SF 3741

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

A bill for an act
relating to taxation; providing tax incentives for green economy businesses;
providing for certification of qualified businesses; appropriating money;
amending Minnesota Statutes 2006, sections 272.02, by adding a subdivision;
290.01, subdivision 29; 290.06, subdivision 2c, by adding a subdivision; 290.067,
subdivision 1; 290.0671, subdivision 1; 290.091, subdivision 2; 290.0921,
subdivision 3; 290.0922, subdivisions 2, 3; 297A.68, by adding a subdivision;
297B.03; Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19b;
proposing coding for new law in Minnesota Statutes, chapter 290.

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

Section 1.

Minnesota Statutes 2006, section 272.02, is amended by adding a
subdivision to read:

new text begin Subd. 85. new text end

new text begin Green business zone property. new text end

new text begin (a) If approved by the municipality in
which the property is located, improvements to real property, and personal property,
classified under section 273.13, subdivision 24, used primarily in the operation of a
green business certified under section 290.993, are exempt from ad valorem taxes levied
under chapter 275.
new text end

new text begin (b) The exemption applies beginning for the first assessment year after certification of
the green business by the commissioner of employment and economic development. The
exemption applies to each assessment year that begins while the green business is certified,
and terminates after the 12th assessment year, but does not apply to any assessment year
when the business ceases to be certified. To be exempt, the property must be occupied by
July 1 of the assessment year by a certified green business that has signed the business
subsidy agreement by July 1 of the assessment year. This exemption does not apply to:
new text end

new text begin (1) the levy under section 475.61 or similar levy provisions under any other law to
pay general obligation bonds; or
new text end

new text begin (2) other school district levies included in the debt service levy of the district
under section 123B.55.
new text end

Sec. 2.

Minnesota Statutes 2007 Supplement, 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. 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 and
under the provisions of Public Law 109-1;

(7) for taxable years beginning before January 1, 2008, the amount of the federal
small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
which is included in gross income under section 87 of the Internal Revenue Code;

(8) 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;

(9) 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 (15), 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 (15), 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;

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

(11) the amount of compensation paid to members of the Minnesota National Guard
or other reserve components of the United States military for active service performed
in Minnesota, excluding 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); (ii) federally
funded state active service as defined in section 190.05, subdivision 5b; or (iii) federal
active service as defined in section 190.05, subdivision 5c, but "active service" excludes
services performed exclusively for purposes of basic combat training, advanced individual
training, annual training, and periodic inactive duty training; special training periodically
made available to reserve members; and service performed in accordance with section
190.08, subdivision 3;

(12) 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
outside Minnesota;

(13) 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;

(14) 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 (16), 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 (16), 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;

(15) to the extent included in federal taxable income, compensation paid to a
nonresident who is a service member as defined in United States Code, title 10, section
101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public
Law 108-189, section 101(2); deleted text begin and
deleted text end

(16) international economic development zone income as provided under section
469.325 new text begin ; and
new text end

new text begin (17) certified green business income as provided in section 290.996 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, 2008.
new text end

Sec. 3.

Minnesota Statutes 2006, section 290.01, subdivision 29, is amended to read:

Subd. 29.

Taxable income.

The term "taxable income" means:

(1) for individuals, estates, and trusts, the same as taxable net income;

(2) for corporations, the taxable net income less

(i) the net operating loss deduction under section 290.095;

(ii) the dividends received deduction under section 290.21, subdivision 4;

(iii) the exemption for operating in a job opportunity building zone under section
469.317;

(iv) the exemption for operating in a biotechnology and health sciences industry
zone under section 469.337; deleted text begin and
deleted text end

(v) the exemption for operating in an international economic development zone
under section 469.326 new text begin ; and
new text end

new text begin (vi) the exemption for operating a certified green business under section 290.997 new text end .

Sec. 4.

Minnesota Statutes 2006, section 290.06, subdivision 2c, is amended to read:

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income
taxes imposed by this chapter upon married individuals filing joint returns and surviving
spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
applying to their taxable net income the following schedule of rates:

(1) On the first $25,680, 5.35 percent;

(2) On all over $25,680, but not over $102,030, 7.05 percent;

(3) On all over $102,030, 7.85 percent.

Married individuals filing separate returns, estates, and trusts must compute their
income tax by applying the above rates to their taxable income, except that the income
brackets will be one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $17,570, 5.35 percent;

(2) On all over $17,570, but not over $57,710, 7.05 percent;

(3) On all over $57,710, 7.85 percent.

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying
as a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $21,630, 5.35 percent;

(2) On all over $21,630, but not over $86,910, 7.05 percent;

(3) On all over $86,910, 7.85 percent.

