469.1732 Tax incentives within development zones.
Subdivision 1. Authority. A business that conducts business activity within a border city development zone designated under section 469.1731 may qualify for the property tax exemption under section 272.0212, the corporate franchise tax credit under subdivision 2, and the sales tax exemption under section 469.1734, subdivision 6.
Subd. 2. Border city zone credit. (a) A corporation may claim a credit against the tax imposed by sections 290.02, 290.0921, and 290.0922, subdivision 1, paragraph (a). The commissioner of revenue shall prescribe the method in which the credit may be claimed. This may include allowing the credit only as a separately processed claim for refund. The allowable credit is based on the tax liability attributable to business conducted within a zone, and may be equal to all or a portion of that liability, as determined by the city.
(c) The tax liability attributable to business conducted within a zone means the taxpayer's tax liability multiplied by a fraction:
(1) the numerator of which is:
(i) the ratio of the taxpayer's property factor under section 290.191 located in the border city development zone, for the taxable year over the property factor numerator determined under section 290.191, plus
(ii) the ratio of the taxpayer's payroll factor under section 290.191 located in the border city development zone, for the taxable year over the payroll factor numerator determined under section 290.191; and
(2) the denominator of which is two.
(d) Any portion of the taxpayer's tax liability that is attributable to illegal activity conducted in the zone must not be used to calculate a credit under this subdivision.
(e) The credit allowed under this subdivision continues through the taxable year in which the zone designation expires.
(f) To be eligible for a credit under this subdivision, the taxpayer must file an annual return under chapter 290.
(g) The credit allowed under this subdivision may not exceed the lesser of:
(1) the tax liability of the taxpayer for the taxable year; or
(2) the amount of the tax credit certificates received by the taxpayer from the city, less any tax credit certificates used under section 469.1734, subdivisions 4, 5, and 6.
Subd. 3. Phaseout at end of zone duration. During the last three years of the duration of a border city development zone, the available exemptions, subtractions, or credits are reduced by the following percentages for the taxes payable year or the taxable years that begin during:
(1) the calendar year that is two years before the final year of designation as a development zone, 25 percent;
(2) the calendar year that is immediately before the final year of designation as a development zone, 50 percent; and
(3) for the final calendar year of designation as a development zone, 75 percent.
Official Publication of the State of Minnesota
Revisor of Statutes