MN Sales Tax Applies to Rental Pick-Up Charges, High Court Rules

Minnesota case law summary by Attorney Richard Clem: MN sales tax, rental pick-up charges.

Interstate Traffic Signs, Inc. v. Commissioner of Revenue. MN sales tax, rental pick-up charges

Minnesota Statute 297A.62 imposes a sales tax "on the gross receipts from retail sale" in Minnesota. Rentals come under the definition of "sales." Interstate Traffic Signs is located in Walker, Minnesota, and rents traffic control equipment to contractors working on road projects. It delivers and sets up the equipment, and then retireves the equipment and does any repairs after the rental period. It sends a bill, which is broken down by the rental charge, delivery charge, and pick-up charge. Customers are required to pay for the pick-up services.

Until 2010, Interstate charged sales tax on the equipment rental, but not on the delivery and pick-up charges. In 2010, it started charging sales tax on the delivery charges. The Minnesota Revenue Department audited Interstate, and took the position that Interstate should have been collecting sales tax on the pick-up charges. The Minnesota Tax Court agreed with the department, and Interstate appealed to the Minnesota Supreme Court.

The Supreme Court also sided with the department and held that the pick-up charges were part of the sales price and were taxable. The court held that they were part of the consideration for the sale. Furthermore, the statute makes clear that charges for "any services necessary to complete the sale" cannot be deducted from the sale price.

For these reasons, the court affirmed the ruling of the tax court.

No. A13-1610 (Minn. April 23, 2014).

Please see the original opinion for the court's exact language.


Richard P. Clem is an attorney and continuing legal education (CLE) provider in Minnesota. He has been in private practice in the Twin Cities for 25 years. He has a J.D., cum laude, from Hamline University School of Law in St. Paul and a B.A. in History from the University of Minnesota. His reported cases include: Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia v. Dow Quimica de Colombia, 988 F.2d 559, rehearing denied, 5 F.3d 530 (5th Cir. 1993), cert. denied, 510 U.S. 1041 (1994); LaMott v. Apple Valley Health Care Center, 465 N.W.2d 585 (Minn. Ct. App. 1991); Abo el Ela v. State, 468 N.W.2d 580 (Minn. Ct. App. 1991).

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