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515 Little Canada Road, Little Canada, MN 551174600 <br />(651) 766-4029 / FAX: (651) 766-4048 <br />www.ci.l ittle-canada.mn.us <br />MEMORANDUM <br />MAYOR <br />Bill Blesener <br />COUNCIL <br />Rick Montour <br />John Keis <br />Michael McGraw <br />Shelly Boss <br />ADMINISTRATOR <br />Joel R. Hanson <br />TO: Mayor Blesener and Members of the City Council <br />FROM: Joel Hanson, City Administrator <br />DATE: August 8, 2014 <br />RE: Minnesota Department of Revenue — Solid Waste Management Tax <br />Settlement Agreement <br />Attached is the proposed settlement agreement arrived at in our meetings with the <br />Minnesota Department of Revenue. As you will recall, they initially claimed we owed <br />$29,600.43 of solid waste management tax related to our billing of refuse service <br />pursuant to our organized collection contract. The issue arose because once the City bills <br />the service; we became the "provider" of the service. As the provider, we need to itemize <br />our charges so it can be readily determined what charges are associated with tax exempt <br />services (recycling). Our bills only indicated the total monthly charge. (We have <br />corrected this issue at the start of 2014.) In reviewing this with MDOR, we were able to <br />document the basis of our charges through our contract with the haulers and through their <br />billing statements to us. Based on this information, it was obvious that the State had been <br />paid the tax they were entitled to for refuse services. <br />One area we did have some exposure related to our "recycling fee". One could argue that <br />this fee was for city time associated with overseeing/managing the refuse accounts. <br />Given that all of our time wouldn't be associated with just recycling, and then part of the <br />fee should be taxable. We agreed with that position and reached the settlement amount of <br />$2,580 that reflects a proration of that fee between the taxable and tax exempt service <br />elements. <br />Staff did arrange for an extension of time until August 15°i to remit this amount given our <br />Council meeting schedule. Based on this information, staff and the City Attorney's <br />office recommend we remit this amount per the settlement agreement attached to close <br />this matter. <br />