Taxable Purchases and Use Tax
Taxable Purchases and Use Tax
Items you use to operate your business are taxable unless a specific exemption applies. Several services are also taxable. If you do not pay sales tax on a taxable purchase, then you owe use tax. See the following table for examples.
| Taxable Purchases | Examples |
|---|---|
| General items |
|
| Cooking and serving equipment |
|
| Utilities |
|
| Taxable services | For more information, see a complete list of taxable services. |
Note: Eating establishments generally do not qualify for the industrial production and capital equipment exemptions.
Vehicles and Trailers
Licensed vehicles and trailers are subject to the Motor Vehicle Sales Tax (not the state general sales tax).
Installing equipment and utilities to convert a vehicle or trailer to serve food is taxable.
For more information, see Motor Vehicle.
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.