2000 Minnesota Statutes

     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. 

    (b) "Tax liability" means the tax liability under sections 
 290.02, 290.0921, and 290.0922, subdivision 1, paragraph (a), 
 after any other credits. 

    (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. 

    HIST: 1998 c 389 art 12 s 7; 1Sp1998 c 3 s 4