SF167

Purpose

• Create a temporary, refundable sales and use tax exemption for construction materials and equipment used in two specific projects in the City of Watertown: a new water tower and a wastewater treatment facility.

What the bill covers (Main provisions)

• Exemption/refund for eligible materials
  • Materials and supplies used or consumed in and equipment incorporated into:
  • Construction of a new water tower, and
  • Construction of a wastewater treatment facility
  • These materials must be purchased within specified dates:
  • Water tower: after April 30, 2024 and before February 1, 2026
  • Wastewater treatment facility: after February 28, 2022 and before July 1, 2025
  • The exemption is handled as a refund: the tax is collected as if the normal rate applied, then refunded in the same manner used for other Watertown projects under the state refund process.
  • Refunds for eligible purchases cannot be issued until after June 30, 2025.
• Funding for refunds
  • The money needed to make these refunds is appropriated from the general fund to the commissioner of revenue.

How the refund works (Tax administration)

• Tax is imposed and collected at the usual rate, but the amount is refunded to the purchaser.
• Refunds follow the same process used for other projects under Minnesota Statutes section 297A75, subdivision 1.
• Administration and timing follow state rules for refunds, with a specific refund eligibility date of after June 30, 2025.

Timing and eligibility details

• Target projects and time windows:
  • Water tower project materials must be bought within the April 30, 2024 to February 1, 2026 window.
  • Wastewater treatment facility materials must be bought within the February 28, 2022 to July 1, 2025 window.
• The exemption is not automatic at purchase; refunds are needed to realize the exemption.

Significance and potential impact

• Creates a temporary, targeted reduction in upfront project costs for Watertown by deferring state sales tax through a refund.
• Shifts the financial flow from immediate tax collection to a later refund funded by state dollars (general fund).
• Applies only to specific construction projects in Watertown and within the defined purchase windows.

Relevant Terms

• Watertown, City of Watertown
• sales tax exemption, refundable exemption
• construction materials, materials and supplies, equipment
• construction, reconstruction, upgrade, expansion, renovation, remodeling
• water tower, wastewater treatment facility
• refunds, refund process
• Minnesota State Statutes: 297A (chapter), 297A62, 297A75
• commissioner of revenue
• general fund, appropriation
• purchase windows: after April 30, 2024; before February 1, 2026; after February 28, 2022; before July 1, 2025
• timing: refunds issued after June 30, 2025

Relevant Terms section - Watertown - sales tax exemption - refundable exemption - construction materials - equipment incorporated into construction - water tower - wastewater treatment facility - refunds - general fund - commissioner of revenue - Minnesota Statutes 297A, especially sections 297A62 and 297A75 - purchase timing windows (dates provided in the bill)