HF4341

Purpose

This bill would create a new Minnesota tax on remittance transfers sent from the state. The tax would raise revenue for the state by charging 1% of the transfer amount.

Main Provisions

• Definitions

  • Remittance transfer, remittance transfer provider, and sender are defined using the same meanings as those in United States Code (15 U.S.C. § 1693o-1, et seq.).

• Tax imposed

  • A tax of 1% of the amount of the remittance transfer is imposed on remittance transfers sent from Minnesota.

• Tax basis and eligible payments

  • The tax applies only to remittance transfers paid with cash, money orders, cashiers checks, or other similar physical instruments that the commissioner determines.

• Exemptions (nonapplication to certain noncash transfers)

  • The tax does not apply to remittance transfers where the money being transferred is withdrawn from a bank account and is funded with a debit card or a credit card issued in the United States. The exemption references specific U.S. code provisions related to financial institutions.

• Collection and remittance

  • A remittance transfer provider must collect the 1% tax from the sender and remit it to the state commissioner in the manner used for other taxes (as with Chapter 297A).

• Administration

  • The usual tax administration provisions apply: audit, assessment, refunds, penalties, interest, enforcement, and appeals, using the existing rules from chapters 270C and 289A.

• Returns and payment

  • Providers must file a return reporting the tax and remit payments in the form and on the schedule prescribed by the commissioner, using the filing cycle and due dates for taxes under Chapter 289A and related sections.

• Personal liability

  • The tax becomes a personal debt of the person required to file the return. In fiduciary situations (e.g., an estate’s executor or administrator), liability is in the fiduciary capacity unless assets are improperly distributed in a way that leaves insufficient assets to pay the tax, in which case the fiduciary may be personally liable for any deficiency.

Significant Changes to Existing Law

• Creates a new remittance transfer tax of 1% on transfers sent from Minnesota.
• Establishes collection responsibilities for remittance transfer providers and aligns administration with existing state tax procedures (Chapters 270C, 289A, and 297A).
• Introduces specific exemptions for certain noncash remittance transfers funded by debit/credit cards and withdrawn from certain bank accounts.
• Sets personal (and fiduciary) liability rules for the tax.

Affected Parties and Practical Impact

• Remittance transfer providers (the entities moving and processing transfers) would be required to collect and remit the tax.
• Senders who use cash-like means for remittance transfers would incur the 1% tax unless an exemption applies.
• Financial institutions and payment processors involved in funding transfers with cash, money orders, or cash-like instruments would be directly affected.
• Could affect individuals who frequently send money from Minnesota, especially those using cash-based methods.

Relevant Terms remittance transfer, remittance transfer provider, sender, cash, money order, cashiers check, physical instrument, noncash remittance transfer, debit card, credit card, issued in the United States, tax, collection, commissioner, Chapter 297A, Chapter 270C, Chapter 289A, personal debt, fiduciary, executor, administrator, exemption, Minnesota Statutes chapter 295