Sales and purchases of copies are taxable unless an exemption applies. However, an exemption applies to the following copies:

• Certified documents
• Documents protected by the Freedom of Information and Data Practices Act
• Court reporter documents to parties in the legal proceeding
• Patent copies

You must charge sales tax on copies when:

• You provide additional copies that were not included in the original charge for legal services
• You charge for copies of depositions made by one law firm for another law firm
• You charge a third party for copies who is not receiving legal services

Note: The “pass through” of reimbursable expenses for copies is not taxable, even if the pass through is a higher fee than what you paid for the copies.

You must pay sales tax or accrue use tax on all taxable copies you purchase to provide legal services. Examples include:

• Unemployment claims
• Medical records
• Insurance claims
• Accident reports

Some accounting firms sell accounting software to their clients. Sales of prewritten computer software are taxable. Software updates may also be taxable. For more information, see Computer Software.

Do not pay sales tax or use tax when you purchase prewritten computer software to resell to clients. Instead, give your supplier a completed Form ST3, Certificate of Exemption. Specify the resale exemption.

Sales of copies are taxable.

You must charge sales tax on copies when:

• You provide additional copies that were not included in the original charge for accounting services
• You charge a third party for copies who is not receiving accounting services

The “pass through” of charges for models, prototypes, and blueprints at the time of service is not taxable. However, if you sell additional models, prototypes, or blueprints after you completed your services, the sale is taxable.

Example: Your original contract states that you provided one copy of the blueprint to your customer at the completion of your services. A year later, your customer requests two additional copies of the blueprints. The sale of blueprint copies is taxable.

Most insurance agencies do not make taxable sales. However, if you sell taxable products, you must charge sales tax. Examples include:

• Charges for copies of insurance claims
• Fire extinguishers
• Radon detectors
• Smoke detectors
   

Note: Do not pay sales or use tax when you purchase these items for resale in your business. Instead give your supplier a completed Form ST3, Certificate of Exemption. Specify the Resale exemption.

Property management is the operation, control, and oversight of real estate. Fees charged for property management services are not taxable. Examples include:

• Showing properties to possible renters
• Collecting monthly fees from tenants
• Maintaining rental records
• Paying bills for property expense
• Handling tenant complaints and violations

Charges for short-term or overnight lodging in an apartment complex or other residential rental property is taxable. For more information, see the Hotels and Other Lodging Establishments Industry Guide.

Certain services are taxable when they are billed separately from other real estate or property management services. Examples include:

• Building cleaning and maintenance
• Lawn and garden care
• Pest control
• Other taxable services

Purchases made for the business by an employee that you later reimburse are taxable. Taxable items purchased and placed on the employee’s expense report or company credit card are also taxable.

Prewritten computer software is the sale, lease, or license to use a canned or prewritten computer software program. Prewritten computer software is taxable.

For more information, see Computer Software.

Custom software is a program created for the needs of a specific customer. It generally requires a consultation and analysis of the customer’s requirements. Fees charged for custom software are not taxable.

For more information, see Computer Software.

Online hosted software is software where users do not take any ownership or possession of the software. Online hosted software is:

• accessed through the Internet
• installed at and hosted from a remote server or location
• owned by the software manufacturer or third-party vendor

Subscriptions to use online-hosted software are not taxable. Charges for maintenance or upgrades to online hosting software are not taxable, even if separately stated.

Digital products are products provided to a customer electronically. Usually, a customer is given access to the product through the Internet or email.

Taxable digital products include:

• Digital audio works (music, audio books, ring tones)
• Digital audiovisual works (movies, music videos)
• Digital books
• Digital codes that give a purchaser access to taxable digital products
• E-Greeting cards
• Online video or computer gaming

Nontaxable digital products include:

• Access to digital news articles
• Charts and graphs
• Data or financial reports
• Digital photos and drawings

For more information, see Digital Products.

• 297A. 61, Definitions
  • subd. 3. Sale and purchase
  • subd. 7. Sales price
  • subd. 16a. Computer
  • subd. 16b. Electronic
  • subd. 16c. Computer software
  • subd. 17. Prewritten computer software 
  • subd. 47. Accommodations intermediary 
  • subd. 50. Digital audio works
  • subd. 51. Digital audiovisual works
  • subd. 52. Digital books
  • subd. 53. Digital code
  • subd. 54. Other digital products
  • subd. 55. Specified digital products
  • subd. 56. Transferred electronically
• 297A.665, Presumption of tax; burden of proof 
• 297A.68, Business exemptions 
  • subd. 22. Copies of court reporter documents

• 8130.0500, subp. 2. Computer time exception
• 8130.9910, Computer Software

• Advertising
• Clothing
• Detective and Security Services
• Digital Products
• Laundry and Cleaning Services
• Lawn and Garden Maintenance, Tree and Shrub Services
• Use Tax for Businesses

• Building Cleaning and Maintenance
• Hotels and Other Lodging Establishments
• Local Sales and Use Taxes