July 21, 2021 LAW FIRM CLIENTS | Minnesota enacts pass-through entity tax Minnesota Governor Tim Walz has signed House File 9 (HF 9), an omnibus tax bill that, among other things, establishes a new elective pass-through entity (PTE) tax effective for tax years beginning after December 31, 2020. Taxpayers operating through PTEs may want to consider the application of the elective PTE tax to mitigate the effects of the federal SALT deduction limitations on individual investors. Once the PTE tax is elected, it is irrevocable for the tax year, and: (1) must be made on or before the due date (or extended due date) of the qualifying entity's PTE tax return; (2) may only be made by qualifying owners who collectively hold more than a 50% ownership interest in the qualifying entity; and (3) is binding on all qualifying owners who have an ownership interest in the qualifying entity. The PTE tax imposed on a qualifying entity equals the sum of the tax liability of each qualifying owner. EY Tax Alert 2021-1393 provides more details. ———————————————
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