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Federal conformity

Updated January 2020

The Tax Cuts and Jobs Act of 2017 (TCJA) created several new nonconforming provisions in Minnesota’s tax code. The tax bill passed in 2019 made some conforming changes but legislators and the governor didn't allocate funds for full conformity.

The issue

Federal tax changes not adopted by Minnesota in 2019 coupled with retroactive conformity has increased taxes for many taxpayers and created additional compliance burdens.

Nonconformity frustrates not only CPAs but also the businesses you work for and the clients you represent. The MNCPA continues to advocate for simplicity and federal conformity. 

Minnesota’s tax code is closer to conformity, but many differences still exist. The MNCPA continues to help legislators and Gov. Walz understand the importance of reducing complexity and the cost of compliance.

The state’s budget is stable and budget forecasts continue to show a surplus. Now is the time to address conformity. CPAs will have many opportunities to advocate for further conformity, help legislators understand its importance to taxpayers and identify issues still needing clarification.

Cost for full conformity to Section 179 expensing

  FY2020 FY2021 FY2022 FY2023
Effective retroactive to 2018 $0 $238,100,000 $38,000,000 $21,000,000
Effective retroactive to 2019 $0 $189,300,000 $56,400,000 $35,600,000
Effective for 2020 $0 $120,000,000 $74,900,000 $57,700,000

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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