Bill
HF 4971
Minnesota would impose new gross receipts taxes on lodging services and pay television by lodging facilities, with credits for taxes paid elsewhere and funds directed to the Victim
Purpose and overall aim
- HF 4971 proposes a two-part package: (1) create a tax return checkoff as part of individual income tax, and (2) impose new gross receipts taxes on lodging facilities for lodging services and for pay television services, with conforming changes across related tax provisions.
- The lodging and pay-television gross receipts taxes would be administered alongside existing Minnesota tax regimes (e.g., Chapter 297A), with separate collection options and credits for taxes paid to other states.
Main provisions
1) Individual income tax checkoff (tax return checkoff)
- The bill title indicates an establishment of a tax return checkoff, which typically allows taxpayers to designate a portion of a refund to support a specific program or fund. The full text excerpt provided does not include the complete checkoff language, but it is intended to appear within or alongside the income tax return processes.
- Implication: Creates an optional earmark on individual income tax returns to fund a designated purpose (not specified in the excerpt).
2) Lodging and pay television services gross receipts tax (Minnesota Statutes, new section 295.90)
- New section targets lodging facilities that sell lodging services and, separately, those that sell pay television services.
- Definitions:
- “Gross receipts”: total amount received for lodging services and pay television services, excluding taxes charged directly to customers and excluded third-party reimbursements; also excludes nondiscount amounts not reimbursed by a third party.
- “Lodging services” and “pay television service” as defined by existing Minnesota statute references (section 297A.61).
- “Retail sale” and “sales price” aligned with existing definitions.
- Subdivision 2 – Gross receipts tax on lodging services:
- A tax is imposed on lodging facilities that sell lodging services in Minnesota.
- Tax rate: stated as “... percent” (the exact rate is not provided in the excerpt).
- Collection: Lodging facilities may opt to collect the tax from purchasers if the tax is separately stated on receipts.
- Bundled transactions: If lodging and pay television are bundled, the entire bundled price is subject to the lodging services tax.
- Interaction with other taxes: Tax is in addition to any other tax on lodging services.
- Subdivision 3 – Gross receipts tax on pay television services:
- A tax is imposed on lodging facilities that sell pay television services not included in the lodging price.
- Tax rate: stated as “... percent” (the exact rate is not provided in the excerpt).
- Collection and bundled transactions: Similar to lodging services, separate statement optional, and bundled pricing results in the entire bundled price subject to the tax.
- Subdivision 4 – Credits for taxes paid to other states:
- Lodging facilities that paid gross receipts taxes to another state on the same gross receipts may receive a credit up to the lesser of (1) tax actually paid elsewhere or (2) Minnesota tax on those receipts.
- Subdivision 5 – Administration:
- The new tax follows applicable provisions of Chapters 270C and 289A for audit, assessment, refunds, penalties, interest, enforcement, collection, and appeals.
- Subdivision 6 – Returns and payment:
- Lodging facilities must report and remit the tax using a form and filing cycle prescribed by the commissioner, aligned with the filing cycle for 289A.20(4) and Chapter 297A.
- Interest rules for overpayments or refunds follow standard timing rules (date of payment vs. refund date).
- Subdivision 7 – Deposit of revenues:
- Revenues, penalties, and interest from this tax are deposited into the Minnesota Victims of Crime account.
- Subdivision 8 – Personal debt:
- The tax remains a personal debt of the taxpayer (or fiduciary liability in fiduciary contexts) from the time the liability arises, regardless of payment timing.
Effective date
- The lodging/pay television gross receipts tax is effective for gross receipts received after June 30, 2026.
Who is affected
- Lodging facilities in Minnesota that provide lodging services and/or pay television services.
- Customers purchasing lodging or pay television services at lodging facilities may see the tax reflected on receipts (if separately stated).
- Tax administration and compliance staff within the Minnesota Department of Revenue, and lodging industry businesses subject to the new taxes.
- Potential cross-border considerations for facilities with customers from other states due to the credit provision.
Key considerations and potential impact
- Revenue use: Section 7 indicates revenues go to the Minnesota Victims of Crime account, linking funding to a public safety-related purpose.
- Economic impact on lodging facilities: New gross receipts taxes could affect pricing, ancillary services, and bundling strategies. Tax would apply to bundled charges, potentially broadening the tax base beyond base lodging rates.
- Interstate considerations: The credit for taxes paid to other states provides a mechanism to avoid double taxation on receipts taxed elsewhere.
- Administrative burden: New tax requires additional filing, collection, and audit processes, with alignment to existing tax filing cycles.
Note on missing details
- The exact tax rates (percentages) for both lodging services and pay television services are not specified in the provided text and would be critical for calculating actual fiscal impact. The effective date is specified, ensuring a June 30, 2026 deadline for gross receipts.
Compiled from official sources — confirm details with the bill’s official record.
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