Minnesota Sales Tax

Minnesota sales tax rate is 6.875%. However, some cities and counties charge additional local sales taxes. These rates need to be combined with the state rate when invoicing clients to determine what they should pay. The Minnesota Department of Revenue has a free lookup tool to help sellers find the right rates based on location. Minnesota sales tax is collected on most retail sales, including sales of tangible personal property and services. However, some items are exempt from tax or subject to special rates (e.g., automobile rentals and hotel rooms). It’s important to understand which taxes apply to your specific business so you can charge the correct amount and avoid penalties.

The state’s sales tax collection obligation is determined by whether you have a significant connection to the state, known as nexus. Historically, nexus was based on physical presence, but the Supreme Court decision in South Dakota v. Wayfair has enabled states to collect and remit sales tax based on economic connections as well.

How to Register For a Minnesota Sales Tax Permit?

Before collecting Sales tax in Minnesota, you must register for a sales tax permit. It’s illegal to collect sales tax without a permit, so getting this step out of the way as soon as possible is important. You can visit the Minnesota Department of Revenue e-Services website and log in to your account.

Once a business registers for sales tax, it must collect the correct tax on all taxable sales and remit it to the state. Failure to do so can result in penalties and interest charges. Additionally, Minnesota has strict requirements for reporting and filing that must be followed. Fortunately, automated sales tax compliance solutions make it easy for businesses to comply with Minnesota sales and use tax laws. These systems integrate with point-of-sale software to calculate accurate sales tax rates based on location and other factors. They also provide a dashboard environment where business users can manage their sales tax obligations.

Minnesota Sales Tax Exemption

Minnesota requires college, university, and system office employees to submit form ST3 to retailers when purchasing on behalf of the institution exempt from sales tax. These exemption certificates are valid until the information on them changes. The state recommends that these certificates be updated every 3 to 5 years. Sales tax rates vary by zip code and product category. The state’s Department of Revenue provides a calculator and rate table that help you calculate the correct amount of sales tax to charge your customers. You can also find out whether a particular item is tax-exempt or subject to special rates.

Minnesota Sales Tax Due Dates

The state of Minnesota requires retailers to file returns and remit collected sales tax on a regular basis. Businesses can avoid penalties and interest charges by staying current with filing deadlines. When you register for a sales tax permit, the state will assign your business a filing frequency, which will determine how often you must file and remit. The frequency will depend on the average amount of sales tax you collect from buyers in each state during a reporting period. It is important to review your filing schedule and prepare for any late filings or payments. If you miss a filing deadline, you can challenge the assessment through administrative court.