SF 1400

as introduced - 89th Legislature (2015 - 2016) Posted on 03/06/2015 08:40am

A bill for an act
relating to taxation; income; providing tax credits to encourage charitable
contributions; establishing an endow Minnesota program; appropriating money;
amending Minnesota Statutes 2014, sections 290.06, by adding a subdivision;
297I.20, by adding a subdivision; proposing coding for new law in Minnesota
Statutes, chapter 116J.

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

Section 1.

new text begin [116J.9821] ENDOW MINNESOTA PROGRAM.
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) "Commissioner" means the commissioner of employment and economic
development.
new text end

new text begin (c) "Endow Minnesota community foundation" means an entity under sections
501(c)(3), 509(a)(1), and 170(b)(1)(a)(vi) of the Internal Revenue Code that is certified by
the Minnesota Council on Foundations as meeting the following requirements:
new text end

new text begin (1) is organized by articles of incorporation in the state of Minnesota to serve the
state of Minnesota, or one or more Minnesota counties or municipalities, or is organized by
articles of incorporation in the state of North Dakota or Wisconsin to serve a metropolitan
statistical area that includes one or more Minnesota counties;
new text end

new text begin (2) is comprised of permanent, component funds established by multiple separate
donors;
new text end

new text begin (3) supports broad-based charitable interests that benefit the residents of a defined
geographic area, no larger than the state of Minnesota;
new text end

new text begin (4) is directed by a board of directors that is comprised of community representatives
and is independent in that it is not subject to the control of another entity;
new text end

new text begin (5) actively engages in charitable activities including, but not limited to, supporting
two or more unaffiliated tax-exempt organizations through grants or other professionally
accepted means of charitable support, and serving in leadership roles on important
community issues;
new text end

new text begin (6) complies with the Minnesota Council on Foundations' guidelines for membership
by a community foundation and subscribes to the principles of grantmaking established by
the Minnesota Council on Foundations;
new text end

new text begin (7) is certified by the national Council on Foundations to comply with national
standards for community foundations, or certifies that it intends to initiate application for
certification within one year following the end of the tax year in which it accepts its initial
endowment gift that qualifies for a tax credit under this section; and
new text end

new text begin (8) has complied with endow Minnesota certification, reporting, and data privacy
requirements under subdivisions 4 and 5.
new text end

new text begin (d) "Endowment gift" means an irrevocable contribution to a permanent endowment
held by an endow Minnesota qualified community foundation.
new text end

new text begin (e) "Metropolitan statistical area" means an area delineated by the United States
Office of Management and Budget in OMB Bulletin No. 13-01, dated February 28, 2013.
new text end

new text begin (f) "Qualified contribution" means an endowment gift of at least $5,000 made to an
endow Minnesota community foundation for a permanent endowment fund established to
substantially benefit charitable causes in this state, and that is a charitable gift as defined in
section 170(c) of the Internal Revenue Code.
new text end

new text begin (g) "Qualified taxpayer" means an individual, estate, trust, insurance company,
or corporation.
new text end

new text begin Subd. 2. new text end

new text begin Endow Minnesota tax credit; limitations; allocation; applications. new text end

new text begin (a)
A qualified taxpayer is eligible for a credit equal to 25 percent of the qualified contribution
made to an endow Minnesota community foundation. The commissioner must not allocate
more than $3,000,000 in credits for each taxable year beginning after December 31,
2015, and before January 1, 2031.
new text end

new text begin (b) $300,000 each taxable year is allocated to credits for qualified contributions
of $30,000 or less. Any portion of a taxable year's credits that is reserved for qualified
contributions of $30,000 or less that is not allocated by August 31 of the taxable years is
available for allocation to other credit applications beginning September 1.
new text end

new text begin (c) The commissioner must not allocate more than $25,000 in credits for a taxable
year to a qualified taxpayer for the taxpayer's qualified contributions to all endow
Minnesota community foundations in the taxable year.
new text end

new text begin (d) The commissioner must not allocate more than $600,000 in credits for a taxable
year for qualified contributions to a single endow Minnesota community foundation. If
the full amount of tax credits for a taxable year is not allocated by September 1 of a
calendar year, the limit on qualified contributions to a single endow Minnesota community
foundation in this paragraph does not apply to that taxable year.
new text end

new text begin (e) 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 (f) Applications for tax credits for 2016 must be made available on the department's
Web site by November 1, 2015. Applications for subsequent years must be made available
by November 1 of the preceding year.
new text end

new text begin (g) To receive a credit allocation, a qualified taxpayer must apply to the
commissioner for tax credits. Tax credits must be allocated to qualified taxpayers in
the order that the tax credit request applications are filed with the department. The
commissioner must approve or reject tax credit request applications within 15 days of
receiving the application. The contribution specified in the application must be made
within 60 days of the allocation of the credits. If the contribution is not made within 60
days, the credit allocation is canceled and available for reallocation. A qualified taxpayer
that fails to contribute as specified in the application, within 60 days of allocation of the
credits, must notify the commissioner of the failure to contribute within five business days
of the expiration of the 60-day contribution period.
new text end

new text begin (h) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. If two or more qualified taxpayers
file tax credit request applications on the same day, and the aggregate amount of credit
allocation claims exceeds the aggregate limit of credits under this section or the lesser
amount of credits that remain unallocated on that day, then the credits must be allocated
among the qualified investors or qualified funds that filed on that day on a pro rata basis
with respect to the amounts claimed. The pro rata allocation for any one qualified investor
or qualified 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 investor
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 taxable year.
new text end

new text begin (i) A qualified taxpayer must notify the commissioner when a contribution for which
credits were 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 credit certificates for the taxable year in which the contribution was made
to the qualified taxpayer.
new text end

