The state of Minnesota has issued a revenue notice clarifying the department’s position on services considered to be necessary to complete a sale, which are included in the sales price of a taxable transaction. A service is necessary to complete a sale if either of the following conditions are met:
If a service is separately stated or contracted for, it may still be subject to tax if it fulfills either of the above qualifications.
The notice also clarifies that it supersedes the department’s previous notice about interior design services, and revokes the one year lookback period used to determine whether interior design services qualify as services necessary to complete a sale. Purchases of furniture made from the provider of an interior design service may be taxable regardless of the timing of the purchase in relation to the service.
Minnesota is a participant in the Streamlined Sales Tax Agreement, which asks states to specify if they include or exclude “charges by the seller for any services necessary to complete the sale other than delivery and installation” from the taxable sales price. Information on whether each Streamlined state taxes these services is available through the Taxability Matrix hosted on https://www.streamlinedsalestax.org/, but states like Minnesota may have additional administrative guidance clarifying how they determine when a service is included in that definition.
(Minnesota Department of Revenue, Revenue Notice # 22-04, December 19, 2022)