- Associated Press - Tuesday, April 26, 2016

BISMARCK, N.D. (AP) - North Dakota lawmakers serving on the interim Political Subdivisions Taxation Committee said Tuesday they’re concerned about a lack of transparency related to angel fund tax credits.

Officials outlined a stark contrast between reporting requirements and standards in North Dakota and Minnesota for granting and tracking the credits, the Bismarck Tribune reported (https://bit.ly/1qRugyy ).

Angel funds are typically supported by successful business people looking to invest in early-stage or startup companies.

Annual reports in North Dakota are required to be filed with the tax commissioner’s office outlining the name of the business as well as the location and principal place of business.

State law allows, but doesn’t require, the tax department to provide information to North Dakota Legislative Management. That includes the names of qualified angel funds, the names of businesses in which the funds made an investment, the principal location of each business receiving an investment and the date and amount invested in each fund.

Unlike in Minnesota, the names of investors aren’t public information in North Dakota.

“This raises a ton of red flags for me. It does not smell right,” Rep. Mike Nathe, R-Bismarck, said. “This is being done on the backs of North Dakota taxpayers.”

The North Dakota angel fund investment tax credit is available to all income taxpayers. A taxpayer can claim 45 percent of the amount to each angel fund each taxable year, capped at $45,000 per year with a lifetime limit of $500,000 in credits.

Criteria for being granted the credit includes that an angel fund must be organized with the intent of investing in at least three primary-sector non-publicly traded businesses with strong growth potential.

House Majority Leader Al Carlson, R-Fargo, said lawmakers and the public have no idea where the tax credits are going and whether they are providing benefits to North Dakota.

“Something’s got to come out of this,” Carlson said of the interim study.


Information from: Bismarck Tribune, https://www.bismarcktribune.com

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