Bill Text: MN SF776 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Equity and opportunity in education income tax credit establishment
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced - Dead) 2013-02-25 - Referred to Taxes [SF776 Detail]
Download: Minnesota-2013-SF776-Introduced.html
1.2relating to taxation; providing an equity and opportunity in education tax credit;
1.3amending Minnesota Statutes 2012, section 290.01, subdivisions 19a, 19c;
1.4proposing coding for new law in Minnesota Statutes, chapter 290.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2012, section 290.01, subdivision 19a, is amended to read:
1.7 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
1.8trusts, there shall be added to federal taxable income:
1.9 (1)(i) interest income on obligations of any state other than Minnesota or a political
1.10or governmental subdivision, municipality, or governmental agency or instrumentality
1.11of any state other than Minnesota exempt from federal income taxes under the Internal
1.12Revenue Code or any other federal statute; and
1.13 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
1.14Code, except:
1.15(A) the portion of the exempt-interest dividends exempt from state taxation under
1.16the laws of the United States; and
1.17(B) the portion of the exempt-interest dividends derived from interest income
1.18on obligations of the state of Minnesota or its political or governmental subdivisions,
1.19municipalities, governmental agencies or instrumentalities, but only if the portion of the
1.20exempt-interest dividends from such Minnesota sources paid to all shareholders represents
1.2195 percent or more of the exempt-interest dividends, including any dividends exempt
1.22under subitem (A), that are paid by the regulated investment company as defined in section
1.23851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
1.24defined in section 851(g) of the Internal Revenue Code, making the payment; and
2.1 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
2.2government described in section 7871(c) of the Internal Revenue Code shall be treated as
2.3interest income on obligations of the state in which the tribe is located;
2.4 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
2.5accrued within the taxable year under this chapter and the amount of taxes based on net
2.6income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state
2.7or to any province or territory of Canada, to the extent allowed as a deduction under
2.8section 63(d) of the Internal Revenue Code, but the addition may not be more than the
2.9amount by which the itemized deductions as allowed under section 63(d) of the Internal
2.10Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of
2.11the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C)
2.12and 63(c)(1)(E) of the Internal Revenue Code, minus any addition that would have been
2.13required under clause (21) if the taxpayer had claimed the standard deduction. For the
2.14purpose of this paragraph, the disallowance of itemized deductions under section 68 of
2.15the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise
2.16taxes are the last itemized deductions disallowed;
2.17 (3) the capital gain amount of a lump-sum distribution to which the special tax under
2.18section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
2.19 (4) the amount of income taxes paid or accrued within the taxable year under this
2.20chapter and taxes based on net income paid to any other state or any province or territory
2.21of Canada, to the extent allowed as a deduction in determining federal adjusted gross
2.22income. For the purpose of this paragraph, income taxes do not include the taxes imposed
2.23by sections290.0922, subdivision 1 , paragraph (b),
290.9727 ,
290.9728 , and
290.9729 ;
2.24 (5) the amount of expense, interest, or taxes disallowed pursuant to section290.10
2.25other than expenses or interest used in computing net interest income for the subtraction
2.26allowed under subdivision 19b, clause (1);
2.27 (6) the amount of a partner's pro rata share of net income which does not flow
2.28through to the partner because the partnership elected to pay the tax on the income under
2.29section 6242(a)(2) of the Internal Revenue Code;
2.30 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
2.31Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
2.32in the taxable year generates a deduction for depreciation under section 168(k) and the
2.33activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
2.34the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
2.35limited to excess of the depreciation claimed by the activity under section 168(k) over the
2.36amount of the loss from the activity that is not allowed in the taxable year. In succeeding
3.1taxable years when the losses not allowed in the taxable year are allowed, the depreciation
3.2under section 168(k) is allowed;
3.3 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
3.4Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
3.5Revenue Code of 1986, as amended through December 31, 2003;
3.6 (9) to the extent deducted in computing federal taxable income, the amount of the
3.7deduction allowable under section 199 of the Internal Revenue Code;
3.8 (10) for taxable years beginning before January 1, 2013, the exclusion allowed under
3.9section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
3.10(11) the amount of expenses disallowed under section 290.10, subdivision 2;
3.11 (12) for taxable years beginning before January 1, 2010, the amount deducted for
3.12qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
3.13the extent deducted from gross income;
3.14 (13) for taxable years beginning before January 1, 2010, the amount deducted for
3.15certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
3.16of the Internal Revenue Code, to the extent deducted from gross income;
3.17(14) the additional standard deduction for property taxes payable that is allowable
3.18under section 63(c)(1)(C) of the Internal Revenue Code;
3.19(15) the additional standard deduction for qualified motor vehicle sales taxes
3.20allowable under section 63(c)(1)(E) of the Internal Revenue Code;
3.21(16) discharge of indebtedness income resulting from reacquisition of business
3.22indebtedness and deferred under section 108(i) of the Internal Revenue Code;
3.23(17) the amount of unemployment compensation exempt from tax under section
3.2485(c) of the Internal Revenue Code;
3.25(18) changes to federal taxable income attributable to a net operating loss that the
3.26taxpayer elected to carry back for more than two years for federal purposes but for which
3.27the losses can be carried back for only two years under section290.095, subdivision
3.2811, paragraph (c);
3.29(19) to the extent included in the computation of federal taxable income in taxable
3.30years beginning after December 31, 2010, the amount of disallowed itemized deductions,
3.31but the amount of disallowed itemized deductions plus the addition required under clause
3.32(2) may not be more than the amount by which the itemized deductions as allowed under
3.33section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction
3.34as defined in section 63(c) of the Internal Revenue Code, disregarding the amounts
3.35allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code, and
4.1reduced by any addition that would have been required under clause (21) if the taxpayer
4.2had claimed the standard deduction:
4.3(i) the amount of disallowed itemized deductions is equal to the lesser of:
4.4(A) three percent of the excess of the taxpayer's federal adjusted gross income
4.5over the applicable amount; or
4.6(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
4.7taxpayer under the Internal Revenue Code for the taxable year;
4.8(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a
4.9married individual filing a separate return. Each dollar amount shall be increased by
4.10an amount equal to:
4.11(A) such dollar amount, multiplied by
4.12(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
