Sign In
Last Updated: 12/30/2015

Purchases

Items you use to operate your business are taxable, unless an exemption applies. Several services are also taxable.
 

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 those items. If your business is 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

Taxable Purchases

In Minnesota, sales tax applies to all goods, equipment, materials, and other items unless a specific exemption applies. This includes items you use to operate your business. Certain services are also taxable; these services are specified by state law.

Purchases

Description

General expenses

​Includes items used for administration, tracking, or any use other than production. Examples include:

  • Computer hardware and software, Fact Sheet 134
  • Office equipment and supplies
  • Furniture and fixtures

Taxable services

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

Travel expenses

As a video service provider, your travel expenses are taxable, even if you bill them to the customer. (You may not purchase travel services exempt for resale.) Examples include:

  • Lodging
  • Meals and beverages
  • Transportation (airfare, vehicle rental, or motor vehicle fuel)

Inputs used to produce nontaxable advertising

 

When you create and produce nontaxable advertising, you are generally acting as an advertising agent and must pay sales tax on all materials used to create the advertising. Taxable inputs include charges to create, modify, or alter a video.

For more information, see Fact Sheet 133, Advertising and Creative Promotional Services.

Nontaxable Purchases

You may buy certain items for your business without paying sales tax by giving your vendor a completed Form ST3, Certificate of Exemption. These exemptions depend on the type of item purchased and how it’s used in your business.

Nontaxable Purchases

Description

Air time

Placement of a commercial at a theater or on the radio, TV, or a website is not taxable. In this case, no certificate of exemption is required.

Resale

Items that you will resell to your customers – as is or as part of the finished product – are exempt from sales tax. Examples include stock video footage or voice-overs.

TV commercials

Materials and labor you buy and use to produce a TV commercial are exempt from sales tax. For details, see Fact Sheet 163, TV Commercials.

Materials/supplies

Materials and supplies are exempt from sales tax if they are used in an industrial production process – that is, consumed or destroyed in the process of creating a tangible product.

Capital equipment

Certain equipment used to create a tangible product for retail sale is exempt from sales tax. For more information, see Fact Sheet 103, Capital Equipment.

Note: None of these exemptions apply to purchases used to create nontaxable advertising services.

Capital Equipment

Purchases of capital equipment are exempt from sales tax if the equipment is used in both of the following ways:
 
  • to create a tangible product for retail sale
  • in Minnesota for at least half of its operating time
Examples of capital equipment used in video production that may qualify include:
 
  • cameras
  • lighting equipment
  • props
  • printing equipment
  • backdrops
  • recording equipment
  • editing equipment
  • production computers and software
  • processing equipment
  • accessories and attachments for production equipment
Note: Equipment is taxable if used in one of the following ways:
 
  • to produce photography that is electronically delivered to a customer

  • to provide nontaxable advertising services.

For more information, see Fact Sheet 103, Capital Equipment.
 
< Nontaxable Sales  ​Recordkeeping >
Return​​​​ to contents page for this guide