State IRC Conformity: Quick Reference Chart, Minnesota Benefits Content Updated

Author: Rena Pirsos, XpertHR Legal Editor

For administrative convenience, some states that require employers to withhold income taxes from employees' wages tie their definitions of "wages" to the definition found in the federal Internal Revenue Code (IRC). However, many states update their IRC references to a specific date every year or so, while others roll their references into the current version of the IRC.

IRC references were recently updated in Iowa, Kentucky, Maine, Minnesota, Nebraska, Oregon, South Carolina and West Virginia. Accordingly, these updates have been included in the State Internal Revenue Code Conformity - Chart in the Quick Reference Tool.

The IRC reference update adopted in Minnesota has resulted in a change to the state's tax treatment of certain employer-provided educational assistance benefits. Retroactive to January 1, 2013, the $5,250 per year income exclusion for employer-provided educational assistance under IRC § 127 has been restored, bringing Minnesota law into conformity with federal law. This benefit generally includes the cost of books, equipment, fees, supplies and tuition. Previously, non- job-related, employer-provided educational assistance benefits were taxable in Minnesota. Accordingly, the Taxation of Employee Compensation: Minnesota section of the Employment Law Manual has also been updated