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Minnesota Legislature

Office of the Revisor of Statutes

SF 3106

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

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; allowing additional research and development credit for
small businesses; appropriating money; amending Minnesota Statutes 2006,
section 290.068, subdivision 3, by adding subdivisions.

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

Section 1.

Minnesota Statutes 2006, section 290.068, subdivision 3, is amended to read:


Subd. 3.

Limitation; carryover.

(a)(1) The creditnew text begin, other than the special credit
under subdivision 7,
new text end for the taxable year shall not exceed the liability for tax. "Liability for
tax" for purposes of this section means the tax imposed under this chapter for the taxable
year reduced by the sum of the nonrefundable credits allowed under this chapter.

(2) In the case of a corporation which is a partner in a partnership, the creditnew text begin, other
than the special credit under subdivision 7,
new text end allowed for the taxable year shall not exceed
the lesser of the amount determined under clause (1) for the taxable year or an amount
(separately computed with respect to the corporation's interest in the trade or business or
entity) equal to the amount of tax attributable to that portion of taxable income which is
allocable or apportionable to the corporation's interest in the trade or business or entity.

(b) If the amount of the credit determined under this sectionnew text begin, other than the special
credit under subdivision 7,
new text end for any taxable year exceeds the limitation under clause (a), the
excess shall be a research credit carryover to each of the 15 succeeding taxable years. The
entire amount of the excess unused credit for the taxable year shall be 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 which may be
added under this clause shall not exceed the taxpayer's liability for tax less the research
credit for the taxable year.

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2006, section 290.068, is amended by adding a subdivision
to read:


new text begin Subd. 7. new text end

new text begin Special credit; small businesses. new text end

new text begin (a) A qualified business is allowed a tax
credit equal to 20 percent of qualified research expenditures incurred for the taxable year.
The maximum credit under this subdivision is limited to $ .......
new text end

new text begin (b) For purposes of this subdivision and subdivision 8, a "qualified business" is a
corporation, individual, or partnership that:
new text end

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

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

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

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

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

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

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

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

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

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

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

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

new text begin (6) the business had less than $1,000,000 in annual gross sales receipts in the
preceding taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2006, section 290.068, is amended by adding a subdivision
to read:


new text begin Subd. 8. new text end

new text begin Special credit; appropriation. new text end

new text begin (a) If the amount of the special credit under
subdivision 7 for any taxable year exceeds the liability for tax, the commissioner shall
refund the excess to the taxpayer.
new text end

new text begin (b) An amount sufficient to pay the refunds required by this subdivision is annually
appropriated to the commissioner of revenue from the general fund.
new text end

new text begin EFFECTIVE DATE. new text end

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