Capital equipment “Capital equipment” generally means machinery and equipment used primarily in manufacturing, fabricating, mining, or refining tangible personal property to be sold at retail, when the equipment is essential to an integrated production process . It can also include equipment used mainly to electronically transmit data to customers and certain foundations, parts, and special‑purpose production buildings. Qualifying capital equipment purchases are typically exempt up front when the buyer provides a completed Form ST3 claiming the appropriate exemption. See the Department of Revenue’s Sales Tax Fact Sheets and Industry Guides for detailed definitions. Resource recovery equipment Certain equipment used to process solid or hazardous waste at a resource recovery facility may be exempt, but advance approval from the Department of Revenue is required. Sales to nonprofit organizations Some nonprofit organizations may be exempt from paying sales tax on purchases if they are organized exclusively for charitable, religious, educational, or qualifying senior citizen purposes. The exemption applies to purchases by the nonprofit; it usually does not allow the nonprofit to sell items tax‑free. The exemption does not apply to purchases of meals, lodging, or motor vehicles, or to certain short‑term vehicle rental taxes and fees. To claim the exemption, qualifying organizations apply using Form ST16, Application for Nonprofit Exempt Status – Sales Tax, and then give sellers a completed Form ST3. Sales to government agencies • Sales to the federal government and its agencies are generally exempt when the purchase is made directly by the agency, often documented by a purchase order, voucher, work order, or Form ST3. Sales to federal employees making personal purchases are taxable. • Minnesota state agencies generally use a direct pay authorization , paying the tax directly to the Department of Revenue on most purchases; sellers usually do not collect sales tax from state agencies except on specific items such as prepared food, lodging, admissions, motor vehicles, and certain services. • Cities, counties, townships, and certain other local government units are exempt on purchases used for qualifying government services. However, they must pay tax on purchases of prepared food, candy, soft drinks, alcoholic beverages, or lodging. A completed Form ST3 is required to claim these exemptions.
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