Purpose

• This bill changes when a person can file for a refund of state taxes and how much they can receive. It updates Minnesota laws to set new time windows and limits on refunds.

Main Provisions

• Time limit for refunds
  • Generally, a claim for a refund must be filed within 312 years from when the return is due, plus any allowed extensions. It must also be filed within one year from certain events (an order assessing tax under section 270C.33, an appeal decision under section 270C.35 subdivision 8, or a return filed by the commissioner under section 270C.33 subdivision 3 after full payment of penalties and interest).
• Special cases for late claims
  • For taxes covered under chapter 297A, if a claim is filed after the 312-year period but within one year after an order, the refund is limited to the amount of penalties and interest on the order or return.
  • For assessments under 289A.38 subdivision 5 or 6, if a claim is filed after the 312-year period but within one year after an order, the refund is limited to penalties and interest due for the period before the 312-year period.
• How the refund amount is capped
  • If the claim is filed during the 312-year period, the refund cannot exceed the tax penalties and interest paid in the period just before filing, up to 312 years plus any extension.
  • If the claim is filed after the 312-year period, the refund cannot exceed the tax penalties and interest paid during the two years just before filing.
  • If no claim is filed, the refund cannot exceed what would be allowed under the above rules if a claim had been filed on the date the refund is allowed.
• Timing rules for prepayments and filings
  • tax withholdings or estimated tax paid before the due date are treated as paid on the last day allowed by law.
  • A return filed before the last day is treated as filed on the last day.
  • If an extension is granted, a return filed before the extended due date is treated as filed on the extended due date.

Significant Changes to Existing Law

• Introduces a very long general time window (312 years) for filing refunds, with extensions and a one-year post-order window to claim refunds.
• Establishes clear refund caps based on when a claim is filed relative to the 312-year window, prioritizing penaties and interest amounts over the original tax in late refund scenarios.
• Adds specific handling for refunds tied to penalties and interest in certain tax subcategories (297A and 289A.38, subds. 5 or 6).
• Clarifies how prepayments and timely filing are treated for purposes of determining the date a refund claim is considered filed.

How It Works in Practice (Examples)

• If you file a refund claim within the 312-year window, your refund is capped at the penalties and interest paid in the period just before you filed (plus any extension time).
• If you file after the 312-year window but within one year of an order, your refund is limited to the penalties and interest due for the period before the 312-year window.
• If you never file a claim, the maximum you could receive would be the amount allowed under the within-312-year or after-312-year rules as if you had filed on the date the refund is finally allowed.

Definitions and Clarifications

• Key terms include: claim for a refund, overpayment, state tax, time limit, penalties and interest, order assessing tax (270C.33), order determining appeal (270C.35 subdivision 8), withholding, estimated tax, and refund amount caps.

Relevant Terms - claim for a refund - overpayment - state tax - time limit - 312 years - extension - order assessing tax (270C.33) - order determining appeal (270C.35) - penalties and interest - commissioner - withholding - estimated tax - refund - chapter 297A - 289A.38 subdivision 5 or 6 - prepayment - last day prescribed by law - extended due date