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8.3. SR 10-16-2017 Eclty1� ,.,�� Request for Action River To Item Number Mayor and City Council 8.3 Agenda Section Meeting Date Prepared by General Business October 16, 2017 Cal Portner, City Administrator Item Description Reviewed by Local Option Sales Tax Consideration Reviewed by Action Requested Receive and discuss information and provide staff direction as desired. Background/Discussion During the discussion regarding the selection of architectural services for the ice arena improvement, Mayor Dietz suggested the consideration of a local option sales tax to pay the anticipated bond payment costs on a$20-25 million bond issue. The mayor also asked staff to identify potential sales tax revenues. According to the Minnesota Department of Revenue,within the City of Elk River in 2015 there were $1,194,672,896 in gross sales, of which $388,667,017 were taxable which at 1%would account for approximately$3.8 million in annual city tax revenue. Other neighboring communities are subject to local option sales taxes including taxing a 0.25% tax in Wright and Anoka Counties and 0.65% in Hennepin County. The mayor has suggested consideration of a 0.5%local option sales tax which would likely cover the anticipated annual bond payment on a$25 million issue over 25 years. Enacting a local option sales tax requires council approval by resolution,voter approval by referendum, and finally special legislation approved by the legislature and signed by the governor. The mayor has solicited the counsel and support of Representative Nick Zerwas. As a quasi-regional center,local option sales taxes can be a more equitable means to finance a public facility than property taxes as the tax is consumption-based,includes taxable purchases from visiting shoppers, and captures taxes on expenditures that may have escaped other taxing options. Financial Impact N/A Attachments ■ MN Dept. of Revenue Sales and Use Taxes Guide ■ MN Stat 297A 99 The Elk River Vision A PehoMing community 2a itb revolutionary and spirited resourcefulness, exceptional POWERED By service, and community engagement that encourages and inspires prosperity INAMIRE1 Sales and Use Tax Division – Mail Station 6330 – St. Paul, MN 55146-6330 Phone: 651-296-6181 or 1-800-657-3777 Email: salesuse.tax@state.mn.us This fact sheet is intended to help you become more familiar with Minnesota tax laws and your rights and responsibilities under the laws. Nothing in this fact sheet su- persedes, alters, or otherwise changes any provisions of the tax law, administrative rules, court decisions, or revenue notices. Alternative formats available upon request. Stock No. 2800164, Revised July 2017 Minnesota Revenue, Local Sales and Use Taxes Local Sales and Use Taxes 164 Fact Sheet Sales Tax Fact Sheet 164 Local Sales and Use Taxes (see the table on page 5 for a listing of the local taxes) Local sales tax The Minnesota Department of Revenue currently ad- ministers the local taxes shown in the chart on pages 5- 7. Local sales tax applies to retail sales made and taxa- ble services provided within the local taxing area. The tax applies to the same items that are taxed by Minne- sota Sales and Use Tax law. To figure the tax, combine the state tax rate and the lo- cal rates. Apply the combined rate to the taxable sales price and round to the nearest full cent. Rate charts are available on our website or upon request. What’s New in 2017 Starting October 1, 2017:  Anoka County will have a 0.25 percent Transit Sales and Use Tax  Carver County will have a 0.5 percent Transit Sales and Use Tax  Clay County will have a 0.5 percent Sales and Use Tax  Dakota County will have a 0.25 percent Transit Sales and Use Tax  Fairmont will have a 0.5 percent Sales and Use Tax  Hennepin County will have a 0.5 percent Transit Sales and Use Tax  Moose Lake will have a 0.5 percent Sales and Use Tax  New London will have a 0.5 percent Sales and Use Tax  Proctor Sales and Use Tax will increase to 1.0 percent (from 0.5 percent)  Ramsey County will have a 0.5 