Minnesota – Revised Local Governments Fact Sheet

SALT Report 2956 – The Minnesota Department of Revenue revised a fact sheet that discusses the sales tax exemptions that apply to local governments.  The publication was revised to reflect that effective January 1, 2014, cities and counties are exempt from sales and use tax on purchases used to provide certain government services. Therefore, cities and counties will be required to pay sales and use tax on all taxable purchases through December 31, 2013.

Under the provisions of Minnesota Statutes, section 297A.70 (2) local governments can buy certain goods and services if they’re used to provide services that are not typically provided by private businesses.  Therefore, to qualify for the exemption, each purchase made by a local government must meet the following requirements:

  • The purchases are “inputs,” used to provide government services
  • The purchases are not used as inputs to services that are generally provided by a private business
  • The purchases are billed to, and paid directly by, the local government

For each qualified purchase, the local government must provide the seller with a fully completed exemption certificate, Form ST3.

Lastly, the fact sheet provides examples of taxable and nontaxable purchases, and discusses qualified motor vehicle purchases, allocating sales tax, and contracts to improve real property.

For Further Information

Minnesota Department of Revenue – Sales Tax Fact Sheet #176