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Office of the Revisor of Statutes

SF 3115

1st Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

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

Current Version - 1st Engrossment

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A bill for an act
relating to economic development; modifying provisions governing the job
opportunity building zones program (JOBZ); modifying tax provisions relating
to JOBZ; providing reporting requirements; providing a tax credit; allowing tax
benefits; defining terms; amending Minnesota Statutes 2006, sections 116J.03,
by adding a subdivision; 270B.15; 289A.12, by adding a subdivision; 290.06, by
adding a subdivision; 469.310, subdivision 11; 469.312, subdivision 5; 469.319;
469.3201; Minnesota Statutes 2007 Supplement, section 268.19, subdivision
1; proposing coding for new law in Minnesota Statutes, chapters 116J; 469;
repealing Minnesota Statutes 2006, section 469.310, subdivision 3.

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

ARTICLE 1

JOBZ REQUIREMENTS

Section 1.

Minnesota Statutes 2006, section 116J.03, is amended by adding a
subdivision to read:


new text begin Subd. 4. new text end

new text begin Targeted rural opportunity community. new text end

new text begin "Targeted rural opportunity
community" means a city or township in a county that either lost population from 1980
to 2000 according to the decennial census or had an unemployment rate higher than the
Minnesota state annual average in 2006 according to local area unemployment statistics
published by the Department of Employment and Economic Development.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2006, section 469.310, subdivision 11, is amended to read:


Subd. 11.

Qualified business.

(a) A person carrying on a trade or business at a
place of business located within a job opportunity building zone is a qualified business
for the purposes of sections 469.310 to 469.320 according to the criteria in paragraphs
(b) to deleted text begin(f)deleted text endnew text begin (g)new text end.

(b) A person is a qualified business only on those parcels of land for which the person
has entered into a business subsidy agreement, as required under deleted text beginsectiondeleted text endnew text begin sections 469.3102
and
new text end 469.313, with the appropriate local government unit in which the parcels are located.

deleted text begin (c) Prior to execution of the business subsidy agreement, the local government
unit must consider the following factors:
deleted text end

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

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

deleted text begin (3) the economic outlook for the industry the business will engage in;
deleted text end

deleted text begin (4) sales that will be generated from outside the state of Minnesota;
deleted text end

deleted text begin (5) how the business will build on existing regional strengths or diversify the
regional economy;
deleted text end

deleted text begin (6) how the business will increase capital investment in the zone; and
deleted text end

deleted text begin (7) any other criteria the commissioner deems necessary.
deleted text end

deleted text begin (d)deleted text end new text begin(c) new text endA person that relocates a trade or business from outside a job opportunity
building zone into a zone is not a qualified business unless the business meets all of the
requirements of deleted text beginparagraphsdeleted text endnew text begin paragraphnew text end (b) deleted text beginand (c)deleted text end and:

(1) increases full-time employment in the first full year of operation within the job
opportunity building zone by a minimum of five jobs or 20 percent, whichever is greater,
measured relative to the operations that were relocated and maintains the required level of
employment for each year the zone designation applies; and

(2) enters a deleted text beginbinding written agreement with the commissionerdeleted text endnew text begin business subsidy
agreement
new text end that:

(i) pledges the business will meet the requirements of clause (1);

(ii) provides for repayment of all tax benefits enumerated under section 469.315 to
the business under the procedures in section 469.319, if the requirements of clause (1) are
not met for the taxable year or for taxes payable during the year in which the requirements
were not met; and

(iii) contains any other terms the commissioner determines appropriate.

deleted text begin (e)deleted text endnew text begin (d)new text end The commissioner may waive the requirements under paragraph deleted text begin(d)deleted text endnew text begin (c)new text end,
clause (1), if the commissioner determines that the qualified business will substantially
achieve the factors under this subdivision.

deleted text begin (f)deleted text endnew text begin (e)new text end A business is not a qualified business if, at its location or locations in the
zone, the business is primarily engaged in making retail sales to purchasers who are
physically present at the business's zone location.

deleted text begin (g)deleted text endnew text begin (f)new text end 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.

deleted text begin (h)deleted text endnew text begin (g)new text end A public utility, as defined in section 336B.01, is not a qualified business.

