After a rather quiet spring, there has been a flurry of tax-related activity and news from both the State Capitol in St. Paul, as well as Capitol Hill in Washington. Here are a few things to keep your eye on.
- At the State Capitol, lawmakers are debating a tax bill that will raise income taxes on the “top 2% of taxpayers” to a new top rate of 9.4%, giving Minnesota the 4th highest tax rates in the country. There is some confusion on what the “top 2%” actually is. Some reports place this new top tax rate on married taxpayers with taxable income of more than about $140,000, while other reports state the new top rate will kick in on married taxpayers with taxable income of more than $250,000. The House passed the bill late last night, and the Senate has yet to vote on the matter. No matter how it passes, the Governor is expected to sign it.
- The same tax bill being debated in the Senate lowers the sales tax in Minnesota from 6.875% to 6.0%, but subjects a number of things to sales tax that were previously exempt, most notably all clothing, warehousing services, and attorney’s services. It also raises the per-pack cigarette tax significantly.
- In the wake of the IRS appearing to inappropriately target conservative organizations seeking non-profit status, the acting commissioner of the IRS has stepped down, and will face a second day of questioning by the Senate today.
- Also, due to the cuts imposed by the sequester, the IRS will be closed entirely this Friday, May 24th. No phone lines will be answered, no returns will be processed, and all enforcement activity will cease for that day. This is the first of a number of scheduled closures that will take place over the summer.
We will keep a close watch on the votes at the State Capitol and let you know the details once they pass the final tax bill.