Bill Text: MN SF388 | 2011-2012 | 87th Legislature | Engrossed
Bill Title: Low-performing school students enrollment options; education tax credit modification; equity and opportunity in education income tax credit
Spectrum: Slight Partisan Bill (Republican 3-1)
Status: (Introduced - Dead) 2012-03-08 - Comm report: To pass as amended and re-refer to Taxes [SF388 Detail]
Download: Minnesota-2011-SF388-Engrossed.html
1.2relating to education; establishing enrollment options for students at
1.3low-performing schools; modifying education tax credit; establishing equity and
1.4opportunity in education income tax credit;amending Minnesota Statutes 2010,
1.5section 290.0674, subdivision 1; Minnesota Statutes 2011 Supplement, section
1.6290.01, subdivisions 19a, 19c; proposing coding for new law in Minnesota
1.7Statutes, chapters 124D; 290.
1.8BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.9 Section 1. [124D.031] ENROLLMENT OPTIONS FOR STUDENTS AT
1.10LOW-PERFORMING SCHOOLS.
1.11 Subdivision 1. Student enrollment options. (a) A student who attends a persistently
1.12low-performing school for at least one school year and whose family income is equal to or
1.13less than 175 percent of the federal poverty level is eligible to enroll in a nonpublic school
1.14under this section or a nonresident district school or program under section 124D.03.
1.15(b) For the purposes of this section, "persistently low-performing school" means
1.16a school that has student performance levels for at least three consecutive school years
1.17immediately preceding the school year a student is enrolling in a nonpublic school under
1.18this section or a nonresident district school or program under section 124D.03 in one
1.19or more of the following:
1.20(1) the total percentage of students scoring at the "does not meet standards" level
1.21for the reading Minnesota Comprehensive Assessments exceeds 25 percent for all grades
1.22tested; or
1.23(2) the total percentage of scoring at the "does not meet standards" level for the
1.24mathematics Minnesota Comprehensive Assessments exceeds 40 percent for all grades
1.25tested.
2.1 Subd. 2. Eligible nonpublic schools. To be eligible to participate under this section,
2.2a nonpublic school must comply with chapter 363A and administer the statewide reading
2.3and math tests under section 120B.30 to its students enrolled under this section.
2.4The commissioner shall ensure that the nonpublic school complies with the
2.5requirements of this subdivision.
2.6 Subd. 3. Tuition funding for students transferring to nonpublic schools. If a
2.7student transfers to a nonpublic school under this section, and upon receiving proof that
2.8the student is enrolled in the nonpublic school, the commissioner shall make quarterly
2.9payments to the student's parent or guardian in an amount equal to the lesser of the
2.10state average general education revenue per pupil unit, calculated without transportation
2.11sparsity revenue or the nonpublic school's operating and debt service cost per pupil that is
2.12related to educational programming, as determined by the commissioner. The total amount
2.13of the payments must not exceed the tuition and fees charged at the nonpublic school
2.14or the amount calculated under this subdivision, whichever is less. The commissioner
2.15shall send the check to the nonpublic school and the parent or guardian shall restrictively
2.16endorse the check for the nonpublic school's use.
2.17 Subd. 4. Student transportation. A resident school district is responsible for
2.18providing transportation within the district's borders for a student who enrolls in a
2.19nonpublic school under this section and shall receive transportation funding equal to the
2.20actual costs in the current school year for those transportation services.
2.21 Subd. 5. Funding for student testing. The state shall pay the nonpublic school
2.22costs of administering tests given under section 120B.30.
2.23 Subd. 6. List of nonpublic schools. The commissioner shall publish a list of
2.24participating nonpublic schools.
2.25EFFECTIVE DATE.This section is effective the day following final enactment
2.26and applies to the 2012-2013 school year and later.
2.27 Sec. 2. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19a, is
2.28amended to read:
2.29 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
2.30trusts, there shall be added to federal taxable income:
2.31 (1)(i) interest income on obligations of any state other than Minnesota or a political
2.32or governmental subdivision, municipality, or governmental agency or instrumentality
2.33of any state other than Minnesota exempt from federal income taxes under the Internal
2.34Revenue Code or any other federal statute; and
3.1 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
3.2Code, except:
3.3(A) the portion of the exempt-interest dividends exempt from state taxation under
3.4the laws of the United States; and
3.5(B) the portion of the exempt-interest dividends derived from interest income
3.6on obligations of the state of Minnesota or its political or governmental subdivisions,
3.7municipalities, governmental agencies or instrumentalities, but only if the portion of the
3.8exempt-interest dividends from such Minnesota sources paid to all shareholders represents
3.995 percent or more of the exempt-interest dividends, including any dividends exempt
3.10under subitem (A), that are paid by the regulated investment company as defined in section
3.11851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
3.12defined in section 851(g) of the Internal Revenue Code, making the payment; and
3.13 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
3.14government described in section 7871(c) of the Internal Revenue Code shall be treated as
3.15interest income on obligations of the state in which the tribe is located;
3.16 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
3.17accrued within the taxable year under this chapter and the amount of taxes based on net
3.18income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state
3.19or to any province or territory of Canada, to the extent allowed as a deduction under
3.20section 63(d) of the Internal Revenue Code, but the addition may not be more than the
3.21amount by which the itemized deductions as allowed under section 63(d) of the Internal
3.22Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of
3.23the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C)
3.24and 63(c)(1)(E) of the Internal Revenue Code, minus any addition that would have been
3.25required under clause (21) if the taxpayer had claimed the standard deduction. For the
3.26purpose of this paragraph, the disallowance of itemized deductions under section 68 of
3.27the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise
3.28taxes are the last itemized deductions disallowed;
3.29 (3) the capital gain amount of a lump-sum distribution to which the special tax under
3.30section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
3.31 (4) the amount of income taxes paid or accrued within the taxable year under this
3.32chapter and taxes based on net income paid to any other state or any province or territory
3.33of Canada, to the extent allowed as a deduction in determining federal adjusted gross
