As a general rule, local sales tax should be charged to customers on all sales made in a local taxing area. The local tax applies to anyone who is from 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 of the local tax area.
EXEMPTIONS
Do not charge local sales tax on sales of taxable items when:
- You receive a completed Form ST3 – Certificate of Exemption.
- You ship or deliver the items to your customer outside the local area.
Note: You must collect local sales tax based on where your customer receives the taxable product or service. The tax should be calculated and charged to the customer based on the final destination of the delivered items.
Example
If a restaurant (outside the locality) buys and picks up materials in a city with a local tax, the local tax rule applies to this sale. To figure the tax, combine the state tax rate and the local rates. Apply the combined rate to the taxable sales price and round to the nearest full cent. Report local taxes when filing your Minnesota Sales and Use Tax. Note – the figures are reported separately from state taxes.
SALES TAX CALCULATOR
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.
More Information
For additional information, visit the Minnesota Department of Revenue website. Click for a table listing all of the local taxes.
If you have questions about sales tax or would like assistance with tax planning, Smith Schafer can help! Click here to schedule a free 30 minute consultation.
