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Labor
152
Sales Tax
Fact Sheet
Installation labor
Installation is labor to set an item into position, or to
connect, adjust or program it for use. Beginning January
1, 2002, if the item being sold is taxable, charges by the
seller to install it are also taxable. Installation charges
are part of the sales price of the item, even if separately
stated. Before January 1, 2002, separately stated installation charges were not taxable.
Beginning July 1, 2002, installation charges by a third
party became a taxable service if the installation would
be taxable if provided by the seller of the taxable item.
Repair labor is not taxable. Installation is labor to add
something new or different to an item, while repair labor
restores an item to its original condition (see Repair labor on page two). For example, a charge to install a
trailer hitch on a car that didnt have a trailer hitch is
installation labor, while a charge to change oil and filter
or to replace a broken radio in a car is repair labor.
Labor to install tangible personal property into real
property remains exempt. See Construction labor on
page two for more information.
Charges for installing nontaxable items are not taxable.
Corporate and Sales Tax Division Mail Station 6330 St. Paul, MN 55146-6330
Phone: Twin Cities 651-296-6181 or toll-free 1-800-657-3777
For TDD, contact Minnesota Relay at 1-800-627-3529, ask for 1-800-657-3777
Fabrication labor
Fabrication labor is taxable. Fabrication labor makes or
creates a product or alters an existing product into a new
or changed product. Fabrication labor is taxable even
when the customer provides the materials for the products that will be created or altered. Taxable fabrication
labor includes, but is not limited to, sawing, cutting,
sewing, combining, assembling, boring, grinding, heating, cooling, dehydrating and printing.
This fact sheet is intended to help you become more familiar with Minnesota tax
laws and your rights and responsibilities under the laws. Nothing in this fact sheet
supersedes, alters, or otherwise changes any provisions of the tax law, administrative
rules, court decisions, or revenue notices. Alternative formats available upon request.
Minnesota Revenue, Labor
Engraving
Engraving that is billed along with or included in the
sales price of a product is taxable. If the customer furnishes the item, the engraving labor is not taxable.
Repair labor
Repair labor is labor to restore an item so that it can be
used for its original purpose. Separately stated charges
for repair labor are not taxable. For example, the charge
to reupholster a sofa is $400 ($200 materials, $200 labor). The labor is for removing the old fabric and replacing it with new. Since the sofa is being restored to its
original form, tax must be charged only on the $200 for
materials. (If the material and labor charges are lumped
together, the entire charge is taxable.)
If the customer furnishes the material for the sofa, the
charge for the repair labor is not taxable.
Sometimes the cost of parts or materials is insignificant
compared to the total charge for labor. When the parts
are insignificant and there is one lump sum price for the
repair, the charge is not taxable. In this case, the repairer
Example.
Construction labor
If an item becomes a permanent attachment to real property, installation labor is not taxable because it is an improvement to real property. These are items that generally stay with the building when it is sold to another
party. Examples include hot water heaters, furnaces, garage doors, doors, windows, gutters, roof, carpet, and
deck. For more information on contractors and construction labor, see Sales Tax Fact Sheet 128, Contractors.
Services
Certain services are specified by the law as taxable.
Many of these services have a substantial labor component. For more information on the following taxable services, see the fact sheet indicated.
Building Cleaning and Maintenance, #112
Detective and Security Services, #114
Laundry and Cleaning Services, #120
Lawn and Garden Care, Tree and Bush Service, Landscaping, #121
Massages, #162
Motor Vehicle Towing, Washing, Rustproofing, #113
Parking Services, #166
Pet Grooming, Boarding, and Care Services, #122
References
M. S. 297A.61, Subd. 3(c), Definitions
M. S. 297A.61, Subd. 7, Sales price
M. S. 297A.61, Subds. 3(g) & 3(j), Services
Other fact sheets you may need:
Automotive Repairs and Service, #131
Local Sales and Use Taxes, #164
Sales to Government, #142
Use Tax for Businesses, #146
Use Tax for Individuals, #156
A Step-by-Step Guide to Filing and Paying Sales and Use Tax
Electronically, #170
Minnesota Revenue, Labor