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March 25, 2011

 

A.    Federal changes adopted by Minnesota for tax year 2010

B.    Legislation repeals refund delays imposed on businesses

C.    Refunds for e-filed returns

A.   Federal changes adopted by Minnesota for tax year 2010

Legislation enacted March 21, 2011 (Chapter 8), adopts all of the federal tax provisions enacted between March 18 and December 31, 2010, that affect federal taxable income for tax year 2010, with the following exception:

  • The 50 percent/100 percent federal bonus depreciation and the increased federal section 179 expensing have been adopted, but these provisions are subject to an addback of 80 percent in the first year and five-year recovery, as under current state law.

What this means for your clients:

  • Individuals:  The new law eliminates the need for the 2010 Schedule M1NC, Federal Adjustments. The law also eliminates the need to add back the federal educator expenses and college tuition and fees deductions on line 9 of Schedule M1M, Income Additions and Subtractions, for tax year 2010. Affected taxpayers are not required to file an amended return. For information on what taxpayers need to do and a list of revised forms, see “What’s new for individuals for tax year 2010.”
  • Corporations:  The new law eliminates the need for corporations to recompute federal taxable income for Minnesota tax purposes for tax year 2010. The law also eliminates the need to add back the federal enhanced charitable contribution deduction for donated computers or to make adjustments for subpart F income. For information on what taxpayers need to do and a list of revised forms, see “What’s new for corporation franchise tax.”
  • Partnerships, S corporations and fiduciaries: The new law eliminates the need for the entity to recompute the federal return and to pass through the difference for Minnesota tax purposes for tax year 2010. For information on what taxpayers need to do and a list of revised forms, see “What’s new for partnerships for 2010,” and “What’s new for S corporations for 2010.”

What preparers need to do:

Use the most current forms, which are available on our website at http://taxes.state.mn.us/pages/current_forms.aspx.

Software developers have been notified of the above changes. Verify that the software you use has been updated. Beginning March 29, 2011, the department will no longer accept any electronically filed Form M1 that reports an amount on Schedule M1M, line 9, and/or with Schedule M1NC.

B.   Legislation repeals refund delays imposed on businesses

The legislation enacted March 21, 2011 (Chapter 8), also repeals the refund delay imposed on businesses by the 2010 legislature. Beginning immediately, the department is releasing $97 million in business tax refunds.

For additional information, see the press release at: http://taxes.state.mn.us/publications/Pages/business_tax_refunds_released.aspx

C.    Refunds for e-filed returns

Generally, refunds for electronically filed returns are processed very quickly. However, some returns take longer to process.

If your client does not receive their refund or a letter within 45 days after the return is accepted electronically, contact the department.