SF5195

Purpose

• Establishes a new tax on amounts obtained through fraud related to state programs or appropriations, with the goal of recovering funds and funding tax relief.

Key definitions

• Fraud: the intentional use of deceit or dishonest means to obtain state money from a state program or appropriation, excluding refunds for overpayment of taxes.
• Commissioner: the commissioner of revenue.
• The bill applies to individuals or organizations convicted of fraud and to others the commissioner determines have obtained fraud, as well as certain participants who receive compensation for taking part in fraudulent activity.

Tax Imposed

• Tax amount: a tax equal to 100 percent of the amount obtained by fraud.
• Who owes the tax:
  • Any individual or organization convicted by a state or federal court of fraud.
  • Any individual or organization the commissioner determines has obtained fraud.
  • Any individual or organization that receives compensation from someone described above in exchange for participating in the fraudulent activity.
  • Any individual or organization that receives compensation from a described party for participating in activity the commissioner has determined to be obtained by fraud.
• The tax applies regardless of any restitution or penalty already imposed or paid.

Administration and enforcement

• The commissioner, in consultation with law enforcement or other applicable agencies, must investigate suspected fraud.
• The commissioner must establish a schedule for payment and the means of enforcing the tax.
• Appeals of tax assessments follow existing procedures under section 270C.35.

Use of funds and funding mechanism

• Money collected from the tax must be deposited into a tax relief account.
• Funds in the tax relief account must be used only for income tax relief, property tax relief, or both, as determined by law.
• The tax relief account is established in the special revenue fund.

Notable implications

• This creates a direct revenue stream tied to fraud recovery that is separate from other penalties or restitution.
• It broadens liability to include not only those convicted of fraud but also those determined by the commissioner and certain participants who are compensated for participating in fraudulent schemes.

Relevant Terms fraud, 100 percent tax, amount obtained by fraud, commissioner of revenue, state or federal court of fraud, compensation, participating in fraud, tax relief account, income tax relief, property tax relief, special revenue fund, enforcement, appeals, section 270C.35