TAX LAW
Prepared by:
Ron Elwood, Staff Attorney
Legal Services Advocacy Project
651-222-3749, ext. 109
relwood@mnlsap.org

I. DEPENDENT CARE CREDIT
Chapter 88, Article 1, Section 9 (HF 1298)
Amends Minn. Stat. § 290.067, subd. 2a
Effective for taxable years beginning after December 31, 2008

Adds unemployment insurance to the calculation of income for the purposes of determining the state's dependent care credit.

II. FUNDING FOR COUNTY PROVISION OF HUMAN SERVICES
Chapter 88, Article 2, Section 48 (HF 1298)
Effective May 17, 2009

Directs DHS to develop a proposal to transition from current maintenance of effort and matching fund requirements to a new consolidated local county property tax contribution across all mandated health and human services. Directs DHS to consult with: (1) county representatives; (2) organizations representing recipients; and (3) the Department of Revenue. Among the criteria the group is directed to consider are: (1) predictability; (2) ease of administration; (3) maintenance of current levels of service; and (4) ensuring equal access by citizens. Requires a report to the Governor and legislative committees with jurisdiction over health and human services by February 1, 2010.

III. HOMESTEAD AND RENTERS CREDIT CALCULATION
Chapter 88, Article 1, Section 11 (HF 1298)
Amends Minn. Stat. § 290A.03, subd. 3
Effective for property tax refunds based on property taxes payable after December 31, 2009, and rent paid after December 31, 2008, and thereafter

Adds unemployment insurance to the calculation of income for the purposes of determining the state's homestead and renters' credit.

IV. RENTERS' CREDIT APPROPRIATION

Reduces expenditures for this program, through unallotment, by 27% or almost $51 million for 2010 for rent paid in 2009.

V. SENIOR CITIZENS' PROPERTY TAX DEFERRAL PROGRAM
Chapter 88, Article 2, Section 26 (HF 1298)
Amends Minn. Stat. § 290B.03, subd. 1
Effective July 1, 2009, and thereafter

Relaxes the qualifications for the deferral program. Requires only one spouse, not both spouses, to be at least 65 years old at the time the first property tax deferral is granted, but adds that the other spouse must be at least 62 years old.

VI. TAX PREPARER REGULATION
Chapter 88, Article 11, Sections 3 and 4; and Article 12 (HF 1298)
Amends Minn. Stat. §§ 270C.445; and 270C.446, subds. 2 and 5
Adds Minn. Stat. § 270C.445, subds. 2(g), 2(h), 2(i), 3a, 4a, 4b, and 5b
Various effective dates

A. Applicability
Expands the applicability of the Refund Anticipation Loan (RAL) protections to those who "facilitate" transactions. Defines "facilitate" broadly to mean: a person, individually or in conjunction or cooperation with another, who (1) accepts an application for a refund anticipation loan; (2) pays the proceeds, through direct deposit, a negotiable instrument, or any other means, of a refund anticipation loan to a client; or (3) offers, arranges, processes, provides, or in any other manner acts to allow the making of, a refund anticipation loan.
Adds Minn. Stat. § 270C.445, subd. 2(h)
Effective August 1, 2009

B. Exemption
Exempts nonprofit organizations providing tax preparation services under the Internal Revenue Service Volunteer Income Tax Assistance (VITA) Program or Tax Counseling for the Elderly (TCE) Program from compliance with standards of conduct and disclosure requirements.
Amends Minn. Stat. § 270C.445, subd. 1
Effective August 1, 2009

C. New Standards
Adds seven standards to the 12 existing ones, including prohibitions against: (1) commingling client and preparer funds; (2) failing to act in the client's best interests; (3) failing to disclose all material facts of which the preparer has knowledge which might reasonably affect the client's rights and interests; (4) violating state and federal debt collection laws; and (5) including specified anti-consumer provisions in contracts.
Amends Minn. Stat. § 270C.445, subd. 3
Effective August 1, 2009

D. Refund Anticipation Loans and Refund Anticipation Checks (RACs)

1. Contracts

a. Written Contracts Required
Requires all contracts for RALs and RACs to be in writing. Adds Minn. Stat. § 270C.445, subd. 3a
Effective August 1, 2009

b. Deduction from Refunds Limited
Prohibits any provision that, directly or indirectly, allows for a deduction for any amount other than the fees for tax preparation and the RAL or RAC.
Adds Minn. Stat. § 270C.445, subd. 3a
Effective August 1, 2009

c. Mandatory Arbitration Limited
Requires that tax preparers permit clients to opt out of mandatory arbitration clauses. Voids any arbitration ruling if the dispute involves a violation of Minnesota statutes governing tax preparers. Requires disclosure of client rights involving mandatory arbitration.
Adds Minn. Stat. § 270C.445, subd. 3a
Effective August 1, 2009

d. Right to Rescind
Provides taxpayers with the right to rescind a RAL on or before the close of business of the next business day after it was taken. Makes rescission effective when the client: (1) provides written notification to the tax preparer of the rescission, and, if applicable, (2) either returns the original check issued for the loan, or tenders the amount of the loan. Allows the tax preparer to charge a fee to rescind only if the preparer has already opened an account at a bank to receive an electronic transfer of the refund. Limits the rescission fee to the amount the bank charges the tax preparer.
Adds Minn. Stat. § 270C.445, subd. 5b
Effective August 1, 2009

2. Disclosures

a. Addition to Itemized Bill Disclosure
Requires tax preparers to separately itemize each fee associated with a RAC.
Amends Minn. Stat. § 270C.445, subd. 5
Effective August 1, 2009

b. Language Requirement
Mandates that all required disclosures be made in the client's primary language, if the tax preparer advertises in that language.
Amends Minn. Stat. § 270C.445, subd. 4
Effective August 1, 2009

c. New RAC Disclosure Required
Adds a disclosure requirement if the tax preparer offers a RAC, informing the client, among other things, that the client is not obligated to take a RAC to get a refund.
Adds Minn. Stat. § 270C.445, subd. 4b
Effective August 1, 2009

E. Private Right of Action
Adds statutory damages of twice the sum of: (i) the tax preparation fees; and (ii) if the plaintiff violated any of the provisions governing RALs, all interest and fees for the loan. Provides that a private action taken under Minn. Stat. § 8.31 is in the public interest.
Amends Minn. Stat. § 270C.445, subd. 7
Effective August 1, 2009

F. Publication of Convicted Tax Preparers

1. Limit on Publication
Clarifies that the Department of Revenue must publish the names of tax preparers who have failed to file or pay taxes or committed other fraudulent acts only if they do so in their capacity as tax preparers.
Amends Minn. Stat. § 270.446, subd. 2
Effective May 17, 2009

2. Removal from Published List
Requires the Department of Revenue to remove from the list a tax preparer who has satisfied all sentences imposed. Clarifies that all conditions for removal must be demonstrated to the Department of Revenue.
Amends Minn. Stat. § 270.446, subd. 5
Effective May 17, 2009