Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Department Operations topic
No spam. Unsubscribe anytime.
Department of Revenue details operations, fraud prevention and data-security practices
Summary
Commissioner Paul Marquardt told the House Tax Committee the Minnesota Department of Revenue collects roughly $33 billion a year, runs with low administrative costs, and has blocked tens of millions in fraudulent refunds. Lawmakers pressed the agency on use of AI, protections for taxpayer data and services for filers without bank accounts.
Paul Marquardt, commissioner of the Minnesota Department of Revenue, briefed the House Tax Committee on the agency’s operations, fraud prevention and customer-service work, saying the department handles roughly $33,000,000,000 in tax receipts a year and operates with an administrative cost of about 0.6%.
Marquardt told members the department manages roughly 3.1 million individual income tax filers each year, processes hundreds of thousands of refunds early in the season, and that refunds are currently going out in about 6.84 days. He described technology and testing systems used to process returns, including an internal processing platform he identified as the GenTAC system used for large-scale testing and return processing.
Why it matters: the department’s work funds schools, safety, health and other services. Maintaining public confidence in the security and privacy of tax records is central to voluntary compliance and to the timeliness of revenue collection.
Marquardt described the department’s fraud-detection work, saying the agency’s fraud unit uses analytics to flag inconsistent returns and identity-theft attempts. “On the average over the last couple years, the department has stopped about $30,000,000 in fraudulent filed tax refunds before they went out the door,” he said. He also said last year the department collected about $487,000,000 in overdue taxes and filed 44 criminal tax-fraud cases that recouped roughly $4,200,000.
Committee members asked whether the department uses artificial intelligence for finding patterns in complex returns. Marquardt said the department is “following and monitoring that trend from other states” and uses data-analytics tools but is not currently deploying higher-level AI systems for auditing. He said the agency declined to use generative AI for taxpayer-facing responses, noting, “we're not doing generative AI because we don't trust it to give you the proper tax data.”
Lawmakers and the commissioner spent time on data-security practices and employee access controls. Marquardt described multifactor authentication, virtual private networks, supervisor monitoring for unauthorized “browsing” of taxpayer accounts and termination as a possible sanction for misuse. A committee member raised federal-level data-breach concerns; another asked how the department coordinates cybersecurity, and Marquardt said the agency works with outside partners and a technical team to monitor threats.
Members also asked about service access for filers without bank accounts or stable mailing addresses. Marquardt recommended the department’s Taxpayer Rights Advocate office as a first point of assistance and said the department would follow up with additional detail.
The commissioner described voluntary-compliance outreach including translation services and public engagement for new programs. He cited the transition of the renter’s refund to a renter’s credit on income tax forms and said the child tax credit outreach achieved about 87% participation among eligible families in the most recent cycle.
Marquardt closed by noting the department employs about 1,400 people, with roughly 20% working in Greater Minnesota, and that the department will continue to support lawmakers with revenue estimates, tax-incident studies, and form and system testing.
The committee did not take formal action on operational items; members asked for follow-up information on data-sharing requests, direct-file planning and services for unbanked taxpayers.
