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Last Updated: 10/26/2017

Frequently Asked Questions

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Sales and Use Tax

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800-657-3777
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  • What is "nexus"? Back to top

    For Minnesota tax purposes, “nexus” means your business has a taxable presence or sales in the state and must report and pay Minnesota taxes.

    Your business has nexus in Minnesota if it has a building or facility in the state. Your business may have nexus if you or another representative of the company make sales or perform other business activities in Minnesota. For more detailed information, see Revenue Notice 00-10, Sales & Use Tax - Nexus Standards.

    Unsure whether you have nexus in Minnesota? You may complete and submit Form ST101, Minnesota Business Activity Questionnaire for Determining Sales Tax Nexus. We’ll review the questionnaire and notify you if you are required to register and collect Minnesota Sales and Use Tax. ​

  • Are labor charges taxable?Back to top

    Sometimes. It may depend on the type of labor and whether it’s listed separately on an invoice. 
    Taxable labor charges include:
    • Fabrication labor – to make or create a product, or to alter an existing product.
    • Installation labor – to set an item of tangible personal property or equipment into position, or to connect, adjust or program it for use.
    Non-taxable labor charges include:
    • Construction labor – to attach an item or materials to a building or land (“real property”).
    • Repair labor – if listed separately from materials or parts on the invoice.

  • What is an acceptable exemption certificate? Back to top

     

    If a purchaser is exempt from paying sales tax, they must provide the seller with a fully completed exemption certificate at the time of the purchase. Purchasers are responsible to know if they qualify for an exemption, and they will be held responsible for any tax, interest and penalties that apply if the purchase isn’t eligible for an exemption.
    The Minnesota Department of Revenue accepts the following forms as valid exemption certificates:
    • Form ST3, Certificate of Exemption (Minnesota Department of Revenue form)
    • Form F0003, Certificate of Exemption (Streamlined Sales Tax form)
    • Uniform Sales and Use Tax Certificate (Multistate Tax Commission form)
    • Exemption certificates from other states, if they meet the requirements below
    • Exemption certificates prepared by the purchaser, if they meet the requirements below
    An exemption certificate must contain the following information to be valid:
    • Purchaser’s name and address
    • Purchaser’s Minnesota tax ID number or if they don’t have one, any of the following:
      • Tax ID number from another state (and list the state of issue)
      • Federal employer ID number (FEIN)
      • Driver’s license (and list the state of issue)
    • Purchaser’s type of business
    • Reason for the exemption
    • Purchaser’s signature

     

  • How often do I need to file Sales and Use Tax?Back to top

    Sales and Use Tax may be due on a monthly, quarterly, or annual basis. The due date is based on the average monthly tax you reported in the previous year, as shown in the table below. 
     
    Filing Frequency Average Tax Reported Due Date​
    Annual​ Less than $100 per month​ Feb. 5 of the following year​
    Quarterly Less than $500 per month​ 20th day of the month after the end of the quarter​
    Monthly More than $500 per month​ 20th day of the month after the end of the month
     
    When a due date falls on a weekend or legal holiday, the due date is the next business day.

  • Do I need to file an amended return? Back to top

    If you have made and error on a previously filed sales and use tax return, you must file an amended return to correct the error.  You may file an amended return up to 3 ½ years from the date the original return was due.

    Common reasons for amending your return are:

    • You did not report enough tax on your original return
    • You reported too much tax on your original return
    • You reported the tax on the wrong tax line
    • You incorrectly charged tax to a customer and have refunded the tax to your customer
    • You received a valid exemption certificate from a customer to exempt a sale reported in a prior period and have refunded the tax to your customer

    An amended return should not be filed to claim:

    • Bad debt loss
    • Returned checks
    • A refund of sales or use tax paid

  • Who needs to register for Sales and Use Tax?Back to top

    You must register to collect sales tax if you make taxable retail sales in Minnesota. This includes businesses outside Minnesota who:
    • have an office, distribution, sales, or sample room location; warehouse or other place of business in Minnesota, either directly or by a subsidiary
    • have a representative, agent, salesperson, canvasser, or solicitor in Minnesota – on either a permanent or temporary basis – who operates under the authority of the retailer or its subsidiary for any purpose
    • deliver items into Minnesota in their own vehicles
    • provide taxable services in Minnesota
    If you make retail sales in any cities, counties, or other local taxing areas that have a local sales tax, you must also register the local sales tax(es).
    If you don’t have taxable sales in Minnesota, but you make taxable purchases, you must register to pay use tax.​

  • Can I file for an extension? Back to top

    There are no extensions given for Sales and Use Tax returns. If you don’t file your return on time, we’ll assess a 5 percent penalty. If you don’t pay the tax on time, we’ll assess a penalty of: 5 percent if your payment is up to 30 days late, 10 percent if it’s 31 to 60 days late, and 15 percent if it’s more than 60 days late.

    For more detailed information on penalties, see I was assessed penalty and interest.

  • Why was I assessed penalty? Back to top

    Penalties are assessed for different reasons. The most common penalties for Sales and Use Tax are for late filing or late payment of the tax.

    If you don’t file your return on time, we’ll assess a 5 percent penalty. If you don’t pay the tax on time, we’ll assess a penalty of: 5 percent if your payment is up to 30 days late, 10 percent if it’s 31 to 60 days late, and 15 percent if it’s more than 60 days late.

    For more detailed information on penalties, see I was assessed penalty and interest.  

  • Can penalties be abated (cancelled)?Back to top

    You may request that we abate (cancel) a penalty if you can show “reasonable cause” – an acceptable reason – for why your return or payment was late, or why you didn’t pay electronically when required to do so.

    For more information on penalty abatements and how to apply, see:

    Do I qualify for a penalty abatement?

    Revenue Notice 97-01, Penalties-Abatements-Policies and Procedures

  • How do I update my business information? Back to top

    If you have a Minnesota tax ID number, you can make some changes through our e-Services system. For other changes, you may have to contact our Business Registration unit.

    For more information, see Update Business Information.

  • What if I don’t owe any tax? Back to top

    If you have a Minnesota tax ID number but don’t owe any tax for the reporting period, you still must file a return stating that zero tax is owed.​

  • What is use tax? Back to top

    Use tax complements sales tax and applies when you buy, lease or rent taxable items or services and aren’t charged sales tax by the seller. Use tax is based on the cost of your taxable purchases, like sales tax (and subject to the same exemptions). You are responsible to pay use tax, when owed.  ​

  • What services are taxable? Back to top

    • Admissions
      • Admissions to places of amusement (including recreational areas and athletic events)
      • Making available amusement devices (including video games and games of chance)
      • Making available health clubs, spas, tanning facilities, reducing salons, steam baths, or athletic facilities
      • Granting membership to a sports or athletic facility
    • Building cleaning and maintenance
    • Delivery of aggregate
    • Detective, security, and alarm services
    • Laundry, dry cleaning, and alterations services
    • Lawn, garden, tree, and bush services
    • Lodging and related services
    • Massages (not medically prescribed)
    • Motor vehicle towing, washing, waxing, rustproofing, and cleaning services
    • Parking services
    • Pet grooming, boarding, and care services
    • Telecommunication services
    Within each of these broad categories there are some activities that are not taxed.
     
    See our sales tax fact sheets and industry guides for more information.

  • Why am I being charged a local sales tax that you don’t have listed on your website?Back to top

    By law, the Department of Revenue must administer all general local Sales and Use taxes. However, each local taxing jurisdiction may choose whether to administer their own special local taxes, or to have the department do it. Lodging, entertainment, food and beverage are some examples of special local taxes.

    For information about a local sales tax not listed on our website, contact the local government where the purchase was made.