in qualified
investments, the Minnesota business investment company must not be permitted to pay
management fees.
new text end

new text begin (e) If, within six years after its allocation date, a Minnesota business investment
company has not invested at least 100 percent of its designated capital in qualified
investments, the Minnesota business investment company must not be permitted to pay
management fees.
new text end

new text begin (f) A Minnesota business investment company may not invest more than 15 percent
of its designated capital in any one qualified business without the specific approval
of the department.
new text end

new text begin (g) For purposes of calculating the investment percentage thresholds of paragraph
(a), the cumulative amount of all qualified investments made by a Minnesota business
investment company from the allocation date must be considered.
new text end

new text begin Subd. 6. new text end

new text begin Minnesota business investment company reporting requirements. new text end

new text begin (a)
Each Minnesota business investment company must report the following to the department
in the form designated by the commissioner:
new text end

new text begin (1) as soon as practicable after the receipt of designated capital:
new text end

new text begin (i) the name of each participating investor from which the designated capital was
received, including such participating investor's insurance tax identification number;
new text end

new text begin (ii) the amount of each participating investor's investment of designated capital; and
new text end

new text begin (iii) the date on which the designated capital was received;
new text end

new text begin (2) on an annual basis, on or before January 31 of each year:
new text end

new text begin (i) the amount of the Minnesota business investment company's designated capital
that remains to be invested in qualified investments at the end of the immediately
preceding taxable year;
new text end

new text begin (ii) whether or not the Minnesota business investment company has invested more
than 15 percent of its total designated capital in any one business;
new text end

new text begin (iii) all qualified investments that the Minnesota business investment company has
made in the previous taxable year, including the number of employees of each qualified
business in which it has made investments at the time of such investment, and as of
December 1 of the preceding taxable year; and
new text end

new text begin (iv) for any qualified business where the Minnesota business investment company
no longer has an investment, the Minnesota business investment company must provide
employment figures for that company as of the last day before the investment was
terminated;
new text end

new text begin (3) other information that the department may reasonably request that helps the
department ascertain the impact of the Minnesota business investment company program
both directly and indirectly on the economy of the state including, but not limited to, the
number of jobs created by qualified businesses that have received qualified investments;
new text end

new text begin (4) within 90 days of the close of its fiscal year, annual audited financial statements
of the Minnesota business investment company, which must include the opinion of an
independent certified public accountant; and
new text end

new text begin (5) an agreed upon procedures report or equivalent regarding the operations of the
Minnesota business investment company.
new text end

new text begin (b) A Minnesota business investment company must pay to the department an
annual, nonrefundable certification fee of $5,000 on or before April 1, or $10,000 if later.
No annual certification fee is required if the payment date for the fee is within six months
of the date a Minnesota business investment company is first certified by the department.
new text end

new text begin (c) Upon satisfying the requirements of subdivision 5, paragraph (a), clause (2),
a Minnesota business investment company must provide the notice to the department
and the department shall, within 60 days of receipt of the notice, either confirm that the
Minnesota business investment company has satisfied the requirements of subdivision
5, paragraph (a), clause (2), as of such date or provide notice of noncompliance and an
explanation of any existing deficiencies. If the department does not provide notification
within 60 days, the Minnesota business investment company is deemed to have met the
requirements of subdivision 5, paragraph (a), clause (2).
new text end

new text begin Subd. 7. new text end

new text begin Distributions. new text end

new text begin (a) A Minnesota business investment company may
make qualified distributions at any time. In order for a Minnesota business investment
company to make a distribution other than a qualified distribution to its equity holders,
the cumulative amount of all qualified investments of the Minnesota business investment
company must equal or exceed 100 percent of its designated capital.
new text end

new text begin (b) The state shall receive ten percent of the net profits on qualified investments.
For purposes of this paragraph, "net profits on qualified investments" means the amount
of money returned to the Minnesota business investment company in exchange for or
repayment of its qualified investments in qualified businesses in excess of the amount
invested by the Minnesota business investment company in qualified investments. The
net profits on qualified investments are the aggregate of all of the Minnesota business
investment company's qualified investments where gains on qualified investments are
netted against losses on qualified investments.
new text end

new text begin Subd. 8. new text end

new text begin Decertification. new text end

new text begin (a) The department shall conduct an annual review of
each Minnesota business investment company to determine if a Minnesota business
investment company is abiding by the requirements of certification and to ensure that no
investment has been made in violation of this section. The cost of the annual review
must be paid by each Minnesota business investment company according to a reasonable
fee schedule adopted by the department.
new text end

new text begin (b) Any material violation of this section, including any material misrepresentation
made to the department in connection with the application process, is grounds for
decertification of a Minnesota business investment company and the disallowance of
credits under section 297I.23, provided that in all instances the department shall provide
notice to the Minnesota business investment company of the grounds of the proposed
decertification and the opportunity to cure the violation before any decertification becomes
effective.
new text end

new text begin (c) The department shall send written notice of decertification to the commissioner
of revenue and to the address of each participating investor whose tax credit is subject
to recapture or forfeiture, using the address shown on the last filing submitted to the
department.
new text end

new text begin (d) Once a Minnesota business investment company has invested an amount
cumulatively equal to 100 percent of its designated capital in qualified investments,
provided that the Minnesota business investment company has met all other requirements
under this section as of such date, the Minnesota business investment company is no
longer subject to regulation by the department or the reporting requirements under
subdivision 6. Upon receiving certification by a Minnesota business investment company
that it has invested an amount equal to 100 percent of its designated capital, the department
shall notify a Minnesota business investment company within 60 days that it has or has not
met the requirements, with a reason for the determination if it has not. If the department
does not provide notification of deregulation within 60 days, the Minnesota business
investment company is deemed to have met the requirements and is deemed to no longer
be subject to regulation by the department.
new text end

new text begin Subd. 9. new text end

new text begin Registration requirements. new text end

new text begin All investments by participating investors
for which tax credits are awarded under this section must be registered or specifically
exempt from registration.
new text end

new text begin Subd. 10. new text end

new text begin Rulemaking. new text end

new text begin The commissioner's actions in establishing procedures and
requirements and in making determinations and certifications to administer this section are
not a rule for purposes of chapter 14, are not subject to the Administrative Procedure Act
contained in chapter 14, and are not subject to section 14.386.
new text end

new text begin Subd. 11. new text end

new text begin Reports to governor and legislature. new text end

new text begin The department shall make an
annual report by March 15 of each year to the governor and the chairs and ranking
minority members of the legislative committees and divisions having jurisdiction over
taxes and economic development. The report must include:
new text end

