Minnesota DOR, Sales Tax, and the Printing Industry
- Nov 30, 2012 | Gail Cole
The Minnesota Department of Revenue has updated information regarding the application of sales and use tax to the printing industry. If you think the taxation of the printing industry is a simple matter, think again. There are more layers involved than you may realize.
According to the DOR, the following sales are subject to sales tax in the state of Minnesota:
- Sales of tangible personal property, including but not limited to charges for the following:
- gravure and rotogravure,
- screen printing,
- electronic and jet printing,
- copying and duplicating,
- multilithing and multigraphing,
- photostats, and
- steel die engraving,
- Sales of the total retail charge for services that are part of the sale of printed material, including but not limited to:
- die cutting,
- embossing, and
- other binding and finishing operations such as folding, collating, trimming.
- Charges from labor resulting "in the alteration, modification or assembly of raw materials."
The following sales may be exempt "if the purchaser provides the printer with a fully completed exemption certificate." (Emphasis mine). Examples include, but are not limited to:
- "[s]ales of identification labels or name plates to a person who will affix them to a product intended for sale… ."
- "sales of direction sheets, instruction books, warranties, and other printed matter packaged with or available only with the purchase of products held for sale… ."
- other sales exempt from sales tax due to "specific provisions of the law… ." These include, but are not limited to: "exempt publications if regularly issued at intervals of three months or less."
Items not used in the production process are subject to sales tax. These include, but are not limited to:
- items used in administrative functions, and
- cleaning solvents used to clean equipment while the production process is shut down.
Items purchased by a printer for use or consumption in the production of tangible personal property intended to be sold at retail are exempt from sales and use tax. Examples include, but are not limited to:
- cleaning solvents such as blanket and roller wash,
- plate cleaner, and
- copper wash.
If these items are used in the production of property not intended for sale, they are subject to tax.
Some maintenance contracts are subject to Minnesota sales tax, and some are not.
- Maintenance contracts "that provide repair and replacement parts and consumable items to maintain the equipment at no additional cost are subject to sales tax."
- "Warranty contracts that cover future unexpected repair costs and do not include consumable items needed to maintain the equipment are exempt from sales tax."
Installation, Fabrication and Repair
- Charges for installation and fabrication labor are taxable.
- Repair labor that is separately stated is exempt.
- Parts or materials used to repair tangible personal property are taxable.
The information notice further parses the taxability of the printing industry. See Modification of Revenue Notice # 93-03 for a complete list of taxable and exempt items involved in the following:
- text copy and art preparation,
- commercial art departments,
- graphic arts photography and film assembly,
- pressroom, and
- bindery, mailing rooms and shipping rooms.
See? There are at least as many layers to the taxation of the printing industry as there are steps to the process of printing.