Plus, details on the final tax bill
MNCPA
MINNESOTA SOCIETY of
CERTIFIED PUBLIC ACCOUNTANTS
Legislative Digest
MAY 28, 2019
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State budget set during one-day special session

The 2019 legislative session was required to adjourn May 20, but legislators and Gov. Tim Walz didn't reached a budget agreement. Negotiations continued past adjournment until an agreement was finally reached late last week. Gov. Walz called legislators back to the Capitol on May 24 to pass a $48.3 billion budget during a one-day special session.

Thirteen different budget bills, including a tax bill, passed during a 21-hour marathon session that began 10 a.m. May 24 and adjourned about 7 a.m. May 25. Walz is expected to sign the bills later this week.

Legislators now return to their districts until the 2020 legislative session begins Feb. 11, 2020.
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Final tax bill
The tax bill made several updates and changes to conform Minnesota tax law with changes passed in the federal Tax Cuts and Jobs Act of 2017 (TCJA). The bill passed the Senate 52-15 and the House 74-54.

Some highlights include:

Individuals
  • A change to the starting point for determining individual income taxes from federal taxable income (FTI) to federal adjusted gross income (FAGI).
  • Conformity to the standard deductions.
  • Dependent exemption equal to that allowed under pre-TCJA law, but the personal exemption was eliminated.
  • Creates a state itemized deduction for unreimbursed employee expenses.
Businesses
  • Section 179 conformity to the $1 million federal allowance, but the 80% add-back rule was retained.
  • Temporary expanded bonus depreciation, but the add-back rule was retained.
  • Business interest deductions are capped at 30% of adjusted taxable income.
  • More businesses will have the option to use cash basis rather than accrual basis.
  • Net operating carrybacks are no longer allowed, and carryovers are limited to 80% of the loss.
Other
  • Many Minnesota changes will take effect at the same time the federal changes took effect, resulting in retroactive conformity.
    • The tax bill included a special adjustment for tax year 2018 that will result in most individual filers not seeing an increase or decrease in tax owed.
  • Changes were made to the June accelerated tax liability formula. The rate increased from 81.4% to 87.5% for tax owed in 2020 and 2021. The rate will reduce to 84.5% for tax owed in 2022.
  • Several new local option sales taxes were passed. The new rates, when effective, will be posted on the Department of Revenue sales tax map.
Tax bill documents
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State government finance bill
Article 9 of the state government finance bill included updates to the Minnesota Board of Accountancy statutes that affect a CPA's license to practice in Minnesota. The changes included in the bill will be effective later this year.

Changes to BOA statutes include:
  • Updates to the definition of attest.
  • Creation of a new license status for retired CPAs.
  • Retroactive enforcement against lapsed certificates.
Be sure to check out my full legislative recap in the August Footnote for details on these bills and the results of our other MNCPA legislative initiatives.
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Reach out to lawmakers
Did you like the results from the 2019 session? Are you unhappy with how things turned out? The time between legislative sessions is a great time to meet with legislators in your community. Meet them for coffee, invite them to your business or invite them to a client's business. Let them know how law changes will affect you or your clients.

Contact your legislators
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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
1650 W. 82nd St., Suite 600, Bloomington, MN 55431
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