new text begin (1) the number of Minnesota business investment companies holding designated
capital;
new text end

new text begin (2) the amount of designated capital invested in each Minnesota business investment
company;
new text end

new text begin (3) the cumulative amount that each Minnesota business investment company has
invested as of January 1, 2011, and the cumulative total each year thereafter;
new text end

new text begin (4) the cumulative amount of follow-on capital that the investments of each
Minnesota business investment company have created in terms of capital invested in
qualified businesses at the same time or subsequent to investments made by a Minnesota
business investment company in such businesses by sources other than Minnesota
business investment companies;
new text end

new text begin (5) the total amount of investment tax credits applied under this section for each year;
new text end

new text begin (6) the performance of each Minnesota business investment company with regard to
the requirements for continued certification;
new text end

new text begin (7) the classification of the companies in which each Minnesota business investment
company has invested according to industrial sector and size of company;
new text end

new text begin (8) the gross number of jobs created by investments made by each Minnesota
business investment company and the number of jobs retained;
new text end

new text begin (9) the location of the companies in which each Minnesota business investment
company has invested;
new text end

new text begin (10) those Minnesota business investment companies that have been decertified,
including the reasons for decertification; and
new text end

new text begin (11) other related information as necessary to evaluate the effect of this section on
economic development.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

new text begin [297I.23] MINNESOTA BUSINESS INVESTMENT COMPANY CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin (a) A participating investor as defined under section
116J.665, subdivision 1, is allowed a credit against the tax imposed in this chapter equal to
80 percent of the participating investor's investment of designated capital in a Minnesota
business investment company. Beginning March 1, 2015, and ending with the tax return
due March 1, 2018, a participating investor may claim yearly an amount equal to 20
percent of the participating investor's investment of designated capital against the tax
liability under this chapter for the preceding calendar year.
new text end

new text begin (b) The credit for any calendar year must not exceed the liability for tax. If the
amount of the credit determined under this section for any calendar year exceeds the
liability for tax, the excess is an investment tax credit carryover to each of the succeeding
calendar years and must be carried forward to each succeeding calendar year until the
entire carryforward has been credited against the participating investor's liability for tax
under this chapter. Credits may be used only on an annual premium tax return filed by
a participating investor.
new text end

new text begin (c) A participating investor claiming a credit under this section is not required to pay
any additional retaliatory tax levied by Minnesota as a result of claiming the credit.
new text end

new text begin (d) A participating investor is not required to reduce the amount of tax passed to the
insured pursuant to the state premium tax liability included by the participating investor
in connection with ratemaking for any insurance contract written in this state because of
a reduction in the participating investor's tax liability based on the tax credit allowed
under this section.
new text end

new text begin (e) Decertification of a Minnesota business investment company under section
116J.665 may result in the disallowance and the recapture of the credit allowed under this
section. The amount disallowed and recaptured must be assessed as follows:
new text end

new text begin (1) decertification of a Minnesota business investment company within two years
of the allocation date of tax credits and prior to meeting the requirements of section
116J.665, subdivision 5, paragraph (a), clause (1), shall result in the disallowance of all
of the credits allowed under this section;
new text end

new text begin (2) decertification of a Minnesota business investment company after two years
of the allocation date of tax credits, but prior to meeting the requirements of section
116J.665, subdivision 5, paragraph (a), clause (1), results in the disallowance of one-half
of all the credits allowed under this section; and
new text end

new text begin (3) decertification of Minnesota business investment company that has already met
the requirements of section 116J.665, subdivision 5, paragraph (a), clause (1), does not
cause the disallowance of any credits allowed under this section nor the recapture of any
portion of the credits that was previously taken.
new text end

new text begin Subd. 2. new text end

new text begin Transfers. new text end

new text begin A participating investor must not transfer, agree to transfer,
sell, or agree to sell the credit under this section until 180 days from the date on which
the participating investor invested designated capital. After 180 days from the date of
investment, a participating investor, or subsequent transferee, may transfer credits to
another person who is subject to tax and must notify the department in the form prescribed
by the commissioner within 30 days of the transfer. A person must not transfer a credit
more than once in a 12-month period. No person is entitled to a refund for the interest
created under this subdivision. A credit acquired by transfer is subject to the limitations
prescribed in this section. Any transfer or sale of the credits does not affect the time
schedule for claiming the credit. Any tax credits recaptured under this section remain the
liability of the participating investor that actually applied the credit towards its tax liability.
new text end

new text begin Subd. 3. new text end

new text begin Repayment of tax benefits received. new text end

new text begin (a) Decertification of a Minnesota
business investment company or revocation of credits under section 116J.665, results
in the disallowance to certified investors of any credits for that calendar year or future
calendar years and the participating investor is required to repay any credits claimed for
the previous year. Repayment must be made within 60 days of the decertification or
the revocation of the certification.
new text end

new text begin (b) The provisions of chapters 270C and 297I relating to audit, assessment, refund,
collection, and appeals are applicable to the credits claimed and repayment required under
this section. The commissioner may impose civil penalties as provided in section 297I.85,
and additional tax and penalties are subject to interest at the rate provided in section
270C.40, from the date payment was due.
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, 2010.
new text end

ARTICLE 3

INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES

Section 1.

Minnesota Statutes 2009 Supplement, section 290.01, subdivision 19b,
is amended to read:

Subd. 19b.

Subtractions from federal taxable income.

For individuals, estates,
and trusts, there shall be subtracted from federal taxable income:

(1) net interest income on obligations of any authority, commission, or
instrumentality of the United States to the extent includable in taxable income for federal
income tax purposes but exempt from state income tax under the laws of the United States;

(2) if included in federal taxable income, the amount of any overpayment of income
tax to Minnesota or to any other state, for any previous taxable year, whether the amount
is received as a refund or as a credit to another taxable year's income tax liability;

(3) the amount paid to others, less the amount used to claim the credit allowed under
section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
transportation of each qualifying child in attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
resident of this state may legally fulfill the state's compulsory attendance laws, which
is not operated for profit, and which adheres to the provisions of the Civil Rights Act
of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and equipment purchased
or leased for use in elementary and secondary schools in teaching only those subjects
legally and commonly taught in public elementary and secondary schools in this state.
Equipment expenses qualifying for deduction includes expenses as defined and limited in
section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
books and materials used in the teaching of religious tenets, doctrines, or worship, the
purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
or materials for, or transportation to, extracurricular activities including sporting events,
musical or dramatic events, speech activities, driver's education, or similar programs. No
deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
the qualifying child's vehicle to provide such transportation for a qualifying child. For
purposes of the subtraction provided by this clause, "qualifying child" has the meaning
given in section 32(c)(3) of the Internal Revenue Code;

