SF 2186

as introduced - 90th Legislature (2017 - 2018) Posted on 03/20/2018 09:37am

A bill for an act
relating to taxation; income; providing tax credits to encourage charitable
contributions; establishing an endow Minnesota program; requiring reports;
appropriating money; amending Minnesota Statutes 2016, sections 290.0131, by
adding a subdivision; 290.0133, by adding a subdivision; 290.06, by adding a
subdivision; 297I.20, 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 Endow Minnesota donations. new text end

new text begin The amount of the deduction allowed under
section 170 of the Internal Revenue Code that represents donations to an endow Minnesota
community foundation under section 290.06, subdivision 37, 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, 2016.
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 Endow Minnesota donations. new text end

new text begin The amount of the deduction allowed under
section 170 of the Internal Revenue Code that represents donations to an endow Minnesota
community foundation under section 290.06, subdivision 37, 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, 2016.
new text end

Sec. 3.

Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to
read:

new text begin Subd. 37. new text end

new text begin Endow Minnesota tax credit. new text end

new text begin (a) For purposes of this subdivision, the
definitions in section 290.0693 apply.
new text end

new text begin (b) A qualified taxpayer is allowed a credit against the tax imposed under subdivisions
1 and 2c for qualified contributions made to an endow Minnesota community foundation
in the taxable year. The credit equals the amount and applies to the taxable year indicated
on the certificate provided to the qualified taxpayer under section 290.0693, but the maximum
credit in any taxable year is $25,000.
new text end

new text begin (c) Each pass-through entity must provide each taxpayer a statement indicating the
taxpayer's share of the credit amount certified to the pass-through entity based on its share
of the pass-through entity's income in the taxable year of the qualified contribution.
new text end

new text begin (d) The credit under this subdivision is limited to the liability for tax. "Liability for tax,"
for purposes of this subdivision, means the tax imposed under subdivisions 1 and 2c for the
taxable year, reduced by the sum of the nonrefundable credits allowed under this chapter.
new text end

new text begin (e) For a corporation that is a partner in a partnership, the credit allowed for the taxable
year is limited to the lesser of:
new text end

new text begin (1) the amount determined under paragraph (c) for the taxable year; or
new text end

new text begin (2) an amount, separately computed with respect to the corporation's interest in the trade,
business, or entity, equal to the amount of tax attributable to that portion of taxable income
that is allocable or apportionable to the corporation's interest in the trade, business, or entity.
new text end

new text begin (f) If the amount of the credit determined under this subdivision for any taxable year
exceeds the limitation under paragraph (d), the excess is a credit carryover to each of the
15 succeeding taxable years. The entire amount of the excess unused credit for the taxable
year is 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 that may be added under this paragraph is limited to the taxpayer's liability
or tax, less the credit for the 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, 2017, and before January 1, 2032, except that credit carryovers are allowed to be applied
against liability through taxable years ending before January 1, 2047.
new text end

Sec. 4.

new text begin [290.0693] ENDOW MINNESOTA PROGRAM.
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) "Endow Minnesota community foundation" means an entity under sections 501(c)(3),
509(a)(1), and 170(b)(1)(a)(vi) of the Internal Revenue Code that is certified by the Minnesota
Council on Foundations as meeting the following requirements:
new text end

new text begin (1) is organized by articles of incorporation in the state of Minnesota and serves the state
of Minnesota, or one or more Minnesota counties or municipalities, or is organized by
articles of incorporation in the state of North Dakota or Wisconsin and serves a metropolitan
statistical area that includes one or more Minnesota counties;
new text end

new text begin (2) is comprised of permanent, component funds established by multiple separate donors;
new text end

new text begin (3) supports broad-based charitable interests;
new text end

new text begin (4) is directed by a board of directors that is comprised of community representatives
and is independent in that it is not subject to the control of another entity;
new text end

new text begin (5) actively engages in charitable activities including, but not limited to, supporting two
or more unaffiliated tax-exempt organizations through grants or other professionally accepted
means of charitable support, and serving in leadership roles on important community issues;
new text end

new text begin (6) complies with the Minnesota Council on Foundations' guidelines for membership
by a community foundation and subscribes to the principles of grantmaking established by
the Minnesota Council on Foundations, or is certified by the national Council on Foundations
to comply with national standards for community foundations; and
new text end

