Bill Text: MN SF2355 | 2011-2012 | 87th Legislature | Engrossed
Bill Title: Small business investment credit provisions modification
Spectrum: Moderate Partisan Bill (Republican 4-1)
Status: (Introduced - Dead) 2012-03-22 - Author added Miller [SF2355 Detail]
Download: Minnesota-2011-SF2355-Engrossed.html
1.2relating to taxation; small business investment credit; providing a higher credit
1.3percentage for certain investments; amending Minnesota Statutes 2010, section
1.4116J.8737, subdivisions 5, 7, 9; Minnesota Statutes 2011 Supplement, section
1.5116J.8737, subdivisions 1, 2.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2011 Supplement, section 116J.8737, subdivision 1,
1.8is amended to read:
1.9 Subdivision 1. Definitions. (a) For the purposes of this section, the following terms
1.10have the meanings given.
1.11(b) "Qualified small business" means a business that has been certified by the
1.12commissioner under subdivision 2.
1.13(c) "Qualified investor" means an investor who has been certified by the
1.14commissioner under subdivision 3.
1.15(d) "Qualified fund" means a pooled angel investment network fund that has been
1.16certified by the commissioner under subdivision 4.
1.17(e) "Qualified investment" means a cash investment in a qualified small business
1.18of a minimum of:
1.19(1) $10,000 in a calendar year by a qualified investor; or
1.20(2) $30,000 in a calendar year by a qualified fund.
1.21A qualified investment must be made in exchange for common stock, a partnership
1.22or membership interest, preferred stock, debt with mandatory conversion to equity, or an
1.23equivalent ownership interest as determined by the commissioner.
1.24(f) "Family" means a family member within the meaning of the Internal Revenue
1.25Code, section 267(c)(4).
2.1(g) "Pass-through entity" means a corporation that for the applicable taxable year is
2.2treated as an S corporation or a general partnership, limited partnership, limited liability
2.3partnership, trust, or limited liability company and which for the applicable taxable year is
2.4not taxed as a corporation under chapter 290.
2.5(h) "Intern" means a student of an accredited institution of higher education, or a
2.6former student who has graduated in the past six months from an accredited institution
2.7of higher education, who is employed by a qualified small business in a nonpermanent
2.8position for a duration of nine months or less that provides training and experience in the
2.9primary business activity of the business.
2.10(i) "Qualified greater Minnesota business" means a qualified small business that
2.11is also certified by the commissioner as a qualified greater Minnesota business under
2.12subdivision 2, paragraph (h).
2.13EFFECTIVE DATE.This section is effective the day following final enactment.
2.14 Sec. 2. Minnesota Statutes 2011 Supplement, section 116J.8737, subdivision 2, is
2.15amended to read:
2.16 Subd. 2. Certification of qualified small businesses. (a) Businesses may apply
2.17to the commissioner for certification as a qualified small business for a calendar year.
2.18In addition, the application may request certification as a qualified greater Minnesota
2.19business under paragraph (h). The application must be in the form and be made under the
2.20procedures specified by the commissioner, accompanied by an application fee of $150.
2.21Application fees are deposited in the small business investment tax credit administration
2.22account in the special revenue fund. The application for certification for 2010 must
2.23be made available on the department's Web site by August 1, 2010. Applications for
2.24subsequent years' certification must be made available on the department's Web site by
2.25November 1 of the preceding year.
2.26(b) Within 30 days of receiving an application for certification under this
2.27subdivision, the commissioner must either certify the business as satisfying the conditions
2.28required of a qualified small business or a qualified greater Minnesota business, request
2.29additional information from the business, or reject the application for certification. If
2.30the commissioner requests additional information from the business, the commissioner
2.31must either certify the business or reject the application within 30 days of receiving the
2.32additional information. If the commissioner neither certifies the business nor rejects
2.33the application within 30 days of receiving the original application or within 30 days of
2.34receiving the additional information requested, whichever is later, then the application is
3.1deemed rejected, and the commissioner must refund the $150 application fee. A business
3.2that applies for certification and is rejected may reapply.
