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Minnesota Tax Bill Impact on 2018 Income Tax Returns

June 28, 2019 by Colleen Netzell
State and Local Taxation

The 2019 Minnesota Omnibus Tax Bill was signed after a special session of the legislature on 5/30/2019.  This law attempted to fix the problems caused by not adopting the Tax Cuts and Jobs Act of 2017 (TCJA) and other federal law changes.  However, the late enactment has created new challenges in filing 2018 returns.

The bill retroactively adopted federal law as of 12/31/2018.  This impacts some returns for 2017 and almost all 2018 returns.  To mitigate the change to 2018 individual returns, a special adjustment will prevent a refund or balance due for most changes caused by the new MN law.  However, this special adjustment does not apply to C corporations, trusts, and individuals reporting business items on their tax returns (i.e. sole proprietors, rentals, and flow-through activity).  When the special adjustment does not apply, taxpayers may receive a refund or owe additional tax under the new rules. 

The Minnesota Department of Revenue is working on implementing the new law.  The Department intends to adjust nonbusiness tax returns and notify taxpayers of the changes.   We anticipate letters will not be mailed until summer 2020, after the 2019 return filing season is over.

For business returns and individual returns with income from business activities, the Department is working on forms to report the retroactive impact.  It has asked preparers and taxpayers not to amend a return that has been filed and wait to file returns that have been extended.  The Department hopes to start issuing guidance by mid-July.

Please contact our office with any question you have regarding the Minnesota Omnibus Tax Bill’s impact on your specific tax situation.

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