Minnesota has terminated the tax reciprocity agreement between their state and the state of Wisconsin. This was due to Wisconsin taking approximately 17 months to submit payments to Minnesota. The state needs to receive the payments in a more timely manner to help balance their budget. The two states tried to reach an agreement on a new payment schedule but was unsuccessful. On January 1, 2010, Minnesota officially terminated the agreement.

The Minnesota website provides very helpful instructions for both individuals and employers.These instructions will help you determine what withholding certificate your employee needs to complete, what taxes need to be withheld, and how the income taxes should be filed.

NOTE:  If you are a Minnesota employer and you will no longer have any Wisconsin tax liability, you will need to inactivate your Wisconsin withholding account.

This agreement was originally put into place back in 1968.  I’m sure there are a lot of employers who need to make necessary changes to their employee’s withholding states.  This can be a painful process, but the sooner you update your files, the better.  The longer you wait, the more corrections you may need to make since it was effective the beginning of this year.

If you have any questions, you can contact:

Minnesota Individual Income Tax

Call:  (651)296-3781 or 1-800-652-9094

TTY:   711 for Minnesota Relay

Email: indinctax@state.mn.us

Minnesota Withholding Tax

Call:  (651) 282-9999 or 1-800-657-3594

TTY:  711 for Minnesota Relay

Email:  withholding.tax@state.mn.us

Wisconsin Individual Income Tax

Call: (608) 266-2776

Email:  income@revenue.wi.gov

Wisconsin Withholding Tax

Call: (608) 266-2772

Email:  sales10@revenue.wi.gov