SF 393

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; providing for a regional investment credit; amending
Minnesota Statutes 2006, section 290.06, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2006, section 290.06, is amended by adding a
subdivision to read:

new text begin Subd. 34. new text end

new text begin Regional investment credit. new text end

new text begin (a) A credit is allowed against the tax
imposed by this chapter for investment in a qualifying regional investment fund. The
credit equals 25 percent of the taxpayer's investment made in the fund for the taxable
year, but not to exceed the least 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 ;
new text end

new text begin (2) the amount of the certificate under paragraph (c) provided to taxpayer by the
fund; and
new text end

new text begin (3) $....... in the case of a single taxpayer, $....... in the case of a married couple filing
a joint return, and $....... in the case of a C corporation.
new text end

new text begin (b) For purposes of this subdivision, the following requirements apply.
new text end

new text begin (1) A regional investment fund means a pooled investment fund that invests in
qualifying small businesses located in the region of the state that is the focus of the
fund. A minimum of two-thirds of the governing body of the fund must be residents of
the region. Investments in the fund may consist of equity investments or notes that pay
interest or other fixed amounts or any combination of both, as the fund's governing body
determines appropriate. The fund must allocate at least 70 percent of the funds it invests
to qualified small businesses that meet local community needs, such as the production of
goods and services for markets within the region.
new text end

new text begin (2) To be a qualifying small business, a business must satisfy either of the following
requirements:
new text end

new text begin (i) its annual revenues for the most recent taxable year that ended before the fund
invested in the business may not exceed $.......; or
new text end

new text begin (ii)(A) it may not employ more than 50 full-time equivalent employees when the
investment was made;
new text end

new text begin (B) 51 percent of the ownership interests in the business, excluding any equity
interest of the fund, must be held by residents of the region; and
new text end

new text begin (C) the business must pay wages and benefits, measured on a full-time equivalent
basis, to 75 percent or more of its employees equal to 175 percent of the federal poverty
level for a family of four.
new text end

new text begin (c) Regional investment funds may apply to the commissioner of employment
and economic development for certification as a qualified regional investment fund.
The application must be in the form and made under the procedures specified by
the commissioner of employment and economic development. The commissioner
of employment and economic development may certify up to ten funds and provide
certificates entitling investors in the fund to credits under this subdivision of up to
$250,000 for each. Of the ten funds, the commissioner may designate no more than three
funds that serve more than 15 Minnesota counties. In awarding certificates under this
paragraph, the commissioner of employment and economic development shall seek to
certify funds that are broadly dispersed across the entire state. No more than 25 percent of
the certificates may be issued to funds that permit investments in businesses located in
the metropolitan area, as defined in section new text begin 473.121, subdivision 2 new text end . The commissioner
of employment and economic development may not issue a total amount of certificates
for all funds of more than $........
new text end

new text begin (d) The commissioner of employment and economic development shall enter an
agreement with each fund awarded credit certificates under paragraph (c). This agreement
must include the fund's agreement to comply with the requirements of this subdivision,
as well as the specific manner in which the fund agrees to satisfy the requirement to
allocate at least 70 percent of its investments to qualified small businesses that meet
local community needs.
new text end

new text begin (e) If the amount of the credit under this subdivision for any taxable year exceeds the
limitations under paragraph (a), clause (1), the excess is a credit carryover to each of the
15 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 paragraph may not
exceed the taxpayer's liability for tax less the credit for the taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2007, for taxable years
beginning after December 31, 2006, and only applies to investments made after the fund
has been certified by the commissioner of employment and economic development.
new text end