Minnesota Senate Bill SF1096

Minnesota 2025-2026 Regular Session

• Introduced: 2/6/25
• Refer: 2/6/25

Caption

Individual income tax and corporate franchise tax refunds modifications; interest calculated on payments of estimated tax inclusion in refund requirement

Summary

SF1096 would change Minnesota’s refund rules for individual income tax and corporate franchise tax by requiring refunds to include interest on certain estimated tax payments. Under current law, taxpayers who overpay tax may receive a refund or credit of the excess amount; this bill expands the definition of “excess tax” to include interest calculated on each installment of estimated tax paid by S corporations, partnerships, and corporations. The interest would run from the date each estimated payment is made until the earlier of the refund claim date or the tax due date, using the same interest rate that applies when taxpayers owe interest to the Department of Revenue. The bill also makes conforming changes to the refund statute governing claims, overpayments discovered during examination, withholding and credit overages, entertainment tax refunds, and surety deposits for construction contracts. It preserves the general rule that the commissioner of revenue must refund overpayments and appropriates money from the general fund to pay refunds under the section. The effective date applies to refunds due on taxes paid for taxable years beginning after December 31, 2024.

Impact

The bill would amend Minnesota Statutes section 289A.50, subdivision 1, by expanding what counts as a refundable overpayment to include interest attributable to estimated tax installments for pass-through entities and corporations. This would affect refund calculations administered by the Department of Revenue and could increase state refund obligations for qualifying taxpayers. It does not create a new tax, but it changes how refunds are computed and paid under existing individual income tax and corporate franchise tax law.

Sentiment

There is limited recorded legislative discussion or voting history available for SF1096, so the overall sentiment is difficult to gauge from committee activity. Based on the bill’s text and authorship, it appears to be a technical tax administration measure intended to align refund treatment with estimated tax payments and interest rules. The absence of recorded opposition or committee testimony suggests no clear public controversy is documented in the available materials.

Contention

The main point of potential contention is fiscal: requiring interest to be included in refunds could increase state expenditures and reduce net revenue, which may concern budget-focused lawmakers or the Department of Revenue. Another possible issue is administrative complexity, since the bill requires calculating interest on each estimated tax installment and applying the same rate used for taxpayer underpayments. No specific opposing arguments or named stakeholders appear in the available transcript or vote record.