3.3(c) To receive certification as a qualified small business, a business must satisfy
3.4all of the following conditions:
3.5(1) the business has its headquarters in Minnesota;
3.6(2) at least 51 percent of the business's employees are employed in Minnesota, and
3.751 percent of the business's total payroll is paid or incurred in the state;
3.8(3) the business is engaged in, or is committed to engage in, innovation in Minnesota
3.9in one of the following as its primary business activity:
3.10(i) using proprietary technology to add value to a product, process, or service in a
3.11qualified high-technology field;
3.12(ii) researching or developing a proprietary product, process, or service in a qualified
3.13high-technology field; or
3.14(iii) researching, developing, or producing a new proprietary technology for use in
3.15the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;
3.16(4) other than the activities specifically listed in clause (3), the business is not
3.17engaged in real estate development, insurance, banking, lending, lobbying, political
3.18consulting, information technology consulting, wholesale or retail trade, leisure,
3.19hospitality, transportation, construction, ethanol production from corn, or professional
3.20services provided by attorneys, accountants, business consultants, physicians, or health
3.21care consultants;
3.22(5) the business has fewer than 25 employees;
3.23(6) the business must pay its employees annual wages of at least 175 percent of the
3.24federal poverty guideline for the year for a family of four and must pay its interns annual
3.25wages of at least 175 percent of the federal minimum wage used for federally covered
3.26employers, except that this requirement must be reduced proportionately for employees
3.27and interns who work less than full-time, and does not apply to an executive, officer, or
3.28member of the board of the business, or to any employee who owns, controls, or holds
3.29power to vote more than 20 percent of the outstanding securities of the business;
3.30(7) the business has not been in operation for more than ten years;
3.31(8) the business has not previously received private equity investments of more
3.32than $4,000,000; and
3.33 (9) the business is not an entity disqualified under section80A.50 , paragraph (b),
3.34clause (3).
4.1(d) In applying the limit under paragraph (c), clause (5), the employees in all
4.2members of the unitary business, as defined in section290.17, subdivision 4 , must be
4.3included.
4.4(e) In order for a qualified investment in a business to be eligible for tax credits, the
4.5business must have applied for and received certification for the calendar year in which
4.6the investment was made prior to the date on which the qualified investment was made.
4.7(f) The commissioner must maintain a list of qualified small businesses and qualified
4.8greater Minnesota businesses certified under this subdivision for the calendar year and
4.9make the list accessible to the public on the department's Web site.
4.10(g) For purposes of this subdivision, the following terms have the meanings given:
4.11(1) "qualified high-technology field" includes aerospace, agricultural processing,
4.12renewable energy, energy efficiency and conservation, environmental engineering, food
4.13technology, cellulosic ethanol, information technology, materials science technology,
4.14nanotechnology, telecommunications, biotechnology, medical device products,
4.15pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar
4.16fields;and
4.17(2) "proprietary technology" means the technical innovations that are unique and
4.18legally owned or licensed by a business and includes, without limitation, those innovations
4.19that are patented, patent pending, a subject of trade secrets, or copyrighted.; and
4.20(3) "greater Minnesota" means the area of Minnesota located outside of the
4.21metropolitan area as defined in section 473.121, subdivision 2.
4.22(h) To receive certification as a qualified greater Minnesota business, a business must
4.23satisfy all of the requirements of paragraph (c) and must satisfy the following conditions:
4.24(1) the business has its headquarters in greater Minnesota; and
4.25(2) at least 51 percent of the business's employees are employed in greater Minnesota,
4.26and 51 percent of the business's total payroll is paid or incurred in greater Minnesota.
4.27EFFECTIVE DATE.This section is effective the day following final enactment.
4.28 Sec. 3. Minnesota Statutes 2010, section 116J.8737, subdivision 5, is amended to read:
4.29 Subd. 5. Credit allowed. (a) A qualified investor or qualified fund is eligible for a
4.30credit equal to:
4.31(1) 25 percent of the qualified investment in a qualified small business; or
4.32(2) 40 percent of the qualified investment in a qualified greater Minnesota business.
4.33Investments made by a pass-through entity qualify for a credit only if the entity is a
4.34qualified fund. The commissioner must not allocate more than $11,000,000 in credits to
5.1qualified investors or qualified funds for taxable years beginning after December 31,
5.22009, and before January 1, 2011, and must not allocate more than $12,000,000 in credits
5.3per year for taxable years beginning after December 31, 2010, and before January 1,
5.42015. Any portion of a taxable year's credits that is not allocated by the commissioner
5.5does not cancel and may be carried forward to subsequent taxable years until all credits
5.6have been allocated.
