Do You Charge Sales Tax on Shipping in Minnesota?

You must collect sales tax from customers in Minnesota if you own a business and sell specified goods there. What about shipping, though? Do you also have to add sales tax to the cost of shipping? It depends, is the answer.

The “sales price” of taxable goods sold in the state, according to the Minnesota Department of Revenue, is subject to sales tax. This includes any shipping and handling fees associated specifically with the sale. Sales tax is also applicable to shipping costs that are individually listed on the invoice and are associated with the sale of taxable goods.

However, if the shipping fee is not specifically mentioned on the invoice and is not connected to the purchase of taxable goods, it is exempt from sales tax. For instance, you would have to add sales tax to the total of $110 if you sold a taxable item for $100 and added a separate $10 shipping cost. However, you would not be required to collect sales tax on the shipping price if you sold a non-taxable service for $100 and added a $10 additional shipping fee.

Sales tax is charged in Minnesota on a variety of products and services, including tangible personal property, digital goods, and specific services. Clothing, furniture, electronics, and food sold in restaurants are a few typical examples of taxable goods. However, there are a lot of exceptions and unique regulations that only apply to particular kinds of transactions. For instance, many textile items—like baby outfits and bridal gowns—are exempt from sales tax.

If you own a business in Minnesota, you must get an Employer Identification Number (EIN), sometimes referred to as a tax ID number, from the Internal Revenue Service (IRS). If your business has workers, operates as a partnership or corporation, or files certain types of tax returns, you must have this number to identify it for tax purposes. By login into your IRS account and choosing the “Print Your EIN” option, you can print your EIN certificate.

It’s crucial to understand that an EIN and a tax ID number are the same thing. If you meet specific requirements, you must have both of them because they are used to identify your firm for tax purposes. You have two options for requesting an EIN: either submit Form SS-4 through mail or fax, or finish the online application on the IRS website.

You must use Form 1099-G to record any income from Minnesota unemployment benefits that you received on your federal tax return for the preceding tax year. You can log into your account on the Minnesota Unemployment Insurance website and choose the “View and Print 1099-G” option to access your 1099-G form. You can use the data on this form to submit your unemployment benefits on your federal tax return.

In conclusion, whether Minnesota applies sales tax to shipping fees depends on whether the fees are directly associated with the sale of taxable goods. To make sure you are collecting and remitting the appropriate amount of sales tax, it is crucial to comprehend the regulations and exemptions that apply to your particular firm. The acquisition of an EIN is a crucial step in starting a business in Minnesota, and your IRS account makes it simple to print your EIN certificate. Last but not least, you must use Form 1099-G to record any income from Minnesota unemployment benefits that you earned on your federal tax return.