Minnesota Sales and Use Tax on Storage and Warehousing Services

The Minnesota Department of Revenue recently issued “Fact Sheet Number 178” addressing the imposition of Sales and Use Tax on Storage and Warehousing Services. Businesses using outside services should become very familiar with this new tax.

The greatest impact will be on those businesses which outsource their distribution functions, such as a manufacturer, which uses a third party to warehouse, inventory, and ship products to the customer.  This sales and use tax applies to services provided and not to bare rents paid.  Consequently, the new tax will undoubtedly lead to some creative contracts attempting to separate rents and services in this area of business.

Foley & Mansfield clients who use such services will likely be aware of the new tax, but may not be aware of its precise application.  Our attorneys stand ready to assist clients and help protect them from future surprises upon audit.

Caveat: While the “Fact Sheets” provided by the Minnesota Department of Revenue are generally reliable, it should be remembered that these documents are not “fact sheets,” but rather represent the position of the Department on the tax issues presented.

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