Last Updated on September 14, 2019
Most businesses starting in Minnesota that are selling a product or offering certain services will need to register for a sales tax permit. This is commonly referred to as a seller’s permit, sales tax license, sales tax number or sales tax registration.
The sales tax permit is obtained through the Minnesota Department of Revenue as a part of applying for a Minnesota Business Tax ID Number.
Check out the rest of this guide to find out who needs a sales tax permit, what products and services are taxable, how to register for a permit and reporting requirements.
Who needs a sales tax permit in Minnesota?
A business must register for a sales tax permit in Minnesota when:
- A business has “nexus” (significant presence in the state) such as a retail store, office, warehouse or inventory stored in a fulfillment center
- Selling products and taxable services in Minnesota
- Employees (including sales representatives or agents) are working in Minnesota
- An online business located in Minnesota is selling taxable products to Minnesota residents
- An out-of-state business selling to Minnesota residents and one of the
- Having 100 or more transactions to Minnesota residents annually or;
- Shipping 10 or more transactions annually to Minnesota residents totaling more than $100,000
What products and services are taxable in Minnesota?
There are a few exceptions, but almost all physical products are taxable when sold at retail in Minnesota. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
Certain manufacturing and agricultural equipment are tax-exempt in addition to baby products, groceries, certain medicines and medical equipment.
A list of taxable sales is available from the Department of Revenue.
Labor in most cases isn’t taxable in Minnesota. For instance, let’s say you broke the screen to your cell phone and take it to a cell phone repair shop to have it fixed. Sales tax would be added to the selling price of the new screen and any additional parts to fix the phone. The labor to replace the screen isn’t taxable. However, a business that makes furniture will indirectly have sales tax on labor. In this instance, let’s say this business is building a dining room table for a customer. Through labor, the pieces of wood are shaped, sanded and painted to build this piece of furniture. While the labor isn’t directly taxable, sales tax is charged to the final selling price of the table.
Digital products, with the exception of canned software (pre-made software), isn’t taxable.
Most services aren’t taxable in Minnesota, however there are a few exceptions, some of which include:
- Short-term lodging
- Admissions and amusement fees (health clubs, spas, golf clubs, movies, etc)
- Commercial building cleaning and maintenance
- Detective, security and alarm services
- Laundry, dry cleaning and alterations services
- Landscaping services
- Towing and car detailing
- Pet grooming, boarding and care services
A full list of taxable services is available from the Department of Revenue.
How to register for a sales tax permit in Minnesota
A sales tax permit can be obtained by registering for a Minnesota Business Tax ID Number.
Information needed to register includes:
- Federal Employer Identification Number (FEIN), or SSN if a sole proprietorship with no employees
- Type of business entity (Sole Proprietorship, Partnership, Corporation, LLC)
- Legal business name and/or DBA name
- Business Address
- North American Industry Classification System (NAICS) code
- Names, addresses and SSN of owners/officers/members
- Date business activities began or will begin
- Projected monthly sales
How much does a sales tax permit cost in Minnesota?
There is no cost for a sales tax permit in Minnesota.
How long does it take to get a Minnesota sales tax permit?
It takes only minutes to receive your seven-digit Tax ID Number.
Do you have to renew your Minnesota sales tax permit?
The sales tax permit is a one-time registration and no renewals are needed. Be mindful that if any information about the business changes such as the mailing address, additional locations or change in ownership, those changes need to be updated with the Department of Revenue.
Sales tax reporting
How is sales tax collected?
When a business makes a sale of a taxable product or service, the business charges the appropriate sales tax rate to the customer. This tax is collected by the business who then sends it to the Minnesota Department of Revenue.
How much sales tax is charged?
The sales tax rate that is charged varies depending on the address of the business if the purchase is made in the store. When shipping in-state, the sales tax is based on the address of the purchaser.
In addition to the statewide tax, there are additional local sales taxes that may be added by cities and municipalities. To find sales tax rates, see the sales tax rate calculator.
When are Minnesota sales tax returns due?
The Department of Revenue will determine a filing frequency based on the expected volume of sales, which will be monthly, quarterly or annually. Generally, a business collecting over $500 each month will file monthly.
Filings are due the 20th day of the month following the reporting period, unless the 20th falls on a weekend or federal holiday, in which case would move to the next business day.
Even if the business had no sales during the reporting period, a filing is still required indicating no sales occurred.
Sales tax on purchases for resale
A business is able to purchase items to resell without paying state sales tax. The tax liability is passed from the wholesaler or distributor to the retailer who will then charge sales tax to the end user of the item.
Wholesalers and distributors will require a sales tax number and a completed Minnesota Certificate of Exemption to document the items being purchased are for resale.
If you have questions about the sales tax permit, the Minnesota Department of Revenue has a guide to sales and use taxes in Minnesota or can be contacted by calling 651-282-5225 or 800-657-3605.