HF 4001

as introduced - 89th Legislature (2015 - 2016) Posted on 05/11/2016 08:23am

A bill for an act
relating to taxation; providing credits for hiring certain targeted individuals;
providing a sales tax exemption for purchases of certain building materials;
providing expanded tax increment financing authority to the city of Minneapolis;
amending Minnesota Statutes 2014, sections 297A.71, by adding a subdivision;
297A.75, subdivision 1; proposing coding for new law in Minnesota Statutes,
chapter 290.

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

Section 1.

new text begin [290.0693] TARGETED JOBS 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, unless the context clearly indicates otherwise.
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new text begin (b) "City" means the city of Minneapolis.
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new text begin (c) "Date of hire" means the day that the qualified employee begins performing
services as an employee of the employer.
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new text begin (d) "High unemployment demographic group" means any one of the following
groups that the commissioner of employment and economic development certifies to the
city has an unemployment rate within the state that is at least 25 percent higher than
the state average, based on the data from the most recent one-year estimates under the
American Community Survey, conducted by the United States Bureau of the Census, for:
new text end

new text begin (1) age groupings, but excluding groups consisting of individuals aged 75 years
and over;
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new text begin (2) race or Hispanic or Latino origin;
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new text begin (3) poverty status in the past 12 months;
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new text begin (4) disability status; or
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new text begin (5) educational attainment.
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new text begin (e) "Qualified area" means the geographic area of the city that is located in one of
the following postal zip codes: 55411, 55412, or 55430.
new text end

new text begin (f) "Qualified employee" means an employee as defined in section 290.92,
subdivision 1:
new text end

new text begin (1) who is a targeted individual on the date of hire;
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new text begin (2) who is paid wages as defined in section 290.92, subdivision 1; and
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new text begin (3) whose wages are attributable to Minnesota under section 290.191, subdivision
12, but excludes:
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new text begin (i) any employee who bears any of the relationships to the employer described in
subparagraphs (A) to (G) of section 152(d)(2) of the Internal Revenue Code;
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new text begin (ii) if the employer is a corporation, an employee who owns, directly or indirectly,
more than 50 percent in value of the outstanding stock of the corporation, or if the
employer is an entity other than a corporation, an employee who owns, directly or
indirectly, more than 50 percent of the capital and profits interests in the entity, as
determined with the application of section 267(c) of the Internal Revenue Code; or
new text end

new text begin (iii) if the employer is an estate or trust, any employee who is a fiduciary of the estate
or trust, or is an individual who bears any of the relationships described in subparagraphs
(A) to (G) of section 152(d)(2) of the Internal Revenue Code to a grantor, beneficiary,
or fiduciary of the estate or trust.
new text end

new text begin (g) "Targeted individual" means an individual who:
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new text begin (1) is a resident of the qualified area;
new text end

new text begin (2) has attained the age of 18 on the hiring date;
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new text begin (3) has not regularly attended any secondary, technical, or postsecondary school
during the four-month period preceding the hiring date;
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new text begin (4) was not regularly employed during four-month period preceding the hiring
date; and
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new text begin (5) is a member of a high unemployment demographic group, as certified under
subdivision 4 for the taxable year, on the hiring date.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An employer who is required to file a return under
section 289A.08, subdivision 1, 2, or 3, is allowed a credit for each qualified employee
employed during the taxable year equal to ten percent of the wages paid to the qualified
employee during the taxable year, but the amount of the credit for each qualified employee
must not exceed $........ An employer may claim the credit either for the taxable year in
which the qualified employee is hired or for the taxable year immediately following the
year in which the qualified employee was hired, but the qualified employer may not claim
the credit for both taxable years.
new text end

new text begin (b) An employer may not claim a credit under this subdivision for an individual if
the employer previously employed the individual.
new text end

new text begin (c) The credit is limited to the liability for tax under this chapter for the taxable year.
If the credit for a taxable year exceeds the liability for tax under this chapter, the excess
may be carried over to each of the five succeeding taxable years. The entire amount of the
excess unused credit must be carried first to the earliest taxable year to which the amount
may be carried. The unused portion of the credit must be carried to the following taxable
year. No credit may be carried to a taxable year more than five years after the taxable year
in which the credit was earned.
new text end

new text begin Subd. 3. new text end

new text begin Pass-through entities. new text end

new text begin Credits granted to a partnership, limited liability
company taxed as a partnership, or S corporation are passed through to the partners,
members, or shareholders, respectively, pro rata to each partner, member, or shareholder
based on the share of the entity's profits or as specially allocated in the organizational
documents, as of the last day of the taxable year.
new text end