3.34income. For the purpose of this paragraph, income taxes do not include the taxes imposed
3.35by sections290.0922, subdivision 1 , paragraph (b),
290.9727 ,
290.9728 , and
290.9729 ;
4.1 (5) the amount of expense, interest, or taxes disallowed pursuant to section290.10
4.2other than expenses or interest used in computing net interest income for the subtraction
4.3allowed under subdivision 19b, clause (1);
4.4 (6) the amount of a partner's pro rata share of net income which does not flow
4.5through to the partner because the partnership elected to pay the tax on the income under
4.6section 6242(a)(2) of the Internal Revenue Code;
4.7 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
4.8Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
4.9in the taxable year generates a deduction for depreciation under section 168(k) and the
4.10activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
4.11the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
4.12limited to excess of the depreciation claimed by the activity under section 168(k) over the
4.13amount of the loss from the activity that is not allowed in the taxable year. In succeeding
4.14taxable years when the losses not allowed in the taxable year are allowed, the depreciation
4.15under section 168(k) is allowed;
4.16 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
4.17Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
4.18Revenue Code of 1986, as amended through December 31, 2003;
4.19 (9) to the extent deducted in computing federal taxable income, the amount of the
4.20deduction allowable under section 199 of the Internal Revenue Code;
4.21 (10) for taxable years beginning before January 1, 2013, the exclusion allowed
4.22under section 139A of the Internal Revenue Code for federal subsidies for prescription
4.23drug plans;
4.24(11) the amount of expenses disallowed under section 290.10, subdivision 2;
4.25 (12) for taxable years beginning before January 1, 2010, the amount deducted for
4.26qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
4.27the extent deducted from gross income;
4.28 (13) for taxable years beginning before January 1, 2010, the amount deducted for
4.29certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
4.30of the Internal Revenue Code, to the extent deducted from gross income;
4.31(14) the additional standard deduction for property taxes payable that is allowable
4.32under section 63(c)(1)(C) of the Internal Revenue Code;
4.33(15) the additional standard deduction for qualified motor vehicle sales taxes
4.34allowable under section 63(c)(1)(E) of the Internal Revenue Code;
4.35(16) discharge of indebtedness income resulting from reacquisition of business
4.36indebtedness and deferred under section 108(i) of the Internal Revenue Code;
5.1(17) the amount of unemployment compensation exempt from tax under section
5.285(c) of the Internal Revenue Code;
5.3(18) the amount of the deduction under section 170 of the Internal Revenue Code
5.4that represents contributions to a qualified foundation under section 290.0682;
5.5(19) changes to federal taxable income attributable to a net operating loss that the
5.6taxpayer elected to carry back for more than two years for federal purposes but for which
5.7the losses can be carried back for only two years under section290.095, subdivision
5.811, paragraph (c);
5.9(19) (20) to the extent included in the computation of federal taxable income in
5.10taxable years beginning after December 31, 2010, the amount of disallowed itemized
5.11deductions, but the amount of disallowed itemized deductions plus the addition required
5.12under clause (2) may not be more than the amount by which the itemized deductions as
5.13allowed under section 63(d) of the Internal Revenue Code exceeds the amount of the
5.14standard deduction as defined in section 63(c) of the Internal Revenue Code, disregarding
5.15the amounts allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue
5.16Code, and reduced by any addition that would have been required under clause (21) if the
5.17taxpayer had claimed the standard deduction:
5.18(i) the amount of disallowed itemized deductions is equal to the lesser of:
5.19(A) three percent of the excess of the taxpayer's federal adjusted gross income
5.20over the applicable amount; or
5.21(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
5.22taxpayer under the Internal Revenue Code for the taxable year;
5.23(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a
5.24married individual filing a separate return. Each dollar amount shall be increased by
5.25an amount equal to:
5.26(A) such dollar amount, multiplied by
5.27(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
5.28Revenue Code for the calendar year in which the taxable year begins, by substituting
5.29"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
5.30(iii) the term "itemized deductions" does not include:
5.31(A) the deduction for medical expenses under section 213 of the Internal Revenue
5.32Code;
5.33(B) any deduction for investment interest as defined in section 163(d) of the Internal
5.34Revenue Code; and
6.1(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
6.2theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
6.3Code or for losses described in section 165(d) of the Internal Revenue Code;
6.4(20) (21) to the extent included in federal taxable income in taxable years beginning
6.5after December 31, 2010, the amount of disallowed personal exemptions for taxpayers
6.6with federal adjusted gross income over the threshold amount:
6.7(i) the disallowed personal exemption amount is equal to the dollar amount of the
6.8personal exemptions claimed by the taxpayer in the computation of federal taxable income
6.9multiplied by the applicable percentage;
6.10(ii) "applicable percentage" means two percentage points for each $2,500 (or
6.11fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
6.12year exceeds the threshold amount. In the case of a married individual filing a separate
6.13return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
6.14no event shall the applicable percentage exceed 100 percent;
6.15(iii) the term "threshold amount" means:
6.16(A) $150,000 in the case of a joint return or a surviving spouse;
6.17(B) $125,000 in the case of a head of a household;
6.18(C) $100,000 in the case of an individual who is not married and who is not a
6.19surviving spouse or head of a household; and
6.20(D) $75,000 in the case of a married individual filing a separate return; and
6.21(iv) the thresholds shall be increased by an amount equal to:
6.22(A) such dollar amount, multiplied by
6.23(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
6.24Revenue Code for the calendar year in which the taxable year begins, by substituting
6.25"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
6.26(21) (22) to the extent deducted in the computation of federal taxable income,
6.27for taxable years beginning after December 31, 2010, and before January 1, 2013, the
6.28difference between the standard deduction allowed under section 63(c) of the Internal
6.29Revenue Code and the standard deduction allowed for 2011 and 2012 under the Internal
6.30Revenue Code as amended through December 1, 2010.
6.31EFFECTIVE DATE.This section is effective for taxable years beginning after
6.32December 31, 2011.