5.7(b) The commissioner may not allocate more than a total maximum amount in credits
5.8for a taxable year to a qualified investor for the investor's cumulative qualified investments
5.9as an individual qualified investor and as an investor in a qualified fund; for married
5.10couples filing joint returns the maximum is $250,000, and for all other filers the maximum
5.11is $125,000. The commissioner may not allocate more than a total of $1,000,000 in credits
5.12over all taxable years for qualified investments in any one qualified small business.
5.13(c) The commissioner may not allocate a credit to a qualified investor either as an
5.14individual qualified investor or as an investor in a qualified fund if the investor receives
5.15more than 50 percent of the investor's gross annual income from the qualified small
5.16business in which the qualified investment is proposed. A member of the family of an
5.17individual disqualified by this paragraph is not eligible for a credit under this section. For
5.18a married couple filing a joint return, the limitations in this paragraph apply collectively
5.19to the investor and spouse. For purposes of determining the ownership interest of an
5.20investor under this paragraph, the rules under section 267(c) and 267(e) of the Internal
5.21Revenue Code apply.
5.22(d) Applications for tax credits for 2010 must be made available on the department's
5.23Web site by September 1, 2010, and the department must begin accepting applications
5.24by September 1, 2010. Applications for subsequent years must be made available by
5.25November 1 of the preceding year.
5.26(e) Qualified investors and qualified funds must apply to the commissioner for tax
5.27credits. Tax credits must be allocated to qualified investors or qualified funds in the order
5.28that the tax credit request applications are filed with the department. The commissioner
5.29must approve or reject tax credit request applications within 15 days of receiving the
5.30application. The investment specified in the application must be made within 60 days of
5.31the allocation of the credits. If the investment is not made within 60 days, the credit
5.32allocation is canceled and available for reallocation. A qualified investor or qualified fund
5.33that fails to invest as specified in the application, within 60 days of allocation of the
5.34credits, must notify the commissioner of the failure to invest within five business days of
5.35the expiration of the 60-day investment period.
6.1(f) All tax credit request applications filed with the department on the same day must
6.2be treated as having been filed contemporaneously. If two or more qualified investors or
6.3qualified funds file tax credit request applications on the same day, and the aggregate
6.4amount of credit allocation claims exceeds the aggregate limit of credits under this section
6.5or the lesser amount of credits that remain unallocated on that day, then the credits must
6.6be allocated among the qualified investors or qualified funds who filed on that day on a
6.7pro rata basis with respect to the amounts claimed. The pro rata allocation for any one
6.8qualified investor or qualified fund is the product obtained by multiplying a fraction,
6.9the numerator of which is the amount of the credit allocation claim filed on behalf of
6.10a qualified investor and the denominator of which is the total of all credit allocation
6.11claims filed on behalf of all applicants on that day, by the amount of credits that remain
6.12unallocated on that day for the taxable year.
6.13(g) A qualified investor or qualified fund, or a qualified small business acting on their
6.14behalf, must notify the commissioner when an investment for which credits were allocated
6.15has been made, and the taxable year in which the investment was made. A qualified fund
6.16must also provide the commissioner with a statement indicating the amount invested by
6.17each investor in the qualified fund based on each investor's share of the assets of the
6.18qualified fund at the time of the qualified investment. After receiving notification that the
6.19investment was made, the commissioner must issue credit certificates for the taxable year
6.20in which the investment was made to the qualified investor or, for an investment made by
6.21a qualified fund, to each qualified investor who is an investor in the fund. The certificate
6.22must state that the credit is subject to revocation if the qualified investor or qualified
6.23fund does not hold the investment in the qualified small business for at least three years,
6.24consisting of the calendar year in which the investment was made and the two following
6.25years. The three-year holding period does not apply if:
6.26(1) the investment by the qualified investor or qualified fund becomes worthless
6.27before the end of the three-year period;
6.28(2) 80 percent or more of the assets of the qualified small business is sold before
6.29the end of the three-year period;
6.30(3) the qualified small business is sold before the end of the three-year period; or
6.31(4) the qualified small business's common stock begins trading on a public exchange
6.32before the end of the three-year period.
6.33(h) The commissioner must notify the commissioner of revenue of credit certificates
6.34issued under this section.
6.35EFFECTIVE DATE.This section is effective the day following final enactment for
6.36taxable years beginning after December 31, 2011.
