Are Services in Minnesota Taxable? A Comprehensive Guide

In Minnesota, the general rule is that tangible personal property is taxable unless specifically exempt, and services are not taxable unless specifically included. Some services are subject to sales tax in Minnesota. For information on a specific service, see the data sheet (PDF) or industry guide below. Most professional services are not subject to taxation.

However, sales of some products may be subject to taxes. In the state of Minnesota, services are generally not considered taxable. While most services are tax exempt, there are some exceptions. For example, a service whose work includes the creation or manufacture of a product is most likely to be taxable and, therefore, will most likely have to pay sales tax for the service.

Assets that are subject to sales tax in Minnesota include physical property, such as furniture, appliances and motor vehicles. Sales tax applies to retail sales of taxable services, tangible personal property, or specific digital products manufactured in Minnesota. Businesses collect sales tax due on items and services sold at retail on behalf of the state. Most retail sales are taxed in Minnesota.

A “retail sale” means any sale, lease, or rental of tangible personal property for any purpose other than resale, subletting, or subleasing. A retail sale also includes services for any purpose other than resale. However, some sales are specifically exempt by law from sales and use tax. These exemptions are discussed later in this section.

All firms or organizations served in Minnesota are subject to the provisions of the Minnesota Unemployment Insurance Act. Both the Internal Revenue Service and the Minnesota Department of Revenue require employers to deposit withheld taxes on a regular basis and to file periodic returns. Both the Internal Revenue Service and the Minnesota Department of Revenue impose penalties and interest for not making deposits on time, not filing required returns on time, and not filing forms W-2 and 1099. The taxation of various transactions (such as services and shipping) may vary from state to state, as can policies on topics such as whether the excise taxes or installation fees included in the purchase price are also subject to sales tax. The transaction is considered a non-taxable service and the locksmith is required to pay sales or use tax on purchases of the parts and materials used to perform such service. All attorney services are provided by independent attorneys hired through an independent law firm and are subject to a separate agreement between lawyer and client.

Sales Tax Helper LLC is not a law firm and its website, as well as technology-based self-help services and forms, are not a substitute for advice from an attorney. The Internal Revenue Service imposes a penalty for not providing correct information on W-2 forms and for not providing a correct tax identification number. Determining if the products or services your company sells are taxable in Arizona is the first step in complying with sales taxes. A digital product or service is anything that is delivered electronically, such as an album downloaded from iTunes or a movie purchased on Amazon. The Internal Revenue Service and the Minnesota Department of Revenue provide withholding tables so that the employer can determine the appropriate withholding amount. Registration is done online or through an automated telephone system, and must be completed as soon as possible after salaries are paid to employees providing covered services in Minnesota, but no later than the due date of the first detailed salary report. Minnesota takes the position that delivery and shipping costs related to taxable items or services are taxable.

Applies when you buy, lease or rent taxable items on services used in your business without paying sales tax to the seller.