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section 290.491;

(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
of the Internal Revenue Code in determining federal taxable income by an individual
who does not itemize deductions for federal income tax purposes for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and
under the provisions of Public Law 109-1;

(7) for taxable years beginning before January 1, 2008, the amount of the federal
small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
which is included in gross income under section 87 of the Internal Revenue Code;

(8) for individuals who are allowed a federal foreign tax credit for taxes that do not
qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
of subnational foreign taxes for the taxable year, but not to exceed the total subnational
foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
"federal foreign tax credit" means the credit allowed under section 27 of the Internal
Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
the extent they exceed the federal foreign tax credit;

(9) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
positive value of any net operating loss under section 172 of the Internal Revenue Code
generated for the tax year of the addition. The resulting delayed depreciation cannot be
less than zero;

(10) job opportunity building zone income as provided under section 469.316;

(11) to the extent included in federal taxable income, the amount of compensation
paid to members of the Minnesota National Guard or other reserve components of the
United States military for active service performed in Minnesota, excluding compensation
for services performed under the Active Guard Reserve (AGR) program. For purposes of
this clause, "active service" means (i) state active service as defined in section 190.05,
subdivision 5a, clause (1); (ii) federally funded state active service as defined in section
190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05,
subdivision 5c, but "active service" excludes service performed in accordance with section
190.08, subdivision 3;

(12) to the extent included in federal taxable income, the amount of compensation
paid to Minnesota residents who are members of the armed forces of the United States or
United Nations for active duty performed outside Minnesota under United States Code,
title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of
the United Nations;

(13) an amount, not to exceed $10,000, equal to qualified expenses related to a
qualified donor's donation, while living, of one or more of the qualified donor's organs
to another person for human organ transplantation. For purposes of this clause, "organ"
means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
"human organ transplantation" means the medical procedure by which transfer of a human
organ is made from the body of one person to the body of another person; "qualified
expenses" means unreimbursed expenses for both the individual and the qualified donor
for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
may be subtracted under this clause only once; and "qualified donor" means the individual
or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
individual may claim the subtraction in this clause for each instance of organ donation for
transplantation during the taxable year in which the qualified expenses occur;

(14) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
case of a shareholder of a corporation that is an S corporation, minus the positive value of
any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
subtraction is not allowed under this clause;

(15) to the extent included in federal taxable income, compensation paid to a service
member as defined in United States Code, title 10, section 101(a)(5), for military service
as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2);

(16) international economic development zone income as provided under section
469.325;

(17) to the extent included in federal taxable income, the amount of national service
educational awards received from the National Service Trust under United States Code,
title 42, sections 12601 to 12604, for service in an approved Americorps National Service
program; deleted text begin and
deleted text end

(18) to the extent included in federal taxable income, discharge of indebtedness
income resulting from reacquisition of business indebtedness included in federal taxable
income under section 108(i) of the Internal Revenue Code. This subtraction applies only
to the extent that the income was included in net income in a prior year as a result of the
addition under section 290.01, subdivision 19a, clause (16) deleted text begin . deleted text end new text begin ;
new text end

new text begin (19) to the extent included in federal taxable income, the amount of gain on the sale
or exchange of small business stock. "Small business stock" means an equity interest, held
directly or indirectly, in a corporation or partnership when that interest is:
new text end

new text begin (i) purchased for money or property, not including stock or payment for services;
new text end

new text begin (ii) purchased after June 30, 2010;
new text end

new text begin (iii) less than 100 percent in a corporation or less than 50 percent by vote or value in
a partnership; and
new text end

new text begin (iv) in a corporation or partnership that:
new text end

new text begin (A) is a single legal entity and not part of any unitary business of the taxpayer;
new text end

new text begin (B) has fewer than 100 employees, or in the case of a corporation or partnership that
is part of a unitary business, the unitary business has fewer than 100 employees;
new text end

new text begin (C) has not issued stock listed on the New York Stock Exchange, American Stock
Exchange, or National Association of Securities Dealers automated quotation system;
new text end

new text begin (D) in the year of purchase, had more than 50 percent of its property and payroll, as
determined under section 290.191, within this state;
new text end

new text begin (E) in the year of purchase, derived less than $25,000 in gross receipts from rents,
interest, dividends, and the sale of intangible investment assets;
new text end

new text begin (F) is not in a trade or business involving the performance of services in the fields
of health, law, engineering, architecture, accounting, actuarial science, performing arts,
consulting, athletics, financial services, brokerage services, or any trade or business where
the principal asset of the trade or business is the reputation or skill of one or more of
its employees;
new text end

new text begin (G) is not in a trade or business involving banking, insurance, financing, leasing,
investing, or similar business;
new text end

new text begin (H) is not a regulated investment company, real estate investment trust, or real
estate mortgage investment conduit;
new text end

new text begin (I) is not a cooperative; and
new text end

new text begin (J) did not liquidate its assets in whole or in part for the purpose of fulfilling the
requirements of this clause.
new text end

new text begin The small business stock must be held for more than five years to qualify for this
subtraction;
new text end

new text begin (20) an amount not less than zero and not to exceed the applicable percent multiplied
by the distributive share of income or loss, as defined in sections 703(a) and 1366(a)(2) of
the Internal Revenue Code, combined from all partnerships or S corporations in which
the taxpayer materially participates, as defined in section 469(h) of the Internal Revenue
Code, and that have employees or tangible property located in this state. As used in this
clause, the "applicable percent" for taxable years beginning in 2011 is five percent; for
taxable years beginning in 2012 is ten percent; for taxable years beginning in 2013 is 15
percent; and for taxable years beginning after December 31, 2013, is 20 percent.
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, 2010.
new text end

Sec. 2.

Minnesota Statutes 2009 Supplement, section 290.01, subdivision 19d, is
amended to read:

Subd. 19d.

Corporations; modifications decreasing federal taxable income.