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

new text begin [469.3101] STATE REVIEW CRITERIA.
new text end

new text begin (a) The commissioner may only approve a business subsidy agreement after
considering:
new text end

new text begin (1) whether the business has local or Minnesota competitors that will be significantly
and adversely effected by the business subsidy agreement;
new text end

new text begin (2) whether the proposed job creation, job retention, and capital investment is
commensurate with the estimated tax benefits provided to the business by participating
in JOBZ; and
new text end

new text begin (3) whether other financial assistance is available.
new text end

new text begin (b) Additionally, the commissioner may only approve a business subsidy agreement
after considering if without the estimated tax benefits, the business:
new text end

new text begin (1) would not have expanded or began operations within Minnesota;
new text end

new text begin (2) would not have relocated from outside the state to Minnesota; or
new text end

new text begin (3) would have moved to another state or expanded in another state rather than
remaining or expanding in Minnesota.
new text end

new text begin (c) The local government unit and the qualified business must provide the
commissioner with the information that the commissioner needs to review a business
subsidy agreement under paragraphs (a) and (b). The information must be in the form
and manner required by the commissioner.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

new text begin [469.3102] BUSINESS SUBSIDY AGREEMENTS; REPORTS.
new text end

new text begin Subdivision 1. new text end

new text begin JOBZ business subsidy agreement. new text end

new text begin A business subsidy agreement
required under section 469.310, subdivision 11, paragraph (b), must comply with this
section.
new text end

new text begin Subd. 2. new text end

new text begin Business subsidy agreement requirements. new text end

new text begin A business subsidy
agreement is not effective until the commissioner has approved the agreement in writing.
The commissioner may not approve an agreement that violates sections 116J.993 to
116J.995 or 469.310 to 469.3201. The commissioner may not approve an agreement
unless:
new text end

new text begin (1) the qualified business is required to create or retain a minimum number of jobs;
new text end

new text begin (2) the agreement defines "jobs" for purposes of determining compliance with wage
and job goals as all jobs and only those jobs that constitute "employment" for purposes of
state unemployment insurance;
new text end

new text begin (3) the qualified business is required to report all jobs created or retained because of
JOBZ as a separate business location for purposes of section 268.044; and
new text end

new text begin (4) the qualified business agrees to provide the appropriate data practices release so
that the commissioner of revenue and the commissioner of employment and economic
development can monitor compliance with the terms of the agreement.
new text end

new text begin Subd. 3. new text end

new text begin Standard agreement. new text end

new text begin The commissioner must develop and require the
use of a standard business subsidy agreement that imposes definitive and enforceable
obligations on the qualified business.
new text end

new text begin Subd. 4. new text end

new text begin Business subsidy reports. new text end

new text begin (a) A local government unit must annually
report to the commissioner on the progress of the qualified business in meeting the goals
listed in the business subsidy agreement. The report must be filed with the commissioner
within 30 days of the end of the immediately preceding yearly period for which job
creation, job retention, or investment obligations are imposed on a business and must be
in a form prescribed by the commissioner. The commissioner must schedule department
compliance reviews and reporting dates under business subsidy agreements so that reports
are due throughout the year and compliance reviews are done on a continuous basis as
reports are filed.
new text end

new text begin (b) The commissioner must hold a qualified business out of compliance or remove
the business from the program if the qualified business fails to provide the information
requested by the local government unit for the report under paragraph (a) within 30 days
of written notice that the information is overdue. This report is in lieu of the reports
required under section 116J.994, subdivisions 7 and 8.
new text end

new text begin Subd. 5. new text end

new text begin Public notice and hearing. new text end

new text begin A local government unit must provide public
notice and hearing as required under section 116J.994, subdivision 5, before approving a
business subsidy agreement. Public notice of a proposed business subsidy agreement must
be published in a local newspaper of general circulation. The public hearing must be held
in a location specified by the local government unit. Notwithstanding the requirements of
section 116J.994, subdivision 5, the commissioner is not required to provide an additional
public notice and hearing when entering into a business subsidy agreement with a local
government unit and a qualified business.
new text end

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.

Minnesota Statutes 2006, section 469.312, subdivision 5, is amended to read:


Subd. 5.

Duration limit.

(a) The maximum duration of a zone is 12 years. The
applicant may request a shorter duration. The commissioner may specify a shorter
duration, regardless of the requested duration.

