Local option sales tax sparks questions

Talk about it

WORTHINGTON — The roughly 50 business owners who came to a meeting about the local option sales tax Tuesday brought plenty of questions about how and when the tax would be collected.

Robert Carter, a revenue tax specialist with the Minnesota Department of Revenue, was on hand to tackle their concerns in the meeting at the Worthington Country Club.

There are special rules for service and construction contracts, leases, utility sales, admission tickets and vehicles, but the gist is this: the .5 percent sales tax should be charged to customers who pick up items in Worthington for business or personal use and to those who have taxable services performed for them in Worthington.

The tax cannot be charged on items delivered outside of the Worthington city limits.

“If (you) have a business outside the city limits and they come and pick it up they don’t need to pay the tax,” added Carter.

The sales tax is also not charged to local governments, Worthington and Nobles County in this case, and those doing construction work for the city or county, for example.

The government, and everyone else, will continue paying state and other local sales and use taxes on taxable items and services.

There is also a use tax, which applies to those located in Worthington who buy items or services without paying Worthington sales tax to the vendor. Rates are the same for the use tax as they would be for the sales tax.

Some expressed concerns about how they would determine which clients need to be taxed at the higher 7 percent rate (6.5 percent state sales tax plus .5 percent local sales tax) and which do not.

“We’re going to have to track every single invoice now?” asked one woman.

A lot of the bigger clients know the rates they should be paying, answered Carter, if not, he suggested local retailers “put a bug in their ear, because that would save you a lot of trouble down the road.”

Scott Petersen, of Petersen Cleaning and Supply, said he sells items and services by retail, delivery and over the internet, and attended the meeting to determine which of those areas would be taxed.

“For carpet cleaning we’re 30 miles, 60 miles around here. I had to find out if they got charged,” he explained. “As long as we’re doing the work in town they get taxed.”

He said he will likely ask the company’s bookkeeper to begin separating invoices into those goods or services provided in Worthington and those provided outside the city limits.

The Worthington local option sales tax was approved by residents at the Nov. 4 general election for the purpose of funding the construction of a Community Center Complex and renovations to Memorial Auditorium.

Collection of the tax will begin April 1.

To view the entire fact sheet distributed at the meeting, visit www.taxes.state.mn.us, click on “Sales and Use Tax,” then click on “Worthington 0.5% sales and use tax,” under the heading “Featured Topics.”

Tags: local option sales tax, news, worthington, salestax