1998 Minnesota Statutes

     268.058 Tax and payment in lieu of taxes lien. 

    Subdivision 1.    Lien.  (a) Any taxes, benefit 
 overpayments, or payments in lieu of taxes due under this 
 chapter and interest and penalties imposed with respect thereto, 
 shall become a lien upon all the property, within this state, 
 both real and personal, of the person liable therefor, from the 
 date of assessment of the tax, benefit overpayment, or payment 
 in lieu of taxes.  The term "date of assessment" means the date 
 a report was due or the payment due date of the notice of 
 benefits charged to a payment in lieu of taxes account. 

    (b)(1) The lien imposed by this section is not enforceable 
 against any purchaser, mortgagee, pledgee, holder of a Uniform 
 Commercial Code security interest, mechanic's lien, or judgment 
 lien creditor, until a notice of lien has been filed by the 
 commissioner in the office of the county recorder of the county 
 in which the property is situated, or in the case of personal 
 property belonging to an individual who is not a resident of the 
 state, or which is a corporation, partnership, or other 
 organization, in the office of the secretary of state.  When the 
 filing of the notice of lien is made in the office of the county 
 recorder, the fee for filing and indexing shall be as prescribed 
 in sections 272.483 and 272.484.  

    (2) Notices of liens, lien renewals, and lien releases, in 
 a form prescribed by the commissioner of economic security, may 
 be filed with the county recorder or the secretary of state by 
 mail, personal delivery, or by electronic transmission by the 
 commissioner or a delegate into the computerized filing system 
 of the secretary of state authorized under section 336.9-411.  
 The secretary of state shall transmit the notice electronically 
 to the office of the county recorder, if that is the place of 
 filing, in the county or counties shown on the computer entry.  
 The filing officer, whether the county recorder or the secretary 
 of state, shall endorse and index a printout of the notice in 
 the same manner as if the notice had been mailed or delivered.  

    (3) County recorders and the secretary of state shall enter 
 information relative to lien notices, renewals, and releases 
 filed in their offices into the central database of the 
 secretary of state.  For notices filed electronically with the 
 county recorders, the date and time of receipt of the notice and 
 county recorder's file number, and for notices filed 
 electronically with the secretary of state, the secretary of 
 state's recording information, must be entered by the filing 
 officer into the central database before the close of the 
 working day following the day of the original data entry by the 
 department.  

    (c) The lien imposed on personal property by this section, 
 even though properly filed, is not enforceable against a 
 purchaser with respect to tangible personal property purchased 
 at retail or as against the personal property listed as exempt 
 in sections 550.37, 550.38 and 550.39. 

    (d) A notice of tax lien filed pursuant to this section has 
 priority over any security interest arising under chapter 336, 
 article 9, which is perfected prior in time to the lien imposed 
 by this section, but only if:  

    (1) the perfected security interest secures property not in 
 existence at the time the notice of tax lien is filed; and 

    (2) the property comes into existence after the 45th day 
 following the day on which the notice of tax lien is filed, or 
 after the secured party has actual notice or knowledge of the 
 tax lien filing, whichever is earlier. 

    (e) The lien imposed by this section shall be enforceable 
 from the time the lien arises and for ten years from the date of 
 filing the notice of lien.  A notice of lien may be renewed by 
 the commissioner before the expiration of the ten-year period 
 for an additional ten years.  The delinquent employer must 
 receive notice of the renewal. 

    (f) The lien imposed by this section shall be enforceable 
 by levy as authorized in subdivision 8 or by judgment lien 
 foreclosure as authorized in chapter 550.  

    Subd. 2.    Limitation for homestead property.  The lien 
 imposed by this section is a lien upon property defined as 
 homestead property in chapter 510.  The lien may be enforced 
 only upon the sale, transfer, or conveyance of the homestead 
 property. 

    Subd. 3.    Levy.  (a) If any tax or payment in lieu of 
 taxes payable to the department is not paid when due, the amount 
 may be collected by the commissioner, a duly authorized 
 representative, or by the sheriff of any county to whom the 
 commissioner has issued a warrant, who may levy upon all 
 property and rights of property of the person liable for the tax 
 or payment in lieu of taxes, (except that which is exempt from 
 execution pursuant to section 550.37), or property on which 
 there is a lien provided by subdivision 1.  The terms "tax or 
 payment in lieu of taxes" shall include any penalty, interest, 
 and costs.  The term "levy" includes the power of distraint and 
 seizure by any means.  Before a levy is made or warrant issued, 
 notice and demand for payment of the amount due shall be given 
 to the person liable for the tax or payment in lieu of taxes at 
 least ten days prior to the levy or issuing of a warrant.  

    (b) Upon the commissioner issuing a warrant, the sheriff 
 shall proceed within 60 days to levy upon the rights to property 
 of the employer within the employer's county, except the 
 homestead and household goods of the employer and property of 
 the employer not liable to attachment, garnishment, or sale on 
 any final process issued from any court under the provisions of 
 section 550.37, and shall sell so much thereof as is required to 
 satisfy the tax, payment in lieu of taxes, interest, and 
 penalties, together with the commissioner's costs.  The sales 
 shall, as to their manner, be governed by the law applicable to 
 sales of like property on execution issued against property upon 
 a judgment of a court of record.  The proceeds of the sales, 
 less the sheriff's costs, shall be turned over to the 
 commissioner, who shall retain a part thereof as is required to 
 satisfy the tax, payment in lieu of taxes, interest, penalties, 
 and costs, and pay over any balance to the employer.  

    (c) If the commissioner has reason to believe that 
 collection of the tax or payment in lieu of taxes is in 
 jeopardy, notice and demand for immediate payment of the amount 
 may be made by the commissioner.  If the tax or payment in lieu 
 of taxes is not paid, the commissioner may proceed to collect by 
 levy or issue a warrant without regard to the ten-day period 
 provided herein.  

    (d) In making the execution of the levy and in collecting 
 the tax or payment in lieu of taxes due, the commissioner shall 
 have all of the powers provided in chapter 550 and in any other 
 law for purposes of effecting an execution against property in 
 this state.  The sale of property levied upon and the time and 
 manner of redemption therefrom shall be as provided in chapter 
 550.  The seal of the court, subscribed by the court 
 administrator, as provided in section 550.04, shall not be 
 required.  The levy for collection of taxes or payments in lieu 
 of taxes may be made whether or not the commissioner has 
 commenced a legal action for collection of the amount. 

    (e) Where a jeopardy assessment or any other assessment has 
 been made by the commissioner, the property seized for 
 collection of the tax or payment in lieu of taxes shall not be 
 sold until any determination of liability, rate, or benefit 
 charges has become final.  No sale shall be made unless the tax 
 or payment in lieu of taxes remain unpaid for a period of more 
 than 30 days after the determination becomes final.  Seized 
 property may be sold at any time if:  

    (1) the employer consents in writing to the sale; or 

    (2) the commissioner determines that the property is 
 perishable or may become greatly reduced in price or value by 
 keeping, or that the property cannot be kept without great 
 expense.  

    (f) Where a levy has been made to collect taxes or payments 
 in lieu of taxes pursuant to this subdivision and the property 
 seized is properly included in a formal proceeding commenced 
 under sections 524.3-401 to 524.3-505 and maintained under full 
 supervision of the court, the property shall not be sold until 
 the probate proceedings are completed or until the court so 
 orders.  

    (g) The property seized shall be returned by the 
 commissioner if the owner gives a surety bond equal to the 
 appraised value of the owner's interest in the property, as 
 determined by the commissioner, or deposits with the 
 commissioner security in a form and amount as the commissioner 
 deems necessary to insure payment of the liability, but not more 
 than twice the liability. 

    (h) Notwithstanding any other law to the contrary, if a 
 levy or sale pursuant to this section would irreparably injure 
 rights in property which the court determines to be superior to 
 rights of the state in the property, the district court may 
 grant an injunction to prohibit the enforcement of the levy or 
 to prohibit the sale. 

    (i) Any person who fails or refuses to surrender without 
 reasonable cause any property or rights to property subject to 
 levy upon demand by the commissioner shall be personally liable 
 to the department in an amount equal to the value of the 
 property or rights not so surrendered, but not exceeding the 
 amount of tax or payment in lieu of taxes for the collection of 
 which the levy has been made.  Any amount recovered under this 
 subdivision shall be credited against the tax or payment in lieu 
 of taxes liability for the collection of which the levy was 
 made.  The term "person" includes an officer or employee of a 
 corporation or a member or employee of a partnership who, as an 
 officer, employee, or member is under a duty to surrender the 
 property or rights to property or to discharge the obligation.  

    (j) Any action taken by the commissioner pursuant to this 
 subdivision shall not constitute an election by the department 
 to pursue a remedy to the exclusion of any other remedy.  

    (k) After the commissioner has seized the property of any 
 person, that person may, upon giving 48 hours notice to the 
 commissioner and to the court, bring a claim for equitable 
 relief before the district court for the release of the property 
 to the employer upon terms and conditions as the court may deem 
 equitable. 

    (l) Any person in possession of (or obligated with respect 
 to) property or rights to property subject to levy upon which a 
 levy has been made who, upon demand by the commissioner, 
 surrenders the property or rights to property or who pays a 
 liability under this subdivision shall be discharged from any 
 obligation or liability to the person liable for the payment of 
 the delinquent tax or payment in lieu of taxes with respect to 
 the property or rights to property so surrendered or paid.  

    (m) Notwithstanding any other provisions of law to the 
 contrary, the notice of any levy authorized by this section may 
 be served by mail or by delivery by an employee or agent of the 
 department. 

    (n) It shall be lawful for the commissioner to release the 
 levy upon all or part of the property or rights to property 
 levied upon if the commissioner determines that the release will 
 facilitate the collection of the liability, but the release 
 shall not operate to prevent any subsequent levy.  If the 
 commissioner determines that property has been wrongfully levied 
 upon, it shall be lawful for the commissioner to return:  

    (1) the specific property levied upon, at any time; or 

    (2) an amount of money equal to the amount of money levied 
 upon, at any time before the expiration of nine months from the 
 date of levy. 

    (o) Notwithstanding section 52.12, a levy by the 
 commissioner made pursuant to the provisions of this section 
 upon an employer's funds on deposit in a financial institution 
 located in this state, shall have priority over any unexercised 
 right of setoff of the financial institution to apply the levied 
 funds toward the balance of an outstanding loan or loans owed by 
 the employer to the financial institution.  A claim by the 
 financial institution that it exercised its right to setoff 
 prior to the levy by the commissioner must be substantiated by 
 evidence of the date of the setoff, and shall be verified by the 
 sworn statement of a responsible corporate officer of the 
 financial institution.  Furthermore, for purposes of determining 
 the priority of any levy made under this section, the levy shall 
 be treated as if it were an execution made pursuant to chapter 
 550.  

    Subd. 4.    Right of setoff.  Upon certification by the 
 commissioner to the commissioner of finance or to any state 
 agency which disburses its own funds, that an employer has an 
 uncontested delinquent tax or payment in lieu of taxes liability 
 owed to the department, and that the state has purchased 
 personal services, supplies, contract services, or property from 
 said employer, the commissioner of finance or the state agency 
 shall apply to the delinquent tax or payment in lieu of taxes 
 liability funds sufficient to satisfy the unpaid liability from 
 funds appropriated for payment of said obligation of the state 
 or any of its agencies that are due and owing the employer.  The 
 credit shall not be made against any funds exempt under section 
 550.37 or those funds owed an individual employer who receives 
 assistance under chapter 256. 

    All funds, whether general or dedicated, shall be subject 
 to setoff in the manner provided in this subdivision.  Transfer 
 of funds in payment of the obligations of the state or any of 
 its agencies to an employer and any actions for the funds shall 
 be had against the commissioner on the issue of the tax or 
 payment in lieu of taxes liability.  Nothing in this section 
 shall be construed to limit the previously existing right of the 
 state or any of its agencies to setoff.  

    Notwithstanding any law to the contrary, the commissioner 
 shall have first priority to setoff funds owed by the department 
 to a delinquent employer. 

    Subd. 5.    Collection by civil action.  (a) In addition 
 to all other collection methods authorized, if any employer is 
 delinquent on any payment of taxes or interest due thereon or 
 penalties for failure to file a tax report and other reports as 
 required by this chapter or by any rule of the commissioner, the 
 amount due may be collected by civil action in the name of the 
 state of Minnesota, and any money recovered shall be credited to 
 the funds provided for under those sections.  Any employer 
 adjudged delinquent shall pay the costs of the action.  Civil 
 actions brought under this subdivision shall be heard as 
 provided under section 16D.14.  No action for the collection of 
 taxes, interest thereon, or penalties shall be commenced more 
 than six years after the taxes have been reported by the 
 employer or determined by the commissioner to be due and 
 payable.  In any action, judgment shall be entered against any 
 employer in default for the relief demanded in the complaint 
 without proof, together with costs and disbursements, upon the 
 filing of an affidavit of default. 

    (b) Any employer that is not a resident of this state and 
 any resident employer removed from this state, shall be 
 considered to appoint the secretary of state as its agent and 
 attorney for the acceptance of process in any civil action under 
 this subdivision.  In instituting an action against any 
 employer, the commissioner shall file process with the secretary 
 of state, together with a payment of a fee of $15 and that 
 service shall be considered sufficient service upon the 
 employer, and shall have the same force and validity as if 
 served upon the employer personally within this state.  The 
 commissioner shall send notice of the service of process, 
 together with a copy of the process, by certified mail, to the 
 employer at its last known address.  The commissioner's 
 affidavit of compliance with the provisions of this section, and 
 a copy of the notice of service shall be appended to the 
 original of the process and filed in the court.  

    (c) No court filing fees, docketing fees, or release of 
 judgment fees may be assessed against the state for actions 
 pursuant to this subdivision. 

    Subd. 6.    Injunction forbidden.  No suit shall lie to 
 enjoin the assessment or collection of any tax or payment in 
 lieu of taxes imposed by this chapter, or the interest and 
 penalties imposed thereby.  

    HIST: 1Sp1982 c 1 s 36; 1983 c 372 s 40-44; 1985 c 281 s 1; 
 1Sp1985 c 14 art 9 s 75; 1986 c 444; 1Sp1986 c 3 art 1 s 82; 
 1987 c 385 s 31-34; 1989 c 209 art 2 s 1; 1991 c 291 art 18 s 1; 
 1992 c 484 s 14; 1993 c 67 s 12; 1993 c 137 s 8; 1994 c 483 s 1; 
 1994 c 488 s 7; 1995 c 54 s 16,17; 1996 c 417 s 25,31; 1997 c 66 
 s 67,79,80; 1998 c 265 s 44