A state legislature-passed omnibus tax bill that would have accelerated the deadline for filing the state copy of Forms W-2 with the Minnesota Department of Revenue from February 28 to January 31, eliminated the need to file an annual withholding reconciliation form and modified the threshold at which small employers are allowed to file withholding returns was left to expire unsigned by Governor Dayton, a move known as a "pocket veto." (HB 848.) (See Tax Alert 2016-1002.)

The bill was passed by the state legislature with overwhelming bipartisan support the day before the legislature adjourned for the year, with a 123-10 vote in the House and 55-12 in the Senate.

According to the governor's June 9, 2016 news release, though he supported the bill which would have cut taxes for 650,000 Minnesotans, he did not approve it due to a $101 million error in the bill discovered by his office.

Special session could be called by the governor to correct error in tax bill

In the news release, the governor urged legislative leaders to agree to certain conditions he has set forth that he insists must be accepted before he will call a special session, during which the tax bill could be corrected and enacted. It remains to be seen whether the governor and legislative leaders will compromise on the governor's demands for a special session.

The Minnesota Chamber of Commerce released a statement on June 9 expressing its disappointment in the governor's veto and urging the governor and legislative leaders to come to an agreement that will allow for a special session.

The provisions involving employer filing of income tax withholding returns was not at issue in the governor's move. Thus, should a special session occur, these provisions could yet be enacted in sufficient time for a tax year 2016 effective date.

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