SF 2921

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/16/2023 08:33am

A bill for an act
relating to taxation; establishing the Minnesota refund program; transferring certain
forecasted positive unrestricted general fund balances to the Minnesota refund
account; establishing criteria for statutory sales tax refunds; requiring reports;
appropriating money; amending Minnesota Statutes 2022, section 16A.152, by
adding a subdivision; proposing coding for new law as Minnesota Statutes, chapter
297J.

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

Section 1.

Minnesota Statutes 2022, section 16A.152, is amended by adding a subdivision
to read:

new text begin Subd. 1c. new text end

new text begin Transfer to Minnesota refund account. new text end

new text begin If, on the basis of a November
forecast of general fund revenues and expenditures, the commissioner of management and
budget determines that there will be a positive unrestricted general fund balance at the close
of the biennium and that the provisions of subdivision 2, paragraph (a), are satisfied, the
commissioner shall transfer to the Minnesota refund account in the special revenue fund 75
percent of the positive unrestricted general fund balance remaining after the provisions of
subdivision 1b have been satisfied.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2023.
new text end

Sec. 2.

new text begin [297J.01] MINNESOTA REFUND PROGRAM; STATEMENT OF PURPOSE.
new text end

new text begin (a) The state of Minnesota derives revenues from a variety of taxes, fees, and other
sources, including the state sales tax.
new text end

new text begin (b) It is fair and reasonable to refund certain state budget surplus amounts in the form
of a Minnesota refund program refund of nonbusiness consumer sales taxes paid by
individuals in previous calendar years.
new text end

new text begin (c) Information concerning the amount of sales tax paid at various income levels is
contained in the Minnesota tax incidence report, which is written by the commissioner of
revenue and presented to the legislature according to section 270C.13.
new text end

new text begin (d) It is fair and reasonable to use information contained in the most recent Minnesota
tax incidence report to determine a reasonable amount of a sales tax refund due to each
eligible taxpayer since no effective or practical mechanism exists for determining the amount
of actual sales tax paid by each eligible individual.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2023.
new text end

Sec. 3.

new text begin [297J.02] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Applicability. new text end

new text begin The following terms when used in this chapter have the
meanings given in this section.
new text end

new text begin Subd. 2. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of revenue.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2023.
new text end

Sec. 4.

new text begin [297J.03] MINNESOTA REFUND ACCOUNT; APPROPRIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Account established. new text end

new text begin The Minnesota refund account is established in
the special revenue fund to receive amounts transferred under section 16A.152, subdivision
1c.
new text end

new text begin Subd. 2. new text end

new text begin Legislative enactment; certification. new text end

new text begin (a) On March 1, 2024, and annually
thereafter, the commissioner of revenue must certify to the commissioner of management
and budget whether one or more qualifying bills have, in total, reduced net general fund tax
revenues in the current or proximate biennium by an amount estimated to be at least equal
to the greater of:
new text end

new text begin (1) the most recent estimated cost of paying minimum sales tax refunds as reported under
section 297J.05, paragraph (b); or
new text end

new text begin (2) the balance of the Minnesota refund account as reported in the most recent November
forecast of general fund revenues and expenditures, after any transfer required under section
16A.152, subdivision 1c.
new text end

new text begin (b) For the purposes of this subdivision, "qualifying bill" means a bill that is enacted
before March 1, 2024, but after the preceding November forecast of general fund revenues
and expenditures and annually thereafter.
new text end

new text begin Subd. 3. new text end

new text begin Conditional transfer. new text end

new text begin On March 2, 2024, and annually thereafter, if the
commissioner of revenue's most recent certification under subdivision 2 indicates that the
conditions of subdivision 2, paragraph (a), have been satisfied, the commissioner of
management and budget must transfer any remaining balance in the Minnesota refund
account to the general fund.
new text end

new text begin Subd. 4. new text end

new text begin Conditional appropriation. new text end

new text begin (a) On March 2, 2024, and annually thereafter,
the amount in the Minnesota refund account is appropriated to the commissioner to pay the
sales tax refunds authorized under this chapter and for administrative costs authorized under
paragraph (b), if:
new text end

new text begin (1) the balance of the Minnesota refund account as reported in the most recent November
forecast of general fund revenues and expenditures, after any transfer required under section
16A.152, subdivision 1c, is at least equal to 105 percent of the most recent estimated cost
of minimum refunds as reported under section 297J.05, paragraph (b); and
new text end

new text begin (2) the commissioner's most recent certification under subdivision 2 indicates that the
conditions of subdivision 2, paragraph (a), have not been satisfied.
new text end

new text begin (b) The commissioner may retain up to $....... from the amount appropriated under this
subdivision to pay the costs of administering the refunds under this chapter.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2023.
new text end

