For those filing income tax forms, the end of January generally marks the start of the process. But late action by Congress in 2012 to resolve the so-called “fiscal cliff” could stall tax filing, if the Legislature waits on a decision to conform to federal changes.
The current and former chairs of the House Taxes Committee sponsor identical bills — HF6 and HF63 — that would conform the state’s tax code to the recent changes. The bills were held over in committee for further consideration; however, Committee Chairwoman Ann Lenczewski (DFL-Bloomington) expects them to be voted on yet this week. Neither has a Senate companion.
The bills would conform Minnesota’s individual income tax and corporate franchise tax to most of the federal changes for tax year 2012 only, including the extensions of the higher education tuition and educator classroom expense deductions; and the ability for those age 70 ½ years or older to transfer up to $100,000 from an individual retirement account or Roth IRA directly to a qualified charity.
The bills also would allow airline employees who received bankruptcy payments to retroactively roll over the payments into a traditional IRA in the year the payments were received.
The federal tax changes are a result of the American Taxpayer Relief Act of 2012 and the Federal Aviation Administration Modernization and Reform Act of 2012.
Conformity would come at a cost, however. According to figures from the nonpartisan House Fiscal Analysis Department, the state’s General Fund in 2013 would be negatively affected by approximately $18.5 million.
Susan Von Mosch, the Department of Revenue’s assist commissioner for tax policy, said the earlier a decision is made on conformity, the better for the state’s taxpayers. She said forms have to be developed, and if conformity is not acted on until later, those who file early would most likely have to file amended returns. She said the governor has no position on the bills at this time.