SF 3473

as introduced - 89th Legislature (2015 - 2016) Posted on 04/07/2016 10:11am

A bill for an act
relating to taxation; individual income and corporate franchise; providing a credit
for the purchase and installation of energy storage systems; requiring a report.

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

Section 1.

new text begin ENERGY STORAGE 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.
new text end

new text begin (b) "Agricultural property" means property classified as class 2a under Minnesota
Statutes, section 273.13, subdivision 23.
new text end

new text begin (c) "Commercial property" means property classified as class 3a under Minnesota
Statutes, section 273.13, subdivision 24.
new text end

new text begin (d) "Cost of the energy storage system" means the actual amount paid for the
energy storage system, including accessories, installation, storage devices, power
conditioning equipment, control or transfer equipment, and other equipment necessary to
the functioning of the energy storage system, but does not include any amount paid for
the energy storage system for which another credit is claimed against the tax imposed by
Minnesota Statutes, chapter 216C or 290, or costs for equipment that is not necessary for
the operation of an energy storage system.
new text end

new text begin (e) "Electrical grid" means the system of electric generation facilities, transmission
lines, and distribution facilities that create and deliver electricity to end users.
new text end

new text begin (f) "Energy storage system" means property that:
new text end

new text begin (1) is directly connected to the electrical grid;
new text end

new text begin (2) is designed to receive electrical energy, store it by means of mechanical, chemical
or thermal processes, and convert that energy to electricity for use at a later time;
new text end

new text begin (3) complies with standards and provisions of the National Electric Code and
Underwriters Laboratory, as applicable; and
new text end

new text begin (4) has the ability to sustain the system's rated power output for a minimum of one
hour. Energy storage system does not include property for a hydroelectric pumped storage
system that stores energy in the form of gravitational potential energy of water that is
pumped from a lower to a higher elevation.
new text end

new text begin (g) "Residential property" means property classified as class 1a or 4a in Minnesota
Statutes, section 273.13, subdivisions 22 and 25.
new text end

new text begin (h) "Taxpayer" has the meaning given in Minnesota Statutes, section 290.01,
subdivision 6.
new text end

new text begin Subd. 2. new text end

new text begin Credit eligibility; limitation. new text end

new text begin (a) A taxpayer who owns residential,
agricultural, or commercial property in this state and who purchases and installs an energy
storage system on the property is eligible to apply for a credit against the tax imposed
under Minnesota Statutes, chapter 290, equal to 30 percent of the cost of the energy
storage system. The maximum credit allowed per energy storage system is $5,000 for an
energy storage system installed on residential property, and $25,000 for an energy storage
system installed on agricultural property or commercial property.
new text end

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

new text begin Subd. 3. new text end

new text begin Application; allocation of credits; issuance of credit certificates.
new text end

new text begin (a) An eligible taxpayer may apply to the commissioner of commerce to be allocated
a credit for the taxable year. The commissioner must make the application available
on the department's Web site by November 1 of the preceding year. The commissioner
may not issue more than $5,000,000 in credits for any taxable year and may not approve
cumulative credits for more than $500,000 to any taxpayer in a taxable year.
new text end

new text begin (b) In order for the purchase and installation of an energy storage system to qualify
for a credit under this section, the taxpayer must have applied for and been allocated a
credit before purchasing and installing the energy storage system.
new text end

new text begin (c) The commissioner of commerce must allocate credits to taxpayers in the order
that the tax credit request applications are filed with the department. Within 30 days of
receiving an application for credit allocation under this subdivision, the commissioner of
commerce must either allocate a credit if the application meets the criteria in this section,
request additional information from the taxpayer, or reject the application. The purchase
and installation of the energy storage system specified in the application must be made
within 180 days of the allocation of the credits. If the purchase and installation is not made
within 180 days, the taxpayer may request a 60-day extension, which the commissioner of
commerce must grant if the taxpayer documents to the commissioner's satisfaction that the
purchase and installation of the system is in process. A taxpayer who is allocated a credit
but fails to purchase and install an energy storage system as specified in the application,
within 120 days of allocation of the credit or within the 60-day extension period, must
notify the commissioner of commerce of the failure to invest within five business days
of the expiration of the 120-day purchase and installation period or the 60-day extension
period, whichever is applicable. On notification to the commissioner of commerce, the
credit allocation is canceled and available for reallocation.
new text end

new text begin (d) All tax credit request applications filed with the commissioner of commerce on
the same day must be treated as having been filed contemporaneously. If two or more
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 taxpayers who filed on that day on a pro rata basis with respect to the
amounts claimed. The pro rata allocation for any one taxpayer is the product obtained by
multiplying a fraction, the numerator of which is the amount of the credit allocation claim
filed by the taxpayer and the denominator of which is the total of all credit allocation
claims filed by 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 (e) A taxpayer must notify the commissioner of commerce when the purchase and
installation of an energy storage system for which credits were allocated has been made,
and the taxable year in which the purchase and installation occurred. After receiving
notification that the purchase and installation was made, the commissioner must issue a
credit certificate to the taxpayer for the taxable year in which the energy storage system
was installed.
new text end

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

new text begin Subd. 4. new text end

new text begin Annual report. new text end

new text begin Beginning in 2018, the commissioner of commerce, in
consultation with the commissioner of revenue, must annually report by March 15 to the
chairs and ranking minority members of the legislative committees with jurisdiction over
taxes and energy policy in the senate and the house of representatives, in compliance
with Minnesota Statutes, 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) the number and amount of credits issued;
new text end

new text begin (2) the number of taxpayers who claimed more than one credit, with detail on the
number of credits claimed; and
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new text begin (3) any other information the commissioners deem appropriate.
new text end

new text begin The commissioner of commerce must include in the report recommendations for changes
in the calculation or administration of the credit.
new text end

new text begin Subd. 5. new text end

new text begin Credit allowed. new text end

new text begin A taxpayer is allowed a credit against the tax imposed
under Minnesota Statutes, chapter 290, for the purchase and installation of energy storage
systems for the taxable year equal to the amount and applicable to the taxable year
indicated on the certificate provided to the taxpayer under subdivision 3.
new text end

new text begin Subd. 6. new text end

new text begin Proportional credits. new text end

new text begin Each pass-through entity must provide each
shareholder a statement indicating the shareholder's share of the credit amount certified to
the pass-through entity based on its share of the pass-through entity's capital assets at the
time of installation of the energy storage system.
new text end

new text begin Subd. 7. new text end

new text begin Audit powers. new text end

new text begin Notwithstanding the certification eligibility issued by the
commissioner of commerce under this section, the commissioner of revenue may utilize
any audit and examination powers under Minnesota Statutes, chapter 270C or 289A, to the
extent necessary to verify that the taxpayer is eligible for the credit and to assess for the
amount of any improperly claimed credit.
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,
2021, except that reporting requirements under subdivision 4 remain in effect through 2022,
and 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 under this section.
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, 2016, and before January 1, 2022.
new text end