1997 Minnesota Statutes

     289A.38 Limitations on time for assessment of tax. 

    Subdivision 1.    General rule.  Except as otherwise 
 provided in this section, the amount of taxes assessable must be 
 assessed within 3-1/2 years after the date the return is filed. 

    Subd. 2.    Filing date.  For purposes of this section, 
 a tax return filed before the last day prescribed by law for 
 filing is considered to be filed on the last day. 

    Subd. 3.    Estate taxes.  Estate taxes must be assessed 
 within 180 days after the return and the documents required 
 under section 289A.10, subdivision 2, have been filed. 

    Subd. 4.    Property tax refund.  For purposes of 
 computing the limitation under this section, the due date of the 
 property tax refund return as provided for in chapter 290A is 
 the due date for an income tax return covering the year in which 
 the rent was paid or the year preceding the year in which the 
 property taxes are payable. 

    Subd. 5.    False or fraudulent return; no return.  
 Notwithstanding the limitations under subdivisions 1 and 3, the 
 tax may be assessed at any time if a false or fraudulent return 
 is filed or when a taxpayer fails to file a return. 

    Subd. 6.    Omission in excess of 25 percent.  
 Additional taxes may be assessed within 6-1/2 years after the 
 due date of the return or the date the return was filed, 
 whichever is later, if: 

    (1) the taxpayer omits from gross income an amount properly 
 includable in it that is in excess of 25 percent of the amount 
 of gross income stated in the return; 

    (2) the taxpayer omits from a sales or withholding tax 
 return an amount in excess of 25 percent of the taxes reported 
 in the return; or 

    (3) the taxpayer omits from the gross estate assets in 
 excess of 25 percent of the gross estate reported in the return. 

    Subd. 7.    Federal tax changes.  If the amount of 
 income, items of tax preference, deductions, or credits for any 
 year of a taxpayer as reported to the Internal Revenue Service 
 is changed or corrected by the commissioner of Internal Revenue 
 or other officer of the United States or other competent 
 authority, or where a renegotiation of a contract or subcontract 
 with the United States results in a change in income, items of 
 tax preference, deductions, credits, or withholding tax, or, in 
 the case of estate tax, where there are adjustments to the 
 taxable estate resulting in a change to the credit for state 
 death taxes, the taxpayer shall report the change or correction 
 or renegotiation results in writing to the commissioner.  The 
 report must be submitted within 180 days after the final 
 determination and must be in the form of either an amended 
 Minnesota return conceding the accuracy of the federal 
 determination or a letter detailing how the federal 
 determination is incorrect or does not change the Minnesota 
 tax.  A taxpayer filing an amended federal tax return must also 
 file a copy of the amended return with the commissioner of 
 revenue within 180 days after filing the amended return. 

    Subd. 8.    Failure to report change or correction of 
 federal return.  If a taxpayer fails to make a report as 
 required by subdivision 7, the commissioner may recompute the 
 tax, including a refund, based on information available to the 
 commissioner.  The tax may be recomputed within six years after 
 the report should have been filed, notwithstanding any period of 
 limitations to the contrary. 

    Subd. 9.    Report made of change or correction of federal 
 return.  If a taxpayer is required to make a report under 
 subdivision 7, and does report the change or files a copy of the 
 amended return, the commissioner may recompute and reassess the 
 tax due, including a refund (1) within one year after the report 
 or amended return is filed with the commissioner, 
 notwithstanding any period of limitations to the contrary, or 
 (2) within any other applicable period stated in this section, 
 whichever period is longer.  The period provided for the 
 carryback of any amount of loss or credit is also extended as 
 provided in this subdivision, notwithstanding any law to the 
 contrary.  If the commissioner has completed a field audit of 
 the taxpayer, and, but for this subdivision, the commissioner's 
 time period to adjust the tax has expired, the additional tax 
 due or refund is limited to only those changes that are required 
 to be made to the return which relate to the changes made on the 
 federal return.  This subdivision does not apply to sales and 
 use tax.  

    For purposes of this subdivision and section 289A.42, 
 subdivision 2, a "field audit" is the physical presence of 
 examiners in the taxpayer's or taxpayer's representative's 
 office conducting an examination of the taxpayer with the 
 intention of issuing an assessment or notice of change in tax or 
 which results in the issuing of an assessment or notice of 
 change in tax.  The examination may include inspecting a 
 taxpayer's place of business, tangible personal property, 
 equipment, computer systems and facilities, pertinent books, 
 records, papers, vouchers, computer printouts, accounts, and 
 documents. 

