Procedures for Sales Tax

Title: Sales Tax Procedures
Effective Date: 09-01-2009
Issuing Authority: Controller
Contact: John Arndt at arndt@stolaf.edu  or 507-786-3659
Last Updated: 10-10-2017

Purpose of Procedures

St. Olaf College has a sales tax exemption for purchases made by the college; however, we must collect sales tax when we are selling certain items.

Sales Tax Exemption on College Purchases

St. Olaf College is exempt from sales and use tax for purchases in Minnesota and many other states. To claim an exemption from sales tax, payments must be made directly by the College to the supplier. Reimbursements to employees for state taxes paid when purchasing goods for the College are not allowed.

Sales tax exemption rules vary from state to state. The College has filed for and received sales and use tax exemption certificates for various states and will make a determination if purchases outside of Minnesota are exempt or not, before the travel occurs. Contact John Arndt in the Business Office for assistance in determining if purchases in other states will be tax exempt or not and the procedures for claiming an exemption.

Sales of Taxable Items

Please make sure you are collecting sales tax when you are selling taxable items.  The MN State Sales Tax rate that currently applies to Northfield is 6.875 percent.

Examples of items typically exempt from sales tax:

  • Clothing
  • Food
  • Textbooks and instructional materials sold to a student and required for class
  • Tuition
  • Graduation cap and gown rentals
  • Club and membership dues (unless it provides use of an athletic facility)
  • Residential Parking Fees

Examples of items that might be subject to sales tax:

  • School and art supplies
  • Delivery charges (including shipping and handling)
  • Printing/copying to students and public (to St. Olaf = non-taxable because exempt)
  • Nonresidential Parking Fees
  • Athletic membership fees and athletic admission tickets
  • Books (other than textbooks), Magazines, Periodicals and Yearbooks
  • Sale of used equipment
  • Recordings
  • Lodging if less than 30 days (lodging taxes in addition to sales tax may apply)
  • Candy, soft drinks, prepared food, vending machine sales
  • Amusement device receipts (pool tables, crane pick-up machines, etc.)

For a more comprehensive list of sales taxes that might apply to colleges, please see the following list: General Sales Tax Guidance for Colleges

For detailed information regarding sales tax, visit the Minnesota Department of Revenue Web site:  Minnesota Department of Revenue Sales and Use Tax

Who needs to know these Procedures

These procedures apply to all St. Olaf faculty, staff, and student organizations.

Procedures

How to calculate the sales tax:

Sale price of item x .06875 = amount of sales tax to charge
Sale price of item x 1.06875 = total amount to charge (sale price + tax)
If you did not originally charge the sales tax, and need to back into the amount of tax:
Total charged / 1.06875 = sale price of item sold
Total charged – (Total charged/1.06875) = sales tax amount

Steps to report sales tax collected to the Business Office:

  1. If the sale was made on an OleCard via the point of sale software, the sales tax will automatically calculate and be reported to the Business Office.
  2. If the sale and sales tax was made with cash, check or credit card, fill out the Business Office Deposit Form
  3. Record any revenue as you normally would
  4. Record sales tax collected using 10-10001-21010

St. Olaf pays Minnesota sales tax by the 20th of the following month.  Please make sure that you send your deposit form to the Business Office in a timely manner.