There are five general sourcing rules that determine where a sale takes place and what taxes are due.

General sourcing rules have an order. Start with rule 1. If it does not apply, go to rule 2. When rule 2 does not apply, go to rule 3. The majority of sales fall into rule 1, 2, or 3.

1. Seller’s Address – When the purchaser picks up the product at the seller’s location, charge tax based on the business location.
2. Delivery Address – When the customer directs the seller to ship the product or service to a location, charge tax based on the location where the product or service is delivered.
3. Billing Address – When 1 or 2 does not apply, charge tax based on the customer’s address in your records.
4. When the above do not apply, charge tax based on the customer’s address obtained during the transaction (for example, the address on a customer’s check).
5. When an address is not available, charge tax based on the address from where the item was shipped or the service was provided.

Determining the Tax Rate

To determine the sales tax rate, use the location where the customer receives the product or service. We have resources to help you determine the total tax rate. See Calculate a Sales Tax Rate.

To help you determine the tax rate, use the tools under Resources on the Local Sales Tax Information page:

• Use our Sales Tax Rate Calculator. If you have a street address, it will identify the nine-digit ZIP Code for you.
• Use our Sales Tax Rate Map. You can visually confirm your location of interest by entering an address.
• Download our Sales Tax Rate Spreadsheet to use at your desk. You must know the nine-digit ZIP Code.
• Download our Sales Tax Rates and Boundaries Tables to program into your point-of-sale system.

Note: These options do not provide information on special local taxes. You must add any special local taxes to the total sales tax rate. See the Special Local Taxes section.

Report local taxes you collected on your Minnesota Sales and Use Tax return in e-Services.

• You must report taxable sales for each local area separately.
• Do not include sales tax collected in taxable sales amounts.
• e-Services calculates the local tax due for each local area from the taxable amount entered.

You do not need to charge local sales tax when:

• Your customer gives you a completed Form ST3, Certificate of Exemption.
• You sell direct-to-home satellite (DBS) services (not cable).
  • These services are subject to the Minnesota general rate sales tax, but not local sales tax.
• You sell to a local government.
  • Local governments do not pay local sales or use taxes. An exemption certificate is not necessary. 
  • Local governments are required to pay special local taxes such as food and beverage, admission, restaurant, liquor, and lodging taxes.