Minnesota's sales tax statute speaks directly to five bid lines: services, related-entity work, equipment rentals, third-party delivery, and tree or lawn services. The tax lines often get a quick glance, or none at all. That habit can cost you money. A bid that leaves out tax on a delivery charge, an equipment rental, or a service line can leave you absorbing the difference after the job is signed.
Key takeaways
- Check every service line against clause (6) of the statute before you finalize the bid.
- Get the ownership facts in writing before you rely on the related-partnership exemption.
- Break rental charges onto their own line and ask the vendor whether its invoice includes Minnesota sales tax.
- Ask suppliers to split out delivery, and confirm whether the aggregate is used in road construction.
- Price tree removal under a land clearing contract separately from other removal work.
This post walks through five areas where Minnesota's sales tax statute speaks directly to delivery, rental, and service charges. It is not a full guide to Minnesota sales tax, and it is not tax advice for your situation. Use it as a checklist to bring to your accountant or to the Minnesota Department of Revenue before you settle on a number.
The statute text quoted here comes from the Office of the Revisor of Statutes. Laws change, so confirm the current version before you rely on any of it. Where the statute doesn't answer a question for your job, the right move is to ask, not to assume.
1. Services the statute treats like goods
The first line to check sits behind the others. When applying the sales tax chapter, the statute says the terms "tangible personal property" and "retail sale" include certain taxable services. Those services are listed in paragraph (g), clause (6), items (i) to (vi) and (viii), and the statute says the rule covers the provision of those services. The same sentence adds a limit: it applies "unless specifically provided otherwise."
Source: Minnesota Statutes section 297A.61
For a bid, this matters because a service can be taxable even when it feels like plain labor. Many estimators assume that work done by a person, rather than sold as a physical product, falls outside the tax. The statute doesn't support that shortcut. It names specific services, and it brings them into the definitions the chapter uses. So the question to ask is not "is this labor?" but "does this service match one of the listed items?"
Start by pulling the list in clause (6) and comparing it against every service line in your draft bid. Write down the items that match, and the ones that clearly don't. For the ones that are unclear, note them as open questions instead of filling them in with a guess. A bid that shows you checked the list is much easier to defend later than one that never mentioned tax.
Pay attention to the phrase "unless specifically provided otherwise." It tells you that the general rule can give way to a more specific rule for a particular service. If a service you're pricing seems to have its own treatment, look for that more specific language before you finalize the line. Don't stop at the first reading of the general rule.
A practical way to work through the list is to read it twice. On the first pass, mark every service in your bid that sounds like something on the list. On the second pass, read the actual wording of each marked item rather than your memory of it. Estimators often remember a list in shorthand, such as "landscaping" or "hauling," and the statute's wording can be narrower or more specific than the shorthand. The exact words are what matter when you defend a line.
2. Work between related partnerships
The second line applies when the work is done between businesses that are closely tied together. The statute says that services performed by a partnership or association for another partnership or association are not taxable if one of the entities owns or controls more than 80 percent of the voting power of the equity interest in the other entity.
Source: Minnesota Statutes section 297A.61
Estimators run into this more often than you might think. A contractor may set up a separate partnership to own equipment, run a crew, or handle hauling, then bill that sister entity for the work. On paper it can look like an ordinary sale between two customers. Under the statute, the ownership test is what decides whether the exemption can apply, and it is a test about voting power in the equity interest. Shared owners, a shared address, or a shared name don't settle the question on their own.
If you plan to rely on this exemption, get the ownership facts in writing before you bid. That means knowing which entity owns which, what percentage of voting power each owner holds, and whether the entities are partnerships or associations as the statute describes. If the percentage is close to the line, or the structure changes during the job, the answer can change with it.
The statute speaks about partnerships and associations. It doesn't address the same arrangement between other kinds of business entities, so don't extend the rule by analogy without advice. When the entity types or the ownership percentages are unclear, treat the service as a line that needs a tax answer before the bid goes out. A rough guess here can turn into a surprise on an audit.
Finally, separate the internal work from the outside work. A related entity doing part of a job is a different situation from a related entity doing all of it, and a bid that mixes both without a note can be hard to untangle later. Split the scope so that each piece has its own tax answer.
3. Equipment and tool rentals
The third line is rental. The statute includes the leasing of tangible personal property, and the granting of a license to use or consume it, for a consideration in money or by exchange or barter. The only exception the clause names is a manufactured home used for residential purposes for a continuous period of 30 days or more.
Source: Minnesota Statutes section 297A.61
For a contractor, that language reaches a wide range of ordinary rentals. Think about the mini excavator you rent for a week, the trench box for a single trench, the compactor, the generator on a remote site, or the scaffolding you lease for a finish job. Each one is tangible personal property, and each one is rented for money.
Don't assume a rental is exempt because the equipment will be used on a project. Look at the rental transaction itself: who holds the equipment, who pays for it, for how long, and on what terms. Those facts are what you can document, and they are what a reviewer will look at if the question ever comes up.
In practice, break rental charges out on their own line in your bid instead of folding them into a general equipment allowance. Show the rental period, the rate, and any delivery or pickup charge separately. Then ask the rental vendor whether its invoice includes Minnesota sales tax. If the vendor's invoice shows tax and your bid doesn't account for it, you have a gap you can see before the job starts. The 30-day manufactured home language is narrow, and it applies only to a residential use, so don't read it as a general exemption for long rentals.
4. Delivery of aggregate and concrete block
The fourth line is delivery. The statute addresses delivery of aggregate materials by a third party, and it excludes delivery of aggregate material used in road construction. It also addresses delivery of concrete block by a third party, but only if that delivery would be subject to sales tax when the seller of the concrete block provides it.
