SF 402

as introduced - 90th Legislature (2017 - 2018) Posted on 01/27/2017 08:58am

A bill for an act
relating to taxation; providing an equity and opportunity in education tax credit;
amending Minnesota Statutes 2016, sections 290.0131, by adding a subdivision;
290.0133, by adding a subdivision; 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 2016, section 290.0131, is amended by adding a subdivision
to read:

new text begin Subd. 14. new text end

new text begin Equity and opportunity donations to qualified foundations. new text end

new text begin The amount
of the deduction under section 170 of the Internal Revenue Code that represents contributions
to a qualified foundation under section 290.0693 is an addition.
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, 2017.
new text end

Sec. 2.

Minnesota Statutes 2016, section 290.0133, is amended by adding a subdivision
to read:

new text begin Subd. 15. new text end

new text begin Equity and opportunity donations to qualified foundations. new text end

new text begin The amount
of the deduction under section 170 of the Internal Revenue Code that represents contributions
to a qualified foundation under section 290.0693 is an addition.
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, 2017.
new text end

Sec. 3.

new text begin [290.0693] EQUITY AND OPPORTUNITY IN EDUCATION TAX CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Eligible student" means a student who:
new text end

new text begin (1) resides in Minnesota;
new text end

new text begin (2) is a member of a household whose total annual income during the year prior to initial
receipt of a qualified grant, without consideration of the benefits under this program, does
not exceed an amount equal to two times the income standard used to qualify for a
reduced-price meal under the National School Lunch Program, as specified in United States
Code, title 42, section 1758; and
new text end

new text begin (3) either:
new text end

new text begin (i) attended a public, nonpublic, or charter school in the semester preceding initial receipt
of a qualified grant;
new text end

new text begin (ii) is starting school in Minnesota for the first time; or
new text end

new text begin (iii) previously received a qualified grant under this section.
new text end

new text begin (c) "Equity and opportunity in education donation" means a donation to a qualified
foundation that makes qualified grants.
new text end

new text begin (d) "Qualified school" means a school operated in Minnesota that is either:
new text end

new text begin (1) a nonpublic elementary or secondary school in Minnesota wherein a resident may
legally fulfill the state's compulsory attendance laws and that is not operated for profit;
new text end

new text begin (2) a charter elementary or secondary school in Minnesota that has at least 30 percent
of its students who qualify for a reduced-price meal under the National School Lunch
Program; or
new text end

new text begin (3) public or nonpublic preschool serving children ages 3 to 5.
new text end

new text begin (e) "Qualified foundation" means a nonprofit organization granted an exemption from
the federal income tax described in section 501(c)(3) of the Internal Revenue Code that
complies with the requirements of the equity and opportunity in education tax credit. Two
or more qualified schools can form a qualified foundation.
new text end

new text begin (f) "Qualified grant" means a grant from a qualified foundation for:
new text end

new text begin (1) qualified scholarships to a qualified student for tuition to attend a qualified school;
or
new text end

new text begin (2) a qualified charter school for use in support of the school's mission of educating
eligible students in academics, arts, or athletics, including transportation.
new text end

new text begin (g) "Qualified scholarship" means a payment to or on behalf of the parent or guardian
of a qualified student for payment of tuition at a qualified school. A qualified scholarship
must not exceed an amount greater than 70 percent of the state average general education
revenue under section 126C.10, subdivision 1, per pupil unit.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An individual or corporate taxpayer is allowed a credit
against the tax due under this chapter equal to 80 percent of the amount donated to a qualified
foundation during the taxable year. No credit is allowed if the taxpayer designates a specific
child as the beneficiary of the contribution.
new text end

new text begin (b) A taxpayer must provide a copy of the receipt provided by the qualified foundation
when claiming the credit for the donation.
new text end

new text begin (c) The credit is limited to the liability for tax under this chapter, including the tax
imposed by sections 290.0921 and 290.0922.
new text end

new text begin (d) If the amount of the credit under this subdivision for any taxable year exceeds the
limitations under paragraph (c), the excess is a credit carryover to each of the five 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 paragraph may not exceed the
taxpayer's liability for tax, less the credit for the taxable year. No credit may be carried to
a taxable year more than five years after the taxable year in which the credit was earned.
new text end

new text begin Subd. 3. new text end

new text begin Application for credit certificate. new text end

new text begin (a) A taxpayer must apply to the
commissioner for an equity and opportunity in education tax credit certificate.
new text end

