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Senate Tax Reform Division adds local economic development projects to federal income tax conformity bill.
(Published Jan 31, 2013)
On January 30 the Senate Tax Reform Division passed SF 119 (Skoe, DFL-Clearbrook), which will conform the Minnesota income tax statutes to an array of federal tax changes. The Bill must now be heard by the full Tax Committee.
Of particular interest to cities was an amendment to the bill that added a number of local economic development and tax provisions from the vetoed 2012 Omnibus Tax bill (2012: HF 247). The amendment contains a number of generally supported local economic development and tax items including:
• St. Cloud Area sales tax use expansion
• St. Cloud TIF provision
• Oakdale TIF provision
• Creation of a Soil Deficiency TIF district
• Creation of a Mining Reclamation Project Area for redevelopment
• Expansion of Rochester sales tax revenue sharing to Wanamingo
• Creation of a plan to better publicize the Angel Investor Tax Credit
Because Minnesota tax returns rely upon federal income tax calculations, SF 119 must be processed quickly in order to allow Minnesota tax filers to take advantage of the conformity provisions.
Among the items included in the bill are conformity provisions that will extend the higher education tuition deduction, extend the educator classroom expense deduction, and extend 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 bill also extends 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 version of the bill (HF 6, Rep. Ann Lenczewski, DFL-Bloomington) was approved in House Tax Committee on January 28 and we believe it will be heard in the Ways and Means Committee on Monday and then sent the floor. The House version of the bill is currently limited to only the 2012 federal tax conformity language, and it is unknown whether the House will add the local economic development provisions.
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