4.13Revenue Code for the calendar year in which the taxable year begins, by substituting
4.14"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
4.15(iii) the term "itemized deductions" does not include:
4.16(A) the deduction for medical expenses under section 213 of the Internal Revenue
4.17Code;
4.18(B) any deduction for investment interest as defined in section 163(d) of the Internal
4.19Revenue Code; and
4.20(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
4.21theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
4.22Code or for losses described in section 165(d) of the Internal Revenue Code;
4.23(20) to the extent included in federal taxable income in taxable years beginning after
4.24December 31, 2010, the amount of disallowed personal exemptions for taxpayers with
4.25federal adjusted gross income over the threshold amount:
4.26(i) the disallowed personal exemption amount is equal to the dollar amount of the
4.27personal exemptions claimed by the taxpayer in the computation of federal taxable income
4.28multiplied by the applicable percentage;
4.29(ii) "applicable percentage" means two percentage points for each $2,500 (or
4.30fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
4.31year exceeds the threshold amount. In the case of a married individual filing a separate
4.32return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
4.33no event shall the applicable percentage exceed 100 percent;
4.34(iii) the term "threshold amount" means:
4.35(A) $150,000 in the case of a joint return or a surviving spouse;
4.36(B) $125,000 in the case of a head of a household;
5.1(C) $100,000 in the case of an individual who is not married and who is not a
5.2surviving spouse or head of a household; and
5.3(D) $75,000 in the case of a married individual filing a separate return; and
5.4(iv) the thresholds shall be increased by an amount equal to:
5.5(A) such dollar amount, multiplied by
5.6(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
5.7Revenue Code for the calendar year in which the taxable year begins, by substituting
5.8"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;and
5.9(21) to the extent deducted in the computation of federal taxable income, for taxable
5.10years beginning after December 31, 2010, and before January 1, 2013, the difference
5.11between the standard deduction allowed under section 63(c) of the Internal Revenue Code
5.12and the standard deduction allowed for 2011 and 2012 under the Internal Revenue Code as
5.13amended through December 1, 2010; and
5.14(22) the amount of the deduction under section 170 of the Internal Revenue Code
5.15that represents contributions to a qualified foundation for which a credit is received under
5.16section 290.0693.
5.17EFFECTIVE DATE.This section is effective for taxable years beginning after
5.18December 31, 2012.
5.19 Sec. 2. Minnesota Statutes 2012, section 290.01, subdivision 19c, is amended to read:
5.20 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
5.21there shall be added to federal taxable income:
5.22 (1) the amount of any deduction taken for federal income tax purposes for income,
5.23excise, or franchise taxes based on net income or related minimum taxes, including but not
5.24limited to the tax imposed under section290.0922 , paid by the corporation to Minnesota,
5.25another state, a political subdivision of another state, the District of Columbia, or any
5.26foreign country or possession of the United States;
5.27 (2) interest not subject to federal tax upon obligations of: the United States, its
5.28possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
5.29state, any of its political or governmental subdivisions, any of its municipalities, or any
5.30of its governmental agencies or instrumentalities; the District of Columbia; or Indian
5.31tribal governments;
5.32 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
5.33Revenue Code;
6.1 (4) the amount of any net operating loss deduction taken for federal income tax
6.2purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
6.3deduction under section 810 of the Internal Revenue Code;
6.4 (5) the amount of any special deductions taken for federal income tax purposes
6.5under sections 241 to 247 and 965 of the Internal Revenue Code;
6.6 (6) losses from the business of mining, as defined in section290.05, subdivision 1 ,
6.7clause (a), that are not subject to Minnesota income tax;
6.8 (7) the amount of any capital losses deducted for federal income tax purposes under
6.9sections 1211 and 1212 of the Internal Revenue Code;
6.10 (8) the exempt foreign trade income of a foreign sales corporation under sections
6.11921(a) and 291 of the Internal Revenue Code;
6.12 (9) the amount of percentage depletion deducted under sections 611 through 614 and
6.13291 of the Internal Revenue Code;
6.14 (10) for certified pollution control facilities placed in service in a taxable year
6.15beginning before December 31, 1986, and for which amortization deductions were elected
6.16under section 169 of the Internal Revenue Code of 1954, as amended through December
6.1731, 1985, the amount of the amortization deduction allowed in computing federal taxable
6.18income for those facilities;
6.19 (11) the amount of any deemed dividend from a foreign operating corporation
6.20determined pursuant to section290.17, subdivision 4 , paragraph (g). The deemed dividend
6.21shall be reduced by the amount of the addition to income required by clauses (20), (21),
6.22(22), and (23);
6.23 (12) the amount of a partner's pro rata share of net income which does not flow
6.24through to the partner because the partnership elected to pay the tax on the income under
6.25section 6242(a)(2) of the Internal Revenue Code;
6.26 (13) the amount of net income excluded under section 114 of the Internal Revenue
6.27Code;
6.28 (14) any increase in subpart F income, as defined in section 952(a) of the Internal
6.29Revenue Code, for the taxable year when subpart F income is calculated without regard to
6.30the provisions of Division C, title III, section 303(b) of Public Law 110-343;
6.31 (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
6.32and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
6.33has an activity that in the taxable year generates a deduction for depreciation under
6.34section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
6.35that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
6.36under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
7.1depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
7.2amount of the loss from the activity that is not allowed in the taxable year. In succeeding
7.3taxable years when the losses not allowed in the taxable year are allowed, the depreciation
7.4under section 168(k)(1)(A) and (k)(4)(A) is allowed;
7.5 (16) 80 percent of the amount by which the deduction allowed by section 179 of the
7.6Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
7.7Revenue Code of 1986, as amended through December 31, 2003;
7.8 (17) to the extent deducted in computing federal taxable income, the amount of the
7.9deduction allowable under section 199 of the Internal Revenue Code;
7.10 (18) for taxable years beginning before January 1, 2013, the exclusion allowed under
7.11section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
7.12 (19) the amount of expenses disallowed under section290.10, subdivision 2 ;
7.13 (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
7.14accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
7.15of a corporation that is a member of the taxpayer's unitary business group that qualifies
7.16as a foreign operating corporation. For purposes of this clause, intangible expenses and
7.17costs include:
7.18 (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
7.19use, maintenance or management, ownership, sale, exchange, or any other disposition of
7.20intangible property;
7.21 (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
7.22transactions;
7.23 (iii) royalty, patent, technical, and copyright fees;
7.24 (iv) licensing fees; and
7.25 (v) other similar expenses and costs.
7.26For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
7.27applications, trade names, trademarks, service marks, copyrights, mask works, trade
7.28secrets, and similar types of intangible assets.
7.29This clause does not apply to any item of interest or intangible expenses or costs paid,
7.30accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
7.31to such item of income to the extent that the income to the foreign operating corporation
7.32is income from sources without the United States as defined in subtitle A, chapter 1,
7.33subchapter N, part 1, of the Internal Revenue Code;
7.34 (21) except as already included in the taxpayer's taxable income pursuant to clause
7.35(20), any interest income and income generated from intangible property received or
8.1accrued by a foreign operating corporation that is a member of the taxpayer's unitary
8.2group. For purposes of this clause, income generated from intangible property includes:
8.3 (i) income related to the direct or indirect acquisition, use, maintenance or
8.4management, ownership, sale, exchange, or any other disposition of intangible property;
8.5 (ii) income from factoring transactions or discounting transactions;
8.6 (iii) royalty, patent, technical, and copyright fees;
8.7 (iv) licensing fees; and
8.8 (v) other similar income.
8.9For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
8.10applications, trade names, trademarks, service marks, copyrights, mask works, trade
8.11secrets, and similar types of intangible assets.
8.12This clause does not apply to any item of interest or intangible income received or accrued
8.13by a foreign operating corporation with respect to such item of income to the extent that
8.14the income is income from sources without the United States as defined in subtitle A,
8.15chapter 1, subchapter N, part 1, of the Internal Revenue Code;
8.16 (22) the dividends attributable to the income of a foreign operating corporation that
8.17is a member of the taxpayer's unitary group in an amount that is equal to the dividends
8.18paid deduction of a real estate investment trust under section 561(a) of the Internal
8.19Revenue Code for amounts paid or accrued by the real estate investment trust to the
8.20foreign operating corporation;
8.21 (23) the income of a foreign operating corporation that is a member of the taxpayer's
8.22unitary group in an amount that is equal to gains derived from the sale of real or personal
8.23property located in the United States;
8.24 (24) for taxable years beginning before January 1, 2010, the additional amount
8.25allowed as a deduction for donation of computer technology and equipment under section
8.26170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income;and
8.27(25) discharge of indebtedness income resulting from reacquisition of business
8.28indebtedness and deferred under section 108(i) of the Internal Revenue Code.; and
8.29(26) the amount of the deduction under section 170 of the Internal Revenue Code
8.30that represents contributions to a qualified foundation for which a credit is received under
8.31section 290.0693.
8.32EFFECTIVE DATE.This section is effective for taxable years beginning after
8.33December 31, 2012.
9.1 Sec. 3. [290.0693] EQUITY AND OPPORTUNITY IN EDUCATION TAX
9.2CREDIT.
9.3 Subdivision 1. Definitions. (a) For purposes of this section, the following terms
9.4have the meanings given.
9.5(b) "Eligible student" means a student who:
9.6(1) resides in Minnesota;
9.7(2) is a member of a household whose total annual income during the year prior
9.8to initial receipt of a qualified grant, without consideration of the benefits under this
9.9program, does not exceed an amount equal to 1.5 times the income standard used to
9.10qualify for a reduced-price meal under the National School Lunch Program, as specified in
9.11United States Code, title 42, section 1758; and
9.12(3) either:
9.13(i) attended a public, nonpublic, or charter school in the semester preceding initial
9.14receipt of a qualified grant;
9.15(ii) is starting school in Minnesota for the first time; or
9.16(iii) previously received a qualified grant under this section.
9.17(c) "Equity and opportunity in education donation" means a donation to a qualified
9.18foundation that makes qualified grants.
9.19(d) "Qualified school" means a school operated in Minnesota that is either:
9.20(1) a nonpublic elementary or secondary school in Minnesota wherein a resident
9.21may legally fulfill the state's compulsory attendance laws, that is not operated for profit,
9.22and that adheres to the provisions of United States Code, title 42, section 1981;
9.23(2) a charter elementary or secondary school in Minnesota that has at least 30
9.24percent of its students who qualify for a reduced-price meal under the National School
9.25Lunch Program; or
9.26(3) public or nonpublic preschool evaluated to be of high quality and serving
9.27children ages 3 to 5.
9.28(e) "Qualified foundation" means a nonprofit organization granted an exemption
9.29from the federal income tax described in section 501(c)(3) of the Internal Revenue Code
9.30that complies with the requirements of the equity and opportunity in education tax credit.
9.31Two or more qualified schools can form a qualified foundation.
