The Minnesota Tax Court recently ruled that an employer's provision of parking to its employees was subject to tax.
The taxpayer operated several hospitals. The taxpayer offered hospital employees the opportunity to use its parking facilities. Because the parking was a transportation fringe benefit under federal tax law, employees could pay for parking through pre-tax payroll deductions. If the employees chose to do so, the taxpayer deducted the payments from the employee's pre-tax wages.
Minnesota sales tax applies to nonresidential parking services furnished for a consideration. The requirement for "consideration" means that there must be a bargain. A bargain is a negotiation where one party voluntarily assumes an obligation in exchange for the other party acting in some way.
The tax court ruled that the taxpayer furnished parking services for a consideration. The taxpayer assumed the obligation to provide parking. In return, the employees allowed the taxpayer to reduce the wages that they would otherwise have received. There was a bargain and thus consideration. Minnesota sales tax therefore applied to the taxpayer's provision of parking to its employees.