Minnesota/Wisconsin Tax Reciprocity Could Return

Minnesota residents who commute across the border into Wisconsin for work could soon save money on their income tax returns. The 2017 tax bill, which passed the legislature last week and was signed into law by Gov. Mark Dayton on May 30, included a provision authorizing a new income tax reciprocity agreement between Minnesota and Wisconsin.

Income tax reciprocity Minnesota Wisconsin

Minnesotans who travel to Wisconsin for work got some good news as part of the 2017 tax package signed by Minnesota Governor Mark Dayton contains a new reciprocity agreement between Minnesota and Wisconsin. (photo from the St Paul Pioneer Press)

The income tax reciprocity provision calls for a dual track approach: for tax year 2017, Minnesota residents working in Wisconsin will be eligible for an income tax reciprocity tax credit. Additionally, the bill instructs the commissioner of the Minnesota Department of Revenue to work with the secretary of the Wisconsin Revenue Department to enter into a new income tax reciprocity agreement for tax year 2018. If the two states are unable to reach an agreement, the tax credit will continue for Minnesota residents.

“Income tax reciprocity is a huge issue for our area,” said Sen. Jeremy Miller (R-Winona), who authored an income tax reciprocity bill early in session. “Thousands of people live in Minnesota but commute to Wisconsin for work – in fact, Houston County is the number one county in Minnesota impacted by the lack of a reciprocity agreement. I have spent years working with Rep. Davids and others toward a bipartisan solution to make filing tax returns more convenient for these residents. I’m very happy we were finally able to get this signed into law.”

The tax bill stipulates that a reciprocity agreement must include the following:

 

  • A provision providing for suspending the agreement if either party does not pay on time
  • A provision setting the interest rate that will be applied
  • A provision stating a time for annual reconciliation
  • A provision requiring both parties to conduct joint benchmark studies about the agreement every five years
  • A provision providing for an annual application for taxpayers who request an exemption
  • A provision stating the quarterly payments must be a reasonable estimate of loss

“This was one of the most productive legislative sessions we have had in a long time,” continued Sen. Miller. “In addition to tax reciprocity, the tax relief package included targeted relief to middle income families, senior citizens, small businesses, and farmers, as well as a first-in-the-nation student loan tax credit, which I authored in the Senate. Finally, this bill included additional permanent, ongoing local aid for cities and counties. I’m proud of the things we were able to get done for the people of Minnesota.”

There was an income tax reciprocity agreement in place from 1968 to 2009, but it was terminated because Wisconsin was not making timely reimbursement payments. An income tax reciprocity tax credit was included in the bipartisan tax bill that passed at the end of the 2016 before ultimately being vetoed by the governor.

Wertish named interim president of MN Farmers Union

Interim president

Minnesota Farmers Union Vice President Gary Wertish was named in the interim President of the organization until a special election on January 21 to fill the last two years of retiring president Doug Peterson’s current term

Effective Monday January 2nd, 2017, Minnesota Farmers Union (MFU) will be led on an interim basis by Gary Wertish, who previously served as the organization’s Vice- President. Wertish, a Renville County farmer, replaces Doug Peterson who retired December 31st and served as MFU President for the past 14 years. Wertish has long been active in public farm policy and MFU, having served as the organizations Vice-President for the past 5 years.

 
“MFU is focused right now on the beginning of the Minnesota Legislative session and working with the new administration in Washington D.C., as well as our members of Congress” said Wertish, the newly named interim president. “I look forward to working with lawmakers to address health care, taxes and other issues to help our farmers, who face a challenging farm economy.”

 
Wertish will serve as interim president until a special election will be held Saturday January 21st, 2017 at the Minnesota Farmers Union office, where MFU County Presidents from around the state will vote on filling the remaining year on Peterson’s two year term. Wertish has filed for the Presidential election, as have Harmon Wilts, long time member and secretary of Swift County, former Senator Lyle Koenen of Chippewa County, and former Senator Vicki Jensen of Steele County.

Minnesota Farm Bureau Outlines Policy for 2017

Farm Bureau policy

Voting delegates discuss and establish policy positions for the Minnesota Farm Bureau Federation at their recent annual meeting in the Twin Cities. Farm Bureau will work on these policy priorities during the coming year. (photo from https://www.flickr.com/photos/minnesotafarmbureau/page1)

Voting delegates at the Minnesota Farm Bureau Federation’s (MFBF) 98th Annual meeting adopted policy positions for 2017. Based on these actions, the MFBF Board of

Directors have provided focus for the organization on public policy, image and leadership including food, health insurance, water, transportation, and taxes.

