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SF 4049

as introduced - 92nd Legislature (2021 - 2022) Posted on 03/22/2022 10:38am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to taxation; individual income and corporate franchise taxes; modifying
the credit for rehabilitation of historic structures; amending Minnesota Statutes
2020, section 290.0681, subdivisions 2, 3, 4; Minnesota Statutes 2021 Supplement,
section 290.0681, subdivision 10.

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

Section 1.

Minnesota Statutes 2020, section 290.0681, subdivision 2, is amended to read:


Subd. 2.

Credit or grant allowed; certified historic structure.

(a) A credit is allowed
against the tax imposed under this chapter equal to not more than 100 percent of the credit
allowed under section 47(a) of the Internal Revenue Code for a project. deleted text beginThe credit is payable
in five equal yearly installments beginning with the year the project is placed in service.
deleted text end
new text begin Notwithstanding the provisions of section 47(a) of the Internal Revenue Code that require
the federal credit to be allocated ratably over a five-year period, the full amount of the credit
under this section is allowed in the taxable year in which the qualified rehabilitated building
is placed in service.
new text endTo qualify for the credit:

(1) the project must receive Part 3 certification and be placed in service during the taxable
year; and

(2) the taxpayer must be allowed the federal credit and be issued a credit certificate for
the taxable year as provided in subdivision 4.

(b) The commissioner of administration may pay a grant in lieu of the credit. The grant
equals 90 percent of the credit that would be allowed for the project. The grant is payable
deleted text begin in five equal yearly installmentsdeleted text end beginning with the year the project is placed in service.

(c) In lieu of the credit under paragraph (a), an insurance company may claim a credit
against the insurance premiums tax imposed under chapter 297I.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property placed in service after June
30, 2022.
new text end

Sec. 2.

Minnesota Statutes 2020, section 290.0681, subdivision 3, is amended to read:


Subd. 3.

Applications; allocations.

(a) To qualify for a credit or grant under this section,
the developer of a project must apply to the office before the rehabilitation begins. The
application must contain the information and be in the form prescribed by the office. The
office may collect a fee for application of up to 0.5 percent of qualified rehabilitation
expenditures, up to $40,000, based on estimated qualified rehabilitation expenditures, to
offset costs associated with personnel and administrative expenses related to administering
the credit and preparing the economic impact report in subdivision 9. Application fees are
deposited in the account. The application must indicate if the application is for a credit or
a grant in lieu of the credit or a combination of the two and designate the taxpayer qualifying
for the credit or the recipient of the grant.

(b) Upon approving an application for credit, the office shall issue allocation certificates
that:

(1) verify eligibility for the credit or grant;

(2) state the amount of credit or grant anticipated with the project, with the credit amount
equal to 100 percent and the grant amount equal to 90 percent of the federal credit anticipated
in the application;

(3) state that the credit or grant allowed may increase or decrease if the federal credit
the project receives at the time it is placed in service is different than the amount anticipated
at the time the allocation certificate is issued; and

(4) state the fiscal year in which the credit or grant is allocated, andnew text begin:
new text end

new text begin (i) for property placed in service before July 1, 2022, new text endthat the taxpayer or grant recipient
is entitled to receive one-fifth of the total amount of either the credit or the grant at the time
the project is placed in service, provided that date is within three calendar years following
the issuance of the allocation certificatedeleted text begin.deleted text endnew text begin; or
new text end

new text begin (ii) for property placed in service after June 30, 2022, that the taxpayer or grant recipient
is entitled to receive the full amount of the credit or the grant at the time the project is placed
in service, provided that date is within three calendar years following the issuance of the
allocation certificate.
new text end

(c) The office, in consultation with the commissioner, shall determine if the project is
eligible for a credit or a grant under this section and must notify the developer in writing
of its determination. Eligibility for the credit is subject to review and audit by the
commissioner.

(d) The federal credit recapture and repayment requirements under section 50 of the
Internal Revenue Code do not apply to the credit allowed under this section.

(e) Any decision of the office under paragraph (c) may be challenged as a contested case
under chapter 14. The contested case proceeding must be initiated within 45 days of the
date of written notification by the office.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for allocation certificates
issued prior to the date of enactment for property placed in service after June 30, 2022.
new text end

Sec. 3.

Minnesota Statutes 2020, section 290.0681, subdivision 4, is amended to read:


Subd. 4.

Credit certificates; grants.

(a)(1) The developer of a project for which the
office has issued an allocation certificate must notify the office when the project is placed
in service. Upon verifying that the project has been placed in service, and was allowed a
federal credit, the office must issue a credit certificate to the taxpayer designated in the
application or must issue a grant to the recipient designated in the application. The credit
certificate must state the amount of the credit.

(2) The credit amount equals the federal credit allowed for the project.

(3) The grant amount equals 90 percent of the federal credit allowed for the project.

(b) The recipient of a credit certificate may assign the certificate to another taxpayer
before the deleted text beginfirst one-fifthdeleted text end payment is claimed, which is then allowed the credit under this
section or section 297I.20, subdivision 3. An assignment is not valid unless the assignee
notifies the commissioner within 30 days of the date that the assignment is made. The
commissioner shall prescribe the forms necessary for notifying the commissioner of the
assignment of a credit certificate and for claiming a credit by assignment.

(c) Credits passed through to partners, members, shareholders, or owners pursuant to
subdivision 5 are not an assignment of a credit certificate under this subdivision.

(d) A grant agreement between the office and the recipient of a grant may allow the
grant to be issued to another individual or entity.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property placed in service after June
30, 2022.
new text end

Sec. 4.

Minnesota Statutes 2021 Supplement, section 290.0681, subdivision 10, is amended
to read:


Subd. 10.

Sunset.

This section expires after fiscal year deleted text begin2022deleted text endnew text begin 2030new text end, except that the office's
authority to issue credit certificates under subdivision 4 based on allocation certificates that
were issued before fiscal year deleted text begin2023deleted text endnew text begin 2031new text end remains in effect through deleted text begin2025deleted text endnew text begin 2033new text end, and the
reporting requirements in subdivision 9 remain in effect through the year following the year
in which all allocation certificates have either been canceled or resulted in issuance of credit
certificates, or deleted text begin2026deleted text endnew text begin 2034new text end, whichever is earlier.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5. new text beginSTATEMENT OF INTENT; TAX EXPENDITURE PURPOSE STATEMENT.
new text end

new text begin The purpose of the tax expenditure in sections 1 to 3, allowing the entirety of the credit
for historic structure rehabilitation to be taken in the year property is placed in service, and
the extension of the sunset date for the credit in section 4, is to encourage investment in
rehabilitating historic buildings. The standard against which effectiveness is to be measured
is the increase in the number of historic rehabilitation projects in the state.
new text end