Who Does What? Guide to MN Property Tax SystemsTax Glossary
CATEGORICAL AID: Aid given to a local unit of government to LOCAL GOVERNMENT AID (LGA): A state government revenue
be used only for a specific purpose. sharing program for cities with low property wealth or high
service burdens that is intended to provide an alternative to
CIRCUIT BREAKER: See "Property Tax Refund." the property tax.
CLASS RATES: The percent of market value set by state law that LOCAL SALESTAX: A local tax, authorized by the state, levied on
establishes the property's tax capacity subject to the property the sale of goods and services to be used for specific purposes
tax. by the local government.
COUNTY PROGRAM AID: State property tax relief aid to counties,
distributed with a formula based on needs (households on
foodstamps, age of the population, number of serious crimes)
and tax base equalization for counties with smaller tax bases.
EDUCATION AID: The total amount of state dollars paid for K -12
education. This aid is paid to the school districts.
FISCAL DISPARITIES: A program in the Twin Cities metropolitan
area and on the iron range in which a portion of the commercial
and industrial property value of each city and township is
contributed to a tax base sharing pool. Each city and township
then receives a distribution of property value from the pool based
on market value and population in each city.
GENERAL PURPOSE AID: Aid given to units of government to
be used attheir own discretion. Examples are Local Government
Aid and County Program Aid.
HIGHWAY AID: Motor fuels tax and license tab money the state
distributes to counties, cities and townships for highways and
bridges.
HOMESTEAD: A residence occupied by the owner.
INDIVIDUAL INCOMETAX: A state tax on the income of residents
and non - residents with Minnesota sources of income that is
deposited into the state general fund.
LEVY: The imposition of a tax, associated with the property
tax.
LEVY LIMIT: The amount a local unit of government is permitted
to levy for specific services under state law.
LIMITED MARKET VALUE: Astate imposed limit on property value
increases for the purpose of calculating property taxes.
ASSOCIATION OF
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MINNESOTA COUNTIES
www.mncounties
LOCAL TAX RATE: The tax rate usually expressed as a percentage
of tax capacity, used to determine the property tax due on a
property.
MARKETVALUE: An assessor's estimate of what property would
be worth if it were sold.
MARKET VALUE AGRICULTURE CREDIT: A state credit to reduce
the property tax paid by agricultural homesteads to the local
taxing jurisdiction.
MARKET VALUE HOMESTEAD CREDIT: A state credit to reduce
the property tax paid by a residential homestead to the local
taxing jurisdiction.
PROPERTY TAX: A tax levied on any kind of property.
PROPERTY TAX REFUND: A partial property tax refund program
for those who have property taxes out of proportion with their
income. This program is available to homeowners and renters.
SALES RATIO STUDY: A study conducted by the
Department of Revenue of open market property sales, which
is then compared to local assessments to ensure that local
assessments adequately reflect the market.
STATE GENERAL PROPERTY TAX: A state - imposed property
tax on commercial, industrial, and seasonal recreational
properties.
STATE SALES TAX: A state tax (6.5 %) levied on the sale of goods
and services that is deposited into the state general fund.
TAX CAPACITY: The valuation of property based on market value
and class rates, on which property taxes are determined.
Minnesota School $ Boards Association
T
www.mnmsba.org
November 2006
L '* M
League of .Minnesota Cities
Cities promoting excellence
www.lmnc.orq
ASSOCIATION OF
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MINNES COUNTIES
Minnesota School Boards Association
League of Minnesota Cities
T Cities promoting excellence
Who woes i�Vhat2
A GUIDE TO MINNESOTA'S
PROPERTY TAX SYSTEM
ASSESSOR
• Locates the property to be taxed, estimates its market value (how much the property would sell for in today's market), and assigns it to
a class according to its use.
• Sends out notices in the spring to "all property owners."
• Multiplies the estimated market value of each piece of property by the tax capacity percentage set by law for its class.
The result is the tax capacity.
• Adds together the tax capacities for all the property in the taxing district and gives the total to:
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Property owners who disagree with
the assessor may appeal to:
4W
BOARDS
OF APPEAL
AND
EQUALIZATION
CITY OR TOWNSHIP BOARD OF
APPEAL AND EQUALIZATION:
• The city council or township
board.
• Meets between April 1 and May
31.
COUNTY BOARD OF EQUALIZATION:
• County board of commissioners.
• Meets for two weeks in June.
STATE BOARD OF EQUALIZATION:
• Commissioner of Revenue.
• Meets between April 15 and
June 30.
• The review board may change
the estimate of the market value
of the classification.
MINNESOTA TAX COURT:
• Small claims or regular division.
•
TAXING DISTRICTS
(YOUR SCHOOL DISTRICT, CITY OR TOWNSHIP, COUNTY, ETC.)
• Determine the services (such as street maintenance, fire and police protection) to
be provided in the coming year.
• Estimate the costs of those services and determine what portion will come from
property taxes.
• Prepare proposed budget /levy amounts
• Send final levy amounts to: . o a . . . s • a . a . . . . . a . . . a .
• Hold Truth -in- Taxation (TnT) hearings on budgets (if required by state law).
• Send final levy amounts to: • • . o . .. a s s o . . s o . s o e 0 0 0 .
•
FINANCE DEPARTMENT
AUDITOR/TREASURER
• Determines the tax capacity rates and also uses the state general tax rate by
dividing the proposed levy by the proposed total amount of tax capacity in the
taxing district.
• Auditor uses state general tax rate to compute taxes (certified by the Commissioner
of MN Dept. of Revenue).
• Calculates the amount of each property owner's proposed state paid credits and
net tax amount.
• Prepares TnT notice and mails to each taxpayer.
Recalculates the amount of each property owner's tax based upon the final levy
amounts.
•
•
•
• Prepares a listing of the tax on all property owners in the county and gives the list
to:. . o . . • e . . . . o . . . . o . • . o a . e . o . . . . a . •
Creates the property tax statements from the county tax lists.
• Mails the statements by March 31 of the following year.
• Property owners mail in their payments (due in two installments on May 15 and
October 15; except that the second installment of taxes on agricultural property is
due on November 15). 0
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