SF 3202

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/31/2023 08:51am

A bill for an act
relating to commerce; establishing a liquid fuel modernization tax credit; modifying
individual income and corporate franchise taxes; requiring a report; amending
Minnesota Statutes 2022, sections 239.7911, by adding a subdivision; 290.0131,
by adding a subdivision; 290.0133, by adding a subdivision; 290.06, by adding a
subdivision; proposing coding for new law in Minnesota Statutes, chapter 239.

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

Section 1.

new text begin [239.787] LIQUID FUEL MODERNIZATION TAX CREDIT.
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 them.
new text end

new text begin (b) "Aboveground storage tank system" means a system of components required to safely
store liquid fuel aboveground and make the fuel available to (1) purchase by a consumer,
or (2) load onto a fuel transport vehicle. Aboveground storage tank system includes but is
not limited to tanks, vent tubes, tank monitors, piping, pumps, containment, meters, loading
racks, dispensers, hoses, and pump handles that are primarily located aboveground.
new text end

new text begin (c) "Bulk plant" means a liquid fuel storage facility with no more than 250,000 gallons
of combined aboveground and underground storage capacity.
new text end

new text begin (d) "Eligible entity" means a corporation, partnership, S corporation, limited liability
company, or sole proprietorship, that installs eligible fuel infrastructure at a new or existing
retail fueling site or bulk plant owned or operated by the corporation, partnership, S
corporation, limited liability company, or sole proprietorship.
new text end

new text begin (e) "Eligible fuel infrastructure" means:
new text end

new text begin (1) all aboveground storage tank system components that are compatible with higher
biofuel blends and essential parts and materials that directly support the components; and
new text end

new text begin (2) all underground storage tank system components that are compatible with higher
biofuel blends, and essential parts and materials that directly support the components.
new text end

new text begin (f) "Eligible fuel infrastructure costs" means all reasonable equipment, material, and
labor costs, as determined by the commissioner, in a taxable year that are paid by an eligible
entity to acquire and install eligible fuel infrastructure at a retail fueling site or bulk plant,
less any amount of financial assistance received by the entity for eligible fuel infrastructure
at the site or plant.
new text end

new text begin (g) "Financial assistance" means federal, state, local, and private grants, forgivable loans,
and insurance proceeds that support the installation of eligible fuel infrastructure.
new text end

new text begin (h) "Higher biofuel blends" means (1) blends of gasoline and ethanol containing more
than ten percent ethanol by volume, and (2) blends of diesel and biodiesel containing more
than 20 percent biodiesel by volume.
new text end

new text begin (i) "Liquid fuel" means petroleum products.
new text end

new text begin (j) "Petroleum products" means the products identified in section 296A.01, subdivision
42, and blends of diesel and biodiesel containing between 21 and 100 percent biodiesel.
new text end

new text begin (k) "Retail fueling site" means a convenience store, service station, or other facility that
offers liquid fuel for sale to consumers.
new text end

new text begin (l) "Underground storage tank system" means a system of components required to safely
store liquid fuel underground and make the fuel available to (1) purchase by a consumer,
or (2) load onto a fuel transport vehicle. Underground storage tank system includes but is
not limited to spill buckets, drop tubes, tanks, vent tubes, tank monitors, piping, submersible
pumps, containment, meters, dispensers, hoses, and pump handles that are located above
or below ground.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An eligible entity is allowed a tax credit for eligible fuel
infrastructure costs at retail fueling sites and bulk plants, as provided by this section and
section 290.06, subdivision 41. The credit is equal to the lesser of:
new text end

new text begin (1) 65 percent of the aggregate amount of eligible fuel infrastructure costs paid by the
eligible entity for retail fueling sites or bulk plants; or
new text end

new text begin (2) $800,000.
new text end

new text begin (b) A unitary business may claim only one credit each year under this subdivision.
new text end

new text begin (c) For an individual or eligible entity holding multiple ownership interests in other
eligible entities, the aggregate credit amount that may be claimed by the individual or entity
holding the multiple interests must not exceed the maximum credit allowed to an eligible
entity not holding multiple interests under this subdivision.
new text end

new text begin Subd. 3. new text end

new text begin Applications; credit certificate. new text end

new text begin (a) To obtain a credit, an eligible entity must
apply to the commissioner for a credit certificate, in the form and manner required by the
commissioner. Applications must be submitted no later than one year after the date the costs
used to qualify for the credit are paid by the eligible entity and must be accompanied by:
new text end

