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This bill creates a nonrefundable individual income and corporate franchise tax credit for investments in qualifying workforce housing projects, which must be located in greater Minnesota. The credit is 40 percent of the investment amount, or 50 percent of the investment amount for local employer investors. The maximum that may be claimed by a taxpayer in a calendar year is $1 million. No more than 40 percent of credits allocated in a year may be allocated for the same workforce housing project. Claimants for the credit must apply to DEED to receive a credit certificate, and DEED must notify the commissioner of revenue of the credit certificates issued. The credit is effective beginning in tax year 2015 with a maximum allocation amount of $25 million. Beginning in tax year 2016, the maximum annual allocation is $50 million.
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Section 1
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Provision
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Subd. 1
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Provides definitions for the workforce housing tax credit.
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Subd. 2
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Provides for a tax credit of up to $1 million for qualifying investments in a qualifying workforce housing project, as defined under subdivision 1, paragraph (m). For qualified project investors, the credit is 40 percent of the amount of the investment. For qualified local employer investors, as defined under subdivision 1, paragraph (k), the credit is 50 percent of the investment. The credit is allowed in the tax year that the qualified workforce housing project is certified for occupancy.
Requires that the maximum amount of credits that may be allocated is $25 million for tax year 2015 and $50 million for tax year 2016 and thereafter. No more than 40 percent of the total amount of credits may be allocated for the same workforce housing project.
Provides requirements for the taxpayer credit application process and requires that the commissioner of DEED notify the commissioner of revenue of the credit certificates issued.
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Subd. 3
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Prohibits the transfer of credits between taxpayers. Allows the commissioner of DEED to revoke credits and require the taxpayer to repay the credit amount if eligibility requirements are not met and credits have been allocated. Requires the commissioner of DEED to notify the commissioner of revenue of the credits that have been revoked and are subject to repayment.
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Subd. 4
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Requires the commissioner of DEED to provide a report to the chairs and ranking minority members of the senate and house of representatives committees on taxes and economic development. The report must contain the information required in clauses (1) to (7).
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Subd. 5.
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Appropriates to DEED an amount sufficient to administer the workforce housing tax credit program.
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Section 2
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Authorizes the tax credit in the income and corporate franchise tax chapter in the amount certified by the commissioner of DEED in section 1. Credits allowed for partnerships, LLCs taxed as partnerships, or S corporations are allocated to partners, members, or shareholders on a pro rata basis. Credits allowed for corporations that are partners in a partnership are limited to the corporation’s tax liability (up to the $1 million maximum amount) or the amount of tax separately computed with respect to the corporation’s interest attributable to the business, trade, or entity, whichever is less. The credit is nonrefundable and may be carried forward for up to ten years.
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