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Last Updated: 8/7/2017

Taxable Purchases

Taxable Purchases

Items you use to operate your business are taxable unless an exemption applies. Several services are also taxable. If you do not pay sales tax on a taxable purchase, then use tax is due. See below for specific examples.

 

​Taxable Purchases

​Examples

​General Items
  • ​Computer hardware and software, see Fact Sheet 134
  • Furniture and fixtures
  • Office equipment and supplies
  • Shelves, cabinets, and racks
  • Tools
​Taxable Services

For more information, see a complete list of taxable services.

​Advertising
  • ​Business cards
  • Calendars
  • Cups and mugs
  • Key chains
  • Pens

For more information, see Fact Sheet 133, Advertising.

Shop supplies

You must pay sales or use tax when you purchase shop supplies used to clean or maintain the shop, equipment, and tools. (Common examples include “floor dry” products, cleaning products, and rags – though cleaning products and rags may be exempt if they are used up while making repairs.)

For more information, see the Motor Vehicle Repair Industry Guide.

Off-road fuel use

Vehicle dealers must pay sales or use tax on fuel used for business activities, except when the fuel is used in a licensed motor vehicle.

For example, a vehicle dealer uses liquefied petroleum gas for heating and refrigerating. In this situation, the dealer paid state petroleum tax when they purchased the fuel, but later received a refund or credit of the state tax; the dealer must pay use tax on the cost of fuel.

Use tax

If you buy equipment, supplies, or other taxable items for your business and the seller does not charge Minnesota sales tax, you owe use tax on the cost of the items. If your business is located in an area with a local tax, you may also owe local use tax.

Some common situations where you may owe use tax include:

  • You buy taxable items or services online without paying sales tax
  • You withdraw an item from inventory to use (instead of selling it), donate, or give away
  • You buy taxable items outside of Minnesota
  • You buy taxable items in another Minnesota city or county with a lower (or no) local sales tax

For more information, see Fact Sheet 146, Use Tax for Businesses and Fact Sheet 164, Local Sales and Use Taxes.

Items taken out of inventory

If you take taxable items out of inventory to use in your business, use tax is due on the cost of those items. Common reasons for taking items out of inventory are:

  • Employee use
  • Other business activities
  • Giveaways or donations
  • Providing nontaxable services
< ​Sales Tax Exemptions Filing Returns and Record-keeping >
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