Law Change FAQs for Businesses

Our forms and systems are now updated for the changes passed into law for tax years 2017 and 2018. If you have already filed your return for these years, do not file an amended return.

• Find a form for Businesses
• Find a form for Individuals

Links to Software Providers who have revised their software are available on our website and additional software will be listed as it becomes available.

• Electronic Filing Options for Business Income Taxes
• Electronic Filing Software for Individuals

We plan to adjust 2017 and 2018 returns:

• For C corporation, S corporation, partnership, and fiduciary income tax returns that pay income tax or composite tax at the entity level by Spring 2020.
• For individuals by Summer 2020.

No. Taxpayers should not file amended returns specifically for adjustments related to tax year 2017 and 2018 law changes. If taxpayers need to change their return for a different reason, they should file an amended return.

For tax year 2017, we will update:

C corporation Forms

• DIV, Deduction for Dividends Received
• M15C, Additional Charge for Underpayment of Estimated Tax
• Minnesota Corporation Franchise Tax M4 Instructions
• M4, Corporation Franchise Tax Return (Includes M4, M4I, M4A, M4T)
• M4X, Amended Franchise Tax Return/Claim for Refund

Fiduciary Forms

• Form EST, Additional Charge for Underpayment of Estimated Tax
• KF, Beneficiary’s Share of Minnesota Taxable Income
• Minnesota Income Tax for Estates and Trusts (Fiduciary) Form M2 Instructions
• M2, Income Tax Return for Estates and Trusts
• M2SB, Income Tax Computation for S Portion of ESBT
• M2X, Amended Income Tax Return for Estates and Trusts

Partnership Forms

• Form EST, Additional Charge for Underpayment of Estimated Tax
• KPC, Partner’s Share of Income, Credits and Modifications
• KPI, Partner’s Share of Income, Credits and Modifications
• Partnership Form M3 Instructions

S corporation Forms

• Form EST, Additional Charge for Underpayment of Estimated Tax
• KS, Shareholder’s Share of Income, Credits and Modifications
• S corporations Form M8 Instructions

For tax year 2018, we will update:

C corporation Forms

Updated forms:

• DIV, Deduction for Dividends Received
• Minnesota Corporation Franchise Tax Instructions (M4, M4I, M4A, M4T, and M4NC)
• Schedule M4NC, Federal Adjustments
• NOL, Net Operating Loss Deduction
• Unrelated Business Income Tax (UBIT) Return (M4NP, M4NP NOL)

Eliminated forms:

• M15C, Additional Charge for Underpayment of Estimated Tax
• LK, Like-Kind Exchanges
• M15NP, Additional Charge for Underpayment of Estimated Tax

Estate Forms

• M706Q, Election to Claim the Qualified Small Business and Farm Property Deduction

Fiduciary Forms

Updated forms:

• KFNC, Federal Adjustments (Fiduciary)
• Minnesota Income Tax for Estates and Trusts (Fiduciary) Form M2 Instructions
• M2NC, Federal Adjustments (Fiduciary)
• M2SBNC, Federal Adjustments (Fiduciary)

Eliminated forms:

• Form EST, Additional Charge for Underpayment of Estimated Tax
• LK, Like-Kind Exchanges

Partnership Forms

Updated forms:

• Schedule KPCNC, Federal Adjustments
• Schedule KPINC, Federal Adjustments
• Partnership Form M3 Instructions
• M3, Partnership Return

Eliminated forms:

• Form EST, Additional Charge for Underpayment of Estimated Tax
• LK, Like-Kind Exchanges

S corporation Forms

Updated forms:

• Schedule KSNC, Federal Adjustments
• S Corporation Form M8 Instructions

Eliminated forms:

• Form EST, Additional Charge for Underpayment of Estimated Tax
• LK, Like-Kind Exchanges

Entities should not file amended returns specifically for adjustments related to tax year 2017 and 2018 law changes.

We will be making these adjustments. If additional information is needed, we will send a letter requesting necessary information.

Yes. Minnesota conformed to the federal changes relating to section 179 expensing and bonus depreciation. The Minnesota 80% addback for current year expensing provisions remains in effect.  

If a taxpayer has already filed their return, we will adjust their return. We may request additional information to make necessary adjustments.

Taxpayers who have not already filed their returns should wait for updated forms and instructions to become available.

Adjustments to the 2017 tax return must be made on the 2017 tax return. Minnesota law does not permit a “true-up.”

For depreciable assets, a taxpayer’s Minnesota adjusted basis will be the same as their federal adjusted basis.

Yes. If bonus depreciation reported on federal Form 4562, or Schedules KS, KPI, or KF, generated an activity loss that you cannot deduct due to the excess business loss limitation, do not include that bonus depreciation amount in the addback calculation for the current year.

