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The Sleepy Eye Herald Dispatch - Sleepy Eye, MN
  • Sales use tax change could save city up to $50,000

  • As of Jan. 1, 2014, cities and counties are exempt from sales and use tax on purchases used to provide certain government services. According to the Minnesota Department of Revenue, Townships have had this exemption since Oct. 1, 2011.
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  • As of Jan. 1, 2014, cities and counties are exempt from sales and use tax on purchases used to provide certain government services. According to the Minnesota Department of Revenue, Townships have had this exemption since Oct. 1, 2011.
    Minnesota Statutes, section 297A.70, subdivision 2, allows local governments to buy some goods and services without paying sales and use tax. Purchases of items or services are exempt if they are used to provide local government services that are not generally provided by a private business.
    When the Sleepy Eye City Council set the 2014 levy at their December meeting, City Manager Mark Kober estimated the sales tax exemption to save the city between $30,000 to $50,000.
    "It is a complicated formula and it is difficult to get a number exactly because some of the things that were exempt before will not be," Kober explained. "But when you consider 6.875 percent on all of our purchases, that can add up pretty quickly."
    Examples of what local governments can buy exempt include:
    • Gravel, sand, salt and salt/sand mixtures
    • Lawn care, tree, bush and stump removal services
    • Office supplies, equipment and telephone services
    • Machinery and equipment, accessories for public safety and road and bridge maintenance
    • Motor vehicles for certain uses
    • Fuel and construction materials.
    The exemption does not apply to purchases used to provide services that are generally provided by a private business such as liquor stores, gas and electric utilities, golf courses, marinas, health and fitness centers, cafes, laundromats and waste management.

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