(b) The duration limit under this subdivision and the duration of the zone for
purposes of allowance of tax incentives described in section 469.315 is extended by three
calendar years for each parcel of property that meets the following requirements:

(1) the qualified business operates an ethanol plant, as defined in section 41A.09, on
the site that includes the parcel; and

(2) the business subsidy agreement was executed after April 30, 2006.

new text begin (c) (1) Notwithstanding the 12-year zone limitation, all qualified businesses that sign
a business subsidy agreement, as required under sections 469.310, subdivision 11, and
469.313, before December 31, 2015, are entitled to claim the tax benefits for which they
qualify under section 469.315 for the year in which the business subsidy agreement is
signed and ten additional years.
new text end

new text begin (2) Notwithstanding the 12-year zone limitation, all qualified businesses that sign
a business subsidy agreement, as required under sections 469.310, subdivision 11, and
469.313, before December 31, 2015, and are located in a targeted rural opportunity
community, as defined under section 116J.03, subdivision 4, are entitled to claim the tax
benefits for which they qualify under section 469.315 for the year in which the business
subsidy agreement is signed and 12 additional years.
new text end

new text begin (3) This paragraph does not apply to:
new text end

new text begin (i) any acreage designated as a job opportunity building zone for which any person
has fully executed a business subsidy agreement before this paragraph became effective; or
new text end

new text begin (ii) any trade or business that relocated as defined in section 469.310, subdivision
12, and received benefits under section 469.315 prior to the relocation.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 6. new text beginREVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall change the term "applicant" or similar terms to "local
government unit" or similar terms wherever the term appears in Minnesota Statutes,
sections 469.310 to 469.3201 and in any other sections referring to the JOBZ program.
The revisor shall also make grammatical changes related to the changes in terms.
new text end

Sec. 7. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, section 469.310, subdivision 3, new text end new text begin is repealed.
new text end

ARTICLE 2

JOBZ TAX PROVISIONS

Section 1.

Minnesota Statutes 2006, section 469.319, is amended to read:


469.319 REPAYMENT OF TAX BENEFITSnew text begin BY BUSINESSES THAT NO
LONGER OPERATE IN A ZONE
new text end.

Subdivision 1.

Repayment obligation.

A business must repay the deleted text beginamount of thedeleted text end
total tax deleted text beginreductiondeleted text end new text beginbenefits new text endlisted in section 469.315 deleted text beginand any refund under section 469.318
in excess of tax liability,
deleted text end received during the two years immediately before it new text begin(1) new text endceased to
deleted text begin operate in the zone, if the business:
deleted text end

deleted text begin (1) received tax reductions authorized by section 469.315; and
deleted text end

deleted text begin (2)(i) did not meet the goals specified in an agreement entered into with the applicant
that states any obligation the qualified 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
deleted text end

deleted text begin (ii) ceased to operate its facility located within the job opportunity building zonedeleted text end
new text begin perform a substantial level of activities described in the business subsidy agreement, new text endor
new text begin (2) new text endotherwise deleted text beginceasesdeleted text end new text beginceased new text endto be deleted text beginor is notdeleted text end a qualified businessnew text begin, other than those subject to
the provisions of section 469.3191
new text end.

new text begin Subd. 1a. new text end

new text begin Repayment obligation of businesses not operating in zone. new text end

new text begin Persons
that receive benefits without operating a business in a zone are subject to repayment
under this section if the business for which those benefits relate is subject to repayment
under this section. Such persons are deemed to have ceased performing in the zone on
the same day that the qualified business for which the benefits relate becomes subject to
repayment under subdivision 1.
new text end

Subd. 2.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given.

(b) "Business" means any person deleted text beginwhodeleted text end new text beginthat new text endreceived tax benefits enumerated in
section 469.315.

(c) "Commissioner" means the commissioner of revenue.

new text begin (d) "Persons that receive benefits without operating a business in a zone" means
persons that claim benefits under section 469.316, subdivision 2 or 4, as well as persons
that own property leased by a qualified business and are eligible for benefits under section
272.02, subdivision 64, or 297A.68, subdivision 37, paragraph (b).
new text end

Subd. 3.

Disposition of repayment.

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 deleted text beginlocal governmentsdeleted text end new text begin taxing authorities new text endwith authority to levy taxes 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 new text beginthe commissioner for distribution to new text endthe
city or county imposing the local sales tax.

Subd. 4.

Repayment procedures.

(a) For the repayment of taxes imposed under
chapter 290 or 297A or local taxes collected pursuant to 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 deleted text beginceasing to do business in the zonedeleted text endnew text begin becoming subject
to repayment under this section
new text end. 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 469.315.

(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 deleted text beginceasing to do business in the zonedeleted text endnew text begin becoming subject
to repayment under this section
new text end.

(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 businessnew text begin and to the taxpayer of recordnew text end. The business must
pay the taxes to the county treasurer within 30 days after receipt of the tax statement.
Thenew text begin business or thenew text end taxpayernew text begin of recordnew text end may appeal the valuation and determination of the
property tax to the Tax Court within 30 days after receipt of the tax statement.

