MN Dept. of Revenue uncovers $352M error in recently adopted tax bill

ST. PAUL, Minn. (KTTC) – Last week, the Minnesota Department of Revenue announced it had uncovered a clerical error in the state’s tax bill that would add an additional $352M in taxes for taxpayers around the state.

Commissioner Paul Marquart was quick to express that the error is similar to errors officials regularly see, but due to the size and impact of the error, they felt it important to divulge.

“Everyone thought it was important, because of the amount, that we be transparent, and we tell people what the situation is,” he said, “Whether or not it’s Democratic control or Republican control you’ve got complicated bills, and oversights occur.”

The error itself is attributable to a single line -- one that would return the standard tax deduction for joint filers to its 2019 level.

The deduction has been tied to inflation and therefore has risen gradually over the last few years. Marquart said when the state tried to index those rates to 2023 levels, the deductible rate wasn’t updated, returning it to the standard 2019 level.

“Taxpayers, if we didn’t do the fix, would lose four years of inflation on their standard deduction and basically lose around $3,000 of deductible income,” he said.

While the issue is a bit complicated and a bit expensive, Marquart stressed that it’s nothing to worry about.

“We’re going to fix that the next time we have a chance to legislature,” he said.

According to Marquart and the bill’s authors, the change wouldn’t begin to impact Minnesotans until the 2024 tax year, giving the state plenty of time in the upcoming legislative session to issue a small correction.

“The correction that needs to be made can be made very quickly, and the governor will sign a bill,” said DFL Sen. Ann Rest of New Hope.

Rest intends to make sure the error has no impact at all on Minnesotans by correcting the issue immediately.

Meanwhile, Republicans were quick to pin the error on the massive amount of legislation that the DFL pushed through in 2023.

“When you try to dramatically change so many different things within the state, something’s going to slip through the cracks,” said Republican Sen. Bill Weber of Luverne.

Weber and Republican Sen. Steve Drazkowski of Mazeppaissued a written statement on the bill, doubling down on the argument that the oversight was a result of too much legislation in a short amount of time.

“Today’s announcement of a $352 million mistake in the tax bill shouldn’t surprise anyone. Working at a breakneck pace all session, the tax bill was negotiated by Democrats behind closed doors until the last minute,” the statement read.

Still, Marquart is adamant that these errors happen all the time and had nothing to do with a quick pace.

“It took a month for someone from the Department of Revenue here to catch it. So [things like] this just happen,” he said.