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the
tax of any individual taxpayer whose taxable net income for the taxable year is less than
an amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not
more than $100. The amount of tax for each bracket shall be computed at the rates set
forth in this subdivision, provided that the commissioner may disregard a fractional part of
a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute
the individual's Minnesota income tax as provided in this subdivision. After the
application of the nonrefundable credits provided in this chapter, the tax liability must
then be multiplied by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross
income as defined in section 62 of the Internal Revenue Code and increased by the
additions required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8),
and (9), and reduced by the Minnesota assignable portion of the subtraction for United
States government interest under section 290.01, subdivision 19b, clause (1), and the
subtractions under section 290.01, subdivision 19b, clauses (9), (10), (14), (15), deleted text begin and deleted text end (16), new text begin
and (17), new text end after applying the allocation and assignability provisions of section 290.081,
clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in
section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), and (9), and reduced by the
amounts specified in section 290.01, subdivision 19b, clauses (1), (9), (10), (14), (15),
deleted text begin and deleted text end (16) new text begin , and (17) 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, 2008.
new text end

Sec. 5.

Minnesota Statutes 2006, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 34. new text end

new text begin Certified green business job credit. new text end

new text begin A taxpayer that is a certified green
business, as defined in section 290.993, subdivision 1, is allowed a credit as determined
under section 290.998 against the tax imposed by this chapter.
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, 2008.
new text end

Sec. 6.

Minnesota Statutes 2006, section 290.067, subdivision 1, is amended to read:

Subdivision 1.

Amount of credit.

(a) A taxpayer may take as a credit against the
tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the
dependent care credit for which the taxpayer is eligible pursuant to the provisions of
section 21 of the Internal Revenue Code subject to the limitations provided in subdivision
2 except that in determining whether the child qualified as a dependent, income received
as a Minnesota family investment program grant or allowance to or on behalf of the child
must not be taken into account in determining whether the child received more than half
of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of
the Internal Revenue Code do not apply.

(b) If a child who has not attained the age of six years at the close of the taxable year
is cared for at a licensed family day care home operated by the child's parent, the taxpayer
is deemed to have paid employment-related expenses. If the child is 16 months old or
younger at the close of the taxable year, the amount of expenses deemed to have been paid
equals the maximum limit for one qualified individual under section 21(c) and (d) of the
Internal Revenue Code. If the child is older than 16 months of age but has not attained the
age of six years at the close of the taxable year, the amount of expenses deemed to have
been paid equals the amount the licensee would charge for the care of a child of the same
age for the same number of hours of care.

(c) If a married couple:

(1) has a child who has not attained the age of one year at the close of the taxable
year;

(2) files a joint tax return for the taxable year; and

(3) does not participate in a dependent care assistance program as defined in section
129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid
for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of
(i) the combined earned income of the couple or (ii) the amount of the maximum limit for
one qualified individual under section 21(c) and (d) of the Internal Revenue Code will
be deemed to be the employment related expense paid for that child. The earned income
limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed
amount. These deemed amounts apply regardless of whether any employment-related
expenses have been paid.

(d) If the taxpayer is not required and does not file a federal individual income tax
return for the tax year, no credit is allowed for any amount paid to any person unless:

(1) the name, address, and taxpayer identification number of the person are included
on the return claiming the credit; or

(2) if the person is an organization described in section 501(c)(3) of the Internal
Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code,
the name and address of the person are included on the return claiming the credit.

In the case of a failure to provide the information required under the preceding sentence,
the preceding sentence does not apply if it is shown that the taxpayer exercised due
diligence in attempting to provide the information required.

In the case of a nonresident, part-year resident, or a person who has earned income
not subject to tax under this chapter including earned income excluded pursuant to section
290.01, subdivision 19b, clause (10) deleted text begin or deleted text end new text begin , new text end (16) new text begin , or (17) new text end , the credit determined under section
21 of the Internal Revenue Code must be allocated based on the ratio by which the earned
income of the claimant and the claimant's spouse from Minnesota sources bears to the
total earned income of the claimant and the claimant's spouse.

For residents of Minnesota, the subtractions for military pay under section 290.01,
subdivision 19b, clauses (11) and (12), are not considered "earned income not subject to
tax under this chapter."

For residents of Minnesota, the exclusion of combat pay under section 112 of the
Internal Revenue Code is not considered "earned income not subject to tax under this
chapter."

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 7.

Minnesota Statutes 2006, section 290.0671, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual is allowed a credit against the tax
imposed by this chapter equal to a percentage of earned income. To receive a credit, a
taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.

(b) For individuals with no qualifying children, the credit equals 1.9125 percent of
the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned
income or adjusted gross income, whichever is greater, in excess of $5,770, but in no
case is the credit less than zero.

