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2015 Minnesota Individual Income Tax
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Hello and thank you for joining us today. I’m Terri Steenblock, Assistant Commissioner of Individual Taxes.
There are several people with me today who will be available to answer your questions. Before we get started, there are a few housekeeping items we want to cover:
1. We have muted your phone lines. This will eliminate background noise and help facilitate the conversation.
2. At the end of the session, we will open the phone lines one at a time for questions. The operator will facilitate this process and will call on participants who have a question. 3. Anytime during the session you can send us a question through the Q&A feature. To do
that, click on the green tab at the top of your screen labeled Michelle Kluge desktop and select Q&A. A box will appear and you can send us a question. We will try to answer questions throughout the meeting. If we don’t get to your question, we will follow up with you afterwards.
4. On your computer screen we will be walking through some different information. You may need to periodically wiggle your mouse to avoid the screen saver kicking in. With the filing season behind us, I want to thank you for the work you do to provide a service to our shared customers. We look forward to working with you to ensure the next filing season goes as smoothly as possible.
Today, we will discuss:
the vendor registration process our updated software guide
new information security requirements error rejection codes (also known as ERC’s) our updated substitute form guide
vouchers
legislative changes affecting individual income tax returns electronic filing of insurance premium tax returns and key dates
2 Let’s start with Vendor Registration
Each year we review our guidelines and application process. We make adjustments based on filing season experiences or new issues.
The first thing we would like to cover is the new Vendor Registration form. To get to the form: First go to our home page at revenue.state.mn.us
Then click the Software Vendors link
As you can see, this will take you to the Software Vendors landing page. Next click the Registration and Standards tab.
Finally, click the 2015 Vendor Registration form link. We have made some changes to the registration form.
The old Minnesota Registration and Software Standards and the Substitute Form
Registration and Authorization forms have been combined into one form. This combined form allows us to streamline and standardize the annual registration process.
We have also made some changes to the registration process.
All software vendors that create Minnesota tax returns electronically or on paper must complete the new Vendor Registration form.
This form is due on or before Friday, October 30th because October 31st is a Saturday this year.
Registration forms received after this date will not be accepted.
We will notify you of your registration status within 5 to 7 business days.
Once your registration has been approved we will send you specific requirements for reporting fraudulent activity to us. This will be covered in greater detail later in the conference call.
After your registration has been approved you can begin the process of preparing your paper forms for approval and your electronic files for approval.
Close the registration form
The 2015 guidelines for electronic and paper are now available. We have made a few changes that we would like to highlight.
Click the 2015 Software Vendor Electronic Filing Guide link
The look and feel of the 2015 Software Vendor Electronic Filing Guidelines has changed. We have simplified some of the language and we have standardized the format.
We added information regarding the addition of Insurance Premium tax forms via MeF. This will be covered in greater detail later in the conference call.
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We added a Fraud section to address reporting fraudulent activities. More information about the reporting requirements will be forthcoming.
A Free File section has also been added. If you intend to offer a free file solution for Minnesota taxpayers, please review this section.
Let’s talk more about Fraud
Information security is extremely important to us. New nationwide requirements are currently in development for vendors who file returns with the IRS and state agencies.
Some of the new requirements are to:
Implement multi-factor authentication using out-of-wallet information to authenticate customers;
o Out-of-wallet information is information that cannot be obtained by going through a person’s wallet or purse
Encrypt data when it is in transit and at rest; When storing customers’ data:
o It must be protected with strong, complex passwords;
o It must be restricted to individuals whose duties and responsibilities require access; and
o It must be properly destroyed when it is no longer needed.
You are also required to submit reports that include identifying potential fraudulent behavior or patterns such as; suspicious bank routing numbers, duplicate social security numbers, and non US IP addresses. These are just a few examples of the information you will be asked to provide. Specific reporting requirements will be sent to vendors once approved in Minnesota.
The proposed nationwide requirements also add 29 new data elements to the MeF file. Some of the new data elements include:
The customer’s device ID and IP address;
The customer’s bank information if you’ve established a holding account to collect preparation fees. In other words, you must send the information for the account you are routing the remaining refund to.
