Minnesota DOR defines a maintenance contract as “a contract under which spare parts and consumables required for equipment maintenance are provided at no additional cost.” “Consumer items” here refer to “items that are depleted, disposable, depleted, depleted, or items that need to be replaced after being used for a certain period of time.” A bundled maintenance contract is a contract for the maintenance or repair of devices sold at a non-itme0 price. The individual price, not indicated, involves both the work and the creation of material personal goods. Personal items include repair parts, spare parts and consumer items. Consumer items are items that are depleted, disposable items, are depleted or need to be replaced for a specified period of time after use. At the time of the contract, the client and the service provider know that the physical personal property is being replaced in accordance with the contract. The material personal property provided under the contract represents more than 10% of the total group price. In the case of a unbundled maintenance contract, only the sale prices of the separately listed taxable items are subject to the Minnesota Sales and Use Tax. Fees for accessing data from a remote database are not taxable. Since certain services or real estate become taxable after June 30, certain types of work contracts are exempt from these increases during a transitional period from July 1 to December 31. If the maintenance contract for prefabricated software is required by the Seller as a condition of sale, rental or license for the use of the prefabricated software, the price of the maintenance contract is taxable. “The not-for-profit exemption generally applies only to the acquisition of physical personal property.
It appears that the DOR views these maintenance contracts as deners and not as services. As a result, a non-profit organization with an income tax exemption decision in Minnesota will most likely not have to pay taxes on optional maintenance contracts,” he said. “When the DOR issues a revenue communication, we generally see more audit activity about a year after the notice is issued. This means that by the end of 2013, there may be more audits of companies offering maintenance contracts,” he explains. For the purposes of the bundled definition of the transaction, “purchase price” means the taxable measure on the seller`s purchases and “de minimis” means that the seller`s purchase price or selling price of the taxable products is 10% or less than 10% of the total purchase price or the selling price of the bundled products. Sellers must use either the purchase price or the selling price of the products to determine whether the price of the taxable products is de minimis. Sellers should not use a combination of the purchase price and the selling price of the products to determine whether the price of the taxable products is de minimis. The seller must use the entire duration of a service contract to determine whether taxable products are de minimis. If the prefabricated software maintenance contract is optional, the separate costs are taxed as follows: A unbundled maintenance contract is a maintenance or repair contract for devices sold at separate individual prices. Separate individual prices may be for work or for the creation of material personal property.
Although the invoice does not break down prices separately, it is nevertheless treated as a unbundled maintenance contract when the price is indicated separately by the product in a sales documentation, made available to the customer on paper or electronically. Examples of sales documentation include an invoice, a sales invoice, receipt, contract, service contract, lease, regular notification of rates and services, a price card or a price list.