6.33 Sec. 3. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19c, is
6.34amended to read:
7.1 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
7.2there shall be added to federal taxable income:
7.3 (1) the amount of any deduction taken for federal income tax purposes for income,
7.4excise, or franchise taxes based on net income or related minimum taxes, including but not
7.5limited to the tax imposed under section290.0922 , paid by the corporation to Minnesota,
7.6another state, a political subdivision of another state, the District of Columbia, or any
7.7foreign country or possession of the United States;
7.8 (2) interest not subject to federal tax upon obligations of: the United States, its
7.9possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
7.10state, any of its political or governmental subdivisions, any of its municipalities, or any
7.11of its governmental agencies or instrumentalities; the District of Columbia; or Indian
7.12tribal governments;
7.13 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
7.14Revenue Code;
7.15 (4) the amount of any net operating loss deduction taken for federal income tax
7.16purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
7.17deduction under section 810 of the Internal Revenue Code;
7.18 (5) the amount of any special deductions taken for federal income tax purposes
7.19under sections 241 to 247 and 965 of the Internal Revenue Code;
7.20 (6) losses from the business of mining, as defined in section290.05, subdivision 1 ,
7.21clause (a), that are not subject to Minnesota income tax;
7.22 (7) the amount of any capital losses deducted for federal income tax purposes under
7.23sections 1211 and 1212 of the Internal Revenue Code;
7.24 (8) the exempt foreign trade income of a foreign sales corporation under sections
7.25921(a) and 291 of the Internal Revenue Code;
7.26 (9) the amount of percentage depletion deducted under sections 611 through 614 and
7.27291 of the Internal Revenue Code;
7.28 (10) for certified pollution control facilities placed in service in a taxable year
7.29beginning before December 31, 1986, and for which amortization deductions were elected
7.30under section 169 of the Internal Revenue Code of 1954, as amended through December
7.3131, 1985, the amount of the amortization deduction allowed in computing federal taxable
7.32income for those facilities;
7.33 (11) the amount of any deemed dividend from a foreign operating corporation
7.34determined pursuant to section290.17, subdivision 4 , paragraph (g). The deemed dividend
7.35shall be reduced by the amount of the addition to income required by clauses (20), (21),
7.36(22), and (23);
8.1 (12) the amount of a partner's pro rata share of net income which does not flow
8.2through to the partner because the partnership elected to pay the tax on the income under
8.3section 6242(a)(2) of the Internal Revenue Code;
8.4 (13) the amount of net income excluded under section 114 of the Internal Revenue
8.5Code;
8.6 (14) any increase in subpart F income, as defined in section 952(a) of the Internal
8.7Revenue Code, for the taxable year when subpart F income is calculated without regard to
8.8the provisions of Division C, title III, section 303(b) of Public Law 110-343;
8.9 (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
8.10and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
8.11has an activity that in the taxable year generates a deduction for depreciation under
8.12section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
8.13that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
8.14under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
8.15depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
8.16amount of the loss from the activity that is not allowed in the taxable year. In succeeding
8.17taxable years when the losses not allowed in the taxable year are allowed, the depreciation
8.18under section 168(k)(1)(A) and (k)(4)(A) is allowed;
8.19 (16) 80 percent of the amount by which the deduction allowed by section 179 of the
8.20Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
8.21Revenue Code of 1986, as amended through December 31, 2003;
8.22 (17) to the extent deducted in computing federal taxable income, the amount of the
8.23deduction allowable under section 199 of the Internal Revenue Code;
8.24 (18) for taxable years beginning before January 1, 2013, the exclusion allowed
8.25under section 139A of the Internal Revenue Code for federal subsidies for prescription
8.26drug plans;
8.27 (19) the amount of expenses disallowed under section290.10, subdivision 2 ;
8.28 (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
8.29accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
8.30of a corporation that is a member of the taxpayer's unitary business group that qualifies
8.31as a foreign operating corporation. For purposes of this clause, intangible expenses and
8.32costs include:
8.33 (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
8.34use, maintenance or management, ownership, sale, exchange, or any other disposition of
8.35intangible property;
9.1 (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
9.2transactions;
9.3 (iii) royalty, patent, technical, and copyright fees;
9.4 (iv) licensing fees; and
9.5 (v) other similar expenses and costs.
9.6For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
9.7applications, trade names, trademarks, service marks, copyrights, mask works, trade
9.8secrets, and similar types of intangible assets.
9.9This clause does not apply to any item of interest or intangible expenses or costs paid,
9.10accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
9.11to such item of income to the extent that the income to the foreign operating corporation
9.12is income from sources without the United States as defined in subtitle A, chapter 1,
9.13subchapter N, part 1, of the Internal Revenue Code;
9.14 (21) except as already included in the taxpayer's taxable income pursuant to clause
9.15(20), any interest income and income generated from intangible property received or
9.16accrued by a foreign operating corporation that is a member of the taxpayer's unitary
9.17group. For purposes of this clause, income generated from intangible property includes:
9.18 (i) income related to the direct or indirect acquisition, use, maintenance or
9.19management, ownership, sale, exchange, or any other disposition of intangible property;
9.20 (ii) income from factoring transactions or discounting transactions;
9.21 (iii) royalty, patent, technical, and copyright fees;
9.22 (iv) licensing fees; and
9.23 (v) other similar income.
9.24For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
9.25applications, trade names, trademarks, service marks, copyrights, mask works, trade
9.26secrets, and similar types of intangible assets.
9.27This clause does not apply to any item of interest or intangible income received or accrued
9.28by a foreign operating corporation with respect to such item of income to the extent that
9.29the income is income from sources without the United States as defined in subtitle A,
9.30chapter 1, subchapter N, part 1, of the Internal Revenue Code;
9.31 (22) the dividends attributable to the income of a foreign operating corporation that
9.32is a member of the taxpayer's unitary group in an amount that is equal to the dividends
9.33paid deduction of a real estate investment trust under section 561(a) of the Internal
9.34Revenue Code for amounts paid or accrued by the real estate investment trust to the
9.35foreign operating corporation;
10.1 (23) the income of a foreign operating corporation that is a member of the taxpayer's
10.2unitary group in an amount that is equal to gains derived from the sale of real or personal
10.3property located in the United States;
10.4 (24) for taxable years beginning before January 1, 2010, the additional amount
10.5allowed as a deduction for donation of computer technology and equipment under section
10.6170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income;and
10.7(25) discharge of indebtedness income resulting from reacquisition of business
10.8indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
10.9(26) the amount of the deduction under section 170 of the Internal Revenue Code
10.10that represents contributions to a qualified foundation under section 290.0682.
10.11EFFECTIVE DATE.This section is effective for taxable years beginning after
10.12December 31, 2011.
10.13 Sec. 4. Minnesota Statutes 2010, section 290.0674, subdivision 1, is amended to read:
10.14 Subdivision 1. Credit allowed. An individual is allowed a credit against the
10.15tax imposed by this chapter in an amount equal to 75 percent of the amount paid for
10.16education-related expenses for a qualifying child in kindergarten through grade 12. For
10.17purposes of this section, "education-related expenses" means:
10.18(1) fees or tuition for instruction by an instructor under section120A.22, subdivision
10.1910 , clause (1), (2), (3), (4), or (5), or a member of the Minnesota Music Teachers
10.20Association, and who is not a lineal ancestor or sibling of the dependent for instruction
10.21outside the regular school day or school year, including tutoring, driver's education
10.22offered as part of school curriculum, regardless of whether it is taken from a public or
10.23private entity or summer camps, in grade or age appropriate curricula that supplement
10.24curricula and instruction available during the regular school year, that assists a dependent
10.25to improve knowledge of core curriculum areas or to expand knowledge and skills under
10.26the required academic standards under section120B.021, subdivision 1 , and the elective
10.27standard under section120B.022, subdivision 1 , clause (2), and that do not include the
10.28teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such
10.29tenets, doctrines, or worship;
10.30(2) expenses for textbooks, including books and other instructional materials and
10.31equipment purchased or leased for use in elementary and secondary schools in teaching
10.32only those subjects legally and commonly taught in public elementary and secondary
10.33schools in this state. "Textbooks" does not include instructional books and materials
10.34used in the teaching of religious tenets, doctrines, or worship, the purpose of which is
10.35to instill such tenets, doctrines, or worship, nor does it include books or materials for
11.1extracurricular activities including sporting events, musical or dramatic events, speech
11.2activities, driver's education, or similar programs;
11.3(3) a maximum expense of $200 per family for personal computer hardware,
11.4excluding single purpose processors, and educational software that assists a dependent to
11.5improve knowledge of core curriculum areas or to expand knowledge and skills under
11.6the required academic standards under section120B.021, subdivision 1 , and the elective
11.7standard under section120B.022, subdivision 1 , clause (2), purchased for use in the
11.8taxpayer's home and not used in a trade or business regardless of whether the computer is
11.9required by the dependent's school; and
11.10(4) the amount paid to others for tuition and transportation of a qualifying child
11.11attending an elementary or secondary school situated in Minnesota, North Dakota, South
11.12Dakota, Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's
11.13compulsory attendance laws, which is not operated for profit, and which adheres to the
11.14provisions of the Civil Rights Act of 1964 and chapter 363A.
