Jeopardy collection occurs when a debtor’s actions necessitate the Minnesota Department of Revenue to immediately take enforced collection action to expedite collection of a debt.
A jeopardy situation exists when the department has reasonable cause to believe a debtor intends to leave the State of Minnesota’s jurisdiction or liquidate or conceal assets that could be used to pay their debts.
The Commissioner of Revenue can demand immediate payment and proceed with enforced collection action if the debtor does not pay. View the statutes (Minnesota Statutes, section 270C.36, subdivision 2; and M.S.297D.12).
The department must send the debtor a letter explaining the information used to determine a jeopardy situation within five days of the collection. The debtor then has 30 days to request an administrative review of the enforced collection action. The debtor can also appeal the administrative review decision in Minnesota Tax Court. A decision issued by the Tax Court cannot be appealed by either party.
Property seized in a jeopardy collection can be sold after the appeal period expires. If the debt remains unpaid for more than 30 days after the judicial system issued a final determination, the department can sell the seized property. Exceptions to this include when:
- The debtor gives written consent to the sale.
- The property is perishable.
- The price or value of the seized property greatly diminishes with time.
- The property is not cost effective to store.
When the seized property is part of a probate proceeding, it cannot be sold until the probate is completed or unless the court orders it sold.
A debtor can reclaim seized property with a surety bond equal to the appraised value of what the department determines the debtor’s interest in the property to be. The debtor can also make a secure payment in the amount the commissioner sets in exchange for return of the property. The determined amount will be no more than twice the amount of the debt.
While Minnesota Tax Court has jurisdiction over the appeal, the District Court may grant an injunction to prohibit enforcement of a seizure or to prohibit the sale of seized property.
