Tax establishment on certain individuals and organizations convicted of and benefitting from fraud
Summary
SF5195 would create a new Minnesota tax on amounts obtained through fraud. The bill defines fraud as the intentional use of deceit or dishonest means to obtain state money from a state program or appropriation, excluding tax overpayment refunds, and applies the tax even if no criminal conviction occurred. A 100 percent tax would be imposed on amounts obtained by individuals or organizations convicted of fraud, determined by the commissioner to have obtained money by fraud, or compensated for participating in fraudulent activity tied to either a conviction or a commissioner determination.
The bill directs the commissioner of revenue to investigate suspected fraud in consultation with law enforcement or other agencies, establish payment schedules and enforcement methods, and handle appeals under existing tax appeal procedures. Revenue collected would be deposited into a newly created tax relief account in the special revenue fund and used only for income or property tax relief. The proposal would apply retroactively to fraud determinations made after December 31, 2019.
Impact
This bill would add a new section to Minnesota Statutes chapter 295, creating a state tax mechanism aimed at recouping amounts obtained through fraud against state programs. It expands the commissioner of revenue’s role by authorizing investigations, assessments, and enforcement actions related to fraud-based tax liability, while also creating a new tax relief account to receive collections. The bill would affect individuals, organizations, and potentially third parties paid to participate in fraudulent conduct, and it would apply regardless of restitution or other penalties already imposed.
Sentiment
Based on the bill text and available context, the measure appears to be framed as an anti-fraud and tax-relief proposal rather than a broad tax increase. There is no recorded committee debate or vote history in the provided materials, so sentiment cannot be measured from legislative discussion. The authorship suggests support from lawmakers interested in fraud enforcement and tax relief, but the absence of transcript or vote data means no clear consensus or opposition is documented here.
Contention
The main points of contention likely concern the breadth of the commissioner’s authority and the bill’s use of a tax, rather than a criminal or civil recovery tool, to address fraud. The bill allows the commissioner to determine that fraud occurred without a conviction, which could raise due process and evidentiary concerns. Retroactive application to fraud determinations after December 31, 2019 may also be controversial, as could the inclusion of people or organizations compensated for participating in the conduct, even if they were not the primary actors.
Certifications in the paid family and medical leave insurance program by foreign providers limited, and suspension of certifications based on credible allegations of fraud and certain convictions required.