    Subd. 10.    Incorrect determination of federal adjusted 
 gross income.  Notwithstanding any other provision of this 
 chapter, if a taxpayer whose net income is determined under 
 section 290.01, subdivision 19, omits from income an amount that 
 will under the Internal Revenue Code extend the statute of 
 limitations for the assessment of federal income taxes, or 
 otherwise incorrectly determines the taxpayer's federal adjusted 
 gross income resulting in adjustments by the Internal Revenue 
 Service, then the period of assessment and determination of tax 
 will be that under the Internal Revenue Code.  When a change is 
 made to federal income during the extended time provided under 
 this subdivision, the provisions under subdivisions 7 to 9 
 regarding additional extensions apply. 

    Subd. 11.    Net operating loss carryback.  If a 
 deficiency of tax is attributable to a net operating loss 
 carryback that has been disallowed in whole or in part, the 
 deficiency may be assessed at any time that a deficiency for the 
 taxable year of the loss may be assessed. 

    Subd. 12.    Request for early audit for individual 
 income, fiduciary income, mining company, and corporate 
 franchise taxes.  (a) Tax must be assessed within 18 months 
 after written request for an assessment has been made in the 
 case of income received (1) during the lifetime of a decedent, 
 (2) by the decedent's estate during the period of 
 administration, (3) by a trustee of a terminating trust or other 
 fiduciary who, because of custody of assets, would be liable for 
 the payment of tax under section 289A.31, subdivision 4, or (4) 
 by a mining company or a corporation.  A proceeding in court for 
 the collection of the tax must begin within two years after 
 written request for the assessment (filed after the return is 
 made and in the form the commissioner prescribes) by the 
 personal representative or other fiduciary representing the 
 estate of the decedent, or by the trustee of a terminating trust 
 or other fiduciary who, because of custody of assets, would be 
 liable for the payment of tax under section 289A.31, subdivision 
 4, or by the corporation.  Except as provided in section 
 289A.42, subdivision 1, an assessment must not be made after the 
 expiration of 3-1/2 years after the return was filed, and an 
 action must not be brought after the expiration of four years 
 after the return was filed. 

    (b) Paragraph (a) only applies in the case of a mining 
 company or a corporation if: 

    (1) the written request notifies the commissioner that the 
 corporation contemplates dissolution at or before the expiration 
 of the 18-month period; 

    (2) the dissolution is begun in good faith before the 
 expiration of the 18-month period; and 

    (3) the dissolution is completed within the 18-month period.

    Subd. 13.    Time limit for assessment and collection for 
 transferee or fiduciary.  The period of limitation for 
 assessment and collection of any liability of a transferee or 
 fiduciary is as follows:  

    (1) In the case of the liability of an initial transferee 
 of the property of the taxpayer, the tax may be assessed within 
 one year after the expiration of the period of limitation of 
 assessment against the taxpayer.  The tax may be collected by 
 action brought within one year after the expiration of the 
 period of limitation for the starting of an action against the 
 taxpayer.  

    (2) In the case of the liability of the transferee of a 
 transferee of the property of the taxpayer, the tax may be 
 assessed within one year after the expiration of the period of 
 limitation for assessment against the preceding transferee, but 
 only if within 3-1/2 years after the expiration of the period of 
 limitation for assessment against the taxpayer.  The tax may be 
 collected by action brought within one year after the expiration 
 of the period of limitation for the starting of an action 
 against the preceding transferee, but only if within four years 
 after the expiration of the period of limitation for bringing an 
 action against the taxpayer; except that if before the 
 expiration of the period of limitation for the assessment of the 
 liability of the transferee a court proceeding for the 
 collection of the tax or liability has been begun against the 
 taxpayer or last preceding transferee, liability of the 
 transferee expires one year after the return of execution in the 
 court proceeding and the period of limitation for collection by 
 action will expire one year after the liability is assessed.  

    (3) In the case of the liability of a fiduciary, the tax 
 may be assessed up to one year after the liability arises or not 
 later than the expiration of the period for collection of the 
 tax for which the liability arises, whichever is later, and may 
 be collected by action brought within one year after assessment. 

    (4) For the purposes of this subdivision, if the taxpayer 
 is deceased, or in the case of a corporation, has ended its 
 existence, the period of limitation for assessment against the 
 taxpayer will be the period that would be in effect had death or 
 termination of existence not occurred. 

    As used in this subdivision, the term "transferee" includes 
 heir, legatee, devisee, and distributee.  

    Subd. 14.    Failure to timely file withholding 
 reconciliation.  If an employer fails to timely file the 
 reconciliation required by section 289A.09, subdivision 2, 
 paragraph (d), withholding taxes may be assessed within the 
 period prescribed in subdivision 1, or within one year from the 
 date the reconciliation is filed with the commissioner, 
 whichever is later. 

    HIST: 1990 c 480 art 1 s 18; 1991 c 291 art 6 s 12,13,46; art 
 11 s 9; 1992 c 511 art 6 s 19; 1993 c 375 art 8 s 14; 1994 c 587 
 art 1 s 24; 1995 c 264 art 10 s 3; 1997 c 31 art 1 s 11