Bill Text: MN SF790 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Small business investment tax credit provisions modifications
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2011-03-17 - Author added Daley [SF790 Detail]
Download: Minnesota-2011-SF790-Introduced.html
1.2relating to economic development; modifying certain small business investment
1.3tax credit provisions;amending Minnesota Statutes 2010, section 116J.8737,
1.4subdivisions 1, 2, 4.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 116J.8737, subdivision 1, is amended to
1.7read:
1.8 Subdivision 1. Definitions. (a) For the purposes of this section, the following terms
1.9have the meanings given.
1.10(b) "Qualified small business" means a business that has been certified by the
1.11commissioner under subdivision 2.
1.12(c) "Qualified investor" means an investor who has been certified by the
1.13commissioner under subdivision 3.
1.14(d) "Qualified fund" means a pooled angel investment network fund that has been
1.15certified by the commissioner under subdivision 4.
1.16(e) "Qualified investment" means a cash investment in a qualified small business
1.17of a minimum of:
1.18(1) $10,000 in a calendar year by a qualified investor; or
1.19(2) $30,000 in a calendar year by a qualified fund.
1.20A qualified investment must be made in exchange for common stock, a partnership
1.21or membership interest, preferred stock, debt with mandatory conversion to equity, or an
1.22equivalent ownership interest as determined by the commissioner.
1.23(f) "Family" means a family member within the meaning of the Internal Revenue
1.24Code, section 267(c)(4).
2.1(g) "Pass-through entity" means a corporation that for the applicable taxable year is
2.2treated as an S corporation or a general partnership, limited partnership, limited liability
2.3partnership, trust, or limited liability company and which for the applicable taxable year is
2.4not taxed as a corporation under chapter 290.
2.5(h) "Intern" means a student of an accredited institution of higher education, or a
2.6former student who has graduated in the past six months from an accredited institution
2.7of higher education, who is employed by a qualified small business in a nonpermanent
2.8position for a duration of nine months or less that provides training and experience in the
2.9primary business activity of the business.
2.10 Sec. 2. Minnesota Statutes 2010, section 116J.8737, subdivision 2, is amended to read:
2.11 Subd. 2. Certification of qualified small businesses. (a) Businesses may apply
2.12to the commissioner for certification as a qualified small business for a calendar year.
2.13The application must be in the form and be made under the procedures specified by the
2.14commissioner, accompanied by an application fee of $150. Application fees are deposited
2.15in the small business investment tax credit administration account in the special revenue
2.16fund. The application for certification for 2010 must be made available on the department's
2.17Web site by August 1, 2010. Applications for subsequent years' certification must be made
2.18available on the department's Web site by November 1 of the preceding year.
2.19(b) Within 30 days of receiving an application for certification under this subdivision,
2.20the commissioner must either certify the business as satisfying the conditions required of a
2.21qualified small business, request additional information from the business, or reject the
2.22application for certification. If the commissioner requests additional information from the
2.23business, the commissioner must either certify the business or reject the application within
2.2430 days of receiving the additional information. If the commissioner neither certifies the
2.25business nor rejects the application within 30 days of receiving the original application or
2.26within 30 days of receiving the additional information requested, whichever is later, then
2.27the application is deemed rejected, and the commissioner must refund the $150 application
2.28fee. A business that applies for certification and is rejected may reapply.
