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 Exemption, to purchase exempt from tax. Sales to employees of the federal government are taxable. Minnesota State agencies use a direct pay authorization. This means that state agencies do not pay the sales tax to the seller, but instead pay the tax directly to the Department of Revenue. Purchase orders used by Minnesota State agencies contain information about the direct pay authorization, so it is not necessary for vendors to obtain a copy of it. There are exceptions to the use of direct pay authorization. Sellers of prepared food or beverages, lodging and related services, admissions to amusement or athletic events, motor vehicles or certain services to the State of Minnesota must collect and remit sales tax on those sales from the purchasing Minnesota State agency. Cities and counties are exempt from sales and use tax on purchases used in providing certain government services. Townships have had this exemption since October 1, 2011. In 2017 this exemption was expanded to special districts; instrumentality of a statutory or home rule charter city, county, or township; and joint powers board or organization. To claim the exemption, these purchasers must provide a Form ST3, Certificate of Exemption to their sellers. However, sales of prepared food, candy, soft drinks, alcoholic beverages or lodging to those entities are not exempt. FILING THE SALES AND USE TAX RETURN A sales and use tax account is set up on either a monthly, quarterly or annual filing basis depending on how much tax is owed each month. Annual Filing. Tax must average less than $100 per month. Quarterly Filing. Tax must average less than $500 per month. Monthly Filing. Tax average is $500 or more per month. Seasonal Filing. If the business is not open year-round, request seasonal filing. With seasonal filing you only need to file returns for those periods when the business is open. One-time Filing. If you will be making taxable sales in Minnesota at only one event or during one month, ask for one-time filing. Do not apply for one-time filing if you plan to make taxable sales in the future. If the amount of tax you report is consistently higher or lower than the limits, you can change your filing cycles when you log into e-Services Minnesota to file or pay taxes. If Internet service is not available, contact the Minnesota Department of Revenue.
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