SF5044

Purpose

The bill would create a dedicated taxpayer refund account inside Minnesota’s special revenue fund to hold money the state recovers that isn’t designated for a specific purpose. The goal is to use these recovered funds to issue automatic taxpayer refunds to eligible residents.

Establishment of the Taxpayer Refund Account

• A taxpayer refund account is created in the special revenue fund.
• The account holds money deposited into it and any interest earned.
• Money in the account is nonlapsing and is annually appropriated to the commissioner of management and budget for the purposes described in the bill.
• The funds in this account are used only for issuing taxpayer refunds.

Sources and Definition of Recovered Funds

• Recovered funds include money received by the state or its agencies from:
  • nondesignated civil judgments or settlements,
  • fraud recovery actions,
  • overpayment recovery actions,
  • nondesignated administrative fines or penalties,
  • reimbursements or returns of money previously disbursed by the state,
  • criminal restitution that is not designated for a specific victim or entity.
• Funds must be deposited into the taxpayer refund account, with exceptions for funds required by federal law for a specific purpose or by a court order for a specific victim/entity.

Transfer of Recovered Funds to the Account

• Within 60 days of receipt, a state agency must transfer recovered funds to the commissioner of management and budget to be deposited in the taxpayer refund account in the state treasury.

Annual Distribution of Funds

• At the adjournment of each annual legislative session, the commissioner determines the balance of the taxpayer refund account.
• If the balance is greater than $300,000,000, refunds must be disbursed. If the balance is not at or above that threshold, the funds are carried over to the next session.
• The refund amount per eligible taxpayer is determined using a proportional or per-capita formula established by rule.
• An eligible taxpayer is any individual who filed a Minnesota individual income tax return for the most recent tax year. The commissioner works with the commissioner of revenue to determine eligible taxpayers.
• Refunds are issued no later than 120 days after adjournment and are paid as direct payments from the treasury.

Rulemaking

• The commissioner must adopt rules to implement the section, including the distribution formula and procedures for processing payments.

Significant Changes (What this bill changes)

• Establishes a new, dedicated taxpayer refund account funded by recovered state funds rather than general budget surpluses or general fund money.
• Sets a specific threshold ($300,000,000) that triggers automatic refunds each year.
• Introduces a defined process and timeline for identifying eligible taxpayers, calculating refund amounts, and issuing refunds as direct payments.
• Requires coordinated rulemaking to implement the funding, calculation, and payment methods.

Relevant Terms - taxpayer refund account - special revenue fund - recovered funds - nondesignated civil judgments - settlements - fraud recovery actions - overpayment recovery actions - nondesignated administrative fines - penalties - reimbursements - criminal restitution (not court-designated) - state treasury - commissioner of management and budget - commissioner of revenue - eligible taxpayer - per capita formula - proportional formula - adjournment sine die - direct payments - rulemaking