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HF 3861

as introduced - 89th Legislature (2015 - 2016) Posted on 04/07/2016 02:56pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to taxation; allowing a tax credit for certain contributions for higher
education scholarships; appropriating money; requiring reports; amending
Minnesota Statutes 2014, section 13.4967, by adding a subdivision; proposing
coding for new law in Minnesota Statutes, chapters 116J; 290.

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

Section 1.

Minnesota Statutes 2014, section 13.4967, is amended by adding a
subdivision to read:


new text begin Subd. 9. new text end

new text begin Scholarship build credit. new text end

new text begin Data related to scholarship build credit
certifications and allocations are classified in section 116J.8739.
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 [116J.8739] SCHOLARSHIP BUILD 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) "Board" means the Board of Trustees of the Minnesota State Colleges and
Universities (MnSCU).
new text end

new text begin (c) "Contribution" means a contribution to a foundation affiliated with a state college
or university designated for use by an eligible department or program that is either:
new text end

new text begin (1) a cash contribution to be used to award undergraduate scholarships; or
new text end

new text begin (2) an in-kind contribution of equipment that the eligible department or program
accepts for use in its course of study.
new text end

new text begin (d) "Economic development region" or "EDR" means a development region defined
in section 462.385.
new text end

new text begin (e) "Eligible department or program" means a department or program at a state
college or university that educates students for employment in a high-demand occupation.
new text end

new text begin (f) "High-demand occupation" means a standard occupational classification major
group for which the job vacancy rate in an economic development region is greater
than the job vacancy rate in the economic development region for all occupations, as
determined by the commissioner based on data reported in the Job Vacancy Survey.
new text end

new text begin (g) "Job vacancy rate" means the job vacancy rate for the fourth quarter of the
preceding calendar year as reported in the Job Vacancy Survey.
new text end

new text begin (h) "Pass-through entity" means a corporation that for the applicable taxable year is
treated as an S-corporation or a general partnership, limited partnership, limited liability
partnership, trust, or limited liability company that, for the applicable taxable year, is not
taxed as a corporation under chapter 290.
new text end

new text begin (i) "Qualified taxpayer" means a taxpayer who has been certified by the
commissioner under subdivision 3.
new text end

new text begin (j) "Standard Occupational Classification" or "SOC" means the 2010 Standard
Occupational Classification adopted by the United States Bureau of Labor Statistics.
new text end

new text begin (k) "SOC major group" means a group of standard occupational classifications
designated by a two-digit SOC code.
new text end

new text begin (l) "State college or university" means a college or university operated by the Board
of Trustees of the Minnesota State Colleges and Universities.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) A qualified taxpayer is eligible for a credit equal to 50
percent of each contribution. The maximum credit allowed in any taxable year for a cash
contribution is $2,000. The maximum credit allowed in any taxable year for an in-kind
contribution is $4,000. The commissioner must not allocate more than $10,000,000 in
credits to qualified taxpayers for taxable years beginning after December 31, 2016, and
must not allocate more than $50,000 in credits to any one qualified taxpayer in any taxable
year. Any portion of a taxable year's credits that is not allocated by the commissioner
does not cancel and may be carried forward to subsequent taxable years until all credits
have been allocated.
new text end

new text begin (b) In order for a contribution to be eligible for a tax credit, the qualified taxpayer
who makes the contribution must have been allocated a tax credit before making the
contribution.
new text end

new text begin Subd. 3. new text end

new text begin Certification of qualified taxpayers and allocations of credits. new text end

new text begin (a) A
business may apply to the commissioner for certification as a qualified taxpayer and to
be allocated a tax credit for a taxable year. The application must be made available on
the department's Web site by November 1 of the preceding year. Businesses must submit
applications to the commissioner by March 15 of the taxable year in which the credit is
claimed.
new text end

new text begin (b) To receive certification as a qualified taxpayer, a business must in the previous
or current calendar year have had or must anticipate having at least one job vacancy that
requires a postsecondary degree or certificate in a high-demand occupation for the EDR
in which the business is located.
new text end

new text begin (c) The application must be in the form and be made under the procedures specified
by the commissioner, and must include:
new text end

new text begin (1) a description of the job vacancy or anticipated job vacancy;
new text end

new text begin (2) the foundation to which the business contemplates making a contribution and the
eligible department or program for which the contribution would be designated;
new text end

new text begin (3) if the contribution will be cash or in-kind; and
new text end

new text begin (4) the amount or value of the contribution contemplated.
new text end

new text begin (d) By April 15 of the taxable year in which the credit is claimed, the commissioner,
in consultation with the board, must determine for each credit application the job gap
for the EDR in which the business of the qualified taxpayer is located, which equals
the difference between:
new text end

new text begin (1) the job vacancy rate for the high-demand occupation for which the eligible
academic department or program designated to receive the contribution educates students;
and
new text end

new text begin (2) the job vacancy rate for all occupations.
new text end

new text begin (e) The commissioner must prioritize applications and allocate credits based on the
job gap determination, with credits first allocated to applications with the highest job gap.
new text end

new text begin (f) By April 30 of the taxable year in which the credit is claimed, the commissioner,
in consultation with the board, must prioritize applications and allocate credits to qualified
taxpayers in order to maximize contributions to eligible departments and programs that
educate students for employment in the highest demand occupations, as determined based
on job vacancy rates. The commissioner must also notify qualified taxpayers who are
not allocated credits, and must notify applicants who are determined to not meet the
requirements for being a qualified taxpayer.
new text end

