Cross-border commuters could see income tax change

LA CROSSE, Wis. — Tens of thousands of people commute between Wisconsin and Minnesota every day. And right now, all of them have to file income tax forms in both states. But that might change soon. Commuters between Wisconsin and Minnesota may see a return to the days where they’re only filing income tax forms in the state where they live.

And that’s very good news for Sheila Chapel, one of the 13,000 people who live in Minnesota and work in Wisconsin. Chapel doesn’t mind commuting from Minnesota to Wisconsin every day. Now that she’s moved from Houston, Minn. to La Crescent, it only takes her ten minutes to cross the state border and get to work at Gundersen Lutheran. But since 2009, she’s had to file her state income tax forms in both states.

“I wasn’t really happy about that. Not only does it take extra time, but it also takes extra costs because you have to file in both states. Therefore, you have to pay for your tax preparer to do them in both states,” said Chapel.

Wisconsin and Minnesota have had some sort of tax reciprocity agreement since 1967, but in 2009 then-Minnesota Governor Tim Pawlenty ended the deal when the two states couldn’t come to an agreement they both liked.


Now it looks like we could see that deal coming back. The Minnesota legislature passed a bill that will authorize the Minnesota Commissioner of Revenue to negotiate a new reciprocity agreement with the Wisconsin Secretary of Revenue– a move that Chapel says is the right one for commuters.

“I’m very pleased that they’re considering getting this back into effect. It has been something that I’ ve been contacting my legislators about since they revoked it a year and a half ago,” said Chapel.

One of those legislators was State Sen. Jeremy Miller (R-Winona), who wrote the legislation.

“There’s no reason why residents who live in one state but work in the other should have to file income tax returns– state income tax returns– in both states. In my opinion, they should just have to file one return and pay state income taxes in the state that they live in,” said Sen. Miller.

This agreement wouldn’t just affect Minnesota commuters. There are more than twice as many Wisconsin residents who travel to Minnesota for work.

Sen. Miller said he hopes Minnesota and Wisconsin can come to an agreement on a new reciprocity deal for tax year 2012. Both Governor Walker and Governor Dayton have indicated they are eager to get a new agreement in place.