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Minnesota Sales Tax: Signage Trumps Collection at Register

  • Jan 23, 2012 | Will Frei

The Minnesota Tax Court recently backed the conclusions of an audit conducted on the Washington County Fair, for the tax periods between April 1, 2004 and September 30, 2009. The ruling, which can be found by searching the Tax Court's Published Orders*, states that the Washington County Agricultural Society owes $82,256 in sales taxes on gate admissions. Among the reasons given was the five admission signs displayed outside the fair, which contained the phrase "tax included" along with the price of entry.

The court's decision came in response to an appeal by the Washington County Agricultural Society, which did not collect any sales tax for the period in question. The court ruled against the society, determining that they failed to meet several tax exemption requirements of Minnesota Statute section 297A.70.

The court also based its ruling on the above-mentioned signage, which had "sales tax included" printed next to the price of admission. The society claims that the signs were intended to "communicate to fair goers how much money to take out of their wallets," but that "it had no intent to collect [sales tax]." However, the court sided with Commissioner of Revenue who argued that the signs made the society liable to remit state sales tax, based on Minnesota Statute 289A.31 subdivision (a) (2010).

The statute declares that "[a]ny amounts collected, even if erroneously or illegally collected, from a purchaser under a representation that they are taxes imposed under chapter 297A are state funds from the time of collection and must be reported on a return filed with the commissioner."

Although the Washington County Agricultural Society would still have owed sales tax without its "price of admission" signs, this particular ruling offers a valuable warning to Minnesota retailers: if you aren't collecting sales tax, don't put it in writing.

*Search on Washington County Agricultural Society

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Avalara Author
Will Frei
Avalara Author Will Frei
Will Frei covers sales tax news including best practices, legislation and sales tax technology. He is the Social Media Manager at Avalara.