HF4498

Purpose

• This bill aims to set up a process in Minnesota to identify and designate scholarship granting organizations (SGOs) that would participate in the federal tax credit program described in Internal Revenue Code Section 25F. It connects Minnesota’s education-related framework (chapter 270C) with federal requirements, requiring the Department of Revenue to designate SGOs, publish a list annually, and coordinate with the U.S. Treasury.

Main provisions

• Annual list of SGOs:
  • By January 1 each year, the commissioner must submit to the U.S. Secretary of the Treasury and publish on the Minnesota Department of Revenue website a list of SGOs located in Minnesota that meet the requirements of IRC Section 25F.
  • The list must reflect compliance with Section 25F and its regulations or other Treasury guidance, and must include all Minnesota SGOs that meet those requirements.
  • This submission counts as Minnesota’s election to participate in the federal program established by Section 25F, though the commissioner may also submit SGOs in a calendar year after determining they meet the requirements.
• Rulemaking and qualifications:
  • The commissioner may establish rules governing the process and documentation needed for an entity to be included on the annual list.
  • Rules must comply with Treasury regulations and guidance; the commissioner’s role is primarily ministerial to ensure compliance.
• Participation by SGOs:
  • SGOs that are registered and permitted to operate and receive donations in Minnesota may participate by submitting a notice of intent to receive qualified donations under IRC Section 25F.
  • The notice of intent must be in a form prescribed by the commissioner and submitted by December 1 of the year before the calendar year of the required submission.
• Definitions:
  • For purposes of this section, “scholarship granting organization” has the meaning given in IRC Section 25F(c5) as amended through July 4, 2025.

How it changes current law

• Establishes a formal mechanism in Minnesota law (chapter 270C) to designate SGOs that participate in the federal IRC 25F tax credit program.
• Adds annual publication and state-elected participation requirements linking state processes with federal guidance.
• Clarifies the commissioner’s role as ministerial in ensuring compliance and creates rulemaking authority for qualification processes.
• Introduces a defined deadline and process for SGOs to submit a notice of intent to receive qualified donations, aligning state procedures with federal program rules.

Definitions and scope (highlights)

• Key terms include: scholarship granting organizations (SGOs), Internal Revenue Code Section 25F (and related guidance), Minnesota Department of Revenue, Secretary of the Treasury, Minnesota Statutes chapter 270C, notice of intent to receive qualified donations, calendar year, and the designation of SGOs as defined in IRC Section 25F(c5).

Implementation notes

• The bill anticipates annual coordination between Minnesota’s Department of Revenue and the U.S. Treasury, with publication on the department’s website and on-boarding of eligible SGOs.
• The process emphasizes compliance with federal requirements while giving the state a formal, ministerial role in designating SGOs and managing the qualification process.

Relevant Terms - scholarship granting organizations - SGOs - Internal Revenue Code Section 25F - 25F(c5) - Minnesota Department of Revenue - Secretary of the Treasury - Minnesota Statutes chapter 270C - list of approved K12 scholarship granting programs - notice of intent to receive qualified donations - calendar year - election to participate in the 25F program - ministerial duties - rules and documentation - qualified donations