(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 deleted text beginceasing to do business
in the job opportunity building zone
deleted text endnew text begin becoming subject to repayment under this sectionnew text end
until the date the tax is paid.

(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 deleted text begintreasurer discovers that the business
ceased to operate in the job opportunity building zone
deleted text endnew text begin auditor provided the statement
under paragraph (c)
new text end.

(f) For determining the tax required to be repaid, a deleted text begintaxdeleted text end reduction new text beginof a state or local
sales or use tax
new text endis deemed to have been received on the date that the deleted text begintax 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.
deleted text endnew text begin good or service was purchased or first put to a
taxable use. In the case of an income tax or franchise tax, including the credit payable
under section 469.318, a reduction of tax is deemed to have been received for the two
most recent tax years that have ended prior to the date that the business became subject to
repayment under this section. In the case of a property tax, a reduction of tax is deemed to
have been received for the taxes payable in the year that the business became subject to
repayment under this section and for the taxes payable in the prior year.
new text end

(g) The commissioner may assess the repayment of taxes under paragraph (d)
any time within two years after the business deleted text beginceases to operate in the job opportunity
building zone
deleted text endnew text begin becomes subject to repayment under subdivision 1new text end, or within any period of
limitations for the assessment of tax under section 289A.38, whichever period is later.new text begin The
county auditor may send the statement under paragraph (c) any time within three years
after the business becomes subject to repayment under subdivision 1.
new text end

new text begin (h) A business is not entitled to any income tax or franchise tax benefits, including
refundable credits, for any part of the year in which the business becomes subject to
repayment under this section nor for any year thereafter. Property is not exempt from tax
under section 272.02, subdivision 64, for any taxes payable in the year following the year
in which the property became subject to repayment under this section nor for any year
thereafter. A business is not eligible for any sales tax benefits beginning with goods
or services purchased or first put to a taxable use on the day that the business becomes
subject to repayment under this section.
new text end

Subd. 5.

Waiver authority.

new text begin(a) new text endThe commissioner may waive all or part of a
repaymentnew text begin required under subdivision 1new text end, 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, 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:

(1) a natural disaster;

(2) unforeseen industry trends; or

(3) loss of a major supplier or customer.

new text begin (b)(1) The commissioner shall waive repayment required under subdivision 1a if
the commissioner has waived repayment by the operating business under subdivision 1,
unless the person that received benefits without having to operate a business in the zone
was a contributing factor in the qualified business becoming subject to repayment under
subdivision 1;
new text end

new text begin (2) the commissioner shall waive the repayment required under subdivision 1a, even
if the repayment has not been waived for the operating business if:
new text end

new text begin (i) the person that received benefits without having to operate a business in the zone
and the business that operated in the zone are not related parties as defined in section
267(b) of the Internal Revenue Code of 1986, as amended through December 31, 2007; and
new text end

new text begin (ii) actions of the person were not a contributing factor in the qualified business
becoming subject to repayment under subdivision 1.
new text end

Subd. 6.

Reconciliation.

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

new text begin EFFECTIVE DATE. new text end

new text begin The amendment to subdivision 4, paragraph (c), of this
section is effective the day following final enactment. The amendment to subdivision 4,
paragraph (f), is effective retroactively from January 1, 2008, and applies to all businesses
that become subject to this section in 2008 and thereafter. The rest of this section is
effective retroactively from January 1, 2004, except that for violations that occur before
the day following final enactment, this section does not apply if the business has repaid the
benefits or the commissioner has granted a waiver.
new text end

Sec. 2.

new text begin [469.3191] BREACH OF AGREEMENTS BY BUSINESSES THAT
CONTINUE TO OPERATE IN ZONE.
new text end

new text begin (a) A "business in violation of its business subsidy agreement but not subject to
section 469.319" means a business that is operating in violation of the business subsidy
agreement but maintains a level of operations in the zone that does not subject it to the
repayment provisions of section 469.319, subdivision 1, clause (1).
new text end

new text begin (b) A business described in paragraph (a) that does not sign a new or amended
business subsidy agreement, as authorized under paragraph (h), is subject to repayment
of benefits under section 469.319 from the day that it ceases to perform in the zone a
substantial level of activities described in the business subsidy agreement.
new text end

new text begin (c) A business described in paragraph (a) ceases being a qualified business after the
last day that it has to meet the goals stated in the agreement.
new text end

