Food, Clothing and Prescription Drugs Generally, the sale of clothing, prescription drugs and most food is exempt from the sales and use tax. However, the exemption for sales of food does not apply to prepared food purchased from restaurants, bars, delicatessens or caterers, and does not include candy, soft drinks or dietary supplements. Capital Equipment Purchases Capital equipment means machinery and equipment purchased or leased, and used in Minnesota by the purchaser or lessee primarily for manufacturing, fabricating, mining, or refining tangible personal property to be sold ultimately at retail if the machinery and equipment are essential to the integrated production process of manufacturing, fabricating, mining, or refining. Capital equipment also includes machinery and equipment used primarily to electronically transmit results retrieved by a customer of an on-line computerized data retrieval system. Capital equipment includes all machinery and equipment that is essential to the integrated production process; also included are repair and replacement parts, materials used for foundations that support machinery or equipment, and materials used to construct and install special purpose buildings used in the production process. Purchases of qualifying capital equipment are exempt upfront with a completed Form ST3, Certificate of Exemption. See Sales Tax Fact Sheets and Industry Guides for more information. Resource Recovery An exemption from sales and use tax is allowed for purchases of equipment used for processing solid or hazardous waste at a resource recovery facility. The exemption requires prior approval by the Minnesota Department of Revenue. For more information, contact the department, Sales and Use Tax Division. Sales to Nonprofit Organizations Nonprofit organizations may, in certain instances, be exempt from paying sales tax. The exemption only applies to groups organized exclusively for charitable purposes, senior citizen groups, religious, and educational organizations. This exemption applies to purchases made by the nonprofit organization; it does not allow them to sell items without collecting and remitting sales tax. To apply, use Form ST16, Application for Nonprofit Exempt Status - Sales Tax. The exemption does not apply to the purchases of meals, lodging, or motor vehicles, and also does not apply to the additional 9.2 percent tax or 5 percent fee on short term rental of vehicles. Qualifying exempt organizations must provide a completed Form ST3, Certificate of Exemption. Sales to Government Agencies Sales to the federal government and its agencies are not taxable. The federal agency must give the seller a purchase order, payment voucher, work order, or completed Form ST3, Certificate of
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