Below are the definitions and examples of each type.

Sales of taxable business inventory do not qualify for the isolated or occasional sale exemption. Business inventory is sold in the regular course of business.

To sell taxable inventory exempt from sales tax, you must obtain a completed Form ST3, Certificate of Exemption from the buyer.

For more information, see Isolated and Occasional Sales.

The clothing exemption applies to clothing suitable for general use. The clothing exemption does not apply to the following, which are taxable: fur clothing, clothing accessories or equipment, sports or recreational equipment, or protective equipment.

Examples of taxable clothing accessories or equipment:

Examples of taxable sport or recreational equipment:

Examples of taxable protective equipment:

For more information, see Clothing.

For sales tax purposes, sales price is the amount subject to sales tax. Sales price includes the following charges:

• All items required as a condition of the sale
• Delivery or handling charges
• Fabrication labor
• Installation charges
• Layaway fees
• Retail price of the product or service

• Service charges (trip charge, fuel surcharge, processing charges, etc.)
• Taxes that are the obligation of the seller

The entire amount billed to the customer is taxable, even if the charges are separately stated.

Sales price does not include the following charges:

• Credit allowed for tangible personal property taken in trade (trade-in allowance)
• Discounts or coupons (see the Discounts and Coupons)
• Interest
• Finance charges
• Taxes legally imposed on the consumer, if separately stated on the invoice

You should separately state sales tax on the customer’s invoice. If you include sales tax in the price, you must note that the item has tax included on the receipt or post a sign stating tax is included.

When a customer returns a taxable item, refund the purchase price and sales tax paid on refunded items.

Some cities and counties have local sales and use taxes. If you make sales into or are located in an area with a local tax, you may owe local sales or use tax. For more information, see Local Sales and Use Taxes.

To determine the sales tax rate, use the location where the product is received by the customer, typically your business or a delivery address. You can use the Sales Tax Rate Map or Sales Tax Rate Calculator to help you determine the sales tax rate.

For more information, see:

• Local Sales Tax Information
• Special Local Taxes
• Minneapolis Special Local Taxes

Ticket sellers who facilitate the sale sell admission tickets to an event or place of amusement on behalf of an event organizer. They are given tickets at no charge by the event organizer and generally return any unsold tickets to the organizer. Ticket seller facilitators include:

• convenience stores
• grocery stores
• remote sellers
• other retailers

Ticket seller facilitators sale do not purchase tickets for resale. They charge the customer for the tickets and may add additional service or delivery charges. They are responsible for collecting and remitting sales tax on the total sales price sold to the customer including any additional charges.

A ticket reseller is in the business of purchasing admission tickets for resale and must be registered to collect sales tax. (Minnesota Statute 297A.68 subd. 43).

Ticket resellers must collect and remit state sales tax and all applicable local taxes on the total sales price of the admission ticket.

Ticket resellers may purchase admission tickets exempt for resale by providing their vendor with a completed Form ST3, Certificate of Exemption. If the ticket reseller did not purchase tickets exempt for resale, the ticket reseller can either:

• use Form ST11, Sales and Use Tax Refund Request for a refund of sales tax paid on the original ticket price
• pass on credit for the tax paid on the original ticket price to their customer

If a reseller purchased the ticket from a seller that is not in the business of selling tickets, they cannot use a resale exemption certificate or file a purchaser refund claim. However, they may take the credit for the tax paid on the original ticket price when charging their customer.

The ticket reseller must keep records to document the price and tax paid when they purchase a ticket and when they resell a ticket. The credit allowed for sales tax paid can never be more than the tax paid on the original ticket or the amount of tax due on the total ticket sale.

Example: A venue will not accept an exemption certificate from a ticket reseller and therefore sells their tickets each with a charge of $5 sales tax. The ticket reseller then sells the tickets to their customers for a higher amount that would result in $7 sales tax on each ticket. The reseller either:

1. Charges and remits the entire $7 on the tax return.

The reseller would charge and remit the total $7 collected from the customer. They would then file Form ST11 directly with the department to recover the $5 sales tax they paid to the venue.

2. Charges and remits $2 on the tax return

When charging the customer, the retailer would credit the $5 they had already paid on their purchase of the original ticket and only charge $2 to the customer. When filing the return, they would report only the $2. They must keep records of the original tax paid, tax charged to their customer and the credit taken.

When event organizers directly sell tickets to and collect payments from the purchaser, they are required to collect and remit sales tax on the total sales price for the ticket, including any additional charges and fees.

When an event organizer sells tickets through a third party and the third party collects the payment, including additional charges, the third party ticket seller is responsible for collecting and remitting sales tax. However, if the event organizer collects the payment directly from the purchaser, they are responsible for collecting the sales tax.