2.29(c) To receive certification, a business must satisfy all of the following conditions:
2.30(1) the business has its headquarters in Minnesota;
2.31(2) at least 51 percent of the business's employees are employed in Minnesota, and
2.3251 percent of the business's total payroll is paid or incurred in the state;
2.33(3) the business is engaged in, or is committed to engage in, innovation in Minnesota
2.34in one of the following as its primary business activity:
3.1(i) using proprietary technology to add value to a product, process, or service in a
3.2qualified high-technology field;
3.3(ii) researching or developing a proprietary product, process, or service in a qualified
3.4high-technology field; or
3.5(iii) researching, developing, or producing a new proprietary technology for use in
3.6the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;
3.7(4) other than the activities specifically listed in clause (3), the business is not
3.8engaged in real estate development, insurance, banking, lending, lobbying, political
3.9consulting, information technology consulting, wholesale or retail trade, leisure,
3.10hospitality, transportation, construction, ethanol production from corn, or professional
3.11services provided by attorneys, accountants, business consultants, physicians, or health
3.12care consultants;
3.13(5) the business has fewer than 25 employees;
3.14(6) the business must pay its employees annual wages of at least 175 percent of the
3.15federal poverty guideline for the year for a family of four and must pay its interns annual
3.16wages of at least 175 percent of the federal minimum wage used for federally covered
3.17employers, except that this requirement must be reduced proportionately for employees
3.18and interns who work less than full-time, and does not apply to an executive, officer, or
3.19member of the board of the business, or to any employee who owns, controls, or holds
3.20power to vote more than 20 percent of the outstanding securities of the business;
3.21(7) the business has not been in operation for more than ten years;
3.22(8) the business has not previously received private equity investments of more
3.23than$2,000,000 $4,000,000; and
3.24 (9) the business is not an entity disqualified under section80A.50 , paragraph (b),
3.25clause (3).
3.26(d) In applying the limit under paragraph (c), clause (5), the employees in all
3.27members of the unitary business, as defined in section290.17, subdivision 4 , must be
3.28included.
3.29(e) In order for a qualified investment in a business to be eligible for tax credits, the
3.30business must have applied for and received certification for the calendar year in which
3.31the investment was made prior to the date on which the qualified investment was made.
3.32(f) The commissioner must maintain a list of businesses certified under this
3.33subdivision for the calendar year and make the list accessible to the public on the
3.34department's Web site.
3.35(g) For purposes of this subdivision, the following terms have the meanings given:
4.1(1) "qualified high-technology field" includes aerospace, agricultural processing,
4.2renewable energy, energy efficiency and conservation, environmental engineering, food
4.3technology, cellulosic ethanol, information technology, materials science technology,
4.4nanotechnology, telecommunications, biotechnology, medical device products,
4.5pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar
4.6fields; and
4.7(2) "proprietary technology" means the technical innovations that are unique and
4.8legally owned or licensed by a business and includes, without limitation, those innovations
4.9that are patented, patent pending, a subject of trade secrets, or copyrighted.
4.10 Sec. 3. Minnesota Statutes 2010, section 116J.8737, subdivision 4, is amended to read:
4.11 Subd. 4. Certification of qualified funds. (a) A pass-through entity may apply to
4.12the commissioner for certification as a qualified fund for a calendar year. The application
4.13must be in the form and be made under the procedures specified by the commissioner,
4.14accompanied by an application fee of $1,000. Application fees are deposited in the small
4.15business investment tax credit administration account in the special revenue fund. The
4.16application for certification for 2010 of qualified funds must be made available on the
4.17department's Web site by August 1, 2010. Applications for subsequent years' certification
4.18must be made available by November 1 of the preceding year.
4.19(b) Within 30 days of receiving an application for certification under this subdivision,
4.20the commissioner must either certify the fund as satisfying the conditions required of a
4.21qualified fund, request additional information from the fund, or reject the application
4.22for certification. If the commissioner requests additional information from the fund,
4.23the commissioner must either certify the fund or reject the application within 30 days
4.24of receiving the additional information. If the commissioner neither certifies the fund
4.25nor rejects the application within 30 days of receiving the original application or within
4.2630 days of receiving the additional information requested, whichever is later, then the
4.27application is deemed rejected, and the commissioner must refund the $1,000 application
4.28fee. A fund that applies for certification and is rejected may reapply.
4.29(c) To receive certification, a fund must:
4.30(1) invest or intend to invest in qualified small businesses;
4.31(2) be organized as a pass-through entity; and
4.32(3) have at least three separate investors,all of whom at least three whose investment
4.33is made in the certified business and who seek a tax credit allocation satisfy the conditions
4.34in subdivision 3, paragraph (c).
5.1(d) Investments in the fund may consist of equity investments or notes that pay
5.2interest or other fixed amounts, or any combination of both.
5.3(e) In order for a qualified investment in a qualified small business to be eligible for
5.4tax credits, a qualified fund that makes the investment must have applied for and received
5.5certification for the calendar year prior to making the qualified investment.
