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Local Sales Tax in Minnesota Attachment C Collection, Administration, and Enforcement of Local Taxes The statute requires the Commissioner of Revenue to administer and collect local sales and use 7 taxes. This merely codified preexisting practice. The local taxes are subject to the same penalties, interest, and enforcement provisions as the state sales tax. Refunds of excess state sales taxes paid must also include a refund of any excess local sales tax paid. The state deducts its collection and administration costs and any local tax refunds from the tax revenue returned to the local taxing jurisdiction. The net local tax revenue is paid to the local taxing jurisdiction on a quarterly basis. Minn. Stat. § 297A.99, subds. 9 and 11. Imposing and Repealing Local Sales Tax To facilitate state administration of local taxes, the imposition of a tax may only begin on the first day of a calendar quarter. Repeal of a local tax is only effective at the end of a calendar quarter. A local taxing jurisdiction must give the Department of Revenue at least 90 days’ notice ealed. The tax is effective after the commissioner has given sellers before a tax is imposed or rep located in the area at least 60 days’ notice and will apply to catalog or remote sales only after the commissioner has given these sellers 120 days’ notice. The practical effect is that there may be a delay in the imposition of a local tax on remote sales if the local government does not provide at least a 120-day advance notice to the state. (Minn. Stat. § 297A.99, subd. 12) Because of the notification and timing requirements, local taxes will usually terminate after the authorized amount is raised. The local government may usually keep this revenue; however, the commissioner may keep any revenue in excess of the average quarterly revenue raised from the tax in the previous 12-month period and deposit it into the state general fund. (Minn. Stat. § 297A.99, subd. 3, para. (f)) The law also requires a political subdivision to wait one year after the expiration of a tax before imposing a new tax. (Minn. Stat. § 297A.99, subd. 3, para. (d)) Despite this requirement, the legislaturehas granted extensions of existing sales taxes without 8 the required break.The only local governments that let an existing tax expire for at least one year before imposing a new tax for a different purpose are: Cook County, which let a tax expire in 2008 and sought and received authority for a new tax during the 2009 legislative session; 7 The city of Duluth is the only local government to ever collect and administer its own tax. At the city’s request, it was originally exempted from the collection and administration provisions of the statute. However, the exemption ended and the commissioner began collecting the Duluth tax January 1, 2006, to meet the SSUTA requirement that one agency collect all state and local sales taxes. 8 Extensions have been granted without a break in imposition for the following local sales taxes since 2005: the Central Minnesota city tax; taxes in the cities of Albert Lea, Baxter, Brainerd, Hermantown, Mankato, New Ulm, North Mankato, Proctor, Rochester, and Worthington; and the second local tax imposed by Cook County in 2009. Minnesota House Research Department Page 5