Federal conformity

Updated January 2019

The Tax Cuts and Jobs Act of 2017 (TCJA) created several new nonconforming provisions in Minnesota’s tax code. The 2018 Legislature passed two tax bills that would have addressed conformity. Both bills were vetoed by then-Gov. Mark Dayton.

Legislators know they will need to address conformity during the 2019 session but will have many competing topics to balance as they prioritize where to allocate the state’s resources.

The issue

The TCJA created new uncertainty and new opportunities for federal conformity. Legislative leaders understand the impact of nonconformity and stated it’s a top priority in 2019. It most likely not will not be addressed until near the end of session in May.

Nonconformity continues to frustrate not only CPAs but also the businesses you work for and the clients you represent. The MNCPA will continue to advocate for simplicity and federal conformity. Past efforts have resulted in some significant and incremental conformity. The November budget forecast projected a budget surplus of approximately $1.5 billion. Some of the surplus should be used to reduce the complexity and compliance burdens of nonconformity.

The MNCPA will continue to help legislators and Gov. Tim Walz understand the importance of including conformity as part of the 2019 tax bill.

The state’s budget has been stable for the past four years and a surplus is projected for the next four years. CPAs will have many opportunities to advocate for further conformity and to educate legislators on its importance to taxpayers.

Why you should care

  • Tax policy that is easy to understand increases taxpayer compliance and helps create a more efficient process for all involved.
  • Tax law that is hard to understand causes unintentional noncompliance and leads to more administrative burdens for the state. Many people who do not use a CPA may not know about not conforming tax laws and, therefore, may not submit a correct tax return or receive a benefit to which they are entitled.

What can you do

Contact your legislators and educate them on how Minnesota's tax laws are impacting your business and your clients.

Encourage them to support federal conformity legislation.

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