new text begin Subd. 4. new text end

new text begin Credit certificates. new text end

new text begin (a) A qualified taxpayer who is allocated a credit must
make the contribution specified in the application by October 15 of the taxable year in
which the credit is claimed. A qualified taxpayer must notify the commissioner when a
contribution for which a credit was allocated has been made, and the taxable year in
which the contribution was made. After receiving notification that the contribution was
made, the commissioner must issue a credit certificate for the taxable year in which the
contribution was made to the qualified taxpayer.
new text end

new text begin (b) If the contribution is not made by October 15, the credit allocation is canceled
and available for reallocation following the prioritization determined under subdivision 3.
A qualified taxpayer who fails to make the contribution specified in the application by
October 15 must notify the commissioner of the failure to make the contribution within
five business days of October 15.
new text end

new text begin (c) The commissioner must notify the commissioner of revenue of credit certificates
issued under this section.
new text end

new text begin Subd. 5. new text end

new text begin Data privacy. new text end

new text begin Data contained in an application submitted to the
commissioner under subdivision 2, 3, or 4 are nonpublic data, or private data on
individuals, as defined in section 13.02, subdivision 9 or 12, except that for each credit
certificate issued under subdivision 4, the following data items are public:
new text end

new text begin (1) the EDR in which the qualified taxpayer is located;
new text end

new text begin (2) the occupation in which the qualified taxpayer had a job vacancy;
new text end

new text begin (3) the amount of the credit certificate issued;
new text end

new text begin (4) the amount of the contribution; and
new text end

new text begin (5) the name of the foundation to which the contribution was made and the eligible
department or program to which the contribution was designated.
new text end

new text begin Subd. 6. new text end

new text begin Report to legislature. new text end

new text begin Beginning in 2018, the commissioner, in
consultation with the board, must annually provide a written report by March 15 to the
chairs and ranking minority members of the legislative committees having jurisdiction over
higher education, jobs and economic development, and taxes, in compliance with sections
3.195 and 3.197, on the tax credits allowed under this section. The report must include:
new text end

new text begin (1) the number and amount of the contributions to each foundation that result
in credits;
new text end

new text begin (2) amounts contributed to foundations for use by academic programs and
departments grouped by industry type and EDR;
new text end

new text begin (3) the amount of credits awarded to qualified taxpayers grouped by industry type
and EDR;
new text end

new text begin (4) the number and dollar amount of credits that are allocated but for which the
commissioner did not issue a credit certificate because the taxpayer did not make a
contribution;
new text end

new text begin (5) program completion and job placement rates for students enrolled in eligible
academic programs and departments that received contributions that resulted in credits
in the preceding academic year and in the academic year that began in the calendar year
preceding the first taxable year in which the credit was allowed, with detail by industry
type and EDR;
new text end

new text begin (6) the number and total dollar amount of scholarships or other assistance awarded
by each state college and university in the preceding academic year and in the academic
year that began in the calendar year preceding the first taxable year in which the credit was
allowed; and
new text end

new text begin (7) an assessment of the efficacy of the credit program at increasing the number of
students completing academic programs and accepting employment in high-demand
occupations.
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 [290.0682] SCHOLARSHIP BUILD CREDIT.
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 each contribution made to a foundation of a state
college or university operated by the Board of Trustees of the Minnesota State Colleges
and Universities. The credit equals the amount and applies to the taxable year indicated
on the certificate provided under section 116J.8739, subdivision 3. The maximum credit
allowed in any taxable year for a cash contribution is $2,000. The maximum credit
allowed in any taxable year for in-kind contribution is $4,000. The maximum cumulative
credits allowed for any one qualified taxpayer in a taxable year is $50,000.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, the terms defined in section
116.8739 have the meanings given in that section.
new text end

new text begin Subd. 3. new text end

new text begin Proportional credits. new text end

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

new text begin Subd. 4. new text end

new text begin Credit refundable; appropriation. new text end

new text begin If the amount of the credit under this
section for any taxable year exceeds the claimant's liability for tax under this chapter, the
commissioner shall refund the excess to the claimant. An amount sufficient to pay the
refunds required by this section is appropriated to the commissioner from the general fund.
new text end

new text begin Subd. 5. 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.8739, the
commissioner may utilize any audit and examination powers under chapter 270C or 289A,
to the extent necessary to verify that the taxpayer is eligible for the credit and to assess for
the amount of any improperly claimed credit.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2016.
new text end

Sec. 4. new text begin APPROPRIATION.
new text end

new text begin $300,000 is appropriated in fiscal year 2017 from the general fund to the
commissioner of the Department of Employment and Economic Development for
administration of the credit in section 2.
new text end

Sec. 5. new text begin PURPOSE STATEMENT; TAX EXPENDITURES.
new text end

new text begin Subdivision 1. new text end

new text begin Authority. new text end

new text begin This section is intended to fulfill the requirement under
Minnesota Statutes, section 3.192, that a bill creating, renewing, or continuing a tax
expenditure provide a purpose for the tax expenditure and a standard or goal against
which its effectiveness may be measured.
new text end

new text begin Subd. 2. new text end

new text begin Scholarship build credit. new text end

new text begin The purpose of this tax credit is to encourage
private sector employers to make contributions, both cash and in-kind, to individual
MnSCU campus foundations. These contributions would allow MnSCU campus
foundations to provide scholarships to help students with the costs of attaining higher
education program completion. As more students complete programs, employers would
be able to more easily fill jobs with high employee demand. The effectiveness of this tax
credit will be measured based on the number of students who are helped to complete
programs, and the number placed in jobs with high employee demand.
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