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Senate Counsel, Research and Fiscal Analysis
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Minnesota Senate Bldg.
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95 University Avenue W. Suite 3300
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St. Paul, MN 55155
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(651) 296-4791
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Alexis C. Stangl
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Director
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Senate
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State of Minnesota
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S.F. No. 417 - Modifying Research and Development Credit Increase; Partial Refundability (as proposed to be amended by the A-1 amendment)
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Author:
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Senator Carla J. Nelson
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Prepared By:
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Nora Pollock, Senate Counsel (651/297-8066)
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Date:
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February 7, 2017
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As proposed to be amended, this bill increases the percentage allowed for the second tier of the research and development (R&D) credit and allows the first $250,000 of the credit to be refundable if the credit exceeds the taxpayer’s liability. Effective beginning in tax year 2017.
Section
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Provision
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1
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Increases the percentage on the second tier of qualified research expenses from 2.5% to 4.5%. Under current law, the credit calculation is 10 percent of the first $2 million of Minnesota qualified research expenses and 2.5 percent of the amount over that.
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2
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Moves the definition of “liability for tax” from the provision of law limiting refundability of the credit to the definitions provisions in the R&D credit statute. This same language is stricken in section 3.
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3
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Strikes the “liability for tax” definition that was moved to section 2. Adds a cross-reference in the carryforward provision in current law to the new refundability provision in section 4.
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4
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Provides that up to $250,000 of the credit is refundable if the credit exceeds the taxpayer’s liability. The 15-year carryforward allowance for the nonrefundable portion of the credit under current law is maintained.
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