7.1 Sec. 4. Minnesota Statutes 2010, section 116J.8737, subdivision 7, is amended to read:
7.2 Subd. 7. Revocation of credits. (a) If the commissioner determines that a
7.3qualified investor or qualified fund did not meet the three-year holding period required in
7.4subdivision 5, paragraph (g), any credit allocated and certified to the investor or fund is
7.5revoked and must be repaid by the investor.
7.6(b) If the commissioner determines that a business did not meet the employment
7.7and payroll requirements in subdivision 2, paragraph (c), clause (2), or (h), clause (2), as
7.8applicable, in any of the five calendar years following the year in which an investment
7.9in the business that qualified for a tax credit under this section was made, the business
7.10must repay the following percentage of the credits allowed for qualified investments
7.11in the business:
7.20(c) The commissioner must notify the commissioner of revenue of every credit
7.21revoked and subject to full or partial repayment under this section.
7.22(d) For the repayment of credits allowed under this section and section290.0692 ,
7.23a qualified small business, qualified investor, or investor in a qualified fund must file an
7.24amended return with the commissioner of revenue and pay any amounts required to be
7.25repaid within 30 days after becoming subject to repayment under this section.
7.26EFFECTIVE DATE.This section is effective the day following final enactment.
7.27 Sec. 5. Minnesota Statutes 2010, section 116J.8737, subdivision 9, is amended to read:
7.28 Subd. 9. Report to legislature. Beginning in 2011, the commissioner must
7.29annually report by March 15 to the chairs and ranking minority members of the legislative
7.30committees having jurisdiction over taxes and economic development in the senate and
7.31the house of representatives, in compliance with sections3.195 and
3.197 , on the tax
7.32credits issued under this section. The report must include:
7.33(1) the number and amount of the credits issued;
7.34(2) the recipients of the credits;
7.35(3) for each qualified small business, its location, line of business, and if it received
7.36an investment resulting in certification of tax credits;
8.1(4) the total amount of investment in each qualified small business resulting in
8.2certification of tax credits;
8.3(5) for each qualified small business that received investments resulting in tax
8.4credits, the total amount of additional investment that did not qualify for the tax credit;
8.5(6) the number and amount of credits revoked under subdivision 7;
8.6(7) the number and amount of credits that are no longer subject to the three-year
8.7holding period because of the exceptions under subdivision 5, paragraph (g), clauses
8.8(1) to (4);and
8.9(8) the number of qualified small businesses that are women or minority-owned; and
8.10(9) any other information relevant to evaluating the effect of these credits.
1.3percentage for certain investments; amending Minnesota Statutes 2010, section
1.4116J.8737, subdivisions 5, 7, 9; Minnesota Statutes 2011 Supplement, section
1.5116J.8737, subdivisions 1, 2.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2011 Supplement, section 116J.8737, subdivision 1,
1.8is amended to read:
1.9 Subdivision 1. Definitions. (a) For the purposes of this section, the following terms
1.10have the meanings given.
1.11(b) "Qualified small business" means a business that has been certified by the
1.12commissioner under subdivision 2.
1.13(c) "Qualified investor" means an investor who has been certified by the
1.14commissioner under subdivision 3.
1.15(d) "Qualified fund" means a pooled angel investment network fund that has been
1.16certified by the commissioner under subdivision 4.
1.17(e) "Qualified investment" means a cash investment in a qualified small business
1.18of a minimum of:
1.19(1) $10,000 in a calendar year by a qualified investor; or
1.20(2) $30,000 in a calendar year by a qualified fund.
1.21A qualified investment must be made in exchange for common stock, a partnership
1.22or membership interest, preferred stock, debt with mandatory conversion to equity, or an
1.23equivalent ownership interest as determined by the commissioner.
1.24(f) "Family" means a family member within the meaning of the Internal Revenue
1.25Code, section 267(c)(4).
2.1(g) "Pass-through entity" means a corporation that for the applicable taxable year is
2.2treated as an S corporation or a general partnership, limited partnership, limited liability
2.3partnership, trust, or limited liability company and which for the applicable taxable year is
2.4not taxed as a corporation under chapter 290.
2.5(h) "Intern" means a student of an accredited institution of higher education, or a
2.6former student who has graduated in the past six months from an accredited institution
2.7of higher education, who is employed by a qualified small business in a nonpermanent
2.8position for a duration of nine months or less that provides training and experience in the
2.9primary business activity of the business.