For
corporations, there shall be subtracted from federal taxable income after the increases
provided in subdivision 19c:

(1) the amount of foreign dividend gross-up added to gross income for federal
income tax purposes under section 78 of the Internal Revenue Code;

(2) the amount of salary expense not allowed for federal income tax purposes due to
claiming the work opportunity credit under section 51 of the Internal Revenue Code;

(3) any dividend (not including any distribution in liquidation) paid within the
taxable year by a national or state bank to the United States, or to any instrumentality of
the United States exempt from federal income taxes, on the preferred stock of the bank
owned by the United States or the instrumentality;

(4) amounts disallowed for intangible drilling costs due to differences between
this chapter and the Internal Revenue Code in taxable years beginning before January
1, 1987, as follows:

(i) to the extent the disallowed costs are represented by physical property, an amount
equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
subdivision 7, subject to the modifications contained in subdivision 19e; and

(ii) to the extent the disallowed costs are not represented by physical property, an
amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
290.09, subdivision 8;

(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
Internal Revenue Code, except that:

(i) for capital losses incurred in taxable years beginning after December 31, 1986,
capital loss carrybacks shall not be allowed;

(ii) for capital losses incurred in taxable years beginning after December 31, 1986,
a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
allowed;

(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
capital loss carryback to each of the three taxable years preceding the loss year, subject to
the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and

(iv) for capital losses incurred in taxable years beginning before January 1, 1987,
a capital loss carryover to each of the five taxable years succeeding the loss year to the
extent such loss was not used in a prior taxable year and subject to the provisions of
Minnesota Statutes 1986, section 290.16, shall be allowed;

(6) an amount for interest and expenses relating to income not taxable for federal
income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
291 of the Internal Revenue Code in computing federal taxable income;

(7) in the case of mines, oil and gas wells, other natural deposits, and timber for
which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
reasonable allowance for depletion based on actual cost. In the case of leases the deduction
must be apportioned between the lessor and lessee in accordance with rules prescribed
by the commissioner. In the case of property held in trust, the allowable deduction must
be apportioned between the income beneficiaries and the trustee in accordance with the
pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
of the trust's income allocable to each;

(8) 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, an amount equal to the allowance for depreciation under Minnesota Statutes
1986, section 290.09, subdivision 7;

(9) amounts included in federal taxable income that are due to refunds of income,
excise, or franchise taxes based on net income or related minimum taxes paid by the
corporation to Minnesota, another state, a political subdivision of another state, the
District of Columbia, or a foreign country or possession of the United States to the extent
that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
clause (1), in a prior taxable year;

(10) 80 percent of royalties, fees, or other like income accrued or received from a
foreign operating corporation or a foreign corporation which is part of the same unitary
business as the receiving corporation, unless the income resulting from such payments or
accruals is income from sources within the United States as defined in subtitle A, chapter
1, subchapter N, part 1, of the Internal Revenue Code;

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

(12) the amount of disability access expenditures in the taxable year which are not
allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;

(13) the amount of qualified research expenses not allowed for federal income tax
purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
the amount exceeds the amount of the credit allowed under section 290.068;

(14) the amount of salary expenses not allowed for federal income tax purposes due
to claiming the Indian employment credit under section 45A(a) of the Internal Revenue
Code;

(15) for taxable years beginning before January 1, 2008, the amount of the federal
small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
which is included in gross income under section 87 of the Internal Revenue Code;

(16) for a corporation whose foreign sales corporation, as defined in section 922
of the Internal Revenue Code, constituted a foreign operating corporation during any
taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
claiming the deduction under section 290.21, subdivision 4, for income received from
the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
income excluded under section 114 of the Internal Revenue Code, provided the income is
not income of a foreign operating company;

(17) any decrease 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 Division C, title III, section 303(b) of Public Law 110-343;

(18) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of
the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
resulting delayed depreciation cannot be less than zero;

(19) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of
the amount of the addition; and

(20) to the extent included in federal taxable income, discharge of indebtedness
income resulting from reacquisition of business indebtedness included in federal taxable
income under section 108(i) of the Internal Revenue Code. This subtraction applies only
to the extent that the income was included in net income in a prior year as a result of the
addition under section 290.01, subdivision 19c, clause (25).

new text begin (21) to the extent included in federal taxable income, the amount of gain on the
sale or exchange of small business stock assigned or apportioned to this state. "Small
business stock" means an equity interest, held directly or indirectly, in a corporation or
partnership when that interest is:
new text end

new text begin (i) purchased for money or property, not including stock or payment for services;
new text end

new text begin (ii) purchased after June 30, 2010;
new text end

new text begin (iii) less than 100 percent in a corporation or less than 50 percent by vote or value in
a partnership; and
new text end

new text begin (iv) in a corporation or partnership that:
new text end

new text begin (A) is a single legal entity and not part of any unitary business of the taxpayer;
new text end

new text begin (B) has fewer than 100 employees, or in the case of a corporation or partnership that
is part of a unitary business, the unitary business has fewer than 100 employees;
new text end

new text begin (C) has not issued stock listed on the New York Stock Exchange, American Stock
Exchange, or National Association of Securities Dealers automated quotation system;
new text end

new text begin (D) in the year of purchase, had more than 50 percent of its property and payroll, as
determined under section 290.191, within this state;
new text end

new text begin (E) in the year of purchase, derived less than $25,000 in gross receipts from rents,
interest, dividends, and the sale of intangible investment assets;
new text end

new text begin (F) is not in a trade or business involving the performance of services in the fields
of health, law, engineering, architecture, accounting, actuarial science, performing arts,
consulting, athletics, financial services, brokerage services, or any trade or business where
the principal asset of the trade or business is the reputation or skill of one or more of
its employees;
new text end

new text begin (G) is not in a trade or business involving banking, insurance, financing, leasing,
investing, or similar business;
new text end

new text begin (H) is not a regulated investment company, real estate investment trust, or real
estate mortgage investment conduit;
new text end

new text begin (I) is not a cooperative; and
new text end

new text begin (J) did not liquidate its assets in whole or in part for the purpose of fulfilling the
requirements of this clause.
new text end

new text begin The small business stock must be held for more than five years to qualify for this
subtraction.
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, 2010.
new text end

Sec. 3.

Minnesota Statutes 2008, section 290.06, subdivision 1, is amended to read:

Subdivision 1.

Computation, corporations.

The franchise tax imposed upon
corporations shall be computed by applying to their taxable income the rate of deleted text begin 9.8 percent. deleted text end new text begin :
new text end

new text begin (1) 9.8 percent in taxable year 2010;
new text end

new text begin (2) 9.3 percent in taxable year 2011;
new text end

new text begin (3) 8.8 percent in taxable year 2012;
new text end

new text begin (4) 8.3 percent in taxable year 2013; and
new text end

new text begin (5) 7.8 percent in taxable years 2014 and thereafter.
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, 2010.
new text end

Sec. 4.

