Dear Friends and Neighbors,
A tax law approved by House Democrats and signed into law by Governor Walz last session is costing farmers across Minnesota thousands of dollars in additional income tax.
More specifically, farmers and other business owners who traded equipment are seeing that trade value counted as income and can likely expect a bill from the Department of Revenue. Unfortunately, it probably won’t be cheap.
The tax problems center on the state's failure to fully conform to Section 179 – accelerated depreciation – in the federal tax code. Under last session’s tax law, the Department of Revenue is directed to review Section 179 claims, adjust for new expensing limits, and review any gains or losses from the equipment traded in.
For a farmer or business owner who traded in farm equipment or other machinery in 2018, and realized a financial gain on that equipment, the Department of Revenue will send a letter to them stating income taxes will now be owed on that gain immediately, while the higher expensing limits will only benefit them over time.
Farmers from all over the state have been reaching out to legislators, sharing their shock and confusion with the unexpected tax bills.
I will be working on legislation this session to alleviate this financial hit on farmers. The bill would fully fund conformity to Section 179 and will also cancel any penalties and interest leveled by the revenue department on unpaid debts due to the Section 179 debacle.
Farmers deserve better than this and we need to make it right.
If you have any questions regarding this unfortunate situation, please reach out to me or my office. I can be reached by phone at 651-296-4229 or via email at firstname.lastname@example.org.
Have a great weekend,