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HF 3909

Tax on gross revenues of private detention facilities imposed.

2025-2026 Regular Session Introduced by Jess Hanson

Imposes a tax on the gross revenues of private detention facilities operating in Minnesota.

Author added Xiong
#correctionsandcorrectionsdepartment #taxation
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WeVote Research Nonpartisan
Bill Summary · HF 3909

Bill Summary: HF 3909 (Minnesota, 2025-2026)

Title

Tax on gross revenues of private detention facilities imposed.

Purpose and Intent

HF 3909 proposes imposing a tax on the gross revenues earned by private detention facilities operating within Minnesota. The bill aims to generate state revenue by levying a tax on the primary income source of these facilities—the total gross receipts from their operations—rather than on profits or specific services. The sponsoring language indicates a fiscal measure intended to broaden the tax base related to criminal justice and detention-related services.

Key Provisions and Changes

  • Tax Base: Establishes a tax on the gross revenue (gross receipts) earned by private detention facilities. This would apply to the total revenues generated from operations within the state.
  • Tax Rate and Calculation: (Not specified in the available text; the bill would typically designate a percentage or tiered rate applied to gross revenues. The actual rate, exemptions, deductions, and apportionment rules would be defined in the bill’s full text.)
  • Who Pays: Private detention facilities operating in Minnesota would be liable for the tax. This includes non-governmental entities that operate detention centers under contract or license.
  • Use of Revenue: (Not specified in the provided information. Often such taxes specify how revenue is allocated, e.g., to state general fund, corrections programs, or rehabilitation services.)
  • Compliance: Likely requires quarterly or annual tax filing, reporting of gross receipts, and potential withholding or reporting requirements; specifics would be detailed in the bill’s provisions.
  • Administration: Administered by the Minnesota Department of Revenue or a specified state tax authority, including enforcement mechanisms for non-compliance.

Affected Parties

  • Private Detention Facilities: Primary impact, as they would owe the proposed tax on gross revenues.
  • State Revenue System: Potentially increases state tax collections, contributing to the general fund or targeted programs (subject to the bill’s allocation provisions).
  • Contracting Entities/Operators: Private companies operating detention facilities under contract with government or private entities would face new tax obligations.
  • Other Stakeholders: Possible indirect effects on contracts, service costs, and up-stream/down-stream budgeting for public safety and corrections.

Procedural and Timeline Aspects

  • Legislative History:
    • Introduced and read for the first time on March 2, 2026, and referred to the Taxes committee.
    • On March 25, 2026, Xiong was added as an author (co-sponsor: Jess Hanson).
  • Next Steps: If enacted, the bill would advance through committee deliberations (markup, amendments), then to the floor of the Minnesota House for debate and potential passage, before moving to the Senate and eventual governor’s signature or veto. The specific schedule would depend on committee workload and the legislative calendar.
  • Effective Date: The bill text would specify when the tax would take effect (e.g., a future tax year), and whether there are transitional provisions for existing facilities.

Notes and Considerations

  • The provided information does not include the proposed tax rate, exemptions, deductions, definitions of “gross revenues” for the purposes of the tax, or allocation of revenue.
  • Details such as nexus rules, apportionment for facilities operating across multiple jurisdictions within Minnesota, and any penalties for non-compliance are not specified here.
  • As a fiscal measure affecting private detention facilities, the bill could have policy and economic implications for operating costs, contract pricing, and potential impacts on detainee services, depending on how the tax interacts with contracts and budgeting.

If you would like, I can incorporate the bill’s exact text to extract the specific rates, definitions, exemptions, and allocation provisions for a more precise summary.

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

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