1.1 .................... moves to amend H.F. No. 3855 as follows:
1.2Delete everything after the enacting clause and insert:
1.3 "Section 1.
[116J.8732] SEED CAPITAL INVESTMENT CREDIT;
1.4COMMISSIONER'S RESPONSIBILITIES.
1.5 Subdivision 1. Scope. This section establishes rules that businesses must satisfy to
1.6qualify for the seed capital investment credit under section 290.06, subdivision 34, and the
1.7commissioner's responsibility for certifying the qualifying businesses.
1.8 Subd. 2. Definitions. (a) For purposes of this section and section 290.06,
1.9subdivision 34, the following terms have the meanings given.
1.10 (b) "Border city" means a city qualifying to designate a border city development
1.11zone under section 469.1731.
1.12 (c) "Pass-through entity" means a corporation that for the applicable tax year is
1.13treated as an S corporation or a general partnership, limited partnership, limited liability
1.14partnership, trust, or limited liability company and which for the applicable taxable year is
1.15not taxed as a corporation under chapter 290.
1.16 (d) "Primary sector business" means a qualified business that through the
1.17employment of knowledge or labor adds value to a product, process, or service and
1.18increases revenues to a Minnesota business generated by sales of products or services to
1.19customers outside of the state or increases revenues to a qualified business the customers
1.20of which previously were unable to acquire, or had limited availability of the product or
1.21service from a Minnesota provider.
1.22 (e) "Qualified business" means a business certified by the commissioner as meeting
1.23the requirements of subdivision 3.
1.24 Subd. 3. Qualified business. (a) The commissioner shall certify whether a business
1.25that has requested to become a qualified business meets the requirements of paragraph (b).
2.1 (b) For purposes of this section, a qualified business must be a primary sector
2.2business, other than a real estate investment trust, that:
2.3 (1) is incorporated or its satellite operation is incorporated as a for-profit corporation
2.4or is a partnership, limited partnership, limited liability company, limited liability
2.5partnership, or joint venture;
2.6 (2) is in compliance with the requirements for filings with the commissioner of
2.7commerce under the securities laws of this state;
2.8 (3) has Minnesota residents as a majority of its employees in its principal office or
2.9the satellite operation, which is located in a border city;
2.10 (4) has its principal office in a border city and has the majority of its business
2.11activity performed in a border city, except sales activity, or has a significant operation in
2.12a border city that has or is projected to have more than ten employees or $150,000 of
2.13sales annually; and
2.14 (5) relies on innovation, research, or the development of new products and processes
2.15in its plans for growth and profitability.
2.16 (c) The commissioner shall establish the necessary forms and procedures for
2.17certifying qualified businesses.
2.18 (d) A qualified business may apply to the commissioner for a recertification. Only
2.19one recertification is available to a qualified business. The application for recertification
2.20must be filed with the commissioner within 90 days before the original certification
2.21expiration date. The recertification issued by the director must comply with the provisions
2.22of paragraph (e).
2.23 (e) The commissioner shall issue a certification letter to a business the commissioner
2.24determines is a qualified business. The certification letter must include:
2.25 (1) the certification effective date; and
2.26 (2) the certification expiration date, which may not be more than four years from the
2.27certification effective date.
2.28 Subd. 4. Seed capital investment credit reporting. Within 30 days after the date
2.29that an investment in a qualified business is purchased, the qualified business shall file with
2.30the commissioner and the commissioner of revenue and provide to the investor completed
2.31forms prescribed by the commissioner of revenue that show as to each investment in the
2.32qualified business the following:
2.33 (1) the name, address, and Social Security number of the taxpayer who made the
2.34investment; and
2.35 (2) the dollar amount paid for the investment by the taxpayer.
2.36EFFECTIVE DATE.This section is effective the day following final enactment.
3.1 Sec. 2. Minnesota Statutes 2006, section 290.06, is amended by adding a subdivision
3.2to read:
3.3 Subd. 34. Seed capital investment credit. (a) An individual, estate, or trust is
3.4allowed a credit against the tax imposed by this chapter for investments in a qualifying
3.5business certified under section 116J.8732, subdivision 3. The credit equals 45 percent
3.6of the amount invested by the taxpayer in qualified businesses during the taxable year.
