SF 1624

as introduced - 89th Legislature (2015 - 2016) Posted on 03/12/2015 09:07am

A bill for an act
relating to higher education; encouraging saving for higher education expenses;
amending Minnesota Statutes 2014, section 290.01, subdivision 19b; proposing
coding for new law in Minnesota Statutes, chapter 136G.

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

Section 1.

new text begin [136G.12] MATCHING GRANTS.
new text end

new text begin Subdivision 1. new text end

new text begin Matching grant qualification. new text end

new text begin By July 1 of each year, a state
matching grant must be added to each account established under the program if the
following conditions are met:
new text end

new text begin (1) the contributor applies, in writing in a form prescribed by the commissioner,
for a matching grant;
new text end

new text begin (2) a minimum contribution of $200 was made during the preceding calendar year;
new text end

new text begin (3) the beneficiary's family meets Minnesota college savings plan residency
requirements; and
new text end

new text begin (4) the family income of the beneficiary did not exceed $80,000.
new text end

new text begin Subd. 2. new text end

new text begin Family income. new text end

new text begin (a) For purposes of this section, "family income" means:
new text end

new text begin (1) if the beneficiary is under age 25, the combined adjusted gross income of the
beneficiary's parents or legal guardians as reported on the federal tax return or returns for
the calendar year in which contributions were made. If the beneficiary's parents or legal
guardians are divorced, the income of the parent claiming the beneficiary as a dependent
on the federal individual income tax return and the income of that parent's spouse, if
any, is used to determine family income; or
new text end

new text begin (2) if the beneficiary is age 25 or older, the combined adjusted gross income of the
beneficiary and the beneficiary's spouse, if any.
new text end

new text begin (b) For a parent or legal guardian of beneficiaries under age 25 and for beneficiaries
age 25 or older who resided in Minnesota and filed a federal individual income tax return,
the matching grant must be based on family income from the calendar year in which
contributions were made.
new text end

new text begin Subd. 3. new text end

new text begin Residency requirement. new text end

new text begin (a) If the beneficiary is under age 25, the
beneficiary's parents or legal guardians must be Minnesota residents to qualify for a
matching grant. If the beneficiary is age 25 or older, the beneficiary must be a Minnesota
resident to qualify for a matching grant.
new text end

new text begin (b) To meet the residency requirements, the parent or legal guardian of beneficiaries
under age 25 must have filed a Minnesota individual income tax return as a Minnesota
resident and claimed the beneficiary as a dependent on the parent or legal guardian's
federal tax return for the calendar year in which contributions were made. If the
beneficiary's parents are divorced, the parent or legal guardian claiming the beneficiary as
a dependent on the federal individual income tax return must be a Minnesota resident.
For beneficiaries age 25 or older, the beneficiary, and a spouse, if any, must have filed
a Minnesota and a federal individual income tax return as a Minnesota resident for the
calendar year in which contributions were made.
new text end

new text begin (c) A parent of beneficiaries under age 25 and beneficiaries age 25 or older who
did not reside in Minnesota in the calendar year in which contributions were made are
not eligible for a matching grant.
new text end

new text begin Subd. 4. new text end

new text begin Age and date of birth determination of beneficiary. new text end

new text begin In determining the
age of the beneficiary for purposes of a matching grant, the plan administrator shall use
the age of the beneficiary as reported on the participation agreement on December 31 of
the year in which the request for a matching grant is made.
new text end

new text begin Subd. 5. new text end

new text begin Amount of matching grant. new text end

new text begin The amount of the matching grant for a
beneficiary equals:
new text end

new text begin (1) if the beneficiary's family income is $50,000 or less, 15 percent of the sum of the
contributions made to the beneficiary's account during the calendar year, not to exceed
$400; and
new text end

new text begin (2) if the beneficiary's family income is more than $50,000 but not more than
$80,000, ten percent of the sum of the contributions made to the beneficiary's account
during the calendar year, not to exceed $400.
new text end

new text begin Subd. 6. new text end

new text begin Budget limit. new text end

new text begin If the total amount of matching grants determined under
subdivision 3 exceeds the amount of the appropriation for the fiscal year, the commissioner
shall proportionately reduce each grant so that the total equals the available appropriation.
The commissioner must reduce matching grants so that the amount of the matching grant
assigned to a beneficiary's account equals:
new text end

new text begin (1) the ratio of state appropriations for the matching grant divided by the total dollar
amount of matching grants for all beneficiaries, multiplied by
new text end

new text begin (2) the dollar amount of the matching grant for each eligible beneficiary.
new text end

