Sales and use taxes can be the most complicated tax obligations for many businesses. Generally, local sales tax should be charged to customers on all sales made in a local taxing area unless the customer provides an exemption certificate. The local tax applies to anyone outside the city or county and picks up items in the local area for business or personal use. This applies even if the customer takes the items outside the local tax area.
Stay up to date on these Changes for Minnesota Local Sales & Use Tax
June Accelerated Payments
Future June accelerated payments may be reduced if a November forecast determines a budget surplus. The threshold for the June accelerated underpayment penalty may also be reduced.
Exclusion: As of July 2021, certain vendors of construction materials are excluded from the June accelerated payments. Vendors of construction materials are excluded if 50 percent or more of their sales revenue is of the following construction materials for the fiscal year ending June 30:
- Lumber, veneer, plywood, wood siding, or wood roofing
- Millwork, including wood trim, wood doors, wood windows, or wood flooring
- Concrete, cement, and masonry
Public Safety Facility Construction
Supplies, materials, and equipment used in the construction, remodeling, improvement, or expansion of fire and police stations are exempt from sales tax.
Season Tickets to College Events
Sales of admission to collegiate athletic events in a preferred viewing location for the season is exempt from sales tax when all the following apply:
- The right to purchase is used entirely to support student scholarships, wellness, and academic costs.
- The amount is separately stated from the admission price.
- The admission price is equal to or greater than the highest priced general admission ticket for the closest seat not in the preferred viewing location.
Student Group Fundraising
Sales made by student groups are exempt from sales tax when all the following apply:
- The sales are for fundraising purposes of elementary or secondary student organizations to fund extracurricular activities such as sports, arts, etc.
- The school district reserves the revenue raised for extracurricular activities.
- The money raised for a specific activity is spent on that activity.
Note: This restores the exemption that was in place before 2019.
Local Tax Changes
The following local areas are authorized to impose a local sales and use tax after voters approve a referendum at a general election. Note: These are new jurisdictions in which to collect sales tax or remit use tax in Minnesota.
- Carlton County
- Fergus Falls
- Grand Rapids
- Itasca County
- Little Falls
- Maple Grove
- Mille Lacs County
- St. Cloud
- St. Peter
- Waite Park
Sales Tax Calculator
There is no better time than now to review your state sales tax filing requirements. The Minnesota Department of Revenue website has a sales tax calculator to determine the state and local sales and use tax rate to apply to taxable purchases. To find the appropriate sales tax rate for a particular jurisdiction, enter a valid address and city, or enter the full nine-digit zip code. The nine-digit zip code method is the most accurate. The sales tax calculator does not include any special local taxes, such as lodging taxes or liquor.
Penalties & Interest
For filing incorrectly or missing deadlines, penalties can be up to 25 percent of an associated liability, and interest can be up to 15 percent.
Knowing where, how, and when to file can be a significant hurdle with the sheer volume of state and local-related forms. Filing dates, deadlines, data requirements, and approaches vary, leading to filing errors.
If a company overpays sales or use tax, getting these funds back can be challenging. This manual process can take up to three-to-four months.
Questions about Sales & Use Tax Updates?
For additional information, visit the Minnesota Department of Revenue website. The Department has free classes and webinars on sales and use tax held throughout the state.
If you have questions about the changes or would like assistance with tax planning, Smith Schafer can help!