percent Transit Sales and Use Tax  Spicer will have a 0.5 percent Sales and Use Tax  Washington County will have a 0.25 percent Transit Sales and Use Tax  Wright County will have a 0.5 percent Transit Sales and Use Tax Ending September 30, 2017:  Transit Improvement Area Tax (includes the counties of Anoka, Dakota, Hennepin, Ramsey, and Washing- ton) will end on September 30, 2017. July 1, 2017:  Olmsted County Transit Sales and Use Tax did increase to 0.5 percent (from 0.25 percent). April 1, 2017:  Lake County has a 0.5 percent Transit Sales and Use Tax December 31, 2016:  Fergus Falls ended their Sales and Use Tax on Dec. 31, 2016 January 1, 2017:  Cook County has a 0.5 percent Transit Sales and Use Tax  Mille Lacs County has a 0.5 percent Transit Sales and Use Tax  Pine County has a 0.5 percent Transit Sales and Use Tax  Winona County has a 0.5 percent Transit Sales and Use Tax 2 Minnesota Revenue, Local Sales and Use Taxes Report local taxes when you electronically file your Minnesota sales and use tax. The figures are reported separately from state taxes. Who is required to collect local tax All retailers who are registered to collect Minnesota sales tax and are doing business in an area with a local tax must be register to collect that local tax. This in- cludes any sellers from outside the locality who:  have an office, distribution, sales, sample, or warehouse location, or other place of business in the local area either directly or by a subsidi- ary  have a representative, agent, salesperson, can- vasser, or solicitor in the local area, on either a permanent or temporary basis, who operates under the authority of the retailer or its subsid- iary for any purpose, such as repairing, selling, installing, or soliciting orders for the retailer’s goods or services, or leasing tangible personal property in the local area  ship or deliver tangible personal property in your own vehicle to the local area  perform taxable services in the local area Local tax applies to sales made or services performed within city limits or county boundaries only. ZIP Codes help to determine the taxing area, but don’t al- ways correspond exactly with city or county limits, so part of a ZIP Code may be outside the city or county. (See the “ZIP Codes” section on page 4.) Local use tax Local use tax applies when you buy items or services for use, storage, distribution, or consumption in the lo- cal area without paying local sales tax to the seller. Use tax is similar to sales tax and the rates are identical. It is based on your cost of taxable purchases. Common examples of when use tax is due:  You buy items outside the local area and the seller doesn’t charge local sales tax, and you use or store the item in the local area.  You buy a taxable item from an out-of-state seller who does not charge local sales tax. For more information, see Fact Sheets 146, Use Tax for Businesses, and 156, Use Tax for Individuals. Credit for local tax paid. If you pay local sales tax in Minnesota to one locality but use the items in another area that imposes local sales and use tax, you are al- lowed credit for the local sales tax already paid. Ways to register You may register for local taxes when filing your Sales and Use Tax return in e-Services. 1. Select the dropdown arrow next to the blank row on the return. 2. Select the local tax that you need to add. 3. Enter the dollar amount for this local tax. If you file by phone, you must register for local tax be- fore you file your return. Call 651-282-5225 or 1-800- 657-3605 (toll-free). You can email us at salesuse.tax@state.mn.us to regis- ter. If you send us an email, include your Minnesota Tax ID number. When to charge local tax As a general rule, charge local sales tax on all sales made in a local taxing area that are subject to Minne- sota state sales tax.  Charge local sales tax to customers from out- side the city or county who pick up items in the local area for business or personal use, even if the items are taken out of the local area.  