2.10(i) "Qualified greater Minnesota business" means a qualified small business that
2.11is also certified by the commissioner as a qualified greater Minnesota business under
2.12subdivision 2, paragraph (h).
2.13EFFECTIVE DATE.This section is effective the day following final enactment.
2.14 Sec. 2. Minnesota Statutes 2011 Supplement, section 116J.8737, subdivision 2, is
2.15amended to read:
2.16 Subd. 2. Certification of qualified small businesses. (a) Businesses may apply
2.17to the commissioner for certification as a qualified small business for a calendar year.
2.18In addition, the application may request certification as a qualified greater Minnesota
2.19business under paragraph (h). The application must be in the form and be made under the
2.20procedures specified by the commissioner, accompanied by an application fee of $150.
2.21Application fees are deposited in the small business investment tax credit administration
2.22account in the special revenue fund. The application for certification for 2010 must
2.23be made available on the department's Web site by August 1, 2010. Applications for
2.24subsequent years' certification must be made available on the department's Web site by
2.25November 1 of the preceding year.
2.26(b) Within 30 days of receiving an application for certification under this
2.27subdivision, the commissioner must either certify the business as satisfying the conditions
2.28required of a qualified small business or a qualified greater Minnesota business, request
2.29additional information from the business, or reject the application for certification. If
2.30the commissioner requests additional information from the business, the commissioner
2.31must either certify the business or reject the application within 30 days of receiving the
2.32additional information. If the commissioner neither certifies the business nor rejects
2.33the application within 30 days of receiving the original application or within 30 days of
2.34receiving the additional information requested, whichever is later, then the application is
3.1deemed rejected, and the commissioner must refund the $150 application fee. A business
3.2that applies for certification and is rejected may reapply.
3.3(c) To receive certification as a qualified small business, a business must satisfy
3.4all of the following conditions:
3.5(1) the business has its headquarters in Minnesota;
3.6(2) at least 51 percent of the business's employees are employed in Minnesota, and
3.751 percent of the business's total payroll is paid or incurred in the state;
3.8(3) the business is engaged in, or is committed to engage in, innovation in Minnesota
3.9in one of the following as its primary business activity:
3.10(i) using proprietary technology to add value to a product, process, or service in a
3.11qualified high-technology field;
3.12(ii) researching or developing a proprietary product, process, or service in a qualified
3.13high-technology field; or
3.14(iii) researching, developing, or producing a new proprietary technology for use in
3.15the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;
3.16(4) other than the activities specifically listed in clause (3), the business is not
3.17engaged in real estate development, insurance, banking, lending, lobbying, political
3.18consulting, information technology consulting, wholesale or retail trade, leisure,
3.19hospitality, transportation, construction, ethanol production from corn, or professional
3.20services provided by attorneys, accountants, business consultants, physicians, or health
3.21care consultants;
3.22(5) the business has fewer than 25 employees;
3.23(6) the business must pay its employees annual wages of at least 175 percent of the
3.24federal poverty guideline for the year for a family of four and must pay its interns annual
3.25wages of at least 175 percent of the federal minimum wage used for federally covered
3.26employers, except that this requirement must be reduced proportionately for employees
3.27and interns who work less than full-time, and does not apply to an executive, officer, or
3.28member of the board of the business, or to any employee who owns, controls, or holds
3.29power to vote more than 20 percent of the outstanding securities of the business;
3.30(7) the business has not been in operation for more than ten years;
3.31(8) the business has not previously received private equity investments of more
3.32than $4,000,000; and
3.33 (9) the business is not an entity disqualified under section
3.34clause (3).
4.1(d) In applying the limit under paragraph (c), clause (5), the employees in all
4.2members of the unitary business, as defined in section
4.3included.
4.4(e) In order for a qualified investment in a business to be eligible for tax credits, the
4.5business must have applied for and received certification for the calendar year in which
4.6the investment was made prior to the date on which the qualified investment was made.
4.7(f) The commissioner must maintain a list of qualified small businesses and qualified
4.8greater Minnesota businesses certified under this subdivision for the calendar year and
4.9make the list accessible to the public on the department's Web site.
