I joined other tax preparers Wednesday morning on a phone conference with state tax officials about last week’s numerous tax cuts from the Minnesota Legislature. State tax collectors now are reprogramming their computer systems to handle huge numbers of returns eligible for larger refunds. Some of the income tax breaks apply retroactively to 2013 returns, which are due on April 15.
However, during the conference call, MN Revenue asked us (preparers) NOT to e-file ANY returns until after April 3, which is next Thursday.
The IRS (federal) and MN returns now are being integrated/bundled under what is called the “ MEF,” or “modernized e-file”, system. Both the state Department of Revenue and independent vendors of tax software programs need some time to update their systems to prevent mismatched information.
One of the big reasons for the Legislature’s action was to coordinate Minnesota’s taxing system better with the federal government’s. On April 3,Minnesota Revenue expects to have its systems and forms updated to reflect the tax breaks for 2013 – but not before then.
Here’s what could happen if we tax preparers sent in a return that is eligible for one of the new tax changes. Let’s say you show a student loan interest deduction on your federal tax return, and your Minnesota return is e-filed now, MN’s system will read the deduction as a “non-compliant” item, which may delay your refund or even cause your return to be rejected. So, MN Revenue is telling us to wait until after systems are fixed on April 3 to send in your forms.
What if your Minnesota tax return already has been e-filed? Minnesota Revenue will handle most of the corrections. The state will send you a letter to inform you if the return was automatically fixed or if you will have to file an amendment to collect on a tax cut. No action will be taken until this occurs. I’m assuming only taxpayers with changes on their returns will receive this letter.
In the meantime. I will work to make necessary adjustments and complete all unfiled returns, but I also will wait to send them to Minnesota Revenue until I have the OK from my software vendor and from MN Revenue. So, generally it’s “business as usual.” I just can’t click the “send” button for a few daysJ
Of course, this happened toward the end of the filing season for 2013 tax returns. If you think MN should have waited three more weeks (after April 15) to make these changes, please feel free to send a note to your local state representative! I’m assuming this is going to cost taxpayers millions in postage alone.