Frequently Asked Questions for Lenders

Customers can use two types of lenders for K-12 Education Credit assignments:

• A financial institution (a state or federally chartered bank, savings bank, savings association, or credit union)
• A tax-exempt organization under section 501(c)(3) of the Internal Revenue Code

You must be registered with the Minnesota Department of Revenue as a financial institution or tax-exempt organization.

You must also verify on Form M1EDA, Assignment of Income Tax Refunds, that the product or service provided has been certified by the Minnesota Department of Education as qualifying for the K-12 Education Credit. For more information on this requirement, see K-12 Education Credit and Subtractions on the Department of Education website.

Do my customers qualify for this program?

To qualify for this program, your customers must qualify to claim the K-12 Education Credit. To determine if they qualify for this credit, see the following resources:

• Instructions for Schedule M1ED, K-12 Education Credit
• Qualifying Child for the K-12 Education Credit
• Qualifying Expenses for the K-12 Education Credit
• K-12 Informational Handout in English
• K-12 Informational Handout in Spanish
• K-12 Informational Handout in Hmong
• K-12 Informational Handout in Somali

You must disclose to customers, in plain language, that:

• They have entered into a loan agreement, which must be in a written format.
• They have given up their Minnesota income tax refund to pay for that loan.
• The K-12 Education Credit will generate a refund equal to 75 percent of the amount paid for qualified expenses.
• The amount of the refund that can be assigned is limited to $1,000 per qualifying child in grades K-12.
• You (the lender) will receive any refunds up to the assigned amount, and the customer will only receive the amount of refunds exceeding that amount.

You must also disclose to customers, in plain language:

• The cost of each product or service for which the vendor separately charges the customer.
• Any fees charged to the customer for tax preparation services.
• Information on available free tax preparation services.

Have your customer complete Form M1EDR, Authorization to Release Tax Information for Assignment of Refunds, and mail it to the address on the form. After processing the form, we will send you a letter with your customer’s tax debt information.

Once you receive this letter, have your customer complete Form M1EDA, Assignment of Income Tax Refunds, and mail it to the address on the form. We will send your customer a letter confirming the assignment or explaining why the assignment was denied. We will send you a copy of this letter.

If your customer’s Minnesota income tax return results in a refund, we will send payments through our e-Services system after all of the following occur:

• The customer submits their return.
• We verify their K-12 Education Credit.
• We process their return.

No. If the return results in a refund, we will first use the refund to:

• Satisfy your customer’s delinquent tax obligations owed to the state, if any.
• Pay claimant agencies to satisfy any revenue recapture claims filed against your customer, if any.
• Pay lenders to satisfy assignments based on the order we received them.

Your customer must file Form M1EDA, Assignment of Income Tax Refunds, by the end of the year (December 31) of the same year of the tax return with the assigned credit. For example, if your customer assigns the K-12 Education Credit from their 2019 state income tax return (due in April 2020), they must file Form M1EDA by December 31, 2019.

Yes. Third-party vendors receiving payment of the amount secured by an assignment must disclose to the customer, in plain language:

• The cost of each product or service for which the third-party vendor separately charges the customer.
• Any fees charged to the customer for tax preparation services.
• Information on available free tax preparation services.

Send a letter to notify us and include the customer’s name and Social Security number. Mail to:

Minnesota Department of Revenue
P.O. Box 67774
St. Paul, MN 55146-0774