To comply with Minnesota’s use tax requirements, businesses should undertake the following key steps:

• Understand Use Tax Applicability: Recognize when use tax applies, such as on out-of-state purchases where sales tax was not collected, and on items used, stored, or consumed in Minnesota.

• Track Purchases: Maintain detailed records of all purchases subject to use tax, including invoices and receipts for goods acquired from out-of-state sellers.

• Calculate Use Tax Owed: Determine the amount of use tax owed by applying the state’s use tax rate (6.875%) plus any applicable local rates to the taxable purchases.

• Register with the Department of Revenue: Ensure the business is registered with the Minnesota Department of Revenue for use tax purposes if required.

• File Use Tax Returns: Submit use tax returns regularly, typically through the same process as sales tax returns, using Form ST-1 or the Department’s e-Services system.

• Report Accurately: Accurately report the use tax owed on the returns, ensuring all taxable purchases are included.

• Claim Exemptions Where Applicable: Identify and apply any exemptions or exclusions that may reduce use tax liability.

• Remit Payments Timely: Pay the calculated use tax by the specified deadlines to avoid penalties and interest.

• Stay Updated: Keep abreast of any changes in use tax laws or rates by consulting the Minnesota Department of Revenue or a tax professional.

• Consult Professionals: When in doubt, seek advice from tax professionals to ensure full compliance and proper handling of use tax obligations.

By diligently following these steps, businesses can effectively comply with Minnesota’s use tax requirements and avoid potential penalties.