new text begin (d) A business is not entitled to any income tax or franchise tax benefits, including
refundable credits, for any part of the year in which the business is no longer a qualified
business under paragraph (c), and thereafter. A business is not eligible for sales tax
benefits beginning with goods or services purchased or put to a taxable use on the day that
it is no longer a qualified business under paragraph (c). Property is not exempt from tax
under section 272.02, subdivision 64, for any taxes payable in the year following the year
in which the business is no longer a qualified business under paragraph (c), and thereafter.
new text end

new text begin (e) A business described in paragraph (a) that wants to resume eligibility for benefits
under section 469.315 must request that the commissioner of employment and economic
development determine the length of time that the business is ineligible for benefits. The
commissioner shall determine the length of ineligibility by applying the proportionate
level of performance under the agreement to the total duration of the zone as measured
from the date that the business subsidy agreement was executed. The length of time
must not be less than one full year for each tax benefit listed in section 469.315. The
commissioner of employment and economic development and the appropriate local
government officials shall consult with the commissioner of revenue to ensure that the
period of ineligibility includes at least one full year of benefits for each tax.
new text end

new text begin (f) The length of ineligibility determined under paragraph (e) must be applied by
reducing the zone duration for the property by the duration of the ineligibility.
new text end

new text begin (g) The zone duration of property that has been adjusted under paragraph (f) must
not be altered again to permit the business additional benefits under section 469.315.
new text end

new text begin (h) A business described in paragraph (a) becomes eligible for benefits available
under section 469.315 by entering into a new or amended business subsidy agreement
with the appropriate local government unit. The new or amended agreement must cover
a period beginning from the date of ineligibility under the original business subsidy
agreement, through the zone duration determined by the commissioner under paragraph
(f). No exemption of property taxes under section 272.02, subdivision 64, is available
under the new or amended agreement for property taxes due or paid before the date of
the final execution of the new or amended agreement, but unpaid taxes due after that
date need not be paid.
new text end

new text begin (i) A business that violates the terms of an agreement authorized under paragraph
(h) is permanently barred from seeking benefits under section 469.315 and is subject to
the repayment provisions under section 469.319 effective from the day that the business
ceases to operate as a qualified business in the zone under the second agreement.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from January 1, 2004.
For violations that occur before the day following final enactment, this section does not
apply if the business has repaid the benefits or the commissioner has granted a waiver.
new text end

Sec. 3.

new text begin [469.3192] PROHIBITION AGAINST AMENDMENTS TO BUSINESS
SUBSIDY AGREEMENT.
new text end

new text begin Except as authorized under section 469.3191, under no circumstance shall terms
of any agreement required as a condition for eligibility for benefits listed under section
469.315 be amended to change job creation, job retention, or wage goals included in
the agreement.
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 all agreements executed before, on, or after the effective date.
new text end

Sec. 4.

new text begin [469.3193] CERTIFICATION OF CONTINUING ELIGIBILITY FOR
JOBZ BENEFITS.
new text end

new text begin (a) By December 1 of each year, every qualified business must certify to the
commissioner of revenue, on a form prescribed by the commissioner of revenue, whether
it is in compliance with any agreement required as a condition for eligibility for benefits
listed under section 469.315. A business that fails to submit the certification, or any
business, including those still operating in the zone, that submits a certification that
the commissioner of revenue later determines materially misrepresents the business's
compliance with the agreement, is subject to the repayment provisions under section
469.319 from January 1 of the year in which the report is due or the date that the business
became subject to section 469.319, whichever is earlier. Any such business is permanently
barred from obtaining benefits under section 469.315. For purposes of this section, the bar
applies to an entity and also applies to any individuals or entities that have an ownership
interest of at least 20 percent of the entity.
new text end

new text begin (b) Before the sanctions under paragraph (a) apply to a business that fails to
submit the certification, the commissioner of revenue shall send notice to the business,
demanding that the certification be submitted within 30 days and advising the business
of the consequences for failing to do so. The commissioner of revenue shall notify
the commissioner of employment and economic development and the appropriate job
opportunity subzone administrator whenever notice is sent to a business under this
paragraph.
new text end

new text begin (c) The certification required under this section is public.
new text end

new text begin (d) The commissioner of revenue shall promptly notify the commissioner of
employment and economic development of all businesses that certify that they are not
in compliance with the terms of their business subsidy agreement and all businesses
that fail to file the certification.
new text end

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 3

STATE AUDITOR AND JOBZ

Section 1.

Minnesota Statutes 2007 Supplement, section 268.19, subdivision 1, is
amended to read:


Subdivision 1.

Use of data.