new text begin (b) The commissioner must not issue a tax credit certificate for an amount greater than
the limits under subdivision 2.
new text end

new text begin (c) The credit certificates under this section must be made available on a first-come,
first-served basis until the maximum statewide credit amount of $80,000,000 has been
reached.
new text end

new text begin Subd. 4. new text end

new text begin Responsibilities of qualified foundations. new text end

new text begin (a) Each qualified foundation that
receives donations directly from taxpayers under this section must:
new text end

new text begin (1) notify the commissioner of its intent to participate in this program and, for purposes
of determining the maximums under subdivision 3, the type of qualified schools who receive
grants or the type of qualified schools attended by qualified students who receive qualified
scholarships from that foundation;
new text end

new text begin (2) demonstrate to the commissioner that it has been granted an exemption from the
federal income tax as an organization described in section 501(c)(3) of the Internal Revenue
Code;
new text end

new text begin (3) provide a receipt or verification on a form approved by the commissioner to taxpayers
for donations and commitments made to qualified foundations;
new text end

new text begin (4) conduct criminal background checks on all of its employees and board members and
exclude from employment or governance any individuals that might reasonably pose a risk
to the appropriate use of contributed funds;
new text end

new text begin (5) demonstrate its financial accountability by:
new text end

new text begin (i) submitting a financial information report for the organization that complies with
uniform financial accounting standards established by the commissioner and conducted by
a certified public accountant; and
new text end

new text begin (ii) having the auditor certify that the report is free of material misstatements;
new text end

new text begin (6) demonstrate its financial viability, if they are to receive donations of $50,000 or more
during the school year, by filing financial information with the commissioner prior to
September 1 of each year that demonstrates the financial viability of the qualified foundation;
new text end

new text begin (7) consistent with paragraph (c), use amounts received as donations to provide qualified
scholarships or make qualified grants within one calendar year from the September 1
following the date of receiving the donation; and
new text end

new text begin (8) ensure that a qualified school that receives qualified grants or enrolls eligible students:
new text end

new text begin (i) complies with all health and safety laws or codes that apply to nonpublic schools;
new text end

new text begin (ii) holds a valid occupancy permit if required by its municipality;
new text end

new text begin (iii) certifies that it adheres to the provisions of United States Code, title 42, section
1981; and
new text end

new text begin (iv) provides academic accountability to parents of students in the program by regularly
reporting to the parents on the student's progress.
new text end

new text begin (b) A qualified foundation that receives donations directly from taxpayers under this
program must report to the commissioner by June 1 of each year the following information
prepared by a certified public accountant regarding its grants in the previous calendar year:
new text end

new text begin (1) the total number and total dollar amount of donations from taxpayers received during
the previous calendar year; and
new text end

new text begin (2) the total number and total dollar amount of qualified scholarships or qualified grants
awarded during the previous calendar year.
new text end

new text begin (c) The foundation may use up to seven percent of the amounts received as donations
for reasonable administrative expenses, including but not limited to fund-raising, scholarship
tracking, and reporting requirements.
new text end

new text begin (d) If the commissioner decides to bar a qualified foundation from the program for failure
to comply with the requirements in paragraph (a), clauses (1) to (8), the qualified foundation
must notify taxpayers who have donated to the qualified foundation in writing within 30
days.
new text end

new text begin Subd. 5. new text end

new text begin Responsibilities of commissioner. new text end

new text begin (a) The commissioner must prescribe a
standardized format for a receipt to be issued by a qualified foundation to a taxpayer to
indicate the value of a donation received.
new text end

new text begin (b) The commissioner must prescribe a standardized format for qualified foundations
to report the information required under subdivision 4.
new text end

new text begin (c) The commissioner must post on the department's Web site the names and addresses
of qualified foundations and regularly update the names and addresses of any qualified
foundations that have been barred from participating in the program.
new text end

new text begin (d) The commissioner may conduct either a financial review or audit of a qualified
foundation upon finding evidence of fraud or intentional misreporting.
new text end

new text begin (e) The commissioner may bar a qualified foundation from participating in the program
if the commissioner establishes that the qualified foundation has intentionally and
substantially failed to comply with the requirements in subdivision 4. If the commissioner
determines that a qualified foundation should be barred from the program, the commissioner
must notify the qualified foundation within 60 days of that determination.
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, 2017.
new text end