HF4754

Purpose

The bill would create a dedicated taxpayer refund account and require certain recovered or unneeded state funds to be deposited there. It would then use that money to issue annual taxpayer refunds to eligible Minnesota residents, with rules for how much to refund, who qualifies, and when refunds are sent.

Main provisions

• Establishment of the taxpayer refund account in the special revenue fund.
  • The account holds money deposited there and any interest earned.
  • Funds in this account are nonlapsing and can only be used to issue taxpayer refunds.
• Administration and record-keeping.
  • The Commissioner of Management and Budget (MMB) would manage the account and keep records of deposits, sources, and balances.
  • Interest earned goes into the same account.
• Deposit of recovered funds into the account.
  • Recovered funds include money from nondesignated civil judgments or settlements, fraud recovery actions, overpayment recovery actions, nondesignated administrative fines or penalties, reimbursements or returns of money previously disbursed, and criminal restitution not designated for a specific victim or entity.
  • Some funds are excluded (e.g., funds required by federal law to be used for a specific purpose, or funds directed by a court to a specific victim or entity).
  • Agencies must transfer recovered funds to the Commissioner of Management and Budget within 60 days of receipt.
• Annual distribution of funds.
  • At the end of each legislative session, the balance is reviewed.
  • If the balance exceeds $300,000,000, refunds must be disbursed. If not, the funds carry over to the next session.
  • The refund amount for each eligible taxpayer is determined using a proportional or per capita formula established by rule.
  • Eligible taxpayers are individuals who filed a Minnesota individual income tax return for the most recent tax year. The Minnesota Department of Revenue will help determine who qualifies.
• Timing and method of refunds.
  • Refunds must be issued no later than 120 days after adjournment and paid as direct payments from the treasury.
• Rulemaking.
  • The Commissioner must adopt rules to implement the section, including the distribution formula and processing procedures.

Significance and changes to existing law

• Creates a new, dedicated source of funds specifically for taxpayer refunds, funded from recovered and non-designated state money.
• Sets explicit thresholds and timing for when refunds are paid.
• Introduces a formal process for determining eligibility and distributing refunds, including interagency collaboration with the Department of Revenue.
• Requires administrative rulemaking to implement the distribution method.

How this affects governance and finances

• The state would keep recovered, non-designated funds in a single account dedicated to refunds rather than using them for other purposes.
• Refund timing and amounts would be governed by formulas and rules rather than discretionary decisions each year.
• There is a clear mechanism to convert certain recovered funds into direct taxpayer payments.

Practical impact for residents

• Eligible Minnesota residents could receive a direct refund if the fund balance meets the threshold.
• The amount per person would depend on the total balance and the formula set by rules.
• Refunds would come from the state treasury within a defined timeframe after the legislative session ends.

Potential considerations

• The $300,000,000 threshold is a key trigger for whether refunds are issued in a given year.
• The determination of eligibility relies on filing Minnesota individual income tax returns and collaboration with the Department of Revenue.
• The balance management and rulemaking process will require ongoing oversight and compliance.

Relevant Terms taxpayer refund account special revenue fund recovered funds nondesignated civil judgments settlements fraud recovery actions overpayment recovery actions nondesignated administrative fines or penalties reimbursement return of money previously disbursed by the state criminal restitution not designated by a court 60 days 60-day transfer requirement annual distribution adjournment sine die $300,000,000 refund threshold proportional formula per capita formula eligible taxpayer Minnesota individual income tax return Department of Revenue commissioner of management and budget rulemaking direct payments treasury account nonlapsing interest credited to account basis for distribution payments timeline