1.1                          A bill for an act 
  1.2             relating to taxation; authorizing the city of Fosston 
  1.3             to impose a sales and use tax. 
  1.4   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.5      Section 1.  [CITY OF FOSSTON; SALES TAX.] 
  1.6      Subdivision 1.  [SALES TAX AUTHORIZED.] Notwithstanding 
  1.7   Minnesota Statutes, section 477A.016, or any other contrary 
  1.8   provision of law, ordinance, or city charter, the city of 
  1.9   Fosston may, by ordinance, impose for the purposes specified in 
  1.10  subdivision 3 an additional sales tax of up to one-half of one 
  1.11  percent on sales transactions taxable pursuant to Minnesota 
  1.12  Statutes, chapter 297A, that occur within the city.  A 
  1.13  compensating use tax, at the same tax rate, must also be imposed 
  1.14  for using, storing, distributing, or consuming tangible personal 
  1.15  property or taxable services within the city.  
  1.16     Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
  1.17  authorized by subdivision 1 must be used for economic 
  1.18  development and tourism purposes, including the expansion of the 
  1.19  heritage center and construction of a business-industrial park 
  1.20  and facilities, and including securing or paying debt service on 
  1.21  bonds issued for those purposes under subdivision 5.  
  1.22     Subd. 3.  [REFERENDUM.] If the Fosston city council 
  1.23  proposes to impose the sales tax authorized by this section, it 
  1.24  shall conduct a referendum on the issue.  The question of 
  2.1   imposing the tax must be submitted to the voters at a special or 
  2.2   general election.  The tax may not be imposed unless a majority 
  2.3   of votes cast on the question of imposing the tax are in the 
  2.4   affirmative.  The commissioner of revenue shall prepare a 
  2.5   suggested form of question to be presented at the election.  
  2.6   This subdivision applies notwithstanding any city charter 
  2.7   provision to the contrary. 
  2.8      Subd. 4.  [ENFORCEMENT; COLLECTION; AND ADMINISTRATION OF 
  2.9   TAXES.] A sales tax imposed under this section must be reported 
  2.10  and paid to the commissioner of revenue with the state sales 
  2.11  taxes, and be subject to the same penalties, interest, and 
  2.12  enforcement provisions.  The proceeds of the taxes, less refunds 
  2.13  and a proportionate share of the cost of collection, shall be 
  2.14  remitted at least quarterly to the city.  The commissioner shall 
  2.15  deduct from the proceeds remitted an amount that equals the 
  2.16  indirect statewide cost as well as the direct and indirect 
  2.17  department costs necessary to administer, audit, and collect the 
  2.18  tax.  The amount deducted shall be deposited in the state 
  2.19  general fund. 
  2.20     Subd. 5.  [BONDS.] The city of Fosston, pursuant to the 
  2.21  approval of the city voters under subdivision 3, may issue 
  2.22  without additional election general obligation bonds of the city 
  2.23  to pay capital expenses for the purposes given in subdivision 
  2.24  2.  The debt represented by the bonds must not be included in 
  2.25  computing any debt limitations applicable to the city, and the 
  2.26  levy of taxes required by Minnesota Statutes, section 475.61, to 
  2.27  pay the principal of and interest on the bonds must not be 
  2.28  subject to any levy limitation or be included in computing or 
  2.29  applying any levy limitation applicable to the city.  
  2.30     Subd. 6.  [EXEMPTION.] For purposes of this subdivision, 
  2.31  the following sales that occur within the city are not subject 
  2.32  to the tax: 
  2.33     (1) the gross receipts from the sale of items that are 
  2.34  mailed, shipped, delivered, or removed from the city and that 
  2.35  are not returned except in the course of interstate or 
  2.36  intrastate commerce are exempt to the same extent that those 
  3.1   items would be exempt from the state sales tax if they were 
  3.2   mailed, shipped, delivered, or removed from the state and are 
  3.3   not returned to the state except in the course of interstate 
  3.4   commerce; 
  3.5      (2) all mobile transportation equipment and parts and 
  3.6   accessories attached to or to be attached to such equipment 
  3.7   would be exempt if purchased by a person using a motor carrier 
  3.8   direct pay permit issued under Minnesota Statutes, section 
  3.9   297A.211; and 
  3.10     (3) all items or services exempt from the state sales and 
  3.11  use tax. 
  3.12     Subd. 7.  [CREDIT FOR OTHER LOCAL TAXES.] If taxable items 
  3.13  or services have been subjected to a sales tax imposed by 
  3.14  another political subdivision, and the items or services are 
  3.15  used, stored, or consumed in the city of Fosston, a credit shall 
  3.16  be given by the city for all legally imposed sales taxes paid by 
  3.17  the purchaser with respect to those items or services. 
  3.18     Subd. 8.  [TAX RATE.] Any items of tangible personal 
  3.19  property or services that are taxed at a rate less than the 
  3.20  general sales and use tax rate under Minnesota Statutes, chapter 
  3.21  297A, are subject to tax at the full rate of tax imposed by the 
  3.22  city. 
  3.23     Subd. 9.  [REFUNDS.] All requests for refunds of state 
  3.24  sales taxes paid in excess of the amount of tax legally due 
  3.25  apply to local taxes paid on those items or services.  The full 
  3.26  amount of the local taxes paid on items exempt from the state 
  3.27  sales and use tax must be refunded to the taxpayer. 
  3.28     Subd. 10.  [SERVICES.] Services that are taxable under the 
  3.29  general state sales tax under Minnesota Statutes, chapter 297A, 
  3.30  are subject to a tax imposed under this section if they are 
  3.31  performed wholly within the boundaries of the city or, if 
  3.32  performed partly within and partly without the city, and the 
  3.33  greater proportion of the service is performed within the 
  3.34  political subdivision, based upon the cost of performance. 
  3.35     Subd. 11.  [TERMINATION.] The tax authorized under this 
  3.36  section terminates at the later of (1) five years after the date 
  4.1   of initial imposition of the tax, or (2) on the first day of the 
  4.2   second month next succeeding a determination by the city council 
  4.3   that sufficient funds have been received from the tax to finance 
  4.4   the improvements described in subdivision 2, and to prepay or 
  4.5   retire at maturity the principal, interest, and premium due on 
  4.6   any bonds issued for the improvements.  Any funds remaining 
  4.7   after completion of the improvements and retirement or 
  4.8   redemption of the bonds may be placed in the general fund of the 
  4.9   city. 
  4.10     Subd. 12.  [NOTIFICATION TO COMMISSIONER.] The city shall 
  4.11  make the tax imposed under this section effective on the first 
  4.12  day of a calendar quarter.  The city shall give the commissioner 
  4.13  90 days' notice to either commence or terminate the imposition 
  4.14  of the tax. 
  4.15     Subd. 13.  [LOCAL APPROVAL; EFFECTIVE DATE.] This section 
  4.16  is effective the day after final enactment, upon compliance with 
  4.17  Minnesota Statutes, section 645.021, subdivision 3, by the 
  4.18  governing body of the city of Fosston.