Federal conformity
In previous years we have achieved some significant and incremental conformity to AMT and the estate tax. Section 179 expensing is an area we continue to advocate for conformity. Legislative leaders have indicated jobs and the economy will continue to be the focus of the 2012 legislature. This presents us an opportunity to pursue further conformity tied to jobs. The Department of Revenue acknowledges the need for conformity, but is faced with limited resources and competing priorities.
The state is in a fragile financial situation and may have other spending priorities. But The MNCPA will continue to pursue federal conformity in 2012.
One example of how Minnesota does not conform is the alternative minimum tax (AMT).
What is AMT?
The AMT is a complex tax that operates in parallel to the regular income tax. Dating back to 1969, the AMT was originally designed to prevent ultra-wealthy taxpayers from offsetting their incomes with big deductions. However, in more recent years the AMT has crept up on middle-class taxpayers, leaving many of them financially devastated. We have made progress toward conformity, but there still are a number of items causing Minnesotans to be adversely impacted by the AMT.
Why you should care
- The current tax policy is still affecting people in a way that is unintended.
- Minnesota AMT is small compared to what Minnesotans pay in Federal AMT, but the impacts can be greater to those paying.
- It is a hidden tax that is hard to understand and causes less compliance which means more administrative burdens for the state. Many people who do not use a CPA may not even know they are supposed to pay this tax, and therefore do not.
- State preferences are contributing to the problem in Minnesota. For example, the state does not allow deductions for home mortgage interest or gambling losses.
Minnesota AMT
| Year |
Minnesotans paying AMT |
Amount paid |
| Projected 2012 |
15,800 |
$27.6 million |
| Projected 2011 |
15,000 |
$26 million |
| 2010 |
14,000 |
$23 million |
| 2009 |
14,000 |
$27.5 million |
| 2007 |
16,000 |
$24.2 million |
| 2006 |
14,000 |
$25.1 million |
| 2005 |
55,500 |
$42.5 million |
| 2004 |
39,000 |
$33 million |
| 2001 |
30,000 |
$33 million |
| 1995 |
5,300 |
$18.42 million |
| 1985 |
3,342 |
$13.75 million |
Changes in 2006 resulted in a large reduction in the number of Minnesotans paying AMT. However, because of non conformity the number of people impacted continues to grow. The number fell slightly after 2007, but it's believed this reduction was more a result of the economy rather than current tax law application.
Projected number of filers who would have paid AMT if mortgage interest was allowed as a deduction:
| Year |
Minnesotans paying AMT |
Amount paid |
| 2010 |
11,400 |
$22.1 million |
| 2007 |
2,000 |
$11.4 million |
| 2006 |
8,000 |
$16.2 million |
MNCPA solutions
- Allow all home mortgage interest deductions
- Allowing the gambling loss deduction