If you buy taxable items online or in another state, for use in Minnesota, you must pay Minnesota sales or use tax on those purchases. If the seller ships the items to you in Minnesota but does not collect Minnesota sales tax, you owe Minnesota use tax.
Why Don’t All Out-of-State Businesses Collect Use Tax?
Out-of-state retail businesses are required to register and collect Minnesota tax if they have a physical presence in Minnesota (such as a store, warehouse, salesperson, etc.) Mail order companies and others who solicit sales in Minnesota – but have no physical presence – generally are not required to register. However, many of these businesses voluntarily collect tax as a convenience to their customers.
Tax Paid to Another State
Minnesota allows a credit for state or local sales tax legally required to be paid to another state or locality. When you buy items outside Minnesota, the seller may be required to charge you that state’s state and local sales tax if you pick up the items there, however, you still owe use tax to Minnesota if the other state’s sales tax rate is less than Minnesota’s general sales tax rate. You pay the difference in the two rates as variable rate use tax on your sales and use tax return.
Local Use Taxes
You may also owe local use tax. Several cities and counties have local sales and use taxes. If you buy taxable items for use in these localities and are not charged local sales tax, local use tax is due. Fact Sheet 164, Local Sales and Use Taxes
, provides detailed information on these taxes.
Use Tax for Individuals
If the items you are buying are for your personal use (rather than for use in a business), you can buy up to $770 worth of taxable items during the calendar year without paying use tax. However, if your purchases total more than $770, you must pay use tax on the entire amount. This exemption does not apply to businesses.
Businesses with a Minnesota tax ID number
Businesses not required to have a Minnesota tax ID number
If your purchases subject to use tax were for business use and total $18,500 or less for the year, file a return and pay the tax due by April 15 of the following year.
If your total purchases subject to use tax exceeds $18,500 before the end of the year, your return and payment are due by the 20th day following the end of the month in which your purchases exceeded $18,500.