5.6 Sec. 4. EFFECTIVE DATE.
5.7Sections 1 to 3 are effective retroactively from January 1, 2011.
1.3tax credit provisions;amending Minnesota Statutes 2010, section 116J.8737,
1.4subdivisions 1, 2, 4.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 116J.8737, subdivision 1, is amended to
1.7read:
1.8 Subdivision 1. Definitions. (a) For the purposes of this section, the following terms
1.9have the meanings given.
1.10(b) "Qualified small business" means a business that has been certified by the
1.11commissioner under subdivision 2.
1.12(c) "Qualified investor" means an investor who has been certified by the
1.13commissioner under subdivision 3.
1.14(d) "Qualified fund" means a pooled angel investment network fund that has been
1.15certified by the commissioner under subdivision 4.
1.16(e) "Qualified investment" means a cash investment in a qualified small business
1.17of a minimum of:
1.18(1) $10,000 in a calendar year by a qualified investor; or
1.19(2) $30,000 in a calendar year by a qualified fund.
1.20A qualified investment must be made in exchange for common stock, a partnership
1.21or membership interest, preferred stock, debt with mandatory conversion to equity, or an
1.22equivalent ownership interest as determined by the commissioner.
1.23(f) "Family" means a family member within the meaning of the Internal Revenue
1.24Code, section 267(c)(4).
2.1(g) "Pass-through entity" means a corporation that for the applicable taxable year is
2.2treated as an S corporation or a general partnership, limited partnership, limited liability
2.3partnership, trust, or limited liability company and which for the applicable taxable year is
2.4not taxed as a corporation under chapter 290.
2.5(h) "Intern" means a student of an accredited institution of higher education, or a
2.6former student who has graduated in the past six months from an accredited institution
2.7of higher education, who is employed by a qualified small business in a nonpermanent
2.8position for a duration of nine months or less that provides training and experience in the
2.9primary business activity of the business.
2.10 Sec. 2. Minnesota Statutes 2010, section 116J.8737, subdivision 2, is amended to read:
2.11 Subd. 2. Certification of qualified small businesses. (a) Businesses may apply
2.12to the commissioner for certification as a qualified small business for a calendar year.
2.13The application must be in the form and be made under the procedures specified by the
2.14commissioner, accompanied by an application fee of $150. Application fees are deposited
2.15in the small business investment tax credit administration account in the special revenue
2.16fund. The application for certification for 2010 must be made available on the department's
2.17Web site by August 1, 2010. Applications for subsequent years' certification must be made
2.18available on the department's Web site by November 1 of the preceding year.
2.19(b) Within 30 days of receiving an application for certification under this subdivision,
2.20the commissioner must either certify the business as satisfying the conditions required of a
2.21qualified small business, request additional information from the business, or reject the
2.22application for certification. If the commissioner requests additional information from the
2.23business, the commissioner must either certify the business or reject the application within
2.2430 days of receiving the additional information. If the commissioner neither certifies the
2.25business nor rejects the application within 30 days of receiving the original application or
2.26within 30 days of receiving the additional information requested, whichever is later, then
2.27the application is deemed rejected, and the commissioner must refund the $150 application
2.28fee. A business that applies for certification and is rejected may reapply.