9.32(f) "Qualified grant" means a grant from a qualified foundation for:
9.33(1) qualified scholarships to a qualified student for tuition to attend a qualified
9.34school; or
9.35(2) a qualified charter school for use in support of the school's mission of educating
9.36eligible students in academics, arts, or athletics, including transportation.
10.1(g) "Qualified scholarship" means a payment to or on behalf of the parent or guardian
10.2of a qualified student for payment of tuition at a qualified school. A qualified scholarship
10.3must not exceed an amount greater than 70 percent of the state average general education
10.4revenue under section 126C.10, subdivision 1, per pupil unit.
10.5 Subd. 2. Credit allowed. (a) An individual or corporate taxpayer is allowed a
10.6credit against the tax due under this chapter equal to 80 percent of the amount donated
10.7to a qualified foundation during the taxable year. No credit is allowed if the taxpayer
10.8designates a specific child as the beneficiary of the contribution.
10.9(b) The maximum annual credit allowed is:
10.10(1) $20,000 for married joint filers;
10.11(2) $10,000 for other individual filers; and
10.12(3) $100,000 for corporate filers.
10.13(c) A taxpayer must provide a copy of the receipt provided by the qualified
10.14foundation when claiming the credit for the donation.
10.15(d) The credit is limited to the liability for tax under this chapter, including the tax
10.16imposed by sections 290.0921 and 290.0922.
10.17(e) If the amount of the credit under this subdivision for any taxable year exceeds
10.18the limitations under paragraph (d), the excess is a credit carryover to each of the five
10.19succeeding taxable years. The entire amount of the excess unused credit for the taxable year
10.20must be carried first to the earliest of the taxable years to which the credit may be carried.
10.21The amount of the unused credit that may be added under this paragraph may not exceed
10.22the taxpayer's liability for tax, less the credit for the taxable year. No credit may be carried
10.23to a taxable year more than five years after the taxable year in which the credit was earned.
10.24 Subd. 3. Application for credit certificate. (a) A taxpayer must apply to the
10.25commissioner for an equity and opportunity in education tax credit certificate.
10.26(b) The commissioner must not issue a tax credit certificate for an amount greater
10.27than the limits under subdivision 2.
10.28 Subd. 4. Responsibilities of qualified foundations. (a) Each qualified foundation
10.29that receives donations directly from taxpayers under this section must:
10.30(1) notify the commissioner of its intent to participate in this program and, for
10.31purposes of determining the maximums under subdivision 3, the type of qualified schools
10.32who receive grants or the type of qualified schools attended by qualified students who
10.33receive qualified scholarships from that foundation;
10.34(2) demonstrate to the commissioner that it has been granted an exemption from
10.35the federal income tax as an organization described in section 501(c)(3) of the Internal
10.36Revenue Code;
11.1(3) provide a receipt or verification on a form approved by the commissioner to
11.2taxpayers for donations and commitments made to qualified foundations;
11.3(4) conduct criminal background checks on all of its employees and board members
11.4and exclude from employment or governance any individuals that might reasonably pose a
11.5risk to the appropriate use of contributed funds;
11.6(5) demonstrate its financial accountability by:
11.7(i) submitting a financial information report for the organization that complies with
11.8uniform financial accounting standards established by the commissioner and conducted by
11.9a certified public accountant; and
11.10(ii) having the auditor certify that the report is free of material misstatements;
11.11(6) demonstrate its financial viability, if they are to receive donations of $50,000 or
11.12more during the school year, by filing financial information with the commissioner prior
11.13to September 1 of each year that demonstrates the financial viability of the qualified
11.14foundation;
11.15(7) consistent with paragraph (c), use amounts received as donations to provide
11.16qualified scholarships or make qualified grants within one calendar year from the
11.17September 1 following the date of receiving the donation; and
11.18(8) ensure that a qualified school that receives qualified grants or enrolls eligible
11.19students:
11.20(i) complies with all health and safety laws or codes that apply to nonpublic schools;
11.21(ii) holds a valid occupancy permit if required by its municipality;
11.22(iii) certifies that it adheres to the provisions of United States Code, title 42, section
11.231981; and
11.24(iv) provides academic accountability to parents of students in the program by
11.25regularly reporting to the parents on the student's progress.
11.26(b) A qualified foundation that receives donations directly from taxpayers under this
11.27program must report to the commissioner by June 1 of each year the following information
11.28prepared by a certified public accountant regarding its grants in the previous calendar year:
11.29(1) the total number and total dollar amount of donations from taxpayers received
11.30during the previous calendar year; and
11.31(2) the total number and total dollar amount of qualified scholarships or qualified
11.32grants awarded during the previous calendar year.
11.33(c) The foundation may use up to seven percent of the amounts received as donations
11.34for reasonable administrative expenses, including but not limited to fund-raising,
11.35scholarship tracking, and reporting requirements.
12.1(d) If the commissioner decides to bar a qualified foundation from the program for
12.2failure to comply with the requirements in paragraph (a), clauses (1) to (8), the qualified
12.3foundation must notify taxpayers who have donated to the qualified foundation in writing
12.4within 30 days.
12.5 Subd. 5. Responsibilities of commissioner. (a) The commissioner must prescribe a
12.6standardized format for a receipt to be issued by a qualified foundation to a taxpayer to
12.7indicate the value of a donation received.
12.8(b) The commissioner must prescribe a standardized format for qualified foundations
12.9to report the information required under subdivision 4.
12.10(c) The commissioner must post on the department's Web site the names and
12.11addresses of qualified foundations and regularly update the names and addresses of any
12.12qualified foundations that have been barred from participating in the program.
12.13(d) The commissioner may conduct either a financial review or audit of a qualified
12.14foundation upon finding evidence of fraud or intentional misreporting.