Another element added is an additional W2 field to indicate whether or not a customer downloaded a W2, attempted but failed to download a W2, or altered a downloaded W2. More information regarding the new requirements and data elements will be located in the Modernized eFile Guide for Software Developers and Transmitters located on the IRS website.
4 Error Rejection Codes
These proposed nationwide standards will cause changes to Error Rejection Codes referred to as ERC’s.
For information regarding ERC’s from our home page: Click the Error Rejection Codes link
You will notice that we provide links to current and prior years ERC’s. We commonly update or change ERC’s throughout a filing season. It is our standard procedure to communicate these changes through our email updates and by updating the ERC worksheets you see on this web page.
Click the 2014 PR ERCs
You will notice in the past we have utilized a color coded system to indicate changes, deletions or additions to the ERC’s. We are currently developing a new process that will no longer use colors in this documentation. Changes to ERC’s will be recorded in the comment column of the ERC worksheets. The comment field of a changed ERC will include:
Details of what is changing, or
Notice that the ERC is new or deleted, and The date the change or impact is effective
All 2015 Error Rejection Code worksheets will be posted when forms are final. Close the ERC worksheet
One ERC change we know is coming is the addition of #0189 requiring the spouse’s date of birth on the joint property tax refund return. This ERC requires the spouse name, last name, social security number, and date of birth. Otherwise, all spouse information must be blank.
As mentioned earlier, in addition to updating the worksheet we also communicate these changes through email updates. If you have not done so already, we encourage you to subscribe to our email updates.
Point to the Red Envelope at the bottom of the page
You can do this from any page of our website by clicking the red envelope at the bottom of each page.
Let’s pause for a minute and see if there are any questions before we move on. Navigate back to home
Another change for MeF this year, we are updating our Property Tax Refund schema to TIGERS standards. Our intentions are to update the remaining MeF schemas next year.
5 Substitute Paper form changes
Next we would like to cover changes to the substitute paper form process. Software Vendors link
Registration and Standards tab
We listened to your feedback, and this year the biggest change you’ll see is that our business tax forms are now on 6/10 grids. You will find a list of the grid forms on our Software Vendors’ Standards webpage.
To illustrate a 6/10 grid, let’s look at one of the forms. Click the est_15 link
Notice how all of the information is aligned to the grids. This is to allow for more exact placement on the form as requested by the NACTP.
Click the back arrow
Converting the forms to the 6/10 grid increased the number of pages for some forms. As you know, more pages means more Form IDs. You can find the list of Form ID’s in the Software Vendor Substitute Form Guidelines.
We would like to take this opportunity to provide some quick reminders to make the form approval process and filing season go more smoothly:
You cannot distribute your software until it has been tested and approved for both paper and electronic filing.
Do not print taxpayer names or social security numbers in the margins of the forms, near the form name or form IDs, and
Do not print information on the bottom of pages near the vendor ID Vouchers
Now, we would like to highlight some changes that we’ve made to the payment vouchers. As an example we will look at the Business Tax Voucher Specs.
Click the Forms, Specs, and Schema page Click the Voucher Specifications link Click Business Tax Voucher Specs Changes that we’ve made include:
Removing the tax type code from the upper right hand corner and Adding colons following each data field name
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Verify the entire scanline populates correctly. We have experienced issues in the past with the following data fields:
Tax year end date
MN Tax ID which must be 7 digits
Social Security number which must be 9 unmasked digits Click the back arrow and then navigate home
Even though paper vouchers are an option, we would like to strongly encourage vendors to promote electronic payments. It is simple to include any tax due and estimated payments at the time of filing the electronic return. All payments can be future dated and customers will not need to mail a check at a later date.
We also encourage vendors to promote direct deposit for any refunds. Any refund can be direct deposited quickly and securely into a customer’s bank account. A customer can also choose to split a refund between applying a portion of it towards a future return and having the remainder direct deposited.
Let’s pause for another moment and see if there are any questions before we move on. We will now move on to legislative changes affecting Individual Income Tax returns: As you may know, this year’s legislative session ended without a tax bill; however, the omnibus education bill contained a provision that affects individual income tax.