new text begin (1) detailed information regarding the total eligible fuel infrastructure costs paid in the
taxable year for which the credit is sought;
new text end

new text begin (2) the total amount of financial assistance received in the taxable year for each site
subject to the credit application;
new text end

new text begin (3) an invoice that demonstrates to the commissioner's satisfaction that all invoiced costs
were incurred after December 31, 2023, and paid in full by the applicant;
new text end

new text begin (4) all successfully filed compatibility documents, notices, and registration forms required
by law; and
new text end

new text begin (5) an affidavit certifying that:
new text end

new text begin (i) all equipment and labor costs submitted for purposes of the credit application were
incurred to purchase or install eligible fuel infrastructure;
new text end

new text begin (ii) no contractor has advanced funds to the applicant; and
new text end

new text begin (iii) the applicant must use the eligible fuel infrastructure to:
new text end

new text begin (A) offer for sale at the retail fueling site a blend of gasoline and ethanol containing
more than ten percent ethanol by volume, or a blend of diesel and biodiesel in which the
biodiesel content exceeds the content required under section 239.77, subdivision 2; or
new text end

new text begin (B) store a higher biofuel blend at the bulk plant.
new text end

new text begin (b) The commissioner must accept or reject a complete initial application within 60 days
of the date the initial application is submitted, and must accept or reject a supplemental
application within 120 days of the date the supplemental application is submitted. The
commissioner must notify the applicant in writing if additional time is necessary to review
the initial or supplemental application. The commissioner must send written notification of
the commissioner's credit application decision by first class United States mail to the applicant
at the applicant's last known address.
new text end

new text begin (c) Within 30 days from the date the commissioner approves an application for the credit,
the commissioner must issue a credit certificate verifying the eligible entity's eligibility for
the credit, the total amount of financial assistance received for each retail fueling site or
bulk plant, excluding the credit amount, the amount of the credit allowed, and the taxable
year in which the credit may be claimed.
new text end

new text begin Subd. 4. new text end

new text begin Duty to provide information. new text end

new text begin (a) A person who submits a credit application
to the commissioner, or who has issued invoices or other documents which are the basis of
an application, must (1) furnish to the commissioner copies of any financial records that
the commissioner requests and that are relevant to determining the validity of the costs listed
in the application, or (2) make the financial records reasonably available to the commissioner
to inspect and audit. The commissioner may obtain access to information that must be made
available under this section as provided in paragraph (b).
new text end

new text begin (b) The commissioner, commissioner of revenue, or any member, employee, or agent
of the agency authorized by the commissioner or commissioner of revenue, may, upon
presentation of official agency credentials, take any of the following actions:
new text end

new text begin (1) examine and copy books, papers, records, memoranda, or data of a person who has
a duty to provide information to the commissioner under paragraph (a); and
new text end

new text begin (2) enter upon public or private property to take action authorized by this subdivision,
including to obtain information from a person who has a duty to provide the information
under paragraph (a), to (i) conduct surveys and investigations, and (ii) take corrective action.
new text end

new text begin Subd. 5. new text end

new text begin Appealing credit decision. new text end

new text begin (a) A credit applicant may appeal an application
decision made by the commissioner under this section to the Liquid Fuel Modernization
Board by submitting a written notice to the board setting forth the specific basis for the
appeal. The credit applicant must file with the board written notice of an appeal of a decision
made by the commissioner within 60 days of the date that the commissioner sends the
applicant written notice of the decision. The board must consider the appeal within 90 days
of the date the applicant's written notice of appeal is received. The written notice must set
forth the specific basis for the appeal.
new text end

new text begin (b) A credit applicant may appeal a decision of the board as a contested case under
chapter 14. A credit applicant must provide to the board written notification of a request
for a contested case, setting forth the specific basis for the appeal, within 30 days of the
date the board makes a decision. Only an applicant may appeal the board's decision. The
commissioner must make the final decision in a contested case requested by an applicant.
new text end

new text begin Subd. 6. new text end

new text begin Credit revocation. new text end

new text begin (a) The commissioner of commerce or the commissioner
of revenue may revoke all or a portion of the amount of any credit issued under this section
if the credit applicant misrepresents or omits a fact relevant to a decision made by the
commissioner under this section. The commissioner or commissioner of revenue and the
credit recipient may agree to a settlement or compromise on the amount of the credit subject
to revocation.
new text end

