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Last Updated: 12/31/2015

Nontaxable Sales

You do not need to charge Minnesota sales taxes when you:

  • Deliver products or services to customers outside of Minnesota
  • Provide nontaxable advertising services

Delivered outside of Minnesota

Products or services delivered to a customer outside of Minnesota are not subject to Minnesota tax. No exemption certificate is required. You must maintain records that show the items were shipped to a customer outside of Minnesota.
 

The customer may owe use tax in the state where the product was delivered.

Nontaxable advertising

Video production services are not taxable when you provide them as part of a sale of nontaxable advertising services. To qualify as a provider of nontaxable advertising, you must meet three requirements:

  • The final product has no use beyond advertising (such as for employee training)

  • You create the advertising (rather than sending the raw video to an ad agency)

  • You work directly with the advertiser (rather than as a subcontractor)

If you meet the above requirements, do not charge sales tax. Your invoice must clearly state that you provided “creative promotional services.” No exemption certificate is required.

Note: You must pay sales or use tax on all taxable inputs used to create the advertising. For more information, see the Taxable Purchases section on the Purchases page within this guide.

Sales tax exemptions

Video sales to certain types of customers and for certain uses are not taxable. You must charge sales tax unless the customer gives you a completed Form ST3, Certificate of Exemption. The customer must complete all of these required sections on the form:

  • Purchaser’s name and address
  • Purchaser’s identification number
  • Type of business
  • Reason for exemption
  • Signature

You must keep the Form ST3 in your records.

Common reasons why a customer may claim an exemption include:

  • Industrial production – such as instruction videos included with a retail product
  • Resale – the customer intends to resell the video products at retail  
  • Qualified exempt organizations – the customer is an organization that is exempt under state law or is granted sales tax exempt status by the Minnesota Department of Revenue
  • TV commercials – items used or consumed in preproduction, production, or postproduction of TV commercials

Note: Sales to advertising agencies are taxable unless an exemption listed above applies.

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