Leveling the playing field for Minnesota-based professional advisers

Jun. 13, 2017  |  Geno Fragnito

If you have clients in other states, you’ve likely heard their concerns about having a Minnesota-based professional adviser. They were probably worried about the potential for that business relationship to be used against them in an audit by the Minnesota Department of Revenue (DOR). Your clients may have also told you that professional advisers in other states were recommending your clients sever ties with you.

This problem was caused by DOR administrative rules written in the mid-1980s and used in two 2013 Minnesota Supreme Court decisions. These cases cited the location of a taxpayer’s professional advisers as one of the factors used to determine whether the taxpayer was domiciled in Minnesota. The rules had not kept up with the times and, as a result, Minnesota businesses were at a competitive disadvantage with similar businesses in other states for many years.

Change at the State Capitol is often a long, slow and arduous process -- but the results can be rewarding. You will be happy to learn that after four years of countless meetings, persistent MNCPA advocacy and thousands of steps tracked on my Fitbit at the Capitol, this problem was corrected this year.

The 2017 tax bill, which was recently signed into law by Gov. Mark Dayton, contained language making changes beneficial to Minnesota-based financial advisers with clients whose residence is in another state.

Beginning Jan. 1, 2017, both the DOR and Minnesota courts are prohibited from using the location of an individual’s CPA, attorney or financial adviser when determining if that individual is domiciled in Minnesota. The new law also prohibits using the location of a financial institution in determining domicile in Minnesota.  

Sometimes, government regulations don’t keep pace with the rapid rate of continuous change. This can result in antiquated rules applied to situations never envisioned, resulting in a “square peg in a round hole” application of that regulation.

That’s why you should speak up if you face a situation where a government regulation doesn’t apply to today’s world. Changing the residency rules took four years, but other changes can happen faster.

Thank you to MNCPA members who shared personal stories, contacted individual legislators or testified at the Capitol in support of these changes.

Topics: Legislative, Tax

Geno Fragnito

Geno Fragnito is the MNCPA’s government relations director, advocating on behalf of the CPA profession. His days consist of last-minute meeting changes, building relationships with lawmakers, helping CPAs navigate state government, and putting in more than 15,000 steps per day walking the halls of the Capitol. Geno unwinds with a little golf and traveling with his family. If he weren’t a lobbyist, Geno would perfect his cast and be a professional fisherman. Geno can be reached at 952-885-5550 or

Posts by this author


Sarah Linder commented on Jun. 27, 2017:
Nice work, thanks!

Comment on this post

* Indicates a required field.

Your name*:  

Your website URL: