Know the rules around sales tax exemption if you manage professional contracts

 

The City of Minneapolis is now exempt from state sales taxes on certain purchases (see http://citytalk/news/WCMS1P-118577). If you manage professional contracts for your department, however, it’s important to be aware of how this law applies to contractors’ expense reimbursements.

For professional services contracts, if the contract stipulates that expenses incurred by the contractor are to be reimbursed by the City, then you must reimburse the contractor for any sales tax paid by the contractor. This is because contractors are not able to make purchases on behalf of the City, and therefore those purchases are subject to sales tax.

Supplies and other items must be purchased by the City (a City employee or contract manager) for the sales tax exemption to apply.

 

Published Jan 22, 2014

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