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HF2133 (Legislative Session 94 (2025-2026))

Income tax; pass-through entity tax technical correction made.

AI Generated Summary

Purpose of the Bill

The purpose of this bill is to make a technical correction to Minnesota's taxation statutes, specifically regarding the passthrough entity tax. It aims to align state tax practices with those concerning tax credits for passthrough entity taxes paid to other states.

Main Provisions

  • Credit for Passthrough Entity Tax: The bill allows a tax credit against Minnesota taxes for passthrough entity taxes paid to another state by qualifying entities and their owners. This adjustment helps ensure that entities paying taxes in multiple states are not taxed twice on the same income.
  • Claiming Credits: The process for claiming this credit must adhere to the guidelines set by the state commissioner. This ensures proper administration and compliance with tax laws.
  • Expiration Alignment: The expiration of this tax credit provision is aligned with section 164(b)(6)(B) of the Internal Revenue Code. However, this expiration will not affect the commissioner’s ability to conduct audits or validate claims related to this credit.

Significant Changes to Existing Law

  • The bill amends the taxation statute to specify and clarify how the credit for taxes paid to other states is calculated and claimed. It also provides definitions for terms such as "income," "passthrough entity tax," "qualifying entity," and "qualifying owner" to avoid ambiguity and ensure proper application of the law.

Relevant Terms

  • Passthrough entity tax
  • Tax credit
  • Qualifying entity
  • Qualifying owner
  • Income
  • Partnership
  • Limited liability corporation (LLC)
  • S corporation

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 09, 2025HouseFloorActionIntroduction and first reading, referred toTaxes
March 11, 2025HouseFloorActionCommittee report, to adopt as amended
March 11, 2025HouseFloorActionSecond reading
March 12, 2025HouseFloorActionHouse rule 1.21, placed on Calendar for the Day
March 12, 2025HouseFloorActionMotion to lay on the table
March 12, 2025HouseFloorActionMotion prevailed

Citations

 
[
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This bill modifies the passthrough entity tax provisions in Minnesota Statutes section 290.06, subdivision 23a.",
      "modified": [
        "Clarifies the application of passthrough entity tax credits for payments to other states, affects instructions on claiming the credit."
      ]
    },
    "citation": "290.06 subdivision 23a"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill references qualifying entity and owner definitions provided in Minnesota Statutes section 289A.08, subdivision 7a.",
      "modified": []
    },
    "citation": "289A.08 subdivision 7a"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Provides the meaning of 'income' in the context of the bill, referencing Minnesota Statutes section 290.01, subdivision 19.",
      "modified": []
    },
    "citation": "290.01 subdivision 19"
  }
]

Sponsors