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STATE OF MINNESOTA <br />DEPARTMENT OF REVENUE <br />Local Government Services Division <br />Mail Station 3340 <br />St. Paul, MN. 55146 -3340 <br />May 30,1991 <br />To: Mayors of Cities and Chairs of Town Boards <br />Your county board will be deciding by July 1, 1991 whether or not to <br />impose a local option sales tax for 1992. This requirement results from a <br />law passed by the 1991 statelegislature. <br />This letter: explains the provisions of the law authorizing the county board <br />to impose a local option sales tax; explains the consequences of the board's <br />decision not to impose the tax; and describes the procedures city councils <br />and town boards can follow to reverse the decision of the county board. <br />Local Option Sales Tax <br />Under the law, an increase in the state sales tax rate of one -half percent <br />automatically goes into effect July 1, 1991 and automatically expires on <br />December 31, 1991. For the period after December 31, 1991, the law <br />gives each county board the option of imposing a one -half percent local <br />sales tax in the county. <br />Thus, for the local option sale tax to take effect after December 31, 1991 <br />each county board must act to impose the tax in the county. The county <br />board must make its decision to impose the tax by July 1 of the year. The <br />board must notify the Commissioner of Revenue of its decision by July 15. If <br />the county decides to impose the tax, it will go into effect on January 1 of <br />the next year. If it decides not to impose the tax by July 1 of this year, it will <br />be automatically removed effective January 1, 1992. <br />Once a board has decided to impose the tax, it remains in effect until it acts <br />to rescind the tax -- unless cities and towns or voters take action to rescind <br />the tax as described below. If the county board decides to rescind the tax <br />prior to August 1 of any year the tax is removed on July 1 of the next year. <br />If imposed, the local option sales tax will be collected by the Department of <br />Revenue -- along with the state sales tax. All the administrative require- <br />ments of imposing and collecting the tax -- including notification of retailers <br />-- will be handled by the Department of Revenue. <br />continued... <br />AN EQUAL OPPORTUNITY EMPLOYER <br />Page 44 <br />