(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first
$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than
$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income,
whichever is greater, in excess of $15,080, but in no case is the credit less than zero.

(d) For individuals with two or more qualifying children, the credit equals ten
percent of the first $9,720 of earned income and 20 percent of earned income over
$14,860 but less than $16,800. The credit is reduced by 10.3 percent of earned income
or adjusted gross income, whichever is greater, in excess of $17,890, but in no case is
the credit less than zero.

(e) For a nonresident or part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).

(f) For a person who was a resident for the entire tax year and has earned income
not subject to tax under this chapter, including income excluded under section 290.01,
subdivision 19b, clause (10) deleted text begin or deleted text end new text begin , new text end (16) new text begin , or (17) new text end , the credit must be allocated based on the
ratio of federal adjusted gross income reduced by the earned income not subject to tax
under this chapter over federal adjusted gross income. For purposes of this paragraph, the
subtractions for military pay under section 290.01, subdivision 19b, clauses (11) and (12),
are not considered "earned income not subject to tax under this chapter."

For the purposes of this paragraph, the exclusion of combat pay under section 112
of the Internal Revenue Code is not considered "earned income not subject to tax under
this chapter."

(g) For tax years beginning after December 31, 2001, and before December 31,
2004, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in
paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by
$1,000 for married taxpayers filing joint returns.

(h) For tax years beginning after December 31, 2004, and before December 31,
2007, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in
paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by
$2,000 for married taxpayers filing joint returns.

(i) For tax years beginning after December 31, 2007, and before December 31, 2010,
the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph
(d), after being adjusted for inflation under subdivision 7, are each increased by $3,000 for
married taxpayers filing joint returns. For tax years beginning after December 31, 2008,
the $3,000 is adjusted annually for inflation under subdivision 7.

(j) The commissioner shall construct tables showing the amount of the credit at
various income levels and make them available to taxpayers. The tables shall follow
the schedule contained in this subdivision, except that the commissioner may graduate
the transition between income brackets.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 8.

Minnesota Statutes 2006, section 290.091, subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of the following for
the taxable year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative
minimum taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue
Code:

(A) for taxable years beginning before January 1, 2006, to the extent that the
deduction exceeds 1.0 percent of adjusted gross income;

(B) for taxable years beginning after December 31, 2005, to the full extent of the
deduction.

For purposes of this clause, "adjusted gross income" has the meaning given in
section 62 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal
Revenue Code, with respect to each property (as defined in section 614 of the Internal
Revenue Code), to the extent not included in federal alternative minimum taxable income,
the excess of the deduction for depletion allowable under section 611 of the Internal
Revenue Code for the taxable year over the adjusted basis of the property at the end of the
taxable year (determined without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the
amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
Internal Revenue Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the
amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and

(6) the amount of addition required by section 290.01, subdivision 19a, clauses
(7), (8), and (9);

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.01, subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by section 290.01, subdivision
19b, clause (2), to the extent included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as
defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
amounts deducted in computing federal adjusted gross income; and

(4) amounts subtracted from federal taxable income as provided by section 290.01,
subdivision 19b, clauses (9) to deleted text begin (16) deleted text end new text begin (17) new text end .

In the case of an estate or trust, alternative minimum taxable income must be
computed as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3)
of the Internal Revenue Code.

(c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
income after subtracting the exemption amount determined under subdivision 3.

(d) "Regular tax" means the tax that would be imposed under this chapter (without
regard to this section and section 290.032), reduced by the sum of the nonrefundable
credits allowed under this chapter.

(e) "Net minimum tax" means the minimum tax imposed by this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 9.

Minnesota Statutes 2006, section 290.0921, subdivision 3, is amended to read:

Subd. 3.

Alternative minimum taxable income.

"Alternative minimum taxable
income" is Minnesota net income as defined in section 290.01, subdivision 19, and
includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
Minnesota tax return, the minimum tax must be computed on a separate company basis.
If a corporation is part of a tax group filing a unitary return, the minimum tax must be
computed on a unitary basis. The following adjustments must be made.

(1) For purposes of the depreciation adjustments under section 56(a)(1) and
56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
income tax purposes, including any modification made in a taxable year under section
290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7,
paragraph (c).

For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
allowance in the first taxable year after December 31, 2000.

(2) The portion of the depreciation deduction allowed for federal income tax
purposes under section 168(k) of the Internal Revenue Code that is required as an
addition under section 290.01, subdivision 19c, clause (16), is disallowed in determining
alternative minimum taxable income.

(3) The subtraction for depreciation allowed under section 290.01, subdivision 19d,
clause (19), is allowed as a depreciation deduction in determining alternative minimum
taxable income.