Sec. 5.

new text begin [297J.04] REFUNDS AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales tax refunds. new text end

new text begin When money is appropriated under section 297J.03
for the purpose of paying sales tax refunds, the commissioner must determine eligibility
and pay the sales tax refunds as provided in this section.
new text end

new text begin Subd. 2. new text end

new text begin Eligibility; amount of refund. new text end

new text begin (a) An individual qualifies for a sales tax refund
if the individual is a United States citizen and:
new text end

new text begin (1) was a resident of Minnesota for all or part of the previous calendar year and filed a
Minnesota income tax return on or before October 15 in the year that the return was originally
due, had a tax liability before refundable credits on that return of at least $1, and was not
allowed to be claimed as a dependent on a federal income tax return filed by another person
for the same taxable year; or
new text end

new text begin (2) was a resident of Minnesota for all of the previous calendar year, was not eligible
for a refund under clause (1), attained the age of 18 on or before December 31 of the previous
calendar year, and received Social Security benefits as defined in section 86(d)(1) of the
Internal Revenue Code in the previous calendar year.
new text end

new text begin (b) Except as provided under paragraph (c), the sales tax refund allowed under paragraph
(a) equals:
new text end

new text begin (1) $500 for married joint filers; and
new text end

new text begin (2) $250 for all other filers.
new text end

new text begin (c) If the amount appropriated for sales tax refunds under this chapter, after subtracting
any administrative expense allowed, exceeds the amount necessary to pay the minimum
refund amounts under paragraph (b), the commissioner must proportionately increase the
refund amounts to a level that would refund the entire amount appropriated.
new text end

new text begin (d) For an individual who was a resident of Minnesota for less than the entire year, the
sales tax refund equals the sales tax refund calculated under paragraph (b) multiplied by
the percentage determined under section 290.06, subdivision 2c, paragraph (e), as calculated
on the individual's most recent income tax return, including subsequent adjustments to that
return made within the time limits specified in subdivision 3, paragraph (b).
new text end

new text begin Subd. 3. new text end

new text begin Payment of refund; other requirements. new text end

new text begin (a) The commissioner must issue
sales tax refunds as soon as possible following the appropriation of money under section
297J.03.
new text end

new text begin (b) The refund must not be adjusted based on changes to an income tax return that are:
(1) made by order of assessment after the date the refund is processed; or (2) made by the
taxpayer by a filing with the commissioner after the date the refund is processed.
new text end

new text begin (c) Individuals who filed a joint income tax return for the most recent calendar year must
receive a joint sales tax refund under the provisions of this paragraph. After the sales tax
refund has been issued, but before the check has been cashed if the refund is issued by
check, either joint claimant may request a separate payment for one-half of the joint sales
tax refund. The amount payable to each person equals one-half of the total joint refund.
Notwithstanding any provision in this section to the contrary, if, prior to payment of the
refund, the commissioner has been notified that taxpayers who filed a joint income tax
return are living at separate addresses, the commissioner may issue separate checks to each
individual listed on the joint return.
new text end

new text begin (d) The sales tax refund is a Minnesota tax law for purposes of section 270B.01,
subdivision 8.
new text end

new text begin (e) The sales tax refund is an overpayment of any tax collected by the commissioner for
purposes of section 270C.64. For purposes of this paragraph, a joint sales tax refund is
payable to each spouse equally.
new text end

new text begin (f) The right to a sales tax refund lapses and the refund check must be deposited in the
Minnesota refund account in the special revenue fund if the commissioner:
new text end

new text begin (1) cannot locate an individual entitled to a sales tax refund under subdivision 2 within
one year of the date of issuance of the refund check; or
new text end

