The location of a taxpayer’s attorney, CPA, financial adviser, or bank will no longer be a factor in determining whether that taxpayer is domiciled in Minnesota for tax purposes. The tax bill that was just signed into law on May 30th contained a provision that specifically eliminates this factor from consideration by Minnesota Revenue and the courts.
The question of whether an individual is subject to income taxation by Minnesota involves the determination of that person’s domicile. Minnesota regulations include a list of 26 factors to be evaluated in making that determination. Among the listed factors are the location of bank accounts, the “location of other transactions with financial institutions” and the “location of business relationships and the place where business is transacted.”
The presence of these factors on the list has long been of concern for Minnesota CPAs, attorneys, bankers, and other financial and business advisors, as it puts these Minnesota professionals at a disadvantage in maintaining business relationships with clients that move out of the state and seek to establish domicile in their new state of residence. The language in the new tax bill overrules the regulation, effectively taking these factors off the list. This puts Minnesota CPAs, attorneys, financial advisers, and financial institutions on equal footing with those of other states, and as a result, benefits the Minnesota economy.