Liquor Stores and Liquor Distributors Industry Guide

richard.kachelmeyer Wed, 05/15/2019 - 08:32

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Liquor Stores and Liquor Distributors Industry Guide

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This guide includes sales and use tax topics related to liquor stores and liquor distributors that sell alcoholic products. Use the links in the Guide Menu to see information about each topic.

Sales

richard.kachelmeyer Wed, 05/15/2019 - 08:34

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Last Updated

August 02, 2022

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Sales

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Generally, sales of alcoholic beverages are taxable. Alcoholic beverages contain 0.5% or more alcohol by volume.

Beer, wine, and liquor sold by a business with an intoxicating liquor license are subject to the following taxes:

6.875% State general rate sales tax
2.5% Liquor gross receipts tax
Any applicable local taxes

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Liquor Store Sales [+]

Liquor stores are not allowed to sell alcohol for resale by another business. Also, nonprofit organizations are not allowed to purchase liquor exempt from tax from a liquor store.

Some liquor stores also sell other taxable and nontaxable products. While liquor tax does not apply to these products, they may be subject to sales and use tax or other taxes. See the chart below for examples.

Taxable (State and Local Sales Taxes Apply)	Nontaxable (No Taxes Apply at Retail Sale)
Accessories (bottle openers, glasses, lighters)	Bottled water
Alcohol-free wine	Cigarettes (sales and cigarette taxes paid at the wholesale distributor level)
Candy	Event admission (wine, beer, or liquor tasting)
Chewing tobacco or snuff	Food and food ingredients (jarred cherries, olives, etc.)
Cigars	Ice
Drink mixes (less than 50% juice by volume)	Juice (contains 50 percent or more juice by volume)
E-cigarettes and accessories	Returnable deposit
Juice (less than 50% juice by volume)	Sacramental wine for religious ceremonies
Keg pumps or coolers (sale, lease, or rental)
Nonalcoholic beers
Soda pop and sweetened water (soft drinks)

For more information about soft drinks, candy, food and food ingredients, see the following fact sheets:

Liquor Distributor Sales [+]

Liquor sales to a business that provides a completed Form ST3, Certificate of Exemption, are not taxable.

Liquor Posting List

Liquor distributors cannot sell liquor to a business listed on the Posting of Tax Delinquencies Liquor, Wine and Beer Sales.

Liquor Distributor Annual Sales Report

Liquor distributors must file an annual informational report indicating the name, address, Minnesota Tax ID Number, and total dollar amount of liquor sold to each retailer in the previous calendar year.

Report Due Date

The annual report is due March 31 and must include all liquor sales you made to retailers during the prior calendar year. You submit the report through our Virtual Room.

If you have questions about your reporting requirements or need assistance call 651-296-6181 or 1-800-657-3777 (toll-free).

Employee Sales [+]

Delivery Charges [+]

Discounts and Rebates [+]

Quantity Discounts

If you offer a discount to a customer who buys a large quantity, charge tax on the discounted price.

Rebates

A rebate either reduces the purchase price or is sent to a customer as cash or credit after the sale.

If a rebate voucher is issued to use on a future purchase with the same retailer or store who provided the rebate, it reduces the sales price. Do not treat the rebate like cash.

If a rebate check is issued, it is treated like cash.

For more information, see Coupons, Discounts, Rewards, Rebates, and Other Forms of Payment.

Gift Certificates and Gift Cards [+]

Local Sales Tax [+]

Some cities and counties have local sales and use taxes. If you are located in or make sales into an area with a local tax, you may owe local sales and use tax. For more information, see Local Sales and Use Taxes.

To determine the sales tax rate, use the location where the product is received by the customer, typically your business or a delivery address. You can use our Sales Tax Rate Map or Sales Tax Rate Calculator to help you determine the sales tax rate.

Note: The map and rate calculator do not include special local taxes.

For more information, see:

Nontaxable Purchases

richard.kachelmeyer Wed, 05/15/2019 - 08:55

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Nontaxable Purchases

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Some items that liquor stores and liquor distributors purchase are not taxable.

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Purchases for Resale [+]

Cigarettes and Tobacco Products [+]

Packing Materials [+]

Clothing [+]

Taxable Purchases and Use Tax

richard.kachelmeyer Wed, 05/15/2019 - 08:59

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Last Updated

January 05, 2023

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Taxable Purchases and Use Tax

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Items you use to operate your business are taxable, unless an exemption applies. Some services are also taxable.

If you do not pay sales tax on a taxable purchase, you must pay use tax.

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Taxable Purchases [+]

Type of Taxable Purchase	Examples
General items	Cleaning supplies Computer hardware and software Dollies Furniture and fixtures Office equipment and supplies Paper towels Reusable containers Reusable pallets Security systems Toilet tissue
Retail equipment and supplies	Cash registers and register tapes Price guns and labels Shelves and racks Shopping baskets and carts
Utilities	Electricity Gas Water
Taxable services	Building cleaning and maintenance Detective and security Laundry and cleaning Lawn and garden care For more information, see a list of taxable services.
Promotional items	Bean bag boards Business cards Calendars Cups and mugs Flash buttons Key chains Matches Pens Umbrellas

Use Tax [+]

If you buy equipment, supplies, or other taxable items for your business and the seller does not charge Minnesota sales tax, you owe use tax on the cost of the items. If your business is located in an area with a local tax, you may also owe local use tax.

Some common situations where you may owe use tax include:

You buy taxable items or services online without paying sales tax
You withdraw an item from inventory to use (instead of selling it), donate, or give away
You buy taxable items outside of Minnesota
You buy taxable items in another Minnesota city or county with a lower (or no) local sales tax

For more information, see Use Tax for Businesses and Local Sales and Use Taxes.

Licensing Information

richard.kachelmeyer Wed, 05/15/2019 - 09:05

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Licensing Information

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Liquor distributors and liquor stores must have a liquor license to sell alcoholic products in Minnesota.

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Liquor Distributor Licenses [+]

Liquor Retailer Licenses [+]

Licensing for Retail Sales of Cigarettes and Tobacco Products [+]

Filing Returns and Record-Keeping

richard.kachelmeyer Wed, 05/15/2019 - 09:09

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Filing Returns and Record-Keeping

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When filing your return, you must report all sales tax collected and use tax you owe.

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Filing Returns [+]

When filing your return, you must report all sales tax collected and use tax you owe.

If you are not registered for sales and use tax, you must contact the Minnesota Department of Revenue and register to collect and report taxes. Call Business Registration at 651-282-5225 or 1-800-657-3605 (toll-free).

For more information, see Sales Tax Return Due Dates.

How to Report Sales and Use Tax [+]

Record-Keeping [+]

It is important to keep good records to determine the correct amount of state and local tax you owe.

Your records should include:

bills, receipts, invoices, cash-register tapes, and any other documents that support the entries in your books
exemption certificates
shipping documents
worksheets used to prepare your tax returns

For more information, see the Sales and Use Tax Business Guide.