Minnesota Tax Court: Out-of-State Purchases Subject to Use Tax
- Dec 18, 2012 | Gail Cole
In the County of Ramsey, Minnesota, the Tax Court has released Findings of Fact regarding the case of Agri Tech Industrial, Inc. (Appellant) vs. Commissioner of Revenue (Appellee). The court found certain out-of-state purchases made by the company to be subject to sales and use tax.
Docket No. 8414-R explains the case. The Appellant, which does not own farm land or sell agricultural products and is not in the business of farming, purchased Two Roofs in Wisconsin without paying sales tax and without providing sales tax exemption certificates to the sellers. The Appellant then assembled the roofs and "installed them on two Harvestore Silos for Minnesota farmers." Without sealed roofs, the silos are worthless to the farmers who keep silage in them.
The Commissioner of Revenue "issued an order for sales and use tax totaling $1,119.92 on the Two Roofs … purchased in Wisconsin and installed in Minnesota." The Appellant filed an appeal.
The docket notes that "the burden of demonstrating the challenged order is incorrect" is on the taxpayer. (Emphasis mine). For the purpose of Minnesota sales and use tax, "every sale is presumed taxable unless specifically exempted… ." Since sales tax was not paid on the Two Roofs in Wisconsin, use tax is owed in Minnesota.
Relevant law reads:
"For the privilege of using, storing, distributing, or consuming in Minnesota tangible personal property or taxable services purchased for use, storage, distribution, or consumption in this state, a use tax is imposed on a person in Minnesota." (Minnesota Statutes § 297A.63,(1)(a)).
In Minnesota, farm machinery and purchases made to repair farm machinery are exempt from taxes (Minnesota Statutes § 297A.69). In this case, the farm machinery that unloads the silage from the silos would not operate if the Two Roofs had not been installed. However, the judge determined that "a sophisticated Harvestore Silo is still a silo, and the fact that is is more sophisticated than a conventional silo does not transform it from a building into farm machinery." In addition, "Silos are not included in Minn. Stat. § 297A.61… ."
The Two Roofs are subject to use tax because an exemption certificate was not provided to the seller and because they meet the following three requirements:
- They are used, stored, distributed or consumed in Minnesota.
- They were purchased.
- They were purchased for use, storage, distribution or consumption in Minnesota.
The Appellant did argue that the Two Roofs could have been used in any number of states, and that they were not specifically purchased to use in Minnesota. However, the Appellant did not offer "evidence in the record to support" that argument. Use tax is therefore owed.
Keep current on Minnesota sales and use tax rates.