 Food

Minnesota farmers and ranchers are committed to providing access to sustainable, safe, healthy food choices. Farmers work to continuously improve production methods, techniques and technologies. Farmers demonstrate their commitment to care for their livestock, manage and improve the quality of their environment and enhance the quality and accessibility of food and fiber they produce utilizing different production methods.

 

Health Insurance

The affordability and availability of health insurance is a significant concern for Minnesota farm families and small businesses. MFBF will work towards finding solutions addressing both increases in premiums and lack of availability to individual health insurance options.

Farm Bureau policy

Farm Bureau Public Policy Associate Cole Rupprecht gives Farm Bureau members an update on the 2017 Minnesota Legislative Session. (photo from https://www.flickr.com/photos/minnesotafarmbureau/page1)

 

Water

Water quality and quantity are top priorities for Minnesota farm families. Agriculture’s role in improving water quality can best be fulfilled through voluntary site-specific actions at the local level.

 

Transportation

MFBF will continue efforts to address Minnesota transportation infrastructure needs, especially rural roads and bridges. It is critical that products are able to be moved efficiently by river, rail and road.

 

Taxes

MFBF will continue efforts to work on education funding issues especially as it relates to improvements or construction of school buildings.

 

Minnesota Farm Bureau is the largest general farm organization in the state representing Farmers • Families • Food. Members determine policy through a grassroots process involving the Farm Bureau members in 78 county Farm Bureau units in a formal, democratic process. Through this process, members make their views heard to political leaders, state government officials, special interest groups and the general public.

Programs for Young Farmers & Ranchers help develop leadership abilities and improve farm management. Promotion & Education Committee members work with programs such as Agriculture in the Classroom, and safety education for farm children.

Farm Bureau is active in a variety of other programs and activities. For more information, contact your county Farm Bureau office.

For more information on Minnesota Farm Bureau go to fbmn.org. For pictures of the Annual Meeting log onto www.flicker.com/photos/minnesotafarmbureau.

Famers assessing their finances for 2016

January is a time when farmers are typically doing paperwork, looking back at 2015 ahead of the upcoming tax season.

What some may find is their books don’t necessarily balance they way they want. The good news is, it’s possible to make better decisions in a difficult Ag economy if you have a clear understanding of where you’re operation is at financially.

Rob Holcomb wants farmers to keep a sharp eye on their finances heading into 2016.

Rob Holcomb is a University of Minnesota Extension Educator, specializing in Ag Business Management over in the Marshall regional office. (Photo from extension.umn.edu)

“What I’m seeing happening right now is people in the habit of doing a FINPACK (software from the Center for Farm Financial Management) analysis,” said Rob Holcomb, Ag Business Educator for the University of Minnesota Extension Service, “including balance sheets and income statements, are really analyzing what happened in 2015.”

He added, “A lot of people are doing analysis, and unless they’ve got some special circumstances, farm returns are due on March 1.”

Dave Bau is encouraging farmers to get their finances in line.

Dave Bau is a University of Minnesota Extension Educator also specializing in Ag Business Management, and based in the Worthington office.

Looking ahead to 2016, Holcomb said the financial condition on farms is a mixed bag.

“We had people last year that had big trouble managing the tax bill,” Holcomb said. “What led to this challenge was the buildup of $8 per bushel corn, which caused more trouble than first thought. You hate to be negative about it, but I knew it would cause trouble down the line, and that’s what we’re finding now.”

He said certain farmers were doing a lot to avoid paying some taxes, like deferring income to the next year.

“They were also maxing out on pre-payments,” Holcomb said. “The problem is, a lot of farmers were rolling these massive deferred tax liabilities forward every year, even though they’re showing a loss. They may have a loss over the last couple years on their accrued farm income, but they still have this cash they have to deal with, because if they don’t do it, they have a monstrous tax bill.”

He said a lack of steady farm income leads to an obvious problem in that situation.

“The challenge is the recent lack of cash flow is such that they can’t afford to have that big tax bill,” Holcomb said. “In a sense, they’ve backed themselves into a corner with their tax problem.

“But that’s not everybody,” he added. “Some folks have been paying a little more as they go and didn’t have a big aversion to paying taxes, I think those folks are in much better shape.”

Holcomb said one of the big buzzwords in the Ag industry is working capital.

“It’s a current and intermediate cushion that the farmer has,” Holcomb said. “The more working capital you have, the better. Unfortunately, we’ve been burning some working capital over the last couple years. That’s probably the thing that lenders are getting the most squeamish about right now.

The lack of working capital on some farms is showing signs of getting serious.

“I got a call last week from a banker in my area that was asking about lender mediation,” Holcomb said. “That conversation can only be the result of one thing, which is a farmer out there that the bank is getting ready to pull the plug on.

