Sales Tax Solutions Inc

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Sales & Use Tax Consulting ServicesAudit Representation Tax Audits Refund Recovery Nexus Studies

At Sales Tax Solutions, Minneapolis, Minnesota, we provide experienced and affordable consulting services. STS can assist companies of any size better manage their tax audits, research, and compliance. We focus on providing our clients savvy, down-to-earth sales & use tax advise, based on our 20 years of experience on either the audit or taxpayer side of the table. Surprisingly, many taxpayers overpay their actual tax liability, so STS also provides our clients an examination of their past transactions for refund recovery. If your goal is to pay the correct amount of sales and use tax, no more and no less, call us today. Contact us for more detailed information about how we can help you.

Services are generally subject to sales tax in Minnesota.
A common bit of mythology in Minnesota is that a labor charge is not subject to sales tax "because it's a service." Perhaps this was once the case, but it is certainly no longer the truth. In fact, the Minnesota Department of Revenue generally regards labor charges as taxable unless an exemption obviously applies. Repair labor charges remain exempt if separately stated from repair parts, which are taxable. A common example of exempt repair labor is automobile repair. Beware, however, that FABRICATION and INSTALLATION LABOR are taxable services in Minnesota. If a mechanic adds something new to your car, such as a trailer hitch or mudflaps or a sunroof, both the materials and the labor are taxable.
Computer-related charges, in particular, are reviewed by auditors for taxability as installation labor. This includes the installation of hardware, software, workstations, and peripheral equipment. Installations by third-party vendors are taxable in many cases, too.
The lesson to learn here is that if you commonly sell or buy services, you should ensure that these services are not taxable. While no single list of taxable services exists, here are a few examples that the DOR believes are taxable:

Photocopying (and sales of copies are generally taxable)

Bundled charges for debugging computers by installing antivirus software

Building cleaning and maintenance (any charges for cleaning real property)

Interior design services (if resulting in sale of furniture from same vendor)

This list is not exhaustive. Examples of each type of taxable labor abound. Too many taxpayers only learn about the taxability of labor after a state tax audit. Auditors have no sympathy for sellers who have failed to impose sales tax on taxable labor charges. The seller will need to remit to the DOR the sales taxes that should have been collected, regardless whether they were. The seller may have to pay penalties and interest as well.
Buyers are not exempt from this problem. If a seller fails to impose sales tax on a taxable service, a Minnesota purchaser has an equal burden to remit use tax to the state. For example, if your business purchases building cleaning services from a vendor who does not impose sales tax, you owe Minnesota use tax.
Note that their are many exceptions to the taxability of services. The statutes are subject to a great deal of interpretation by auditors. We suggest you research the taxability of any services you sell and know where you stand before the auditor tells you.
CONTACT STS FOR MORE INFORMATION!

STS can answer any of your multistate sales tax questions and concerns as well as offering strategic suggestions to better manage the function. We are very responsive to the needs of our clients and will serve you to the best of our abilities. Call us to set up a consultation today.

Try Before You Buy: Mention this website for your first hour of consulting for no charge!

Contact our consulting service company, in St. Louis Park, Minnesota,
for sales tax audits, research and tax negotiation and representation.

Links:Minnesota Revenue Department: www.taxes.state.mn.us
Hearts & Hammers - Twin Cities: www.heartsandhammers.org
Affiliations:Wipfli, LLP: www.wipfli.com

Upper Midwest Minnesota Minneapolis, MN Saint Paul, MN Rochester, MN
Duluth, MN Madison, WI Des Moines, IA Omaha, NE

Upcoming Sales & Use Tax Training:
1. Lorman at http://www.lorman.com/seminars/seminar_agenda.php?pid=184239&tid=&sid=
2. MNCPA at http://www.mncpa.org/professional/Catalog/cpeinfo.asp?showall=true