When it comes to handyman services in Minnesota, it's important to understand the state's sales and use tax regulations. According to the Minnesota Statutes, section 297A, 61, subdivision 4, paragraph (d), sales of construction materials, supplies, and equipment to owners, contractors, subcontractors, or builders constitute retail sales and are therefore subject to taxation. In addition to materials and supplies, some services in Minnesota are also subject to sales tax. The Minnesota Department of Revenue website provides a detailed list of taxable services.
When a lessor of tangible personal property other than motor vehicles undertakes to provide the full maintenance of such assets and the periodic payment is a lump sum covering both the rental of the property and the maintenance service, the entire payment is subject to tax. This does not include contracts under which these services are provided as stages of the processing of customer data. When a florist or nursery prepares a flower arrangement for a customer who has provided the flowers or other materials, the labor of the florist or nursery constitutes labor and is subject to taxation. Similarly, when a buyer of a taxable asset makes a donation of such property and, subsequently, the recipient of the donation returns the property to the seller and requests a refund of the amount paid for the property, the recipient shall be entitled to a refund of the sales tax applicable to the amount of the sales price being reimbursed.
Tangible personal goods that become an ingredient or an integral part of taxable retail advertising can be purchased exempt from resale. The purchase of fuel, electricity, gas, steam and water that is used or consumed directly in agricultural or industrial production is not subject to taxes. However, sales of these same items to transportation service providers are subject to taxation, unless otherwise required by the Minnesota Statutes. Total gross revenue from the sale of custom-made products is subject to taxation, with no deduction for labor costs, provided that the manufactured item remains personal property after installation. Similarly, when a service office prepares labels to be placed on material to be sent by mail with names and addresses provided by the customer or maintained by the customer service office, no tax is applied to the charge for producing the labels when the service office itself places them on material being sent by mail. However, chemicals used to clean areas surrounding food processing machinery and equipment are subject to taxation.
Examples of items that are considered separate removable units include drill bits, cutting tools, abrasive wheels, belts, sheets and sanding and polishing discs, faucets, reamers, printing plates, saw blades and certain dies, templates, patterns and molds; however if these items are included in the purchase price of a basic machine and their cost is not indicated separately they are considered part of a basic machine and subject to taxation. The Minnesota sales or use tax does not apply to gross revenues attributable to services related to works of art, films or preliminary tapes.
