From the internet

The documents and the statistics have spoken and they say that Minnesota’s income tax system is among the most progressive in the nation.

The study that was released from the Minnesota center for Fiscal Excellence states that the income tax system is a national leader in addressing the issues taxpayers have with their ability to pay. Although many of the higher income taxpayers in Minnesota pays some of the highest taxes in the countries, the lower income families have the lowest income tax burdens.

This is a report that is designed to help determine who is paying their fair share of taxes, especially since Minnesota lawmakers are considering imposing even higher tax rates for some of the top earners in the state.

Typically, “fairness’ is a politically convenient term that is used when there is the desire to raise more tax revenue. However, it has been cited that there is a need to go into such increases with eyes wide open in order to ensure other things do not suffer. There are three areas being considered and they are stability, accountability, and competitiveness. The fear is that a lot of revenue would be lost when the higher earners would leave the state. That would affect stability and competitiveness. The accountability aspect is ensuring that taxpayers are not insulated from their responsibility of paying their taxes.

Also covered in the study is the impact that income tax has on seniors in the state. Those with household incomes that exceed $75,000 pay some of the highest income taxes among retirees in the U.S. and much more than seniors in surrounding states. This is because Minnesota doesn’t give seniors special treatment. It is recognized that there is some risk in this arena since seniors tend to be more mobile in regards to moving out of the state to save money.

Nonetheless, the state tends to be under-appreciated for its addressing of ability-to-pay issues. There is also the state’s generosity in its property tax refund program.

This study compared Minnesota with the District of Columbia and 41 other states. The other 9 states in the union either have no state income tax or they have that is limited to the point that it wasn’t feasible to analyze. Overall, the study gives Minnesota an idea of how it stacks up against other states, which is important when considering tax increases since such increases can influence whether or not some of the higher earners stay within the state.

Source: http://www.twincities.com/ci_22902004/minnesota-income-tax-how-much-fairness-is-too

From the internet

In 2014, Minnesota taxpayers will receive their state income tax refunds via debit cards as opposed to paper checks. For some lawmakers, this poses privacy worries, especially for those taxpayers who prefer to bypass the direct deposit option.

On April 18, the Minnesota House declined to stop the conversion to debit cards while a study about the security of debit cards and data storage was conducted. There is a concern that there will not be enough safeguards for electronic transactions when taxpayers use the cards to spend their refunds.

Revenue officials have stated that they won’t pry into the spending data of taxpayers and that taxpayers can go to a bank and cash out their debit cards. However, it is possible to track activity and legislators believe that measures should be put in place to protect privacy rather than relying on the word of revenue officials.

The study being conducted must be completed by the end of the year.

It is believed that the Department of Revenue will save around $4.5 million each year by implementing the debit cards, making it a very important money saving measure for the state.

It is one that will provide taxpayers with a degree of convenience. In the meantime, the results of the study may influence what kind of legislature is put in place that protects the privacy of taxpayers.

Sources: http://minnesota.cbslocal.com/2013/04/20/minn-house-wont-stall-debit-card-tax-refunds/

http://www.tcdailyplanet.net/news/2013/04/21/government-efficiency-sought-omnibus-state-government-bill

From The Internet

The Minnesota Department of Revenue will be going greener by issuing their tax refunds via debit card instead of paper checks.

While most of the tax returns in Minnesota are handled electronically with direct deposit, there are still approximately 1 million paper checks issued for refunds each year. Some of those individuals do not have bank accounts at credit unions or banks.

This switch covers individual and not corporate tax refunds and the purpose is to cut costs, adding an environmental benefit due to the reduction in paper consumption. This also reduces the possibility of check fraud, saving the state around $400,000. People with debit cards will also get their refunds approximately 30 days earlier than with paper checks due to not having to go through three different state agencies before making it to the taxpayer and will eliminate the need of the taxpayers to go to locations that will cash the checks.

