Dear neighbor,
Last week the legislature passed and the Governor signed into law legislation that brings Minnesota’s tax code in alignment with some provisions of the federal tax code in tax year 2013, with the other major provisions starting in 2014. This bill also repeals the sales tax on commercial/industrial repair, warehousing and telecommunications machinery and equipment starting April 1, 2014.
It’s disappointing that it took until mid-March to fix some of the tax mistakes from the 2013 Legislative Session - especially given the April deadline to file taxes quickly approaching. The 2013 Omnibus Tax Bill that raised $2.1 billion on hardworking Minnesotans should never have been enacted in the first place. Even after session was over, my Republican colleagues and I called for a quick special session to repeal the job-killing business-to-business taxes that were slipped into the bill at the last minute. Unfortunately, that never occurred.
While I’m pleased we were finally able to un-do some of the damaging tax policy that was enacted by the Democrats in the 2013 Legislative Session, it truly did not go far enough considering there is a $1.2 billion surplus. Notably absent items:
· Increased Standard Deduction for married joint filers which would have saved 640,000 married couples an average of $112 per return for tax year 2013.
· Retroactive repeal of business-to-business sales tax that went into effect in 2013 which would have returned $55.9 million to hardworking Minnesota taxpayers.
Although this legislation was a small step in the right direction, it fell woefully short for the hardworking taxpayers of Minnesota. It’s distressing to me that job providers who were forced to lay off employees in order to pay these taxes will not have their money returned to them. Even though the job-destroying business-to-business taxes enacted in 2013 were repealed, we should be giving the money back to those from whom it was taken by state government in the first place.
According to the Minnesota Department of Revenue, if you are affected by these tax changes and have already filed your return, one of three things will occur:
· The Minnesota Department of Revenue will fix your return and send a letter explaining what was fixed
· The Minnesota Department of Revenue will request more information from you so they can fix your return
· The Minnesota Department of Revenue will notify you they cannot fix your return. If this happens, you will need to file an amended return.
If you have not yet filed your 2013 taxes, you should wait until after April 3, 2014 to do so. The Department of Revenue will have their online systems updated by then to account for tax refund changes.
Last year the legislature passed and the governor signed into law a proposal that exempted local units of government from having to pay sales tax. However, the Department of Revenue’s interpretation of the law did not include local units of government which save taxpayer money by sharing services among multiple cities – known as Joint Powers Agreements. In our community, the South Lake Minnetonka Police Department operates under a Joint Powers Agreement for police services for the cities of Excelsior, Greenwood, Shorewood and Tonka Bay. My bill clarifies that such entities would qualify for the sales tax exemption. We shouldn’t be penalizing local units of government for spending taxpayer dollars more efficiently by pooling resources – especially when they are doing so for the safety of the public. I was honored to have South Lake Minnetonka Police Chief Bryan Litsey testify before the House Taxes Committee in support of my legislation on March 11. Unfortunately, I learned late last night that although my bill (House File 2703) will be included as a provision in the 2014 Omnibus Tax Bill, the current language delays enactment of the sales tax exemption for Joint Powers Agreements until July 1, 2015. I’m working to change that particular provision so that the effective date would be immediately after the bill becomes law.
With session now well underway and legislation moving quickly, I encourage you to contact my office with your thoughts, comments, and concerns. I greatly appreciate having heard from so many of you! You can e-mail at rep.cindy.pugh@house.mn. You can call me at (651) 296-4315. Mail can be sent to Rep. Cindy Pugh, 313 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, Minnesota 55155. If you haven’t yet contacted me but would like to weigh in, I’d love to hear you.
Sincerely,
Cindy