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SF 5193

Certain individuals and organizations convicted of and benefiting from fraud tax establishment

2025-2026 Regular Session Introduced by Doron Clark and 4 co-sponsors

Imposes a 100% tax on fraud proceeds to fund income and property tax relief, targeting convicted fraudsters, those determined by the commissioner, and certain intermediaries.

Referred to Taxes
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Bill Summary · SF 5193

Summary of SF 5193 (2025-2026) — Tax on Amounts Obtained Through Fraud

Overview

  • Jurisdiction: Minnesota
  • Bill: SF 5193
  • Session: 2025-2026
  • Status: Introduced and referred to Taxes (April 21, 2026)
  • Primary aim: Establish a new tax equal to 100% of amounts obtained through fraud, targeting individuals or organizations convicted of fraud, those determined by the commissioner to have obtained funds through fraud, and intermediaries who receive compensation to participate in fraudulent activities. Revenue is directed to the tax relief account for income or property tax relief.

Purpose and Intent

  • Create a punitive, targeted tax to recover funds gained through fraudulent activities involving state programs or appropriations.
  • Fund tax relief programs via a dedicated tax relief account within the special revenue fund.
  • Provide a framework for enforcement, collection, and appeals related to this fraud-based tax.

Key Provisions

Section: 295.90 – Tax on Amounts Obtained Through Fraud

  • Definitions
    • “Fraud”: Intentional deceit or dishonest means of obtaining state money from a state program or appropriation. The definition applies regardless of whether there is a conviction.
    • “Commissioner”: The Commissioner of Revenue.
  • Tax Imposed (Subd. 2)
    • A tax equal to 100% is imposed on the amount obtained by fraud in four categories:
    • By any individual or organization convicted by state or federal court of fraud.
    • By any individual or organization determined by the commissioner to have obtained fraud (investigative determination).
    • By any individual or organization that receives compensation from an entity described in (1) in exchange for participating in the fraudulent activity.
    • By any individual or organization that receives compensation from an entity described in (2) in exchange for participating in activity the commissioner has determined to be fraud.
    • The tax applies regardless of any restitution or penalties already imposed or paid.
  • Role of the Commissioner (Subd. 3)
    • The commissioner, with relevant law enforcement partners, must investigate individuals/organizations reasonably believed to have engaged in fraud.
    • The commissioner must establish a payment schedule and enforcement mechanisms for the tax.
    • Appeals of an order assessing the tax are subject to the procedures in § 270C.35 (existing Minnesota tax procedure/appeal framework).
  • Deposit of Money (Subd. 4)
    • Funds collected under this section must be deposited into the Tax Relief Account.
    • The Tax Relief Account must be used only for income tax relief, property tax relief, or both, as determined by law.
    • The Tax Relief Account is established within the Special Revenue Fund.

Effective Date

  • The section is retroactive for determinations of fraud made after December 31, 2019.

Who Would Be Affected

  • Individuals and organizations:
    • Convicted fraudsters (state or federal court convictions).
    • Individuals/organizations the commissioner determines have obtained funds through fraud.
    • Intermediaries who received compensation to participate in fraudulent activities (either from convicted entities or from entities determined to have fraudulently obtained funds).
  • Recipients of compensation who facilitated fraud (based on the specified clauses).

Procedural and Timeline Aspects

  • Investigations would be conducted by the Commissioner of Revenue in coordination with law enforcement and other agencies as applicable.
  • A formal payment schedule and enforcement mechanism would be established by the commissioner.
  • Appeals would follow the established tax appeal procedures in Minnesota (Section 270C.35).
  • Retroactive effectiveness covers fraud determinations made after December 31, 2019, implying possible retroactive implications for cases identified previously.

Potential Impacts and Considerations

  • Adds a stringent 100% tax on fraud proceeds, potentially increasing deterrence for fraud against state programs.
  • Creates a dedicated funding stream for tax relief programs, potentially expanding relief initiatives.
  • Could raise questions about (a) the evidentiary standards for “determined by the commissioner to have obtained fraud,” (b) how restitution interacts with the tax liability, and (c) due-process considerations given retroactive applicability to post-2019 determinations.
  • May affect fraud enforcement strategies, including collaboration with law enforcement and how intermediaries are identified and treated.

If you’d like, I can provide a side-by-side comparison with existing Minnesota tax provisions or a plain-language glossary of terms used in this bill.

Compiled from official sources — confirm details with the bill’s official record.

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