new text begin Subd. 4. new text end

new text begin High unemployment demographic group certification. new text end

new text begin By November 1
of each year, the commissioner of employment and economic development shall certify to
the city the high unemployment demographic groups for taxable years that begin during
the immediately following calendar year. The city shall make the information available
to employers via its Web site and any other method that it determines appropriate to
publicize the availability of the credit under this section.
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, 2015, for qualified employees hired after the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2014, section 297A.71, is amended by adding a subdivision
to read:

new text begin Subd. 49. new text end

new text begin Construction materials, redevelopment in North Minneapolis.
new text end

new text begin Construction materials and supplies used in construction, reconstruction, or redevelopment
of a commercial, industrial, or mixed-use building that includes commercial or industrial
space, located in either the 55411 or 55412 zip code or in the portion of the 55430 zip
code located in the city of Minneapolis, are exempt. To qualify for the exemption under
this subdivision, the total construction cost of the project must equal at least $....... during
the 24-month period. The tax on purchases exempt under this subdivision must be
imposed and collected as if the rate under section 297A.62, subdivision 1, applies and
then refunded in the manner provided in section 297A.75.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2016.
new text end

Sec. 3.

Minnesota Statutes 2014, section 297A.75, subdivision 1, is amended to read:

Subdivision 1.

Tax collected.

The tax on the gross receipts from the sale of the
following exempt items must be imposed and collected as if the sale were taxable and the
rate under section 297A.62, subdivision 1, applied. The exempt items include:

(1) building materials for an agricultural processing facility exempt under section
297A.71, subdivision 13;

(2) building materials for mineral production facilities exempt under section
297A.71, subdivision 14;

(3) building materials for correctional facilities under section 297A.71, subdivision 3;

(4) building materials used in a residence for disabled veterans exempt under section
297A.71, subdivision 11;

(5) elevators and building materials exempt under section 297A.71, subdivision 12;

(6) materials and supplies for qualified low-income housing under section 297A.71,
subdivision 23;

(7) materials, supplies, and equipment for municipal electric utility facilities under
section 297A.71, subdivision 35;

(8) equipment and materials used for the generation, transmission, and distribution
of electrical energy and an aerial camera package exempt under section 297A.68,
subdivision 37;

(9) commuter rail vehicle and repair parts under section 297A.70, subdivision 3,
paragraph (a), clause (10);

(10) materials, supplies, and equipment for construction or improvement of projects new text begin , new text end
and facilities under section 297A.71, subdivision 40;

(11) materials, supplies, and equipment for construction, improvement, or expansion
of:

(i) an aerospace defense manufacturing facility exempt under section 297A.71,
subdivision 42;

(ii) a biopharmaceutical manufacturing facility exempt under section 297A.71,
subdivision 45;

(iii) a research and development facility exempt under section 297A.71, subdivision
46; deleted text begin and
deleted text end

(iv) an industrial measurement manufacturing and controls facility exempt under
section 297A.71, subdivision 47; new text begin and
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new text begin (v) a commercial, industrial, or mixed-use building under section 297A.71,
subdivision 49;
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(12) enterprise information technology equipment and computer software for use in
a qualified data center exempt under section 297A.68, subdivision 42;

(13) materials, supplies, and equipment for qualifying capital projects under section
297A.71, subdivision 44;

(14) items purchased for use in providing critical access dental services exempt
under section 297A.70, subdivision 7, paragraph (c); and

(15) items and services purchased under a business subsidy agreement for use or
consumption primarily in greater Minnesota exempt under section 297A.68, subdivision 44.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2016.
new text end

Sec. 4. new text begin TAX INCREMENT FINANCING; CITY OF MINNEAPOLIS.
new text end

new text begin (a) Notwithstanding Minnesota Statutes, section 469.1763, the city of Minneapolis
may authorize, by resolution, that up to ten percent of the increment from one or more of
its tax increment financing districts be transferred to and used for qualifying costs of a tax
increment financing project if the following requirements are satisfied:
new text end

new text begin (1) the project costs are incurred for improvements in the qualified area, as defined
in Minnesota Statutes, section 290.0693, subdivision 1;
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new text begin (2) the expenditures satisfy the requirements of Minnesota Statutes, section 469.176,
subdivision 4j;
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new text begin (3) the city finds that the expenditures will principally benefit residents of the
qualified area; and
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new text begin (4) the expenditures do not supplant other city expenditures for the project.
new text end

new text begin (b) The provisions of Minnesota Statutes, section 469.1763, do not apply to or
restrict increments expended under this section and the authorizing resolution. The total
amount the city may expend under this section is limited to no more than $........
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
without local approval under the provisions of Minnesota Statutes, section 645.023,
subdivision 1, clause (a).
new text end