(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
of the Internal Revenue Code does not apply.

(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
Revenue Code does not apply.

(6) The special rule for dividends from section 936 companies under section
56(g)(4)(C)(iii) does not apply.

(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
Code does not apply.

(8) The tax preference for intangible drilling costs under section 57(a)(2) of the
Internal Revenue Code must be calculated without regard to subparagraph (E) and the
subtraction under section 290.01, subdivision 19d, clause (4).

(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
Revenue Code does not apply.

(10) The tax preference for charitable contributions of appreciated property under
section 57(a)(6) of the Internal Revenue Code does not apply.

(11) For purposes of calculating the tax preference for accelerated depreciation or
amortization on certain property placed in service before January 1, 1987, under section
57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
deduction allowed under section 290.01, subdivision 19e.

For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, not previously deducted is a
depreciation or amortization allowance in the first taxable year after December 31, 2004.

(12) For purposes of calculating the adjustment for adjusted current earnings in
section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
minimum taxable income as defined in this subdivision, determined without regard to the
adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.

(13) For purposes of determining the amount of adjusted current earnings under
section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), (ii) the
amount of refunds of income, excise, or franchise taxes subtracted as provided in section
290.01, subdivision 19d, clause (10), or (iii) the amount of royalties, fees or other like
income subtracted as provided in section 290.01, subdivision 19d, clause (11).

(14) Alternative minimum taxable income excludes the income from operating in a
job opportunity building zone as provided under section 469.317.

(15) Alternative minimum taxable income excludes the income from operating in a
biotechnology and health sciences industry zone as provided under section 469.337.

(16) Alternative minimum taxable income excludes the income from operating in an
international economic development zone as provided under section 469.326.

new text begin (17) Alternative minimum taxable income excludes the income from operating a
certified green business as provided under section 290.997.
new text end

Items of tax preference must not be reduced below zero as a result of the
modifications in this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 10.

Minnesota Statutes 2006, section 290.0922, subdivision 2, is amended to read:

Subd. 2.

Exemptions.

The following entities are exempt from the tax imposed
by this section:

(1) corporations exempt from tax under section 290.05;

(2) real estate investment trusts;

(3) regulated investment companies or a fund thereof; and

(4) entities having a valid election in effect under section 860D(b) of the Internal
Revenue Code;

(5) town and farmers' mutual insurance companies;

(6) cooperatives organized under chapter 308A or 308B that provide housing
exclusively to persons age 55 and over and are classified as homesteads under section
273.124, subdivision 3;

(7) an entity, if for the taxable year all of its property is located in a job opportunity
building zone designated under section 469.314 and all of its payroll is a job opportunity
building zone payroll under section 469.310; deleted text begin and
deleted text end

(8) an entity, if for the taxable year all of its property is located in an international
economic development zone designated under section 469.322, and all of its payroll is
international economic development zone payroll under section 469.321. The exemption
under this clause applies to taxable years beginning during the duration of the international
economic development zone deleted text begin . deleted text end new text begin ; and
new text end

new text begin (9) an entity, if for the taxable year all of its property is used primarily in conducting
a certified green business under section 290.993 and all of its payroll is certified green
business payroll. The exemption under this clause applies to taxable years beginning
during the certification of the green business.
new text end

Entities not specifically exempted by this subdivision are subject to tax under this
section, notwithstanding section 290.05.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 11.

Minnesota Statutes 2006, section 290.0922, subdivision 3, is amended to read:

Subd. 3.

Definitions.

(a) "Minnesota sales or receipts" means the total sales
apportioned to Minnesota pursuant to section 290.191, subdivision 5, the total receipts
attributed to Minnesota pursuant to section 290.191, subdivisions 6 to 8, and/or the
total sales or receipts apportioned or attributed to Minnesota pursuant to any other
apportionment formula applicable to the taxpayer.

(b) "Minnesota property" means total Minnesota tangible property as provided in
section 290.191, subdivisions 9 to 11, any other tangible property located in Minnesota,
but does not include: (1) property located in a job opportunity building zone designated
under section 469.314, (2) property of a qualified business located in a biotechnology and
health sciences industry zone designated under section 469.334, or (3) for taxable years
beginning during the duration of the zone, property of a qualified business located in the
international economic development zone designated under section 469.322. Intangible
property shall not be included in Minnesota property for purposes of this section.
Taxpayers who do not utilize tangible property to apportion income shall nevertheless
include Minnesota property for purposes of this section. On a return for a short taxable
year, the amount of Minnesota property owned, as determined under section 290.191,
shall be included in Minnesota property based on a fraction in which the numerator is the
number of days in the short taxable year and the denominator is 365.

