In the early hours of July 1, both chambers of the Minnesota Legislature passed the tax bill, marking the final piece of legislation approved in the special session that went right up until the end of the state fiscal year.
After failing to reach a budget agreement during the 2021 legislative session, which adjourned May 17, lawmakers returned to St. Paul on June 14 to convene the special session. Gov. Tim Walz called the special session to extend his emergency powers and to allow legislators to work on a budget agreement and to pass a tax bill. At 1:15 a.m. today, the House approved the omnibus tax bill (69-55 vote). After 3 a.m., the Senate approved the bill 54-11. It was the final vote needed to avoid a partial shutdown. The bill was signed into law by Governor Walz on July 1.
Highlights from the tax bill:
- Partnership audit conformity.
- Full conformity to the Paycheck Protection Program (PPP) loan exclusion.
- Full conformity to the $10,200 unemployment insurance (UI) compensation exclusion.
- Passthrough entities are allowed to file as C Corporations as a SALT cap workaround.
- A technical fix to the Section 179 legislation passed in 2020. The fix eliminates the state addition for Section 179 carryovers for property placed into service prior to tax year 2020.
- Conformity for retirement plan distributions for tax year 2020.
- Exclusion for economic injury disaster loans (EIDL) grants.
- Exclusion for SBA loan repayment assistance.
- A formula to eliminate the June accelerated sales tax remission if certain state budget criteria are met.
- Authorization of 21 new local option sales taxes.
- A new legislative Tax Expenditure Review Commission to review current tax expenditures.
The full list for conformity can be read in the bill summary.
This is what Minnesota Revenue stated at their website:
Unemployment Compensation and PPP Loan Forgiveness
If you filed a 2020 income tax return that included unemployment compensation or PPP loan forgiveness, wait to hear from us. Depending on your return’s complexity, we will either adjust it and issue you a refund, or we will ask you to amend your return. We’ll let you know later this summer.
- If we can adjust your return: We’ll send you a letter describing what we changed and any refund you may receive as a result. We are committed to adjusting as many returns as we can.
- If you need to amend: We’ll send you a letter about amending your return. Do not file an amended return before hearing from us.
We will post updates as we receive more information from the MN Department of Revenue.
MN Department of Revenue Update
Questions?
Visit with one of our tax experts at (888) 388-1040.
SOURCE: MNCPA.ORG
