Revenue Recapture Related Information

The Minnesota Department of Revenue will not apply refunds to your agency's Revenue Recapture claims when a debtor is in bankruptcy. You must:

• Place a hold on any claims during bankruptcy proceeding (See Place a Claim on Hold)
• Cancel any claims for debts that are discharged in bankruptcy (See Cancel a Claim)

If you receive a refund from us after a debtor files bankruptcy, you must contact us. Include the:

• Customer name(s)
• Social Security number(s)
• Amount your agency received
• Revenue Recapture 10-digit account number
• Bankruptcy filing date

We will send you a Revenue Recapture Setoff Error letter requesting the funds be returned to us.

When a taxpayer receives a Revenue Recapture Notification, they have the right to request a contested case hearing before an administrative law judge with the Minnesota Office of Administrative Hearings (OAH). To do do:

• The taxpayer must send a written request to the agency.
• The request must be received within 45 days of the mailing date of the original notification or of the corrected notification . (See Minnesota Statute 270A.08.)

If a taxpayer contacts your agency and requests a contested claim hearing:

• Place the claim on hold until hearing is complete and it is determined if the debt is valid or the claim needs to be closed
• Respond as shown here:

For further questions about the hearing process, contact the Office of Administrative Hearings:

Phone: 651-361-7900
Fax: 651-539-0310
Email: oah.webmaster@state.mn.us  

We require you remove claims for deceased debtors before the statute of limitations for the debt expires.

We recommend removing non-expired deceased debtor claims 3.5 years after the due date of the final tax return. Refunds will not apply after that time. This allows your agency to write the balance off as uncollectible.

To determine if a customer is deceased, you can check with the Minnesota Department of Health for a death record. 

If you add a claim for a deceased customer, you must send notification to their estate within five days.

Exemption Qualifications for Medical Services Debts

Medical service debts are exempt from Revenue Recapture if the debtor's income was below Poverty (Medical) Income Guidelines at the time of the medical service. (See Minnesota Statute 270A.03 and Minnesota Rules 8165.0300.)

What Does an Agency Need to Determine Exemption Qualification?

Debtors must provide their federal tax return and all sources of income for the tax year they received the medical service to the claimant agency. Use the Poverty (Medical) Income Guidelines chart on this page to determine if the income is at or below poverty.

What qualifies as income?

For this purpose, income is the debtors' federal adjusted gross income plus any of the following income for both spouses:

• Nontaxable income
• Cash public assistance and relief
• Payments received through the Social Security Act
• Workers’ Compensation
• Disability income
• Lump-sum distributions

Note: Child support does not count as income.

Poverty (Medical) Income Guidelines

The following table shows Minnesota's Poverty (Medical) Income Guidelines. We base current year data on Federal Poverty Guidelines and adjust by state guidelines. (See M.S. 270A.03, subd 5.)

Note: If the debtor is married, include both spouses' incomes when applying these guidelines, unless they are legally separated.

The Minnesota Department of Revenue may take a married filer’s joint refund for debts owed by one spouse.

A spouse is not liable to a creditor for any debts of the other spouse (see Minnesota Statute 519.05). The other (nonliable) spouse may request a refund of their portion within 18 months of our recapture notification for that refund. 

If your agency receives a claim from a nonliable spouse, you must:

1. Determine how much of the original refund belongs to the nonliable spouse by using the calculation worksheet.
2. Contact the Revenue Recapture Program about returning the refund and include the:
   • Full name of the liable and nonliable spouse
   • Social Security Number for the liable spouse
   • Amount of the offset
   • Amount to be refunded
3. Update the claim balance in Revenue Recapture e-Services.

When your agency files a claim for a debt, you must send notice to the debtor's last known address no more than 30 days before and no later than five days after filing the claim. Your agency must retain a copy of the notification letter while the claim is open.

Notification Requirements

Your agency’s Revenue Recapture notice must be on agency letterhead and clearly state:

• The date or date range, reason, amount of debt, and total claim amount
• Your agency will apply the debtor’s state refunds to the debt until the debt is paid, canceled, or the statute of limitations expires
• The debtor may dispute recapture of their refund by requesting a contested case hearing
• Any other information required by law, depending on the type of debt or agency making the claim

Sample Revenue Recapture notifications

General Notification 

Assistance Claims Notification 

Medical Notification  Medical Notification (Spanish)

Public Housing Notification 

You must contact us before you refund Revenue Recapture overpayments of $40 or more. Instead of issuing a refund, you may need to return it to us.

Before you contact us:

• Review your recapture claim in Revenue Recapture e-Services
• Cancel or update the balance

When you contact us, include:

• Customer names
• Social Security Numbers
• Amount your agency received
• Amount of the overpayment
• Date your agency received the payment
• Reason for the overpayment
• 10-digit Revenue Recapture account number (email requests only)

Unless there is a judicial or administrative finding of an intentional program violation, you may not use Revenue Recapture to collect overpayments of public assistance in either of these situations: 

• The debtor is still a client of the assistance program and has not signed a waiver
• The debtor is no longer a client of the assistance program but currently receives food support, transitional child care, or transitional medical care

If the U.S. Postal Service returned your letter, you must check e-Services for a new address using the customer's name and Social Security Number. 

When referring to revenue recapture, the Statute of Limitations (SOL) is the length of time an agency may use the revenue recapture process to offset refunds and pay debts. Once the SOL expires, you must cancel the recapture claim.

State law governs most debt collection and sets the SOL to six years from the date of debt. (See Minnesota Statute 541.05.)

Some situations change the SOL for a debt. These include:

• Agency-specific statutes based on the debt type collected. For example, child support arrearage and restitution debts do not expire. If your agency governs under a statute that allows a longer SOL, contact the Revenue Recapture Program.
• Filing judgments before the SOL has expired allows you to use Revenue Recapture until the debt is paid.
• Voluntary payments restart the SOL from the date the payment is received. Your agency must update the SOL in e-Services.
• Signed waiver before the SOL has expired.

Revenue Recapture requires agencies to add the SOL date on any new claim and when editing an existing claim without one.

Agencies must monitor and remove claims before they expire. If an agency fails to remove claims before expiration, we may suspend them from using Revenue Recapture.

Key Statute of Limitations Dates:

Under Minnesota law, claimant agencies cannot use outside debt collectors or other third parties to manage their Revenue Recapture claims. Only authorized employees of an agency are allowed to manage its claims.