2.29(c) To receive certification, a business must satisfy all of the following conditions:
2.30(1) the business has its headquarters in Minnesota;
2.31(2) at least 51 percent of the business's employees are employed in Minnesota, and
2.3251 percent of the business's total payroll is paid or incurred in the state;
2.33(3) the business is engaged in, or is committed to engage in, innovation in Minnesota
2.34in one of the following as its primary business activity:
3.1(i) using proprietary technology to add value to a product, process, or service in a
3.2qualified high-technology field;
3.3(ii) researching or developing a proprietary product, process, or service in a qualified
3.4high-technology field; or
3.5(iii) researching, developing, or producing a new proprietary technology for use in
3.6the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;
3.7(4) other than the activities specifically listed in clause (3), the business is not
3.8engaged in real estate development, insurance, banking, lending, lobbying, political
3.9consulting, information technology consulting, wholesale or retail trade, leisure,
3.10hospitality, transportation, construction, ethanol production from corn, or professional
3.11services provided by attorneys, accountants, business consultants, physicians, or health
3.12care consultants;
3.13(5) the business has fewer than 25 employees;
3.14(6) the business must pay its employees annual wages of at least 175 percent of the
3.15federal poverty guideline for the year for a family of four and must pay its interns annual
3.16wages of at least 175 percent of the federal minimum wage used for federally covered
3.17employers, except that this requirement must be reduced proportionately for employees
3.18and interns who work less than full-time, and does not apply to an executive, officer, or
3.19member of the board of the business, or to any employee who owns, controls, or holds
3.20power to vote more than 20 percent of the outstanding securities of the business;
3.21(7) the business has not been in operation for more than ten years;
3.22(8) the business has not previously received private equity investments of more
3.23than
3.24 (9) the business is not an entity disqualified under section
3.25clause (3).
3.26(d) In applying the limit under paragraph (c), clause (5), the employees in all
3.27members of the unitary business, as defined in section
3.28included.
3.29(e) In order for a qualified investment in a business to be eligible for tax credits, the
3.30business must have applied for and received certification for the calendar year in which
3.31the investment was made prior to the date on which the qualified investment was made.
3.32(f) The commissioner must maintain a list of businesses certified under this
3.33subdivision for the calendar year and make the list accessible to the public on the
3.34department's Web site.
3.35(g) For purposes of this subdivision, the following terms have the meanings given:
4.1(1) "qualified high-technology field" includes aerospace, agricultural processing,
4.2renewable energy, energy efficiency and conservation, environmental engineering, food
4.3technology, cellulosic ethanol, information technology, materials science technology,
4.4nanotechnology, telecommunications, biotechnology, medical device products,
4.5pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar
4.6fields; and
4.7(2) "proprietary technology" means the technical innovations that are unique and
4.8legally owned or licensed by a business and includes, without limitation, those innovations
4.9that are patented, patent pending, a subject of trade secrets, or copyrighted.
4.10 Sec. 3. Minnesota Statutes 2010, section 116J.8737, subdivision 4, is amended to read:
4.11 Subd. 4. Certification of qualified funds. (a) A pass-through entity may apply to
4.12the commissioner for certification as a qualified fund for a calendar year. The application
4.13must be in the form and be made under the procedures specified by the commissioner,
4.14accompanied by an application fee of $1,000. Application fees are deposited in the small
4.15business investment tax credit administration account in the special revenue fund. The
4.16application for certification for 2010 of qualified funds must be made available on the
4.17department's Web site by August 1, 2010. Applications for subsequent years' certification
4.18must be made available by November 1 of the preceding year.
4.19(b) Within 30 days of receiving an application for certification under this subdivision,
4.20the commissioner must either certify the fund as satisfying the conditions required of a
4.21qualified fund, request additional information from the fund, or reject the application
4.22for certification. If the commissioner requests additional information from the fund,
4.23the commissioner must either certify the fund or reject the application within 30 days
4.24of receiving the additional information. If the commissioner neither certifies the fund
4.25nor rejects the application within 30 days of receiving the original application or within
4.2630 days of receiving the additional information requested, whichever is later, then the
4.27application is deemed rejected, and the commissioner must refund the $1,000 application
4.28fee. A fund that applies for certification and is rejected may reapply.
4.29(c) To receive certification, a fund must:
4.30(1) invest or intend to invest in qualified small businesses;
4.31(2) be organized as a pass-through entity; and
4.32(3) have at least three separate investors,
4.33is made in the certified business and who seek a tax credit allocation satisfy the conditions
4.34in subdivision 3, paragraph (c).
5.1(d) Investments in the fund may consist of equity investments or notes that pay
5.2interest or other fixed amounts, or any combination of both.
5.3(e) In order for a qualified investment in a qualified small business to be eligible for
5.4tax credits, a qualified fund that makes the investment must have applied for and received
5.5certification for the calendar year prior to making the qualified investment.
5.6 Sec. 4. EFFECTIVE DATE.
5.7Sections 1 to 3 are effective retroactively from January 1, 2011.