Charge local sales tax to customers from out- side the local area if you perform taxable ser- vices in the local area. For example, charge lo- cal tax if you perform a car wash or deliver dry cleaned items in an area with a local tax. Exemptions Do not charge local sales tax on sales of taxable items when:  your customer gives you a completed Form ST3, Certificate of Exemption  you ship or deliver the items to your customer outside the local area  you sell direct-to-home satellite (DBS) ser- vices (not cable). These services are subject to state sales tax, but not local sales tax. This is a federal preemption from the Telecommunica- tions Act of 1996. Federal government agencies are exempt from state and local sales and use taxes. Minnesota state agencies have Direct Pay authoriza- tion when buying tangible items, which means that they do not pay sales tax to the seller—they pay use tax directly to the state. Local governments including cities, towns, counties, instrumentalities, political subdivisions, commissions, special districts, and governmental boards are not re- quired to pay general local sales taxes. No exemption certificate is necessary. Cities, counties, and towns do not pay the state sales tax on most purchases. For more information, see Fact Sheet 142, Sales to Governments. 3 Minnesota Revenue, Local Sales and Use Taxes Vehicle leases Long-term leases. If you enter into a long term lease for a vehicle that is principally based or garaged in an area with local sales tax, local sales tax applies. The lo- cal tax applies even if the leasing company is located outside the city or county. If the lease is for a vehicle that requires an up-front payment of state sales tax, local tax is also due up- front, if the vehicle is principally garaged in the local area. Short-term rentals. Vehicles leased or rented under agreements for less than 29 days are subject to local tax if the lease agreement is entered into in the local taxing area, even if the lessee intends to use the vehicle out- side the city or county. Vehicle sales Local sales tax does not apply to sales of motor vehi- cles. However, $20 vehicle excise tax applies to sales of motor vehicles when the sale occurs in a county listed in the table below. County Effective Date Anoka* 10/1/2017 Beltrami 4/1/2014 Carver 10/1/2017 Carlton, St. Louis 4/1/2015 Dakota* 10/1/2017 Hennepin* 10/1/2017 Otter Tail 1/1/2016 Ramsey* 10/1/2017 Scott 10/1/2015 Transit Improvement Area* 7/1/2008 Washington* 10/1/2017 *The Transit Improvement Area Tax (includes the counties of Anoka, Dakota, Hennepin, Ramsey, and Washington) ends September 30, 2017. Starting Octo- ber 1, 2017, each county will have their own $20 vehi- cle excise tax. This excise tax must be collected by any person in the business of selling new or used motor vehicles at retail and must be submitted to the Minnesota Department of Revenue on your Minnesota Sales and Use Tax return. Motor vehicle means any self-propelled vehicle re- quired to be licensed for road use and any vehicle pro- pelled or drawn by a self-propelled vehicle required to be licensed for road use. It includes, but is not limited to, cars, vans, pickups, trucks, truck-tractors, tractors, trailers, motor homes, and motor cycles. Note: An excise tax of $20 also applies to sales of ve- hicles made by dealers located within Baxter, Brainerd, Clearwater, Hutchinson, Mankato, New Ulm, Roches- ter and Worthington. For more information, contact the city offices directly. The Department of Revenue does not administer the excise tax for these cities. Special local taxes The Minnesota Department of Revenue also adminis- ters special local taxes that are imposed in Detroit Lakes, Giants Ridge Recreation Area, Mankato, Min- neapolis, Proctor Rochester, St. Cloud, and St. Paul. The city of Detroit Lakes imposes a 1 percent Food and Beverage tax. Giants Ridge Recreation Area imposes a 2 percent Admissions and Recreation tax; a 1 percent Food and Beverage tax; and a 2 percent Lodging tax. The city of Mankato imposes a 0.5 percent Food and Beverage tax; and a 0.5 percent Entertainment