Why is this goal important?
Because the revenue system relies on voluntary compliance, it must have the support and cooperation of its citizens. The department’s role is to make it easy and convenient for taxpayers to fulfill their filing and paying obligations. The department also has an obligation to manage its operations as efficiently as possible, and to make prudent investments in appropriate technology.

Electronic filing and paying helps us accomplish both goals. For taxpayers, e-filing is fast, secure, and accurate; for the department and the state, e-filed returns and payments are less costly to process than paper returns.
 

How will this goal be accomplished?
Our transition from paper began in 1994, with mandatory paperless filing for the newly enacted MinnesotaCare tax. Since then, we have worked to shift other business taxes to e-filing and paying. In 2001, e-filing reached another milestone when the sales and withholding tax systems eliminated paper filing; businesses now file these returns via the Internet, or by telephone.

Individual income tax filers are also leaving paper behind. The department works to encourage e-filing through partnerships and information campaigns directed at individuals and tax preparers. In addition, we have worked with the IRS to increase the number of e-filings.
 

What is Revenue's progress to date?
● The number of returns filed electronically has steadily increased since 2001. This transition from paper to electronic filing is improving the speed, accuracy and convenience of tax filing for citizens. The result is that taxpayers who file electronically can receive their tax refunds in just a few days and about 98 percent of all income tax filings are error free.

In 2006, 65 percent of individual income tax returns and 15 percent of property tax refund returns were filed electronically. The department exceeded its 2006 electronic filing goals- 60 percent for individual income tax and 10 percent for property tax refund filers.

In FY 2006, the department exceeded its electronic return goals for business taxes-98 percent for sales and use tax returns and 99 percent for withholding returns.
● The number of payments made electronically is an indicator of improved efficiency of tax payment processing. Electronic payments are less costly to process. In 2006, 63 percent of payments for all tax types were made electronically. In terms of revenue, those payments accounted for 85 percent of dollars received.

● The department surveys citizens every two years to determine their satisfaction with the filing process. Their responses tell us whether we are achieving our goal of making it easy and convenient for taxpayers to fulfill their filing and paying obligations. According to the 2005 survey results, 93 percent of respondents said they were satisfied with the time it took to get a refund. Our goal is to increase that number to 98 percent by the time of the 2007 survey. Usefulness of the information received from the department was given a satisfaction rating of 75 percent in 2005. Strategies to improve these survey results and ultimately customer satisfaction with filing and paying, are being developed.

Learn more at:
http://www.taxes.state.mn.us/taxes/legal_policy/other_supporting_content/
leg_pol_other_publications.shtml

Why is this goal important?
In the last decade, the Internet has become a major channel for information and commerce. Meeting the needs of citizens and businesses for electronic services is essential to achieving voluntary compliance with the tax system.

How will this goal be accomplished?
We have created web and phone self-service systems to enable people to get the information they need to file and pay their taxes, check on their refunds, make payments, update their information, and set up payment plans for delinquent taxes.
 

What is Revenue's progress to date?
● Use of the department’s web services has grown dramatically. For example, in 2006, there were over 375,000 visits to the “Where’s My Refund” web application- 23 percent increase from 2005. This increase reflects taxpayer acceptance of and appreciation for the convenience of online services. With the growing reliance on our web services, fewer calls are coming in to the department's refund information phone line. In 2006, this service received 312,000 calls-a 15 percent decrease from 2005.

● In May 2003, we launched a new online service to make it easier for people with delinquencies to pay their tax debts. Today, 27 percent of the pay plans created were made on the web; our goal for 2007 is to increase this percentage to 30 percent.

● The department also offers e-services for businesses. In FY2007, 64 percent of new business registrations were created on the web. In 2007, the department launched a new service for employers that enables them to submit employee W-2 forms electronically.

Why is this goal important?
Minnesota is home to a growing number of limited English speakers; between 2000 and 2025, Minnesota’s Asian-Pacific population is expected to double, and its Hispanic population will be two and a half times what it is today. Keeping pace with demographic changes is essential in order to ensure that all citizens have access to the services and information they need to meet their tax obligations.

The economy continues to shift from industrial production to services; and traditional bricks-and-mortar businesses face increasing competition from the electronic marketplace. To ensure fairness, stability, and adequate revenues, the tax system must accommodate these changes.

