Title
RESOLUTION AUTHORIZING THE CITY TO ENTER INTO AN UPDATED AGREEMENT WITH THE MINNESOTA DEPARTMENT OF REVENUE TO ADMINISTER THE CITY OF DULUTH’S GENERAL SALES AND USE TAX.
Body
CITY PROPOSAL:
RESOLVED, that the proper city officials are authorized to enter into to an agreement, substantially in the form of the agreement attached as Exhibit A, with the Minnesota Department of Revenue to administer the City of Duluth’s general sales and use tax.
Statement of Purpose
STATEMENT OF PURPOSE: This resolution authorizes entering into an updated agreement with the Minnesota Department of Revenue to administer the City of Duluth’s general sales and use tax.
The Minnesota Department of Revenue (DOR), in accordance with state law, has been administering the City of Duluth’s general sales and use tax collections since 2006. The City has an existing agreement with DOR in which the City is charged a flat 1.35% fee on sales tax collections. In 2024, the DOR placed a temporary pause on charging the 1.35% fee based on a review of DOR administrative costs and the fee DOR was charging. The DOR determined that a lower administrative fee should be charged.
The new agreement establishes a flat fee of up to 1.00%. The DOR is currently charging 0.90%. An updated agreement will be required if the DOR proposes to increase the flat fee over the 1.00% ceiling.
2025 budgeted sales tax revenue is $26,367,300. The fee reduction (1.35% to 0.90%) results in approximately $118,650 less in administrative fees for the City based on budgeted 2025 sales tax collections.