Minnesota enacts Code conformity law

Minnesota Gov. Mark Dayton has signed legislation retroactively conforming the state’s corporate franchise and personal income tax to most federal changes enacted since December 31, 2014, for tax year 2015 and following years. As a result of the legislation, the Internal Revenue Code (Code) conformity tie-in date for purposes of computing corporate franchise and personal income tax liability is December 16, 2016. However, Minnesota does not conform to federal bonus depreciation or the increased Code Sec. 179 expensing amounts. Instead, the state retains its current law requirement that taxpayers add back to taxable income 80% of the additional expensing or depreciation amount in the first tax year. Taxpayers may then subtract one-fifth of the amount added back in each of the five following years.

At this time, the Department of Revenue anticipates opening the income tax filing season on January 23, 2017, which is the same date as the IRS.

Form changes. The Department has issued additional guidance on how specific 2015 and 2016 corporate income tax, pass-through entity, fiduciary, and personal income tax forms are changing in light of the recently enacted federal conformity legislation. The Department outlines the specific lines that have been updated to “This line intentionally left blank” and notes that Schedule M1NC, Federal Adjustments, is no longer needed for tax years 2015 or 2016. Additionally, 2015 forms and 2016 forms are now available on the Department’s website. The Department will change personal income tax error rejection codes (ERCs) for tax years 2015 and 2016 on January 19, 2017. Specific changes are noted in the department’s bulletin.

Finally, the Department held a conference call on Thursday, January 19, 2017 for questions related to federal conformity. A complete script of the call for federal conformity will be available on Friday, January 20, 2017. (Ch. 1 (H.F. 2), Laws 2017, effective January 14, 2017, except as noted; Update on Federal Conformity Legislation for Tax Preparers, Minnesota Department of Revenue, January 12, 2017; More than 200,000 Minnesotans Now One Step Closer Tax Relief, Minnesota Department of Revenue, January 12, 2017; Federal conformity ERC and forms changes, Minnesota Department of Revenue, January 18, 2017.)

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