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 details, review K-12 Education Credit and Subtractions on the Department of Education website.

To qualify for this program, your customers must qualify to claim the K-12 Education Credit. To determine if they qualify for this credit, review these 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
• K-12 Informational Handout in Karen

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% 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

They must 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 we process the customer’s return.

If the return results in a refund, we will use it for these items before paying you:

• Delinquent tax obligations owed to the state
• Revenue recapture claims filed against your customer
• Other loan assignments based on the order we received them 

They 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.

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