3.7The credit must not exceed $112,500 for each taxable year.
3.8 (b) A pass-through entity that invests in a qualified business must be considered to
3.9be the taxpayer for purposes of the investment limitations in this subdivision and the
3.10amount of the credit allowed with respect to a pass-through entity's investment in a
3.11qualified business must be determined at the pass-through entity level. The amount of the
3.12total credit determined at the pass-through entity level must be allowed to the members in
3.13proportion to their respective interests in the pass-through entity.
3.14 (c) An investment made in a qualified business from the assets of a retirement
3.15plan is deemed to be the retirement plan participant's investment for the purpose of this
3.16subdivision if a separate account is maintained for the plan participant and the participant
3.17directly controls where the account assets are invested.
3.18 (d) The investment must be made on or after the certification effective date and
3.19must be at risk in the business to be eligible for the tax credit under this subdivision.
3.20An investment for which a credit is received under this subdivision must remain in the
3.21qualified business for at least three years. Investments placed in escrow do not qualify
3.22for the credit.
3.23 (e) The entire amount of an investment for which a credit is claimed under this
3.24subdivision must be expended by the qualified business for plant, equipment, research and
3.25development, marketing and sales activity, or working capital for the qualified business.
3.26 (f) A taxpayer who owns a controlling interest in the qualified business or who
3.27receives more than 50 percent of the taxpayer's gross annual income from the qualified
3.28business is not entitled to a credit under this subdivision. A member of the immediate
3.29family of a taxpayer disqualified by this subdivision is not entitled to the credit under this
3.30subdivision. For purposes of this subdivision, "immediate family" means the taxpayer's
3.31spouse, parent, sibling, or child or the spouse of any such person.
3.32 (g) The commissioner may disallow any credit otherwise allowed under this
3.33subdivision if any representation by a business in the application for certification as a
3.34qualified business proves to be false or if the taxpayer or qualified business fails to satisfy
3.35any conditions under this subdivision or section 116J.8732 or any conditions consistent
3.36with those requirements otherwise determined by the commissioner. The commissioner
4.1has four years after the due date of the return or after the return was filed, whichever
4.2period expires later, to audit the credit and assess additional tax that may be found due
4.3to failure to comply with the provisions of this subdivision and section 116J.8732. The
4.4amount of any credit disallowed by the commissioner that reduced the taxpayer's income
4.5tax liability for any or all applicable tax years, plus penalty and interest as provided under
4.6chapter 289A, must be paid by the taxpayer.
4.7 (h) If the amount of the credit under this subdivision for any taxable year exceeds
4.8the dollar limitations under paragraph (a), the excess is a credit carryover to each of
4.9the four succeeding taxable years. The entire amount of the excess unused credit for
4.10the taxable year must be carried first to the earliest of the taxable years to which the
4.11credit may be carried. The amount of the unused credit that may be added under this
4.12paragraph may not exceed the taxpayer's liability for tax, less the credit for the taxable
4.13year. Each year, the aggregate amount of seed capital investment tax credits allowed for
4.14investments under this subdivision is limited to allocations that a border city has available
4.15for tax reductions in border city enterprise zones under section 469.170. The city must
4.16annually notify the commissioner of the amount of its section 469.170 allocations that it
4.17wishes to use to provide credits under this paragraph and the commissioner, after verifying
4.18the available allocation, shall implement the limit under this paragraph. If investments
4.19in qualified businesses reported to the commissioner exceed the limit on credits for
4.20investments imposed by this subdivision, the credit must be allowed to taxpayers in the
4.21chronological order of their investments in qualified businesses as determined from the
4.22forms filed under section 116J.8732.
4.23EFFECTIVE DATE.This section is effective July 1, 2008, for taxable years
4.24beginning after December 31, 2007, and only applies to investments made after the
4.25qualified business has been certified by the commissioner of employment and economic
4.26development."
4.27Amend the title accordingly