tax. The city of Proctor imposes a 1 percent Food and Beverage tax. St. Cloud imposes a 1 percent tax on liquor and food sold at restaurants and “places of refreshment” lo- cated within the city limits. Minneapolis, Rochester, and St. Paul impose various lodging taxes administered by the Department of Revenue. Minneapolis imposes a city wide 3 percent entertainment tax. Special 3 percent restaurant and 3 percent liquor taxes apply in the Min- neapolis downtown taxing district. See Fact Sheets 164M, Minneapolis Special Taxes and 164S, Special Local Taxes, for more information about special local taxes administered by the Department of Revenue. Lodging taxes Many Minnesota cities, towns, and areas impose a lodging tax. Except for the ones listed in the chart, these taxes are not administered by the Minnesota De- partment of Revenue. All questions should be directed to the city or town imposing the tax. 4 Minnesota Revenue, Local Sales and Use Taxes Examples of when to charge local tax In the examples below, Minnesota state tax always applies. Local tax applies as indicated.  A Duluth company sells items to a Hermantown company. The Duluth company delivers the items to Hermantown in their own truck. The Duluth company is required to collect the Her- mantown and the St. Louis County Transit Sales and Use Tax.  A contractor buys and picks up materials in a city with a local tax for use in an area without a local tax. Since the materials are picked up in the city with a local tax, that city’s local sales tax applies. If the materials are delivered by the seller to the construction site, no local tax is due.  A North Dakota contractor buys there and pays the North Dakota tax. The materials are brought into Minnesota to be used at a construction site in Bemidji. Bemidji local use tax is due. (Also, since North Dakota’s tax rate is lower than Min- nesota’s rate, the difference is due as Minnesota state use tax.)  A person sells at a craft show located in a city with a local tax and customers take possession of the items in that city. Since the sales are being made in a city with a local tax, the seller must collect the local tax. This is true even if the seller is from outside the city.  A photographer takes pictures at a site where there is no local tax. The customer picks up the photos at the photographer’s studio in a city with a local tax. Local tax is due because the cus- tomer takes possession of the photos in a city with a local tax. If the photographer mails the photos to an area with no local tax, no local tax is due. ZIP Codes You can use the Sales Tax Rate Calculator to help you determine the sales tax rate. You can find the calculator on our website. Go to www.revenue.state.mn.us and type sales tax calculator into the Search box. Note: the rate calculator does not include special local taxes (lodging, entertainment, liquor, admissions, and restaurant taxes). For information, see: Fact Sheet 164S, Special Local Taxes Fact Sheet 164M, Minneapolis Special Local Taxes The general ZIP Code area for each local tax is listed in the Local Tax Guide – ZIP Codes, Cities, and Towns on our website. Unfortunately, ZIP Codes do not corre- spond exactly with city/county limits. To be sure you are getting the correct results for the specific address you are looking up, use the sales tax rate calculator on our web- site. Legal References Minnesota Statutes 297A.63, Use Taxes Imposed; Rates Minnesota Statutes 297A.95, Coordination of state and local sales tax rates Minnesota Statutes 297A.98, Local governments exempt from local sales taxes Minnesota Statutes 297A.99, Local sales taxes Other Fact Sheets 142, Sales to Government 146, Use Tax for Businesses 156, Use Tax for Individuals 164M, Minneapolis Special Local Taxes 164S, Special Local Taxes Minnesota Revenue, Local Sales and Use Taxes 5 Local Sales and Use Taxes (and Special Local Taxes) City/County Type of Tax Begin Date Rate Albert Lea Sales and Use Tax 4/1/06 0.50% Anoka County Transit Sales and Use Tax 10/1/17 0.25% Austin Sales and Use Tax 4/1/07 