Minnesota to Extend Certain Exemptions to Cities and Counties
- Sales Tax News
- Sep 5, 2013 | Gail Cole
Townships in Minnesota have had the privilege of purchasing certain items and services exempt from sales and use tax since October 2011. Beginning January 1, 2014, those exemptions will be extended to Minnesota cities and counties.
Exempt
The Minnesota Department of Revenue lists the following items as examples of what local governments may purchase free from sales and use tax:
- Gravel, sand, salt, and sand/salt mixtures;
- Lawn care, tree, bush, and stump removal services;
- Office supplies and equipment and telephone service;
- Machinery and equipment, accessories for public safety, and road and bridge maintenance;
- Motor vehicles for certain uses; and
- Fuel (when used to provide exempt services) and construction materials (for their own use).
Not exempt
The sales and use tax exemption does not apply to any of the following:
- Purchases of lodging, prepared food, candy, soft drinks and alcoholic beverages;
- Solid waste management tax;
- Certain cemetery-related purchases for cities, towns and counties with a municipal cemetery (equipment, office supplies, etc). Lawn maintenance services and the like for cemeteries are exempt.
- Purchases used to provide services generally provided by a private business, such as golf courses, marinas, campgrounds, and laundromats.
When local government purchases are used to provide both exempt and taxable services, tax should be paid on the taxable portion.
Examples may be found in the DOR's sales tax fact sheet #176. The department also provides a Local Government FAQ sheet on the issue.
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