Did you know that any delivery going into Hennepin County is subject to the .15% Twins stadium tax? Minnesota florists are beginning to be hit hard with audits, owing big dollars to the County. With in 4 years all Minnesota retailers will be aduited. Get ready, get informed; You will be glad you did!

                   Here is a great starting point: http://mndor.state.mn.us/taxes/sales/local_tax_information/sales_local_taxes.shtml

Below is an article by the The Updater, a Resource for Small Business newsletter and information on Hennipin County’s website. The best way to prevent an audit is to be informed!

       In Minnesota, most of the audits we have seen for small business haveBeen sales tax audits. It appears as though compared to one year ago,sales tax audits for micro businesses (less than 100 employees) haveincreased by 700%. Resources for Small business took the time to call locals CPAs and see what their experience is, and they confirm our observations.Whereas in previous years, the auditors may have been more global in their way of looking at your previous tax filings, the new auditors areboth very green and “by the book.” They are less flexible about errors.If you have been fairly compliant all along, you should have little to worry about, especially if you’ve been using good accounting software like MYOB, QuickBooks, POS•IM or STX. Areas of weakness we notice for many businesses include:      
    Taxing freight. The rules changed on taxing freight back in 2002,yet we see many businesses who are not doing this. If you are one of them, you may want to talk with your CPA and see if s/he thinks you should go backwards and pay the taxes on freight.Taxing Services. Certain services have been taxable, again, since2002. Depending on the business type you have, you should review what is taxable in Minnesota to see if you should have been filing sales tax for your service. A great example is if RSB installs software or hardware, do be aware that this service is taxable. RE-installation is not. (Even if you don’t see that you’ve been taxed on that service, do be aware that RSB has been compliant with the law and paid sales taxes for those services).      
    Taxing Film, printing, backbar, internet purchases. If you are a photographer, you should have been paying use taxes on photographic film. Printing services are also taxable to the end user.Backbar in the hair industry is taxable.

      The biggest offender is internet purchases. Print your internet receipt and save it with your creditcard statement. Be sure to pay use tax on those purchases. MN will presume you did NOT pay use tax, otherwise.Protect yourself. If you are not taxing taxable sales for a particular customer, make sure you have the ST-3, Certificate of Exemption onfile for each and every client. These need to be filled out properly and signed by the client. Payroll Tax Audits and Unemployment Audits.
There are two main things that the Minnesota Auditors are looking for there: Subcontractors that should have been treated as employees andunderpayment of tip wages. Otherwise, if you are current on your payroll taxes, the likelihood that you will be audited for these reasons is smaller. Of the two types of audits, unemployment audits are more likely, but are not terribly time-consuming unless you don’t have good payroll records. What should you do if you’re audited?

      Make sure you have enough time to get your paperwork

in order. Your notification of audit will include a date on which you will be audited. You need to look at the calendar and decide whether or not you can realistically get organized by then. If not, immediately contact the agency and reschedule the appointment. If you have a choice, have the audit offsite. It may be better to have your CPA or accountant handle your audit, or at least have the audit at the auditor’s office. This way, the work at your location will have the minimum of interruptions. Most CPAs will handle your audit foryou if you so desire. If you do have the audit onsite, consider having your CPA or accountant there at least part of the time.
Don’t give your auditor the rattiest chair, the worstoffice, or rotten coffee. You wouldn’t believe what people put auditors through. One auditor reports that he was given a chair with square wheels. He looked at EVERY document and stayed longer than he would have had they been nice to him. To him, it was a sign that they had something to hide. DO have your stuff organized, be polite, and answer questions when asked them.
Do not add additional information, but also DO pay attention to what they’re looking at. Be professional!
Do not sign anything without CPA or Legal advice. You especially do not want to sign IRS form 872, which allows the IRS longer than statutory limits to audit and collect from you. 
Do stick up for what you know is right. With some of the“newbie” auditors, they will make mistakes on what is actually taxableor non-taxable. For example, we’ve seen a newbie auditor try to charge sales taxes for someone who clearly had a valid Certificate ofExemption. Feel free to use the documents from the State of Minnesotaand politely remind them of the facts.
Do not get into an emotional argument with an auditor. If you believe you’ve been unfairly treated, have your CPA or Tax Attorney step into the picture and resolve the issues for you.  

How do you prevent an audit?      
     There is no surefire way to prevent an audit. A good percentage of audits are done randomly. That being said, there are some things you can do to prevent red flags or ease the audit process if you are audited:     
   1. Keep good records. Make sure that you have your old records organized and easy to get at. Then, if you are audited, a minimum of  preparation time will be necessary. Sales tax audits and IRS audits can            be time-consuming even for the best-organized person.   
     2. Use an accounting package. Have backup for everything.      
  3. Don’t cheat. Do the best you can to be within the law. If you have a record of compliance, little errors will be less important to the auditor.      
   4. Educate yourself. The IRS and the State of Minnesota both have classes available to you to learn the proper laws. Also, talk to your CPA if you have any questions. 

Information and assistance  
E-mail: salesuse.tax@state.mn.us
Phone: 651-296-6181 Toll free 1-800-657-3777 Minnesota Relay 711 (TTY)
Fax: 651-556-3102
Write: Minnesota Revenue Sales and Use Tax Division Policy Services and Taxpayer Programs Mail Station 6330 St. Paul, MN 55146-6330  

Hennepin County Cities and Towns

 Bloomington Brooklyn Center Brooklyn Park Champlin Chanhassen* Corcoran Crystal Dayton Deephaven Eden Prairie Edina Excelsior Fort Snelling Golden Valley Greenfield Greenwood Hanover* Hassan Township Hopkins Independence Long Lake Loretto Maple Grove Maple Plain Medicine Lake Medina Minneapolis Minnetonka Minnetonka Beach Minnetrista Mound New Hope Orono Osseo Plymouth Richfield Robbinsdale Rockford* Rogers Shorewood Spring Park St. Anthony* St. Bonifacius St. Louis Park Tonka Bay Wayzata Woodland  * Part of this city is outside Hennepin County. Hennepin tax only applies to addresses within Hennepin County.

Hennepin County Zip Codes
The general zip codes for Hennepin County are listed below. Unfortunately, zip codes do not correspond exactly with the county boundaries, so some zip code areas are partly inside and partly outside the county. Zip codes that are primarily outside of Hennepin County are not listed.
 55111 55305 55311 55316 55317* 55327 55331 55340 55341* 55343 55344 55345 55346 55347 55356 55357 55359 55364 55369 55373* 55374* 55375 55384 55388 55391 55401 55402 55403 55404 55405 55406 55407 55408 55409 55410 55411 55412 55413 55414 55415 55416 55417 55418* 55419 55420 55421* 55422 55423 55424 55425 55426 55427 55428 55429 55430 55431 55435 55436 55437 55438 55439 55440 55441 55442 55443 55444 55445 55446 55447 55450 55454 55455 55458 55459 55460 55470 55472 55473 55474 55478 55479 55480 55482 55483 55484 55486 55487 55488  *Part of this zip code is outside Hennepin County. Hennepin tax only applies to addresses within Hennepin County

There are several “unique” zip codes listed above that are not cities, but rather are a zip code for a specific business. For example, banks and department stores in downtown Minneapolis may have their own zip code.

This entry was posted on Thursday, February 21st, 2008 at 3:35 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.