Minnesota Statutes 2009 Supplement, section 290.06, subdivision 2c, is
amended to read:

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income
taxes imposed by this chapter upon married individuals filing joint returns and surviving
spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
applying to their taxable net income the following schedule of rates:

(1) On the first $25,680, 5.35 percent;

(2) On all over $25,680, but not over $102,030, 7.05 percent;

(3) On all over $102,030, 7.85 percent.

Married individuals filing separate returns, estates, and trusts must compute their
income tax by applying the above rates to their taxable income, except that the income
brackets will be one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $17,570, 5.35 percent;

(2) On all over $17,570, but not over $57,710, 7.05 percent;

(3) On all over $57,710, 7.85 percent.

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying
as a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $21,630, 5.35 percent;

(2) On all over $21,630, but not over $86,910, 7.05 percent;

(3) On all over $86,910, 7.85 percent.

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the
tax of any individual taxpayer whose taxable net income for the taxable year is less than
an amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not
more than $100. The amount of tax for each bracket shall be computed at the rates set
forth in this subdivision, provided that the commissioner may disregard a fractional part of
a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute
the individual's Minnesota income tax as provided in this subdivision. After the
application of the nonrefundable credits provided in this chapter, the tax liability must
then be multiplied by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross income
as defined in section 62 of the Internal Revenue Code and increased by the additions
required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12),
(13), (16), and (17), and reduced by the Minnesota assignable portion of the subtraction
for United States government interest under section 290.01, subdivision 19b, clause (1),
and the subtractions under section 290.01, subdivision 19b, clauses (9), (10), (14), (15),
(16), and (18) new text begin to (20) new text end , after applying the allocation and assignability provisions of section
290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in
section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), (16), and
(17), and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1),
(9), (10), (14), (15), (16), and (18) new text begin to (20) 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, 2010.
new text end

Sec. 5.

Minnesota Statutes 2008, section 290.068, is amended to read:

290.068 CREDIT FOR INCREASING RESEARCH ACTIVITIES.

Subdivision 1.

Credit allowed.

A corporation, deleted text begin other than deleted text end new text begin partners in a partnership,
or shareholders in new text end a corporation treated as an "S" corporation under section 290.9725 deleted text begin ,
is deleted text end new text begin are new text end allowed a credit against deleted text begin the portion of deleted text end the deleted text begin franchise deleted text end tax computed under section
290.06 deleted text begin , subdivision 1 deleted text end deleted text begin , deleted text end for the taxable year equal to:

deleted text begin (a) deleted text end 5 percent deleted text begin of the first $2,000,000 deleted text end of the excess (if any) of

(1) the qualified research expenses for the taxable year, over

(2) the base amount deleted text begin ; and
deleted text end

deleted text begin (b) 2.5 percent on all of such excess expenses over $2,000,000 deleted text end .

Subd. 2.

Definitions.

For purposes of this section, the following terms have the
meanings given.

(a) "Qualified research expenses" means (i) qualified research expenses and basic
research payments as defined in section 41(b) and (e) of the Internal Revenue Code, except
it does not include expenses incurred for qualified research or basic research conducted
outside the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue
Code; and (ii) contributions to a nonprofit corporation established and operated pursuant
to the provisions of chapter 317A for the purpose of promoting the establishment and
expansion of business in this state, provided the contributions are invested by the nonprofit
corporation for the purpose of providing funds for small, technologically innovative
enterprises in Minnesota during the early stages of their development.

(b) "Qualified research" means qualified research as defined in section 41(d) of the
Internal Revenue Code, except that the term does not include qualified research conducted
outside the state of Minnesota.

(c) "Base amount" means base amount as defined in section 41(c) of the Internal
Revenue Code, except that the average annual gross receipts must be calculated using
Minnesota sales or receipts under section 290.191 and the definitions contained in clauses
(a) and (b) shall apply. new text begin If a taxpayer does not have records to substantiate the aggregate
qualified research expenses for the taxable years beginning after December 31, 1983, and
before January 1, 1989, to compute the base amount, and is not a start-up company to
which Internal Revenue Code, section 41(c)(3)(B) applies, the corporation is permitted to
use a fixed-base percentage of 16 percent.
new text end

Subd. 3.

Limitation; carryover.

(a)(1) The credit for deleted text begin the deleted text end new text begin a new text end taxable year new text begin beginning
before January 1, 2012, new text end shall not exceed the liability for tax. "Liability for tax" for
purposes of this section means the tax imposed under section 290.06, subdivision 1, for the
taxable year reduced by the sum of the nonrefundable credits allowed under this chapter.

(2) In the case of a corporation which is a partner in a partnership, the credit allowed
for the taxable year shall not exceed the lesser of the amount determined under clause (1)
for the taxable year or an amount (separately computed with respect to the corporation's
interest in the trade or business or entity) equal to the amount of tax attributable to that
portion of taxable income which is allocable or apportionable to the corporation's interest
in the trade or business or entity.

(b) If the amount of the credit determined under this section for any taxable year
exceeds the limitation under clause (a), the excess shall be a research credit carryover to
each of the 15 succeeding taxable years. The entire amount of the excess unused credit for
the taxable year shall 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 clause shall not exceed the
taxpayer's liability for tax less the research credit for the taxable year.

Subd. 4.

Partnerships new text begin and S corporations new text end .

In the case of partnerships the credit
shall be allocated in the same manner provided by section 41(f)(2) of the Internal Revenue
Code.

new text begin In the case of shareholders in S corporations the credit shall be allocated in the same
manner as provided by section 1366(a) of the Internal Revenue Code.
new text end

Subd. 5.

Adjustments; acquisitions and dispositions.

If a taxpayer acquires or
disposes of the major portion of a trade or business or the major portion of a separate unit
of a trade or business in a transaction with another taxpayer, the taxpayer's qualified
research expenses and base amount are adjusted in the same manner provided by section
41(f)(3) of the Internal Revenue Code.

new text begin Subd. 6. new text end

new text begin Credit to be refundable. new text end

new text begin If the amount of credit allowed in this section for
qualified research expenses incurred in taxable years beginning after December 31, 2011,
exceeds the taxpayer's tax liability under section 290.02 or 290.03, the commissioner
shall refund the excess amount. This credit must be used before any other credit allowed
under this chapter.
new text end

new text begin Subd. 7. new text end

new text begin Appropriation. new text end

new text begin 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 EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 6.