4.10(g) For purposes of this subdivision, the following terms have the meanings given:
4.11(1) "qualified high-technology field" includes aerospace, agricultural processing,
4.12renewable energy, energy efficiency and conservation, environmental engineering, food
4.13technology, cellulosic ethanol, information technology, materials science technology,
4.14nanotechnology, telecommunications, biotechnology, medical device products,
4.15pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar
4.16fields;
4.17(2) "proprietary technology" means the technical innovations that are unique and
4.18legally owned or licensed by a business and includes, without limitation, those innovations
4.19that are patented, patent pending, a subject of trade secrets, or copyrighted
4.20(3) "greater Minnesota" means the area of Minnesota located outside of the
4.21metropolitan area as defined in section 473.121, subdivision 2.
4.22(h) To receive certification as a qualified greater Minnesota business, a business must
4.23satisfy all of the requirements of paragraph (c) and must satisfy the following conditions:
4.24(1) the business has its headquarters in greater Minnesota; and
4.25(2) at least 51 percent of the business's employees are employed in greater Minnesota,
4.26and 51 percent of the business's total payroll is paid or incurred in greater Minnesota.
4.27EFFECTIVE DATE.This section is effective the day following final enactment.
4.28 Sec. 3. Minnesota Statutes 2010, section 116J.8737, subdivision 5, is amended to read:
4.29 Subd. 5. Credit allowed. (a) A qualified investor or qualified fund is eligible for a
4.30credit equal to:
4.31(1) 25 percent of the qualified investment in a qualified small business; or
4.32(2) 40 percent of the qualified investment in a qualified greater Minnesota business.
4.33Investments made by a pass-through entity qualify for a credit only if the entity is a
4.34qualified fund. The commissioner must not allocate more than $11,000,000 in credits to
5.1qualified investors or qualified funds for taxable years beginning after December 31,
5.22009, and before January 1, 2011, and must not allocate more than $12,000,000 in credits
5.3per year for taxable years beginning after December 31, 2010, and before January 1,
5.42015. Any portion of a taxable year's credits that is not allocated by the commissioner
5.5does not cancel and may be carried forward to subsequent taxable years until all credits
5.6have been allocated.
5.7(b) The commissioner may not allocate more than a total maximum amount in credits
5.8for a taxable year to a qualified investor for the investor's cumulative qualified investments
5.9as an individual qualified investor and as an investor in a qualified fund; for married
5.10couples filing joint returns the maximum is $250,000, and for all other filers the maximum
5.11is $125,000. The commissioner may not allocate more than a total of $1,000,000 in credits
5.12over all taxable years for qualified investments in any one qualified small business.
5.13(c) The commissioner may not allocate a credit to a qualified investor either as an
5.14individual qualified investor or as an investor in a qualified fund if the investor receives
5.15more than 50 percent of the investor's gross annual income from the qualified small
5.16business in which the qualified investment is proposed. A member of the family of an
5.17individual disqualified by this paragraph is not eligible for a credit under this section. For
5.18a married couple filing a joint return, the limitations in this paragraph apply collectively
5.19to the investor and spouse. For purposes of determining the ownership interest of an
5.20investor under this paragraph, the rules under section 267(c) and 267(e) of the Internal
5.21Revenue Code apply.
5.22(d) Applications for tax credits for 2010 must be made available on the department's
5.23Web site by September 1, 2010, and the department must begin accepting applications
5.24by September 1, 2010. Applications for subsequent years must be made available by
5.25November 1 of the preceding year.
5.26(e) Qualified investors and qualified funds must apply to the commissioner for tax
5.27credits. Tax credits must be allocated to qualified investors or qualified funds in the order
5.28that the tax credit request applications are filed with the department. The commissioner
5.29must approve or reject tax credit request applications within 15 days of receiving the
5.30application. The investment specified in the application must be made within 60 days of
5.31the allocation of the credits. If the investment is not made within 60 days, the credit
5.32allocation is canceled and available for reallocation. A qualified investor or qualified fund
5.33that fails to invest as specified in the application, within 60 days of allocation of the
5.34credits, must notify the commissioner of the failure to invest within five business days of
5.35the expiration of the 60-day investment period.
6.1(f) All tax credit request applications filed with the department on the same day must
6.2be treated as having been filed contemporaneously. If two or more qualified investors or
6.3qualified funds file tax credit request applications on the same day, and the aggregate
6.4amount of credit allocation claims exceeds the aggregate limit of credits under this section
6.5or the lesser amount of credits that remain unallocated on that day, then the credits must
6.6be allocated among the qualified investors or qualified funds who filed on that day on a
6.7pro rata basis with respect to the amounts claimed. The pro rata allocation for any one
6.8qualified investor or qualified fund is the product obtained by multiplying a fraction,
6.9the numerator of which is the amount of the credit allocation claim filed on behalf of
6.10a qualified investor and the denominator of which is the total of all credit allocation
6.11claims filed on behalf of all applicants on that day, by the amount of credits that remain
6.12unallocated on that day for the taxable year.
