HF 183

as introduced - 90th Legislature (2017 - 2018) Posted on 02/01/2017 03:42pm

A bill for an act
relating to taxation; individual income; modifying the terms for reciprocity with
Wisconsin; amending Minnesota Statutes 2016, section 290.081.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2016, section 290.081, is amended to read:

290.081 INCOME OF NONRESIDENTS, RECIPROCITY.

(a) The compensation received for the performance of personal or professional services
within this state by an individual whose residence, place of abode, and place customarily
returned to at least once a month is in another state, shall be excluded from gross income
to the extent such compensation is subject to an income tax imposed by the state of residence;
provided that such state allows a similar exclusion of compensation received by residents
of Minnesota for services performed therein.

(b) deleted text begin When it is deemed to be in the best interests of the people of this state, the
commissioner may determine that the provisions of paragraph (a) shall not apply. deleted text end As long
as the provisions of paragraph (a) apply between Minnesota and Wisconsin, the provisions
of paragraph (a) shall apply to any individual who is domiciled in Wisconsin.

(c) For the purposes of paragraph (a), whenever the Wisconsin tax on Minnesota residents
which would have been paid Wisconsin without paragraph (a) exceeds the Minnesota tax
on Wisconsin residents which would have been paid Minnesota without paragraph (a), or
vice versa, then the state with the net revenue loss resulting from paragraph (a) shall receive
from the other state the amount of such loss. This provision shall be effective for all years
beginning after December 31, 1972. The data used for computing the loss to either state
shall be determined on or before September 30 of the year following the close of the previous
calendar year.

(d)(1) Interest is payable on all amounts calculated under paragraph (c) relating to taxable
years beginning after December 31, 2000. Interest accrues from July 1 of the taxable year.

(2) The commissioner of revenue deleted text begin is authorized to deleted text end new text begin shall new text end enter into agreements with the
state of Wisconsin specifying the reciprocity payment due dates, conditions constituting
delinquency, interest rates, and a method for computing interest due new text begin , if the taxing official
of the state of Wisconsin agrees to terms consistent with clause (3) new text end .

(3) deleted text begin For agreements entered into before October 1, 2014, the annual compensation required
under paragraph (c) must equal at least the net revenue loss minus $1,000,000 per fiscal
year.
deleted text end

deleted text begin (4) For agreements entered into after September 30, 2014, deleted text end The annual compensation
required under paragraph (c) must equal the net revenue loss per fiscal year.

deleted text begin (5) deleted text end For the purposes of deleted text begin clauses (3) and (4) deleted text end new text begin this clause new text end , "net revenue loss" means the
difference between new text begin :
new text end

new text begin (i) new text end the amount of Minnesota income taxes Minnesota forgoes by not taxing Wisconsin
residents on income subject to reciprocity new text begin less the cost of providing refundable credits in
excess of liability under this chapter to Wisconsin residents; new text end and

new text begin (ii) new text end the deleted text begin credit Minnesota would have been required to give under section 290.06,
subdivision 22, to Minnesota residents working in Wisconsin had there not been reciprocity deleted text end new text begin
amount of Wisconsin income taxes Wisconsin forgoes by not taxing Minnesota residents
on income subject to reciprocity new text end .

(e) If an agreement cannot be reached as to the amount of the loss, the commissioner of
revenue and the taxing official of the state of Wisconsin shall each appoint a member of a
board of arbitration and these members shall appoint the third member of the board. The
board shall select one of its members as chair. Such board may administer oaths, take
testimony, subpoena witnesses, and require their attendance, require the production of books,
papers and documents, and hold hearings at such places as are deemed necessary. The board
shall then make a determination as to the amount to be paid the other state which
determination shall be final and conclusive.

(f) The commissioner may furnish copies of returns, reports, or other information to the
taxing official of the state of Wisconsin, a member of the board of arbitration, or a consultant
under joint contract with the states of Minnesota and Wisconsin for the purpose of making
a determination as to the amount to be paid the other state under the provisions of this
section. Prior to the release of any information under the provisions of this section, the
person to whom the information is to be released shall sign an agreement which provides
that the person will protect the confidentiality of the returns and information revealed thereby
to the extent that it is protected under the laws of the state of Minnesota.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment for
taxable years beginning after December 31, 2016.
new text end