Minnesota Statutes 2009 Supplement, section 290.091, subdivision 2, is
amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of the following for
the taxable year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative
minimum taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue
Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal
Revenue Code, with respect to each property (as defined in section 614 of the Internal
Revenue Code), to the extent not included in federal alternative minimum taxable income,
the excess of the deduction for depletion allowable under section 611 of the Internal
Revenue Code for the taxable year over the adjusted basis of the property at the end of the
taxable year (determined without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the
amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
Internal Revenue Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the
amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and

(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7)
to (9), (12), (13), (16), and (17);

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.01, subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by section 290.01, subdivision
19b, clause (2), to the extent included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as
defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
amounts deducted in computing federal adjusted gross income; and

(4) amounts subtracted from federal taxable income as provided by section 290.01,
subdivision 19b, clauses (6), (9) to (16), and (18) new text begin to (20) new text end .

In the case of an estate or trust, alternative minimum taxable income must be
computed as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3)
of the Internal Revenue Code.

(c) "Net minimum tax" means the minimum tax imposed by this section.

(d) "Regular tax" means the tax that would be imposed under this chapter (without
regard to this section and section 290.032), reduced by the sum of the nonrefundable
credits allowed under this chapter.

(e) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
income after subtracting the exemption amount determined under subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

Sec. 7.

Minnesota Statutes 2008, section 290.0921, subdivision 1, is amended to read:

Subdivision 1.

Tax imposed.

In addition to the taxes computed under this chapter
without regard to this section, the franchise tax imposed on corporations includes a tax
equal to the excess, if any, for the taxable year of:

(1) new text begin (i) new text end 5.8 percent of Minnesota alternative minimum taxable income new text begin in taxable
year 2010 new text end ; deleted text begin over
deleted text end

new text begin (ii) 5.5 percent of Minnesota alternative minimum taxable income in taxable year
2011;
new text end

new text begin (iii) 5.2 percent of Minnesota alternative minimum taxable income in taxable year
2012;
new text end

new text begin (iv) 4.9 percent of Minnesota alternative minimum taxable income in taxable year
2013; and
new text end

new text begin (v) 4.6 percent of Minnesota alternative minimum taxable income in taxable year
2014 and thereafter;
new text end

new text begin over
new text end

(2) the tax imposed under section 290.06, subdivision 1, new text begin for the taxable year new text end without
regard to this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

Sec. 8.

Minnesota Statutes 2008, section 290.0921, subdivision 3, is amended to read:

Subd. 3.

Alternative minimum taxable income.

"Alternative minimum taxable
income" is Minnesota net income as defined in section 290.01, subdivision 19, and
includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
Minnesota tax return, the minimum tax must be computed on a separate company basis.
If a corporation is part of a tax group filing a unitary return, the minimum tax must be
computed on a unitary basis. The following adjustments must be made.

(1) For purposes of the depreciation adjustments under section 56(a)(1) and
56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
income tax purposes, including any modification made in a taxable year under section
290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7,
paragraph (c).

For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
allowance in the first taxable year after December 31, 2000.

(2) The portion of the depreciation deduction allowed for federal income tax
purposes under section 168(k) of the Internal Revenue Code that is required as an
addition under section 290.01, subdivision 19c, clause (15), is disallowed in determining
alternative minimum taxable income.

(3) The subtraction for depreciation allowed under section 290.01, subdivision 19d,
clause (18), is allowed as a depreciation deduction in determining alternative minimum
taxable income.

(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
of the Internal Revenue Code does not apply.

(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
Revenue Code does not apply.

(6) The special rule for dividends from section 936 companies under section
56(g)(4)(C)(iii) does not apply.

(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
Code does not apply.

(8) The tax preference for intangible drilling costs under section 57(a)(2) of the
Internal Revenue Code must be calculated without regard to subparagraph (E) and the
subtraction under section 290.01, subdivision 19d, clause (4).

(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
Revenue Code does not apply.

(10) The tax preference for charitable contributions of appreciated property under
section 57(a)(6) of the Internal Revenue Code does not apply.

(11) For purposes of calculating the tax preference for accelerated depreciation or
amortization on certain property placed in service before January 1, 1987, under section
57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
deduction allowed under section 290.01, subdivision 19e.

For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, not previously deducted is a
depreciation or amortization allowance in the first taxable year after December 31, 2004.

(12) For purposes of calculating the adjustment for adjusted current earnings in
section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
minimum taxable income as defined in this subdivision, determined without regard to the
adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.

(13) For purposes of determining the amount of adjusted current earnings under
section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), (ii) the
amount of refunds of income, excise, or franchise taxes subtracted as provided in section
290.01, subdivision 19d, clause (9), or (iii) the amount of royalties, fees or other like
income subtracted as provided in section 290.01, subdivision 19d, clause (10).

(14) Alternative minimum taxable income excludes the income from operating in a
job opportunity building zone as provided under section 469.317.

(15) Alternative minimum taxable income excludes the income from operating in a
biotechnology and health sciences industry zone as provided under section 469.337.

(16) Alternative minimum taxable income excludes the income from operating in an
international economic development zone as provided under section 469.326.

new text begin (17) Alternative minimum taxable income includes the subtraction for small business
stock as provided under section 290.01, subdivision 19d, clause (21).
new text end

Items of tax preference must not be reduced below zero as a result of the
modifications in this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

ARTICLE 4

LAWSUIT REFORM

Section 1.

Minnesota Statutes 2008, section 8.31, subdivision 3a, is amended to read:

Subd. 3a.

Private remedies.

In addition to the remedies otherwise provided by law new text begin
and subject to subdivision 3d new text end , any person injured by a violation of any of the laws referred
to in subdivision 1 may bring a civil action and recover damages, together with costs
and disbursements, including costs of investigation and reasonable attorney's fees, and
receive other equitable relief as determined by the court. The court may, as appropriate,
enter a consent judgment or decree without the finding of illegality. In any action brought
by the attorney general pursuant to this section, the court may award any of the remedies
allowable under this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2008, section 8.31, is amended by adding a subdivision to
read:

new text begin Subd. 3d. new text end

new text begin Private remedies for Unlawful Trade Practices Act, Prevention of
Consumer Fraud Act, False Statement in Advertisement Act. new text end