6.13(g) A qualified investor or qualified fund, or a qualified small business acting on their
6.14behalf, must notify the commissioner when an investment for which credits were allocated
6.15has been made, and the taxable year in which the investment was made. A qualified fund
6.16must also provide the commissioner with a statement indicating the amount invested by
6.17each investor in the qualified fund based on each investor's share of the assets of the
6.18qualified fund at the time of the qualified investment. After receiving notification that the
6.19investment was made, the commissioner must issue credit certificates for the taxable year
6.20in which the investment was made to the qualified investor or, for an investment made by
6.21a qualified fund, to each qualified investor who is an investor in the fund. The certificate
6.22must state that the credit is subject to revocation if the qualified investor or qualified
6.23fund does not hold the investment in the qualified small business for at least three years,
6.24consisting of the calendar year in which the investment was made and the two following
6.25years. The three-year holding period does not apply if:
6.26(1) the investment by the qualified investor or qualified fund becomes worthless
6.27before the end of the three-year period;
6.28(2) 80 percent or more of the assets of the qualified small business is sold before
6.29the end of the three-year period;
6.30(3) the qualified small business is sold before the end of the three-year period; or
6.31(4) the qualified small business's common stock begins trading on a public exchange
6.32before the end of the three-year period.
6.33(h) The commissioner must notify the commissioner of revenue of credit certificates
6.34issued under this section.
6.35EFFECTIVE DATE.This section is effective the day following final enactment for
6.36taxable years beginning after December 31, 2011.
7.1 Sec. 4. Minnesota Statutes 2010, section 116J.8737, subdivision 7, is amended to read:
7.2 Subd. 7. Revocation of credits. (a) If the commissioner determines that a
7.3qualified investor or qualified fund did not meet the three-year holding period required in
7.4subdivision 5, paragraph (g), any credit allocated and certified to the investor or fund is
7.5revoked and must be repaid by the investor.
7.6(b) If the commissioner determines that a business did not meet the employment
7.7and payroll requirements in subdivision 2, paragraph (c), clause (2), or (h), clause (2), as
7.8applicable, in any of the five calendar years following the year in which an investment
7.9in the business that qualified for a tax credit under this section was made, the business
7.10must repay the following percentage of the credits allowed for qualified investments
7.11in the business:
7.20(c) The commissioner must notify the commissioner of revenue of every credit
7.21revoked and subject to full or partial repayment under this section.
7.22(d) For the repayment of credits allowed under this section and section
7.23a qualified small business, qualified investor, or investor in a qualified fund must file an
7.24amended return with the commissioner of revenue and pay any amounts required to be
7.25repaid within 30 days after becoming subject to repayment under this section.
7.26EFFECTIVE DATE.This section is effective the day following final enactment.
7.27 Sec. 5. Minnesota Statutes 2010, section 116J.8737, subdivision 9, is amended to read:
7.28 Subd. 9. Report to legislature. Beginning in 2011, the commissioner must
7.29annually report by March 15 to the chairs and ranking minority members of the legislative
7.30committees having jurisdiction over taxes and economic development in the senate and
7.31the house of representatives, in compliance with sections
7.32credits issued under this section. The report must include:
7.33(1) the number and amount of the credits issued;
7.34(2) the recipients of the credits;
7.35(3) for each qualified small business, its location, line of business, and if it received
7.36an investment resulting in certification of tax credits;
8.1(4) the total amount of investment in each qualified small business resulting in
8.2certification of tax credits;
8.3(5) for each qualified small business that received investments resulting in tax
8.4credits, the total amount of additional investment that did not qualify for the tax credit;
8.5(6) the number and amount of credits revoked under subdivision 7;
8.6(7) the number and amount of credits that are no longer subject to the three-year
8.7holding period because of the exceptions under subdivision 5, paragraph (g), clauses
8.8(1) to (4);
8.9(8) the number of qualified small businesses that are women or minority-owned; and
8.10(9) any other information relevant to evaluating the effect of these credits.