0.50% Baxter Sales and Use Tax 10/1/06 0.50% Becker County Transit Sales and Use Tax 7/1/14 0.50% Beltrami County Transit Sales and Use Tax 4/1/14 0.50% Bemidji Sales and Use Tax 1/1/06 0.50% Blue Earth County Transit Sales and Use Tax 4/1/16 0.50% Brainerd Sales and Use Tax 4/1/07 0.50% Brown County Transit Sales and Use Tax 4/1/16 0.50% Carlton County Transit Sales and Use Tax 4/1/15 0.50% Carver County Transit Sales and Use Tax 10/1/17 0.50% Cass County Transit Sales and Use Tax 4/1/16 0.50% Chisago County Transit Sales and Use Tax 4/1/16 0.50% Clay County Sales and Use Tax 10/1/17 0.50% Clearwater Sales and Use Tax 10/1/08 0.50% Cloquet Sales and Use Tax 4/1/13 0.50% Cook County Sales and Use Tax Transit Sales and Use Tax 4/1/10 (1) 1/1/17 1.00% 0.50% Crow Wing County Transit Sales and Use Tax 4/1/16 0.50% Dakota County Transit Sales and Use Tax 10/1/17 0.25% Detroit Lakes Food and Beverage Tax* 4/1/11 1.00% Douglas County Transit Sales and Use Tax 10/1/14 0.50% Duluth Sales and Use Tax 1/1/70 (2) 1.00% Fairmont Sales and Use Tax 10/1/17 0.50% Fergus Falls Sales and Use Tax 1/1/12 – 12/31/16 0.50% Fillmore County Transit Sales and Use Tax 1/1/15 0.50% Freeborn County Transit Sales and Use Tax 1/1/16 0.50% Giants Ridge Recreation Area Admissions and Recreation Tax* Food and Beverage Tax* Lodging Tax* 7/1/11 7/1/11 7/1/11 2.00% 1.00% 2.00% Hennepin County Sales and Use Tax Transit Sales and Use Tax 1/1/07 10/1/17 0.15% 0.50% Hermantown (2) Sales and Use Tax Sales and Use Tax 4/1/13 1/1/00 – 3/31/13 1.00% 0.50% Hubbard County Transit Sales and Use Tax 7/1/15 0.50% Hutchinson Sales and Use Tax 1/1/12 0.50% Lake County Transit Sales and Use Tax 4/1/17 0.50% Lanesboro Sales and Use Tax 1/1/12 0.50% Lyon County Transit Sales and Use Tax 10/1/15 0.50% 6 Minnesota Revenue, Local Sales and Use Taxes City/County Type of Tax Begin Date Rate Mankato Sales Tax Use Tax Food and Beverage Tax* Entertainment Tax* 4/1/92 1/1/00 4/1/09 4/1/09 0.50% 0.50% 0.50% 0.50% Marshall Sales and Use Tax Food and Beverage Tax* 4/1/13 7/1/13 0.50% 1.50% Medford Sales and Use Tax 4/1/13 0.50% Mille Lacs County Transit Sales and Use Tax 1/1/17 0.50% Minneapolis Sales and Use Tax Downtown Liquor Tax* Lodging Tax* Lodging Tax* Downtown Restaurant Tax* Entertainment Tax* 2/1/87 2/1/87 10/1/17 (3) 4/1/02 – 9/30/17 2/1/87 10/1/69 0.50% 3.00% 2.125% 2.625% 3.00% 3.00% Moose Lake Sales and Use Tax 101/17 0.50% New London Sales and Use Tax 10/1/17 0.50% New Ulm Sales and Use Tax 4/1/01 0.50% North Mankato Sales and Use Tax 10/1/08 0.50% Olmsted County Transit Sales and Use Tax Transit Sales and Use Tax 7/1/17 (7) 1/1/14 – 6/30/17 0.50% 0.25% Otter Tail County Transit Sales and Use Tax 1/1/16 0.50% Owatonna Sales and Use Tax 4/1/07 – 6/30/11 0.50% Pine County Transit Sales and Use Tax 1/1/17 0.50% Proctor Sales and Use Tax (8) Sales and Use Tax Food and Beverage Tax* 10/1/17 4/1/00 – 9/30/17 4/1/15 1.00% 0.50% 1.00% Ramsey County Transit Sales and Use Tax 10/1/17 0.50% Rice County Transit Sales and Use Tax 1/1/14 0.50% Rochester Sales and Use Tax (6) Sales and Use Tax Lodging Tax* 1/1/16 1/1/93 – 12/31/15 9/1/71 (5) 0.75% 0.50% 7.00% Spicer Sales and Use Tax 10/1/17 0.50% St. Cloud Area (4) Sales and Use Tax 1/1/03 0.50% St. Cloud Liquor Tax* Food Tax* 2/1/87 2/1/87 1.00% 1.00% St. Louis County Transit Sales and Use Tax 4/1/15 0.50% St. Paul Sales Tax Use Tax Lodging Tax 50+ rooms* Lodging Tax less than 50 rooms* 9/1/93 1/1/00 4/1/04 4/1/04 0.50% 0.50% 6.00% 3.00% Scott County Transit Sales and Use Tax 10/1/15 0.50% Steele County Transit Sales and Use Tax 4/1/15 0.50% Todd County Transit Sales and Use Tax 1/1/15 0.50% Transit Improvement Area (includes the counties of Anoka, Dakota, Hennepin, Ramsey, and Washington) Sales and Use Tax 7/1/08 – 9/30/2017 0.25% Two Harbors Sales and Use Tax 4/1/99 0.50% Wabasha County Transit Sales and Use Tax 4/1/16 0.50% 7 Minnesota Revenue, Local Sales and Use Taxes (1) Cook County Sales and Use Tax resumed 4/1/10. (2) Hermantown Sales and Use Tax increased to 1% (from 0.5%) effective 4/1/13. (3) Minneapolis