Starting a Local Sales Tax

Revenue administers all general local sales and use taxes.

To impose a general local sales and use tax, you must receive authorization through the Minnesota Legislature. To receive this authorization, you must complete the following steps:

1. Pass a resolution that includes:
   • Proposed tax rate
   • Detailed description of up to five capital projects to be funded with the tax. A capital project includes:
     • A single building or structure, including associated infrastructure needed to safely access or use the building or structure
     • Improvements within a single park or named recreation area
     • A contiguous trail
   • Documentation of how each project will provide an economic benefit to residents, businesses, and visitors from outside the jurisdiction
   • Amount of revenue to be raised for each project and the estimated time needed to raise funds
   • Total amount of revenue to be raised for all projects
   • Estimated length of time the tax will be in effect if all proposed projects are approved
2. Submit the approved resolution and supporting documents to the senate and house tax committee chairs by January 31.
3. Once legislative approval is given, revise and reaffirm your resolution. The resolution must be passed at least 90 days before a general election.
4. Pass a referendum to impose the tax:
   • Hold a vote at a general election within two years of legislative approval.
     • Each project must have a separate question for approval.
     • Voters must approve by a majority vote. If a project is not approved, the revenue and expiration date must be adjusted.
   • You cannot spend money to advertise or promote the proposed tax, but you may publicize information included in the resolution.
5. If approved, create and pass an ordinance imposing the tax.
6. File a certificate of approval and a copy of the ordinance with the Minnesota Secretary of State.
7. After you file with the Minnesota Secretary of State, you must notify us in writing to start a new local tax.

You must notify Revenue, in writing, at least 90 days before the anticipated begin date.

The letter must include:

• Authorizing session law or Minnesota Statute
• Date you plan to begin the tax (must begin on the first day of a calendar quarter)
• Approved tax rate
• Formal request for the Minnesota Department of Revenue to administer the new tax

You must provide us a copy of the following information:            

• Resolution imposing the local tax
• Board meeting minutes approving the resolution
• Your ordinance for sales and use tax regulations
• The certificate of approval and the ordinance sent to the Minnesota Secretary of State
• Referendum questions and results
• Documentation of public informational meetings held prior to the referendum (if held)
• Meeting minutes approving the project plan or capital improvement designated for the use of revenues collected

Send the letter and supporting documents to:

Commissioner of Revenue
Minnesota Department of Revenue
Mail Station 6350
St. Paul, MN 55146

Follow these guidelines unless your tax was authorized under Minnesota Statutes 469.190 or other special laws.

Special local sales and use taxes include food and beverage, lodging, and entertainment. You may administer special local taxes or have Revenue administer the taxes.

To impose a special local tax, you must complete the following steps:

1. Pass a resolution at least 90 days before the general election that includes:
   • Proposed tax rate
   • Intended use of the revenue (project plan)
   • Amount of revenue to be raised
   • Anticipated expiration date
2. The proposed tax must be passed by a majority vote of the local government in a general election:
   • You cannot spend money to advertise or promote the proposed tax, but you may publicize information included in the resolution.
3. If passed, file a certificate of approval and a copy of the ordinance to the Minnesota Secretary of State.
4. Contact the Minnesota Legislature.

This information only applies to local taxes administered by Revenue.

You must notify us, in writing, at least 90 days before the anticipated begin date.  

The letter must include:

• Authorizing session law or Minnesota Statute
• Date you plan to begin the tax (must begin on the first day of a calendar quarter)
• Approved tax rate
• Formal request for the Minnesota Department of Revenue to administer the new tax

You must provide us a copy of the following information:

• Resolution imposing the local tax
• Board meeting minutes approving the resolution
• Your ordinance for sales and use tax regulations
• The certificate of approval and the ordinance sent to the Minnesota Secretary of State
• Referendum questions and results
• Documentation of public informational meetings held prior to the referendum (if held)
• Meeting minutes approving the project plan or capital improvement designated for the use of revenues collected
  • The use of funds must be designated 90 days before the referendum.

Send the letter and supporting documents to:

Commissioner of Revenue
Minnesota Department of Revenue
Mail Station 6350
St. Paul, MN 55146

Any county may impose a local sales and use tax of up to 0.5% and a $20 vehicle excise tax on commercial sales of motor vehicles to fund a transportation or transit project. These funds can also be used to fund transit operating costs and safe routes to school programs.

Note: Revenue administers all local transportation sales and use taxes.

To impose a local transportation tax, you must complete the following steps:

1. Publish advanced notification of a public hearing to discuss potential transportation projects. A vote on the proposed tax by county residents in a general election is not required.
2. Pass a resolution that includes:
   • Reference Minnesota Statutes 297A.993
   • Proposed tax rate up to 0.5%
   • $20 vehicle excise tax (if applicable)
   • Intended use of the revenue (project plan)
   • Amount of revenue to be raised
   • Anticipated expiration date
   • Intent to have Revenue administer the new tax
   • Reference Minnesota Statutes 297A.99, subd. 4 and subd. 6-13

You must notify Revenue, in writing, at least 90 days before the anticipated begin date.

The letter must include:

• Authorizing session law or Minnesota Statute
• Date you plan to begin the tax (must begin on the first day of a calendar quarter)
• Approved tax rate and the $20 vehicle excise tax if included in your resolution
• Formal request for the Minnesota Department of Revenue to administer the new tax

You must provide us a copy of the following information:

• Resolution imposing the local tax
• Transportation project plan that includes:
  • Proposed tax rate up to 0.5%
  • $20 vehicle excise tax (if applicable)
  • Intended use of the revenue
  • Amount of revenue to be raised
  • Anticipated expiration date
• Board meeting minutes approving the resolution
• Documentation of public informational meetings held before passing the resolution

Send the letter and supporting documents to:

Commissioner of Revenue
Minnesota Department of Revenue
Mail Station 6350
St. Paul, MN 55146

You must notify the public 60 days before the local tax starts by:

• Announcing on your website the new local tax and the effective date
• Posting information on your website that includes:
  • The tax rate
  • The local tax notice
  • A link to Revenue’s website

You must leave this information on your website to inform new businesses of the local tax.

Public Utility Service Statements

If you provide and bill for public utility services, you must include a statement that your customers may owe use tax on purchases made outside of the local tax area on your invoices at least once per year. You need to include information on how the customer can calculate and pay the use tax.

If your local taxes are administered by Revenue, the main local government contacts with Revenue must complete annual disclosure training. The training provides data privacy information before you can access non-public taxpayer data. Take the Annual Disclosure Training.

We will notify the public of your new local tax at least 60 days before it begins and register businesses located in the taxing jurisdiction for the new local tax.