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The Minnesota Department of Revenue may assess penalties and interest on income tax returns. It?s important to understand these penalties and when we may impose them.?
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Type of Penalty
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When It Applies
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Late Filing
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Your client has an unpaid balance and files a Minnesota income tax return more than six months after the due date. Generally, there is no penalty for filing late for a refund (see ?Extended Delinquency for Missing Returns? in this table).
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Late Payment
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Your client has an unpaid balance and they pay income tax after the due date.
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Extended Delinquency for Missing Returns
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Your client receives a Request for Missing Return letter and fails to respond within the time allowed on the letter (normally 30 days). If your client files after this timeframe and is due a refund, this penalty still applies.
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Late Payment for Tax Assessments
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Your client receives a Notice of Change letter and fails to pay any tax owed within 30 days of the assessment date (or 30 days after an appeal resolution).
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Intentionally file a false or fraudulent return to claim a refundable credit
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Your client fraudulently claims a refundable credit.
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Underpayment of Estimated Tax
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Your client?s tax liability is more than $500 after subtracting Minnesota withholding and refundable credits. Also applies if your client did not make Minnesota estimated payments on time.??
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For more details on these penalties, see our Penalties and Interest for Individuals page.
Interest Rate
We charge interest on tax and penalty from the time a debt is past due until it is paid in full. The interest rate for 2023 is 5%.
Worksheet to Determine Penalty and Interest
If your clients file or pay after the due date, calculate the penalties and interest they will owe. To do this, complete the ?Worksheet to Determine Penalty and Interest? on page 20 of the instructions for 2022 Form M1, Individual Income Tax. If you do not complete the worksheet, we will add the amount of interest and penalty to your clients? amount owed.
Questions?
Contact us.
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