Lodging Tax will decrease to 2.125% (from 2.625%) effective 10/1/17. (4) St. Cloud Area Tax includes the cities of St. Cloud, Sartell, Sauk Rapids, St. Augusta, St. Joseph, and Waite Park. (5) Rochester Lodging Tax increased to 7% (from 4%) effective 1/1/14. (6) Rochester Sales and Use Tax increased to 0.75% (from 0.5%) effective 1/1/16. (7) Olmsted County Transit Sales and Use Tax increased to 0.5% (from 0.25%) effective 7/1/17. (8) Proctor Sales and Use Tax will increase to 1.0% (from 0.50%) effective 10/1/17. * For more information about the special local taxes, see: Fact Sheet 164M, Minneapolis Special Local Taxes Fact Sheet 164S, Special Local Taxes City/County Type of Tax Begin Date Rate Wadena County Transit Sales and Use Tax 4/1/14 0.50% Washington County Transit Sales and Use Tax 10/1/17 0.25% Willmar Sales and Use Tax 1/1/06 – 12/31/12 0.50% Winona County Transit Sales and Use Tax 1/1/17 0.50% Wright County Transit Sales and Use Tax 10/1/17 0.50% Worthington Sales and Use Tax 4/1/09 0.50% I MINNESOTA STATUTES 2017 297A.99 297A.99 LOCAL SALES TAXES. Subdivision 1. Authorization; scope. (a) A political subdivision of this state may impose a general sales tax(1) under section 297A.992, (2) under section 297A.993, (3)if permitted by special law, or(4)if the political subdivision enacted and imposed the tax before January 1, 1982,and its predecessor provision. (b)This section governs the imposition of a general sales tax by the political subdivision.The provisions of this section preempt the provisions of any special law: (1) enacted before June 2, 1997, or (2) enacted on or after June 2, 1997,that does not explicitly exempt the special law provision from this section's rules by reference. (c) This section does not apply to or preempt a sales tax on motor vehicles or a special excise tax on motor vehicles. (d) A political subdivision may not advertise or expend funds for the promotion of a referendum to support imposing a local option sales tax. (e)Notwithstanding paragraph(d), a political subdivision may expend funds to: (1) conduct the referendum; (2) disseminate information included in the resolution adopted under subdivision 2; (3) provide notice of, and conduct public forums at which proponents and opponents on the merits of the referendum are given equal time to express their opinions on the merits of the referendum; (4)provide facts and data on the impact of the proposed sales tax on consumer purchases; and (5)provide facts and data related to the programs and projects to be funded with the sales tax. Subd. 2. Local resolution before application for authority. Before the governing body of a political subdivision requests legislative approval of a special law for a local sales tax that is administered under this section, it shall adopt a resolution indicating its approval of the tax. The resolution must include, at a minimum, information on the proposed tax rate, how the revenues will be used, the total revenue that will be raised before the tax expires,and the estimated length of time that the tax will be in effect.This subdivision applies to local laws enacted after June 30, 1998. Subd. 3. Requirements for adoption, use, termination. (a) Imposition of a local sales tax is subject to approval by voters of the political subdivision at a general election.The election must be conducted before the governing body of the political subdivision requests legislative approval of the tax. (b) The proceeds of the tax must be dedicated exclusively to payment of the cost of a specific capital improvement which is designated at least 90 days before the referendum on imposition of the tax is conducted. (c)The tax must terminate after the improvement designated under paragraph(b)has been completed. (d) After a sales tax imposed by a political subdivision has expired or been terminated, the political subdivision is prohibited from imposing a local sales tax for a period of one year.Notwithstanding subdivision 13,this paragraph applies to all local sales taxes in effect at the time of or imposed after May 26, 1999. Subd. 4. Tax base. (a) The tax applies to sales taxable under this chapter that occur within the political subdivision. Copyright U 2017 by the Revisor of Statutes,State of Minnesota.All Rights Reserved. 