Local taxes are reported when you file your Minnesota sales and use tax. Each local tax has a separate line to report the sales separately. You must be registered for each local tax you report. Local tax applies to sales when a sale is made in the local area, a service performed in the local area, or taxable items are shipped into the local area. To figure the total tax, combine the state tax rate and the local tax rates; apply the combined rate to the taxable sales price. Local use tax applies when items or services are bought for business or personal use in the local area without paying local sales tax to the seller. Use tax is similar to sales tax and the rates are identical. It is based on the cost of taxable purchases. Common examples of when local use tax is due: – Items are bought outside the local area and the seller did not collect local sales tax, and then the item is used for business or personal use in the local area. – A taxable item is bought for your business from an out-of-state seller who did not collect local sales tax. Refer to Local Sales Tax Information. EXEMPTION CERTIFICATES Generally, all sales of items and services are presumed to be subject to the sales tax, unless an exemption applies. To purchase qualifying items exempt from sales tax give your supplier a completed Form ST3, Certificate of Exemption. Form available at Sales and Use Tax. Unless the customer gives the seller a completed exemption certificate, the seller is required to collect and remit the sales tax. It is not sufficient for the customer to provide only its sales and use tax number. An exemption certificate may be for either a single purchase or a blanket exemption. Customers who frequently make exempt purchases from one seller should give that seller a blanket exemption certificate to cover future purchases. That way, the seller will not need to collect a new certificate each time the customer makes a purchase. A completed exemption certificate should be retained in the seller’s files to substantiate the exemption. Certificates are subject to inspection by the Minnesota Department of Revenue, but they should not be mailed to the department. EXEMPTIONS AND EXEMPT ORGANIZATIONS Certain sales are exempt from sales and use tax. Exemptions commonly encountered by Minnesota businesses are listed below.
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