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

new text begin Subd. 3. new text end

new text begin Program administration. new text end

new text begin The commissioner may issue a request for
proposals for a program administrator. The commissioner may select an administrator
and collaborate with the administrator in operating the program in this section and in
preparing the report required in subdivision 6.
new text end

new text begin Subd. 4. new text end

new text begin Reporting by endow Minnesota community foundations. new text end

new text begin By February 1
of each year, each endow Minnesota community foundation that received a contribution
that qualified for a credit must submit an annual report to the commissioner. Reports must
be made in the form required by the commissioner and include information on how the
foundation used contributions that qualified for credits.
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 are nonpublic data, or private data on individuals, as
defined in section 13.02, subdivision 9 or 12.
new text end

new text begin Subd. 6. new text end

new text begin Biennial report to legislature. new text end

new text begin Beginning in 2017, the commissioner
must biennially report by March 15 to the chairs and ranking minority members of the
legislative committees having jurisdiction over taxes and economic and community
development in the senate and the house of representatives, in compliance with sections
3.195 and 3.197, on the tax credits issued under this section. The report must include:
new text end

new text begin (1) information on the impact of the endow Minnesota program on promoting
development of jobs, promoting community development, increasing community
foundation endowments, and capturing generational transfer of wealth for benefit in
Minnesota communities; and
new text end

new text begin (2) any other information relevant to evaluating the effect of the credit.
new text end

new text begin Subd. 7. new text end

new text begin Employment and economic development base adjustment. new text end

new text begin For fiscal
years 2016 to 2041, $50,000 is added to the base administrative appropriation to the
commissioner of employment and economic development in Laws 2013, chapter 85, article
1, section 3, subdivision 2, for the purpose of administering the endow Minnesota program
and credits under this section. The commissioner may solicit and accept contributions from
government or private entities to administer or evaluate the endow Minnesota program.
new text end

new text begin Subd. 8. new text end

new text begin Sunset. new text end

new text begin This section expires for taxable years beginning after December
31, 2030, except that reporting requirements under subdivisions 3 and 5 remain in effect
through 2031, and the appropriation in subdivision 6 remains in effect through fiscal
year 2013.
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.

Minnesota Statutes 2014, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 37. new text end

new text begin Endow Minnesota tax credit. new text end

new text begin (a) For purposes of this subdivision,
the definitions in section 116J.9821 apply.
new text end

new text begin (b) A qualified taxpayer is allowed a credit against the tax imposed under
subdivisions 1 and 2c for qualified contributions made to an endow Minnesota community
foundation in the taxable year. The credit equals the amount and applies to the taxable year
indicated on the certificate provided to the qualified taxpayer under section 116J.9821,
but the maximum credit in any taxable year is $25,000.
new text end

new text begin (c) 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 income in the taxable year of the qualified contribution.
new text end

new text begin (d) The credit under this subdivision is limited to the liability for tax. "Liability
for tax," for purposes of this subdivision, means the tax imposed under subdivisions 1
and 2c for the taxable year, reduced by the sum of the nonrefundable credits allowed
under this chapter.
new text end

new text begin (e) For a corporation that is a partner in a partnership, the credit allowed for the
taxable year is limited to the lesser of: (1) the amount determined under paragraph (c) for
the taxable year; or (2) an amount, separately computed with respect to the corporation's
interest in the trade, business, or entity, equal to the amount of tax attributable to that
portion of taxable income that is allocable or apportionable to the corporation's interest
in the trade, business, or entity.
new text end

new text begin (f) If the amount of the credit determined under this subdivision for any taxable year
exceeds the limitation under paragraph (d), 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 is 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 that may be added under this paragraph is limited to the taxpayer's liability
or 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 for taxable years beginning after
December 31, 2015, and before January 1, 2031, except that credit carryovers are allowed
to be applied against liability through taxable years ending before January 1, 2046.
new text end

Sec. 3.

Minnesota Statutes 2014, section 297I.20, is amended by adding a subdivision
to read:

new text begin Subd. 4. new text end

new text begin Endow Minnesota tax credit. new text end

new text begin (a) For purposes of this subdivision, the
definitions in section 116J.9821 apply.
new text end

new text begin (b) A qualified taxpayer is allowed a credit against the premiums tax imposed
under this chapter for qualified contributions made to an endow Minnesota community
foundation in the taxable year. The credit equals the amount and applies to the taxable year
indicated on the certificate provided to the qualified taxpayer under section 116J.9821,
but the maximum credit in any taxable year is $25,000. This credit does not affect the
calculation of police and fire aid under section 69.021.
new text end

new text begin (c) The credit under this subdivision is limited to the liability for tax. "Liability for
tax," for purposes of this subdivision, means the tax imposed under this chapter for the
taxable year reduced by the sum of the nonrefundable credits allowed under this chapter.
new text end

new text begin (d) If the amount of the credit determined under this subdivision for any taxable year
exceeds the limitation under paragraph (c), 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 is 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 that may be added under this paragraph is limited to the taxpayer's liability
or 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 for taxable years beginning after
December 31, 2015, and before January 1, 2031, except that credit carryovers are allowed
to be applied against liability through taxable years ending before January 1, 2046.
new text end