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The Minnesota Department of Revenue assesses 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.
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Late Payment
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Your client has a balance they pay after the due date.
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Extended Delinquency for Missing Returns
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Your client does not respond to a Request for Missing Return letter 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 does not 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. This 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 webpage.
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 2024 is 8%.
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 22 of the 2023 Form M1, Individual Income Tax Instructions and enter the amount on line 28 of their Form M1. If you do not complete the worksheet, we will add the amount of interest and penalty to the amount your client owes.
Questions?
Contact us.
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