When you’re audited by the Minnesota Department of Revenue, one of two things usually happens. The first, and ideal, situation is that the MDR verifies your tax information is correct and goes away satisfied. The second, which isn’t such good news, is that the agency determines you owe more tax and is prepared to collect it through:
- Levies
- Property liens
- Offsetting certain government payments
Fortunately, you have the right to appeal. In this complete guide to the Minnesota tax process, we explain your options when you don’t agree with an assigned tax liability and how a tax appeal lawyer at Pridgeon & Zoss, PLLC can help you protect your rights.
An Overview of Minnesota State Taxes
Minnesota state taxes include the following: business taxes and fees, individual and corporate income taxes, and sales and excise taxes.
Based on the information you provide during your audit, the Commissioner of Revenue may determine that you either owe taxes or should be denied a refund. After this determination, which is also known as an assessment, you will receive a letter, called an Order, detailing the following:
- How much tax the MNR has determined that you owe, including penalties and interest OR confirmation that your refund was denied
- The reason why you owe the amount or aren’t eligible for a refund
- Steps you can take to appeal this assessment
What is the Appeal Process in Minnesota?
Taxpayers who are notified that they owe tax or that their refund request has been denied can appeal administratively with the Appeals Office of the Minnesota Department of Revenue or appeal to the Minnesota Tax Court if they believe the determination is incorrect.
Administrative Appeals
With an administrative appeal, you can request reconsideration of the Commissioner’s order. It’s less formal than a tax court appeal and you don’t incur costs like filing fees.
Within 60 days of receiving the assessment, you must request the administrative appeal and provide a statement as to why you disagree with the findings. You may request a 30-day extension if you need additional time to prepare an appeal, as long as you do so within 60 days.
During the administrative appeal, the Appeals Office will assign the case to an Appeals Officer who will handle the appeal for the Department of Revenue. The Appeals Officer will probably request additional documentation and other information before reaching a final conclusion. Upon completion of an administrative appeal, the Commissioner will issue a determination stating the findings. In the event you disagree with the commissioner’s findings, you can request the Minnesota Tax Court to decide the dispute by filing a complaint within 60 days of the final order.
Tax Court Appeals
You can appeal to the tax court immediately after receiving the audit Order without appealing to the MDR Appeals Office or after going through the administrative appeals process.
If you decide not to request an administrative appeal, you have 60 days from the date of the Commissioner’s Order to appeal to the Minnesota Tax Court. Appeal filing deadlines can be extended by 30 days if requested within this 60-day period. You may appeal to the tax court under the regular or small claims division, and you must pay the requisite filing fee.
Small Claims Division
State tax cases heard in the small claims division involve tax amounts under $15,000. This division has reduced filing fees, however, you do not have the ability to appeal the tax court’s final ruling to the Minnesota Supreme Court. There is also no court reporter present at these hearings, so no court record is created for these cases, which further reduces the costs associated with this option.
Regular Division
State tax cases heard in the regular division are cases in which the amount in controversy is over $15,000. Regular division cases can be appealed to the supreme court. A taxpayer whose case meets the criteria for filing in the small claims division may still file in the regular division.
Can You Get a Refund?
Yes, if the Commissioner finds that you overpaid your state taxes, you may have the excess amount refunded to you. However, bear in mind that there are times when the state can keep your income or property tax refund to satisfy a debt. This is permitted by the Revenue Recapture Act. In cases where you owe money to a state or county agency, the Department of Revenue will likely send your refund to that organization.
If this happens and you believe you don’t owe money, you can write to the agency in question within 45 days of getting your notice. Known as a revenue recapture appeal, it gives you the opportunity to outline why the agency is not entitled to your refund. Acceptable reasons include:
- You don’t owe them money
- Your refund is protected from revenue capture because your original debt is less than $25, over six years old, a welfare overpayment, or a medical debt if your income was below a certain limit at the time you received care
A Note About IRS Audits
When you successfully appeal an IRS audit, you should also appeal your Minnesota tax audit if the resulting changes impacted your state taxes. When preparing to schedule an appeal, be sure to collect all IRS documents showing that the original audit was reversed or revised.
Do You Need a Lawyer to Help You Schedule an Appeal?
While there is no law requiring you to use an attorney to guide you through the appeal process in Minnesota, there are excellent reasons why you should, especially if the amount of money at stake is significant.
Minnesota’s tax appeal process can reduce your income or property tax payment and save you substantial amounts of money. In many cases, however, the process is complicated and requires a significant amount of time and expertise to complete. A Minnesota tax attorney can:
- Ensure that the correct paperwork is filed on time
- Assertively present your side of the dispute at all levels of appeal
- Prepare you for any necessary hearings
A knowledgeable lawyer is a valuable investment. At Pridgeon & Zoss, PLLC, we are in an excellent position to represent and advise the diverse range of people and businesses that call Minnesota home. We have two offices to provide easier access to clients facing challenging and sensitive tax matters, including:
- Individual taxpayers
- High net-worth taxpayers
- The self-employed
- Businesses of all sizes
- Technology companies
We understand the serious and sensitive nature of civil tax law disputes and strive to achieve the best possible result for every client.
Questions About the Appeal Process in Minnesota? Speak to a Tax Lawyer!
At Pridgeon & Zoss, PLLC, our experience makes the difference. We have over 70 years of combined experience in tax law practice, allowing us to successfully resolve regular and complex tax law issues.
Our tax attorneys have a unique understanding of how the state and federal authorities investigate and prosecute serious tax law violations. We are confident our firm can help you resolve your tax dispute or negotiate an affordable settlement option or offer in compromise.
For more information about our legal services or to discuss a state tax law matter with a Minnesota tax lawyer, please contact us to schedule a legal consultation. Located in Edina and Roseville, we serve clients throughout Minnesota and western Wisconsin and look forward to helping you put your tax controversy behind you.
