HF 1005

as introduced - 89th Legislature (2015 - 2016) Posted on 03/10/2015 08:42am

A bill for an act
relating to taxation; individual income; modifying the terms for reciprocity with
Wisconsin; amending Minnesota Statutes 2014, section 290.081.

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

Section 1.

Minnesota Statutes 2014, 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, 2014.
new text end