Minnesota Sales Tax Guide for Businesses
- Sales Tax Rate
- Local Taxes
- Department of Revenue
- Tax Line
We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Minnesota, and if so, how best to tackle the sales tax situation in the Land of 10,000 Lakes.
After reading this, you’ll know:
- Do you or don’t you need to collect Minnesota sales tax?
- Which customers do you collect from?
- How much do you collect?
- What do you do with all the sales tax you’ve collected?
- Way more than you probably ever wanted to know about Minnesota sales tax
Do you have sales tax nexus in Minnesota?
Good news! You only have to begin thinking about Minnesota sales tax if you have sales tax nexus in Minnesota.
“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.
Minnesota considers a seller to have sales tax nexus in the state if you have any of the following in the state:
- have an office; distribution, sales, or sample room location; warehouse or other place of business in Minnesota, either directly or by a subsidiary
- have a representative, agent, salesperson, canvasser, or solicitor in Minnesota, on either a permanent or temporary basis, who operates under the authority of the retailer or its subsidiary for any purpose, such as repairing, selling, delivering, installing, soliciting orders for the retailer’s goods or services, or leasing tangible items in Minnesota;
- deliver items into Minnesota in their own vehicles;
- provide taxable services in Minnesota
- have entered into an agreement with a solicitor for the referral of Minnesota customers for a commission and your gross receipts over 12 months is at least $10,000
Do I have sales tax nexus in Minnesota if I sell on Amazon FBA?
Online retailers are increasingly using Fulfillment by Amazon to sell their products. According to Minnesota’s rules of nexus, a seller who stores items in a physical location in the state – including an Amazon Fulfillment Center – has sales tax nexus there and must collect sales tax from Minnesota buyers.
To determine whether or not you have items stored in an FBA warehouse in Minnesota, you can do one of two things:
- Login to Amazon Seller Central and pull your inventory report
- Try a 30-day free trial of TaxJar and we’ll show you you the states from where your items are shipping with our Amazon badge feature
Currently Minnesota only has one Amazon fulfillment center:
|Warehouse Code||Address||County||Tax Rate|
|MSP1||2601 4th Ave E, Shakopee, MN 55379||Scott||7.375%|
Is what you’re selling even taxable?
You’ve probably read this far because you realized you have sales tax nexus in Minnesota. Your next step is to determine if what you’re selling is even taxable.
Services in Minnesota are generally not taxable. So if you’re a freelance writer or a plumber, you’re in luck and you don’t have to worry about sales tax. But watch out – if the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax on products.
Tangible products are taxable in Minnesota, with a few exceptions. These exceptions include things like clothing, baby products and over-the-counter drugs and See Minnesota’s sales tax guide starting on page 7 for more about what isn’t taxable in Minnesota.
So if you sell toys, then charge sales tax to your Minnesota customers.
But if you’re a graphic designer, don’t charge sales tax to your Minnesota customers.
If you have sales tax nexus in Minnesota and your products are taxable, your next step is to register for a sales tax permit.
How to Register for a Sales Tax Permit in Minnesota
Sellers with sales tax nexus in Minnesota must apply for an Minnesota sales tax permit.
Don’t skip this step! Many states consider it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in Minnesota.
How to Collect Sales Tax in Minnesota
So you’ve determined that you have sales tax nexus in Minnesota and what you’re selling is taxable. And you’re all set and registered for your Minnesota sales tax permit.
The next step is to determine how much sales tax to collect.
Minnesota is an destination-based sales tax state. So if you live in Minnesota, collecting sales tax can be tricky.
Collect sales tax at the rate of your buyer’s ship to address.
Example: You live and run your business in Rochester, MN., in the 55901 zip code, where the tax rate is 7.63%. But you make a sale to a buyer in Edina in the 55436 zip code where the sales tax rate is 7.78%. Because Minnesota is a destination-based sales tax state, you would charge your buyer their local 7.78% rate.
If you are based in another state but have sales tax nexus in Minnesota, do the same thing: collect sales tax at the rate of your buyer’s ship to address.
What are the Amazon sales tax settings for Minnesota?