(c) "Minnesota payrolls" means total Minnesota payrolls as provided in section
290.191, subdivision 12, but does not include: (1) job opportunity building zone payrolls
under section 469.310, subdivision 8, (2) biotechnology and health sciences industry zone
payrolls under section 469.330, subdivision 8, deleted text begin or deleted text end (3) for taxable years beginning during
the duration of the zone, international economic development zone payrolls under section
469.321, subdivision 9 new text begin , or (4) for taxable years beginning during the certification of the
green business, certified green business payrolls new text end . Taxpayers who do not utilize payrolls
to apportion income shall nevertheless include Minnesota payrolls for purposes of this
section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 12.

new text begin [290.993] GREEN BUSINESS CERTIFICATION.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) As used in this section, the following terms have
the meanings given.
new text end

new text begin (b) "Commissioner" means the commissioner of employment and economic
development.
new text end

new text begin (c) "Person" includes an individual, corporation, partnership, limited liability
company, association, or any other entity.
new text end

new text begin (d) A "certified green business" is a person carrying on a trade or business if the
commissioner certifies that its primary business activity is production of products,
processes, methods, technologies, or services intended to do one or more of the following:
new text end

new text begin (1) to increase the use of energy from renewable sources, as defined in section
216B.1691;
new text end

new text begin (2) to increase the energy efficiency of the electric utility infrastructure system or to
increase energy conservation related to electricity use, as provided in sections 216B.2401
and 216B.241;
new text end

new text begin (3) to reduce greenhouse gas emissions, as defined in section 216H.01, subdivision
2, or to mitigate greenhouse gas emissions through, but not limited to, carbon capture,
storage, or sequestration;
new text end

new text begin (4) to monitor, protect, restore, and preserve the quality of surface waters; and
new text end

new text begin (5) to expand use of biofuels, including expanding the feasibility or reducing the
cost of producing biofuels or the types of equipment, machinery, and vehicles that can use
biofuels.
new text end

new text begin Subd. 2. new text end

new text begin Business subsidy agreement. new text end

new text begin (a) A person is a qualified business only if
the person has entered into a business subsidy agreement with the commissioner.
new text end

new text begin (b) Prior to execution of the business subsidy agreement, the commissioner must
consider the following factors:
new text end

new text begin (1) how wages compare to the regional industry average;
new text end

new text begin (2) the number of jobs that will be provided relative to overall employment in the
community;
new text end

new text begin (3) how the business will build on existing regional strengths or diversify the
regional economy;
new text end

new text begin (4) how the business will increase capital investment in the state; and
new text end

new text begin (5) any other criteria the commissioner deems necessary.
new text end

new text begin Subd. 3. new text end

new text begin Compensation requirement. new text end

new text begin A qualifying business must pay each
employee compensation, including benefits not mandated by law, that on an annualized
basis is equal to at least 110 percent of the federal poverty level for a family of four.
new text end

Sec. 13.

new text begin [290.994] APPLICATION FOR DESIGNATION.
new text end

new text begin Subdivision 1. new text end

new text begin Who may apply. new text end

new text begin A person proposing to conduct a green business
may apply for certification as a certified green business.
new text end

new text begin Subd. 2. new text end

new text begin Application content. new text end

new text begin The application must include:
new text end

new text begin (1) the proposed duration of the certification, not to exceed 12 years;
new text end

new text begin (2) an agreement by the certified green business to treat incentives provided under
section 290.995 as business subsidies under sections 116J.993 to 116J.995, and to comply
with the requirements of that law; and
new text end

new text begin (3) supporting evidence to allow the commissioner to evaluate the application under
the criteria in section 290.993.
new text end

Sec. 14.

new text begin [290.995] TAX INCENTIVES AVAILABLE TO CERTIFIED GREEN
BUSINESSES.
new text end

new text begin Certified green businesses, individuals who invest in a certified green business, and
property used in operation of a certified green business qualify for:
new text end

new text begin (1) exemption from individual income taxes as provided under section 290.996;
new text end

new text begin (2) exemption from corporate franchise taxes as provided under section 290.997;
new text end

new text begin (3) exemption from the state sales and use tax and any local sales and use taxes on
qualifying purchases as provided in section 297A.68, subdivision 42;
new text end

new text begin (4) exemption from the state sales tax on motor vehicles and any local sales tax on
motor vehicles as provided under section 297B.03;
new text end

new text begin (5) if approved by the municipality in which the property is located, exemption from
the property tax as provided in section 272.02, subdivision 85; and
new text end

new text begin (6) the jobs credit allowed under section 290.998.
new text end

Sec. 15.

