MN, WI near tax agreement on interstate commuters

The state Department of Revenue says Minnesota and Wisconsin have taken a major step toward reinstating the income tax reciprocity process for people who live in one state but work in the other.

If finalized, the agreement would allow cross-border workers to file only one state tax return beginning in tax year 2013.

Three years ago, the revenue department under Gov. Tim Pawlenty ended the 41-year agreement because Wisconsin was taking too long to make its payments to Minnesota.

Minnesota Revenue Commissioner Myron Frans said Wisconsin will speed up those payments.

"By agreeing to make sure that the payments are made in the year that they're being withheld anyway, instead of waiting until the next year to make those payments, we've agreed in principle to eliminate the time lag," Frans said.

Frans said the amount of money Wisconsin will have to pay Minnesota for income taxes withheld will be an estimated $100 million in 2013.