Examples - Local Sales Taxes

In these examples, the general Minnesota sales tax applies and local sales taxes apply as described.

1. A Duluth company sells and delivers items to a business in Hermantown. Since the items are delivered to the business in Hermantown, the Duluth company is required to collect the tax where the items are delivered.

The following taxes apply to the sale:

• Minnesota General Sales Tax Rate
• Hermantown Sales Tax
• St. Louis County Transit Sales Tax

2. A contractor buys and picks up materials in a city with a local sales tax. The materials are then used in a location where there is no local sales tax. The contractor must pay the local sales tax, because the materials were picked up in an area with a local sales tax. There is no credit of the local sales tax paid because the materials were brought to a different location where the tax rate is lower.

3. A contractor buys and picks up materials in a city with a local sales tax. The materials are then used in a location where the local tax rate is higher. The contractor owes the difference between the total sales tax rate where the item was picked up and total sales tax rate where the item was used.

4. A contractor buys materials in a different state and pays the other state’s sales tax. The materials are brought to and used at a construction site in Detroit Lakes.

a. If the sales tax rate paid for the materials was higher than the sales tax rate in Detroit Lakes, no additional tax is owed. The sales tax paid at the time of purchase is not refundable.

b. If the tax rate paid was lower, the contractor owes use tax on the materials as follows:

• The difference between Minnesota general rate sales tax and the other state’s total sales tax rate.  Report the difference as variable rate use tax on your Sales and Use Tax return.
• All general local use taxes for Detroit Lakes on the cost of the materials. Report the following local taxes on the appropriate local tax line when you file your Sales and Use Tax return.
  • Becker County Transit Use Tax
  • Detroit Lakes Use Tax

5. An individual sells crafts at an event in Rochester. Since customers buy the items in Rochester, the seller has established local nexus and is required to collect the Rochester local taxes.

The following taxes apply to the sale:

• Minnesota General Sales Tax Rate
• Rochester Sales Tax
• Olmsted County Transit Sales Tax