11.15For purposes of this section, "qualifying child" has the meaning given in section
11.1632(c)(3) of the Internal Revenue Code.
11.17EFFECTIVE DATE.This section is effective for taxable years beginning after
11.18December 31, 2011.
11.19 Sec. 5. [290.0682] EQUITY AND OPPORTUNITY IN EDUCATION TAX
11.20CREDIT.
11.21 Subdivision 1. Definitions. (a) For purposes of this section, the following terms
11.22have the meanings given.
11.23(b) "Eligible student" means a student who:
11.24(1) is a member of a household whose total annual income during the year, without
11.25consideration of the benefits under this program, does not exceed an amount equal to 1.85
11.26times the income standard used to qualify for a reduced-price meal under the National
11.27School Lunch Program, as specified in United States Code, title 42, section 1758. Once a
11.28student is eligible under this program, the student remains eligible regardless of household
11.29income until the student graduates from high school or reaches 21 years of age, whichever
11.30occurs first;
11.31(2) was eligible to attend a public school in the preceding semester or is starting
11.32school in Minnesota for the first time; and
11.33(3) resides in Minnesota.
11.34(c) "Equity and opportunity in education donation" means a donation to a qualified
11.35foundation that makes qualified grants.
12.1(d) "Qualified foundation" means a foundation fulfilling the requirement under
12.2subdivision 4.
12.3(e) "Qualified school" means a school operated in Minnesota that is either:
12.4(1) a nonpublic elementary or secondary school in Minnesota wherein a resident
12.5may legally fulfill the state's compulsory attendance laws, which is not operated for profit,
12.6and that adheres to the provisions of United States Code, title 42, section 1981; or
12.7(2) a high quality preschool.
12.8(f) "Qualified grant" means a grant from a qualified foundation to the parents or
12.9guardians of an eligible student for use at a qualified school.
12.10 Subd. 2. Credit allowed. (a) An individual or corporate taxpayer is allowed a credit
12.11against the tax due under this chapter equal to 100 percent of the amount donated to a
12.12qualified foundation during the taxable year.
12.13(b) The maximum aggregate statewide credits must not exceed $20,000,000 per
12.14taxable year.
12.15(c) A taxpayer must provide a copy of the receipt provided by the qualified
12.16foundation when claiming the credit for the equity and opportunity in education donation.
12.17 Subd. 3. Application for credit certificate. (a) A taxpayer must apply to the
12.18commissioner for an equity and opportunity in education tax credit certificate. Tax credit
12.19certificates under this section must be made available on a first-come, first-served basis
12.20until the maximum aggregate statewide credit amount has been reached. The maximum
12.21statewide credit amounts must not exceed $20,000,000 per taxable year for donations and
12.22commitments to qualified nonpublic schools or preschools.
12.23(b) The commissioner must not issue a tax credit certificate for an amount greater
12.24than the limits under subdivision 2.
12.25 Subd. 4. Qualified foundations. (a) Each qualified foundation that receives equity
12.26and opportunity in education donations directly from taxpayers under this section must:
12.27(1) notify the commissioner of its intent to participate in this program;
12.28(2) demonstrate to the commissioner that it has been granted an exemption from
12.29the federal income tax as an organization described in section 501(c)(3) of the Internal
12.30Revenue Code;
12.31(3) provide a receipt or verification on a form approved by the commissioner to
12.32taxpayers for donations and commitments made to qualified foundations;
12.33(4) conduct criminal background checks on all of its employees and board members
12.34and exclude from employment or governance any individuals that might reasonably pose a
12.35risk to the appropriate use of contributed funds;
12.36(5) demonstrate its financial accountability by:
13.1(i) submitting a financial information report for the organization that complies with
13.2uniform financial accounting standards established by the commissioner and conducted by
13.3a certified public accountant; and
13.4(ii) having the auditor certify that the report is free of material misstatements;
13.5(6) demonstrate its financial viability, if it is to receive donations of $150,000 or
13.6more during the school year, by filing financial information with the commissioner prior
13.7to September 1 of each year that demonstrates the financial viability of the qualified
13.8foundation;
13.9(7) allocate at least 90 percent of annual revenues for tuition grants;
13.10(8) use amounts received as donations to make qualified grants within two years
13.11of the date of receiving the donation; and
13.12(9) ensure that qualified schools that receive qualified grants or enroll eligible
13.13students:
13.14(i) comply with all health and safety laws or codes that apply to nonpublic schools;
13.15(ii) hold a valid occupancy permit if required by its municipality;
13.16(iii) certify that their admissions policy adheres to provisions in United States Code,
13.17title 42, section 1981; and
13.18(iv) provide academic accountability to parents of students in the program by
13.19regularly reporting to the parent on the student's progress.
13.20(b) A qualified foundation that receives equity and opportunity in education
13.21donations directly from taxpayers under this program must report to the commissioner by
13.22June 1 of each year the following information prepared by a certified public accountant
13.23regarding its grants in the previous calendar year:
13.24(1) the total number and total dollar amount of donations from taxpayers received
13.25during the previous calendar year; and
13.26(2) the total number and total dollar amount of qualified scholarships or qualified
13.27grants awarded during the previous calendar year.
13.28(c) If the commissioner decides to bar a qualified foundation from the program for
13.29failure to comply with the requirements in paragraph (a), clauses (1) to (9), the qualified
13.30foundation must notify taxpayers who have donated to the qualified foundation in writing
13.31within 30 days.
13.32 Subd. 5. Responsibilities of commissioner. (a) The commissioner must prescribe a
13.33standardized format for a receipt to be issued by a qualified foundation to a taxpayer to
13.34indicate the value of a donation received.
13.35(b) The commissioner must prescribe a standardized format for qualified foundations
13.36to report the information required under subdivision 4.
14.1(c) The commissioner must post on the department's Web site the names and
14.2addresses of qualified foundations and regularly update the names and addresses of any
14.3qualified foundations that have been barred from participating in the program.
14.4(d) The commissioner may conduct either a financial review or audit of a qualified
14.5foundation upon finding evidence of fraud or intentional misreporting.
14.6(e) The commissioner may bar a qualified foundation from participating in the
14.7program if the commissioner establishes that the qualified foundation has intentionally and
14.8substantially failed to comply with the requirements in subdivision 4. If the commissioner
14.9determines that a qualified foundation should be barred from the program, the
14.10commissioner must notify the qualified foundation within 60 days of that determination.
14.11EFFECTIVE DATE.This section is effective for taxable years beginning after
14.12December 31, 2011.