new text begin (2) if an individual to whom a sales tax refund was issued has not cashed the refund
check within one year of the date of issuance of the refund check.
new text end

new text begin (g) Individuals who are entitled to a sales tax refund but did not receive one and
individuals who receive a sales tax refund that was not correctly calculated must file a claim
with the commissioner in a form prescribed by the commissioner. A claim made under this
paragraph is a claim for refund under section 289A.50, subdivisions 4 and 7. Individuals
entitled to a sales tax refund must file the claim by July 1 of the calendar year in which
money is appropriated to pay sales tax refunds.
new text end

new text begin (h) The sales tax refund is a refund subject to revenue recapture under chapter 270A.
The commissioner shall remit the entire refund to the claimant agency, which shall, upon
the request of the spouse who does not owe the debt, refund one-half of the joint sales tax
refund to the spouse who does not owe the debt.
new text end

new text begin (i) The refund is a reduction of current fiscal year sales tax revenues.
new text end

new text begin (j) If a sales tax refund issued by check is cashed by someone other than the payee or
payees of the check, and the commissioner determines that the check has been forged or
improperly endorsed, the commissioner may issue an order of assessment for the amount
of the check against the person or persons cashing it. If a sales tax refund issued by debit
card is stolen or otherwise used by someone other than the payee or payees of the debit
card, and the commissioner determines that the debit card has been improperly used as
tender, the commissioner may issue an order of assessment for the amount of the debit card
against the person or persons using it. The commissioner must make the assessment within
two years after the check is cashed or debit card is used, but if cashing the check or using
the debit card constitutes theft under section 609.52, or forgery under section 609.63, the
commissioner may make the assessment. A person issued an assessment may appeal the
assessment under chapter 14 or may seek judicial review. The commissioner may take action
to collect the assessment in the same manner as provided by chapter 289A for any other
order of the commissioner assessing tax.
new text end

new text begin (k) If the commissioner determines that a refund was issued under this section to an
ineligible individual, the commissioner must issue an order of assessment to the individual
receiving the refund for the amount of the refund payment. The order must be made within
two years after the date of the issuance or six years after the date of the refund payment in
the case of fraud. The audit, assessment, appeal, collection, enforcement, and administrative
provisions of chapters 270C and 289A apply to the orders issued under this section.
new text end

new text begin (l) Notwithstanding sections 9.031, 16A.40, and 16B.49, and any other law to the
contrary, the commissioner may take whatever actions the commissioner deems necessary
to pay the refunds required by this section, including issuance of debit cards or checks. The
commissioner may, in consultation with the commissioner of management and budget,
contract with a private vendor or vendors to process, print, and mail debit cards, checks, or
warrants required under this section and receive and disburse state funds to pay debit cards,
checks, or warrants.
new text end

new text begin (m) The commissioner may pay refunds by electronic funds transfer to individuals who
requested that the income tax refund, if any, attributable to their most recently filed individual
income tax return be paid through electronic funds transfer. The commissioner may make
the electronic funds transfer payments to the same financial institution and into the same
account as the individual income tax refund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2023.
new text end

Sec. 6.

new text begin [297J.05] REPORTS REQUIRED.
new text end

new text begin (a) Within 15 months of the issuance of refunds under this chapter, the commissioner
must report to the chairs and ranking minority members of the legislative committees with
jurisdiction over taxes, the senate Finance Committee, and the house of representatives
Ways and Means Committee on the payments issued under this chapter. The reports must
comply with sections 3.195 and 3.197.
new text end

new text begin (b) On November 1, 2023, and annually thereafter, the commissioner of revenue must
report to the commissioner of management and budget and to the chairs and ranking minority
members of the legislative committees with jurisdiction over taxes, the senate Finance
Committee, and the house of representatives Ways and Means Committee the amount equal
to the current estimated cost of paying sales tax refunds at the minimum amounts indicated
under section 297J.04, subdivision 2, paragraph (b), to all eligible recipients, including the
administrative costs authorized under section 297J.03, based on the most recent information
available to the commissioner. The report must comply with sections 3.195 and 3.197.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2023.
new text end