SF4483

Purpose

• Imposes a new state tax on remittance transfers sent from Minnesota. The goal is to generate revenue from money sent abroad or within the state using remittance services.

Key Definitions (as used in the bill)

• remittance transfer: defined as in United States Code title 15 section 1693o-1g
• remittance transfer provider: defined as in United States Code title 15 section 1693o-1g
• sender: defined as in United States Code title 15 section 1693o-1g
• commissioner: Minnesota state tax authority responsible for administering the tax

Tax Imposed and Rate

• A tax is added on remittance transfers that originate in Minnesota.
• Tax rate: 1% of the amount of the remittance transfer.

Tax Base and Exemptions

• Tax applies only when the sender provides cash or a cash-like instrument to the remittance transfer provider. This includes cash, money orders, cashier’s checks, or other similar physical instruments.
• Exemptions (nonapplication) apply to certain noncash remittance transfers, specifically transfers where the money being sent is:
  • withdrawn from a account held in or by a financial institution described in 31 U.S.C. § 5312(a) and subject to subchapter II, or
  • funded with a debit card or a credit card issued in the United States.
• In short: noncash transfers funded electronically or from certain accounts are not taxed.

Collection and Remittance

• The remittance transfer provider must:
  • collect the 1% tax from the sender, and
  • remit the tax to the Minnesota commissioner using the same process as other taxes under Minnesota law (the framework used for taxes under chapter 297A).

Administration, Audits, Penalties, and Enforcement

• The administrative and enforcement provisions that already apply to other Minnesota taxes (including audits, assessments, refunds, penalties, interest, and remedies under chapters 270C and 289A) also apply to this remittance transfer tax.

Returns and Payment

• Providers must file a tax return for the remittance transfer tax and pay the tax using the filing cycle and due dates established for other taxes under Minnesota law (chapter 289A, section 289A.20, subdivision 4).
• Interest applies to overpayments refunded or credited, calculated from the tax payment date to the refund date.

Personal Liability and Fiduciaries

• The tax is a personal debt of the person required to file the return, starting when the liability arises.
• For estates and fiduciaries (executors/administrators), liability generally runs to the person in that official capacity unless assets are held and distributed in a way that reserves sufficient assets to pay the tax, interest, and penalties.

Significant Changes from Current Law

• Establishes a new 1% tax on certain remittance transfers sent from Minnesota.
• Creates a specific tax base limited to cash or cash-like instruments; most noncash transfers are exempt.
• Integrates the new tax into existing Minnesota tax administration and collection framework (including chapters 270C, 289A, and 297A).
• Shifts compliance to remittance transfer providers, who must collect and remit the tax, report returns, and follow the standard enforcement processes.

Relevant Terms - remittance transfer - remittance transfer provider - sender - tax imposed - 1 percent - cash - money order - cashier's check - physical instrument - noncash remittance transfers - debit card - credit card - withdrawal - 31 U.S.C. § 5312a (account types) - commissioner - chapter 297A - chapter 270C - chapter 289A - returns - filing cycle - due date - interest - penalties - personal debt - executor - administrator - fiduciary