14.13 Sec. 6. TUITION FUNDING, NONPUBLIC SCHOOLS, FISCAL YEARS 2013
14.14AND 2014.
14.15(a) Notwithstanding Minnesota Statutes, section 124D.031, subdivision 3, in fiscal
14.16year 2013 only the quarterly payments calculated under Minnesota Statutes, section
14.17124D.031, subdivision 3, shall be reduced by 40 percent.
14.18(b) Notwithstanding Minnesota Statutes, section 124D.031, subdivision 3, in fiscal
14.19year 2014 only the quarterly payments calculated under Minnesota Statutes, section
14.20124D.031, subdivision 3, shall be reduced by 20 percent.
1.3low-performing schools; modifying education tax credit; establishing equity and
1.4opportunity in education income tax credit;amending Minnesota Statutes 2010,
1.5section 290.0674, subdivision 1; Minnesota Statutes 2011 Supplement, section
1.6290.01, subdivisions 19a, 19c; proposing coding for new law in Minnesota
1.7Statutes, chapters 124D; 290.
1.8BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.9 Section 1. [124D.031] ENROLLMENT OPTIONS FOR STUDENTS AT
1.10LOW-PERFORMING SCHOOLS.
1.11 Subdivision 1. Student enrollment options. (a) A student who attends a persistently
1.12low-performing school for at least one school year and whose family income is equal to or
1.13less than 175 percent of the federal poverty level is eligible to enroll in a nonpublic school
1.14under this section or a nonresident district school or program under section 124D.03.
1.15(b) For the purposes of this section, "persistently low-performing school" means
1.16a school that has student performance levels for at least three consecutive school years
1.17immediately preceding the school year a student is enrolling in a nonpublic school under
1.18this section or a nonresident district school or program under section 124D.03 in one
1.19or more of the following:
1.20(1) the total percentage of students scoring at the "does not meet standards" level
1.21for the reading Minnesota Comprehensive Assessments exceeds 25 percent for all grades
1.22tested; or
1.23(2) the total percentage of scoring at the "does not meet standards" level for the
1.24mathematics Minnesota Comprehensive Assessments exceeds 40 percent for all grades
1.25tested.
2.1 Subd. 2. Eligible nonpublic schools. To be eligible to participate under this section,
2.2a nonpublic school must comply with chapter 363A and administer the statewide reading
2.3and math tests under section 120B.30 to its students enrolled under this section.
2.4The commissioner shall ensure that the nonpublic school complies with the
2.5requirements of this subdivision.
2.6 Subd. 3. Tuition funding for students transferring to nonpublic schools. If a
2.7student transfers to a nonpublic school under this section, and upon receiving proof that
2.8the student is enrolled in the nonpublic school, the commissioner shall make quarterly
2.9payments to the student's parent or guardian in an amount equal to the lesser of the
2.10state average general education revenue per pupil unit, calculated without transportation
2.11sparsity revenue or the nonpublic school's operating and debt service cost per pupil that is
2.12related to educational programming, as determined by the commissioner. The total amount
2.13of the payments must not exceed the tuition and fees charged at the nonpublic school
2.14or the amount calculated under this subdivision, whichever is less. The commissioner
2.15shall send the check to the nonpublic school and the parent or guardian shall restrictively
2.16endorse the check for the nonpublic school's use.
2.17 Subd. 4. Student transportation. A resident school district is responsible for
2.18providing transportation within the district's borders for a student who enrolls in a
2.19nonpublic school under this section and shall receive transportation funding equal to the
2.20actual costs in the current school year for those transportation services.
2.21 Subd. 5. Funding for student testing. The state shall pay the nonpublic school
2.22costs of administering tests given under section 120B.30.
2.23 Subd. 6. List of nonpublic schools. The commissioner shall publish a list of
2.24participating nonpublic schools.
2.25EFFECTIVE DATE.This section is effective the day following final enactment
2.26and applies to the 2012-2013 school year and later.
2.27 Sec. 2. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19a, is
2.28amended to read:
2.29 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
2.30trusts, there shall be added to federal taxable income:
2.31 (1)(i) interest income on obligations of any state other than Minnesota or a political
2.32or governmental subdivision, municipality, or governmental agency or instrumentality
2.33of any state other than Minnesota exempt from federal income taxes under the Internal
2.34Revenue Code or any other federal statute; and
3.1 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
3.2Code, except:
3.3(A) the portion of the exempt-interest dividends exempt from state taxation under
3.4the laws of the United States; and
3.5(B) the portion of the exempt-interest dividends derived from interest income
3.6on obligations of the state of Minnesota or its political or governmental subdivisions,
3.7municipalities, governmental agencies or instrumentalities, but only if the portion of the
3.8exempt-interest dividends from such Minnesota sources paid to all shareholders represents
3.995 percent or more of the exempt-interest dividends, including any dividends exempt
3.10under subitem (A), that are paid by the regulated investment company as defined in section
3.11851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
3.12defined in section 851(g) of the Internal Revenue Code, making the payment; and
3.13 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
3.14government described in section 7871(c) of the Internal Revenue Code shall be treated as
3.15interest income on obligations of the state in which the tribe is located;
3.16 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
3.17accrued within the taxable year under this chapter and the amount of taxes based on net
3.18income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state
3.19or to any province or territory of Canada, to the extent allowed as a deduction under
3.20section 63(d) of the Internal Revenue Code, but the addition may not be more than the
3.21amount by which the itemized deductions as allowed under section 63(d) of the Internal
3.22Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of
3.23the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C)
3.24and 63(c)(1)(E) of the Internal Revenue Code, minus any addition that would have been
3.25required under clause (21) if the taxpayer had claimed the standard deduction. For the
3.26purpose of this paragraph, the disallowance of itemized deductions under section 68 of
3.27the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise
3.28taxes are the last itemized deductions disallowed;
3.29 (3) the capital gain amount of a lump-sum distribution to which the special tax under
3.30section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
3.31 (4) the amount of income taxes paid or accrued within the taxable year under this
3.32chapter and taxes based on net income paid to any other state or any province or territory
3.33of Canada, to the extent allowed as a deduction in determining federal adjusted gross
3.34income. For the purpose of this paragraph, income taxes do not include the taxes imposed
3.35by sections
4.1 (5) the amount of expense, interest, or taxes disallowed pursuant to section
4.3allowed under subdivision 19b, clause (1);
4.4 (6) the amount of a partner's pro rata share of net income which does not flow
4.5through to the partner because the partnership elected to pay the tax on the income under
4.6section 6242(a)(2) of the Internal Revenue Code;
4.7 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
4.8Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
4.9in the taxable year generates a deduction for depreciation under section 168(k) and the
4.10activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
4.11the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
4.12limited to excess of the depreciation claimed by the activity under section 168(k) over the
4.13amount of the loss from the activity that is not allowed in the taxable year. In succeeding
4.14taxable years when the losses not allowed in the taxable year are allowed, the depreciation
4.15under section 168(k) is allowed;
4.16 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
4.17Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
4.18Revenue Code of 1986, as amended through December 31, 2003;
4.19 (9) to the extent deducted in computing federal taxable income, the amount of the
4.20deduction allowable under section 199 of the Internal Revenue Code;
4.21 (10) for taxable years beginning before January 1, 2013, the exclusion allowed
4.22under section 139A of the Internal Revenue Code for federal subsidies for prescription
4.23drug plans;
4.24(11) the amount of expenses disallowed under section 290.10, subdivision 2;
4.25 (12) for taxable years beginning before January 1, 2010, the amount deducted for
4.26qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
4.27the extent deducted from gross income;
4.28 (13) for taxable years beginning before January 1, 2010, the amount deducted for
4.29certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
4.30of the Internal Revenue Code, to the extent deducted from gross income;
4.31(14) the additional standard deduction for property taxes payable that is allowable
4.32under section 63(c)(1)(C) of the Internal Revenue Code;
4.33(15) the additional standard deduction for qualified motor vehicle sales taxes