297A.99 MINNESOTA STATUTES 2017 2 (b) Taxable goods or services are subject to a political subdivision's sales tax,if they are sourced to the political subdivision pursuant to section 297A.668. Subd. 5. Tax rate. (a) The tax rate is as specified in the special law authorization and as imposed by the political subdivision. (b) The full political subdivision rate applies to any sales that are taxed at a state rate, and the political subdivision must not have more than one local sales tax rate or more than one local use tax rate. This paragraph does not apply to sales or use taxes imposed on electricity,piped natural or artificial gas,or other heating fuels delivered by the seller, or the retail sale or transfer of motor vehicles, aircraft, watercraft, modular homes,manufactured homes, or mobile homes. Subd. 6. Use tax.A compensating use tax applies,at the same rate as the sales tax,on the use, storage, distribution, or consumption of tangible personal property or taxable services. Subd. 7. Exemptions. (a) All goods or services that are otherwise exempt from taxation under this chapter are exempt from a political subdivision's tax. (b) All mobile transportation equipment, and parts and accessories attached to or to be attached to the equipment are exempt,if purchased by a holder of a motor carrier direct pay permit under section 297A.90. Subd. 8. Credit for other local taxes. If a person paid sales or use tax to another political subdivision of this state on an item subject to tax under this section, a credit applies against the tax imposed under this section. The credit equals the tax the person paid to the other political subdivision for the item. Subd. 9. Enforcement; collection; and administration. (a)The commissioner of revenue shall collect the taxes subject to this section. The commissioner may collect the tax with the state sales and use tax. All taxes under this section are subject to the same penalties, interest, and enforcement provisions as apply to the state sales and use tax. (b) A request for a refund of state sales tax paid in excess of the amount of tax legally due includes a request for a refund of the political subdivision taxes paid on the goods or services.The commissioner shall refund to the taxpayer the full amount of the political subdivision taxes paid on exempt sales or use. (c)A political subdivision shall incur a legal debt to the state for refunds of local sales taxes made by the commissioner after a tax has terminated when the amount of the refunds exceeds the amount of local sales taxes collected for but not remitted to the political subdivision.The commissioner of revenue shall bill the political subdivision for this difference. The commissioner shall deposit the money in the state treasury and credit it to the general fund. Subd. 10. Use of zip code in determining location of sale. The lowest combined tax rate imposed in the zip code area applies if the area includes more than one tax rate in any level of taxing jurisdictions. If a nine-digit zip code designation is not available for a street address or if a seller is unable to determine the nine-digit zip code designation of a purchaser after exercising due diligence to determine the designation, the seller may apply the rate for the five-digit zip code area. For the purposes of this subdivision,there is a rebuttable presumption that a seller has exercised due diligence if the seller has attempted to determine the nine-digit zip code designation by utilizing software approved by the governing board that makes this designation from the street address and the five-digit zip code of the purchaser.Notwithstanding subdivision 13,this subdivision applies to all local sales taxes without regard to the date of authorization.This subdivision does not apply when the purchased product is received by the purchaser at the business location of the seller. Copyright U 2017 by the Revisor of Statutes,State of Minnesota.All Rights Reserved. 