new text begin [290.996] INDIVIDUAL INCOME TAX EXEMPTION.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin An individual, estate, or trust operating a certified green
business and an individual, estate, or trust making a qualifying investment in a certified
green business qualifies for the exemptions from taxes imposed under this chapter, as
provided in this section. The exemptions provided under this section apply only to the
extent that the income otherwise would be taxable under this chapter. Subtractions under
this section from federal taxable income, alternative minimum taxable income, or any
other base subject to tax are limited to the amount that otherwise would be included in
the tax base absent the exemption under this section. This section applies only to taxable
years beginning during the duration of the green business certification.
new text end

new text begin Subd. 2. new text end

new text begin Rents. new text end

new text begin An individual, estate, or trust is exempt from the taxes imposed
under this chapter on net rents derived from real or tangible personal property used by a
certified green business for a taxable year in which the green business was certified.
new text end

new text begin Subd. 3. new text end

new text begin Business income. new text end

new text begin An individual, estate, or trust is exempt from the taxes
imposed under this chapter on net income from the operation of a certified green business.
No subtraction is allowed under this section in excess of 20 percent of the sum of the
certified green business payroll and the adjusted basis of the property at the time that the
property is first used by the certified green business.
new text end

new text begin Subd. 4. new text end

new text begin Capital gains. new text end

new text begin (a) An individual, estate, or trust is exempt from the taxes
imposed under this chapter on:
new text end

new text begin (1) net gain derived on a sale or exchange of real property used by a certified green
business. If the property was held by the individual, estate, or trust during a period when
the business was not certified, the gain must be prorated based on the percentage of time,
measured in calendar days, that the real property was held by the individual, estate, or
trust during the period the certification was in effect to the total period of time the real
property was held by the individual;
new text end

new text begin (2) net gain derived on a sale or exchange of tangible personal property used by
a certified green business. If the property was held by the individual, estate, or trust
during a period when the business was not certified, the gain must be prorated based on
the percentage of time, measured in calendar days, that the property was held by the
individual, estate, or trust during the period the certification was in effect to the total
period of time the property was held by the individual; and
new text end

new text begin (3) net gain derived on a sale of an ownership interest in a certified green business.
new text end

Sec. 16.

new text begin [290.997] CORPORATE FRANCHISE TAX EXEMPTION.
new text end

new text begin (a) A certified green business is exempt from taxation under section 290.02, the
alternative minimum tax under section 290.0921, and the minimum fee under section
290.0922, on the portion of its income attributable to operations as a green business.
new text end

new text begin (b) No subtraction is allowed under this section in excess of 20 percent of the sum of
the payroll of the certified green business and the adjusted basis of the property at the time
that the property is first used by the certified green business.
new text end

new text begin (c) This section applies only to taxable years beginning during the certification of
the business as a certified green business.
new text end

Sec. 17.

new text begin [290.998] JOBS CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin A certified green business is allowed a credit against
the taxes imposed under this chapter. The credit equals seven percent of total Minnesota
payroll of the certified green business for the taxable year, less total Minnesota payroll of
the certified green business for the base year, minus $30,000 multiplied by (the number of
full-time equivalent employees that the certified green business employs for the taxable
year, minus the number of full-time equivalent employees the business employed in the
base year, but not less than zero.)
new text end

new text begin Subd. 2. 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) "Base year" means the taxable year beginning during the calendar year prior to
the calendar year in which the certification took effect.
new text end

new text begin (c) "Full-time equivalent employees" means the equivalent of annualized expected
hours of work equal to 2,080 hours.
new text end

new text begin (d) "Minnesota payroll" means the wages or salaries attributed to Minnesota under
section 290.191, subdivision 12, for the certified green business less the amount of
compensation attributable to any employee that exceeds $100,000.
new text end

new text begin Subd. 3. new text end

new text begin Inflation adjustment. new text end

new text begin For taxable years beginning after December 31,
2008, the dollar amounts in subdivision 1 and subdivision 2, paragraph (d), are annually
adjusted for inflation. The commissioner of revenue shall adjust the amounts by the
percentage determined under section 290.06, subdivision 2d, for the taxable year.
new text end

new text begin Subd. 4. new text end

new text begin Refundable. new text end

new text begin If the amount of the credit exceeds the liability for tax under
this chapter, the commissioner of revenue shall refund the excess to the qualified business.
new text end

new text begin Subd. 5. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the refunds authorized by this
section is appropriated to the commissioner of revenue from the general fund.
new text end

Sec. 18.

