Tax Conformity Bill Approved by the Senate

The bill makes a number of income tax conforming changes, including extending the higher education tuition deduction and the educator classroom expense deduction.
(Published Feb 19, 2013)

The full Senate on Feb. 14 considered, amended, and approved HF 6, the 2012 federal conformity bill authored by House Taxes Committee Chair Ann Lenczewski (DFL-Bloomington).

The bill makes a number of income tax conforming changes that will extend:

  • The higher education tuition deduction.
  • The educator classroom expense deduction.
  • The authority for individuals age 70½ or older to transfer up to $100,000 from an IRA or Roth IRA directly to a qualified charity.
  • The increase in the federal adjusted gross income limit on the amount of qualified conservation easements that may be claimed as a charitable deduction.

The House bill was amended by Sen. Rod Skoe (DFL-Clearbrook) with a number of provisions related to the Iron Range Resources and Rehabilitation Board, the taconite economic development fund, and the annual tax incidence study. However, the floor amendment did not include many of the local provisions that were added earlier to the Senate version, SF 119, of the 2012 conformity bill.

Less than two hours earlier, the Senate had been working in the Taxes Committee on the companion bill, authored by Sen. Skoe, chair of the Senate Taxes Committee. The Senate version of the bill had been modified to include parts of the vetoed 2012 omnibus tax bill, including several local tax increment and local sales tax provisions. The Senate bill, which was initially amended in the Senate Tax Reform Division, contains a number of generally supported local economic development and tax items including:

  • An extension through Jan. 1, 2014, of the 2010 jobs bill authority that allows economic development districts to be used for any type of project if the municipality finds the project will create new jobs in the state, including construction jobs, and the project otherwise would not have begun before Jan. 1, 2014, without the assistance. In addition, construction of the project must begin no later than Jan. 1, 2014, and the request for certification must be made by Dec. 31, 2013.
  • An 18-month extension of a 2010 jobs bill provision that allows the use of surplus tax increment financing (TIF) increments to stimulate projects where construction commences by Jan. 1, 2014. The authority to spend increments expires on June 30, 2014.
  • St. Cloud Area sales tax use expansion.
  • St. Cloud TIF provision.
  • Oakdale TIF provision.
  • Creation of soil deficiency TIF district authority.
  • Creation of a Mining Reclamation Project Area for redevelopment.
  • Expansion of Rochester sales tax revenue sharing to Wanamingo, Racine, Grand Meadow, Dexter, Mazeppa, Lake City, and Goodhue.
  • Creation of a plan to better publicize the Angel Investor Tax Credit.

HF 6, as amended by the Senate, will now be returned to the House. The House can either approve the bill or reject the Senate amendments and request a conference committee. It does not appear at this time that the Senate version of the bill, with the local tax provisions, will re-emerge before an omnibus tax bill is compiled later this session.

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