Lawmakers agree to restore tax reciprocity

• Lawmakers meet, agree

Western Wisconsin lawmakers Rep. John Murtha, Sen. Sheila Harsdorf and Rep. Dean Knudson recently traveled to St. Paul to participate in a meeting about restoring tax reciprocity between the states. Don Davis photos

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• Feb. 28 reciprocity story

Wisconsin and Minnesota officials say they’ve reached an agreement-in-principle to restore income tax reciprocity – which lets people who live in one state and work in the other file a single tax return.

Revenue officials and lawmakers from both states met Monday, Feb. 27, in St. Paul before announcing their agreement.

About 60,000 Wisconsinites work in Minnesota; and about 20,000 Minnesotans work in Wisconsin. That means Wisconsin would have to pay the Gopher State a certain amount to make sure that both get their proper amounts of state tax revenues.

The payment will be determined in a study that will begin shortly. Wisconsin Revenue Secretary Rick Chandler and Minnesota’s Myron Frans say they’ll sign an agreement by October 1, so employers can be notified about new withholding requirements before the next tax year begins. The tax reciprocity would then resume in 2013.

Legislative action is not required. Wisconsin and Minnesota had reciprocity for over four decades until former Minnesota Governor Tim Pawlenty cut it off in 2009. He said Wisconsin owed too much, and he was tired of waiting for Madison to pay up.

Governor Scott Walker made that payment last year, and both he and Minnesota Governor Mark Dayton said they favor restoring reciprocity. River Falls Senate Republican Sheila Harsdorf says the current policy of making cross-state workers file two tax returns is an “accounting nightmare” for hundreds of businesses.

Tags: area news, wisconsin, minnesota, government, politics, news