12.15(e) The commissioner may bar a qualified foundation from participating in the
12.16program if the commissioner establishes that the qualified foundation has intentionally and
12.17substantially failed to comply with the requirements in subdivision 4. If the commissioner
12.18determines that a qualified foundation should be barred from the program, the
12.19commissioner must notify the qualified foundation within 60 days of that determination.
12.20EFFECTIVE DATE.This section is effective for taxable years beginning after
12.21December 31, 2012.
1.3amending Minnesota Statutes 2012, section 290.01, subdivisions 19a, 19c;
1.4proposing coding for new law in Minnesota Statutes, chapter 290.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2012, section 290.01, subdivision 19a, is amended to read:
1.7 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
1.8trusts, there shall be added to federal taxable income:
1.9 (1)(i) interest income on obligations of any state other than Minnesota or a political
1.10or governmental subdivision, municipality, or governmental agency or instrumentality
1.11of any state other than Minnesota exempt from federal income taxes under the Internal
1.12Revenue Code or any other federal statute; and
1.13 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
1.14Code, except:
1.15(A) the portion of the exempt-interest dividends exempt from state taxation under
1.16the laws of the United States; and
1.17(B) the portion of the exempt-interest dividends derived from interest income
1.18on obligations of the state of Minnesota or its political or governmental subdivisions,
1.19municipalities, governmental agencies or instrumentalities, but only if the portion of the
1.20exempt-interest dividends from such Minnesota sources paid to all shareholders represents
1.2195 percent or more of the exempt-interest dividends, including any dividends exempt
1.22under subitem (A), that are paid by the regulated investment company as defined in section
1.23851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
1.24defined in section 851(g) of the Internal Revenue Code, making the payment; and
2.1 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
2.2government described in section 7871(c) of the Internal Revenue Code shall be treated as
2.3interest income on obligations of the state in which the tribe is located;
2.4 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
2.5accrued within the taxable year under this chapter and the amount of taxes based on net
2.6income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state
2.7or to any province or territory of Canada, to the extent allowed as a deduction under
2.8section 63(d) of the Internal Revenue Code, but the addition may not be more than the
2.9amount by which the itemized deductions as allowed under section 63(d) of the Internal
2.10Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of
2.11the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C)
2.12and 63(c)(1)(E) of the Internal Revenue Code, minus any addition that would have been
2.13required under clause (21) if the taxpayer had claimed the standard deduction. For the
2.14purpose of this paragraph, the disallowance of itemized deductions under section 68 of
2.15the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise
2.16taxes are the last itemized deductions disallowed;
2.17 (3) the capital gain amount of a lump-sum distribution to which the special tax under
2.18section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
2.19 (4) the amount of income taxes paid or accrued within the taxable year under this
2.20chapter and taxes based on net income paid to any other state or any province or territory
2.21of Canada, to the extent allowed as a deduction in determining federal adjusted gross
2.22income. For the purpose of this paragraph, income taxes do not include the taxes imposed
2.23by sections
2.24 (5) the amount of expense, interest, or taxes disallowed pursuant to section
2.26allowed under subdivision 19b, clause (1);
2.27 (6) the amount of a partner's pro rata share of net income which does not flow
2.28through to the partner because the partnership elected to pay the tax on the income under
2.29section 6242(a)(2) of the Internal Revenue Code;
2.30 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
2.31Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
2.32in the taxable year generates a deduction for depreciation under section 168(k) and the
2.33activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
2.34the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
2.35limited to excess of the depreciation claimed by the activity under section 168(k) over the
2.36amount of the loss from the activity that is not allowed in the taxable year. In succeeding
3.1taxable years when the losses not allowed in the taxable year are allowed, the depreciation
3.2under section 168(k) is allowed;
3.3 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
3.4Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
3.5Revenue Code of 1986, as amended through December 31, 2003;
3.6 (9) to the extent deducted in computing federal taxable income, the amount of the
3.7deduction allowable under section 199 of the Internal Revenue Code;
3.8 (10) for taxable years beginning before January 1, 2013, the exclusion allowed under
3.9section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
3.10(11) the amount of expenses disallowed under section 290.10, subdivision 2;
3.11 (12) for taxable years beginning before January 1, 2010, the amount deducted for
3.12qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
3.13the extent deducted from gross income;
3.14 (13) for taxable years beginning before January 1, 2010, the amount deducted for
3.15certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
3.16of the Internal Revenue Code, to the extent deducted from gross income;
3.17(14) the additional standard deduction for property taxes payable that is allowable
3.18under section 63(c)(1)(C) of the Internal Revenue Code;
3.19(15) the additional standard deduction for qualified motor vehicle sales taxes
3.20allowable under section 63(c)(1)(E) of the Internal Revenue Code;
3.21(16) discharge of indebtedness income resulting from reacquisition of business
3.22indebtedness and deferred under section 108(i) of the Internal Revenue Code;
3.23(17) the amount of unemployment compensation exempt from tax under section
3.2485(c) of the Internal Revenue Code;
3.25(18) changes to federal taxable income attributable to a net operating loss that the
3.26taxpayer elected to carry back for more than two years for federal purposes but for which
3.27the losses can be carried back for only two years under section
3.29(19) to the extent included in the computation of federal taxable income in taxable
3.30years beginning after December 31, 2010, the amount of disallowed itemized deductions,
3.31but the amount of disallowed itemized deductions plus the addition required under clause
3.32(2) may not be more than the amount by which the itemized deductions as allowed under
3.33section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction
3.34as defined in section 63(c) of the Internal Revenue Code, disregarding the amounts
3.35allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code, and
4.1reduced by any addition that would have been required under clause (21) if the taxpayer
4.2had claimed the standard deduction:
4.3(i) the amount of disallowed itemized deductions is equal to the lesser of:
4.4(A) three percent of the excess of the taxpayer's federal adjusted gross income
4.5over the applicable amount; or
4.6(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
4.7taxpayer under the Internal Revenue Code for the taxable year;
4.8(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a
4.9married individual filing a separate return. Each dollar amount shall be increased by
4.10an amount equal to:
4.11(A) such dollar amount, multiplied by
4.12(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
4.13Revenue Code for the calendar year in which the taxable year begins, by substituting
4.14"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
4.15(iii) the term "itemized deductions" does not include:
4.16(A) the deduction for medical expenses under section 213 of the Internal Revenue
4.17Code;
4.18(B) any deduction for investment interest as defined in section 163(d) of the Internal
4.19Revenue Code; and
4.20(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
4.21theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
4.22Code or for losses described in section 165(d) of the Internal Revenue Code;
4.23(20) to the extent included in federal taxable income in taxable years beginning after
4.24December 31, 2010, the amount of disallowed personal exemptions for taxpayers with
4.25federal adjusted gross income over the threshold amount:
4.26(i) the disallowed personal exemption amount is equal to the dollar amount of the
4.27personal exemptions claimed by the taxpayer in the computation of federal taxable income
4.28multiplied by the applicable percentage;
4.29(ii) "applicable percentage" means two percentage points for each $2,500 (or
4.30fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
4.31year exceeds the threshold amount. In the case of a married individual filing a separate
4.32return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
4.33no event shall the applicable percentage exceed 100 percent;
4.34(iii) the term "threshold amount" means:
4.35(A) $150,000 in the case of a joint return or a surviving spouse;
4.36(B) $125,000 in the case of a head of a household;
5.1(C) $100,000 in the case of an individual who is not married and who is not a
5.2surviving spouse or head of a household; and
5.3(D) $75,000 in the case of a married individual filing a separate return; and
5.4(iv) the thresholds shall be increased by an amount equal to:
5.5(A) such dollar amount, multiplied by
5.6(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
5.7Revenue Code for the calendar year in which the taxable year begins, by substituting
5.8"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
5.9(21) to the extent deducted in the computation of federal taxable income, for taxable
5.10years beginning after December 31, 2010, and before January 1, 2013, the difference
5.11between the standard deduction allowed under section 63(c) of the Internal Revenue Code
5.12and the standard deduction allowed for 2011 and 2012 under the Internal Revenue Code as
5.13amended through December 1, 2010; and
5.14(22) the amount of the deduction under section 170 of the Internal Revenue Code
5.15that represents contributions to a qualified foundation for which a credit is received under
5.16section 290.0693.
5.17EFFECTIVE DATE.This section is effective for taxable years beginning after
5.18December 31, 2012.
5.19 Sec. 2. Minnesota Statutes 2012, section 290.01, subdivision 19c, is amended to read:
5.20 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
5.21there shall be added to federal taxable income:
5.22 (1) the amount of any deduction taken for federal income tax purposes for income,
5.23excise, or franchise taxes based on net income or related minimum taxes, including but not
5.24limited to the tax imposed under section
5.25another state, a political subdivision of another state, the District of Columbia, or any
5.26foreign country or possession of the United States;
5.27 (2) interest not subject to federal tax upon obligations of: the United States, its
5.28possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
5.29state, any of its political or governmental subdivisions, any of its municipalities, or any
5.30of its governmental agencies or instrumentalities; the District of Columbia; or Indian
5.31tribal governments;
5.32 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
5.33Revenue Code;
6.1 (4) the amount of any net operating loss deduction taken for federal income tax
6.2purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
6.3deduction under section 810 of the Internal Revenue Code;
6.4 (5) the amount of any special deductions taken for federal income tax purposes
6.5under sections 241 to 247 and 965 of the Internal Revenue Code;
6.6 (6) losses from the business of mining, as defined in section
6.7clause (a), that are not subject to Minnesota income tax;
6.8 (7) the amount of any capital losses deducted for federal income tax purposes under
6.9sections 1211 and 1212 of the Internal Revenue Code;
6.10 (8) the exempt foreign trade income of a foreign sales corporation under sections
6.11921(a) and 291 of the Internal Revenue Code;
6.12 (9) the amount of percentage depletion deducted under sections 611 through 614 and
6.13291 of the Internal Revenue Code;
6.14 (10) for certified pollution control facilities placed in service in a taxable year
6.15beginning before December 31, 1986, and for which amortization deductions were elected
6.16under section 169 of the Internal Revenue Code of 1954, as amended through December
6.1731, 1985, the amount of the amortization deduction allowed in computing federal taxable
6.18income for those facilities;
6.19 (11) the amount of any deemed dividend from a foreign operating corporation
6.20determined pursuant to section
6.21shall be reduced by the amount of the addition to income required by clauses (20), (21),
6.22(22), and (23);
6.23 (12) the amount of a partner's pro rata share of net income which does not flow
6.24through to the partner because the partnership elected to pay the tax on the income under
6.25section 6242(a)(2) of the Internal Revenue Code;
6.26 (13) the amount of net income excluded under section 114 of the Internal Revenue
6.27Code;
6.28 (14) any increase in subpart F income, as defined in section 952(a) of the Internal
6.29Revenue Code, for the taxable year when subpart F income is calculated without regard to
6.30the provisions of Division C, title III, section 303(b) of Public Law 110-343;
6.31 (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
6.32and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
6.33has an activity that in the taxable year generates a deduction for depreciation under
6.34section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
6.35that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
6.36under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
7.1depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
7.2amount of the loss from the activity that is not allowed in the taxable year. In succeeding
7.3taxable years when the losses not allowed in the taxable year are allowed, the depreciation
7.4under section 168(k)(1)(A) and (k)(4)(A) is allowed;
7.5 (16) 80 percent of the amount by which the deduction allowed by section 179 of the
7.6Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
7.7Revenue Code of 1986, as amended through December 31, 2003;
7.8 (17) to the extent deducted in computing federal taxable income, the amount of the
7.9deduction allowable under section 199 of the Internal Revenue Code;
7.10 (18) for taxable years beginning before January 1, 2013, the exclusion allowed under
7.11section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
7.12 (19) the amount of expenses disallowed under section
7.13 (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
7.14accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
7.15of a corporation that is a member of the taxpayer's unitary business group that qualifies
7.16as a foreign operating corporation. For purposes of this clause, intangible expenses and
7.17costs include:
7.18 (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
7.19use, maintenance or management, ownership, sale, exchange, or any other disposition of
7.20intangible property;
7.21 (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
7.22transactions;
7.23 (iii) royalty, patent, technical, and copyright fees;
7.24 (iv) licensing fees; and
7.25 (v) other similar expenses and costs.
