|
| Date: | March 16, 2011 | | Contact Name: | Chris Van Guilder | | Contact Phone: | 651-296-1388 | | Contact Email: | christopher.vanguilder@senate.mn | | For Immediate Release | |
|
| SENATOR MILLER INTRODUCES RENEWAL OF MINNESOTA-WISCONSIN TAX RECIPROCITY |
St. Paul – Senator Jeremy Miller (R-Winona) introduced a bill on Monday that would renew income tax reciprocity discussions between Minnesota and Wisconsin. Senate File 802 would reverse a September 18, 2009 decision by the Commissioner of Revenue to terminate the individual income tax reciprocity agreement with Wisconsin. Senator Miller’s bill directs the Commissioner of Revenue to initiate negotiations with the Wisconsin Secretary of Revenue, with the objective of entering into an income tax reciprocity agreement for tax years beginning January 1, 2012.
Senator Miller, chief author of the bill, stated: “Minnesota and Wisconsin have participated in some type of reciprocity agreement since 1967 as an attempt to relieve the burden of filing two state income tax returns for residents who live in one state and work in the other. That ended in 2009 when reciprocity was terminated due to the absence of a re-negotiated agreement. By installing a new agreement, we can continue to help taxpayers in Minnesota and across the border in Wisconsin, while ensuring that the State of Minnesota receives its necessary payments going forward.”
Under the previous reciprocity arrangement, Wisconsin was required to make a payment to Minnesota each year for Minnesota’s net revenue loss due to reciprocity. The State of Wisconsin currently owes $58,697,000, which was due on December 1, 2010. Daily interest of $4,584 began accruing after the due date.
According to the Minnesota Department of Revenue, District 31 may be affected more than nearly any area in Minnesota. More than 2,800 Houston County residents work in Wisconsin, the most of any Minnesota county. Without the reciprocity agreement, it is anticipated many of these residents will experience an increase in income taxes owed to Wisconsin.
The 2009 action of the Commissioner to terminate the agreement with Wisconsin was based on Minnesota Statutes, Section 290.081(b), which allows the Commissioner of Revenue to repeal the individual income tax reciprocity when deemed to be in the best interest of the people. Senate File 802 not only directs the Commissioner to initiate negotiations for a new agreement, but also modifies Minnesota Statute to remove the authority of the Commissioner of Revenue to terminate an agreement.
The proposed law does the following:
· Requires Wisconsin to make one or more estimated payments to Minnesota in the fiscal year in which the revenue loss occurs and a final payment in the following fiscal year.
· Revokes the authority of the Commissioner of Revenue to terminate an agreement, and any agreement would remain in effect until terminated by Minnesota or Wisconsin law.
· Applies interest to the final payment from July 1 of the tax year, not to the estimated payments.
A revenue impact is not yet known, as there is no effective date for a new agreement and the methodology used to calculate the estimated payments and final payment has not been determined.
Senate File 802 was referred to the Senate Taxes Committee, where it is scheduled to be heard on Thursday, March 17. The companion bill, House File 820, was authored by Representative Greg Davids (R-Preston) and is currently in the House Taxes Committee.
###
