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S.F. No. 2503 - Angel Investment Tax Credit Modifications (as Proposed to be Amended by the A-6 Amendment)
 
Author: Senator Roger Reinert
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: March 17, 2014



 

This bill makes changes to the qualification requirements in the small business investment credit (commonly known as the “Angel Investment Credit”), increases the annual appropriation for the credit for tax year 2014, extends the credit to tax year 2016, and requires allocation of the credit in 2015 and 2016 to women and minority-owned businesses and greater Minnesota businesses.

Section

Provision

1

Adds a reference to a “qualified greater Minnesota business” in the definitions section.  Effective the day following final enactment for tax years beginning after December 31, 2014. 
 

2

Adds references to a qualified greater Minnesota business for purposes of the certification requirements. Requires that to receive certification as a qualified greater Minnesota business, a business must satisfy the existing requirements for qualified small businesses under current law, have its headquarters in greater Minnesota, have at least 51 of percent of its employees employed in greater Minnesota, and have 51 percent of its total payroll paid or incurred in greater Minnesota. Requires the DEED Commissioner to maintain a list of qualified small businesses and qualified greater Minnesota businesses certified in a calendar year and make the list accessible to the public. Defines “greater Minnesota” as the area outside the seven-county metropolitan area, with the exception of certain cities listed in statute. Effective the day following final enactment for tax years beginning after December 31, 2014. 
 

3

Increases the amount that may be allocated for credits under the program and extends the allocation for two years. For tax year 2014, the allocation is increased from $12 million under current law to $15 million, effective the day following final enactment for tax year 2014. 

Extends the allocation to tax years 2015 and 2016, and authorizes $15 million to be allocated each year. Requires that for 2015 and 2016, $7.5 million must be allocated to credits for qualifying investments in qualified greater Minnesota businesses and minority or women-owned qualified small businesses anywhere in the state. Adds a requirement that, at the time the investment is proposed, the qualified investor or investor in a qualified fund must not be a founder, officer, or principal of the qualified small business or qualified greater Minnesota small business. Family members of individuals disqualified by this requirement are also not eligible for the credit. These provisions are effective the day following final enactment for tax years beginning after December 31, 2014. 
 

4

Applies the repayment provisions for the small business investment credit to greater Minnesota businesses, if the DEED Commissioner determines that a business did not meet the certification requirements under section 2 in any of the five years after the year in which the qualifying investment was made. Effective the day following final enactment for tax years beginning after December 31, 2014. 
 

5

Adds the requirement that the annual report to the Legislature on the qualified small business investment credit include information regarding location, type of business, and whether the qualified greater Minnesota business received investment resulting in certification of tax credits. Effective the day following final enactment for tax years beginning after 2014. 
 

6

Extends the credit through tax year 2016. Retains reporting requirements necessary to enforce credit revocations and provide program information to the legislature. Effective the day following final enactment.
 

 

 
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