Insurance Taxes Audit Process

The Minnesota Department of Revenue audits tax returns to ensure you are correctly reporting and paying insurance taxes. One of our auditors will:

• Review your records. 
• Explain any errors you have made and how to correct them.
• Make recommendations to help you eliminate similar errors in the future. 
• Provide an audit report summarizing any changes to your tax liability. 
• Be available in the future to help with your returns or answer any questions or concerns you have.

Note: You may have an attorney, accountant or other person represent you or attend any meetings connected to our audit. To do so, you must complete Form REV184b, Business Power of Attorney.

 We will contact you to discuss your business and the types of records you will need to provide.

 We may request the following records:

•  Tax returns and payment records, including refund claims or amended returns.
•  Policy documentation

We will check if you correctly reported premiums, fees and commissions on insurance policies that you sold. We will also check for missing records. Items that cannot  be accounted for will be considered taxable unless you can provide information to show otherwise.

We may also request information from other parties as part of our audit. These include:

• Minnesota Department of Commerce 
• Surplus Lines Association of Minnesota 
• National Association of Insurance Commissioners 
• Surplus lines policyholders or insureds, insurance companies and agencies 
• Your bank or other financial institutions 
• Any others deemed necessary

We may choose to sample your records to complete the audit as quickly and efficiently as possible while still maintaining accuracy. This means we review representative records and project the results to the entire audit period. We will explain our sampling methods and make sure you understand what we did and the results.

After our review, we will discuss the results with you. You will have time to gather additional documentation to support adjustments to our findings. Once the audit is complete, we’ll send you a final report that explains any tax, penalty and interest you may owe, or if you are entitled to a refund.

You will have 60 days from the date of the report to respond in one of the following ways:

•  Pay what you owe without additional penalties or interest being added.
• File a written formal appeal with the department’s Appeals Unit (or request a 30-day extension if you need more time).
• File a formal appeal with the Minnesota Tax Court (or request a 30-day extension if you need more time).

If you have questions or need more information, please contact the auditor who worked with you, or the department, at the address and phone number listed on the audit report.

Despite our efforts, problems occasionally arise that may not be resolved by the audit and appeal process. If you feel you’ve been treated unfairly, you may contact the department’s Taxpayer Rights Advocate Office. For more information, see Taxpayer Rights Advocate.