Plus: Opportunity remains for you to be heard
MNCPA
MINNESOTA SOCIETY of
CERTIFIED PUBLIC ACCOUNTANTS
Legislative Digest
APRIL 27, 2018
Legislative session enters final weeks

It's the homestretch of the session, with legislators having three weeks to reach a compromise on several bills. Federal tax conformity remains at -- or near -- the top of everyone's list.

Gov. Mark Dayton and the House Tax Committee released their respective proposed tax bills, while the Senate is still working on its bill and is expected to release its proposal Tuesday.

A considerable amount of time continues to be spent on conformity and tax reform, but these two issues are not the only items the Legislature must tackle before its May 21 adjournment. Legislators are also debating changes to laws affecting health and human services, the environment and natural resources, the state's IT systems and cybersecurity. Add developing a capital bonding bill to the mix, and the next three weeks will be busy.
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Tort reform continues to move forward

Tort laws and accountant liability statutes affect every CPA, the businesses you work for and the clients you represent. Tort reform is a priority on the MNCPA 2018 legislative agenda, and it is an issue still under consideration at the Capitol.

The House Public Safety Committee omnibus bill includes a change repealing the 10-percent pre-judgment interest rate that currently applies from the time a lawsuit is entered until the time a judgment is entered. This rate is separate from the post-judgment interest rate, which is also at 10 percent. This change benefits any CPA facing litigation.

A summary of the House pre-judgment interest rate change can be found in section nine on Page 3 of the House Research summary for HF 2856 (PDF).

Similar legislation also is waiting for action by the full Senate. Senate File 1197 would eliminate the 10-percent interest rate on both pre-judgment and post-judgment awards. If signed into law, the new rate would be based on a secondary market yield of one-year United States Treasury bills.

SF 1197 summary

The MNCPA supports the pre-judgment change and repealing the post-judgment rate.
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County government audits

Minnesota law allows cities, school districts and counties to hire CPA firms to conduct its annual audits. In 2016, the Office of the State Auditor (OSA) challenged the constitutionality of the law allowing counties to retain a CPA firm, and filed a lawsuit. This month, the Minnesota Supreme Court ruled against the OSA's challenge.

Read the decision (PDF)

The Legislature is also considering the creation of new guidelines for OSA reviews of county audits performed by CPA firms. A recent report from the Office of the Legislative Auditor (OLA) was critical of the lack of due process the OSA afforded CPA firms whose work was reviewed; the report was also critical of the OSA for not thoroughly supporting its findings. The House State Government Finance Committee omnibus bill includes a proposal for new guidelines, establishing timelines and expectations for future OSA reviews of CPA firms' audits of county governments.

Read the OLA report findings (PDF) that are the basis for the proposed statutory changes.
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Tax bill proposals released

Dayton and the House Republicans have released their proposals for a 2018 tax bill. The Senate Republicans are expected to release their proposal next week.

The governor's plan, according to data released by Dayton's office, "... would preserve a balanced budget for our state's future and would cut taxes for over 2 million Minnesotans and their families." Changes proposed:
  • A new Minnesota Personal and Dependent Credit.
  • An expansion of the Working Family Tax Credit.
  • A move from using Federal Taxable Income to Federal Adjusted Gross Income for filing Minnesota individual state income taxes.
  • Fully conforming to Section 179 expensing.
  • Allowing businesses with gross receipts of less than $25 million per year to continue deducting 100 percent of their interest.
Read the full summary of Dayton's tax bill (PDF)

The House bill is significantly different from Dayton's bill, but the House does include some of the same changes.

Same:
  • Move Minnesota from using Federal Taxable Income to Federal Adjusted Gross Income for filing Minnesota individual state income taxes.
  • Fully conform to Section 179 expensing.
Different:
  • Allows an itemized deduction for property taxes paid up to $30,000.
  • Eliminates the corporate AMT.
  • Reduces the second income tax bracket rate from 7.05 percent to 7 percent for 2018, 6.9 percent for 2019, and 6.75 percent for years 2020 and later.
Read the full House summary (PDF)
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Department of Revenue releases beta version of a sales tax tracking map

The Department of Revenue (DOR) has created a mapping tool that helps identify a sales tax rate based on a physical location on a map. This tool will allow you to see what state, county, city and special district taxes apply. Users can also enter an address and a pop-up box will show the rates for the specific location you are viewing.

Try the beta tax rate locator

The DOR encourages feedback after you've played around with the map. Let them know what works, what isn't working, and if there are other options they should consider as they continue to develop this tool.

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Geno Fragnito Your Lobbyist
Geno Fragnito
Geno Fragnito, director of government relations, is the MNCPA's registered lobbyist working full time on behalf of the membership. For more information or to get involved, contact Geno at 952-885-5550 or gfragnito@mncpa.org.
Minnesota Society of Certified Public Accountants
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