ST. PAUL — Minnesota lawmakers are moving quickly on bipartisan lines to bring state tax codes in alignment with federal code, a move that could save taxpayers more than $100 million.
During the pandemic, the federal government enacted policies that affected the tax status of businesses and individual filers, including student loan borrowers and the hospitality industry. But because Minnesota hasn’t conformed its tax laws to the federal code since 2019, some filers in the state may have missed out on some of the credits and deductions.
ADVERTISEMENT
Under the changes expected to reach Gov. Tim Walz’s desk by the end of the week, many filers would be able to claim exemptions, credits and deductions made available during the pandemic by the federal government that Minnesota did not recognize. The exemptions included grants for restaurants and venues shuttered by lockdowns.
The changes would mean Minnesota would give up about $100 million in revenue in 2024 and 2025, and another $3 million or so in the following two years.
Lawmakers of both parties in the Senate and the House are pushing to get the tax conformity bill to the governor's desk as quickly as possible, as tax season kicks off this month. Revenue Commissioner Paul Marquart, a former DFL state representative from Dilworth, last week told the House Tax Committee that the Department of Revenue could adjust for 2022 filers in time if the governor signed off on a conformity bill by Jan. 13.
The bill affects tax returns for 2019-22, years affected by pandemic-era federal bills like the American Rescue Plan and CARES Act. Filers would have to submit amended returns for previous years where state and federal tax codes did not align in order to take advantage of the changes. If the bill is signed this week, Marquart said the state revenue department will get the head start it needs to revise forms, and 2022 filers will not have to file amendments for the most recent tax year.
The House of Representatives voted 132-0 on Monday to pass the bill, and the Senate is expected to take up the bill on the floor Wednesday, according to a Senate DFL caucus spokesman. Marquart extended thanks to House lawmakers last week from Gov. Tim Walz and Lt. Gov. Peggy Flanagan for moving quickly on the matter, and said conformity is among the administration’s top priorities.
DFLers have many early priorities this session that they’ll likely move on with little to no support from Republicans, including abortion rights and a package of elections-related legislation.
But conformity is an issue with broad support, so the bill has been fast-tracked through committees to the floors of the Senate and House. And it appears highly possible Walz will sign state-federal conformity legislation by the end of the week.
ADVERTISEMENT
Rep. Pat Garofalo, R-Farmington, said he was happy both parties could get an individual bill together they agreed upon.
“There’s lots of things on our agenda we do have agreement on,†he said ahead of the House vote to pass the bill. “There will be plenty of things for us to fight about later on, but I hope this is a sign of things to come — that for those items we can agree on we can work on both sides of the aisle to enact those things as single bills.â€
The Trust Project