In a future year when that suspended loss is allowed, you must include the bonus depreciation in the addback calculation. The bonus depreciation is treated as the last suspended loss allowed.

Yes. Minnesota caps section 179 expensing at $25,000 in the year of purchase, with an investment limit of $200,000.

Both. The $25,000 limit applies at the entity level first and then flows through to shareholders or partners. The limits also apply at the individual level.

No, unless you first amend your federal return. Your treatment of bonus depreciation and Section 179 expensing on the Minnesota return must match what you elected on the federal return. If you amend your federal return to separate Section 179 expensing from what you previously claimed for bonus depreciation, you must amend your Minnesota return to reflect the federal changes within 180 days.

No. Minnesota Section 179 subtractions are based on prior-year Minnesota Section 179 additions. If you do not adjust your addition, future-year subtraction amounts attributable to an addition would not change.

No, you are not required to complete a Minnesota Schedule LK or Form 8824. See the updated instructions for Minnesota Form M1X, M3X, M4X, or M8X for additional guidance.

Minnesota Return Due Dates

For more filing information, select the Instructions link in the table below for your specific tax type.

*If the due date falls on a Saturday, Sunday, or legal holiday, returns postmarked or electronically transmitted on the next business day are considered on time. To avoid penalties and interest, payment is due by the original due date.

Taxpayers should not file amended 2017 and 2018 returns if their only change is due to changes in Minnesota tax law.

We will adjust those returns for all tax year 2017 and 2018 law changes, including those in the special limited adjustment.

We will review affected returns that have already been filed. Affected taxpayers will receive one or more of the following:

• A letter requesting additional information necessary to make changes
• A tentative audit report
• An order for assessment or refund

The special limited adjustment applies to the following income taxpayers:

• Individuals
• Fiduciaries (estates and trusts)
• Partnerships
• S corporations
• Partners, shareholders, or beneficiaries electing composite tax

The special limited adjustment does not apply to C corporations.

Yes. We will provide guidance on the special limited adjustment within the nonconformity schedules and instructions.

Our forms and systems are now updated for the changes passed into law for tax years 2017 and 2018. 

• Find a form for Businesses
• Find a form for Individuals

The business interest expense limitation must be aggregated between the combined report entities consistent with the application to a consolidated group for federal income tax purposes. The tax attributes of entities not included in the Minnesota combined group may not be included when determining the Minnesota limitation.

For tax year 2017, we will waive the ATC for underpayment of estimated income tax if both of the following apply:

• You underpaid due to uncertainty in tax planning as a result of federal tax law changes effective after December 31, 2016.
• Your tax after allowable credits is less than $1,000. 2019 Minn. Laws, 1st Spec. Sess., ch. 6, art. 2, sec. 25.

For tax year 2018, we will waive the ATC for underpayment of estimated income tax due to the uncertainty in tax planning that resulted from the federal law changes made in the TCJA in 2016, which were addressed in Minnesota law  in 2019. Minn. Stat. 270C.34.

Yes. For tax year 2018, due dates for filing and paying have not changed. If you are assessed penalty and interest related to the  federal law changes made in the TCJA in 2017, which were addressed in Minnesota law in  2019 (“tax law changes”), you may qualify for relief.

Yes. The department will send taxpayers a summary of adjustments that impact future tax years even if there is no adjustment to the tax liability in the adjustment year. The summary will include adjustments to taxpayers’ NOLs and credit carryforwards.

Yes. The Minnesota corporate 80% NOL limitation applies to each tax year after December 31, 2017. Minnesota law does not distinguish between NOL carryovers generated before or after the law change.

Yes. The Minnesota corporate 80% NOL limitation applies to taxpayers that have UBIT income that is reported on Form M4NP, Unrelated Business Income Tax Return. The limitation applies to each tax year after December 31, 2017. Minnesota law does not distinguish between NOL carryovers generated before or after the law change.

Yes. The Minnesota NOL for UBIT filers now follows Minnesota Statute 290.095, which allows a 15-year carryforward and no carrybacks instead of a 20-year carryforward and two-year carryback. The NOL change applies to each tax year after December 31, 2017.

Yes. Minnesota will recognize the following:

• The deferral of gains from investments that have been properly transferred to Opportunity Zone funds
• The amount of gain that is included in federal income upon the sale or transfer of the investment
• The exclusion of gains from investments that are federally excluded.
   

The special limited adjustment applies to all income taxpayers except C corporations and does not allow the issuance of a refund for this provision for tax year 2018.

Minnesota retroactively conformed to the Opportunity Zone gain deferrals in May 2019. This permits investors to defer tax on almost all capital gains they properly reinvest in Opportunity Zones from January 1, 2018, to December 31, 2026.

C corporations may get a refund under this provision.

Individuals must adjust for the retroactive conformity. Due to the Special Limited Adjustment, individuals may not claim a refund.

No. Minnesota does not tax deferred foreign income under I.R.C. section 965 for C corporations.

