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Last Updated: 12/3/2014

Internet and Out-of-State Purchases

Minnesota sales or use tax is due when you buy taxable items online or in another state and use them in Minnesota. If the seller does not collect Minnesota sales tax, you owe use tax.

Who is required to collect Minnesota sales tax?

Out-of-state sellers must collect Minnesota sales tax if they do any of the following:

  • Have a physical presence in Minnesota (such as a store, warehouse, office, or salesperson)

  • Have “solicitors” in Minnesota who refer customers through a link on a website or in other ways (for more information, see Solicitor Nexus)

  • Have an agreement with an online marketplace that requires them to collect sales tax on Minnesota sales

  • Registered for a sales tax account through the state of Minnesota or Streamlined Sales Tax

Note: Retailers must register for a Minnesota sales tax account before collecting any tax from customers.

What is use tax?

Use tax is the counterpart of sales tax, with the same exemptions and rate – 6.875% plus any local tax that applies. Use tax is due if you buy a taxable item for use in Minnesota and the seller does not collect sales tax on the purchase.

Examples include purchases you make:

  • On the Internet

  • Through a catalog or home shopping channel

  • In other states or countries (even if foreign taxes or duty have been paid)

Use tax applies to the same items as sales tax. Examples of taxable items often bought online or out-of-state include:

  • Jewelry, art, or tools

  • Boat motors, snowmobiles, or ATVs

  • Furniture, appliances, or electronics

For more information, see:

Local Use Taxes

Some cities and counties have local sales and use taxes. Local use tax is due when you buy taxable items for use in one of these cities or counties and the seller does not collect local sales tax on the purchase. For more information, see: Fact Sheet 164, Local Sales and Use Taxes

Tax paid to another state

When you buy items in another state, the seller may collect sales tax for that state. When calculating the Minnesota use tax on these purchases, you subtract state or local sales taxes you paid to the other state.

Example
You own a business in Winona, Minnesota. You buy office supplies at a store in LaCrosse, Wisconsin, and bring the supplies back to Winona for use in your business. The store charges 5.5% sales tax on your purchase. (This rate includes Wisconsin’s 5% state tax and LaCrosse County’s 0.5% local tax.)

You still owe Minnesota use tax, but the rate is reduced to reflect the sales tax you paid in Wisconsin, as shown below.

    Minnesota sales tax rate:                  6.875%
  Wisconsin sales tax charged:           5.500%
    Minnesota use tax due:                     1.375% 
 

Use tax for individuals

Each calendar year, individuals can buy up to $770 worth of taxable items for personal use without paying use tax. If your purchases for the year total more than $770, you must pay use tax on the entire amount. For more information, see Individual Use Tax.

Due dates

Most businesses must report and pay use tax on their Sales and Use Tax return. Other businesses and individuals report and pay use tax on a separate return. See the table below for details and due dates.

If you are:
Report and pay use tax:
A business with a Minnesota tax ID number
When you file your next Sales and Use tax return
A business that’s not required to have a Minnesota tax ID number and your purchases subject to use tax are $18,500 or less in a calendar year
By April 15 of the following year (use Form UT1, Use Tax for Individuals)
A business that is not required to have a Minnesota tax ID number and your purchases subject to use tax total are more than $18,500 in a calendar year
By the 20th day following the end of the month in which your purchases exceeded $18,500 (use Form UT1, Use Tax for Individuals).
An individual
By April 15 of the following year (file online or use Form UT1, Use Tax for Individuals)