HF3913

Purpose

Authorizes the Minnesota Department of Revenue to create and operate a tax compliance program that uses advanced tax analytics and business intelligence tools. The goal is to improve tax assessment and collection by better identifying which taxpayers should be audited or pursued for collections, and by prioritizing these enforcement activities to increase efficiency and outcomes.

Main Provisions

• Program activities: The commissioner of revenue may implement a program that uses advanced tax analytics and business intelligence tools to identify high-risk taxpayers, guide audits and collections, and prioritize enforcement efforts to improve the department’s return on its enforcement work.
• Implementation: The commissioner may enter into contracts to obtain or create these tax analytics and BI tools. Any contracts must follow applicable statutes governing procurement (specifically Minnesota Statutes section 16C.072).
• Priority targets: The program should focus compliance and enforcement efforts on:
  • Corporations and complex passthrough entities under corporate franchise taxes and individual income taxes
  • Individual income taxpayers reporting more than $500,000 in taxable income
  • Businesses subject to sales and use tax

Funding and Fiscal Impact

• An appropriation of $5,000,000 from the general fund for fiscal year 2027 is provided to support the tax compliance analytics and business intelligence tools program. This funding is intended to supplement, not replace, other funds available for these purposes.

Significance and Legal Changes

• Creates authority for a specialized, analytics-driven approach to tax enforcement within the Department of Revenue.
• Requires adherence to existing procurement laws for contracting (16C.072).
• Does not create new tax liabilities or change tax rates; it changes how enforcement activities can be planned and funded.

Implementation Notes

• The program relies on contracts to obtain or develop analytics and BI tools.
• The identified priority groups indicate where the state expects the new tools to have the most impact.

Relevant Terms tax compliance program; advanced tax analytics; business intelligence tools; tax assessment; tax collection; audits; enforcement; compliance; corporations; complex passthrough entities; corporate franchise tax; individual income tax; taxpayers; over $500,000; sales and use tax; general fund; fiscal year 2027; appropriation; Minnesota Statutes section 16C.072; contracts.