A Minnesota bill would create a temporary tax credit for donated food from restaurants that are closed to indoor dining because of the COVID-19 pandemic.
S.F. 10, introduced December 14 by Senate Taxes Committee Chair Roger Chamberlain (R), would create a temporary tax credit equal to 50 percent of food donations.
The food donations would need to qualify as charitable contributions under IRC section 170 and be made at a period “during which a food service business was prohibited from offering in-person dining under an act of the legislature or an emergency executive order issued as a result of the COVID-19 pandemic” or within seven days after the end of the business closure, according to the bill.
The donation would also have to be from a food service business’s inventory and be made after November 20, 2020 but before July 1, 2021.
The tax credit would be limited to $5,000 per food service business. However, if an entity operates several food service businesses, “the credit is calculated based on the amount of qualified food donations from each food service business, and the limit applies separately to each food service business.”
According to S.F. 10, “credits allowed to a partnership, a limited liability company taxed as a partnership, an S corporation, or multiple owners of property are passed through to the partners, members, shareholders, or owners, respectively, pro rata to each partner, member, shareholder, or owner based on their share of the entity's income for the taxable year.”
If the amount of credit exceeds the taxpayer’s tax liability, the excess credit would be refunded, the bill says.
The bill would prevent taxpayers claiming the credit from deducting their food donations as charitable contributions under Minn. Stat. section 290.0122, subdivision 4. The amount of food donations used to claim the credit would be considered an addition to federal taxable income for corporations under section 290.0133, and for individuals, estates, and trusts under section 290.0131.
The bill would be effective for tax years beginning after December 31, 2019, and before January 1, 2022.
Chamberlain did not respond to a request for comment by press time.