new text begin Subd. 7. new text end

new text begin Coordination with Department of Revenue. new text end

new text begin In administering matching
grants, the commissioner may require that applicants submit sufficient information to
determine whether the beneficiary qualifies for a grant, including the Social Security
numbers, family income information, and any other information the commissioner
determines necessary. The applicant or applicants may authorize the commissioner to
request information from the commissioner of revenue to verify eligibility for a grant from
tax information on file with the commissioner or obtained from the Internal Revenue
Service. If this method is used and the taxpayer has authorized a release of the information
to the commissioner, the commissioner of revenue may verify that the beneficiary is
eligible for a grant at a specified rate and maximum, and disclose that information to the
commissioner, notwithstanding the provisions of chapter 270B.
new text end

new text begin Subd. 8. new text end

new text begin Private contributions. new text end

new text begin (a) The office may solicit and accept contributions
from private corporations, other businesses, foundations, employers, or individuals to
provide:
new text end

new text begin (1) matching grants under this section in addition to those funded with direct
appropriations;
new text end

new text begin (2) grants to students who withdraw money from accounts established under the
program; or
new text end

new text begin (3) contributions to an account on behalf of a beneficiary.
new text end

new text begin (b) Amounts contributed may only be used for those purposes. Amounts contributed
are appropriated to the commissioner for the purposes of this subdivision.
new text end

new text begin (c) Contributors may designate a specific field of study, geographic area, or other
criteria that govern use of the grants funded with their contributions, but may not
discriminate on the basis of race, ethnicity, or gender. The office may refuse contributions
that are subject, in the judgment of the commissioner, to unacceptable conditions on
their use.
new text end

new text begin Subd. 9. new text end

new text begin Annual application new text end

new text begin An account owner must submit an application form
for a matching grant on an annual basis. The application must be postmarked by May 1
of the year in which the matching grant would be awarded if the applicant qualifies for a
matching grant.
new text end

new text begin Subd. 10. new text end

new text begin Single beneficiaries with multiple accounts. new text end

new text begin (a) A matching grant will
first be computed on an account owned by a parent or legal guardian of the beneficiary,
or an account owner who is also the beneficiary. If there are multiple accounts for a
single beneficiary, any matching grant, up to the annual maximum, will be proportionately
awarded to the beneficiary named in accounts owned by the parents or guardians.
new text end

new text begin (b) If the account owned by a parent or a guardian or an account owner who is also
the beneficiary does not qualify for the maximum annual matching grant, any remaining
matching grant funds are proportionately distributed to the beneficiary to an account or
accounts owned by someone other than the parent or guardian.
new text end

new text begin (c) If the account for a beneficiary is not owned by a parent or a legal guardian, or an
account owner who is also the beneficiary, then the matching grant will be proportionately
distributed to the beneficiary to accounts owned by others.
new text end

Sec. 2.

Minnesota Statutes 2014, section 290.01, subdivision 19b, is amended to read:

Subd. 19b.

Subtractions from federal taxable income.

For individuals, estates,
and trusts, there shall be subtracted from federal taxable income:

(1) net interest income on obligations of any authority, commission, or
instrumentality of the United States to the extent includable in taxable income for federal
income tax purposes but exempt from state income tax under the laws of the United States;

(2) if included in federal taxable income, the amount of any overpayment of income
tax to Minnesota or to any other state, for any previous taxable year, whether the amount
is received as a refund or as a credit to another taxable year's income tax liability;

(3) the amount paid to others, less the amount used to claim the credit allowed under
section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
transportation of each qualifying child in attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
resident of this state may legally fulfill the state's compulsory attendance laws, which
is not operated for profit, and which adheres to the provisions of the Civil Rights Act
of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and equipment purchased
or leased for use in elementary and secondary schools in teaching only those subjects
legally and commonly taught in public elementary and secondary schools in this state.
Equipment expenses qualifying for deduction includes expenses as defined and limited in
section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
books and materials used in the teaching of religious tenets, doctrines, or worship, the
purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
or materials for, or transportation to, extracurricular activities including sporting events,
musical or dramatic events, speech activities, driver's education, or similar programs. No
deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
the qualifying child's vehicle to provide such transportation for a qualifying child. For
purposes of the subtraction provided by this clause, "qualifying child" has the meaning
given in section 32(c)(3) of the Internal Revenue Code;

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section 290.491;

(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
of the Internal Revenue Code in determining federal taxable income by an individual
who does not itemize deductions for federal income tax purposes for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
under the provisions of Public Law 109-1 and Public Law 111-126;

(7) for individuals who are allowed a federal foreign tax credit for taxes that do not
qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
of subnational foreign taxes for the taxable year, but not to exceed the total subnational
foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
"federal foreign tax credit" means the credit allowed under section 27 of the Internal
Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
the extent they exceed the federal foreign tax credit;