Starting with tax year 2015, full-year non-residents will not be eligible to claim the Minnesota Working Family Credit. Let’s take a look at Schedule M1WFC to see how this will affect the form. To find it from our homepage:
Click Software Vendors
Click the Form, Specs, and Schema tab Click Individual Income Tax
And now click Schedule M1WFC_15
We added a note on line 6 which states full-year non-residents are no longer eligible for the working family credit. Part-year residents continue to qualify for this credit regardless of whether they are moving into or out of Minnesota.
Click the back arrow
If you have questions on how to handle unique situations due to this change, please email us at efile.prepsupport@state.mn.us. We will post the questions and answers in the FAQ section of our Working Family Credit page.
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Next, let’s review changes to the M1. We have updated the political party contribution checkoff to reflect the parties certified by the Secretary of State.
For the 2015 forms, the following codes have been assigned: Grassroots-Legalize Cannabis Party – 14 (name change) Green Party of Minnesota – 15 (party added back this year) Legalize Marijuana Now Party – 17 (new party this year) All other political parties remain the same.
(go to page 2, line 17)
As a reminder, the Reading Credit has sunset. Since this credit was not extended, we’ve made additional changes to Form M1 that we’d like to point out.
On the second page of the form you will notice that line 17 is now the credit for taxes paid to another state. As a result of this change, lines 18 through 26 have shifted.
Click the back arrow
Next we would like to discuss Schedule M1M. Navigate to Schedule M1M_15
You will notice that multiple lines have been intentionally left blank.
Line 6 is being held for the Section 179 expensing addition if it is extended.
Line 35 is being held for the subtraction for railroad maintenance expenses if this credit is extended.
Line 36 currently reads, “Federally taxable employer-provided mass transit benefits up to $120/month.” This line will be intentionally left blank if parity between mass transit benefits and parking benefits is extended.
Lines 14 and 38 which were intentionally left blank in 2014 continue to be left blank as placeholders for potential federal provisions.
Click the back arrow
Highlight the fact that this is DRAFT Pull up the M1NC_15
DRAFT M1NC
We have drafted an M1NC that assumes federal legislation will extend deductions and
exclusions that affect adjusted gross income. Because this draft is based on assumptions you may not want to begin any development. We continue to monitor federal legislation and will make other changes to our forms as necessary.
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The 2016 Minnesota legislative session begins March 8 and we will closely monitor any tax law changes that may affect the 2015 tax returns.
We will provide further guidance at a later date depending on federal and state developments. As a reminder, if you have not done so already, we encourage you to subscribe to our email updates.
Click the back arrow and navigate home
Let’s pause for another moment and see if there are any questions before we move on to Insurance Premium tax returns.
Click Software Vendors Forms, Specs and Schema tab Click the link for Insurance
Electronic filing of Insurance Premium tax returns
We are proud to announce that we will begin accepting original and amended insurance premium tax returns via MeF starting with the 2015 tax year. We will be posting related documents on this page in the near future.
The Insurance forms will be part of the MeF Corporate submission category. The forms we will be accepting are:
Insurance Premium Tax for Property and Casualty Companies (form M11) Insurance Premium Tax Return for Life and Health Companies (form M11L) Insurance Fees Schedule (form M11B)
Fire Insurance Tax (form M11AR)
Police Premium Report (form IG258) and Firetown Premium Report ( form IG259) Key Dates
Lastly, we would like to cover a few key dates. On the Software Vendors webpages you will notice an FAQ section in the navigation panel on the right. The top FAQ lists the key dates you should be aware of.
Click the “Are there any key dates…” link on the right under Top FAQ’s
Final forms will be available October 1st. Near final forms have already been posted. The new Vendor Registration form is due on or before Friday, October 30th. We will not
accept late filed registration forms.
December 1st is the last day to submit your letter of intent to participate in the Vendor Free File program.
We will post the the 2015 test scenarios by December 1st.
9 Conclusion
This concludes our portion of the conference call. We will now open it up for a Q&A session. Before we hang up
Before we go, I want to thank you in advance for all the work you are doing in preparing for next season. I appreciate your continued support and the job that you do helping taxpayers file their returns. We look forward to working with you during this next filing season.
If you have electronic filing questions you can call us at 651-556-4818 option 2 for the technical help line or e-mail us at Efile.DevSupport@state.mn.us
