The Minnesota Tax Court ruled that a separately stated surcharge covering credit card processing fees was subject to sales tax. The taxpayer, a sole proprietor, operates vacation rental properties that are held out for booking either directly through the taxpayer or through third-party marketers. The taxpayer charges a 4% separately stated surcharge for reservations booked directly with him as a reimbursement of his credit card fees. The taxpayer had not collected sales tax on the surcharge. The Tax Court concluded that the credit card surcharge is included within the broad statutory definition of “sales price,” and thus is subject to sales tax. The Tax Court reasoned that the surcharge is an expense of the seller that cannot be deducted from the sales price and that the fee did not qualify for the exception for “carrying charges from credit extended on the sale of personal property or services.”
