5.3. ERMUSR 08-22-2006 - Laserfiche WebLink

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MINNESOTA REVENUE August 2°d, 2006 Theresa Slominski Elk River Municipal Utilities 13069 Orono Pkwy Elk River, MN 55330 RE: Minnesota Sales and Use Tax Audit, MN ID# 8777905 Dear Ms. Slominski, Included with this letter are the preliminary schedules, exhibit A, explanation of reason codes, rule 8130.1100, and computation of tax, penalty, and interest. They are as follows: 1. Schedule A -General MN Sales. The periods from 1-1-OS through 12-31-OS were reviewed for any taxable sales generated in your miscellaneous revenue accounts. The items listed were subject to Minnesota sales tax, but were not charged sales tax. Sales of electric and water connection/access fees are taxable. Taxability of these fees can be seen in rule 8130.1100 and on fact sheet 157 -residential utilities. This schedule has been projected on a straight average basis. ~IaG~;c.. 2. Schedule B -Use Tax On ~Stter Donated. The periods from 1-1-04 through 12-31- 05 were reviewed. These amounts represent the donated water at cost donated to the City of Elk River. Gifts are taxable to the entity purchasing them at their cost. This schedule has been projected on a straight average basis. 3. Schedule C -Purchases Subject to MN Use Taz. The periods from 1-1-OS through 12-31-OS were reviewed. The items listed are subject to Minnesota sales tax but were not charged sales tax. It is your responsibility to accrue use tax if the vendor does not charge sales tax. Documentation showing sales tax was paid or the item is not taxable will be needed to delete any of these items. This schedule has been projected on a straight average basis. 4. Schedule D -Capital Equipment Purchases. These purchases found during the audit period qualify as capital equipment. Tax is due on capital equipment when purchased, but you are entitled a refund of the tax when you file a capital equipment refund claim. These items were not taxed so I have listed them as taxable purchases. The refund for these items is on schedule E. This schedule will not be projected. 5. Schedule E -Capital Equipment from Schedule D. This is the capital equipment refund of tax listed on schedule D. This schedule will not be projected. 6. Schedule F -Asset Purchases. All assets for the audit period were reviewed. These assets were bought without evidence of sales tax being paid. These items aze subject to sales tax. Review items that have a name of "Depreciation Expense." These items were listed on you depreciation expense report, but I could not find an invoice to verify sales tax being paid for these items. Documentation showing sales tax was paid 3300 County Road 10, Suite 406 Minnesota Relay (77'Y) 711