“That means there are farm folks who could be in tough shape,” he added.

He’s especially worried about young farmers.

“When the $8 per bushel corn began coming down,” Holcomb said, “some of the younger guys were paying ridiculous land rental rates to try and get their hands on some acres to work. The problem is they’ve got the least ability to weather out low prices because they don’t have a lot of working capital. They have a cost structure that’s not sustainable.”

High land rental rates are squeezing farmers finances.

The high cost of land rental rates in farm lease contracts are putting a heavier squeeze on farmers and their financial bottom line than we’ve seen in several years. (photo from americasnewfarmers.org)

Rents are beginning to come down, but they have a ways to go to ensure profitability for both farmers and landowners.

Rent is the largest input cost for corn and soybeans,” said Dave Bau, University of Minnesota Ag Business Management Educator in Worthington. “Rents are going down, but at current corn and bean prices, they should be around $100 to $125 an acre. Even base rents on flexible leases are still much higher than this.”

There is still pressure on farmers for land rents to remain very high for at least one more year.

“Farmers are doing more and more flexible agreements with a base rent and additional rent if prices improve,” Bau said. “With other input costs not coming down significantly, break-even prices for corn are $3.80 to $4.00 for corn, and $9.50 to $10 for soybeans.”

Bau adds, “Cash prices currently are around $3.40 for corn, and $8.25 for soybeans.”

With this much economic gloom ahead, what’s the key to surviving the downturn in 2016?

“I think the number one thing is you have to get your cost structure in line,” Holcomb said. “Land rent is one of those high costs that can be negotiated. $400 land rent won’t work right now.”

One of the best things farmers can do is figure out where they’re at financially before they make decisions on the year ahead.

“The farmers I fear for the most are the ones that aren’t doing any kind of financial analysis,” Holcomb said. “They have no idea where they’re at. It’s a sad situation when they find out they’re in trouble, and it’s their banker that tells them”

He added, “The smart producers know where they’re at, and that can alleviate a lot of trouble.”

Farmers need to do a better job of marketing their products in 2016.

“There are marketing workshops going on around the state,” Holcomb said, “and I think it’s really important to look at that.”

 

 

 

 

 

 

Who pays the bill in Wabasha County

Julie Porcher is on a one-woman campaign to bring some accountability and openness to Wabasha County government. The reason she’s shouldered the burden is simple: her family’s roots in Wabasha County run very deep.

Julie can trace her family beginnings in Wabasha County as far back as the nineteenth century. She has an 1874 county plat map, and it shows 2 Cliff (her maiden name) farms existed in the county. The records show that her maternal grandfather purchased the farm back in 1862, during the Civil War. Porcher can trace her family’s civic-minded nature back that far as well, as her maternal grandfather was a school board member.

Porcher grew up in the family farmhouse as 1 of 7 children, and loved playing outdoors from morning till night during the nice days. The family tried not to freeze in the winter, in spite of the electric blankets and space heaters spread throughout the house. “There was no central heat or air in the farmhouse,” she said.

She said one of the best parts of living in farm country were the relatives that lived close to their farm.   “I spent so many hours playing with my cousins, all over that farm.”

Julie said she learned some of her most important life lessons on the farm too. “At my father’s knee, I learned that everything comes from the land. Not just our food, which is important by itself, but the fibers grown for our clothes, wood for our houses, minerals, gemstones, along with coal and oil for energy.” She said “You care for the land to give animals a place to live, and so you can draw clean water from it.”

Julie and her husband Eric raised three children while living in St Paul. Logan is 30, Emily is 27, and Samantha is now 23.

Julie is buying 55 of the original 80 acres that her family owned. After her parents died, a part of it was sold to nephews. She’s planning on renting out the farmland, similar to what her father did during her childhood. “I’m educating myself about land practices as we speak,” she said.

Porcher began to attend Wabasha County board meetings back in 2012. “My sister had been attending for quite some time and encouraged me to go. I already knew I was going to buy out my sibling’s interest in the family farm and would be paying taxes for the foreseeable future,” she said.

Porcher doesn’t like what she sees in the way Wabasha County government has been running for some time. “For our county government to collect the hard-earned money of its citizens and be so careless in the way it spends the money is almost criminal. I want good government, even if most folks think good government is an oxymoron,” she said.

“I want information out there for the citizens who can’t attend the Tuesday morning board meetings,” said Julie. “They pay their taxes and they should be informed about how the government is spending their money. I hope it leads to residents being engaged in how their government is run. I hope that engagement leads to more accountability in how our elected officials spend money while they’re in office.”

She talked about why it’s so important for citizens to engage with what’s going on in county government: