Collection plans getting in gear for transit tax

As metro counties decide whether to impose a quarter-cent sales tax for transit improvements, the Minnesota Department of Revenue is gearing up to collect it.

A multicounty sales tax will be the farthest-ranging local tax the department has ever overseen, said Anne Gravelle, the agency's senior sales tax specialist.

In the 90 days allowed for the department to set up collections for the tax, it will correspond with more than 100,000 businesses, alerting them to their responsibility to add the tax to sales. Most will respond by reprogramming electronic cash registers and amending accounting reports, Gravelle said.

The transit tax will take effect July 1 in the counties where commissioners approve it. Ramsey and Anoka counties adopted it this week. Hennepin, Washington and Dakota counties are expected to vote on it on Tuesday. Carver County has decided against it, and Scott County commissioners said they intend to reject it next week.

The counties were given the option to pass the new tax to help finance rail lines and bus transitways in a $6.6 billion state transportation bill passed in February by legislators over the veto of Gov. Tim Pawlenty.

With collection starting July 1, counties will be in a position to capture an estimated $3 million to $6 million from the Republican National Convention in St. Paul in September.

The Revenue Department will have information on the new tax on its website in April. Then, around May 1, it will send notices to businesses registered to collect the 6.5 percent state sales tax and alert them to their responsibility to add the quarter-cent. Included are businesses in participating counties and companies in other locations that sell products and make deliveries in counties that impose the tax.

The rates must be combined when the taxes are collected, Gravelle said. To guide businesses, "We are in the process of developing 12 new rate charts to cover all the possible combinations of taxes."

In its mailings, the department will try to anticipate questions.

For instance, if products are paid for by July 1, they would not be subject to the tax if delivered by the end of July. Products purchased from a store in a county with the tax but delivered to someone living outside the taxing district would not be subject to the tax.

Once the tax is collected, the Revenue Department will forward the money to an account held by a joint powers board representing the participating counties.

Representatives of the counties that approve the tax are scheduled to meet Wednesday to organize as a joint powers board. Tasks before them include setting up a process for selecting transit projects to fund from the tax pool.