Minnesota – Exemption for Water Used to Provide Fire Protection

SALT Report 1707 – The Minnesota Department of Revenue issued guidance regarding the newly enacted sales and use tax exemption for purchases of water used for fire protection services. To qualify for the exemption, the water must be “used directly” by an organized fire department, fire protection district, or fire company that is responsible for providing fire protection services to the state or a political subdivision.

The exempt water must be directly used for extinguishing, suppressing, containing, controlling, or preventing a fire within the state. However, the practice of using water hoses, opening fire hydrants, and finding and using water supplies, when done to extinguish, contain, control, or prevent the spread of fire from a practice burn, is also exempt and considered a direct use.

Indirect uses of water such as flushing fire hydrants; water fights by fire fighters, either as practice or in competition, and not done in conjunction with a practice burn; and water used by fire fighters in the fire house for cooking, cleaning, bathing, and grooming are not exempt.

The Department will accept a reasonable estimation of the amount of water used to extinguish, suppress, contain, control, or prevent a fire from the agency requesting the exemption.  The Department recommends that the method for determining the amount of water used to provide the services be documented and available upon request.

The exemption applies retroactively for sales and purchases made after June 30, 2007, however refunds for amounts already paid on water purchased between June 30, 2007 and January 30, 2010 are prohibited by law.

For Further Information:

Minnesota Department of Revenue – Revenue Notice No. 12-09



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