HF 449

as introduced - 87th Legislature (2011 - 2012) Posted on 02/10/2011 10:18am

A bill for an act
relating to taxation; repealing two percent contractor withholding; amending
Minnesota Statutes 2010, section 289A.31, subdivision 5; repealing Minnesota
Statutes 2010, section 290.92, subdivision 31.

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

Section 1.

Minnesota Statutes 2010, section 289A.31, subdivision 5, is amended to
read:

Subd. 5.

Withholding tax, withholding from payments to out-of-state
contractors, and withholding by partnerships and small business corporations.

(a)
Except as provided in paragraph (b), an employer or person withholding tax under section
290.92 or 290.923, subdivision 2, who fails to pay to or deposit with the commissioner a
sum or sums required by those sections to be deducted, withheld, and paid, is personally
and individually liable to the state for the sum or sums, and added penalties and interest,
and is not liable to another person for that payment or payments. The sum or sums
deducted and withheld under section 290.92, subdivision 2a or 3, or 290.923, subdivision
2, must be held as a special fund in trust for the state of Minnesota.

(b) If the employer or person withholding tax under section 290.92 or 290.923,
subdivision 2, fails to deduct and withhold the tax in violation of those sections, and later
the taxes against which the tax may be credited are paid, the tax required to be deducted
and withheld will not be collected from the employer. This does not, however, relieve the
employer from liability for any penalties and interest otherwise applicable for failure to
deduct and withhold. This paragraph does not apply to an employer subject to paragraph
(g) deleted text begin , or to a contractor required to withhold under section 290.92, subdivision 31 deleted text end .

(c) Liability for payment of withholding taxes includes a responsible person or entity
described in the personal liability provisions of section 270C.56.

(d) Liability for payment of withholding taxes includes a third-party lender or surety
described in section 270C.59.

(e) A partnership or S corporation required to withhold and remit tax under section
290.92, subdivisions 4b and 4c, is liable for payment of the tax to the commissioner, and a
person having control of or responsibility for the withholding of the tax or the filing of
returns due in connection with the tax is personally liable for the tax due.

(f) A payor of sums required to be withheld under section 290.9705, subdivision
1, is liable to the state for the amount required to be deducted, and is not liable to an
out-of-state contractor for the amount of the payment.

(g) If an employer fails to withhold tax from the wages of an employee when
required to do so under section 290.92, subdivision 2a, by reason of treating such
employee as not being an employee, then the liability for tax is equal to three percent of
the wages paid to the employee. The liability for tax of an employee is not affected by
the assessment or collection of tax under this paragraph. The employer is not entitled to
recover from the employee any tax determined under this paragraph.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for payments made after June 30,
2011.
new text end

Sec. 2. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2010, section 290.92, subdivision 31, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for payments made after June 30,
2011.
new text end