Potential Changes to your Minnesota Tax Returns Due to Retroactive Tax Law Changes

Minnesota recently passed a tax bill that retroactively brings some of Minnesota’s income tax provisions into conformity with federal income tax provisions that were passed in December 2017, as part of the federal Tax Cuts and Jobs Act (TCJA). Under prior law, Minnesota elected to ignore the provisions of TCJA which created significant and complex differences between federal and Minnesota taxable income.

How does this impact your previously filed 2017 and/or 2018 Minnesota tax returns?

The tax bill passed by Minnesota includes retroactive conformity to the federal tax bill from December 2017. This means that your 2017 and/or 2018 Minnesota tax returns may need to be adjusted to reflect these recent tax law changes. Note that some taxpayers will not be impacted by these changes.

While the Minnesota Department of Revenue (DOR) has not had an opportunity to fully assess the complexity of these changes, their initial position is that the DOR will directly make the necessary adjustments to previously filed returns and send correspondence to taxpayers notifying them of any changes. They have specifically requested that taxpayers not file amended tax returns at this time.

Upon receipt of any correspondence from the Minnesota Department of Revenue, please contact your Froehling Anderson relationship manager so that we may review and confirm the accuracy of any adjustments made by the DOR, as well as to make necessary notes to your file.

How does this impact your yet-to-be filed 2018 tax return currently under extension?

The DOR is still assessing this situation and will be providing guidance soon. We believe that it will take a fair amount of time and effort for the DOR to provide updated tax forms and tax preparation software updates for 2018 tax returns. To this point, we currently recommend that we continue to prepare your tax returns as originally instructed.

We are waiting for specific details of the tax law changes to emerge so that we can assess and inform you of its impact to your Minnesota tax liability. We will also continue to monitor correspondence and guidance from the DOR and we will send additional communications to you as more details become available.