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, with provisions for compliance and indemnification against federal penalties for employers acting in good faith. The bill also establishes a legal defense fund to support employers facing federal prosecution related to compliance with the compact.

Activation of the compact requires at least ten states to enact similar legislation, collectively representing 30% of federal income tax revenue. The Compact Commission will oversee implementation and coordination, including legal defense strategies and compliance systems. The bill outlines various triggering events for activation, such as congressional refusal to count lawful electoral votes or federal interference in state elections. It also includes provisions for the release of escrowed funds, conditions for deactivation, and protections for state officials against federal prosecution. Additionally, the bill mandates the development of administrative systems for escrow operations and employer education, ensuring readiness for activation and addressing legal defense and appropriations for implementation.