Minnesota Sales Tax Applies to Parking Fees Deducted From Payroll

Monday, May 19th, 2014

A indoor parking garage.

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.


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TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

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