Insights: Article

Minnesota Tax Conformity Vetoed

June 25, 2018

Gov. Mark Dayton vetoed H.F. 947 on May 23, which was legislation intended to bring conformity between federal and Minnesota tax filings. While there were a number of other areas of interest included in H.F. 947, Minnesotans now are facing a somewhat unpredictable tax storm. Minnesota businesses and individuals will be preparing federal tax returns under the new federal tax reform regulations while calculating and paying Minnesota taxes under old IRS rules as of Dec. 16, 2016. With Dayton’s veto, federal legislation enacted from Dec. 16, 2016, through March 31, 2018—which notably includes the federal tax reform effort known as the Tax Cuts and Jobs Act—will not become part of Minnesota tax law.

Details of H.F. 947
The Minnesota House Research Department summary of H.F. 947 said the bill would have reduced the corporate franchise tax rate from 9.8 percent to 9.65 percent for 2018 and 2019 and to 9.1 percent for the years after 2019. In addition, the corporate alternative minimum tax would have been repealed. Then, on the individual side, the tax rates for a single filer would have been reduced from 5.35 percent to 5.25 percent after 2019. For taxpayers with income between $25,890 and $85,060 the rate would have been reduced from 7.05 to 6.95 for 2018 and 2019 and then 6.85 percent. Other tax brackets would have remained unchanged.

While a rate reduction is significant for many, the beginning point in determining the taxable income is critical. Two such beginning points in federal tax reform were in play. The first is allowing the global intangible low-taxed income included in federal taxable income to be deducted from Minnesota tax. The bill would have required S corporation shareholders to add the deduction for foreign-derived intangible income back to federal adjusted gross income. The bill would also have allowed the dividend received deduction on deemed repatriation income as well as the federal preferred rate. The bill was estimated to save multinational corporations $200 million in state taxes.

More Information to Come
The Minnesota Department of Revenue commissioner released a statement on May 23 announcing efforts to update the department’s processes for the 2019 tax season. We are following information from them and will keep you advised.

Contact your Eide Bailly professional or a member the state and local tax team for more information, or with questions.

Latest Insights

November 15, 2018
Article
Until recently, many businesses weren’t overly concerned about sales tax. They knew they needed to collect and remit in the state in which they resided, but beyond that, their compliance burden was limited.
November 7, 2018
Recorded Webinar
State and local sales tax compliance is always evolving, making it important to stay up-to-date on changes affecting your tax liability and responsibilities. This session will cover what you need to know regarding the recently enacted state and…
November 1, 2018
Article
There has been a lot of talk lately about the SCOTUS Wayfair decision. That ruling provides states the opportunity to collect sales tax from businesses making sales in their state, without a physical presence.
October 10, 2018
Article
As anticipated, the Tax Cuts and Jobs Act of 2017 (Public Law 115-97) made significant changes to individual and business tax provisions.
October 8, 2018
Article
The recent US Supreme Court decision that overturned Quill in the South Dakota v Wayfair case has many states making or considering law changes related to sales tax compliance for out-of-state sellers.
September 19, 2018
Recorded Webinar
Are you considering doing business or having employees in North Dakota? Have you had issues with your state tax filing? Join our state and local tax team for some helpful insights into North Dakota tax filings. This webinar will cover registration,…
September 19, 2018
Recorded Webinar
Are you considering doing business or having employees in Pennsylvania? Have you had issues with your state tax filing? Join our state and local tax team for some helpful insights into Pennsylvania tax filings.
September 19, 2018
Recorded Webinar
Are you considering doing business or having employees in Nevada? Have you had issues with your state tax filing? Join our state and local tax team for some helpful insights into Nevada tax filings. This webinar will cover registration, various…
September 18, 2018
Tool
Get ahead of tax season with the Eide Bailly Tax Planning Guide. A supplemental strategy guide to help guide year-end and make the tax laws work for you.
Find A Location