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. Services in Minnesota are generally not taxable.
However, if the service you provide includes the creation or manufacture of a product, you may have to pay sales tax on the products. Some products are exempt from sales tax under Minnesota law. Examples include most grocery items, feminine hygiene products, and medical supplies. As in many other states, professional services in Minnesota are generally not taxable unless they result in the creation of a product for sale.
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 special taxes or installation fees included in the purchase price are also subject to sales tax. For sales with taxable and exempt products, taxes must be charged based on the percentage or weight of the taxable goods. This is a free service, but preparing Minnesota sales tax returns can be time consuming, especially for larger sellers. Basically, if the item being shipped to the buyer is considered taxable, the shipping cost is also considered taxable, and if the item being shipped is not taxable, the shipping cost is also not considered taxable.
Companies in other states must collect and remit sales or use taxes from Minnesota on all taxable sales made while in the state The state of Minnesota wants you to charge sales tax on shipping costs to your customers if the items you shipped are subject to taxes. Shipping and handling charges in Minnesota are considered part of the sales price, even when indicated separately, and should apply to taxable sales and omitted from exempt sales. We recommend that companies review the laws and regulations established by the Minnesota Department of Revenue to stay up to date on what assets are taxable and which are exempt, and under what conditions. Because books are taxable in the state of Minnesota, Mary charges her customers a lump-sum sales tax of 7.625% on all sales.
Taxing transactions involving services, shipping and installation of tangible goods can be a bit complicated, as several laws apply to slightly different situations. Determining if the products or services your company sells are taxable in Arizona is the first step in complying with sales taxes. If you sell taxable goods to Minnesota residents and have inventory stored in the state, you likely have a link and an obligation to collect and remit taxes. If taxable and non-taxable items are shipped together, the percentage (based on the sales price or weight of the item or items in question) of the shipping costs related to the taxable items must be taxed.
All sales of tangible movable property and some services are subject to tax, unless there is a legal exemption or the purchaser files a completed Form ST3, Certificate of Exemption,.
