SF210

Purpose

• The bill addresses taxation and employee classification by changing how the Internal Revenue Code (IRC) is defined for Minnesota’s tax rules. It aims to align Minnesota law with federal definitions, but with a notable exclusion.

Main Provisions

• Amends Minnesota Statutes 2024 section 290.01 subdivision 31 (Subd 31 Internal Revenue Code).
  • (a) Definition change: “Internal Revenue Code” means the Internal Revenue Code of 1986 as amended through May 1, 2023. It also includes any uncodified provision in federal law that relates to provisions of the Internal Revenue Code that are incorporated into Minnesota law.
  • (b) Exclusion: For purposes of this chapter, “Internal Revenue Code” does not include Section 530 of Public Law 95-600 as amended.

Significant Changes to Existing Law

• Expands what counts as the Internal Revenue Code for Minnesota tax purposes by including uncodified provisions in federal law that relate to the IRC and are incorporated into Minnesota law.
• Explicitly removes Section 530 (the federal safe-harbor provision related to worker classification) from the Internal Revenue Code for Minnesota purposes.
• These changes affect how Minnesota interprets tax rules related to employee classification by tying them to a broader or differently scoped definition of the IRC than before.

Impact and Considerations

• Because uncodified federal provisions can be broad, the definition may broaden the set of federal provisions Minnesota considers when applying tax law.
• Excluding Section 530 may remove a federal safe-harbor option for worker classification in Minnesota’s tax context, potentially affecting how workers are classified for tax purposes.
• The practical effect depends on how Minnesota courts and agencies interpret the uncodified federal provisions that are “incorporated into Minnesota law.”

Terminology and Key Concepts (for clarity and search relevance)

• Internal Revenue Code
• uncodified provision in federal law
• provisions of the Internal Revenue Code that are incorporated into Minnesota law
• Section 530
• Public Law 95-600
• Minnesota Statutes 2024 section 29001 subdivision 31
• employee classification
• taxation

Relevant Terms - Internal Revenue Code - uncodified provision in federal law - provisions of the Internal Revenue Code that are incorporated into Minnesota law - Section 530 - Public Law 95-600 - May 1, 2023 - Internal Revenue Code of 1986 - Minnesota Statutes 2024 - 29001 subdivision 31 - employee classification - taxes - Minnesota