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Investment tax credit.
Allows a 25-percent investment tax credit for qualifying taxpayers’
investments of at least $12,500 in qualified new business ventures. The
maximum credit per investor is limited to $50,000 per year and total
statewide credits are limited to $10 million per year. The credit applies to
both the individual income tax and the corporate franchise tax. The credit
is limited to the least of the following amounts:
•
The liability for individual income or corporate
franchise tax, including the alternative minimum taxes
•
$50,000
Amounts in excess of
tax liability are carryovers to the next 10 taxable years. Taxpayers can
claim the credit only after holding the investment. Waives the four year
holding period if the investment becomes worthless or the business is sold
before the holding period has expired.
Qualified taxpayers are
defined as accredited investors under SEC Regulation D who either does not
own 20 percent or more of the outstanding securities of the qualified
business or does not receive more than 50 percent of the gross annual income
from the qualified business. (The holdings and income of immediate family
holdings members count to determine whether the two percentage tests are
met.) Under Regulation D, accredited investors generally are high income and
net worth individuals or entities with substantial assets.
Individuals and
entities apply to the commissioner of the Department of Employment and
Economic Development (DEED) for certification as qualified taxpayers, and pay
a $250 fee which is applied to DEED’s costs of administering the program.
DEED will certify applicants on a first-come-first-served basis, and can
issue up to $10 million of provisional credit certificates per year. A
qualified taxpayer with a provisional credit certificate requests a final
credit certificate after the four-year holding period has expired. The
taxpayer must demonstrate that the qualified business has continued to have
its headquarters in Minnesota, over half of its employees and payroll in
Minnesota, and to meet the wage requirements specified for a qualified new
business venture.
Qualifying businesses
are defined as meeting the following requirements:
•
Its headquarters are in Minnesota.
•
It has fewer than 25 employees and at least 51
percent of employees or payroll are located in Minnesota; if the business has
more than 5 employees it must pay annual wages of at least 175 percent of the
federal poverty guidelines for a family of four.
•
The business is engaged in a qualified
high-technology, or a qualified biotechnology or medical device field, or in
green manufacturing (further defined in the bill), and is not engaged in real
estate development, insurance, banking, lobbying, political consulting retail
or wholesale trade, professional services, construction, transportation,
producing ethanol from corn, health care or similar ventures.
•
It has not been in operation for more than 10
consecutive years.
•
It has not received more than $1 million in
investments that qualify for the credit or more than $2 million in private
equity investment (regardless of whether they qualify for the credit).
•
It does not have more than $2 million in annual
gross sales.
•
It cannot be an affiliate or subsidiary of
business with more than 100 employees or gross annual sales of $2 million or
more.
Effective date: DEED
would begin issuing provisional credit certificates in tax fiscal year 2010.
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