Changes to Minnesota R&D Tax Credit Carryforwards

The Minnesota Department of Revenue updated guidance for the Minnesota Credit for Increasing Research Activities (R&D credit) for C corporations filing a combined return. Currently Schedule RD states the credit carryover may only be used by the earning member. Upon further review the credit carryover must be applied to the other members similar to how the credit is applied in the year of generation.

 

What do I need to know?

For combined groups, the R&D credit carryforward must be used:

 

• First by the earning member to the amount of their tax liability
• Then by other members of the group to the amount of their tax liabilities

 

This change is effective for tax years beginning after December 31, 2012. It may be applied within the statute of limitations to claim a refund. (See Minnesota Statutes, section 289A.40.) We are currently updating our 2018 and 2019 forms and instructions to be consistent with this guidance.

If you or your client are impacted for a period within the statute of limitations to claim a refund, file Form M4X, Amended Franchise Tax Return/Claim for Refund. Use the Find a Form search on our website to locate forms for the years you need to file amended returns.

 

What if I have an open audit, appeal, or refund claim?

Tax years currently under active audit, in administrative appeals, and refund claims will be processed consistent with this change.

 

Where do I find more information?

• See M.S. 290.068
• See Credit for Increasing Research Activities on our website

 

Questions?

If you have questions, contact us at businessincome.tax@state.mn.us or 651-556-3075

 

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