new text begin (b) The taxpayer subject to a credit revocation under this subdivision must, for purposes
of the taxes imposed under chapter 290, amend all returns as required by the commissioner
of revenue and pay any additional amount of tax due as a result of any amendment.
new text end

new text begin (c) The commissioner or commissioner of revenue may enforce the provisions of this
subdivision and may recover administrative and legal expenses in a civil action brought by
the attorney general against the credit applicant in a district court or the Minnesota Tax
Court. If the commissioner's or commissioner of revenue's revocation is based on willful
actions of the applicant, the applicant must also forfeit and pay to the state a civil penalty
in an amount to be determined by the court. A civil penalty under this paragraph must not
exceed the full amount of the credit.
new text end

new text begin Subd. 7. new text end

new text begin Fraud. new text end

new text begin (a) If a person, with intent to defraud, issues an invoice or other document
with knowledge that the invoice or other document is in whole or in part false, and with
knowledge that the invoice or other document is being submitted in relation to an application
for the credit allowed under this section:
new text end

new text begin (1) the person is considered to have presented a false claim to a public body under section
609.465; and
new text end

new text begin (2) the commissioner may demand that the person pay an amount equal to all or a portion
of the amount of the credit received as a result of a credit decision made on the basis of the
false invoice or other document.
new text end

new text begin (b) If the penalty in paragraph (a) is not paid upon the commissioner's demand, the
commissioner may recover the penalty amount, with administrative and legal expenses, in
a civil action brought by the attorney general against the credit applicant in a district court.
The applicant must also forfeit and pay to the state a civil penalty in an amount to be
determined by the court. A civil penalty under this paragraph must not exceed the full
amount of the credit received by the person on the basis of the false invoice or other
document.
new text end

new text begin Subd. 8. new text end

new text begin Kickbacks. new text end

new text begin (a) A consultant or contractor must not agree to pay or forgive, as
a condition of performing services, any amount of eligible fuel infrastructure costs billed
or invoiced at a retail fueling site or bulk plant for which the costs are used by a credit
applicant to claim the credit under this section. An applicant must not accept forgiveness
of or demand payment from a consultant or contractor for any amount of eligible fuel
infrastructure costs billed or invoiced at a retail fueling site or bulk plant for which the costs
are used by a credit applicant to claim the credit under this section.
new text end

new text begin (b) Nothing in this subdivision prohibits forgiveness or payments of costs provided that
the forgiveness or payment of costs are subtracted from the eligible fuel infrastructure costs
detailed in an application under subdivision 3, prior to the issuance of a credit certificate.
For forgiveness or payments of costs occurring after the credit certificate is issued, a credit
applicant may amend their application after the credit certificate is issued, to subtract eligible
fuel infrastructure costs, if the commissioner and commissioner of revenue both consent to
the amendment, which must be made in the form and manner required by the commissioner.
If the application is amended, the commissioner must determine the necessary adjustments
to the credit certificate, modify the certificate accordingly, provide the amended certificate
to the credit applicant, and notify the commissioner of revenue of the modification. Within
30 days, the applicant must file the amended credit certificate with the commissioner of
revenue, and make any amendments to returns and pay any additional tax due as provided
for revocations under subdivision 6.
new text end

new text begin (c) A violation of this subdivision is fraud, as provided in subdivision 7.
new text end

new text begin Subd. 9. new text end

new text begin Board. new text end

new text begin (a) The commissioner must convene a Liquid Fuel Modernization
Board. The board consists of:
new text end

new text begin (1) the commissioner or the commissioner's designee;
new text end

new text begin (2) the commissioner of agriculture or the commissioner's designee;
new text end

new text begin (3) the commissioner of the Pollution Control Agency or the commissioner's designee;
new text end

new text begin (4) a Minnesota fuel equipment and service industry representative, appointed by the
governor; and
new text end

new text begin (5) a Minnesota petroleum industry representative, appointed by the governor.
new text end

new text begin (b) The board member appointed under paragraph (a), clause (5), must serve as chair of
the board.
new text end

new text begin (c) Section 15.0575 governs the filling of positions and vacancies, membership terms,
payment of compensation and expenses, and removal of members.
new text end

new text begin (d) The board's duties are to (1) advise the commissioner regarding the liquid fuel
modernization tax credit, and (2) consider appeals under subdivision 7.
new text end

new text begin Subd. 10. new text end

new text begin Rules. new text end

new text begin The commissioner may adopt rules under chapter 14 necessary to
implement this section.
new text end

new text begin Subd. 11. new text end

new text begin Expiration. new text end

new text begin This section expires January 1, 2034, for credits claimed in taxable
years beginning after December 31, 2033, except that the expiration of this section does not
affect the commissioner's authority to enforce and administer this section for credits claimed
under this subdivision in prior taxable years.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies to credits claimed in taxable years beginning after December 31, 2023.
new text end

Sec. 2.

