Minnesota 2025-2026 Regular Session

Minnesota House Bill HF1649 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to taxation; corporate franchise and unitary taxation; requiring certain
3	3	1.3 foreign corporations to be treated as unitary with a shareholder; amending
4	4	1.4 Minnesota Statutes 2024, sections 290.0132, by adding subdivisions; 290.0134,
5	5	1.5 by adding subdivisions; 290.17, by adding subdivisions; 290.21, subdivision 9;
6	6	1.6 repealing Minnesota Statutes 2024, section 290.21, subdivision 10.
7	7	1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
8	8	1.8 Section 1. Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
9	9	1.9to read:
10	10	1.10 Subd. 36.Global intangible low-taxed income.The amount of global intangible
11	11	1.11low-taxed income under section 951A of the Internal Revenue Code is a subtraction.
12	12	1.12 EFFECTIVE DATE.This section is effective for taxable years beginning after December
13	13	1.1331, 2024.
14	14	1.14 Sec. 2. Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
15	15	1.15to read:
16	16	1.16 Subd. 37.Subpart F income.For a shareholder of a controlled foreign corporation
17	17	1.17treated as unitary under section 290.17, subdivision 4a, the amount of income included
18	18	1.18under section 951 of the Internal Revenue Code is a subtraction.
19	19	1.19 EFFECTIVE DATE.This section is effective for taxable years beginning after December
20	20	1.2031, 2024.
21	21	1Sec. 2.
22	22	REVISOR EAP/LJ 25-0367902/11/25
23	23	State of Minnesota
24	24	This Document can be made available
25	25	in alternative formats upon request
26	26	HOUSE OF REPRESENTATIVES
27	27	H. F. No. 1649
28	28	NINETY-FOURTH SESSION
29	29	Authored by Greenman and Gomez02/27/2025
30	30	The bill was read for the first time and referred to the Committee on Taxes 2.1 Sec. 3. Minnesota Statutes 2024, section 290.0134, is amended by adding a subdivision
31	31	2.2to read:
32	32	2.3 Subd. 21.Global intangible low-taxed income.The amount of global intangible
33	33	2.4low-taxed income under section 951A of the Internal Revenue Code is a subtraction.
34	34	2.5 EFFECTIVE DATE.This section is effective for taxable years beginning after December
35	35	2.631, 2024.
36	36	2.7 Sec. 4. Minnesota Statutes 2024, section 290.0134, is amended by adding a subdivision
37	37	2.8to read:
38	38	2.9 Subd. 22.Subpart F income.For a shareholder of a controlled foreign corporation
39	39	2.10treated as unitary under section 290.17, subdivision 4a, the amount of income included
40	40	2.11under section 951 of the Internal Revenue Code is a subtraction.
41	41	2.12 EFFECTIVE DATE.This section is effective for taxable years beginning after December
42	42	2.1331, 2024.
43	43	2.14 Sec. 5. Minnesota Statutes 2024, section 290.17, is amended by adding a subdivision to
44	44	2.15read:
45	45	2.16 Subd. 4a.Controlled foreign corporations.(a) For purposes of applying subdivision
46	46	2.174, a controlled foreign corporation as defined in section 957 of the Internal Revenue Code
47	47	2.18is deemed to be a domestic corporation if:
48	48	2.19 (1) a United States shareholder of a controlled foreign corporation is required for the
49	49	2.20taxable year to include in gross income the shareholder's global intangible low-taxed income
50	50	2.21under section 951A of the Internal Revenue Code; and
51	51	2.22 (2) the controlled foreign corporation is a member of a unitary group.
52	52	2.23 (b) In the event the taxpayer fails to designate the controlled foreign corporation as a
53	53	2.24member of a unitary group and the commissioner subsequently determines that the controlled
54	54	2.25foreign corporation is a member of a unitary group, the commissioner's determination is
55	55	2.26prima facie valid. The taxpayer subject to the determination has the burden of establishing
56	56	2.27the incorrectness of the determination in any related action or proceeding.
57	57	2.28 (c) For purposes of imposing a tax under this chapter, the federal taxable income of a
58	58	2.29controlled foreign corporation deemed to be a domestic corporation under this subdivision
59	59	2.30must be computed as follows:
60	60	2Sec. 5.
61	61	REVISOR EAP/LJ 25-0367902/11/25 3.1 (1) a profit and loss statement must be prepared in the currency in which the books of
62	62	3.2account of the controlled foreign corporation are regularly maintained;
63	63	3.3 (2) except as determined by the commissioner or otherwise allowed under the Internal
64	64	3.4Revenue Code, adjustments must be made to the profit and loss statement to conform the
65	65	3.5statement to the accounting principles generally accepted in the United States for the
66	66	3.6preparation of those statements;
67	67	3.7 (3) adjustments must be made to the profit and loss statement to conform it to the tax
68	68	3.8accounting standards required by the commissioner;
69	69	3.9 (4) unless otherwise authorized by the commissioner, the apportionment factors and
70	70	3.10profit and loss statement of each member of the combined group must be converted into
71	71	3.11the currency in which the parent company maintains its books and records; and
72	72	3.12 (5) the taxpayer's apportionment factors and profit and loss statement must be expressed
73	73	3.13in United States dollars.