4.34allowable under section 63(c)(1)(E) of the Internal Revenue Code;
4.35(16) discharge of indebtedness income resulting from reacquisition of business
4.36indebtedness and deferred under section 108(i) of the Internal Revenue Code;
5.1(17) the amount of unemployment compensation exempt from tax under section
5.285(c) of the Internal Revenue Code;
5.3(18) the amount of the deduction under section 170 of the Internal Revenue Code
5.4that represents contributions to a qualified foundation under section 290.0682;
5.5(19) changes to federal taxable income attributable to a net operating loss that the
5.6taxpayer elected to carry back for more than two years for federal purposes but for which
5.7the losses can be carried back for only two years under section
5.9
5.10taxable years beginning after December 31, 2010, the amount of disallowed itemized
5.11deductions, but the amount of disallowed itemized deductions plus the addition required
5.12under clause (2) may not be more than the amount by which the itemized deductions as
5.13allowed under section 63(d) of the Internal Revenue Code exceeds the amount of the
5.14standard deduction as defined in section 63(c) of the Internal Revenue Code, disregarding
5.15the amounts allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue
5.16Code, and reduced by any addition that would have been required under clause (21) if the
5.17taxpayer had claimed the standard deduction:
5.18(i) the amount of disallowed itemized deductions is equal to the lesser of:
5.19(A) three percent of the excess of the taxpayer's federal adjusted gross income
5.20over the applicable amount; or
5.21(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
5.22taxpayer under the Internal Revenue Code for the taxable year;
5.23(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a
5.24married individual filing a separate return. Each dollar amount shall be increased by
5.25an amount equal to:
5.26(A) such dollar amount, multiplied by
5.27(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
5.28Revenue Code for the calendar year in which the taxable year begins, by substituting
5.29"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
5.30(iii) the term "itemized deductions" does not include:
5.31(A) the deduction for medical expenses under section 213 of the Internal Revenue
5.32Code;
5.33(B) any deduction for investment interest as defined in section 163(d) of the Internal
5.34Revenue Code; and
6.1(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
6.2theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
6.3Code or for losses described in section 165(d) of the Internal Revenue Code;
6.4
6.5after December 31, 2010, the amount of disallowed personal exemptions for taxpayers
6.6with federal adjusted gross income over the threshold amount:
6.7(i) the disallowed personal exemption amount is equal to the dollar amount of the
6.8personal exemptions claimed by the taxpayer in the computation of federal taxable income
6.9multiplied by the applicable percentage;
6.10(ii) "applicable percentage" means two percentage points for each $2,500 (or
6.11fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
6.12year exceeds the threshold amount. In the case of a married individual filing a separate
6.13return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
6.14no event shall the applicable percentage exceed 100 percent;
6.15(iii) the term "threshold amount" means:
6.16(A) $150,000 in the case of a joint return or a surviving spouse;
6.17(B) $125,000 in the case of a head of a household;
6.18(C) $100,000 in the case of an individual who is not married and who is not a
6.19surviving spouse or head of a household; and
6.20(D) $75,000 in the case of a married individual filing a separate return; and
6.21(iv) the thresholds shall be increased by an amount equal to:
6.22(A) such dollar amount, multiplied by
6.23(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
6.24Revenue Code for the calendar year in which the taxable year begins, by substituting
6.25"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
6.26
6.27for taxable years beginning after December 31, 2010, and before January 1, 2013, the
6.28difference between the standard deduction allowed under section 63(c) of the Internal
6.29Revenue Code and the standard deduction allowed for 2011 and 2012 under the Internal
6.30Revenue Code as amended through December 1, 2010.
6.31EFFECTIVE DATE.This section is effective for taxable years beginning after
6.32December 31, 2011.
6.33 Sec. 3. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19c, is
6.34amended to read:
7.1 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
7.2there shall be added to federal taxable income:
7.3 (1) the amount of any deduction taken for federal income tax purposes for income,
7.4excise, or franchise taxes based on net income or related minimum taxes, including but not
7.5limited to the tax imposed under section
7.6another state, a political subdivision of another state, the District of Columbia, or any
7.7foreign country or possession of the United States;
7.8 (2) interest not subject to federal tax upon obligations of: the United States, its
7.9possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
7.10state, any of its political or governmental subdivisions, any of its municipalities, or any
7.11of its governmental agencies or instrumentalities; the District of Columbia; or Indian
7.12tribal governments;
7.13 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
7.14Revenue Code;
7.15 (4) the amount of any net operating loss deduction taken for federal income tax
7.16purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
7.17deduction under section 810 of the Internal Revenue Code;
7.18 (5) the amount of any special deductions taken for federal income tax purposes
7.19under sections 241 to 247 and 965 of the Internal Revenue Code;
7.20 (6) losses from the business of mining, as defined in section
7.21clause (a), that are not subject to Minnesota income tax;
7.22 (7) the amount of any capital losses deducted for federal income tax purposes under
7.23sections 1211 and 1212 of the Internal Revenue Code;
7.24 (8) the exempt foreign trade income of a foreign sales corporation under sections
7.25921(a) and 291 of the Internal Revenue Code;
7.26 (9) the amount of percentage depletion deducted under sections 611 through 614 and
7.27291 of the Internal Revenue Code;
7.28 (10) for certified pollution control facilities placed in service in a taxable year
7.29beginning before December 31, 1986, and for which amortization deductions were elected
7.30under section 169 of the Internal Revenue Code of 1954, as amended through December
7.3131, 1985, the amount of the amortization deduction allowed in computing federal taxable
7.32income for those facilities;
7.33 (11) the amount of any deemed dividend from a foreign operating corporation
7.34determined pursuant to section
7.35shall be reduced by the amount of the addition to income required by clauses (20), (21),
7.36(22), and (23);
8.1 (12) the amount of a partner's pro rata share of net income which does not flow
8.2through to the partner because the partnership elected to pay the tax on the income under
8.3section 6242(a)(2) of the Internal Revenue Code;
8.4 (13) the amount of net income excluded under section 114 of the Internal Revenue
8.5Code;
8.6 (14) any increase in subpart F income, as defined in section 952(a) of the Internal
8.7Revenue Code, for the taxable year when subpart F income is calculated without regard to
8.8the provisions of Division C, title III, section 303(b) of Public Law 110-343;
8.9 (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
8.10and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
8.11has an activity that in the taxable year generates a deduction for depreciation under
8.12section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
8.13that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
8.14under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
8.15depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
8.16amount of the loss from the activity that is not allowed in the taxable year. In succeeding
8.17taxable years when the losses not allowed in the taxable year are allowed, the depreciation
8.18under section 168(k)(1)(A) and (k)(4)(A) is allowed;
8.19 (16) 80 percent of the amount by which the deduction allowed by section 179 of the
8.20Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
8.21Revenue Code of 1986, as amended through December 31, 2003;
8.22 (17) to the extent deducted in computing federal taxable income, the amount of the
8.23deduction allowable under section 199 of the Internal Revenue Code;
8.24 (18) for taxable years beginning before January 1, 2013, the exclusion allowed
8.25under section 139A of the Internal Revenue Code for federal subsidies for prescription
8.26drug plans;
8.27 (19) the amount of expenses disallowed under section
8.28 (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
8.29accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
8.30of a corporation that is a member of the taxpayer's unitary business group that qualifies
8.31as a foreign operating corporation. For purposes of this clause, intangible expenses and
8.32costs include:
8.33 (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
8.34use, maintenance or management, ownership, sale, exchange, or any other disposition of
8.35intangible property;
9.1 (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
9.2transactions;
9.3 (iii) royalty, patent, technical, and copyright fees;
9.4 (iv) licensing fees; and
9.5 (v) other similar expenses and costs.
