Tax Administration
Issue
Are the requirements related to the administration of the state’s tax statutes fair and balanced?
Policy
Minnesota generally receives good marks with respect to tax administration; however, fairness could be improved with the following change:
- Federal adjustments should not open the entire state tax return to audit.
The Minnesota Chamber believes that the Department of Revenue should have 3½ years to make assessments on a corporation’s state tax return. If the 3½ years have lapsed, the department should be able to make adjustments only to the portions of the corporation’s state return that are due to federal adjustments.
Business Impact
Limiting the Department of Revenue’s authority to make assessments to the 3½-year statute of limitations will give corporations more certainty over their state tax returns. Under current law, if a corporation signs a waiver to keep its federal tax return open and the Minnesota Department of Revenue has not conducted a field audit, its state tax return also remains open. Since federal returns can be open for a decade or more, the department has an extended period in which to make assessments. In addition, according to the Council on State Taxation, only nine states require a state return to remain open if a federal waiver is signed. Making a change would put Minnesota in line with the majority of states.
This web site is developed and owned by the Minnesota Chamber of Commerce. Any use or reprinting is strictly prohibited without prior consent of the Minnesota Chamber of Commerce.