7.26For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
7.27applications, trade names, trademarks, service marks, copyrights, mask works, trade
7.28secrets, and similar types of intangible assets.
7.29This clause does not apply to any item of interest or intangible expenses or costs paid,
7.30accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
7.31to such item of income to the extent that the income to the foreign operating corporation
7.32is income from sources without the United States as defined in subtitle A, chapter 1,
7.33subchapter N, part 1, of the Internal Revenue Code;
7.34 (21) except as already included in the taxpayer's taxable income pursuant to clause
7.35(20), any interest income and income generated from intangible property received or
8.1accrued by a foreign operating corporation that is a member of the taxpayer's unitary
8.2group. For purposes of this clause, income generated from intangible property includes:
8.3 (i) income related to the direct or indirect acquisition, use, maintenance or
8.4management, ownership, sale, exchange, or any other disposition of intangible property;
8.5 (ii) income from factoring transactions or discounting transactions;
8.6 (iii) royalty, patent, technical, and copyright fees;
8.7 (iv) licensing fees; and
8.8 (v) other similar income.
8.9For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
8.10applications, trade names, trademarks, service marks, copyrights, mask works, trade
8.11secrets, and similar types of intangible assets.
8.12This clause does not apply to any item of interest or intangible income received or accrued
8.13by a foreign operating corporation with respect to such item of income to the extent that
8.14the income is income from sources without the United States as defined in subtitle A,
8.15chapter 1, subchapter N, part 1, of the Internal Revenue Code;
8.16 (22) the dividends attributable to the income of a foreign operating corporation that
8.17is a member of the taxpayer's unitary group in an amount that is equal to the dividends
8.18paid deduction of a real estate investment trust under section 561(a) of the Internal
8.19Revenue Code for amounts paid or accrued by the real estate investment trust to the
8.20foreign operating corporation;
8.21 (23) the income of a foreign operating corporation that is a member of the taxpayer's
8.22unitary group in an amount that is equal to gains derived from the sale of real or personal
8.23property located in the United States;
8.24 (24) for taxable years beginning before January 1, 2010, the additional amount
8.25allowed as a deduction for donation of computer technology and equipment under section
8.26170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income;
8.27(25) discharge of indebtedness income resulting from reacquisition of business
8.28indebtedness and deferred under section 108(i) of the Internal Revenue Code
8.29(26) the amount of the deduction under section 170 of the Internal Revenue Code
8.30that represents contributions to a qualified foundation for which a credit is received under
8.31section 290.0693.
8.32EFFECTIVE DATE.This section is effective for taxable years beginning after
8.33December 31, 2012.
9.1 Sec. 3. [290.0693] EQUITY AND OPPORTUNITY IN EDUCATION TAX
9.2CREDIT.
9.3 Subdivision 1. Definitions. (a) For purposes of this section, the following terms
9.4have the meanings given.
9.5(b) "Eligible student" means a student who:
9.6(1) resides in Minnesota;
9.7(2) is a member of a household whose total annual income during the year prior
9.8to initial receipt of a qualified grant, without consideration of the benefits under this
9.9program, does not exceed an amount equal to 1.5 times the income standard used to
9.10qualify for a reduced-price meal under the National School Lunch Program, as specified in
9.11United States Code, title 42, section 1758; and
9.12(3) either:
9.13(i) attended a public, nonpublic, or charter school in the semester preceding initial
9.14receipt of a qualified grant;
9.15(ii) is starting school in Minnesota for the first time; or
9.16(iii) previously received a qualified grant under this section.
9.17(c) "Equity and opportunity in education donation" means a donation to a qualified
9.18foundation that makes qualified grants.
9.19(d) "Qualified school" means a school operated in Minnesota that is either:
9.20(1) a nonpublic elementary or secondary school in Minnesota wherein a resident
9.21may legally fulfill the state's compulsory attendance laws, that is not operated for profit,
9.22and that adheres to the provisions of United States Code, title 42, section 1981;
9.23(2) a charter elementary or secondary school in Minnesota that has at least 30
9.24percent of its students who qualify for a reduced-price meal under the National School
9.25Lunch Program; or
9.26(3) public or nonpublic preschool evaluated to be of high quality and serving
9.27children ages 3 to 5.
9.28(e) "Qualified foundation" means a nonprofit organization granted an exemption
9.29from the federal income tax described in section 501(c)(3) of the Internal Revenue Code
9.30that complies with the requirements of the equity and opportunity in education tax credit.
9.31Two or more qualified schools can form a qualified foundation.
9.32(f) "Qualified grant" means a grant from a qualified foundation for:
9.33(1) qualified scholarships to a qualified student for tuition to attend a qualified
9.34school; or
9.35(2) a qualified charter school for use in support of the school's mission of educating
9.36eligible students in academics, arts, or athletics, including transportation.