Source: Minnesota Statutes section 297A.61
Two points matter for pricing. First, the road construction exclusion means that the same gravel can be treated differently depending on whether it is used in road construction. Hauling aggregate for a driveway, a parking lot, or a building pad is a different question from hauling it for road construction, and your bid should make clear which one you are pricing. Second, the concrete block rule depends on a comparison. You don't just ask whether a hauler charges for delivery. You ask whether the block seller would owe tax on delivering the block itself. If that answer is yes, a third-party delivery of the block may fall under the same rule.
Delivery charges are easy to bury. When you get a delivered quote, ask the supplier to split out the delivery charge. Then ask whether the delivery is handled by the supplier's own trucks or by a third party. Those two answers determine which part of the statute you need to read. For the material side of that line, see 5 checks to set a material price after tax and discounts.
Keep the paperwork that supports your delivery numbers. Save the quote, the delivery ticket, and any note about where the material is going. If you later have to explain why a delivery was or wasn't taxed, a clean file with the destination and the use of the material will make that conversation much shorter. Hold on to the records for the whole job, not just the invoice.
5. Lawn, tree, and landscape services
The fifth line is the one many estimators overlook, because it sits in the landscaping and grounds work they consider routine. Clause (6), item (vi) of the statute lists lawn care, fertilizing, mowing, spraying, and sprigging services. It also lists garden planting and maintenance, tree, bush, and shrub pruning, bracing, spraying, and surgery, and indoor plant care. The list then covers tree, bush, shrub, and stump removal, along with tree trimming for public utility lines.
Source: Minnesota Statutes section 297A.61
The statute carves out one exception. Tree, bush, shrub, and stump removal are not on the list when they are performed as part of a land clearing contract, as defined in section 297A.68, subdivision 40 of the statutes. That makes the contract type important. A removal job by itself is handled differently from a removal job that is part of a land clearing contract. If you bid both kinds of work, don't let the two blend together in one number.
When you bid a site job that mixes grading, clearing, planting, and maintenance, break out each scope item. Write the item, the service, and whether it appears in the clause (6) list. Then note whether the removal sits under a land clearing contract. A bid that separates these items is easier to price correctly, and easier to explain to a customer who asks why one line has tax and another doesn't.
Be careful with recurring maintenance. A monthly contract for mowing, fertilizing, and pruning can include several items on the list at once. Check each item in the contract, not just the headline service. If the contract covers an indoor plant service, a tree trimming job for a utility line, and a basic mowing schedule, each of those lines needs its own answer.
Seasonal and one-time work often gets mixed into the same proposal. A spring cleanup that includes fertilizing, a fall job that includes stump removal, and a winter contract for indoor plant care may all sit in one document. Write the proposal so that each seasonal scope has its own heading and its own price. A customer who sees the work laid out this way can also see why each line is priced the way it is, and you can revisit one line without reopening the whole contract.
Don't overlook the crew you use. If part of the landscaping work is subcontracted, ask the subcontractor how they price and document the work they do, and make sure their bid shows the same level of detail you expect from your own crew. A subcontractor's line that says only "grounds work" gives you nothing to check, and that gap belongs in your notes before you accept the number.
Illustrative example: a rental and a delivery on one bid
Keep the delivery charge separate. If the aggregate is for road construction, that load needs its own tax answer. If the answer is unclear, list the load as an open item in the bid notes rather than averaging it into the total.
Putting the five lines into your bid
Before you send a number, run each line through a short set of questions. You don't need a lawyer for the first pass. You need the statute text, your draft bid, and the documents from your suppliers and rental companies.
- Does any service line match an item in clause (6), and does the phrase "unless specifically provided otherwise" point to a different rule?
- Does any work happen between two entities, and would the ownership test of more than 80 percent of voting power be met?
- Is any equipment rented, and does the rental vendor's invoice show Minnesota sales tax?
- Is any delivery a third-party charge, and is the material aggregate, concrete block, or road construction material?
- Are trees, shrubs, or stumps involved, and is the removal part of a land clearing contract?
Write the answer next to each line on your bid worksheet. For how the material line fits the whole bid, see Construction material cost line: 3 sourced checks. If you can't answer a question from the documents in front of you, don't guess. Ask the supplier, the rental company, the customer, or your tax adviser, and record what you were told and by whom. A bid with a clear note on each tax line is easier to defend than one that quietly assumed the answer.
What this checklist does not cover
This post doesn't cover every sales tax question you may face in Minnesota. It doesn't give the tax rate for a particular sale, explain how to handle exemption paperwork from a customer, or walk through how a specific project should be taxed. Those topics depend on the facts of the job and the buyer, and they go beyond the five lines above. For exemption forms, see Exempt purchase certificates: 3 forms for tax-free materials.
When you talk with a customer about a tax line, keep the explanation plain. Say which service or delivery the line covers, and say whether tax applies and why, using the wording of the item if you have it. Avoid promising a result you haven't confirmed. A short, accurate answer builds more trust than a long guess.
When a question falls outside this checklist, take it to a professional who knows your business. The Minnesota Department of Revenue is also a useful place to confirm how the rules apply to your situation. The goal of this checklist is simple: find the tax lines early, so you can price them on purpose instead of discovering them after the contract is signed.
Your next step today: open your current draft bid and mark every service, rental, and delivery line that matches one of the five areas above. Write one short note beside each marked line.
Frequently asked questions
Does Minnesota sales tax apply to labor on a bid?
Sometimes. The statute names specific taxable services, so work that looks like plain labor can still fall under the tax.
Is work between related partnerships exempt?
Only in a narrow case: services between partnerships or associations are not taxable when one owns or controls more than 80 percent of the voting power of the equity interest in the other.