290.0679 ASSIGNMENT OF REFUND.
Subdivision 1. Definitions.
(a) "Qualifying taxpayer" means a resident who has a child in
kindergarten through grade 12 in the current tax year and who met the income requirements under
290.0674, subdivision 2
, for receiving the education credit in the tax year preceding the
assignment of the taxpayer's refund.
(b) "Education credit" means the credit allowed under section
(c) "Refund" means an individual income tax refund.
(d) "Financial institution" means a state or federally chartered bank, savings bank, savings
association, or credit union.
(e) "Qualifying organization" means a tax-exempt organization under section 501(c)(3) of
the Internal Revenue Code.
(f) "Assignee" means a financial institution or qualifying organization that is entitled to
receive payment of a refund assigned under this section.
Subd. 2. Conditions for assignment.
A qualifying taxpayer may assign all or part of an
anticipated refund for the current and future taxable years to a financial institution or a qualifying
organization. A financial institution or qualifying organization accepting assignment must pay the
amount secured by the assignment to a third-party vendor. The commissioner of education shall,
upon request from a third-party vendor, certify that the vendor's products and services qualify for
the education credit. A denial of a certification is subject to the contested case procedure under
chapter 14. A financial institution or qualifying organization that accepts assignments under
this section must verify as part of the assignment documentation that the product or service to
be provided by the third-party vendor has been certified by the commissioner of education as
qualifying for the education credit. The amount assigned for the current and future taxable years
may not exceed the maximum allowable education credit for the current taxable year. Both the
taxpayer and spouse must consent to the assignment of a refund from a joint return.
Subd. 3. Consent for disclosure.
When the taxpayer applies to the financial institution or
the qualifying organization for a loan to be secured by the assignment under subdivision 2, the
taxpayer must sign a written consent on a form prescribed by the commissioner. The consent must
authorize the commissioner to disclose to the financial institution or qualifying organization the
total amount of state taxes owed or revenue recapture claims filed under chapter 270A against
the taxpayer, and the total amount of outstanding assignments made by the taxpayer under this
section. For a refund from a joint return, the consent must also authorize the disclosure of taxes,
revenue recapture claims, and assignments relating to the taxpayer's spouse, and must be signed
by the spouse. The financial institution or qualifying organization may request that the taxpayer
provide a copy of the taxpayer's previous year's income tax return, if any, and may assist the
taxpayer in requesting a copy of the previous year's return from the commissioner.
Subd. 4. Consumer disclosure.
(a) A third-party vendor that receives payment of the amount
secured by an assignment must comply with the requirements of this subdivision.
(b) The third-party vendor must disclose to the taxpayer, in plain language:
(1) the cost of each product or service for which the third-party vendor separately charges the
(2) any fees charged to the taxpayer for tax preparation services; and
(3) for qualifying low-income taxpayers, information on the availability of free tax
(c) The third-party vendor must provide to the taxpayer executed copies of any documents
signed by the taxpayer.
Subd. 5. Filing of assignment.
The commissioner shall prescribe the form of and manner for
filing an assignment of a refund under this section.
Subd. 6. Effect of assignment.
The taxpayer may not revoke an assignment after it has been
filed. The assignee must notify the commissioner if the loan secured by the assignment has been
paid in full, in which case the assignment is canceled. An assignment is in effect until the amount
assigned is refunded in full to the assignee, or until the assignee cancels the assignment.
Subd. 7. Payment of refund.
When a refund assigned under this section is issued by the
commissioner, the proceeds of the refund, as defined in subdivision 1, paragraph (c), must be
distributed in the following order:
(1) to satisfy any delinquent tax obligations of the taxpayer which are owed to the
(2) to claimant agencies to satisfy any revenue recapture claims filed against the taxpayer, in
the order of priority of the claims set forth in section
(3) to assignees to satisfy assignments under this section, based on the order in time in which
the commissioner received the assignments; and
(4) to the taxpayer.
Subd. 8. Legal action.
If there is a dispute between the taxpayer and the assignee after the
commissioner has remitted the taxpayer's refund to the assignee, the taxpayer's only remedy is to
bring an action against the assignee in court to recover the refund. The action must be brought
within two years after the commissioner remits the refund to the assignee. The commissioner
may not be a party to the proceeding.
Subd. 9. Assignments private data.
Information regarding assignments under this section is
classified as private data on individuals.
History: 1Sp2001 c 5 art 9 s 12; 2003 c 127 art 3 s 14,23; 2003 c 130 s 12