(C) Minnesota Reformer
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Minnesota House passes fix to $350 million drafting error in tax bill [1]
['Michelle Griffith', 'More From Author', '- February']
Date: 2024-02
The Minnesota House on Monday voted 128-2 in favor of a bill fixing an error to the state’s 2023 tax bill that could cost taxpayers over $350 million if lawmakers were to take no action.
Lawmakers last year inadvertently used the 2019 standard deduction amount, meaning it didn’t include four years of inflation adjustments. Department of Revenue Commissioner Paul Marquart said during one of the bill’s committee hearings that the error would mean married joint filers would lose about $3,400 of tax deductible income.
“When you look in the language, it’s a little, itty bitty few words, but the cost is pretty significant, probably about $350 million per year,” Marquart said last week.
Democratic-Farmer-Labor legislators said the tax bill fix would be among the first bills to reach Gov. Tim Walz’s desk.
The tax fix bill also includes a definition change that would allow the 11 tribal nations within Minnesota to apply for statewide local housing aid and allows a Beltrami County local sales tax to take effect.
Republicans on Monday attempted to amend the bill on the floor to include another fix to the 2023 tax bill, but one that would affect businesses.
Lawmakers last year made changes to how businesses report net operating losses beginning in tax year 2023. Rep. Aisha Gomez, DFL-Minneapolis, said lawmakers intended for the change to go into effect in tax year 2024. The mistake means businesses that already began filing their taxes this year have been using the net operating loss error. Businesses who have already filed will need to refile their taxes to account for the change.
Fiscal staff say the net operating loss error would cost Minnesota about $15 million. Democrats on Monday said they’d prefer to tackle the net operating loss fix after the state budget forecast on Feb. 28, so they have a better understanding of how the change would impact the state’s budget.
“Once again, we are proving why Minnesota is not a friendly place to do business,” said House Minority Leader Lisa Demuth, R-Cold Spring, criticizing the decision to refrain from fixing the mistake that affects businesses.
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[1] Url:
https://minnesotareformer.com/briefs/minnesota-house-passes-fix-to-350-million-drafting-error-in-tax-bill/
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