Further, we must keep pace with changes in technology, both to protect our information and processes, and to improve the delivery of our services. We are moving our critical database and network components to newer technologies that will give us the flexibility to meet demands for services and will ensure the integrity of our information and processes.
 

How will this goal be accomplished?
To reduce the language barriers that keep new citizens from complying with the tax system, we have hired bilingual employees to provide income tax education services to the Hispanic, Asian-Pacific, and East African communities. We provide tax help and work to establish self-sustaining volunteer groups to provide consistent, year-to-year help in filing returns. We also provide key tax information in languages other than English on our website.

Our strategies call for greater integration of information, improved citizen access to services, and self-service capabilities for all users. We are working to reduce the department’s reliance on obsolete technology and to diminish the risk of system failures by replacing aged computer systems. Besides ensuring the stability of our applications and the integrity of our information, improved tools will enable us to provide better information to citizens and policy makers.
 

What is Revenue's progress to date?
●  Progress toward helping limited-English-speaking Minnesotans meet their tax obligations can be measured by the number of people served at volunteer tax preparation sites and the number of state tax returns completed. These department-sponsored sites serve non-English-speaking, low income, and elderly Minnesotans. By the end of 2006, the number of state tax returns completed for the 2005 tax year was 73,705, which represents a 2.6 percent increase over the number of returns completed for the previous tax year (71,856).

●  Since 2004, we have offered a bilingual English-Spanish version of the individual income tax and property tax refund instructions on our website. Other Spanish-language website offerings include income tax, sales tax, and property tax fact sheets. Our website also provides information on the Working Family Credit and the Taxpayer Rights program in eight languages other than English. In 2006, the department expanded its outreach by offering a Spanish-language sales tax workshop for new businesses.

● Increased reliance on new technology and the increase in the number of electronic and self-service transactions have helped reduce the overall administrative cost per transaction. As an example, in FY 2006, it cost $1.15 to process each transaction, which is 2 cents less per transaction than in FY 2005.

● In the last two years, we have advanced our modernization goals by replacing our aging network infrastructure, including updating our desktop and network operating systems; expanding the IP telephone system to regional offices; and installing a storage area network

● We also began the process of modernizing our property tax system and implemented a new system to accommodate the sales tax returns and payments that flow from the national Streamline Sales Tax Project system.

● Finally, we have converted paper partnership income tax returns to images, thereby reducing storage space needed for forms and giving employees immediate access to information, and scanned all correspondence from delinquent taxpayers, which has created a virtually paperless work environment in the agency's Collection Division.
 

Why is this goal important?
If Minnesota’s revenue system is to work well, fairness is essential; a fair system means that everyone pays the right amount of tax, no more, no less. However, a significant number of individuals and businesses with Minnesota tax liabilities do not pay all they owe, or do not file or pay at all. Noncompliance carries a substantial price tag: the Minnesota tax gap—the estimated difference between what is owed the state and what is actually paid—is $1.3 billion. To create a fairer tax system for all, these under-reporters and nonfilers must be brought into compliance.
 

How will this goal be accomplished?
We are focusing audit and enforcement activities on those who are furthest from compliance. Besides the revenues they produce, these activities carry an additional benefit, in that the visibility they generate also improves voluntary compliance.

In addition to audit and enforcement, we have formed partnerships with other states to simplify sales tax collection on out-of-state purchases, are working to identify ways to reduce the complexity of the sales tax laws, and are providing education opportunities for businesses. These efforts will help ensure that everyone is paying the right amount.

What is Revenue's progress to date?
● One measure of progress toward improving compliance is to track how much in increased revenues we are able to collect through stepped-up auditing and enforcement. In the 2004-2005 biennium, we collected approximately $92.2 million through these compliance initiatives—$30 million more than had been projected. The department received additional funds for FY 2006-2007; based on current collections, these initiatives are projected to bring in $124 million by the end of the biennium. This amount would be $33 million more than had been projected.

Learn more at:
http://www.taxes.state.mn.us/taxes/legal_policy/other_supporting_content/tax_gap_study.pdf

http://www.taxes.state.mn.us/taxes/legal_policy/research_reports/content/ tax_gap_study.shtml