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Elk River of the estimated cost for administering, collecting, and auditing the local taxes at least 180 days <br />prior to when the change will be implemented. <br />For each month of collection related to July through December 2023, the following calculation of <br />reimbursement for administrative costs will continue to apply. <br />All local jurisdictions share in the cost of local tax administration. The calculations are based on <br />the share of total revenues and total tax lines reported on Minnesota sales and use tax returns <br />for each local area. The department weights each ƆǒƩźƭķźĭƷźƚƓ͸ƭ ƦĻƩĭĻƓƷğge of revenue by one <br />third and their percentage of tax lines by two thirds to compute their monthly percentage of <br />total administrative costs. <br />Example: <br /> <br />Assume monthly totals for all Local Sales Taxes: <br /> <br />Total Tax revenues $20,000,000.00 <br />Total Tax lines on returns 90,000.00 <br />Total Administrative costs $200,000.00 <br /> <br />If Local Tax A has revenues of $1,600,000.00 (8% of the total) and 9,000 tax lines (10% of the <br />total) their share of monthly expenses would be 9.34% or $18,680.00, which represents <br />approximately 1.17% of their monthly revenues. The following is how the 9.34% was calculated: <br /> <br /> 8% x 1/3 = 2.67% <br /> 10% x 2/3 = 6.67% <br /> 9.34% <br />For each month of collection beginning January 1, 2024, the following calculation of reimbursement for <br />administrative costs will apply. <br />Minnesota Statutes, section 297A.99, subdivision 11 states the Department shall deduct the <br />direct and indirect costs to administer local taxes. Elk River will pay a flat rate of 1.35% of sales <br />taxes collected to cover the administration, collection, and auditing of local sales taxes. Any <br />changes required to balance costs and fees will be communicated according to the notification <br />schedule noted above. Any shortfalls or reserves will be managed across years to the extent <br />possible. <br />Termination of a local tax <br />The department will provide a report to Elk River after the last month that the tax is in effect. The report <br />will indicate the total amount of Elk River taxes, corresponding adjustments made, prior month <br />corrections, and administrative fees retained. In addition, when a tax ends, the department will work <br />with Elk River to determine a reserve amount the department will retain which will be used as a fund to <br />make adjustments or refunds. Please see the Responsibilities section below for more details. The <br />portion of this fund not used for refunds or adjustments will be transmitted to Elk River at the close of <br />the period of limitations. The account remains open for a period equal to the statute of limitations <br />provided in Minnesota Statutes, section 289A.40, for sales and use tax returns. The account will be <br />reconciled, and Elk River will be notified of the final settlement. <br /> <br />4 <br /> <br />