Minnesota Legislature
SF 2532
as introduced - 92nd Legislature (2021 - 2022) Posted on 05/16/2021 09:17am
Current Version - as introduced
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A bill for an act
relating to taxation; corporate franchise; applying a rate increase to certain
corporations; amending Minnesota Statutes 2020, sections 290.06, by adding a
subdivision; 290.068, subdivision 2; 290.0921, subdivisions 1, 8.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2020, section 290.06, is amended by adding a subdivision
to read:
new text begin Subd. 1b. new text end
new text begin Tax rate for high pay ratio corporations. new text end
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(a) For purposes of this subdivision,
the following terms have the meanings given:
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(1) "executive hourly compensation" means wages and any noncash amounts, including
benefits, paid or otherwise provided by a corporation in a taxable year to an executive or
officer, expressed as an hourly amount equal to the total annual compensation under this
clause, divided by:
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(i) 52 weeks; and
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(ii) 40 hours;
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(2) "pay ratio" means the ratio of:
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(i) the executive hourly compensation received by the corporation's highest paid executive
or officer in the taxable year; to
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(ii) the hourly wage of the corporation's lowest paid employee or contractor in the taxable
year; and
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(3) "high pay ratio corporation" means a corporation with a pay ratio of greater than 50
to one in a taxable year.
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(b) For a high pay ratio corporation, the tax rate imposed under subdivision 1 is increased
by the amounts in clauses (1) to (6). If the pay ratio is:
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(1) greater than 50 to one but not greater than 100 to one, one-half of one percentage
point;
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(2) greater than 100 to one but not greater than 200 to one, one percentage point;
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(3) greater than 200 to one but not greater than 300 to one, 2 percentage points;
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(4) greater than 300 to one but not greater than 400 to one, 3 percentage points;
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(5) greater than 400 to one but not greater than 500 to one, 4 percentage points; and
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(6) greater than 500 to one, 5 percentage points.
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new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for taxable years beginning after December
31, 2021.
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Sec. 2.
Minnesota Statutes 2020, section 290.068, subdivision 2, is amended to read:
Subd. 2.
Definitions.
For purposes of this section, the following terms have the meanings
given.
(a) "Qualified research expenses" means (i) qualified research expenses and basic research
payments as defined in section 41(b) and (e) of the Internal Revenue Code, except it does
not include expenses incurred for qualified research or basic research conducted outside
the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue Code; and
(ii) contributions to a nonprofit corporation established and operated pursuant to the
provisions of chapter 317A for the purpose of promoting the establishment and expansion
of business in this state, provided the contributions are invested by the nonprofit corporation
for the purpose of providing funds for small, technologically innovative enterprises in
Minnesota during the early stages of their development.
(b) "Qualified research" means qualified research as defined in section 41(d) of the
Internal Revenue Code, except that the term does not include qualified research conducted
outside the state of Minnesota.
(c) "Base amount" means base amount as defined in section 41(c) of the Internal Revenue
Code, except that the average annual gross receipts and aggregate gross receipts must be
calculated using Minnesota sales or receipts under section 290.191 and the definitions
contained in paragraphs (a) and (b) shall apply.
(d) "Liability for tax" means the sum of the tax imposed under section 290.06,
subdivisions 1new text begin , 1b,new text end and 2c, for the taxable year reduced by the sum of the nonrefundable
credits allowed under this chapter, on all of the entities required to be included on the
combined report of the unitary business.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for taxable years beginning after December
31, 2021.
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Sec. 3.
Minnesota Statutes 2020, section 290.0921, subdivision 1, is amended to read:
Subdivision 1.
Tax imposed.
In addition to the taxes computed under this chapter without
regard to this section, the franchise tax imposed on corporations includes a tax equal to the
excess, if any, for the taxable year of:
(1) 5.8 percent of Minnesota alternative minimum taxable income; over
(2) the tax imposed under section 290.06, deleted text begin subdivisiondeleted text end new text begin subdivisionsnew text end 1new text begin and 1bnew text end , without
regard to this section.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for taxable years beginning after December
31, 2021.
new text end
Sec. 4.
Minnesota Statutes 2020, section 290.0921, subdivision 8, is amended to read:
Subd. 8.
Carryover credit.
(a) A corporation is allowed a credit against qualified regular
tax for qualified alternative minimum tax previously paid. The credit is allowable only if
the corporation has no tax liability under this section for the taxable year and if the
corporation has an alternative minimum tax credit carryover from a previous year. The
credit allowable in a taxable year equals the lesser of
(1) the excess of the qualified regular tax for the taxable year over the amount computed
under subdivision 1, clause (1), for the taxable year or
(2) the carryover credit to the taxable year.
(b) For purposes of this subdivision, the following terms have the meanings given.
(1) "Qualified alternative minimum tax" equals the amount determined under subdivision
1 for the taxable year.
(2) "Qualified regular tax" means the tax imposed under section 290.06, deleted text begin subdivisiondeleted text end new text begin
subdivisionsnew text end 1new text begin and 1bnew text end .
(c) The qualified alternative minimum tax for a taxable year is an alternative minimum
tax credit carryover to each of the taxable years succeeding the taxable year. The entire
amount of the credit must be carried to the earliest taxable year to which the amount may
be carried. Any unused portion of the credit must be carried to the following taxable year.
No credit may be carried to a taxable year in which alternative minimum tax was paid.
(d) An acquiring corporation may carry over this credit from a transferor or distributor
corporation in a corporate acquisition. The provisions of section 381 of the Internal Revenue
Code apply in determining the amount of the carryover, if any.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for taxable years beginning after December
31, 2021.
new text end