10.1(g) "Qualified scholarship" means a payment to or on behalf of the parent or guardian
10.2of a qualified student for payment of tuition at a qualified school. A qualified scholarship
10.3must not exceed an amount greater than 70 percent of the state average general education
10.4revenue under section 126C.10, subdivision 1, per pupil unit.
10.5 Subd. 2. Credit allowed. (a) An individual or corporate taxpayer is allowed a
10.6credit against the tax due under this chapter equal to 80 percent of the amount donated
10.7to a qualified foundation during the taxable year. No credit is allowed if the taxpayer
10.8designates a specific child as the beneficiary of the contribution.
10.9(b) The maximum annual credit allowed is:
10.10(1) $20,000 for married joint filers;
10.11(2) $10,000 for other individual filers; and
10.12(3) $100,000 for corporate filers.
10.13(c) A taxpayer must provide a copy of the receipt provided by the qualified
10.14foundation when claiming the credit for the donation.
10.15(d) The credit is limited to the liability for tax under this chapter, including the tax
10.16imposed by sections 290.0921 and 290.0922.
10.17(e) If the amount of the credit under this subdivision for any taxable year exceeds
10.18the limitations under paragraph (d), the excess is a credit carryover to each of the five
10.19succeeding taxable years. The entire amount of the excess unused credit for the taxable year
10.20must be carried first to the earliest of the taxable years to which the credit may be carried.
10.21The amount of the unused credit that may be added under this paragraph may not exceed
10.22the taxpayer's liability for tax, less the credit for the taxable year. No credit may be carried
10.23to a taxable year more than five years after the taxable year in which the credit was earned.
10.24 Subd. 3. Application for credit certificate. (a) A taxpayer must apply to the
10.25commissioner for an equity and opportunity in education tax credit certificate.
10.26(b) The commissioner must not issue a tax credit certificate for an amount greater
10.27than the limits under subdivision 2.
10.28 Subd. 4. Responsibilities of qualified foundations. (a) Each qualified foundation
10.29that receives donations directly from taxpayers under this section must:
10.30(1) notify the commissioner of its intent to participate in this program and, for
10.31purposes of determining the maximums under subdivision 3, the type of qualified schools
10.32who receive grants or the type of qualified schools attended by qualified students who
10.33receive qualified scholarships from that foundation;
10.34(2) demonstrate to the commissioner that it has been granted an exemption from
10.35the federal income tax as an organization described in section 501(c)(3) of the Internal
10.36Revenue Code;
11.1(3) provide a receipt or verification on a form approved by the commissioner to
11.2taxpayers for donations and commitments made to qualified foundations;
11.3(4) conduct criminal background checks on all of its employees and board members
11.4and exclude from employment or governance any individuals that might reasonably pose a
11.5risk to the appropriate use of contributed funds;
11.6(5) demonstrate its financial accountability by:
11.7(i) submitting a financial information report for the organization that complies with
11.8uniform financial accounting standards established by the commissioner and conducted by
11.9a certified public accountant; and
11.10(ii) having the auditor certify that the report is free of material misstatements;
11.11(6) demonstrate its financial viability, if they are to receive donations of $50,000 or
11.12more during the school year, by filing financial information with the commissioner prior
11.13to September 1 of each year that demonstrates the financial viability of the qualified
11.14foundation;
11.15(7) consistent with paragraph (c), use amounts received as donations to provide
11.16qualified scholarships or make qualified grants within one calendar year from the
11.17September 1 following the date of receiving the donation; and
11.18(8) ensure that a qualified school that receives qualified grants or enrolls eligible
11.19students:
11.20(i) complies with all health and safety laws or codes that apply to nonpublic schools;
11.21(ii) holds a valid occupancy permit if required by its municipality;
11.22(iii) certifies that it adheres to the provisions of United States Code, title 42, section
11.231981; and
11.24(iv) provides academic accountability to parents of students in the program by
11.25regularly reporting to the parents on the student's progress.
11.26(b) A qualified foundation that receives donations directly from taxpayers under this
11.27program must report to the commissioner by June 1 of each year the following information
11.28prepared by a certified public accountant regarding its grants in the previous calendar year:
11.29(1) the total number and total dollar amount of donations from taxpayers received
11.30during the previous calendar year; and
11.31(2) the total number and total dollar amount of qualified scholarships or qualified
11.32grants awarded during the previous calendar year.
11.33(c) The foundation may use up to seven percent of the amounts received as donations
11.34for reasonable administrative expenses, including but not limited to fund-raising,
11.35scholarship tracking, and reporting requirements.
12.1(d) If the commissioner decides to bar a qualified foundation from the program for
12.2failure to comply with the requirements in paragraph (a), clauses (1) to (8), the qualified
12.3foundation must notify taxpayers who have donated to the qualified foundation in writing
12.4within 30 days.
12.5 Subd. 5. Responsibilities of commissioner. (a) The commissioner must prescribe a
12.6standardized format for a receipt to be issued by a qualified foundation to a taxpayer to
12.7indicate the value of a donation received.
12.8(b) The commissioner must prescribe a standardized format for qualified foundations
12.9to report the information required under subdivision 4.
12.10(c) The commissioner must post on the department's Web site the names and
12.11addresses of qualified foundations and regularly update the names and addresses of any
12.12qualified foundations that have been barred from participating in the program.
12.13(d) The commissioner may conduct either a financial review or audit of a qualified
12.14foundation upon finding evidence of fraud or intentional misreporting.
12.15(e) The commissioner may bar a qualified foundation from participating in the
12.16program if the commissioner establishes that the qualified foundation has intentionally and
12.17substantially failed to comply with the requirements in subdivision 4. If the commissioner
12.18determines that a qualified foundation should be barred from the program, the
12.19commissioner must notify the qualified foundation within 60 days of that determination.
12.20EFFECTIVE DATE.This section is effective for taxable years beginning after
12.21December 31, 2012.