If you are an Amazon pro seller and use Amazon to collect sales tax, be sure you have your sales tax settings set up correctly. Find step-by-step instructions for setting up your Amazon sales tax settings here.
|If you are a…||State tax||County tax||City tax||District tax||Custom rate||Is shipping taxable?||Is gift wrapping taxable?|
|Seller living in Minnesota||X||X||X||X||N/A||Yes||Yes|
|Seller living outside of Minnesota||X||X||X||X||N/A||Yes||Yes|
Should you collect sales tax on shipping charges in Minnesota?
The state of Minnesota wants you to charge sales tax on shipping charges to your customers if the items you shipped are taxable. If the items you shipped are not taxable, then you also don’t have to charge sales tax on shipping charges.
Read a full explanation of sales tax on shipping in Minnesota here.
|20||St Louis Park||45,250||Hennepin||7.78%|
When are Minnesota Sales Tax Returns Due?
You’ll be assigned a sales tax filing frequency when you apply for your Minnesota sales tax permit. Depending on your frequency, here are your Minnesota sales tax filing due dates:
2016 Minnesota Monthly Sales Tax Filing Due Dates
If your tax due averages more than $500/month in Minnesota, you will likely be assigned to file monthly.
|Taxable Period||Due Date|
|January||February 22, 2016*|
|February||March 21, 2016*|
|March||April 20, 2016|
|April||May 20, 2016|
|May||June 20, 2016|
|June||July 20, 2016|
|July||August 22, 2016*|
|August||September 20, 2016|
|September||October 20, 2016|
|October||November 21, 2016*|
|November||December 20, 2016|
|December||January 20, 2017|
2016 Minnesota Quarterly Sales Tax Filing Due Dates
If your tax due averages more than $100/month but less than $500/month you will likely be assigned to file quarterly.
|Taxable Period||Due Date|
|Q1 (Jan - Mar)||April 20, 2016|
|Q2 (Apr - Jun)||July 20, 2016|
|Q3 (Jul - Sep)||October 20, 2016|
|Q4 (Oct - Dec)||January 20, 2017|
2016 Minnesota Annual Sales Tax Filing Due Date
If your sales due averages less than $100/month you will likely be assigned to file annually.
|Taxable Period||Due Date|
|Year 2016||February 6, 2017|
* indicates a due date pushed back due to a weekend or holiday
Click here for a more about Minnesota sales tax filing due dates in 2016 (p. 12).
How to File Sales Tax in Minnesota
When it comes time to file sales tax in Minnesota you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
We’ll walk you through these steps.
How to Calculate How Much Sales Tax You Owe in Minnesota
Calculating how much sales tax you should remit to the state of Minnesota is easy with TaxJar’s Minnesota sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Minnesota sales tax return will be waiting for you in TaxJar. All you have to do is login!
How to File and Pay Sales Tax in Minnesota
You have three options for filing and paying your Minnesota sales tax:
- File online - File online at the Minnesota Department of Revenue. You can remit your payment through their online system. If you have a sales and use tax liability of $10,000 or more in the state’s fiscal year (July 1 June 30), you must pay all taxes electronically beginning with the next calendar year.
- File by phone - Call 1-800- 570-3329 to file by touch-tone phone. If you have a sales and use tax liability of $10,000 or more in the state’s fiscal year (July 1 June 30), you must pay all taxes electronically beginning with the next calendar year.
- AutoFile - Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.
Other Facts You Should Know about Minnesota Sales Tax Filing
There are a few more things you should know about sales tax in Minnesota:
If you don’t pay the sales tax you owe to the state on time, you owe a penalty of 5 percent of the tax due from 1 to 30 days late; 10 percent from 31 to 60 days late; 15 percent if the payment is more than 60 days late You can tack on an extra 5 percent to that if you fail to file a return on time. (From the Minnesota Sales & Use Tax Instruction Booklet, p. 12).
Other penalties for fraud or serial offenses include higher penalties and even criminal charges.
Minnesota requires that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay. Click here for a list of states that require zero sales tax returns.
And that’s it. You’ve mastered Minnesota sales tax filing! Now that sales tax is out of the way, you can get back to what you do best – running your business.
Minnesota Sales Tax Resources
For more about Minnesota sales tax, check out the Minnesota section of the TaxJar blog.