This bill provides an 80 percent credit against insurance premium taxes to a business investment company that invests in a qualified Minnesota small business.
Section 1 [Minnesota Business Investment Company Credit], subdivision 1 (Definitions) defines “affiliate,” “allocation date,” “designated capital,” “Minnesota business investment company,” “participating investor,” “person,” “qualified business,” “qualified debt instrument,” “qualified distribution,” “qualified investment,” and “state premium tax liability.”
Subdivision 2 (Certification) provides for the application process for certification of a Minnesota business investment company, including a nonrefundable application fee of $7,500, and audited balanced sheet showing equity capitalization of $500,000 or more. Requires the department to issue the certificate or refusal for certification within 45 days from receipt of the application. Requires application fees collected to be appropriated to the Department of Employment and Economic Development for costs associated with certifying Minnesota bsuiness investment companies.
Subdivision 3 (Requirements) prohibits a participating investor or affiliate from owning more than 15 percent of, managing, or controlling the investments of a Minnesota business investment company. Allows a Minnesota business investment company to obtain guaranties, indemnities, bonds, insurance policies for the benefit of participating investors from any entity.
Subdivision 4 (Aggregate limitations on investment tax credits; allocation) limits the aggregate amount of investment tax credits to $160,000,000. Credits must be allocated in the order that the allocation claims are filed with the department. Provides application and investment deadlines and describes the allocation process.
Subdivision 5 (Requirements for continuation of certification) requires a Minnesota business investment company to invest at least 35 percent of its capital within two years of the allocation, and at least 50 percent within three years. Prohibits a Minnesota business investment company from paying management fees if it has not invested at least 60 percent of its designated capital within four years or 100 percent within six years.
Subdivision 6 (Reporting requirements) requires Minnesota business investment companies to report the name of participating investors; the amount of each participating investor’s investment of designated capital; the amount of designated capital that remains to be invested; whether it has invested more than 15 percent of its designated capital in any one business; the qualified investments made; and the number of employees of each qualified business receiving investments.
Subdivision 7 (Distributions) allows a Minnesota business investment company to make qualified distributions at any time. Requires the state to receive 10 percent of the net profits on qualified investments.
Subdivision 8 (Decertification) requires the department to conduct an annual review of each Minnesota business investment company and provides for a process of decertification in the event of material violation of the statute.
Subdivision 9 (Registration requirements) requires investments to be registered or specifically exempt from registration.
Subdivision 10 (Rulemaking exception) exempts Department of Employment and Economic Development procedures under this section from rulemaking under Chapter 14.
Subdivision 11 (Report) requires the department to submit an annual report to the governor and legislature on the tax credits issued under this section as specified.
[Effective Date] provides that the section is effective the day following final enactment.
Section 2 [Minnesota Business Investment Company Credit], subdivision 1 (Credit allowed) provides that a qualified taxpayer is allowed a credit against insurance premium taxes equal to 80 percent of investments made in a Minnesota business investment company. The credit must be taken as 20 percent of the total credit over four taxable years from tax year 2015 to tax year 2018. Limits the credit to be nonrefundable and provides for a carryover for an unlimited number of succeeding taxable years. Allows for recapture of the credit in the event of decertification, unless the Minnesota business investment company has already invested 35 percent of its designated capital within two years.
Subdivision 2 (Transfers) provides the requirements for transfer of credits after 180 days from the date of investment.
Subdivision 3 (Repayment of tax benefits received) provides for repayment of credits by the investors in the event of decertification of a Minnesota business investment company or revocation of credits.
[Effective Date] provides that the section is effective beginning in tax year 2012.