1. The Minnesota State Colleges and Universities System is an Equal Opportunity employer and educator. Tax Update April 22, 2008 Ann Page, Tax Specialist Steve Gednalske, Tax Administrator

2. The Minnesota State Colleges and Universities System is an Equal Opportunity employer and educator. NAVIGATING THE TAX WEBSITE How to find what you need

3. Slide 3 Tax Information Website

4. Slide 4 Website Scenarios Is Tax or the College responsible for filing the Minnesota Care tax return? Find the answer on the Campus reporting requirements table! http://www.finance.mnscu.edu/taxinformation/campusre porting/requirementstable.htmlhttp://www.finance.mnscu.edu/taxinformation/campusre porting/requirementstable.html

5. Slide 5 Website Scenarios A vendor has requested an updated MN Sales Tax exemption certificate from our college – is this available on the Tax website? Yes! ST-3 can be found for each campus http://www.finance.mnscu.edu/taxinformation/sale stax/form_st3_information.htmlhttp://www.finance.mnscu.edu/taxinformation/sale stax/form_st3_information.html

6. Slide 6 Website Scenarios Some student workers are unsure how to complete their W-4 forms – is there somewhere that I can send them for guidance? Federal Withholding Guidance http://www.finance.mnscu.edu/taxinform ation/studentpayroll/fedwithholdingguida nce.htmlhttp://www.finance.mnscu.edu/taxinform ation/studentpayroll/fedwithholdingguida nce.html

7. Slide 7 Tax Information Website Minnesota State Colleges & Universities –http://www.mnscu.edu/http://www.mnscu.edu/ System Employees –http://www.chancellor.mnscu.edu/http://www.chancellor.mnscu.edu/ Division Website –http://www.chancellor.mnscu.edu/divisionsites.htmlhttp://www.chancellor.mnscu.edu/divisionsites.html Finance –http://www.finance.mnscu.edu/http://www.finance.mnscu.edu/ Tax Information –http://www.finance.mnscu.edu/taxinformation/index. htmlhttp://www.finance.mnscu.edu/taxinformation/index. html

8. The Minnesota State Colleges and Universities System is an Equal Opportunity employer and educator. Year End Reporting Review

9. Slide 9 2007 Tax Reporting New Form Designs New Printer – U of MN Printing Services Postage Cost Up 6% 1098-T –239,338 records Student Payroll W-2 Wage Reports –21,776 records 1099-Misc –1061 records

10. Slide 10 $130,726 Total Cost 2007 Tax Reporting Cost Allocation

11. Slide 11 Reprints of Wage Reports Current Tax Year –Printed & mailed by the U of MN –Mailed on Tuesday or Wednesday –Employee receipt w/in 10-14 days of request Prior Tax Year –Printed & mailed by MnSCU Tax –Employee receipt w/in 10-14 days of request Frequency of Printing –Weekly thru 4/30 –Every other week after 4/30

12. Slide 12 Tax Forms & Addresses Lots of buzz from campuses regarding “bad addresses” Address Rules “Problem” should “go away” soon –CORE Data Project ELECTRONIC FILING –Be an Advocate!

13. Slide 13 Tax Form Address Rules Only Valid Addresses are used for tax reporting. To be a valid address the following must be true: –Foreign Zip Code must be spaces –Country must be spaces or US –Must have a Street 1 or Street 2 –Must have a City –Must have a State –Must have a Zip Code –Active = Current date between the addresses’ begin and end date.

14. Slide 14 Valid Address Hierarchy P (Permanent), H (Housing), L (Local), T (Temporary), B (Billing), K (Next of Kin). If no valid address is found in the above, then look for I (International Permanent). –For I type, State must be blank except CAN (Canada). If CAN the State is not required to be populated but if populated then must be a valid province. Zip must be blank.

15. Slide 15 Tax Form Address Rules If still no address found, then we look to see if there is a P address with a Country other than US but not null or spaces or has a Foreign Zip. Also, State must be blank except CAN but not required to be populated for Canada & if populated then must be valid province. Zip must be blank. Then we keep going, so if no P like this, then it looks at H, L, T, B, & K.

16. Slide 16 Year-end Tax Reporting Undeliverable Tax Forms? Send them to Tax! –Minnesota State Colleges and Universities –Attn: Ann Page,Tax Services –30 7th Street East, Suite 350 –St. Paul, MN 55101

17. The Minnesota State Colleges and Universities System is an Equal Opportunity employer and educator. MN Entertainer Tax & Foreign Visitors

18. Slide 18 MN Entertainer Tax & Nonresident Alien Taxation Minnesota 2% Entertainer Tax –Compensation and expense reimbursements paid to an entertainer or public speaker who is not a Minnesota resident are generally subject to 2% withholding. Federal 30% Nonresident Alien Tax –Compensation paid to a nonresident alien (foreign) for independent services are generally subject to 30% withholding.

