For the latest news and updates on Minnesota state and local tax
September 30, 2021
Minnesota – Updated Guidance on Prepared Food
The Minnesota Department of Revenue has recently released revised guidance on the sales and use tax treatment of prepared food in the state. The Department of Revenue has clarified three guidelines in which a food or drink item will be considered prepared food and therefore subject to sales and use tax:
- The food or drink is sold in a heated state or was previously heated by the seller; or
- Two or more ingredients are mixed by the seller and sold as a single item; or
- Eating utensils are provided by the seller.
Items such as bakery items, food that requires cooking prior to consumption, raw meats, poultry, seafood that require cooking before consumption, and foods that the seller only slices, repackages, and pasteurizes are example of items that will not fall under prepared food though they may match the item guidelines above. Food and drinks sold in restaurants or catering will continue to be taxed under normal tax laws.
July 16, 2021
Minnesota Tax Legislation Updates Selective Conformity
On July 1, 2021, Minnesota enacted law updating the state’s selective conformity to federal individual and corporate income tax law enacted after December 31, 2018. The Minnesota legislation provides, among other updates, an exclusion from gross income for loan forgiveness through the federal Paycheck Protection Program (PPP), allowances for businesses that received PPP loan forgiveness to deduct their associated expenses, and a $10,200 exclusion from gross income for unemployment insurance compensation. Also, effective retroactively for tax years beginning after December 31, 2019, , Minnesota conforms to IRC § 179, no longer requiring an addback for taking the IRC § 179 deduction for tax years 2020 and after.
Minnesota Enacts Pass-Through Entity Tax Election
Minnesota’s recently-enacted legislation also provides an election for qualifying pass-through entities to be taxed at the entity level. The election may be made for tax years beginning after December 31, 2020, and it is irrevocable for the tax year once made. The deadline to make the election is the date the return is due, or the extended due date. Electing entities must make estimated payments the same as required for the composite tax. Qualifying owners may claim a credit on their own returns equal to their share of a pass-through entity’s tax liability.
March 23, 2021
Minnesota Update on Extension of Filing Deadline
In following with the Internal Revenue Service (IRS), the Minnesota Department of Revenue will allow a grace period for taxpayers filing their annual Minnesota Individual Income Tax return for tax year 2020. Those taxpayers now have until May 17, 2021, to file and make their payments without any penalty or interest. This grace period does not include individual estimated tax payments. (News release, Minn. Dept. Rev., 05/19/2021.)
March 23, 2020
Additional Time to File and Pay Minnesota 2019 Individual Income Tax
The Minnesota Department of Revenue has announced that taxpayers filing their annual Minnesota Individual Income Tax return for the tax year 2019 now have until Wednesday, July 15, 2020, to file and make their payments without any penalties or interest. This grace period does not include state estimated tax payments for individual income taxes due April 15, 2020, for the 2020 tax year.
While the Minnesota due date for the corporation franchise tax remains due on April 15, 2020, under current Minnesota law, businesses receive an automatic extension to file their state return to the later of November 15, 2020, or the date of any Federal extension to file. Furthermore, the due date of April 15, 2020, has not changed for partnerships, fiduciaries, and S-corporations, as these entities will receive an automatic extension to file their state return to the date of any federal extension to file.
Please note that those taxpayers who are unable to pay may request relief from other late-file or late-pay penalties, additional tax charges, or interests, for reasonable cause or the state of emergency declarations by the president and governor due to COVID-19. Taxpayers may request relief after being notified of a penalty.
March 21, 2020
30-Day Sales and Use Tax Grace Period
The Minnesota Department of Revenue is granting a 30 day Sales and Use Tax grace period as Identified in Executive Order 20-04. The Department will not assess penalties or interest. Identified business, such as restaurants, bars, and other places with public accommodation, that have a monthly Sales and Use Tax payment due by March 20, 2020, have until April 20, 2020, to make that payment.
These businesses should still file their return by March 20. This grace period for penalties and interest is only for monthly filers and only for the March 20 payment. Businesses can request additional relief from penalties and interest for reasonable cause after April 20.
Effective May 31, 2019, federal changes are effective retroactively for corporate franchise and individuals income tax from December 16, 2016 through December 31, 2018.
State Starting Point Change
For tax years beginning after 2018 the starting point for the state return has been changed to Federal Adjusted Gross Income (FAGI) from Federal Taxable Income (FTI).
Marketplace Facilitator – Sales Tax Requirements
Beginning September 30, 2019, marketplace facilitators are now required to collect and remit sales tax if sales total $100,000 or more or have more than 200 sales in the state. This has been reduced from $250,000 per year.