(8) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (7), or 19c, clause (12), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount
of the addition made by the taxpayer under subdivision 19a, clause (7), or subdivision 19c,
clause (12), in the case of a shareholder of an S corporation, minus the positive value of
any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. The resulting delayed depreciation cannot be less than zero;

(9) job opportunity building zone income as provided under section 469.316;

(10) to the extent included in federal taxable income, the amount of compensation
paid to members of the Minnesota National Guard or other reserve components of the
United States military for active service, including compensation for services performed
under the Active Guard Reserve (AGR) program. For purposes of this clause, "active
service" means (i) state active service as defined in section 190.05, subdivision 5a, clause
(1); or (ii) federally funded state active service as defined in section 190.05, subdivision
5b, and "active service" includes service performed in accordance with section 190.08,
subdivision 3;

(11) to the extent included in federal taxable income, the amount of compensation
paid to Minnesota residents who are members of the armed forces of the United States
or United Nations for active duty performed under United States Code, title 10; or the
authority of the United Nations;

(12) an amount, not to exceed $10,000, equal to qualified expenses related to a
qualified donor's donation, while living, of one or more of the qualified donor's organs
to another person for human organ transplantation. For purposes of this clause, "organ"
means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
"human organ transplantation" means the medical procedure by which transfer of a human
organ is made from the body of one person to the body of another person; "qualified
expenses" means unreimbursed expenses for both the individual and the qualified donor
for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
may be subtracted under this clause only once; and "qualified donor" means the individual
or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
individual may claim the subtraction in this clause for each instance of organ donation for
transplantation during the taxable year in which the qualified expenses occur;

(13) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (8), or 19c, clause (13), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (13), in the
case of a shareholder of a corporation that is an S corporation, minus the positive value of
any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
subtraction is not allowed under this clause;

(14) to the extent included in the federal taxable income of a nonresident of
Minnesota, compensation paid to a service member as defined in United States Code, title
10, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief
Act, Public Law 108-189, section 101(2);

(15) to the extent included in federal taxable income, the amount of national service
educational awards received from the National Service Trust under United States Code,
title 42, sections 12601 to 12604, for service in an approved Americorps National Service
program;

(16) to the extent included in federal taxable income, discharge of indebtedness
income resulting from reacquisition of business indebtedness included in federal taxable
income under section 108(i) of the Internal Revenue Code. This subtraction applies only
to the extent that the income was included in net income in a prior year as a result of the
addition under subdivision 19a, clause (13);

(17) the amount of the net operating loss allowed under section 290.095, subdivision
11, paragraph (c);

(18) the amount of expenses not allowed for federal income tax purposes due
to claiming the railroad track maintenance credit under section 45G(a) of the Internal
Revenue Code;

(19) the amount of the limitation on itemized deductions under section 68(b) of the
Internal Revenue Code;

(20) the amount of the phaseout of personal exemptions under section 151(d) of
the Internal Revenue Code; deleted text begin and
deleted text end

(21) to the extent included in federal taxable income, the amount of qualified
transportation fringe benefits described in section 132(f)(1)(A) and (B) of the Internal
Revenue Code. The subtraction is limited to the lesser of the amount of qualified
transportation fringe benefits received in excess of the limitations under section
132(f)(2)(A) of the Internal Revenue Code for the year or the difference between the
maximum qualified parking benefits excludable under section 132(f)(2)(B) of the Internal
Revenue Code minus the amount of transit benefits excludable under section 132(f)(2)(A)
of the Internal Revenue Code deleted text begin . deleted text end new text begin ; and
new text end

new text begin (22) the amount equal to the contributions made during the tax year to a college
savings plan account qualifying under section 529 of the Internal Revenue Code, not
including amounts rolled over from other college savings plan accounts, and not to exceed
$10,000 for married couples filing joint returns and $5,000 for all other filers.
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, 2014.
new text end

Sec. 3. new text begin REVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall renumber the provisions of Minnesota Statutes listed in
Column A to the references listed in Column B. The revisor shall also make necessary
cross-reference changes in Minnesota Statutes and Minnesota Rules consistent with the
renumbering in this instruction.
new text end

new text begin Column A new text end	new text begin Column B new text end
new text begin 136G.11, subdivision 11 new text end	new text begin 136G.12, subdivision 11 new text end
new text begin 136G.11, subdivision 12 new text end	new text begin 136G.12, subdivision 12 new text end
new text begin 136G.11, subdivision 13 new text end	new text begin 136G.12, subdivision 13 new text end