Another hope of this program is to reduce the need for refund anticipation loans, which are very expensive and consist of their own problems. People will be able to use the debit card the same way they use the prepaid card for rapid refund, but money cannot be reloaded on the card.

Approximately seven states have already made these changes, eliminating the agencies in which paper checks must pass through. As of now, all that needs to be determined is how the vet card issuers will place the refunds on the cards.

Source: http://www.startribune.com/business/195480151.html

From The Internet

The Minnesota Commerce Commissioner is once again urging CPAs and other tax professionals in Minnesota to use what they know to identify financial abuse and elder fraud. This has now become a top priority by the department and now they are advising CPAs to help their elderly clients who may have been the victims of fraud and give them assistance if they need it.

Seniors hold approximately 70 percent of the wealth in the nation, making scams that target them, such as fake investments and poor financial products, very profitable for scammers. In 2010, a survey showed that over 7 million elderly Americans had been victimized by some kind of financial scam. According to the Investor Protection Trust, these con artists make over $2 billion per year.

The most troubling statistic of all is that approximately 80 percent of these cases are not reported. The reason is because the victims are embarrassed, confused, and fearful.

Fortunately, licensed tax professionals possess the skills to identify when their clients may be victims of some kind of financial abuse. Accountants can see when the numbers don’t make sense and help bring awareness to the fraud for victims and their families.

Some things that the Minnesota Commerce Commissioner has told tax professionals to be vigilant of include:

1. Incomplete documentation or documentation that is missing
2. Large increases or decreases in income
3. Gifts and promissory notes at non-competitive interest rates or gifting large sums of money to questionable individuals
4. Unfair broker fees
5. Investing in exotic instruments
6. Unsuitable investments
7. A 1035 exchange that is not suitable

Investigators with the Commerce Department are standing by to take action against fraudsters who try to take advantage of the elderly investor and taxpayer.

Source: http://www.echopress.com/event/article/id/102933/group/News/

From the internet

The border battle between Minnesota and Wisconsin is heating up.

Due to a proposal to extend sales tax to items that are currently not subject to it, Wisconsin’s governor and a state legislator are working to convince Minnesota companies to bring their business to Wisconsin.

When Minnesota’s Governor, Mark Dayton, proposed lowering the sales tax but extending it to clothing, services, and over-the-counter medications, Wisconsin’s governor jumped on the opportunity. However, Dayton has stated that this is “job poaching.”

It has been said that such an issue could result in agreements between tax reciprocity and college tuition being threatened. Wisconsin’s governor, Scott Walker, stated in a tweet that what “stirred the pot” was when Dayton proposed a sales tax on business-to-business transactions. It is believed that taxation on these transactions would bring in $2 billion.

The two states have had a long standing agreement to allow students in each state to receive in-state tuition rates at the University of Minnesota and the University of Wisconsin no matter where they live in the two states. This is an arrangement that tends to benefit Wisconsin a little more, especially with some schools depending on students that come from the Twin Cities.

The states have also had a deal for over 40 years that allows residents of one state to work in the other and file only one state on their income tax return. There are approximately 60,000 Wisconsin residents that work in Minnesota and 20,000 Minnesota residents that work in Wisconsin.

In 2009, former Minnesota Governor Tim Pawlenty said that tax reciprocity was costing the state millions. No resolution has been reached in this dispute.

As for why Wisconsin’s Governor is trying to pull businesses from Minnesota, he has also faced a budget deficit that he inherited from the previous administration. His challenge is to close a gap of $1 billion.

Dayton’s tax proposal is to tax professional services, which includes legal and accounting services, advertising, and construction. He says the revenues would be used for economic development, education, and property tax relief for the middle class.

When Wisconsin’s Governor received this information, he tweeted on Twitter that Wisconsin was open for business.

Dayton responded the next day that Walker doesn’t have an economic development record to brag about and elaborated on the conditions of Walker’s economy in Wisconsin.

Source: WSJ