Minnesota Sales and Use Tax Increases July 1st
Beginning July 1, 2009 the Minnesota state general sales and use tax rate will increase to 6.875% from its current 6.5%.
All businesses which are registered to collect Minnesota sales tax or have purchases subject to use tax should make changes to their accounting and software programs accordingly. It is your responsibility to make sure that the correct tax is collected and then subsequently reported and remitted to the state when your monthly, quarterly, or annual Sales and Use tax report is filed. If you have any questions or need any assistance with this change please do not hesitate to call us here at Kaiser Tax & Business Consulting.
Some businesses may be subject to a Local Sales and Use tax or the Transit Improvement tax depending on the location of the business or where the delivery of product or service is made. Click here to see a chart of these taxes and who it affects.
Use Tax
If you buy a taxable item for your own use without paying sales tax, you owe use tax. The tax rate is the same for both sales and use tax, and the same exemptions apply. While sales tax is collected by the seller and paid to the state by the seller, use tax is self-assessed and paid by the purchaser. Please see our article ’Minnesota Use Tax’ on our website for further explanation.
Reminder about the Transit Improvement Tax
There are five counties in the metropolitan area – Anoka, Dakota, Hennepin, Ramsey, and Washington – that must charge an additional .25% transit improvement sales and use tax. This tax started July 1, 2008. This tax is reported at the same time you report your Minnesota sales and use tax. This tax is separate and in addition to the HennepinCounty, St. Paul and Minneapolis local sales and use taxes that already exist. All of the guidelines for the Minnesota sales and use tax are the same for this Transit Tax.
Did you know…..?
Did you know your company may need to collect sales tax if you sell your used business equipment and furniture? If you have over $1,000 in sales of equipment and furniture for the year and these are sales of tangible personal property that could be expensed or depreciated for income tax purposes you will need to collect sales tax. An item is considered to be primarily used in a trade or business if it was used by the seller at least 50 percent or more of its operating time in a trade or business.