1.1 	A bill for an act
1.2 	relating to taxation; providing a tax credit for certain mattress manufacturers that 
1.3 	meet flame retardant standards;proposing coding for new law in Minnesota 
1.4 	Statutes, chapter 290.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. [290.0681] MATTRESS MANUFACTURERS CREDIT.
1.7 		Subdivision 1. Credit allowed; PBDE-free mattresses. (a) A manufacturer is 
1.8 	allowed a credit against the taxes imposed under this chapter, including the taxes imposed 
1.9 	under sections 290.091 and 290.0921, for the taxable year equal to:
1.10 	(1) ten percent of its gross receipts for the taxable year from sales of qualifying 
1.11 	mattresses that meet the Consumer Product Safety Commission's flammability standard 
1.12 	under Code of Federal Regulations, title 16, part 1632, as in effect on March 1, 2006; or
1.13 	(2) 20 percent of its gross receipts for the taxable year from sales of qualifying 
1.14 	mattresses that meet the Consumer Product Safety Commission's open flame flammability 
1.15 	standard for mattresses as approved by the commission on February 16, 2006, and as 
1.16 	may be amended or modified in the future.
1.17 	(b) For purposes of this section, "qualifying mattress" means a mattress that was 
1.18 	manufactured in the state of Minnesota and that does not use polybrominated diphenyl 
1.19 	ethers as flame retardants or otherwise in its construction. "Polybrominated diphenyl 
1.20 	ethers" means chemical forms that consist of diphenyl ethers bound with bromine atoms. 
1.21 	Polybrominated diphenyl ethers include, but are not limited to, the three primary forms of 
1.22 	the commercial mixtures known as pentabromodiphenylether, octabromodiphenylether, 
1.23 	and decabromodiphenylether. 
2.1 		Subd. 2.Limitations; carryover. (a) The credit is limited to the sum of the liability 
2.2 	for tax under sections 290.06, 290.091, and 290.0921 for the taxable year, reduced by the 
2.3 	sum of any other nonrefundable credits allowed under those sections.
2.4 	(b) If a corporation is a partner in a partnership, the credit allowed for the taxable 
2.5 	year is limited to the lesser of:
2.6 	(1) the amount determined under paragraph (a) for the taxable year; or
2.7 	(2) an amount, separately computed with respect to the corporation's interest in 
2.8 	the trade or business or entity, equal to the amount of tax attributable to the portion of 
2.9 	taxable income that is allocable or apportionable to the corporation's interest in the trade 
2.10 	or business or entity.
2.11 	(c) If the amount of the credit under this section for any taxable year exceeds 
2.12 	the limitation under paragraphs (a) and (b), the excess is a carryover to each of the 15 
2.13 	succeeding taxable years. The entire amount of the excess unused credit for the taxable 
2.14 	year must be carried first to the earliest of the taxable years to which the credit may be 
2.15 	carried and then to each successive year to which the credit may be carried. The amount 
2.16 	of the unused credit which may be added under this clause must not exceed the taxpayer's 
2.17 	liability for tax less the credit for the taxable year.
2.18 	(d) A partnership must allocate the credit based on the income shares of its partners.

2.19 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
2.20 	December 31, 2005, and applies to gross receipts from qualifying mattresses received 
2.21 	after June 30, 2006.