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House Research Department Local Sales Taxes in Minnesota Updated: October 2003 Page 2 session to make the law conform with streamlined sales tax requirements.' The additions are indicated in the summary. Summary of the Local Sales Tax Provisions in Minn. Stat. � 297A.99 Local Taxes Subject to the Statutory Provisions The statutory provisions apply to all local sales taxes authorized after 7une 2, 1997, unless the enabling legislation specifically exempts the local authority from these rules by reference. Starting 7anuary 1,2000, the statutory provisions apply to and preempt any contrary provisions of all local sales taxes authorized before 7une 2, I997. Steps That a Local Government Must Follow to Impose a Local Sales Tax A political subdivision must get special legislation authorizing the imposition of the sales tax. The statute requires that the governing body of the political subdivision pass a resolution indicating its desire to impose t1�e tax prior to requesting the enabling legislation. The resolution must include info�.ation on the proposed tax rate, the amount of revenue to be raised and its intended use, and the anticipated date when the tax would expire. This resolution requirement was added during the 1998 session. In 1999 R:Se legislature began requiring a political subdivision to hold a local referendum at a general election� before imposing an authorized local sales tax. The revenue may only be used to fund specific capital improvements which must be identified at least 90 days before the referendum. This codifies existing practice since most special 1�gislatian authorizing local taxes passed in recent years already imposed these requirements. Determination of the Local Tax Rate .. , . ' s . --.. T h e local tax rate is set in the legislation authbrizing t�� ax. The statute clarifies that the full �• �ocal t�x rate applies to all taxable sales, even those that are taxed at a reduced rate by the state. Definition of the Tax Base for the �oe�� Tax Generally the statute provides that the local sales tax applies to the same tax base, with the same exemptions, as the state sales tax. A taxable service is subject to the local tax if more than oi�e- half of the service, based on the cost, is performedwithin the local jurisdiction. The following sales made within the local taxing jurisdiction are exempt from the local tax: � Streamlined Sales Tax is a national project in which participating sfates develop language to simplify and standardize sales tax administratian and definitions between states. z A general election means either t�ie state general election held on the first Tuesday after the first Monday in November of an even-numbered year, ar a regularly scheduled election for local public officials far that political subdivision.