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Minnesota: Sales Tax Exemptions for Towns


 Minnesota DOR Explains Sales Tax Exemptions for Towns.

The Minnesota Department of Revenue has released a revenue notice regarding the sales and use tax exemption for towns. The exemption "allows towns to purchase tangible personal property and services taxable under Minnesota Statutes, Chapter 297A, exempt with certain exceptions listed in subdivision 2(b)."

The relevant Minnesota Statute reads:

"All sales, except those listed in paragraph (b), to the following governments and political subdivisions, or to the listed agencies or instrumentalities of governments and political subdivisions, are exempt: …

(7) towns… ."   (Section 297A.70, subdivision 2(a)(7))

Revenue Notice #12-08 explains, "For purposes of this exemption, the term 'town' includes, and is synonymous with, the term 'township' and may be used interchangeably."

Purchases that are not eligible for the exemption include, but are not limited to:

  • "[G]oods or services purchased by a town as inputs to goods and services that are generally provided by a private business and the purchases would be taxable if made by a private business engaged in the same activity." (Section 297A.70, subdivision 2(b)(5)).

The Minnesota Department of Revenue provides a number of examples to help clarify what does and does not qualify for the exemption.

Exempt:

  • A town's purchases of "supplies and equipment for use in its administrative office."
  • A town's purchases of "gravel, fuel, concrete, a dump truck and new grade blades for use in maintaining town roads."

Not Exempt:

  • A town's purchases of "office supplies, lawn care and related service as well as gas and electric services … " for use in a town-owned and operated town cemetery.
  • A town's purchases of "electricity, lawn mowers, shovels, rakes, brooms and cleaning supplies … " used to operate and maintain a town-owned campground.

A properly and fully completed Certificate of Exemption (From ST3) must be provided by towns to retailers "[i]n order to purchase qualifying goods and services exempt… ."

Revenue Notice #12-08  revokes Revenue Notice #99-16.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.