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I'm Moving to a No Tax State, Do I Need A New Tax Preparer and Financial Planner?

I'm Moving to a No Tax State, Do I Need A New Tax Preparer and Financial Planner?

| May 10, 2022

Every bitter cold winter since moving back to Minnesota from San Diego, I fantasize about moving somewhere warm again. 

Also, the elimination of some state income taxes is quite a pull as well!  However, at least for the foreseeable future, my family is here for the high standard of living and the good education that Minnesota offers our family.  

Regarding how to move and stop the Minnesota income taxes along with the weather continues to be mired with misunderstandings.

The origins of this could be cocktail party talk, innocent assumptions, or overzealous actors looking to benefit, but this issue keeps coming up.

Recently one of our long-time clients came to us under the belief that we would have to stop working together, as they were making a move to a no income tax state and needed someone local to appease the tax collectors.

Obviously, check with your own legal council for your own situation.  But I checked with some people we work with, and this certainly does not appear to be the case.  

For example:

"The law in 2017 changed so that the Minnesota Department of Revenue can no longer consider a person's relationship with financial advisors in evaluating domicile for state income and estate tax purposes."

Minn. Stat. section 290.01, subd. 7(c) provides:

 (c) In determining where an individual is domiciled, neither the commissioner nor any court shall consider:

(1) charitable contributions made by the individual within or without the state;

(2) the location of the individual's attorney, certified public accountant, or financial adviser; or

(3) the place of business of a financial institution at which the individual applies for any new type of credit or at which the individual opens or maintains any type of account.

(d) For purposes of this subdivision, the following terms have the meanings given them:

(1) "financial adviser" means:

(i) an individual or business entity engaged in business as a certified financial planner, registered investment adviser, licensed insurance producer or agent, or registered securities broker-dealer representative; or

(ii) a financial institution providing services related to trust or estate administration, investment management, or financial planning; and

(2) "financial institution" means a financial institution as defined in section 47.015, subdivision 1; a state or nationally chartered credit union; or a registered broker-dealer under the Securities and Exchange Act of 1934.

We also reached out to some local financial advisors in the new state that were standing to potentially benefit from this misunderstanding, and they confirmed they had the same information.

Also, more details can be found from Daniel Donovan's article here titled "Home Is (Not) Where Your Legal and Financial Advisers Are: Minnesota Changes Domicile Determinations"

Thanks for taking a look!