new text begin [290.999] REPAYMENT OF TAX BENEFITS.
new text end

new text begin Subdivision 1. new text end

new text begin Repayment obligation. new text end

new text begin A business must repay the amount of the
total tax reduction listed in section 290.995, in excess of tax liability, received during the
two years immediately before it ceased to operate as a certified green business, if the
business:
new text end

new text begin (1) received tax reductions authorized by section 290.995; and
new text end

new text begin (2)(i) did not meet the goals specified in an agreement entered into with the applicant
that states any obligation the certified green business must fulfill in order to be eligible
for tax benefits. The commissioner of employment and economic development may
extend for up to one year the period for meeting any goals provided in an agreement. The
applicant may extend the period for meeting other goals by documenting in writing the
reason for the extension and attaching a copy of the document to its next annual report to
the commissioner of employment and economic development; or
new text end

new text begin (ii) ceased to operate its facility located within the zone or otherwise ceases to
be or is not a qualified business.
new text end

new text begin Subd. 2. 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) "Business" means any person who received tax benefits enumerated in section
290.995.
new text end

new text begin (c) "Commissioner" means the commissioner of revenue.
new text end

new text begin Subd. 3. new text end

new text begin Disposition of repayment. new text end

new text begin The repayment must be paid to the state to
the extent it represents a state tax reduction and to the county to the extent it represents a
property tax reduction. Any amount repaid to the state must be deposited in the general
fund. Any amount repaid to the county for the property tax exemption must be distributed
to the local governments that granted a tax exemption in the zone in the same manner
provided for distribution of payment of delinquent property taxes. Any repayment of local
sales taxes must be repaid to the city or county imposing the local sales tax.
new text end

new text begin Subd. 4. new text end

new text begin Repayment procedures. new text end

new text begin (a) For the repayment of taxes imposed under
chapter 290 or 297A or local taxes collected under section 297A.99, a business must file
an amended return with the commissioner of revenue and pay any taxes required to be
repaid within 30 days after ceasing to do business in the zone. The amount required to be
repaid is determined by calculating the tax for the period or periods for which repayment
is required without regard to the exemptions and credits allowed under section 290.995.
new text end

new text begin (b) For the repayment of taxes imposed under chapter 297B, a business must pay any
taxes required to be repaid to the motor vehicle registrar, as agent for the commissioner of
revenue, within 30 days after ceasing to do business in the zone.
new text end

new text begin (c) For the repayment of property taxes, the county auditor shall prepare a tax
statement for the business, applying the applicable tax extension rates for each payable
year and provide a copy to the business. The business must pay the taxes to the county
treasurer within 30 days after receipt of the tax statement. The taxpayer may appeal the
valuation and determination of the property tax to the Tax Court within 30 days after
receipt of the tax statement.
new text end

new text begin (d) The provisions of chapters 270C and 289A relating to the commissioner's
authority to audit, assess, and collect the tax and to hear appeals are applicable to the
repayment required under paragraphs (a) and (b). The commissioner may impose civil
penalties as provided in chapter 289A, and the additional tax and penalties are subject to
interest at the rate provided in section 270C.40, from 30 days after ceasing to do business
in the zone until the date the tax is paid.
new text end

new text begin (e) If a property tax is not repaid under paragraph (c), the county treasurer shall add
the amount required to be repaid to the property taxes assessed against the property for
payment in the year following the year in which the treasurer discovers that the business
ceased to operate in the zone.
new text end

new text begin (f) For determining the tax required to be repaid, a tax reduction is deemed to have
been received on the date that the tax would have been due if the taxpayer had not been
entitled to the exemption or on the date a refund was issued for a refundable tax credit.
new text end

new text begin (g) The commissioner may assess the repayment of taxes under paragraph (d) any
time within two years after the business ceases to operate in the zone, or within any period
of limitations for the assessment of tax under section 289A.38, whichever period is later.
new text end

new text begin Subd. 5. new text end

new text begin Waiver authority. new text end

new text begin The commissioner may waive all or part of a
repayment, if the commissioner, in consultation with the commissioner of employment
and economic development and appropriate officials from the local government units in
which the qualified business is located if the local government imposed a local sales tax or
granted a property tax reduction, determines that requiring repayment of the tax is not
in the best interest of the state or the local government units and the business ceased
operating as a result of circumstances beyond its control including, but not limited to:
new text end

new text begin (1) a natural disaster;
new text end

new text begin (2) unforeseen industry trends; or
new text end

new text begin (3) loss of a major supplier or customer.
new text end

new text begin Subd. 6. new text end

new text begin Reconciliation. new text end

new text begin Where this section is inconsistent with section 116J.994,
subdivision 3, paragraph (e); or subdivision 6, or other provisions of sections 116J.993 to
116J.995, this section prevails.
new text end

Sec. 19.

