1.1                                        A bill for an act
1.2     relating to tax compliance; providing for income tax return processing; requiring 
1.3     certain withholding returns be filed by electronic means; providing for a study 
1.4     of certain audit positions within the Department of Revenue; providing for a 
1.5     study of sales and use tax compliance assistance for taxpayers of limited English 
1.6     proficiency; imposing a civil penalty;amending Minnesota Statutes 2004, 
1.7     section 289A.09, by adding a subdivision; Minnesota Statutes 2005 Supplement, 
1.8     sections 270C.01, subdivision 4; 289A.60, subdivision 21; proposing coding for 
1.9     new law in Minnesota Statutes, chapter 270C.
1.10    BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.11        Section 1. Minnesota Statutes 2005 Supplement, section 270C.01, subdivision 4, is 
1.12    amended to read:
1.13        Subd. 4. Electronic means; electronically. "Electronic means" and "electronically" 
1.14    mean a method that is electronic, as defined in section 325L.02, paragraph (e), and 
1.15    that is prescribed by the commissioner. If permitted by the commissioner, it includes a 
1.16    telephone communication.
1.17    EFFECTIVE DATE.This section is effective July 1, 2006.

1.18        Sec. 2. [270C.415] INCOME TAX RETURN PROCESSING; AGREEMENT 
1.19    WITH INTERNAL REVENUE SERVICE.
1.20    The commissioner of revenue shall enter into an agreement with the United States 
1.21    Internal Revenue Service to participate in a tax processing program whereby the Internal 
1.22    Revenue Service processes electronically filed state returns together with the federal 
1.23    returns. If possible, the ability of taxpayers to file property tax refund claims under chapter 
1.24    290A with state income tax returns must be preserved.

2.1         Sec. 3. Minnesota Statutes 2004, section 289A.09, is amended by adding a subdivision 
2.2     to read:
2.3         Subd. 1a. Employer returns; electronic means. If an employer is required to 
2.4     remit deposits for wages paid by electronic means, under section 289A.20, subdivision 2, 
2.5     paragraph (d), the employer must file each return for wages deducted and withheld under 
2.6     section 290.92, subdivision 2a or 3, by electronic means.
2.7     EFFECTIVE DATE.This section is effective for returns due after June 30, 2006.

2.8         Sec. 4. Minnesota Statutes 2005 Supplement, section 289A.60, subdivision 21, is 
2.9     amended to read:
2.10        Subd. 21. Penalty for failure to make payment or file return by electronic 
2.11    means. (a) In addition to other applicable penalties imposed by this section, after 
2.12    notification from the commissioner to the taxpayer that payments are required to be made 
2.13    by electronic means under section 289A.20, subdivision 2, paragraph (e), or 4, paragraph 
2.14    (c), or 289A.26, subdivision 2a, and the payments are remitted by some other means, 
2.15    there is a penalty in the amount of five percent of each payment that should have been 
2.16    remitted electronically.
2.17    (b) In addition to other applicable penalties imposed by this section, after notification 
2.18    from the commissioner to the taxpayer that withholding tax returns are required to be filed 
2.19    by electronic means under section 289A.09, subdivision 1a, if returns are filed by some 
2.20    other means, a penalty is imposed in the amount of five percent of the tax payable on each 
2.21    return that should have been filed electronically.
2.22    (c)  After the commissioner's initial notification to the taxpayer that payments or 
2.23    returns are required to be made by electronic means, the commissioner is not required to 
2.24    notify the taxpayer in subsequent periods if the initial notification specified the amount 
2.25    of tax liability at which a taxpayer is required to remit payments or file returns by 
2.26    electronic means. The penalty can be abated under the abatement procedures prescribed 
2.27    in section 270C.34, subdivision 2, if the failure to remit the payment electronically is 
2.28    due to reasonable cause.

2.29        Sec. 5. JOINT STUDY BY COMMISSIONERS OF REVENUE AND 
2.30    DEPARTMENT OF EMPLOYEE RELATIONS.
2.31    In order to increase compliance with income and franchise taxes and tax laws, the 
2.32    commissioners of the Departments of Revenue and Employee Relations, in consultation 
2.33    with the affected bargaining units, shall study the competitiveness of compensation of 
2.34    tax compliance auditors within the Department of Revenue. The study shall consider 
3.1     the performance of compliance auditors, including training, experience, employment 
3.2     classification, and duties. The study shall be completed by September 1, 2006, and the 
3.3     commissioner of employee relations shall implement its recommendations.
3.4     EFFECTIVE DATE.This section is effective the day following final enactment.

3.5         Sec. 6. SALES AND USE TAX; SERVICES TO TAXPAYERS WITH LIMITED 
3.6     ENGLISH PROFICIENCY.
3.7     The commissioner of revenue shall study and implement procedures and services 
3.8     that will assist sales and use taxpayers of limited English proficiency in complying with 
3.9     sales and use tax laws. The benefits of translating sales and use tax fact sheets, forms, 
3.10    and instructions into Spanish and other languages must be considered. In addition, the 
3.11    commissioner shall study how to direct taxpayers of limited English proficiency who 
3.12    contact the Department of Revenue by telephone to assistance in Spanish and other 
3.13    languages as determined by the commissioner. The commissioner shall report on the 
3.14    results of the study and a plan to implement them to the senate and house of representatives 
3.15    committees with jurisdiction over tax laws by February 1, 2007.
3.16    EFFECTIVE DATE.This section is effective the day following final enactment.