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Tax Position Disclosure
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Form TPD, Tax Position Disclosure, may be filed with your return to provide explanation of items or positions of question. This form is filed to further explain certain tax positions, which may reduce the substantial understatement of liability penalty if your position has a reasonable basis.
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Form TPD may be filed with these forms by certain taxpayers:
Business and Fiduciaries
- Form M2, Income Tax Return for Estates and Trusts
- Form M3, Partnership Return
- Form M4, Corporation Franchise Tax Return
- Form M4NP, Unrelated Business Income Tax Return
- Form M8, S Corporation Return
- Form M30, Occupation Tax Return
- Form PS2000, Application to Title/Register a Vehicle
- SW-1, Metropolitan Solid Waste Landfill Fee Monthly Report
Individuals
- Form M706, Estate Tax Return
- Form M1, Individual Income Tax
We assess an understatement penalty if you understate a substantial amount of tax on your return.
The penalty is 20% of the amount you underpaid due to the understatement.
An understatement is the difference between the amount of tax required under law and the amount of tax reported on the return.
How Penalty is Assessed
The penalty is assessed differently for C corporations and mining companies than other taxpayers.
C Corporations and Mining Companies
- The understatement exceeds the greater of $10,000 or 10% of the corrected tax liability
- For C corporations only, the understatement exceeds the lesser of 10% of the corrected tax liability (or, if greater, $10,000) or $10 million
Other Taxpayers
The penalty is assessed if the understatement exceeds the greater of $5,000 or 10% of the corrected tax liability.
Reduction of Understatement Penalty
The understatement penalty may be reduced if there is either:
- Substantial authority for the tax as shown on the return
- A reasonable basis for the tax shown on the return and that basis is adequately disclosed in the return or in a statement attached to the return, including in Form TPD
These reductions are subject to exceptions as defined in Minnesota Statute 289A.60, subdivision 4.
