MN SF2853

Modifies the pass-through entity tax to allow qualifying owners of partnerships, limited liability companies, and S corporations to make voluntary elections to pay tax at the entity level rather than individual level for taxable years beginning after December 31, 2020.

Expands definition of "qualifying owner" to include disregarded entities that have a qualifying owner as their single owner, and clarifies income allocation rules for resident and nonresident owners.

Election requires approval by qualifying owners holding more than 50 percent of ownership interests, must exclude non-qualifying owners, and is binding and irrevocable once made for the taxable year.

Tax liability is calculated by multiplying each qualifying owner's income by the highest individual tax rate, with nonbusiness deductions and standard deductions disallowed in the calculation.

Requires audited partnerships to file amended pass-through entity tax reports for direct partners within 90 days of final determination date and file amended reports for partners who were included in pass-through entity tax returns in the reviewed year, effective retroactively for taxable years beginning after December 31, 2021.