Purchases and Use Tax

derek.l.anderson Mon, 05/13/2019 - 14:35

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Purchases and Use Tax

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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 the table below for specific examples.

Taxable Purchases	Examples
General items	Cash register tapes Computer hardware and software Furniture and fixtures Office equipment and supplies
Laundry services	Coats and coveralls Floor mats and rugs Shirts Work uniforms For more information, see Laundry and Cleaning Services.
Promotional items	Calendars Key chains Pens Note: Clothing items, such as T-shirts and caps, are not taxable.
Safety equipment and supplies	Breathing masks Fire extinguishers Hearing protectors Safety glasses or goggles (nonprescription) Welding gloves or helmets
Shop supplies	Cleaning products “Floor dry” products Rags Note: cleaning products and rags may be exempt if they are used up while making repairs.
Tools and equipment	Lifting equipment Paint booths Power tools Wrenches
Utilities	Electricity Gas for cooking and heating Water
Taxable services	Building cleaning and maintenance industry guide Detective and security services Lawn and garden maintenance For more information, see a list of taxable services.

Donations [+]

Nontaxable Purchases [+]

Subcontracted Repairs and Services

If you subcontract with another business for repair work or services, do not pay sales or use tax on your purchase. Instead, give the subcontractor a completed Form ST3, Certificate of Exemption. Specify the resale exemption.

But you must charge sales tax to your customer for any taxable subcontracted labor, parts, or materials. Charges for repair labor are not taxable.

Clothing

General clothing items are not taxable. Examples include:

cloth or latex gloves
coveralls and uniforms
disposable clothing
steel-toe shoes or boots

For more information, see Clothing.

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 Use Tax for Businesses and Local Sales and Use Taxes.

Purchases and Use Tax

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Purchases and Use Tax