Minnesota – Gasoline and Diesel Fuel Sales to State and Local Units of Government

SALT Report 2976 – The Minnesota Department of Revenue updated a petroleum tax fact sheet for distributors of gasoline and diesel fuel to provide guidance regarding sales made to state and local governments.  The fact sheet reflects that effective January 1, 2014, sales tax does not apply to sales of dyed diesel fuel for off-road use if the agency purchasing the fuel is exempt.

Also, state and local government are exempt from the federal excise tax; however they are not exempt from the motor fuel excise tax for gasoline and diesel fuel used in licensed vehicles.  In this case, the motor fuel excise tax must be charged on the total sale if undyed diesel fuel or gasoline is delivered to a government agency. Also, excise tax is due if dyed diesel fuel is sold and the governmental agency does not have a special fuel license.

The fact sheet also discusses the taxability of purchases made by government units that are, and are not, licensed; refunds; nonrefundable purchases; bulk deliveries; and diesel fuel used in emergency vehicles.

For Further Information

Minnesota Department of Revenue – Petroleum Tax Fact Sheet No. 300