new text begin (7) has complied with endow Minnesota reporting and data privacy requirements under
subdivisions 4 and 5.
new text end

new text begin (c) "Endowment gift" means an irrevocable contribution to a permanent endowment
held by an endow Minnesota qualified community foundation and includes but is not limited
to designated funds established on behalf of another tax-exempt organization, unrestricted
endowment contributions, and contributions for donor-advised funds.
new text end

new text begin (d) "Metropolitan statistical area" means an area delineated by the United States Office
of Management and Budget in OMB Bulletin No. 13-01, dated February 28, 2013.
new text end

new text begin (e) "Qualified contribution" means an endowment gift of at least $5,000 made to an
endow Minnesota community foundation for a permanent endowment fund established to
substantially benefit charitable causes in this state, and that is a charitable gift as defined
in section 170(c) of the Internal Revenue Code.
new text end

new text begin (f) "Qualified taxpayer" means an individual, estate, trust, insurance company, or
corporation.
new text end

new text begin Subd. 2. new text end

new text begin Endow Minnesota tax credit; limitations; allocation; applications. new text end

new text begin (a) A
qualified taxpayer is eligible for a credit equal to 25 percent of the qualified contribution
made to an endow Minnesota community foundation. The commissioner must not allocate
more than $4,000,000 in credits for each taxable year beginning after December 31, 2017,
and before January 1, 2032.
new text end

new text begin (b) $300,000 each taxable year is allocated to credits for qualified contributions of
$30,000 or less. Any portion of a taxable year's credits that is reserved for qualified
contributions of $30,000 or less that is not allocated by August 31 of the taxable years is
available for allocation to other credit applications beginning September 1.
new text end

new text begin (c) The commissioner must not allocate more than $25,000 in credits for a taxable year
to a qualified taxpayer for the taxpayer's qualified contributions to all endow Minnesota
community foundations in the taxable year.
new text end

new text begin (d) The commissioner must not allocate more than $750,000 in credits for a taxable year
for qualified contributions to a single endow Minnesota community foundation. If the full
amount of tax credits for a taxable year is not allocated by September 1 of a calendar year,
the limit on qualified contributions to a single endow Minnesota community foundation in
this paragraph does not apply to that taxable year.
new text end

new text begin (e) Any portion of a taxable year's credits that is not allocated by the commissioner does
not cancel and may be carried forward to subsequent taxable years until all credits have
been allocated.
new text end

new text begin (f) Applications for tax credits for 2018 must be made available on the department's
Web site by November 1, 2017. Applications for subsequent years must be made available
by November 1 of the preceding year.
new text end

new text begin (g) To receive a credit allocation, a qualified taxpayer must apply to the commissioner
for tax credits. The commissioner must begin accepting applications on January 1, and tax
credits must be allocated to qualified taxpayers in the order that the tax credit request
applications are filed with the department. The commissioner must approve or reject tax
credit request applications within 15 days of receiving the application. The contribution
specified in the application must be made within 60 days of the allocation of the credits. If
the contribution is not made within 60 days, the credit allocation is canceled and available
for reallocation. A qualified taxpayer that fails to contribute as specified in the application,
within 60 days of allocation of the credits, must notify the commissioner of the failure to
contribute within five business days of the expiration of the 60-day contribution period.
new text end

new text begin (h) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. If two or more qualified taxpayers file
tax credit request applications on the same day, and the aggregate amount of credit allocation
claims exceeds the aggregate limit of credits under this section or the lesser amount of
credits that remain unallocated on that day, then the credits must be allocated among the
qualified taxpayers who filed on that day on a pro rata basis with respect to the amounts
claimed. The pro rata allocation for any one qualified taxpayer is the product obtained by
multiplying a fraction, the numerator of which is the amount of the credit allocation claim
filed on behalf of a qualified taxpayer and the denominator of which is the total of all credit
allocation claims filed on behalf of all applicants on that day, by the amount of credits that
remain unallocated on that day for the taxable year.
new text end

new text begin (i) A qualified taxpayer must notify the commissioner when a contribution for which
credits were allocated has been made, and the taxable year in which the contribution was
made. After receiving notification that the contribution was made, the commissioner must
issue credit certificates for the taxable year in which the contribution was made to the
qualified taxpayer.
new text end