Minnesota Statutes 2022, section 239.7911, is amended by adding a subdivision
to read:

new text begin Subd. 3. new text end

new text begin Equipment compatibility goal. new text end

new text begin (a) The equipment compatibility goal of the
state is that no later than December 31, 2028, at least 50 percent of retail gasoline storage
and dispensing equipment is certified for and offering for sale the highest ethanol blend
authorized by law for use in standard combustion engines.
new text end

new text begin (b) No later than February 1 each year, the commissioner, in consultation with the
commissioner of agriculture and the Liquid Fuel Modernization Board established under
section 239.787, must report to the legislative committees with jurisdiction over commerce
and agriculture regarding:
new text end

new text begin (1) progress made toward achieving the goal in paragraph (a); and
new text end

new text begin (2) the total expenditures, and the total and average liquid fuels modernization tax credit
per site, granted under section 239.787.
new text end

new text begin (c) If equipment and labor availability, blending capacity, ethanol outages at pipelines
or refineries, federal requirements, or other relevant constraints impede progress in achieving
the goal in paragraph (a), the commissioner must identify the constraints, along with any
corresponding recommendations, in the reports required under paragraph (b).
new text end

new text begin (d) This subdivision expires June 30, 2034.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2023.
new text end

Sec. 3.

Minnesota Statutes 2022, section 290.0131, is amended by adding a subdivision
to read:

new text begin Subd. 21. new text end

new text begin Eligible fuel infrastructure costs; liquid fuel modernization tax credit. new text end

new text begin The
amount of any deduction under the Internal Revenue Code for eligible fuel infrastructure
costs, as defined in section 239.787, subdivision 1, used to claim the credit in section 290.06,
subdivision 41, is an addition.
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, 2023.
new text end

Sec. 4.

Minnesota Statutes 2022, section 290.0133, is amended by adding a subdivision
to read:

new text begin Subd. 16. new text end

new text begin Eligible fuel infrastructure costs; liquid fuel modernization tax credit. new text end

new text begin The
amount of any deduction under the Internal Revenue Code for eligible fuel infrastructure
costs, as defined in section 239.787, subdivision 1, used to claim the credit in section 290.06,
subdivision 41, is an addition.
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, 2023.
new text end

Sec. 5.

Minnesota Statutes 2022, section 290.06, is amended by adding a subdivision to
read:

new text begin Subd. 41. new text end

new text begin Liquid fuel modernization tax credit. new text end

new text begin (a) A taxpayer may claim a credit
against the tax imposed by this chapter equal to the amount certified on a credit certificate
issued under section 239.787, subdivision 3, subject to the limitations under this subdivision.
new text end

new text begin (b) The credit is limited to the liability for tax, as computed under this chapter, for the
taxable year. If the amount of the credit determined under this subdivision for any taxable
year exceeds this limitation, the excess is a liquid fuels modernization tax credit carryover
to each of the ten 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 must not exceed the
taxpayer's liability for tax, less any liquid fuel modernization tax credit for the taxable year.
new text end

new text begin (c) Credits allowed to a partnership, a limited liability company taxed as a partnership,
or an S corporation are passed through to the partners, members, shareholders, or owners,
respectively, pro rata to each based on the partner's, member's, shareholder's, or owner's
share of the entity's assets, or as specially allocated in the organizational documents or any
other executed agreement, as of the last day of the taxable year.
new text end

new text begin (d) Notwithstanding the approval, certification, administrative, and enforcement authority
provided to the commissioner of commerce under section 239.787, the commissioner may
utilize any audit and examination powers under chapter 270C or 289A to the extent necessary
to verify that the taxpayer is eligible for the credit and to assess the amount of any improperly
claimed credit.
new text end

new text begin (e) This subdivision expires January 1, 2034, for taxable years beginning after December
31, 2033, except that the expiration of this section does not affect the commissioner of
revenue's authority to audit or power of examination and assessment for credits claimed in
prior taxable years under this subdivision.
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, 2023.
new text end