(a) Except as provided by this section, data gathered
from any person under the administration of the Minnesota Unemployment Insurance Law
are private data on individuals or nonpublic data not on individuals as defined in section
13.02, subdivisions 9 and 12, and may not be disclosed except according to a district court
order or section 13.05. A subpoena is not considered a district court order. These data
may be disseminated to and used by the following agencies without the consent of the
subject of the data:

(1) state and federal agencies specifically authorized access to the data by state
or federal law;

(2) any agency of any other state or any federal agency charged with the
administration of an unemployment insurance program;

(3) any agency responsible for the maintenance of a system of public employment
offices for the purpose of assisting individuals in obtaining employment;

(4) the public authority responsible for child support in Minnesota or any other
state in accordance with section 256.978;

(5) human rights agencies within Minnesota that have enforcement powers;

(6) the Department of Revenue to the extent necessary for its duties under Minnesota
laws;

(7) public and private agencies responsible for administering publicly financed
assistance programs for the purpose of monitoring the eligibility of the program's
recipients;

(8) the Department of Labor and Industry and the Division of Insurance Fraud
Prevention in the Department of Commerce for uses consistent with the administration of
their duties under Minnesota law;

(9) local and state welfare agencies for monitoring the eligibility of the data subject
for assistance programs, or for any employment or training program administered by those
agencies, whether alone, in combination with another welfare agency, or in conjunction
with the department or to monitor and evaluate the statewide Minnesota family investment
program by providing data on recipients and former recipients of food stamps or food
support, cash assistance under chapter 256, 256D, 256J, or 256K, child care assistance
under chapter 119B, or medical programs under chapter 256B, 256D, or 256L;

(10) local and state welfare agencies for the purpose of identifying employment,
wages, and other information to assist in the collection of an overpayment debt in an
assistance program;

(11) local, state, and federal law enforcement agencies for the purpose of ascertaining
the last known address and employment location of an individual who is the subject of
a criminal investigation;

(12) the United States Citizenship and Immigration Services has access to data on
specific individuals and specific employers provided the specific individual or specific
employer is the subject of an investigation by that agency;

(13) the Department of Health for the purposes of epidemiologic investigations; deleted text beginand
deleted text end

(14) the Department of Corrections for the purpose of postconfinement employment
tracking of individuals who had been committed to the custody of the commissioner
of correctionsdeleted text begin.deleted text endnew text begin; and
new text end

new text begin (15) the state auditor to the extent necessary to conduct audits of job opportunity
building zones as required under section 469.3201.
new text end

(b) Data on individuals and employers that are collected, maintained, or used by
the department in an investigation under section 268.182 are confidential as to data
on individuals and protected nonpublic data not on individuals as defined in section
13.02, subdivisions 3 and 13, and must not be disclosed except under statute or district
court order or to a party named in a criminal proceeding, administrative or judicial, for
preparation of a defense.

(c) Data gathered by the department in the administration of the Minnesota
unemployment insurance program must not be made the subject or the basis for any
suit in any civil proceedings, administrative or judicial, unless the action is initiated by
the department.

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2006, section 270B.15, is amended to read:


270B.15 DISCLOSURE TO LEGISLATIVE AUDITORnew text begin AND STATE
AUDITOR
new text end.

new text begin (a) new text endReturns and return information must be disclosed to the legislative auditor to the
extent necessary for the legislative auditor to carry out sections 3.97 to 3.979.

new text begin (b) The commissioner must disclose return information, including the report
required under section 289A.12, subdivision 15, to the state auditor to the extent necessary
to conduct audits of job opportunity building zones as required under section 469.3201.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2006, section 289A.12, is amended by adding a subdivision
to read:


new text begin Subd. 15. new text end

new text begin Report of job opportunity zone benefits; penalty for failure to file
report.
new text end

new text begin (a) By October 15 of each year, every qualified business, as defined under section
469.310, subdivision 11, must file with the commissioner, on a form prescribed by the
commissioner, a report listing the tax benefits under section 469.315 received by the
business for the previous year.
new text end

new text begin (b) The commissioner shall send notice to each business that fails to timely submit
the report required under paragraph (a). The notice shall demand that the business submit
the report within 60 days. Where good cause exists, the commissioner may extend
the period for submitting the report as long as a request for extension is filed by the
business before the expiration of the 60-day period. The commissioner shall notify the
commissioner of the Department of Employment and Economic Development and the
appropriate job opportunity subzone administrator whenever notice is sent to a business
under this paragraph.
new text end

new text begin (c) A business that fails to submit the report as required under paragraph (b) is no
longer a qualified business under section 469.310, subdivision 11, and is subject to the
repayment provisions of section 469.319.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with reports required to be
filed October 15, 2008.
new text end

Sec. 4.

Minnesota Statutes 2006, section 469.3201, is amended to read:


469.3201 deleted text beginJOBZ EXPENDITURE LIMITATIONS; AUDITSdeleted text endnew text begin STATE
AUDITOR; AUDITS OF JOB OPPORTUNITY BUILDING ZONES AND
BUSINESS SUBSIDY AGREEMENTS
new text end.

The deleted text beginTax Increment Financing, Investment and Finance Division of thedeleted text end Office of the
State Auditor must annually audit the creation and operation of all job opportunity building
zones and business subsidy agreements entered into under Minnesota Statutes, sections
469.310 to 469.320.new text begin To the extent necessary to perform this audit, the state auditor may
request from the commissioner of revenue tax return information of taxpayers who are
eligible to receive tax benefits authorized under section 469.315. To the extent necessary
to perform this audit, the state auditor may request from the commissioner of employment
and economic development wage detail report information required under section 268.044
of taxpayers eligible to receive tax benefits authorized under section 469.315.
new text end

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 4

REGIONAL EMERGING BUSINESS INVESTMENT TAX CREDIT

Section 1.

new text begin [116J.8746] REGIONAL EMERGING BUSINESS INVESTMENT
TAX CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For the purposes of this section, the following terms
have the meanings given:
new text end

new text begin (1) "qualifying small business" means a business that:
new text end

new text begin (i) for a business with five or more employees, pays wages and benefits, measured
on a full-time equivalent basis, to 75 percent or more of its employees in excess of the first
five employees, equal to 110 percent of the federal poverty level for a family of four;
new text end

new text begin (ii) is engaged in, or is committed to engage in, biotechnology, technology,
manufacturing, agriculture, processing or assembling products, conducting research and
development, or developing a new product or business process;
new text end

new text begin (iii) is not engaged in real estate development, insurance, banking, lobbying, political
consulting, wholesale or retail trade, leisure, hospitality, construction, or professional
services provided by attorneys, accountants, business consultants, physicians, or health
care consultants;
new text end

new text begin (iv) has its headquarters in Minnesota;
new text end

new text begin (v) employs at least 51 percent of the business's employees in Minnesota;
new text end

new text begin (vi) has less than 100 employees;
new text end

new text begin (vii) has less than $2,000,000 in annual gross sales receipts for the previous year;
new text end

new text begin (viii) is not a subsidiary or an affiliate of a business which employs more than 100
employees or has total gross sales receipts for the previous year of more than $......,
computed by aggregating all of the employees and gross sales receipts of the business
entities affiliated with the business;
new text end

new text begin (ix) has not previously received more than $2,000,000 in private equity investments;
and
new text end

new text begin (x) has not previously received more than $1,000,000 in investments that have
qualified for and received tax credits under this section; and
new text end

new text begin (2) "regional investment fund" means a pooled investment fund that:
new text end

new text begin (i) invests in qualifying small businesses located in the region of the state that is the
focus of the fund;
new text end

new text begin (ii) is organized as a limited liability company or other pass-through entity; and
new text end

new text begin (iii) has no fewer than five separate investors, each not owning more than 25 percent
of the outstanding ownership interests in the fund. For purposes of determining the number
of investors and the ownership interest of an investor under this clause, the ownership
interests of an investor include those of the investor's spouse, children, and siblings, and
any of the investor's corporations, partnerships, and trusts in which the investor has a
controlling equity interest or in which the investor exercises management control.
new text end

new text begin Subd. 2. 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 chapter 290 for qualifying investments made in the year by a qualifying regional
investment fund. The credit equals 25 percent of the taxpayer's investment made in the
fund, but not to exceed the lesser of:
new text end

new text begin (1) the liability for tax under chapter 290, including the applicable alternative
minimum tax, but excluding the minimum fee under section 290.0922; and
new text end

new text begin (2) the amount of the certificate provided to the taxpayer by the fund under
subdivision 4.
new text end

new text begin Subd. 3. new text end

new text begin Qualifying regional investment fund requirements. new text end

new text begin (a) To be certified as
a qualifying regional investment fund for purposes of this section, a regional investment
fund must:
new text end

new text begin (1) have a minimum of two-thirds of the regional investment fund's members,
shareholders, or partners be residents of the region that is the focus of the fund; and
new text end

new text begin (2) allocate at least 60 percent of the funds it invests, or plans to invest, to qualified
small businesses within the region.
new text end