Minnesota Statutes 2006, section 297A.68, is amended by adding a
subdivision to read:

new text begin Subd. 42. new text end

new text begin Certified green business. new text end

new text begin (a) Purchases of tangible personal property or
taxable services by a certified green business, as defined in section 290.993, are exempt
if the property or services are primarily used or consumed in the operation of a green
business certified under section 290.993.
new text end

new text begin (b) Purchase and use of construction materials and supplies used or consumed in,
and equipment incorporated into, the construction of improvements to real property used
primarily in the operation of a certified green business are exempt if the improvements
after completion of construction are to be used in the conduct of a certified green business.
This exemption applies regardless of whether the purchases are made by the business
or a contractor.
new text end

new text begin (c) The exemptions under this subdivision apply to a local sales and use tax
regardless of whether the local sales tax is imposed on the sales taxable as defined under
this chapter.
new text end

new text begin (d) This subdivision applies to sales, if the purchase was made and delivery received
during the duration of the zone.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for purchases after June 30, 2008.
new text end

Sec. 20.

Minnesota Statutes 2006, section 297B.03, is amended to read:

297B.03 EXEMPTIONS.

There is specifically exempted from the provisions of this chapter and from
computation of the amount of tax imposed by it the following:

(1) purchase or use, including use under a lease purchase agreement or installment
sales contract made pursuant to section 465.71, of any motor vehicle by the United States
and its agencies and instrumentalities and by any person described in and subject to the
conditions provided in section 297A.67, subdivision 11;

(2) purchase or use of any motor vehicle by any person who was a resident of
another state or country at the time of the purchase and who subsequently becomes a
resident of Minnesota, provided the purchase occurred more than 60 days prior to the date
such person began residing in the state of Minnesota and the motor vehicle was registered
in the person's name in the other state or country;

(3) purchase or use of any motor vehicle by any person making a valid election to be
taxed under the provisions of section 297A.90;

(4) purchase or use of any motor vehicle previously registered in the state of
Minnesota when such transfer constitutes a transfer within the meaning of section 118,
331, 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 1563(a) of the Internal
Revenue Code of 1986, as amended through December 31, 1999;

(5) purchase or use of any vehicle owned by a resident of another state and leased
to a Minnesota-based private or for-hire carrier for regular use in the transportation of
persons or property in interstate commerce provided the vehicle is titled in the state of
the owner or secured party, and that state does not impose a sales tax or sales tax on
motor vehicles used in interstate commerce;

(6) purchase or use of a motor vehicle by a private nonprofit or public educational
institution for use as an instructional aid in automotive training programs operated by the
institution. "Automotive training programs" includes motor vehicle body and mechanical
repair courses but does not include driver education programs;

(7) purchase of a motor vehicle for use as an ambulance by an ambulance service
licensed under section 144E.10;

(8) purchase of a motor vehicle by or for a public library, as defined in section
134.001, subdivision 2, as a bookmobile or library delivery vehicle;

(9) purchase of a ready-mixed concrete truck;

(10) purchase or use of a motor vehicle by a town for use exclusively for road
maintenance, including snowplows and dump trucks, but not including automobiles,
vans, or pickup trucks;

(11) purchase or use of a motor vehicle by a corporation, society, association,
foundation, or institution organized and operated exclusively for charitable, religious,
or educational purposes, except a public school, university, or library, but only if the
vehicle is:

(i) a truck, as defined in section 168.011, a bus, as defined in section 168.011, or a
passenger automobile, as defined in section 168.011, if the automobile is designed and
used for carrying more than nine persons including the driver; and

(ii) intended to be used primarily to transport tangible personal property or
individuals, other than employees, to whom the organization provides service in
performing its charitable, religious, or educational purpose;

(12) purchase of a motor vehicle for use by a transit provider exclusively to provide
transit service is exempt if the transit provider is either (i) receiving financial assistance or
reimbursement under section 174.24 or 473.384, or (ii) operating under section 174.29,
473.388, or 473.405;

(13) purchase or use of a motor vehicle by a qualified business, as defined in section
469.310, located in a job opportunity building zone, if the motor vehicle is principally
garaged in the job opportunity building zone and is primarily used as part of or in direct
support of the person's operations carried on in the job opportunity building zone. The
exemption under this clause applies to sales, if the purchase was made and delivery
received during the duration of the job opportunity building zone. The exemption under
this clause also applies to any local sales and use tax deleted text begin . deleted text end new text begin ; and new text end

new text begin (14) purchase or use of a motor vehicle by a certified green business, as defined in
section 290.993, if the motor vehicle is primarily used as part of or in direct support of the
certified green business operations. The exemption under this clause applies to sales if the
purchase was made and delivery received during the duration of the certification of the
green business. The exemption under this clause also applies to any local sales and use tax.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for purchases after June 30, 2008.
new text end