3 MINNESOTA STATUTES 2017 297A.99 Subd. 11. Revenues; cost of collection. The commissioner shall remit the proceeds of the tax, less refunds and a proportionate share of the cost of collection, at least quarterly, to the political subdivision. The commissioner shall deduct from the proceeds remitted an amount that equals (1) the direct and indirect costs of the department to administer, audit, and collect the political subdivision's tax,plus (2) the political subdivision's proportionate share of the indirect cost of administering all taxes under this section,plus (3) the cost of constructing and maintaining a zip code or geo-code database necessary for local sales tax collections under the Streamlined Sales and Use Tax Agreement in section 297A.995. The initial cost of constructing a database under clause (3) shall be distributed among the cities with a local sales tax based on each city's population. The commissioner shall develop a method for distributing the cost of maintaining the database among the cities with a local sales tax based on the number of boundary changes for each city. Subd. 12. Effective dates; notification. (a)A political subdivision may impose a tax under this section starting only on the first day of a calendar quarter.A political subdivision may repeal a tax under this section stopping only on the last day of a calendar quarter. (b)The political subdivision shall notify the commissioner of revenue at least 90 days before imposing, changing the rate of, or repealing a tax under this section. (c)The political subdivision shall change the rate of tax imposed under this section starting only on the first day of a calendar quarter, and only after the commissioner has notified sellers at least 60 days prior to the change. (d) The political subdivision shall apply the rate change for sales tax imposed under this section to purchases from printed catalogs,wherein the purchaser computed the tax based upon local tax rates published in the catalog,starting only on the first day of a calendar quarter,and only after the commissioner has notified sellers at least 120 days prior to the change. (e)The political subdivision shall apply local jurisdiction boundary changes to taxes imposed under this section starting only on the first day of a calendar quarter, and only after the commissioner has notified sellers at least 60 days prior to the change. Subd. 12a. Notification of use tax.Any political subdivision imposing a local sales and use tax,which maintains an official Web site, must display on its main home page a link to a notice that residents and businesses in the political subdivision may owe a local use tax on purchases of goods and services made outside of the political subdivision limits. The notice must provide information, including a link to any relevant Department of Revenue Web site, on how the taxpayer may get information and forms necessary for calculating and paying the tax. If the political subdivision provides and bills for sewer, water, garbage collection, or other public utility services, the billing statement must also include at least once per year a notice that residents and businesses may owe a local use tax on purchases made outside of the political subdivision limits and provide information on how the taxpayer may get information and forms necessary for calculating and paying the tax. Copyright U 2017 by the Revisor of Statutes,State of Minnesota.All Rights Reserved. 297A.99 MINNESOTA STATUTES 2017 4 Subd. 13. Application. This section applies to all local sales taxes that were authorized before, on, or after June 2, 1997. History: 2000 c 418 art I s 42; 1 Sp2001 c 5 art 12 s 81-83; 2003 c 127 art I s 28-30; 2005 c 151 art 7 s 22; 1 Sp2005 c 3 art 5 s 22,23; 2006 c 259 art 6 s 30; 2008 c 152 art 4 s 1; 2008 c 366 art 7 s 7; 1 Sp2011 c 7 art 4 s 1,2; 2013 c 143 art 8 s 43 Copyright U 2017 by the Revisor of Statutes,State of Minnesota.All Rights Reserved.