2001 Minnesota Statutes

     297I.55 Examinations; audits and collections. 

    Subdivision 1.    Examination of taxpayer.  To determine 
 the accuracy of a return or report, or in fixing liability under 
 this chapter, or for the purpose of collection, the commissioner 
 may make reasonable examinations or investigations of a 
 taxpayer's place of business; tangible personal property; 
 equipment, computer systems and facilities; and pertinent books, 
 records, papers, vouchers, computer printouts, accounts, and 
 documents. 

    Subd. 2.    Access to records of other persons in 
 connection with examination of taxpayer.  When conducting an 
 investigation or an audit of a taxpayer, or for the purpose of 
 collection, the commissioner may, except where privileged by 
 law, examine the relevant records and files of any state agency 
 as well as any person, business, institution, financial 
 institution, agency of the United States government, or agency 
 of any other state where permitted by statute, agreement, or 
 reciprocity.  The commissioner may compel production of these 
 records by subpoena. A subpoena may be served directly by the 
 commissioner. 

    Subd. 3.    Power to compel testimony.  In the 
 administration of this chapter, the commissioner may: 

    (1) administer oaths or affirmations and compel by subpoena 
 the attendance of witnesses, testimony, and the production of a 
 person's pertinent books, records, papers, or other data for 
 inspection and copying; and 

    (2) examine under oath or affirmation any person regarding 
 the business of any taxpayer concerning any relevant matter 
 incident to the administration of this chapter.  The fees of 
 witnesses required by the commissioner to attend a hearing are 
 equal to those allowed to witnesses appearing before courts of 
 this state.  The fees must be paid in the manner provided for 
 the payment of other expenses incident to the administration of 
 state tax law. 

    Subd. 4.    Third-party subpoena where taxpayer's identity 
 is known.  An investigation may extend to a person that the 
 commissioner determines has access to information that may be 
 relevant to the examination or investigation.  When a subpoena 
 requiring the production of records as described in subdivision 
 2 is served on a third-party recordkeeper, written notice of the 
 subpoena must be mailed to the taxpayer and to any other person 
 who is identified in the subpoena.  The notices must be given 
 within three days of the day on which the subpoena is served.  
 Notice to the taxpayer required by this section is sufficient if 
 it is mailed to the last address on record with the commissioner.

    The provisions of this subdivision relating to notice to 
 the taxpayer or other parties identified in the subpoena do not 
 apply if there is reasonable cause to believe that the giving of 
 notice may lead to attempts to conceal, destroy, or alter 
 records or assets relevant to the examination, to prevent the 
 communication of information from other persons through 
 intimidation, bribery, or collusion, or to flee to avoid 
 prosecution, testifying, or production of records. 

    Subd. 5.    Third-party subpoena where taxpayer's identity 
 is not known.  A subpoena that does not identify the person or 
 persons whose tax or surcharge liability is being investigated 
 may be served only if: 

    (1) the subpoena relates to the investigation of a 
 particular person or ascertainable group or class of persons; 

    (2) there is a reasonable basis for believing that the 
 person or group or class of persons may fail or may have failed 
 to comply with laws administered by the commissioner; 

    (3) the information sought to be obtained from the 
 examination of the records, and the identity of the person or 
 persons with respect to whose liability the subpoena is issued, 
 is not readily available from other sources; 

    (4) the subpoena is clear and specific concerning the 
 information sought to be obtained; and 

    (5) the information sought to be obtained is limited solely 
 to the scope of the investigation. 

    When a subpoena does not identify the person or persons 
 with respect to whose tax or surcharge liability the subpoena is 
 issued, the party served with the subpoena may petition for a 
 determination concerning whether the commissioner has complied 
 with clauses (1) to (5) and thus whether the subpoena is 
 enforceable.  The petitions must be to the district court in 
 which the party is located.  The petition must be filed within 
 20 days after service of the subpoena.  If the party served does 
 not petition within the time prescribed, the subpoena has the 
 effect of a court order. 

    Subd. 6.    Request by taxpayer for subpoena.  When the 
 commissioner has the power to issue a subpoena for investigative 
 or auditing purposes, the commissioner shall honor a reasonable 
 request by the taxpayer to issue a subpoena on the taxpayer's 
 behalf, if in connection with the investigation or audit. 

    Subd. 7.    Application to court for enforcement of 
 subpoena.  Disobedience of subpoenas issued under this section 
 is punishable by the district court of the district in which the 
 party served with the subpoena is located, in the same manner as 
 contempt of the district court. 

    Subd. 8.    Cost of production of records.  The cost of 
 producing records of a third party required by a subpoena must 
 be paid by the taxpayer, if the taxpayer requests the subpoena 
 to be issued, or if the taxpayer has the records available but 
 has refused to provide them to the commissioner.  In other cases 
 where the taxpayer cannot produce records and the commissioner 
 then initiates a subpoena for third-party records, the 
 commissioner shall pay the reasonable cost of producing the 
 records.  The commissioner may later assess the reasonable costs 
 against the taxpayer if the records contribute to the 
 determination of an assessment of tax or surcharge against the 
 taxpayer. 

    HIST: 2000 c 394 art 1 s 12