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S.F. No. 2499 - Youth intervention donation tax credit
Author: Senator Paul T. Anderson
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
Date: April 3, 2019


This bill establishes a refundable tax credit for donations to a qualified youth intervention organization. An entity must apply to and be approved by the commissioner as a qualified organization. Taxpayers must obtain a credit certificate from the Department of Revenue to claim the credit. Effective beginning in tax year 2020.

Section 1. Youth intervention donation tax credit.

Subd. 1. Definitions. Defines terms applicable to the credit. In pertinent part:

“Qualified youth intervention organization” or “qualified organization” means a 501(c)(3) entity primarily engaged in providing youth intervention services, has been approved by the commissioner as a qualifying organization, and has not been barred from participating in the program.

“Youth intervention services” means community-based services intended and designed to help at-risk youth in their development.

“At-risk youth” means an individual aged 6-21 who meets at least one of eight risk factors listed in paragraph (e).

Subd. 2. Credit allowed. Authorizes a credit against individual income and corporate franchise tax equal to 50 percent of the amount contributed to a qualifying organization. The taxpayer must have received a credit certificate to claim the credit.

Subd. 3. Application for credit certificate; limitations. Requires the commissioner to make credit applications available by January 1 of the tax year in which the credit will be claimed. Taxpayers must apply to the commissioner for a credit certificate. The commissioner must issue credit certificates on a first-come, first-served basis. Credit certificates must indicate the qualified organization designated on the credit application and the maximum amount of the credit allowed. Up to $5 million may be allocated in tax credits each year. The maximum amount of credits available in a tax year for a donation to each qualified organization is $10,000 for married joint filers; $5,000 for any other individual filer; $50,000 for a corporate filer; and $5,000 for each member, partner, or shareholder of a pass-through entity.

Subd. 4. Responsibilities of qualified organizations. Requires entities seeking to become a qualified organization to apply for certification by September 15 of the year preceding the tax year in which the entity will receive donations for which credits may be claimed. The application must demonstrate the entity’s 501(c)(3) status and attest that it provides youth intervention services. A qualified organization must also provide information to the commissioner demonstrating financial viability if the organization received donations of at least $150,000 in a tax year; documentation that it has used donations to provide youth intervention services; and report the total number and dollar amount of donations received for which credit certificates were issued.

Subd. 5. Responsibilities of commissioner. Requires the commissioner to make applications available for entities to be approved as a qualifying organization by August 1 of the year preceding the tax year in which a credit to the organization will be claimed; approve complete applications within 60 days of receipt; and notify organizations that provide incomplete applications to resubmit within 30 days. Requires the commissioner to post qualified organizations on its website by November 15 for the next tax year and to regularly update the list for qualifying organizations that have been barred from the program. The commissioner must also prescribe a standardized format for qualified organizations to provide taxpayer receipts and to provide the information required under subdivision 4.

Authorizes the commissioner or an experienced private 501(c)(3) entity to conduct a financial audit of a qualified organization upon evidence of fraud or intentional misreporting. Upon finding of fraud or intentional misreporting, the qualified organization is barred for further participation.

Subd. 6. Credit refundable. Provides that the credit is refundable and appropriates a sufficient amount to pay refunds.

Subd. 7. Proportional credits. Requires pass-through entities to provide shareholders, partners, or members a statement indicating each individual’s share of the certified credit amount.

Subd. 8. Audit powers. Authorizes the commissioner to use audit and examination powers existing under current law to verify taxpayer credit eligibility.

Section 2. Appropriation; administrative costs. Appropriates $100,000 to the commissioner to implement and administer the credit.

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