new text begin Civil actions pursuant to
subdivision 3a for violations of the Unlawful Trade Practices Act (sections 325D.09 to
325D.16), Prevention of Consumer Fraud Act (sections 325F.68 to 325F.70), or the False
Statement in Advertisement Act (section 325F.67) or other laws against false or fraudulent
advertising may be brought only by natural persons who purchase or lease goods, services,
or real estate for personal, family, or household purposes. Each such person seeking to
recover damages for violations of these sections, either in an individual action, a class
action, or any other type of action, shall be required to plead and prove on an individual
basis that the deceptive act or practice caused the person to enter into the transaction that
resulted in the damages. No award of damages in an action covered by this subdivision
may be made without proof that the person or persons seeking damages suffered an actual
out-of-pocket loss. The term "out-of-pocket loss" means an amount of money equal to the
difference between the amount paid by the consumer for the good or service and the actual
market value of the good or service that the consumer actually received.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

new text begin [540.19] CLASS ACTIONS; INTERLOCUTORY APPEAL.
new text end

new text begin A court's order certifying a class action, refusing to certify a class action, or denying
a motion to decertify a class action is appealable in the same manner as a final order or
judgment. While an appeal under this subdivision is pending, all discovery and other
proceedings in the district court must be stayed.
new text end

new text begin EFFECTIVE DATE; APPLICATION. new text end

new text begin This section is effective July 1, 2010.
new text end

Sec. 4.

Minnesota Statutes 2008, section 541.05, is amended to read:

541.05 VARIOUS CASES, SIX YEARS.

Subdivision 1.

Six-year limitation.

Except where the Uniform Commercial Code
new text begin or section 541.077 new text end otherwise prescribes, the following actions shall be commenced within
six years:

(1) upon a contract or other obligation, express or implied, as to which no other
limitation is expressly prescribed;

(2) upon a liability created by statute, other than those arising upon a penalty or
forfeiture or where a shorter period is provided by section 541.07;

(3) for a trespass upon real estate;

(4) for taking, detaining, or injuring personal property, including actions for the
specific recovery thereof;

(5) for criminal conversation, or for any other injury to the person or rights of
another, not arising on contract, and not hereinafter enumerated;

(6) for relief on the ground of fraud, in which case the cause of action shall not be
deemed to have accrued until the discovery by the aggrieved party of the facts constituting
the fraud;

(7) to enforce a trust or compel a trustee to account, where the trustee has neglected to
discharge the trust, or claims to have fully performed it, or has repudiated the trust relation;

(8) against sureties upon the official bond of any public officer, whether of the
state or of any county, town, school district, or a municipality therein; in which case the
limitation shall not begin to run until the term of such officer for which the bond was
given shall have expired;

(9) for damages caused by a dam, used for commercial purposes; or

(10) for assault, battery, false imprisonment, or other tort resulting in personal injury,
if the conduct that gives rise to the cause of action also constitutes domestic abuse as
defined in section 518B.01.

Subd. 2.

Strict liability.

Unless otherwise provided by law, any action based on the
strict liability of the defendant and arising from the manufacture, sale, use or consumption
of a product shall be commenced within deleted text begin four deleted text end new text begin three new text end years.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2010, and applies to
actions commenced on or after that date.
new text end

Sec. 5.

new text begin [541.077] MERCHANT ACTIONS.
new text end

new text begin (a) For the purpose of this section, "merchant" means a person who deals in goods or
services of the kind, or otherwise holds out as having knowledge or skill peculiar to the
practices, goods, or services involved in the transaction or to whom this knowledge or
skill may be attributed by the employment of an agent or broker or other intermediary who
by occupation holds out as having this knowledge or skill.
new text end

new text begin (b) An action, whether based on a contract or tort, arising from the furnishing of
goods or services by a merchant in the ordinary course of business must be commenced
within three years from the date the cause of action accrued.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2010, and applies to
actions commenced on or after that date.
new text end

Sec. 6. new text begin SEVERABILITY.
new text end

new text begin The provisions of this article are severable. If any portion of this article is declared
unconstitutional or the application of any part of this act to any person or circumstance
is held invalid, the remaining portions of the act and their applicability to any person or
circumstance shall remain valid and enforceable.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

ARTICLE 5

ENVIRONMENT

Section 1.

Minnesota Statutes 2008, section 115.07, is amended to read:

115.07 VIOLATIONS AND PROHIBITIONS.

Subdivision 1.

Obtain permit.

new text begin (a) new text end It deleted text begin shall be deleted text end new text begin is new text end unlawful for any person to construct,
install new text begin , new text end or operate a disposal system, or any part thereof, until plans deleted text begin therefor shall deleted text end new text begin and
specifications for the disposal system new text end have been submitted to the agency new text begin , new text end unless the agency
deleted text begin shall have waived the deleted text end new text begin waives new text end submission deleted text begin thereof to it deleted text end new text begin of the plans and specifications, new text end and a
written permit deleted text begin therefor shall have been deleted text end new text begin for the disposal system is new text end granted by the agency.

new text begin (b) If a person who discharges a pollutant into the waters of the state is required by
statutes or rules to obtain both a national pollutant discharge elimination system permit
and a state disposal system permit and the permit is not for discharges under Minnesota
Rules, part 7090.2010, it is unlawful for the person to construct, install, or operate the
disposal system, or any part thereof, until plans and specifications for the disposal system
have been submitted to the agency, unless the agency waives submission of the plans and
specifications. The person is prohibited from discharging a pollutant into the waters of
the state until a written permit for the discharge is granted by the agency and plans and
specifications for the disposal system have been approved, unless the agency waives the
submission of the plans and specifications.
new text end

new text begin (c) new text end For disposal systems operated on streams with extreme seasonal flows, the
agency must allow seasonal permit limits based on a fixed or variable effluent limit when
the municipality operating the disposal system requests them and is in compliance with
agency water quality standards.

Subd. 3.

Permission for extension.

new text begin (a) new text end It deleted text begin shall be deleted text end new text begin is new text end unlawful for any person to
make any change in, addition to new text begin , new text end or extension of any existing disposal system or point
source, or part thereof, to effect any facility expansion, production increase, or process
modification which results in new or increased discharges of pollutants, or to operate such
system or point source, or part thereof as so changed, added to, or extended new text begin , new text end until plans
and specifications therefor shall have been submitted to the agency new text begin , new text end unless the agency
deleted text begin shall have waived the deleted text end new text begin waives new text end submission deleted text begin thereof to it deleted text end new text begin of the plans and specifications, new text end and a
written permit deleted text begin therefor shall have been deleted text end new text begin for the change, addition, or extension is new text end granted
by the agency.

new text begin (b) If a person who discharges a pollutant into the waters of the state is required by
statutes or rules to obtain both a national pollutant discharge elimination system permit
and a state disposal system permit and the permit is not for discharges under Minnesota
Rules, part 7090.2010, it is unlawful for the person to change, add to, or extend an existing
disposal system or point source, or part thereof, as specified under paragraph (a) until
plans and specifications for the change, addition, or extension have been submitted to
the agency, unless the agency waives submission of the plans and specifications. The
person is prohibited from discharging additional or increased pollutants into the waters
of the state until a written permit for the discharge is granted by the agency and plans
and specifications for the change, addition, or extension have been approved, unless the
agency waives the submission of plans and specifications.
new text end

Sec. 2.

