HF 632

1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; income; providing for economic growth in rural counties
of the state by allowing a credit against the income tax of an employer for the
creation and retention of certain jobs; appropriating money; proposing coding for
new law in Minnesota Statutes, chapter 290.

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

Section 1.

new text begin [290.0681] [RURAL ECONOMIC GROWTH CREDIT.]
new text end

new text begin Subdivision 1. new text end [CREDIT NAME.] new text begin The credit allowed by this section shall be known
as the "Rural Minnesota Catch-Up Credit."
new text end

new text begin Subd. 2. new text end [DEFINITIONS.] new text begin (a) For purposes of this section, the following terms
have the meanings given.
new text end

new text begin (b) "Eligible county" means a county, located outside the metropolitan area, as
defined in section 473.121, subdivision 2, that experienced, between 1993 and 2003, a net
new job growth rate of less than 15.6 percent, or a county that has a population of less
than 25,000 according to the 2000 census.
new text end

new text begin (c) "Qualifying job" means a job in an industry that produces goods or services
that bring outside wealth into an eligible county. A qualifying job includes jobs in
the following industries: value-added manufacturing, technologically innovative and
information industries, forestry, mining, agriprocessing, and tourism attractions. At a
minimum, a qualifying job must provide full-time employment and pay not less than $12
per hour, or $10 per hour plus health insurance benefits, or its equivalent. A qualifying job
does not include any job for which a tax credit is received under section 469.318 or for
which a grant is made under section 469.309.
new text end

new text begin Subd. 3. new text end [CREDIT ALLOWED.] new text begin A taxpayer that is awarded a credit under
subdivision 4 may take a credit against the tax imposed by this chapter, equal to $4,000
per qualifying job created by the taxpayer, per year for three years and $3,000 in the
fourth year.
new text end

new text begin Subd. 4. new text end [QUALIFICATION; APPLICATION.] new text begin (a) To qualify for a credit under
this section a taxpayer must create a new qualifying job within an eligible county. The
taxpayer must create the qualifying job within 12 months of being awarded the credit.
If a taxpayer does not create the qualifying job within 12 months, the credit is forfeited
and, if claimed by the taxpayer, subject to recapture, and the credit amount accrues back
to the eligible county for allocation under subdivision 5.
new text end

new text begin (b) A taxpayer seeking a credit under this section must make an application to an
eligible county at least 60 days before the award date in paragraph (c). Applications for a
credit shall be made on a form and in a manner prescribed by the commissioner.
new text end

new text begin (c) Eligible counties shall award credits under this section twice each year, by March
15 and September 15. An eligible county shall publish a notice advertising the award
date at least 90 days before the date. Selection of applicants for awarding tax credits
under this section shall be made by the county board of commissioners of an eligible
county, or the duly appointed representatives of the county board of commissioners,
using uniform criteria established by the commissioner. In selecting among applicants
for awarding credits under this section, criteria must contemplate and place greater
weight on the following factors: whether the qualifying job provides higher wages, better
benefits, or on-the-job training; whether the taxpayer's business is locally owned and
owns, rather than leases, its own facilities or buildings; whether the taxpayer's business
provides employee stock ownership plans or employee profit sharing; and whether a
higher percentage of the business's employees are hired with tax credits under this section.
For purposes of this section, "duly appointed representatives" include a county or regional
economic development agency or authority.
new text end

new text begin Subd. 5. new text end [LIMITATION; CARRYFORWARD.] new text begin (a) The total amount of credits
under this section may not exceed $150,000 per eligible county over two years. If a
county fails to award $150,000 within a year, it may carry forward the amount that
remains unawarded to the following year. Unawarded amounts may not be carried beyond
the following year and are lost.
new text end

new text begin (b) A taxpayer may claim the credit under this section for the year following the
year in which the new qualifying job is created and for each year the new qualifying job
remains in existence, up to a maximum of four years or $15,000 per qualifying job created.
The taxpayer may claim the credit under this section for years in which the qualifying job
was in existence for the entire year. A credit under this section is awarded to the taxpayer
for, and attaches to, a designated employee. If the designated employee for whom a credit
under this section was awarded leaves the employment of the taxpayer for any reason,
the remaining credit the taxpayer would otherwise be eligible to receive is forfeited and
may not be claimed by the taxpayer unless a replacement employee is hired to fill the
qualifying job within a reasonable period, not to exceed three months. Credit amounts
forfeited under this paragraph accrue back to and may be awarded by an eligible county as
if the amount had been unawarded, as provided in paragraph (a).
new text end

new text begin Subd. 6. new text end [CREDIT REFUNDABLE.] new text begin If the amount of credit that the taxpayer
is eligible to receive under this section exceeds the liability for tax under this chapter,
the commissioner shall refund the excess to the claimant. An amount sufficient to pay
the refunds authorized by this subdivision is appropriated to the commissioner from the
general fund.
new text end

new text begin Subd. 7. new text end [MANNER OF CLAIMING.] new text begin The commissioner shall prescribe the
manner in which the credit may be issued and claimed. This may include providing for
the issuance of credit certificates or allowing the credit only as a separately processed
claim for a refund.
new text end

new text begin Subd. 8. new text end [REPORT.] new text begin The commissioner shall report to the legislature by February
15, 2008, on credits claimed under this section and shall evaluate the feasibility and
benefit of continuing the program. The commissioner may consult with the commissioner
of employment and economic development in preparing this report.
new text end

new text begin Subd. 9. new text end [EXPIRATION.] new text begin This section expires for taxable years beginning after
December 31, 2010.
new text end

[EFFECTIVE DATE.] new text begin This section is effective January 1, 2006. new text end