9.6For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
9.7applications, trade names, trademarks, service marks, copyrights, mask works, trade
9.8secrets, and similar types of intangible assets.
9.9This clause does not apply to any item of interest or intangible expenses or costs paid,
9.10accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
9.11to such item of income to the extent that the income to the foreign operating corporation
9.12is income from sources without the United States as defined in subtitle A, chapter 1,
9.13subchapter N, part 1, of the Internal Revenue Code;
9.14 (21) except as already included in the taxpayer's taxable income pursuant to clause
9.15(20), any interest income and income generated from intangible property received or
9.16accrued by a foreign operating corporation that is a member of the taxpayer's unitary
9.17group. For purposes of this clause, income generated from intangible property includes:
9.18 (i) income related to the direct or indirect acquisition, use, maintenance or
9.19management, ownership, sale, exchange, or any other disposition of intangible property;
9.20 (ii) income from factoring transactions or discounting transactions;
9.21 (iii) royalty, patent, technical, and copyright fees;
9.22 (iv) licensing fees; and
9.23 (v) other similar income.
9.24For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
9.25applications, trade names, trademarks, service marks, copyrights, mask works, trade
9.26secrets, and similar types of intangible assets.
9.27This clause does not apply to any item of interest or intangible income received or accrued
9.28by a foreign operating corporation with respect to such item of income to the extent that
9.29the income is income from sources without the United States as defined in subtitle A,
9.30chapter 1, subchapter N, part 1, of the Internal Revenue Code;
9.31 (22) the dividends attributable to the income of a foreign operating corporation that
9.32is a member of the taxpayer's unitary group in an amount that is equal to the dividends
9.33paid deduction of a real estate investment trust under section 561(a) of the Internal
9.34Revenue Code for amounts paid or accrued by the real estate investment trust to the
9.35foreign operating corporation;
10.1 (23) the income of a foreign operating corporation that is a member of the taxpayer's
10.2unitary group in an amount that is equal to gains derived from the sale of real or personal
10.3property located in the United States;
10.4 (24) for taxable years beginning before January 1, 2010, the additional amount
10.5allowed as a deduction for donation of computer technology and equipment under section
10.6170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income;
10.7(25) discharge of indebtedness income resulting from reacquisition of business
10.8indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
10.9(26) the amount of the deduction under section 170 of the Internal Revenue Code
10.10that represents contributions to a qualified foundation under section 290.0682.
10.11EFFECTIVE DATE.This section is effective for taxable years beginning after
10.12December 31, 2011.
10.13 Sec. 4. Minnesota Statutes 2010, section 290.0674, subdivision 1, is amended to read:
10.14 Subdivision 1. Credit allowed. An individual is allowed a credit against the
10.15tax imposed by this chapter in an amount equal to 75 percent of the amount paid for
10.16education-related expenses for a qualifying child in kindergarten through grade 12. For
10.17purposes of this section, "education-related expenses" means:
10.18(1) fees or tuition for instruction by an instructor under section
10.1910
10.20Association, and who is not a lineal ancestor or sibling of the dependent for instruction
10.21outside the regular school day or school year, including tutoring, driver's education
10.22offered as part of school curriculum, regardless of whether it is taken from a public or
10.23private entity or summer camps, in grade or age appropriate curricula that supplement
10.24curricula and instruction available during the regular school year, that assists a dependent
10.25to improve knowledge of core curriculum areas or to expand knowledge and skills under
10.26the required academic standards under section
10.27standard under section
10.28teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such
10.29tenets, doctrines, or worship;
10.30(2) expenses for textbooks, including books and other instructional materials and
10.31equipment purchased or leased for use in elementary and secondary schools in teaching
10.32only those subjects legally and commonly taught in public elementary and secondary
10.33schools in this state. "Textbooks" does not include instructional books and materials
10.34used in the teaching of religious tenets, doctrines, or worship, the purpose of which is
10.35to instill such tenets, doctrines, or worship, nor does it include books or materials for
11.1extracurricular activities including sporting events, musical or dramatic events, speech
11.2activities, driver's education, or similar programs;
11.3(3) a maximum expense of $200 per family for personal computer hardware,
11.4excluding single purpose processors, and educational software that assists a dependent to
11.5improve knowledge of core curriculum areas or to expand knowledge and skills under
11.6the required academic standards under section
11.7standard under section
11.8taxpayer's home and not used in a trade or business regardless of whether the computer is
11.9required by the dependent's school; and
11.10(4) the amount paid to others for tuition and transportation of a qualifying child
11.11attending an elementary or secondary school situated in Minnesota, North Dakota, South
11.12Dakota, Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's
11.13compulsory attendance laws, which is not operated for profit, and which adheres to the
11.14provisions of the Civil Rights Act of 1964 and chapter 363A.
11.15For purposes of this section, "qualifying child" has the meaning given in section
11.1632(c)(3) of the Internal Revenue Code.
11.17EFFECTIVE DATE.This section is effective for taxable years beginning after
11.18December 31, 2011.
