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Headaches ahead for tax returns in Minnesota

Missing out on a tax conformity bill "would be a nightmare for us," accountant Jenny Miller said on Tuesday. Then on Wednesday the governor's veto came. So the nightmare begins. At issue is federal tax reform, passed late last year, and Minnesota...

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Missing out on a tax conformity bill "would be a nightmare for us," accountant Jenny Miller said on Tuesday.

Then on Wednesday the governor's veto came. So the nightmare begins.

At issue is federal tax reform, passed late last year, and Minnesota's own tax laws that don't quite line up with the new federal rules. Though the Legislature passed a bill that would have helped state laws conform - and bring down tax rates a little bit - Gov. Mark Dayton's veto means the laws remain as-is.

The Minnesota Society of Certified Professional Accountants warned political leaders that inaction can hurt all taxpayers, since best-laid plans will now be rushed.

"It would be like planning for a tropical vacation for months, only to be told shortly before departing that you're going to the Arctic," the group wrote earlier this year.

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Professional tax preparers and folks who brave returns on their own will now have to wrangle with the state/federal differences, which run from itemized deductions and real estate write-offs to certain business expenses.

"There is a part of the population that would actually pay more without any sort of conformity," said Miller, a principal with Kolquist, Seitz & Goldman in Duluth. "Compliance would be prefered, obviously, but if they're not going to comply, then we want to know about the adjustments so we can plan for clients now."

The Department of Revenue said it will update its systems and issue guidance on the continuing differences between federal and state tax laws.

"We look forward to working together with taxpayers, software vendors, tax preparers and professionals, Volunteer Income Tax Assistance sites and other stakeholders to ensure everyone has the information, education and services they need to meet their obligations under Minnesota law," Revenue Commissioner Cynthia Bauerly said in a news release. "We will work throughout the summer to engage all of our stakeholders as we update our systems."

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