SF 3101

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

A bill for an act
relating to taxation; limiting the jurisdiction to tax persons investing in certain
entities; amending Minnesota Statutes 2006, section 290.015, subdivision 3, by
adding a subdivision.

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

Section 1.

Minnesota Statutes 2006, section 290.015, subdivision 3, is amended to read:

Subd. 3.

Exceptions.

(a) A person is not subject to tax under this chapter if the
person is engaged in the business of selling tangible personal property and taxation of that
person under this chapter is precluded by Public Law 86-272, United States Code, title 15,
sections 381 to 384, or would be so precluded except for the fact that the person stored
tangible personal property in a state licensed facility under chapter 231.

(b) Ownership of an interest in the following types of property (including those
contacts with this state reasonably required to evaluate and complete the acquisition
or disposition of the property, the servicing of the property or the income from it, the
collection of income from the property, or the acquisition or liquidation of collateral
relating to the property) shall not be a factor in determining whether the owner is subject
to tax under this chapter:

(1) an interest in a real estate mortgage investment conduit, a real estate investment
trust, a financial asset securitization investment trust, or a regulated investment company
or a fund of a regulated investment company, as those terms are defined in the Internal
Revenue Code;

(2) an interest in money market instruments or securities as defined in section
290.191, subdivision 6, paragraphs (c) and (d);

(3) an interest in a loan-backed, mortgage-backed, or receivable-backed security
representing either: (i) ownership in a pool of promissory notes, mortgages, or receivables
or certificates of interest or participation in such notes, mortgages, or receivables, or (ii)
debt obligations or equity interests which provide for payments in relation to payments or
reasonable projections of payments on the notes, mortgages, or receivables;

(4) an interest acquired from a person in assets described in section 290.191,
subdivision 11, paragraphs (e) to (l), subject to the provisions of paragraph (c), clause
(2)(A);

(5) an interest acquired from a person in the right to service, or collect income from
any assets described in section 290.191, subdivision 11, paragraphs (e) to (l), subject to
the provisions of paragraph (c), clause (2)(A);

(6) an interest acquired from a person in a funded or unfunded agreement to extend
or guarantee credit whether conditional, mandatory, temporary, standby, secured, or
otherwise, subject to the provisions of paragraph (c), clause (2)(A);

(7) an interest of a person other than an individual, estate, or trust, in any intangible,
tangible, real, or personal property acquired in satisfaction, whether in whole or in part,
of any asset embodying a payment obligation which is in default, whether secured or
unsecured, the ownership of an interest in which would be exempt under the preceding
provisions of this subdivision, provided the property is disposed of within a reasonable
period of time; deleted text begin or
deleted text end

(8) amounts held in escrow or trust accounts, pursuant to and in accordance with the
terms of property described in this subdivision new text begin ; or
new text end

new text begin (9) an interest in a qualified high technology business, as defined in subdivision 6, if
the entity qualified when the person acquired the interest new text end .

(c)(1) For purposes of paragraph (b), clauses (4) to (6), an interest in the type of
assets or credit agreements described is deemed to exist at the time the owner becomes
legally obligated, conditionally or unconditionally, to fund, acquire, renew, extend, amend,
or otherwise enter into the credit arrangement.

(2)(A) An owner has acquired an interest from a person in paragraph (b), clauses
(4) to (6), assets if:

(i) the owner at the time of the acquisition of the asset does not own, directly or
indirectly, 15 percent or more of the outstanding stock or in the case of a partnership 15
percent or more of the capital or profit interests of the person from whom it acquired
the asset;

(ii) the person from whom the owner acquired the asset regularly sells, assigns, or
transfers interests in paragraph (b), clauses (4) to (6), assets during the 12 calendar months
immediately preceding the month of acquisition to three or more persons; and

(iii) the person from whom the owner acquired the asset does not sell, assign, or
transfer 75 percent or more of its paragraph (b), clauses (4) to (6), assets during the 12
calendar months immediately preceding the month of acquisition to the owner.

For purposes of determining indirect ownership under item (i), the owner is deemed to
own all stock, capital, or profit interests owned by another person if the owner directly
owns 15 percent or more of the stock, capital, or profit interests in the other person. The
owner is also deemed to own through any intermediary parties all stock, capital, and
profit interests directly owned by a person to the extent there exists a 15 percent or more
chain of ownership of stock, capital, or profit interests between the owner, intermediary
parties and the person.

(B) If the owner of the asset is a member of a unitary business, paragraph (b),
clauses (4) to (8), do not apply to an interest acquired from another member of the unitary
business. If the interest in the asset was originally acquired from a nonunitary member
and at that time qualified as a section 290.015, subdivision 3, paragraph (b), asset, the
foregoing limitation does not apply.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 2.

Minnesota Statutes 2006, section 290.015, is amended by adding a subdivision
to read:

new text begin Subd. 6. new text end

new text begin Qualified high technology business. new text end

new text begin (a) For purposes of subdivision 3, a
"qualified high technology business" is a corporation, individual, or partnership that:
new text end

new text begin (1) had no more than 30 full-time equivalent employees in this state during the
preceding taxable year; and
new text end

new text begin (2) is engaged in or is committed to engage in a qualified high technology field.
new text end

new text begin (b) For purposes of this subdivision, "qualified high technology field" includes, but
is not limited to, aerospace, agricultural processing, alternative energy, biotechnology,
defense, drug delivery, environmental engineering, food technology, cellulosic ethanol,
information technology, green manufacturing, materials science technology, medical
devices, nanotechnology, pharmaceutical technology, and telecommunications. Unless
otherwise provided under the rules of the Department of Employment and Economic
Development, a business is a qualified business for purposes of this subdivision only if the
business satisfies all of the following conditions:
new text end

new text begin (1) the business has its headquarters in Minnesota;
new text end

new text begin (2) at least 51 percent of the business's employees are employed in Minnesota;
new text end

new text begin (3) the business is engaged in, or is committed to engage in:
new text end

new text begin (i) using advanced technology to add value to a product, process, or service in a
qualified high technology field;
new text end

new text begin (ii) conducting research in and development of a product, process, or service in a
qualified high technology field; or
new text end

new text begin (iii) developing a new product, process, or service in a qualified high technology
field;
new text end

new text begin (4) the business is not engaged in real estate development, insurance, banking,
lending, lobbying, political consulting, information technology consulting, wholesale or
retail trade, leisure, hospitality, transportation, construction, ethanol production from
corn, or professional services provided by attorneys, accountants, business consultants,
physicians, or health care consultants;
new text end

new text begin (5) the business has not been in operation for more than ten consecutive years; and
new text end

new text begin (6) the business had less than $1,000,000 in net income in the preceding taxable year.
new text end

new text begin (c) For purposes of applying the requirement under paragraph (a), clause (1), all of
the employees of the unitary business, as that term is used in section 290.17, subdivision
4, must be taken into account and "full-time equivalent" has the meaning given in section
469.318, subdivision 2.
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, 2007.
new text end