11.19 Sec. 5. [290.0682] EQUITY AND OPPORTUNITY IN EDUCATION TAX
11.20CREDIT.
11.21 Subdivision 1. Definitions. (a) For purposes of this section, the following terms
11.22have the meanings given.
11.23(b) "Eligible student" means a student who:
11.24(1) is a member of a household whose total annual income during the year, without
11.25consideration of the benefits under this program, does not exceed an amount equal to 1.85
11.26times the income standard used to qualify for a reduced-price meal under the National
11.27School Lunch Program, as specified in United States Code, title 42, section 1758. Once a
11.28student is eligible under this program, the student remains eligible regardless of household
11.29income until the student graduates from high school or reaches 21 years of age, whichever
11.30occurs first;
11.31(2) was eligible to attend a public school in the preceding semester or is starting
11.32school in Minnesota for the first time; and
11.33(3) resides in Minnesota.
11.34(c) "Equity and opportunity in education donation" means a donation to a qualified
11.35foundation that makes qualified grants.
12.1(d) "Qualified foundation" means a foundation fulfilling the requirement under
12.2subdivision 4.
12.3(e) "Qualified school" means a school operated in Minnesota that is either:
12.4(1) a nonpublic elementary or secondary school in Minnesota wherein a resident
12.5may legally fulfill the state's compulsory attendance laws, which is not operated for profit,
12.6and that adheres to the provisions of United States Code, title 42, section 1981; or
12.7(2) a high quality preschool.
12.8(f) "Qualified grant" means a grant from a qualified foundation to the parents or
12.9guardians of an eligible student for use at a qualified school.
12.10 Subd. 2. Credit allowed. (a) An individual or corporate taxpayer is allowed a credit
12.11against the tax due under this chapter equal to 100 percent of the amount donated to a
12.12qualified foundation during the taxable year.
12.13(b) The maximum aggregate statewide credits must not exceed $20,000,000 per
12.14taxable year.
12.15(c) A taxpayer must provide a copy of the receipt provided by the qualified
12.16foundation when claiming the credit for the equity and opportunity in education donation.
12.17 Subd. 3. Application for credit certificate. (a) A taxpayer must apply to the
12.18commissioner for an equity and opportunity in education tax credit certificate. Tax credit
12.19certificates under this section must be made available on a first-come, first-served basis
12.20until the maximum aggregate statewide credit amount has been reached. The maximum
12.21statewide credit amounts must not exceed $20,000,000 per taxable year for donations and
12.22commitments to qualified nonpublic schools or preschools.
12.23(b) The commissioner must not issue a tax credit certificate for an amount greater
12.24than the limits under subdivision 2.
12.25 Subd. 4. Qualified foundations. (a) Each qualified foundation that receives equity
12.26and opportunity in education donations directly from taxpayers under this section must:
12.27(1) notify the commissioner of its intent to participate in this program;
12.28(2) demonstrate to the commissioner that it has been granted an exemption from
12.29the federal income tax as an organization described in section 501(c)(3) of the Internal
12.30Revenue Code;
12.31(3) provide a receipt or verification on a form approved by the commissioner to
12.32taxpayers for donations and commitments made to qualified foundations;
12.33(4) conduct criminal background checks on all of its employees and board members
12.34and exclude from employment or governance any individuals that might reasonably pose a
12.35risk to the appropriate use of contributed funds;
12.36(5) demonstrate its financial accountability by:
13.1(i) submitting a financial information report for the organization that complies with
13.2uniform financial accounting standards established by the commissioner and conducted by
13.3a certified public accountant; and
13.4(ii) having the auditor certify that the report is free of material misstatements;
13.5(6) demonstrate its financial viability, if it is to receive donations of $150,000 or
13.6more during the school year, by filing financial information with the commissioner prior
13.7to September 1 of each year that demonstrates the financial viability of the qualified
13.8foundation;
13.9(7) allocate at least 90 percent of annual revenues for tuition grants;
13.10(8) use amounts received as donations to make qualified grants within two years
13.11of the date of receiving the donation; and
13.12(9) ensure that qualified schools that receive qualified grants or enroll eligible
13.13students:
13.14(i) comply with all health and safety laws or codes that apply to nonpublic schools;
13.15(ii) hold a valid occupancy permit if required by its municipality;
13.16(iii) certify that their admissions policy adheres to provisions in United States Code,
13.17title 42, section 1981; and
13.18(iv) provide academic accountability to parents of students in the program by
13.19regularly reporting to the parent on the student's progress.
13.20(b) A qualified foundation that receives equity and opportunity in education
13.21donations directly from taxpayers under this program must report to the commissioner by
13.22June 1 of each year the following information prepared by a certified public accountant
13.23regarding its grants in the previous calendar year:
13.24(1) the total number and total dollar amount of donations from taxpayers received
13.25during the previous calendar year; and
13.26(2) the total number and total dollar amount of qualified scholarships or qualified
13.27grants awarded during the previous calendar year.
13.28(c) If the commissioner decides to bar a qualified foundation from the program for
13.29failure to comply with the requirements in paragraph (a), clauses (1) to (9), the qualified
13.30foundation must notify taxpayers who have donated to the qualified foundation in writing
13.31within 30 days.
13.32 Subd. 5. Responsibilities of commissioner. (a) The commissioner must prescribe a
13.33standardized format for a receipt to be issued by a qualified foundation to a taxpayer to
13.34indicate the value of a donation received.
13.35(b) The commissioner must prescribe a standardized format for qualified foundations
13.36to report the information required under subdivision 4.
14.1(c) The commissioner must post on the department's Web site the names and
14.2addresses of qualified foundations and regularly update the names and addresses of any
14.3qualified foundations that have been barred from participating in the program.
14.4(d) The commissioner may conduct either a financial review or audit of a qualified
14.5foundation upon finding evidence of fraud or intentional misreporting.
14.6(e) The commissioner may bar a qualified foundation from participating in the
14.7program if the commissioner establishes that the qualified foundation has intentionally and
14.8substantially failed to comply with the requirements in subdivision 4. If the commissioner
14.9determines that a qualified foundation should be barred from the program, the
14.10commissioner must notify the qualified foundation within 60 days of that determination.
14.11EFFECTIVE DATE.This section is effective for taxable years beginning after
14.12December 31, 2011.
14.13 Sec. 6. TUITION FUNDING, NONPUBLIC SCHOOLS, FISCAL YEARS 2013
14.14AND 2014.
14.15(a) Notwithstanding Minnesota Statutes, section 124D.031, subdivision 3, in fiscal
14.16year 2013 only the quarterly payments calculated under Minnesota Statutes, section
14.17124D.031, subdivision 3, shall be reduced by 40 percent.
14.18(b) Notwithstanding Minnesota Statutes, section 124D.031, subdivision 3, in fiscal
14.19year 2014 only the quarterly payments calculated under Minnesota Statutes, section
14.20124D.031, subdivision 3, shall be reduced by 20 percent.