Minnesota Statutes 2008, section 116D.04, subdivision 2a, is amended to read:

Subd. 2a.

When prepared.

Where there is potential for significant environmental
effects resulting from any major governmental action, the action shall be preceded by a
detailed environmental impact statement prepared by the responsible governmental unit.
The environmental impact statement shall be an analytical rather than an encyclopedic
document which describes the proposed action in detail, analyzes its significant
environmental impacts, discusses appropriate alternatives to the proposed action and
their impacts, and explores methods by which adverse environmental impacts of an
action could be mitigated. The environmental impact statement shall also analyze those
economic, employment and sociological effects that cannot be avoided should the action
be implemented. To ensure its use in the decision-making process, the environmental
impact statement shall be prepared as early as practical in the formulation of an action.
No mandatory environmental impact statement may be required for an ethanol plant,
as defined in section 41A.09, subdivision 2a, paragraph (b), that produces less than
125,000,000 gallons of ethanol annually and is located outside of the seven-county
metropolitan area.

(a) The board shall by rule establish categories of actions for which environmental
impact statements and for which environmental assessment worksheets shall be prepared
as well as categories of actions for which no environmental review is required under
this section.

(b) The responsible governmental unit shall promptly publish notice of the
completion of an environmental assessment worksheet in a manner to be determined by
the board and shall provide copies of the environmental assessment worksheet to the board
and its member agencies. Comments on the need for an environmental impact statement
may be submitted to the responsible governmental unit during a 30 day period following
publication of the notice that an environmental assessment worksheet has been completed.
The responsible governmental unit's decision on the need for an environmental impact
statement shall be based on the environmental assessment worksheet and the comments
received during the comment period, and shall be made within 15 days after the close of
the comment period. The board's chair may extend the 15 day period by not more than 15
additional days upon the request of the responsible governmental unit.

(c) An environmental assessment worksheet shall also be prepared for a proposed
action whenever material evidence accompanying a petition by not less than 25
individuals, submitted before the proposed project has received final approval by the
appropriate governmental units, demonstrates that, because of the nature or location of a
proposed action, there may be potential for significant environmental effects. Petitions
requesting the preparation of an environmental assessment worksheet shall be submitted to
the board. The chair of the board shall determine the appropriate responsible governmental
unit and forward the petition to it. A decision on the need for an environmental assessment
worksheet shall be made by the responsible governmental unit within 15 days after the
petition is received by the responsible governmental unit. The board's chair may extend
the 15 day period by not more than 15 additional days upon request of the responsible
governmental unit.

(d) Except in an environmentally sensitive location where Minnesota Rules, part
4410.4300, subpart 29, item B, applies, the proposed action is exempt from environmental
review under this chapter and rules of the board, if:

(1) the proposed action is:

(i) an animal feedlot facility with a capacity of less than 1,000 animal units; or

(ii) an expansion of an existing animal feedlot facility with a total cumulative
capacity of less than 1,000 animal units;

(2) the application for the animal feedlot facility includes a written commitment by
the proposer to design, construct, and operate the facility in full compliance with Pollution
Control Agency feedlot rules; and

(3) the county board holds a public meeting for citizen input at least ten business
days prior to the Pollution Control Agency or county issuing a feedlot permit for the
animal feedlot facility unless another public meeting for citizen input has been held with
regard to the feedlot facility to be permitted. The exemption in this paragraph is in
addition to other exemptions provided under other law and rules of the board.

(e) The board may, prior to final approval of a proposed project, require preparation
of an environmental assessment worksheet by a responsible governmental unit selected
by the board for any action where environmental review under this section has not been
specifically provided for by rule or otherwise initiated.

new text begin (f) In determining whether a proposed project has significant potential for
environmental effect, the responsible governmental unit may consider the extent to which
the environmental effects are subject to mitigation by ongoing public regulatory authority.
The responsible governmental unit may rely only on mitigation measures that are specific
and that can be reasonably expected to effectively mitigate the identified environmental
impacts of the project. If an applicant for a proposed project demonstrates that the project
can meet an environmental standard established in state or federal statute or rule, the
responsible governmental unit shall conclude that the standard can be reasonably expected
to effectively mitigate the specific environmental impact addressed by that standard.
new text end

deleted text begin (f) deleted text end new text begin (g) new text end An early and open process shall be utilized to limit the scope of the
environmental impact statement to a discussion of those impacts, which, because of the
nature or location of the project, have the potential for significant environmental effects.
The same process shall be utilized to determine the form, content and level of detail
of the statement as well as the alternatives which are appropriate for consideration in
the statement. In addition, the permits which will be required for the proposed action
shall be identified during the scoping process. Further, the process shall identify those
permits for which information will be developed concurrently with the environmental
impact statement. The board shall provide in its rules for the expeditious completion of
the scoping process. The determinations reached in the process shall be incorporated into
the order requiring the preparation of an environmental impact statement.

deleted text begin (g) deleted text end new text begin (h) new text end Whenever practical, information needed by a governmental unit for making
final decisions on permits or other actions required for a proposed project shall be
developed in conjunction with the preparation of an environmental impact statement.

deleted text begin (h) deleted text end new text begin (i) new text end An environmental impact statement shall be prepared and its adequacy
determined within 280 days after notice of its preparation unless the time is extended by
consent of the parties or by the governor for good cause. The responsible governmental
unit shall determine the adequacy of an environmental impact statement, unless within 60
days after notice is published that an environmental impact statement will be prepared,
the board chooses to determine the adequacy of an environmental impact statement. If an
environmental impact statement is found to be inadequate, the responsible governmental
unit shall have 60 days to prepare an adequate environmental impact statement.

Sec. 3. new text begin RULE AMENDMENT.
new text end

new text begin The commissioner of the Pollution Control Agency shall amend Minnesota Rules,
part 7001.0030, to comply with the amendments made under section 1. The commissioner
may use the good cause exemption under Minnesota Statutes, section 14.388, subdivision
1, clause (3), to adopt the amendment under this section, and Minnesota Statutes, section
14.386, does not apply except as provided under Minnesota Statutes, section 14.388.
new text end