Potential Refund Opportunity For Minnesota Individual AMT Taxpayers
By: SUE ANN NELSON & ROBERT J. STUART
If you were subject to the Minnesota alternative minimum tax (“AMT”) in tax years 2001 and earlier and made contributions to charitable organizations located outside the State of Minnesota, you may be entitled to an income tax refund. Why? Out-of-state charitable contributions which previously were not deductible for AMT purposes are now deductible in the above tax years as a result of the court case of Chapman v. Commissioner. In Chapman, the Minnesota Supreme Court struck down as unconstitutional the state’s different treatment of charitable contributions merely on the basis of the location of the charitable organization. Consistent with this ruling, the Minnesota Department of Revenue issued Revenue Notice 03-03 on May 5, 2003, stating:
As a result of the recent Minnesota Supreme Court decision in Chapman v. Commissioner of Revenue, 651 N.W.2d 825 (Minn. 2002), the Department of Revenue will allow an individual alternative minimum tax deduction for charitable contributions made to non-Minnesota charities in tax years beginning on or before December 31, 2001. Individual taxpayers who have paid the Minnesota individual alternative minimum tax may file an amended return claiming a refund generated by the deduction for contributions to non-Minnesota charities if they file the amended return within the period specified in Minnesota Statutes, section 289A.40.
To determine if you are entitled to a refund in either 2000 or 2001 (or for any year prior to 2000 if open by agreement or otherwise), you should review your originally filed Minnesota income tax return to see if you had out-of-state charitable contributions that would now qualify for deduction. A recalculation of your AMT liability with those additional deductions will disclose the amount of your refund. An amended return must then be timely filed with the Minnesota Department of Revenue to claim the refund amount, plus interest. As a general rule under Minnesota Statutes § 289A.40, an amended Minnesota individual income tax return must be filed within 3-1/2 years of the later of the original due date of the return or the date of a timely filed return under an extension. As a result, and unless a tax return has been filed pursuant to an extension or kept open by agreement, individual Minnesota taxpayers must file an amended return for the year 2000 on or before October 15, 2004, and for the year 2001 on or before October 15, 2005. Your tax advisor can assist you in this process.
Sue Ann and Bob represented the taxpayers in Chapman v. Commissioner.