SF 1927

as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; providing income tax credits for 
  1.3             costs paid or incurred to develop qualified child care 
  1.4             programs and facilities and for foregone interest on 
  1.5             debt related to qualified child care facilities; 
  1.6             proposing coding for new law in Minnesota Statutes, 
  1.7             chapter 290. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  [290.0672] [CHILD CARE PROGRAM AND FACILITY 
  1.10  CREDITS.] 
  1.11     Subdivision 1.  [CREDIT ALLOWED.] For each taxable year 
  1.12  beginning after December 31, 1997, and before January 1, 2008, 
  1.13  there shall be allowed as a credit against the tax imposed under 
  1.14  section 290.06 an amount equal to 30 percent of the sum of the 
  1.15  amounts determined under subdivisions 3 and 4. 
  1.16     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
  1.17  the terms defined in this subdivision have the meanings given 
  1.18  them.  
  1.19     (b) "Startup expenses" include feasibility studies, site 
  1.20  preparation and construction, renovation, or acquisition of 
  1.21  facilities for purposes of establishing or expanding centers 
  1.22  eligible for the credit provided in this section. 
  1.23     (c) "Local area median income" means that income factor as 
  1.24  determined by the U.S. Department of Housing and Urban 
  1.25  Development. 
  1.26     (d) "Primarily" means not less than 51 percent. 
  2.1      (e) "Costs incurred" include mortgage indebtedness, both 
  2.2   recourse and nonrecourse, incurred in connection with the 
  2.3   purchase, rehabilitation, or construction of eligible facilities.
  2.4      Subd. 3.  [CHILD CARE PROGRAMS AND FACILITIES.] (a) The 
  2.5   costs described in this subdivision are eligible for the credit 
  2.6   provided under this section. 
  2.7      (b) The cost paid or incurred by the taxpayer for the 
  2.8   startup expenses of establishing a child care or child 
  2.9   development program or constructing a child care or child 
  2.10  development facility in Minnesota to be used primarily by the 
  2.11  children of the taxpayer's employees or by the children of 
  2.12  employees of tenants leasing commercial or office space in a 
  2.13  building owned by the taxpayer. 
  2.14     (c) The cost paid or incurred by the taxpayer for startup 
  2.15  expenses of establishing a child care or child development 
  2.16  program or purchasing, constructing, or rehabilitating a child 
  2.17  care or child development facility in Minnesota to be used 
  2.18  primarily by the children of households whose annual household 
  2.19  income does not exceed 75 percent of the local area median 
  2.20  income. 
  2.21     In the case of a child care facility established jointly by 
  2.22  two or more taxpayers or by a partnership that includes one or 
  2.23  more taxpayers as partners, the credit shall be allowed if the 
  2.24  facility is to be used primarily by children in one or more of 
  2.25  the following categories:  the children of the employees of each 
  2.26  of the taxpayers, or the children of households with annual 
  2.27  incomes that do not exceed 75 percent of the local area median 
  2.28  income. 
  2.29     Subd. 4.  [CREDIT FOR FOREGONE INTEREST.] (a) For taxable 
  2.30  year beginning December 31, 1997, and before January 1, 2008, 
  2.31  there is allowed as a credit against the tax imposed under 
  2.32  section 290.06 an amount equal to the cost incurred by the 
  2.33  taxpayer for "foregone interest" on a loan made to a borrower 
  2.34  for the purpose of constructing, purchasing, or rehabilitating a 
  2.35  child care or child development facility that primarily serves 
  2.36  households whose incomes do not exceed 75 percent of the local 
  3.1   area median income. 
  3.2      (b) In the alternative, the credit under this subdivision 
  3.3   may be claimed by a taxpayer with respect to deposits made with 
  3.4   a financial institution if the benefit of the foregone interest 
  3.5   inures to the benefit of a borrower to whom the financial 
  3.6   institution extends a loan for the purpose of constructing, 
  3.7   purchasing, or rehabilitating a child care or child development 
  3.8   facility that primarily serves households whose incomes do not 
  3.9   exceed 75 percent of the local area median income. 
  3.10     (c) "Foregone interest" with respect to a credit claimed 
  3.11  directly by a lender shall be calculated annually as the 
  3.12  difference between the (1) interest that would have been earned 
  3.13  had the lender charged its customary market rate of interest on 
  3.14  a loan for financing a child care or child development facility, 
  3.15  not to exceed in any event the lender's announced prime rate of 
  3.16  interest, and (2) the actual interest earned on the loan.  
