Application for Sales and Use Tax Exempt Status
Please read carefully and complete the attached application if you wish to apply for sales and use tax exempt status. Be sure to provide all the required supporting documentation requested for the organization. Applications received without the required supporting documentation will not be processed.
Under Minnesota law, some nonprofit organizations may purchase certain items without paying sales tax. These organizations must receive formal authorization from the Minnesota Department of Revenue and use Form ST3, Certificate of Exemption, in order to make tax-free purchases. The exemption applies only to purchases made by the nonprofit organization; it does not allow the organization to sell items without collecting sales tax.
Note: Nonprofit organizations that qualify for federal income tax exemption are not automatically exempt from Minnesota sales tax.
Read the list below to determine if the group is eligible for exemption from Minnesota sales and use tax.
Use this application if the group is:
- Organized and operated exclusively for charitable, religious or educational purposes and has obtained exemption from federal income tax under section 501(c)(3) of the Internal Revenue Code; or
- A senior citizen group that is organized for pleasure, recreation or other nonprofit purpose, not including housing. The group must be an exempt organization under 501(c) of the Internal Revenue Code and must limit membership to those who are age 55 years or older or are physically disabled; or
- A cemetery that is owned by a religious organization. Examples of nonprofit organizations that may qualify for sales tax exempt status include churches, private schools, colleges and universities, museums and historical societies, youth organizations, senior citizen groups and volunteer fire departments.
Examples of organizations that do not qualify for sales tax exempt status include Chambers of Commerce, Knights of Columbus, Masonic Lodges, city-run celebrations, homeowners’ associations, fraternities, sororities, lake improvement associations, animal shelters and animal help groups, medical clinics, Jaycees, Kiwanis and Lions Clubs, adult sports clubs of any type, trade associations, prayer societies, professional associations, senior housing organizations and social clubs.
Hospitals and outpatient surgical centers generally do not qualify for sales tax exempt status, but are eligible for a separate exemption under M.S. 297A.70, subd. 7.
What is Exempt?
The exemption applies only to purchases of items used in the performance of the charitable, religious or educational functions of the exempt organization. The item or service must be sold directly to and paid for by the exempt organization.
The exemption does not apply in all cases. Organizations that have been granted sales tax exempt status must pay sales tax on the following:
- Building, construction or reconstruction materials purchased by a contractor or a subcontractor as part of a lump-sum contract or similar arrangement
- Construction materials purchased by the organization or a contractor to be used in constructing buildings or facilities that will not be principally used by the exempt organization
- Prepared food, candy, soft drinks, and alcoholic beverages, including catered food
- Gambling equipment and supplies
- Most motor vehicles
- 9.2% car rental tax and 5% car rental fee
- Waste collection and disposal services (although this is a special tax, not a sales tax)
- An organization is not exempt from Minnesota sales and use tax if it is not organized and operated exclusively for religious, educational or charitable purposes.
- The fact that an organization is nonprofit does not necessarily make it an exempt organization for sales and use tax purposes.
- If an exempt organization attempts to influence legislation or intervene or participate in political campaigns they may lose their income tax exempt status under section 501(c)(3) of the Internal Revenue Code and also jeopardize their sales tax exempt status.Continued
- An exempt organization must serve the public rather than a private interest to qualify for exemption from Minnesota sales and use tax.
- The assets of an exempt organization must be dedicated to an exempt purpose to qualify for exemption from Minnesota sales and use tax.
- An exempt organization must notify the Department of Revenue in writing if there is a change in its purpose or activities that causes the organization to no longer qualify for sales tax exempt status. Failure to notify the department may be grounds for retroactive revocation of the organization’s sales tax exempt status.
- Exempt organizations must enter their Minnesota Tax ID number on the completed Form ST3, Certificate of Exemption. This form is provided to vendors when making purchases.
What to Expect During the Application Process
- Allow at least 90 days processing time to receive a determination on your application.
- We may request additional information to determine whether or not your organization qualifies for exempt status. If you do not provide the additional information within 60 days, we will preliminarily deny your application.
- If you disagree with the preliminary denial you may provide more information within 60 days of the preliminary letter of denial.
- If you do not provide additional information, your application will be closed and you will receive a denial order. If you disagree with the determination regarding the denial order, you will have 60 days from the date of the letter to appeal our determination.
Information and Assistance
Sales and use tax forms, fact sheets and other information are available on our website at www.revenue.state.mn.us.
If you need help in completing this application or have questions, call 651-296-6181 or 1-800-657-3777; Call 711 for Minnesota Relay.
Minnesota Statute, 297A.70, Subd. 4: https://www.revisor.mn.gov/statutes/?id=297A.70 Minnesota Rule 8130.6200: https://www.revisor.mn.gov/rules/?id=8130.6200