HF 3515

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 03/29/2010 10:04am

A bill for an act
relating to state government; appropriating money to the commissioner of
revenue for additional activities to identify and collect tax liabilities; directing
the commissioner to issue a request for proposals for a contract to implement a
related system of tax analytics and business intelligence tools.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text begin APPROPRIATION; DEPARTMENT OF REVENUE.
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new text begin Subdivision 1. new text end

new text begin Tax system management. new text end

new text begin (a) $2,428,500 is appropriated to the
commissioner of revenue for additional activities to identify and collect tax liabilities from
individuals and businesses that currently do not pay all taxes owed. This initiative is
expected to result in new general fund revenues of $6,532,500 for fiscal year 2011. This
initiative is in addition to any other initiative enacted in the 2010 legislative session.
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new text begin (b) The department must report to the chairs of the house of representative Ways
and Means and senate Finance Committees by March 15, 2011, and January 15, 2012,
on the following performance indicators:
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new text begin (1) the number of corporations noncompliant with the corporate tax system each
year and the percentage and dollar amounts of valid tax liabilities collected;
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new text begin (2) the number of businesses noncompliant with the sales and use tax system and the
percentage and dollar amount of the valid tax liabilities collected; and
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new text begin (3) the number of individual noncompliant cases resolved and the percentage and
dollar amount of valid tax liabilities collected.
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new text begin (c) The reports must also identify base-level expenditures and staff positions related
to compliance and audit activities, including baseline information as of January 1, 2009.
The information must be provided at the budget activity level.
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new text begin Subd. 2. new text end

new text begin Debt collection management. new text end

new text begin $935,000 is for additional activities to
identify and collect tax liabilities from individuals and businesses that currently do not
pay all taxes owed. This initiative is expected to result in new general fund revenues of
$6,900,000 for fiscal year 2011. This initiative is in addition to any other initiative enacted
in the 2010 legislative session.
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new text begin Subd. 3. new text end

new text begin Telecommuting. new text end

new text begin To the extent possible, staff hired for the compliance
initiative under this section must telecommute.
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Sec. 2. new text begin REQUEST FOR PROPOSALS.
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new text begin (a) The commissioner of revenue shall issue a request for proposals for a contract to
implement a system of tax analytics and business intelligence tools to enhance the state's
tax collection process and revenues by improving the means of identifying candidates
for audit and collection activities and prioritizing those activities to provide the highest
returns on auditors' and collection agents' time. The request for proposals must require
that the system recommended and implemented by the contractor:
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new text begin (1) leverage the Department of Revenue's existing data and other available data
sources to build models that more effectively and efficiently identify accounts for audit
review and collections;
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new text begin (2) leverage advanced analytical techniques and technology such as pattern
detection, predictive modeling, clustering, outlier detection, and link analysis to identify
suspect accounts for audit review and collections;
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new text begin (3) leverage a variety of approaches and analytical techniques to rank accounts and
improve the success rate and the return on investment of department employees engaged
in audit activities;
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new text begin (4) leverage technology to make the audit process more sustainable and stable, even
with turnover of department auditing staff;
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new text begin (5) provide optimization capabilities to more effectively prioritize collections and
increase the efficiency of employees engaged in collections activities; and
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new text begin (6) incorporate mechanisms to decrease wrongful auditing and reduce interference
with Minnesota taxpayers who are fully complying with the laws.
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new text begin (b) Based on acceptable responses to the request for proposals, the commissioner
shall enter into a contract for the services specified in paragraph (a) by July 1, 2012. The
contract must incorporate a performance-based vendor financing option whereby the
vendor shares in the risk of the project's success.
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new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
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