new text begin (b) Investments from other regional investment funds into the qualified small
business shall count toward the allocation in paragraph (a), clause (2).
new text end

new text begin (c) new text end new text begin Investments in the fund may consist of equity investments or notes that pay
interest or other fixed amounts, or any combination of both, as the fund's governing body
determines appropriate.
new text end

new text begin Subd. 4. new text end

new text begin Certification of funds. new text end

new text begin (a) Regional investment funds may apply to the
commissioner of employment and economic development for certification as a qualified
regional investment fund. The application must be in the form and made under the
procedures specified by the commissioner.
new text end

new text begin (b) The commissioner may certify up to 20 funds. Certifications shall be awarded
in the order of qualifying applications received. Of the 20 funds, the commissioner may
certify no more than three funds that seek business investment opportunities that may
qualify for and receive tax credits under this section in more than 15 Minnesota counties,
no more than five funds that seek business investment opportunities that may qualify for
and receive tax credits under this section in the metropolitan area, as defined in section
473.121, subdivision 2, and no more than three funds that seek business investment
opportunities that may qualify for and receive tax credits under this subdivision in the
same region of the state.
new text end

new text begin (c) new text end new text begin The commissioner may provide certificates entitling investors in a certified
fund to credits under this provision of up to $....... for each fund upon receipt of a report
from the fund showing evidence of compliance with the agreement under subdivision 5,
including investment in a qualifying small business. The commissioner may not issue a
total amount of certificates for all funds of more than $....... per year in fiscal year 2009. If
less than $....... a year is spent, the remaining funds may be carried over to the following
two fiscal years. Certificates may only be issued for investments made by qualified funds
in qualifying small businesses located in the region in which the fund operates.
new text end

new text begin Subd. 5. new text end

new text begin Fund requirements. new text end

new text begin The commissioner of employment and economic
development shall enter into an agreement with each of the qualifying regional investment
funds certified under subdivision 4. Each agreement must include a provision requiring
the qualifying regional investment fund to report on the employment figures, wages,
and benefits paid by the businesses in which investments are made, or are planned to
be made, and a provision stating the specific manner in which the regional investment
fund agrees to satisfy the requirement to allocate at least 60 percent of its investments to
qualified small businesses within the region. The commissioner shall define "region"
for the purposes of this section.
new text end

new text begin Subd. 6. new text end

new text begin Limitations. new text end

new text begin The taxpayer must claim the credit in the same tax year
for which the fund receives the tax credit certificate under subdivision 4. The credit is
allowed only for investments made in qualifying regional investment funds after the
fund is certified by the commissioner of employment and economic development under
subdivision 4.
new text end

new text begin Subd. 7. new text end

new text begin Statement of credit share. new text end

new text begin Each fund must provide to each investor
a statement indicating the investor's share of the credit certified to the fund under
subdivision 4, based on the investor's pro rata investment in the fund at the time of the
investment in the qualified small business.
new text end

new text begin Subd. 8. new text end

new text begin Carryover. new text end

new text begin If the amount of the credit under this section for any taxable
year exceeds the amount reached under subdivision 2, clause (1), the excess is a credit
carryover to each of the ten succeeding taxable years. The entire amount of the excess
unused credit for the taxable year must be carried first to the earliest of the taxable years
to which the credit may be carried. The amount of the unused credit that may be added
under this subdivision may not exceed the taxpayer's liability for tax, less the credit for
the taxable year.
new text end

new text begin Subd. 9. new text end

new text begin False applications. new text end

new text begin (a) A taxpayer who has received a credit under this act
for an investment in a regional investment fund forfeits any unused credit if:
new text end

new text begin (1) the regional investment fund does not meet the conditions of subdivision 3; or
new text end

new text begin (2) the small business invested in by the fund does not meet the conditions in
subdivision 1.
new text end

new text begin (b) Any credits taken on a tax return shall be returned to the commissioner of
revenue as an underpayment of tax, if:
new text end

new text begin (1) the regional investment fund does not meet the conditions of subdivision 3; or
new text end

new text begin (2) the small business invested in by the fund does not meet the conditions in
subdivision 1.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008, for taxable years
beginning after December 31, 2007, and only applies to investments made after the fund
has been certified by the commissioner of employment and economic development.
new text end

Sec. 2.

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 Regional emerging business investment tax credit. new text end

new text begin A taxpayer is
allowed a credit as determined under section 116J.8746 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 July 1, 2008, for taxable years
beginning after December 31, 2007, and only applies to investments made after the fund
has been certified by the commissioner of employment and economic development.
new text end