  3.17  "Foregone interest" with respect to a credit claimed by a 
  3.18  depositor of funds in a financial institution shall be 
  3.19  calculated annually as the difference between the interest rate 
  3.20  that would have been paid by the financial institution had the 
  3.21  depositor obtained the rate of interest available from the 
  3.22  financial institution for a deposit of the size and term made by 
  3.23  the taxpayer and the actual interest rate agreed to by the 
  3.24  depositor, but shall not exceed the amount of the foregone 
  3.25  interest that the financial institution actually provides to the 
  3.26  eligible facility. 
  3.27     Subd. 5.  [LIMITATION ON CREDIT.] (a) The amount of the 
  3.28  credit allowed by subdivision 3 shall not exceed $100,000 for 
  3.29  each individual taxpayer claiming the credit for any taxable 
  3.30  year and shall not exceed $500,000 for any single facility for 
  3.31  the aggregate of all credit amounts claimed under this section 
  3.32  with respect to the facility by multiple taxpayers in all income 
  3.33  years. 
  3.34     (b) If the credit provided under subdivision 3 exceeds the 
  3.35  tax liability of the taxpayer for the taxable year, up to 
  3.36  $100,000 of the excess amount of the credit may be carried over 
  4.1   to each of the taxable years succeeding the taxable year.  The 
  4.2   entire amount of the credit must be carried to the earliest 
  4.3   taxable year to which the amount may be carried.  The unused 
  4.4   portion of the credit must be carried to the following taxable 
  4.5   year. 
  4.6      (c) If the credit carryovers from preceding taxable years 
  4.7   allowed under paragraph (b), and subdivision 6, paragraph (b), 
  4.8   plus the credit allowed for the taxable year under subdivision 3 
  4.9   exceed $100,000, then the credit allowed under this section for 
  4.10  the taxable year is limited to $100,000 and the amount in excess 
  4.11  of $100,000 may be carried over and applied against the tax in 
  4.12  the following year, and succeeding years if necessary, in an 
  4.13  amount which, when added to the credit allowed under subdivision 
  4.14  3 for that succeeding year, does not exceed $100,000. 
  4.15     Subd. 6.  [RULES FOR CLAIMING CREDIT.] (a) If two or more 
  4.16  taxpayers, including partners in a partnership, share in the 
  4.17  costs eligible for the credits provided by this section, each 
  4.18  taxpayer shall be eligible to receive a tax credit with respect 
  4.19  to its respective share of the costs paid or incurred. 
  4.20     (b) The credit allowed under subdivision 3 may be claimed 
  4.21  in the year that the facility or child care or child development 
  4.22  program first enrolls a child or when the purchase, 
  4.23  construction, or rehabilitation is complete, whichever is later. 
  4.24     Subd. 7.  [VERIFICATION OF CLAIMS.] (a) In order to be 
  4.25  eligible for the credit allowed under subdivision 3, the 
  4.26  taxpayer shall submit to the commissioner a statement in the 
  4.27  form required by the commissioner certifying that the costs for 
  4.28  which the credit is claimed are incurred with respect to 
  4.29  expenses that are eligible for the credit and that the program 
  4.30  or facility will be in operation for at least 60 consecutive 
  4.31  months after completion. 
  4.32     (b) In order to be allowed the credit under subdivision 3 
  4.33  or the credit allowed under subdivision 4, the taxpayer shall 
  4.34  indicate, in the form and manner prescribed by the commissioner, 
  4.35  the number of children that the child care program or facility 
  4.36  will be able to legally accommodate; and, where applicable, the 
  5.1   number of those children whose household income does not exceed 
  5.2   75 percent of the area median income.  The credit allowed under 
  5.3   subdivision 4 may be claimed only in years in which the facility 
  5.4   is actually operating and enrolling children. 
  5.5      Subd. 8.  [TERMINATION OF FACILITY OPERATION.] If the child 
  5.6   care or child development center for which a credit is claimed 
  5.7   pursuant to subdivision 3 is disposed of or ceases to operate 
  5.8   within 60 months after completion, that portion of the credit 
  5.9   claimed which represents the remaining portion of the 60-month 
  5.10  period shall be added to the taxpayer's tax liability in the 
  5.11  taxable year when the disposition or termination of operation 
  5.12  occurs.