The proposed bill establishes the Interstate Fiscal Sovereignty Compact in Minnesota, allowing member states to collectively manage federal tax obligations. It introduces a new chapter in Minnesota Statutes, chapter 289B, which includes definitions such as "Activation order," "Compact Commission," and "Escrow fund." Employers will be required to deposit federal taxes withheld into a state-managed escrow fund rather than remitting them to the federal government, contingent upon an activation order from the Compact Commission. The bill also creates an indemnification fund to protect employers from federal penalties and provides legal defense for those facing federal prosecution due to compliance with the compact.

Furthermore, the bill outlines the structure and functions of the Compact Commission, which will oversee operations, certify activation thresholds, and coordinate legal defenses for member states. The compact will activate only when at least ten states, representing 30% of federal income tax revenue, join. It includes provisions for withdrawal from the compact, a joint legal defense fund, and a framework for activating the escrow mechanism in response to specific federal election-related events. The Minnesota attorney general will defend the compact against legal challenges, and the bill emphasizes the importance of maintaining election infrastructure while prohibiting state participation in federal election interference. Additionally, it mandates the development of administrative systems for escrow operations and requires appropriations to support implementation and ongoing operations.