Sales Tax State Activity Update - November 2004

Minnesota Clarifies Advertising Materials Exemption

In a Revenue Notice the Director of Appeals and Legal Services Division clarified that under Minnesota Statutes, section 297A.68, subdivision 11, a sales and use tax exemption exists for advertising materials that are transferred, and used out of state. In addition to the advertising materials that are designed to promote the sale of merchandise or services, shipping materials used exclusively to mail the promotional materials are also exempt.

Examples of the mailing materials given in the notice are as follows:

• Boxes
• Labels (part of an envelope)
• Styrofoam containers
• Banding to hold a Styrofoam container together
  
  

Taxable Materials
Items that have a primary purpose other than advertising are considered subject to sales and use tax.

Examples of such taxable materials are as follows:

• Items sent to fulfill a legal obligation such as purchased or ordered goods and rebate checks
• Items sent to transmit non-advertising information such as billing statements and invoices

Although not mentioned in this notice mailing envelopes and reply envelopes are enumerated as exempt in the statute.

This notice may be viewed at: http://www.taxes.state.mn.us/taxes/sales/publications/revenue_notices/content/rn_04_09.pdf (Revenue Notice # 04-09, October 4, 2004)

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