No. Minnesota does not tax income excluded at the federal level as previously taxed under I.R.C. sections 965 (deferred foreign income) or 951A (global intangible low-taxed income) for C corporations.

Yes, only for tax year 2018.  Income excluded at the federal level as previously taxed under I.R.C. sections 965 (deferred foreign income) or 951A (global intangible low-taxed income) is not an exception to the special limited adjustment.

We will adjust returns for the final taxpayers for whom the income is taxable. We will not adjust S corporation, partnership, and fiduciary income tax returns unless the entity is paying income tax at the entity level or is reporting and paying composite tax on behalf of the owners or beneficiaries.

If you still need to file your 2018 return, contact the entity in which you have an ownership interest to receive updated information. 

Entities that have already filed should not file amended returns specifically for adjustments related to tax year 2017 and 2018 law changes.
If you need to file your 2018 or 2019 return before we adjust your 2017 return, follow these steps to determine your 2018 and 2019 bonus depreciation subtraction for that asset if you claimed a 100% bonus depreciation on your federal return:

1. Identify the federal bonus depreciation claimed on that asset on the 2017 federal return. Contact the entity in which you have an ownership interest to determine your share of federal bonus depreciation claimed on that asset. 
2. Multiply that deduction by 16% (0.16).

Do not file an amended 2017 Minnesota return specifically to make this adjustment. We will adjust your return.  

Do not report the amount on the “intentionally left blank” line. The amount is not needed to calculate your tax under the 2019 Minnesota laws.

We removed the 2018 Schedule LK from our website. When we adjust taxpayers’ returns, we will remove Schedule LK and the tax effects of that schedule.

Under the 2019 Minnesota law changes, Minnesota requires like-kind exchange treatment for the same transactions that is required for federal tax purposes.

The cost recovery method (depreciation and basis) for Minnesota purposes will be the same as what taxpayers used for federal tax purposes.

No. You do not need to correct your depreciation schedule. You will use your federal depreciation schedule to complete your Minnesota return.

For a small number of customers, we will send letters requesting more information so we can adjust their returns. Taxpayers may receive a letter if they did one of the following:

• Claimed bonus depreciation or section 179 expensing on their Schedule M1M, Income Additions and Subtractions
• Reported an amount on line 10 of their Schedule M1NR, Nonresidents/Part-Year Residents

For bonus depreciation or section 179 expensing, we will request copies of your federal Form 4562 and Schedule K.

For taxpayers with an amount on line 10 of Schedule M1NR, we will request information about the Schedule M1M additions reported on this line.

It depends on the tax year.

For tax year 2018, there is a subtraction allowed due to the special limited adjustment under Minnesota Statute 290.993. If an estate or trust was not allowed a federal deduction due to Tax Cuts and Job Act (TCJA), section 11045 but would have been allowed the deduction under prior law, then the disallowed federal deduction is allowed as a subtraction (subject to the federal limit) on the Minnesota return. The amount is reported on the nonconformity schedule’s “Other Adjustments to Federal Taxable Income” line. This line is located on Schedule M2NC Line 25, Schedule M2SBNC Line 26, and Schedule KFNC Line 24 for fiduciary income tax. The schedule requires that you attach a statement showing the calculation of any amount entered and that you reference of TCJA Section 11045 in the statement for that line.

For tax years beginning after December 31, 2018, and before January 1, 2026, there is not a subtraction. Minnesota conformed to the federal suspension of miscellaneous itemized deductions subject to the 2% floor. This suspension includes estate and trust taxpayers.

Most retail sales are taxable in Minnesota. However, nonprofit organizations may make certain sales exempt from sales tax. For additional information on these exemptions, see our Nonprofit Organizations Industry Guide.

Retail sales are subject to sales tax unless an exemption applies. If the purchaser qualifies for an exemption, they must provide the seller with a completed Form ST3, Certificate of Exemption.

Yes, sales to exempt entities are included in calculating your total retail sales, unless they are for resale. Do not consider sales for resale as part of your total retail sales.

Yes, sales of nontaxable items are included in calculating your total retail sales, unless they are for resale. Do not consider sales for resale as part of your total retail sales.

You must register, collect, and remit Minnesota sales tax on the first taxable retail sale into Minnesota that occurs no later than 60 days after you exceed the Small Seller Exception. You will also have a sales tax return filing obligation.

Note: If you are making sales into Minnesota and do not exceed the small seller exception, you may choose to collect and remit Minnesota Sales Tax at any time.

Currently, there is not a universal sales tax return. However, several Certified Service Providers (CSPs) are able to file sales tax returns in all sales tax states.

No, you are only liable to collect Minnesota Sales Tax when you exceed the Small Seller Exception.

Remote sellers who made taxable sales prior to October 1, 2018, were not required to collect sales tax on those transactions.