new text begin Subd. 3. new text end

new text begin Program administration. new text end

new text begin The commissioner may issue a request for proposals
for a program administrator. The commissioner may select an administrator with knowledge
and experience working with community foundations and collaborate with the administrator
in operating the program in this section and in preparing the report required in subdivision
6.
new text end

new text begin Subd. 4. new text end

new text begin Reporting by endow Minnesota community foundations. new text end

new text begin By February 1 of
each year, each endow Minnesota community foundation that received a contribution that
qualified for a credit must submit an annual report to the commissioner. Reports must be
made in the form required by the commissioner and include any information the
commissioner deems necessary for preparing the report to the legislature required in
subdivision 6.
new text end

new text begin Subd. 5. new text end

new text begin Data privacy. new text end

new text begin Data contained in an application submitted to the commissioner
under subdivision 2 are nonpublic data, or private data on individuals, as defined in section
13.02, subdivision 9 or 12.
new text end

new text begin Subd. 6. new text end

new text begin Biennial report to legislature. new text end

new text begin Beginning in 2019, the commissioner must
biennially report by March 15 to the chairs and ranking minority members of the legislative
committees having jurisdiction over taxes and economic and community development in
the senate and the house of representatives, in compliance with sections 3.195 and 3.197,
on the tax credits issued under this section. The report must include:
new text end

new text begin (1) information about the amount of credits claimed, changes in the dollar value of
community foundation endowments, number of designated funds established to support
tax-exempt organizations other than community foundations, and changes in the dollar value
of grants made by community foundations;
new text end

new text begin (2) descriptive information about each eligible community foundation's priorities for
community and economic development as outlined in the foundation's strategic plan and
progress toward addressing those priorities in the context of growth in the foundation's
endowment stimulated by the tax credit; and
new text end

new text begin (3) any other information relevant to evaluating the effect of the credit.
new text end

new text begin The report due in 2019 must also report on the need and feasibility of expanding the tax
credit to apply to permanent endowment contributions to any tax-exempt organization
located in Minnesota.
new text end

new text begin Subd. 7. new text end

new text begin Appropriation. new text end

new text begin $50,000 in fiscal year 2018 and $50,000 in fiscal year 2019
are appropriated from the general fund to the commissioner of revenue for the purpose of
administering the endow Minnesota program and credits under this section. The commissioner
may solicit and accept contributions from government or private entities to administer or
evaluate the endow Minnesota program. The base amount for fiscal year 2032 is $0.
new text end

new text begin Subd. 8. new text end

new text begin Sunset. new text end

new text begin This section expires for taxable years beginning after December 31,
2031, except that reporting requirements under subdivisions 3 and 5 remain in effect through
2032, and the appropriation in subdivision 6 remains in effect through fiscal year 2033.
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 2016, section 297I.20, is amended by adding a subdivision to
read:

new text begin Subd. 4. new text end

new text begin Endow Minnesota tax credit. new text end

new text begin (a) For purposes of this subdivision, the
definitions in section 290.0693 apply.
new text end

new text begin (b) A qualified taxpayer is allowed a credit against the premiums tax imposed under this
chapter for qualified contributions made to an endow Minnesota community foundation in
the taxable year. The credit equals the amount and applies to the taxable year indicated on
the certificate provided to the qualified taxpayer under section 290.0693, but the maximum
credit in any taxable year is $25,000. This credit does not affect the calculation of police
and fire aid under section 69.021.
new text end

new text begin (c) The credit under this subdivision is limited to the liability for tax. "Liability for tax,"
for purposes of this subdivision, means the tax imposed under this chapter for the taxable
year reduced by the sum of the nonrefundable credits allowed under this chapter.
new text end

new text begin (d) If the amount of the credit determined under this subdivision for any taxable year
exceeds the limitation under paragraph (c), the excess is a credit carryover to each of the
15 succeeding taxable years. The entire amount of the excess unused credit for the taxable
year is 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 that may be added under this paragraph is limited to the taxpayer's liability
or tax, less the credit for the 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, 2017, and before January 1, 2032, except that credit carryovers are allowed to be applied
against liability through taxable years ending before January 1, 2047.
new text end