Minnesota Updates Guidance on the Taxability of Sales to Governments

Wednesday, January 21st, 2015

Minnesota Department of Revenue

The Minnesota Department of Revenue revised its guidance for sales to governments.

Sales to the federal government are not taxable if the retailer receives a purchase order, payment voucher, work order, or completed Form ST3 directly from the federal government. Sales to federal government employees are taxable, even when reimbursed by the federal government.

Purchases of tangible personal property by Minnesota state agencies are subject to sales tax. Generally, the agency pays sales tax on property directly to the Department of Revenue through a direct pay authorization. The agency must include details about the direct pay authorization in its purchase order instead of providing an exemption certificate. However, the agency pays sales tax to the retailer on purchases of prepared food and motor vehicles.

Purchases of taxable services by Minnesota state agencies are subject to sales tax. Agencies do not have direct pay authorization for purchases of taxable services. The retailer collects the sales tax at the time of purchase. Taxable services include lodgings, admissions to places of amusement, and cell phone and pager services.

Local governments are exempt from paying local and state sales tax on most purchases. Local governments must present a complete Form ST3 or Certificate of Exemption at the time of purchase. Local governments include counties, cities, townships, school districts and other municipalities, and most local government instrumentalities.


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TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

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