74	74	3.14 EFFECTIVE DATE.This section is effective for taxable years beginning after December
75	75	3.1531, 2024.
76	76	3.16 Sec. 6. Minnesota Statutes 2024, section 290.17, is amended by adding a subdivision to
77	77	3.17read:
78	78	3.18 Subd. 4b.Worldwide election.(a) Taxpayer members of a unitary group, of which one
79	79	3.19or more members are deemed to be domestic corporations under subdivision 4a for the
80	80	3.20taxable year, may elect to determine each of their apportioned shares of the net business
81	81	3.21income or loss of the combined group under a worldwide election. Under the election,
82	82	3.22taxpayer members must take into account the entire income and apportionment factors of
83	83	3.23each member of the unitary group, regardless of the place where a member is incorporated
84	84	3.24or formed. Corporations or other entities incorporated or formed outside of the United States
85	85	3.25are subject to the requirements of subdivision 4a, paragraph (c), in reporting their income.
86	86	3.26 (b) A worldwide election is effective only if made on a timely filed, original return for
87	87	3.27the tax year by each member of the unitary group subject to tax under this chapter.
88	88	3.28 (c) A worldwide election is binding for and applies to the taxable year it is made and
89	89	3.29for the ten following taxable years.
90	90	3.30 EFFECTIVE DATE.This section is effective for taxable years beginning after December
91	91	3.3131, 2024.
92	92	3Sec. 6.
93	93	REVISOR EAP/LJ 25-0367902/11/25 4.1 Sec. 7. Minnesota Statutes 2024, section 290.17, is amended by adding a subdivision to
94	94	4.2read:
95	95	4.3 Subd. 4c.Withdrawal; reinstitution.(a) The election under subdivision 4b, paragraph
96	96	4.4(a), may be withdrawn:
97	97	4.5 (1) after expiration of the ten-year period in subdivision 4b, paragraph (c), provided that
98	98	4.6the withdrawal is made in writing within one year after the expiration of the election; or
99	99	4.7 (2) prior to the expiration of the ten-year period, if the taxpayer members:
100	100	4.8 (i) file a written withdrawal request with the commissioner;
101	101	4.9 (ii) demonstrate that they would experience an extraordinary financial hardship due to
102	102	4.10increased tax arising from unforeseen changes in this state's tax statutes, laws, or policies;
103	103	4.11and
104	104	4.12 (iii) receive written permission from the commissioner approving the withdrawal, which
105	105	4.13the commissioner may grant.
106	106	4.14 (b) A withdrawal made under paragraph (a) is binding for ten years. If no withdrawal
107	107	4.15is properly made under paragraph (a), clause (1), the worldwide election is binding for an
108	108	4.16additional ten taxable years. If the commissioner grants written permission to withdraw
109	109	4.17under paragraph (a), clause (2), the commissioner must impose any requirement deemed
110	110	4.18necessary to prevent evasion of tax or to clearly reflect income for the election period before
111	111	4.19or after withdrawal.
112	112	4.20 (c) Notwithstanding the requirement binding withdrawal for ten years under paragraph
113	113	4.21(b), the election may be reinstituted if the taxpayer members:
114	114	4.22 (1) file a written reinstitution request with the commissioner;
115	115	4.23 (2) demonstrate that they would experience an extraordinary hardship due to unforeseen
116	116	4.24changes in this state's tax statutes, laws, or policies; and
117	117	4.25 (3) receive written permission from the commissioner approving the reinstitution, which
118	118	4.26the commissioner may grant.
119	119	4.27 (d) A reinstitution under paragraph (c) is binding for a period of ten years. The withdrawal
120	120	4.28provisions of paragraph (a) apply to a reinstitution under paragraph (c), and the provisions
121	121	4.29of paragraph (c) apply to a reinstitution following a subsequent withdrawal.
122	122	4.30 EFFECTIVE DATE.This section is effective for taxable years beginning after December
123	123	4.3131, 2024.
124	124	4Sec. 7.
125	125	REVISOR EAP/LJ 25-0367902/11/25 5.1 Sec. 8. Minnesota Statutes 2024, section 290.21, subdivision 9, is amended to read:
126	126	5.2 Subd. 9.Controlled foreign corporations.For a shareholder of a controlled foreign
127	127	5.3corporation not treated as unitary under section 290.17, subdivision 4a, the net income of
128	128	5.4a corporation that is included pursuant to section 951 of the Internal Revenue Code is
129	129	5.5dividend income.
130	130	5.6 EFFECTIVE DATE.This section is effective for taxable years beginning after December
131	131	5.731, 2024.
132	132	5.8 Sec. 9. REPEALER.
133	133	5.9 Minnesota Statutes 2024, section 290.21, subdivision 10, is repealed.
134	134	5.10 EFFECTIVE DATE.This section is effective for taxable years beginning after December
135	135	5.1131, 2024.
136	136	5Sec. 9.
137	137	REVISOR EAP/LJ 25-0367902/11/25 290.21 DEDUCTIONS ALLOWED TO CORPORATIONS.
138	138	Subd. 10.Global intangible low-taxed income.Any amounts included in taxable income
139	139	pursuant to section 951A of the Internal Revenue Code, are dividend income.
140	140	1R
141	141	APPENDIX
142	142	Repealed Minnesota Statutes: 25-03679