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268.145 INCOME TAX WITHHOLDING.
    Subdivision 1. Notification. (a) Upon filing an application for unemployment benefits,
the applicant must be informed that:
    (1) unemployment benefits are subject to federal and state income tax;
    (2) there are requirements for filing estimated tax payments;
    (3) the applicant may elect to have federal income tax withheld from unemployment benefits;
    (4) if the applicant elects to have federal income tax withheld, the applicant may, in addition,
elect to have Minnesota state income tax withheld; and
    (5) at any time during the benefit year the applicant may change a prior election.
    (b) If an applicant elects to have federal income tax withheld, the commissioner shall
deduct ten percent for federal income tax, rounded down to the next lower whole dollar. If an
applicant also elects to have Minnesota state income tax withheld, the commissioner shall make
an additional five percent deduction for state income tax, rounded down to the next lower whole
dollar. Any amounts deducted or offset under sections 268.155, 268.18, and 268.184 have priority
over any amounts deducted under this section. Federal income tax withholding has priority
over state income tax withholding.
    (c) An election to have income tax withheld may not be retroactive and only applies to
unemployment benefits paid after the election.
    Subd. 2. Transfer of funds. The amount of any unemployment benefits deducted under this
section remains in the trust fund until transferred to the federal Internal Revenue Service, or the
Department of Revenue, as an income tax payment on behalf of the applicant.
    Subd. 3. Correction of errors. Any error that resulted in underwithholding or
overwithholding under this section will not be corrected retroactively.
    Subd. 4. Federal requirement. The commissioner shall follow all federal requirements for
the deduction and withholding of income tax from unemployment benefits.
    Subd. 5. Effect of payments. Any amount deducted under this section shall be considered as
unemployment benefits paid to the applicant.
History: 1996 c 417 s 17; 1997 c 66 s 79; 1998 c 254 art 1 s 73; 1999 c 107 s 53,66; 2000
c 343 s 4; 1Sp2001 c 4 art 2 s 23; 1Sp2003 c 3 art 2 s 20; 2004 c 183 s 77; 2005 c 112 art 2 s
35; 2007 c 128 art 6 s 84-86

Official Publication of the State of Minnesota
Revisor of Statutes