BLOG: Atkins Predicts Bipartisan Support for Tax Simplification Law

No, that headline is not a misprint. I and others really are working on a bipartisan effort to pass a new Minnesota tax law, set for a vote on Monday, February 11, for which we hope to secure wide support from both sides of the aisle. 

HF 6 adds clarity and simplicity to Minnesota’s tax system in an effort to conform in a straightforward way with federal tax changes made in 2012. These changes will result in tax relief for middle class Minnesotans, including 55,000 teachers, 90,000 homeowners, 60,000 students and 32,000 small business owners.

Why do Minnesota taxpayers benefit from state-federal tax conformity?

Congress’ late enactment of the American Taxpayer Relief Act of 2012 has created big potential problems for Minnesota taxpayers who qualify for the tax year 2012 federal changes and want to file their Minnesota taxes. The problem is that the new federal tax changes allow deductions that are not currently allowed under Minnesota’s tax system.

If we don’t enact this legislation to conform with the new federal changes, each taxpayer who claims any of the affected deductions will need to file a special form to calculate their Minnesota income tax liability. These taxpayers would need to “add back” the federal deductions and include that amount in their Minnesota income tax liability. All of this adds up to a lot of unnecessary confusion and problems.

If Minnesota does conform to the new changes, then Minnesotans would likely not need to change forms and taxpayers could file without making additional adjustments.

How many Minnesotans will be affected by federal tax conformity?

Over 250,000 tax returns will be affected. Affected taxpayers include:

- 55,000 teachers who claim the $250 educator expense deduction

- 90,000 homeowners who claim an itemized deduction for mortgage insurance premiums

- 60,000 students or parents of students who take up to $4,000 for the higher education tuition and fee deduction

- 32,000 small business owners who quality for Section 179 expensing

- Unknown amount of seniors who would need to recalculate the amount of Social Security benefits that would be taxable in Minnesota, which would exceed the amount taxed federally because they would not qualify for the IRA distributions to public charities if age 70 ½ or older.

Passing HF 6 on Monday will add simplicity and clarity for Minnesota taxpayers, provide significant tax relief, and will hopefully signal more bipartisan solutions to come.

On this or any other legislative issue, please do not hesitate to contact me. You can leave a comment below, give me a call at the Capitol at 296-4192 or email me at rep.joe.atkins@house.mn. Thank you!