19. Slide 19 Foreign Public Speakers NO WITHHOLDING Paid less than $2000, or Only reimbursed for expenses WITHHOLDING Paid $2000 or more –Withhold 2% on both compensation and reimbursed expenses

20. Slide 20 Foreign Entertainers WITHHOLD 2% All Payments, regardless of amount All Reimbursed expenses

21. The Minnesota State Colleges and Universities System is an Equal Opportunity employer and educator. Sales & Use Tax Updates Changes to County Sales Tax Rates

22. Slide 22 New Local Taxes in Five Metro Counties Beginning July 1, 2008, a new local.25% sales and use tax, and a $20 vehicle excise tax will begin. The five metro counties that have enacted the taxes are: Anoka County Dakota County Hennepin County Ramsey County Washington County

23. Slide 23 Brief Summary of New Local Taxes Sales and use tax: Beginning July 1, 2008, the five counties will have a one quarter of one percent (.25 percent or.0025) sales and use tax. The sales tax applies to retail sales made within the above five counties. The tax applies to the same items that are taxable under the Minnesota sales and use tax law.

24. Slide 24 Announcement Sales Tax Seminar via WebEx When: Thursday, June 26, 2008 at 10:30am-11:30am Email announcement and sign up instructions will be sent soon.

25. Slide 25 Sales tax Determine if amounts in various sales tax object codes are reported as gross or net of sales tax revenue. Example: $5,000 is reported in parking revenue for the month of March for MCTC. If the $5,000 is the total receipts from parking it already includes the collection of sales tax.

26. Slide 26 Calculate Sales Tax Rate Example – Minneapolis Community & Technical College –6.5% Minnesota State Sales Tax –.5% Minneapolis City Sales Tax –.15% Hennepin County Sales Tax (current) –.25% Hennepin County Sales Tax (July 1, 2008) Total Sales Tax Rate = 7.4% (as of 7/1/08)

27. Slide 27 Sales tax To determine taxable sales to report for parking for the month compute as follows: $5,000 divided by 1.074 = $4,655.49; then take the $4,655.49 x.074 = $344.51 sales tax vs. $5,000 x.074 = $370 sales tax

28. The Minnesota State Colleges and Universities System is an Equal Opportunity employer and educator. IRS Hot Topics Current Issues & Coming Attractions

29. Slide 29 IRS Hot Topics Independent Contractors vs. Employees –IRS focus item in the coming year is worker classification –Tax web site has link to IRS topic resources –NACUBO check list UBIT – Unrelated Business Income Tax –IRS currently selecting institutions for audit Bonds –Survey of 200 exempt organizations

30. Slide 30 “New” 3 % Withholding Requirement IRS Section 3402(t) All Government entities will be required to withhold 3 percent of all payments for services or property made after December 31, 2010.

31. Slide 31 Exceptions to the 3% Withholding Payments actually being withheld under backup withholding; Payments of interest; Payments for real property; Payments to tax-exempt entities or foreign Governments; Intra-Governmental payments; Payments made pursuant to a classified or confidential contract (as defined in section 6050M(e)(3)); Payments to Government employees that are not otherwise excludable from the new withholding provision with respect to the employees’ services as employees.

32. Slide 32 Additional Exceptions Political subdivisions of a State (or any instrumentality thereof) making less than $100,000,000 of payments for property or services are exempt from this requirement. Does not apply to any payments made through a Federal, State, or local Government public assistance or public welfare program for which eligibility is determined by a needs or income test. Does not apply to payments of wages Does not apply to payments with respect to which mandatory (e.g., U.S. source income of foreign taxpayers) or voluntary (e.g., unemployment benefits) withholding applies under present law.

33. Slide 33 De Minimis? There is no statutory exception for de minimis payments for property or services that is not exempt from this withholding requirement.

34. Slide 34 Proposed legislation Delay the implementation of the requirement that government entities withhold 3% by one year (start January 2012). Proposed legislation to remove the requirement to track cellular phone use for tax purposes. Note: This would not change rules regarding personal use of state property.

35. Slide 35 Contact Information Tax Services Website: http://www.financialreporting.mnscu.edu/ Tax_Services/index.html Steve Gednalske, 651-632-5016, Steve.Gednalske@so.mnscu.edu Steve.Gednalske@so.mnscu.edu Ann Page, 651-632-5007 Ann.Page@so.mnscu.edu Ann.Page@so.mnscu.edu