Minn. Dept. of Revenue is looking to collect about $38.4 million from 2019/2020 tax returns

Published: Jul. 4, 2022 at 10:18 PM CDT
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ROCHESTER, Minn. (KTTC) – Tens of thousands of Minnesotans owe money to the Minnesota Department of Revenue - but it’s not because of an error on their part, but the state’s.

“It’s a mess. I don’t know what else to say about it,” Oertil and Pleschourt senior partner and CPA Bill Oertil said.

According to the Minnesota Department of Revenue, the 2019 legislation shifted the Minnesota standard tax deduction. But when MDR updated its form for the upcoming tax season to reflect law changes, it was done wrong. The calculation reduced the standard deduction by 20 percent, when it should have been reduced by 80 percent. Meaning, 45,000 Minnesotans filing jointly and making more than $350,000 annually, got a letter in the mail recently, saying they owe money to the state, from two years ago.

“This is the worst I’ve ever seen. I’ve been doing this 42 years and this is the worst I’ve ever seen on the state level,” Oertil said. “...It’s a big thing. I can’t personally believe they let it go on and didn’t catch it.”

In total, about $38.4 million went uncollected because of the issue.

“This is what kills me,” Oertil said. “If you ask what makes me angry. They bury it back here and they don’t give a super great explanation.”

Oertil showed KTTC crews one of the letters from his client. On the back, in small font it reads in part, “This adjustment was due to an issue with our worksheet, not errors you or your tax preparer made. We did not assess penalty or interest that would have been due solely to this adjustment.”

“We regret that this happened,” Minnesota Department of Revenue Asst. Commissioner Sarah Bronson said. “We regret the impact that it has on taxpayers. We are required to collect what the laws tell us to collect.”

Bronson said at this point, all letters have been already sent out. While it might seem unfair, the statue of limitations have not expired on 2019 returns and it’s still the law to pay.

“Our job at the Department of Revenue is to take the laws that the legislature enacted and make sure that they are carried out,” Bronson said.

It’s doesn’t stop Oertil, or the 50 clients that come in with this issue weekly, from being frustrated.

“They still have glitches in their software,” Oertil said. “So, I’d advise people to make sure you run the numbers. Or have someone run them. Because they are not all correct.”

“We area always continuing to improve and refine our processes. We have a lot of people looking at these forms and instructions before they out and we will continue to look at how we can improve that process,” Bronson said.

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