Items shipped or delivered to a customer out of state are not taxable. You must keep records that show the items were shipped or delivered outside of Minnesota.

When you sell an exempt item, show the item separately on the invoice. You do not have to provide any other proof why no tax was charged. Common examples include:

• Clothing for general use, see Clothing
• Food (grocery items), see Food and Food Ingredients
• Prescription and over-the-counter drugs for humans, see Drugs

Note: Each of the above categories may include both taxable and nontaxable items. See the corresponding fact sheet for details.

Most services are not taxable. For more information, see:

• Personal Services
• Professional Services
• Taxable Services

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. You must keep the form in your records.

For the form to be complete, the customer must complete these required sections:

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

Note: The federal government may provide proof of government purchase and payment instead of Form ST3, Certificate of Exemption. For more information, see Government – Federal Government.

Gift certificates and gift cards are not taxable when sold. When a gift certificate or gift card is redeemed, charge sales tax on any taxable portion of the purchase. Apply the amount of the gift certificate or card as a cash payment.

Note: Your purchase of gift card or certificate stock is taxable.

Restocking fees are not taxable.

Quantity discounts are offered to urge customers to buy larger quantities. Charge sales tax on the discounted price.

Cash discounts are given if the customer pays for an item before the payment is due. Charge sales tax on the discounted price.

You must keep records to document the discount.

Generally, customers buy discount vouchers and group coupons online and then bring them to the retailer for the discount. The purchase of a discount voucher is not taxable. If the item (or service) is taxable, charge sales tax when the voucher or coupon is redeemed.

Note: Your records must support the tax calculation.

A rewards program is an incentive to encourage customer loyalty. The incentive can include points, checks, discounts, rebates, coupons, or any similar items in return for certain customer behavior.

The facts and circumstances of the specific program determine how sales tax is applied. The retailer’s records must support the tax calculations.

Retailer rewards programs are discounts and not taxable when they:

• Give a reward for enrolling or buying certain products and services
• Are refunded for store credit

When a reward is a discount, charge sales tax after the price reduction is made.

A reward is a discount when it:

• Is not purchased
• Is not provided in exchange for services
• Cannot be redeemed for cash
• Is not reimbursed by a third party

Charge sales tax after the discount is applied in the following rewards programs:

• Rewards cards – when a retailer offers rewards cards that have a barcode and the customer receives a greater discount the more they use the card.
• Punch cards – when a retailer offers rewards by running promotional events where a customer earns seller’s cash for spending a certain amount.
• Seller’s cash – when a retailer offers rewards by running promotional events where a customer earns seller’s cash for spending a certain amount.
• Store credit card – when a retailer offers an incentive for customers to open a new store credit card or use an existing store card by giving them a percentage discount.

Retailer rewards are taxable if they:

• Require the customer to pay cash (or other consideration) for the reward
• Require the customer provide services in exchange for the reward
• Are reimbursed by a third party
• Can be redeemed for cash

The reward’s value is subject to sales tax when the reward is used to purchase taxable goods and services.

Charge sales tax before the reward is applied in the following rewards programs:

• Secret Shoppers – a retailer hires individuals who agree to “act” as customers to evaluate services provided by employees. They receive a reward (such as a gift card) in exchange for their service.
• Credit Card Points – a credit card company or financial institution issues points to its customers to redeem for different types of rewards. These rewards are reimbursed by a third party.
• Bundled Rewards – when a taxable reward is combined with a nontaxable reward (discount), the whole reward is taxable unless the seller can provide documentation showing otherwise.

Rebates can reduce the purchase price or be sent to customers as cash or credit after the sale has taken place.

When rebates are issued in the form of a check, they are treated the same as cash.

When rebates are issued in the form of a voucher to be used on subsequent purchases with the same retailer or store who provided the rebate, the rebate is not treated as cash and reduces the selling price of the subsequent purchase.

The following purchases are subject to sales or 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.

Note: If you are not required to be registered for sales tax, you may register for use tax only to pay the use tax.

• 297A.61, Definitions
  • Subd. 3, Sales and purchases
  • Subd. 4, Retail sale
  • Subd. 7, Sales price
  • Subd. 9, Retailer and seller
• 297A.665, Presumption of tax, burden of proof
• 297A.68, Business exemptions
  • Subd. 2, Materials consumed in industrial production
  • Subd. 11, Advertising materials
• 297A.72, Exemption certificates

• 06-11, Sales Price Labor Charges

• Candy
• Capital Equipment
• Clothing
• Computer Software
• Delivery Charges
• Dietary Supplements
• Drugs
• Food and Food Ingredients
• Industrial Production
• Isolated and Occasional Sales
• Use Tax for Businesses

• Government – Federal Government
• Personal Services
• Professional Services