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Chapter 297A

Section 297A.70

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297A.70 EXEMPTIONS FOR GOVERNMENTS AND NONPROFIT GROUPS.
    Subdivision 1. Scope. (a) To the extent provided in this section, the gross receipts from sales
of items to or by, and storage, distribution, use, or consumption of items by the organizations
listed in this section are specifically exempted from the taxes imposed by this chapter.
(b) Notwithstanding any law to the contrary enacted before 1992, only sales to governments
and political subdivisions listed in this section are exempt from the taxes imposed by this chapter.
(c) "Sales" includes purchases under an installment contract or lease purchase agreement
under section 465.71.
    Subd. 2. Sales to government. (a) All sales, except those listed in paragraph (b), to the
following governments and political subdivisions, or to the listed agencies or instrumentalities of
governments and political subdivisions, are exempt:
(1) the United States and its agencies and instrumentalities;
(2) school districts, the University of Minnesota, state universities, community colleges,
technical colleges, state academies, the Perpich Minnesota Center for Arts Education, and an
instrumentality of a political subdivision that is accredited as an optional/special function school
by the North Central Association of Colleges and Schools;
(3) hospitals and nursing homes owned and operated by political subdivisions of the state of
tangible personal property and taxable services used at or by hospitals and nursing homes;
(4) the Metropolitan Council, for its purchases of vehicles and repair parts to equip
operations provided for in section 473.4051;
(5) other states or political subdivisions of other states, if the sale would be exempt from
taxation if it occurred in that state; and
(6) sales to public libraries, public library systems, multicounty, multitype library systems as
defined in section 134.001, county law libraries under chapter 134A, state agency libraries, the
state library under section 480.09, and the Legislative Reference Library.
(b) This exemption does not apply to the sales of the following products and services:
(1) building, construction, or reconstruction materials purchased by a contractor or a
subcontractor as a part of a lump-sum contract or similar type of contract with a guaranteed
maximum price covering both labor and materials for use in the construction, alteration, or repair
of a building or facility;
(2) construction materials purchased by tax exempt entities or their contractors to be used in
constructing buildings or facilities which will not be used principally by the tax exempt entities;
(3) the leasing of a motor vehicle as defined in section 297B.01, subdivision 5, except for
leases entered into by the United States or its agencies or instrumentalities; or
(4) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause (2), and
prepared food, candy, and soft drinks, except for lodging, prepared food, candy, and soft drinks
purchased directly by the United States or its agencies or instrumentalities.
(c) As used in this subdivision, "school districts" means public school entities and districts of
every kind and nature organized under the laws of the state of Minnesota, and any instrumentality
of a school district, as defined in section 471.59.
    Subd. 3. Sales of certain goods and services to government. (a) The following sales to or
use by the specified governments and political subdivisions of the state are exempt:
(1) repair and replacement parts for emergency rescue vehicles, fire trucks, and fire apparatus
to a political subdivision;
(2) machinery and equipment, except for motor vehicles, used directly for mixed municipal
solid waste management services at a solid waste disposal facility as defined in section 115A.03,
subdivision 10
;
(3) chore and homemaking services to a political subdivision of the state to be provided
to elderly or disabled individuals;
(4) telephone services to the Department of Administration that are used to provide
telecommunications services through the intertechnologies revolving fund;
(5) firefighter personal protective equipment as defined in paragraph (b), if purchased or
authorized by and for the use of an organized fire department, fire protection district, or fire
company regularly charged with the responsibility of providing fire protection to the state or a
political subdivision;
(6) bullet-resistant body armor that provides the wearer with ballistic and trauma protection,
if purchased by a law enforcement agency of the state or a political subdivision of the state, or a
licensed peace officer, as defined in section 626.84, subdivision 1;
(7) motor vehicles purchased or leased by political subdivisions of the state if the vehicles
are exempt from registration under section 168.012, subdivision 1, paragraph (b), exempt from
taxation under section 473.448, or exempt from the motor vehicle sales tax under section
297B.03, clause (12);
(8) equipment designed to process, dewater, and recycle biosolids for wastewater treatment
facilities of political subdivisions, and materials incidental to installation of that equipment;
(9) sales to a town of gravel and of machinery, equipment, and accessories, except motor
vehicles, used exclusively for road and bridge maintenance, and leases by a town of motor
vehicles exempt from tax under section 297B.03, clause (10); and
(10) the removal of trees, bushes, or shrubs for the construction and maintenance of roads,
trails, or firebreaks when purchased by an agency of the state or a political subdivision of the state.
(b) For purposes of this subdivision, "firefighters personal protective equipment" means
helmets, including face shields, chin straps, and neck liners; bunker coats and pants, including
pant suspenders; boots; gloves; head covers or hoods; wildfire jackets; protective coveralls;
goggles; self-contained breathing apparatus; canister filter masks; personal alert safety systems;
spanner belts; optical or thermal imaging search devices; and all safety equipment required by the
Occupational Safety and Health Administration.
    Subd. 4. Sales to nonprofit groups. (a) All sales, except those listed in paragraph (b), to the
following "nonprofit organizations" are exempt:
(1) a corporation, society, association, foundation, or institution organized and operated
exclusively for charitable, religious, or educational purposes if the item purchased is used in the
performance of charitable, religious, or educational functions; and
(2) any senior citizen group or association of groups that:
(i) in general limits membership to persons who are either age 55 or older, or physically
disabled; and
(ii) is organized and operated exclusively for pleasure, recreation, and other nonprofit
purposes, no part of the net earnings of which inures to the benefit of any private shareholders.
For purposes of this subdivision, charitable purpose includes the maintenance of a cemetery
owned by a religious organization.
(b) This exemption does not apply to the following sales:
(1) building, construction, or reconstruction materials purchased by a contractor or a
subcontractor as a part of a lump-sum contract or similar type of contract with a guaranteed
maximum price covering both labor and materials for use in the construction, alteration, or repair
of a building or facility;
(2) construction materials purchased by tax-exempt entities or their contractors to be used in
constructing buildings or facilities that will not be used principally by the tax-exempt entities; and
(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause (2),
and prepared food, candy, and soft drinks; and
(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 5, except as
provided in paragraph (c).
(c) This exemption applies to the leasing of a motor vehicle as defined in section 297B.01,
subdivision 5
, only if the vehicle is:
(1) a truck, as defined in section 168.011, a bus, as defined in section 168.011, or a passenger
automobile, as defined in section 168.011, if the automobile is designed and used for carrying
more than nine persons including the driver; and
(2) intended to be used primarily to transport tangible personal property or individuals,
other than employees, to whom the organization provides service in performing its charitable,
religious, or educational purpose.
(d) A limited liability company also qualifies for exemption under this subdivision if (1)
it consists of a sole member that would qualify for the exemption, and (2) the items purchased
qualify for the exemption.
    Subd. 5. Veterans groups. Sales to an organization of military service veterans or an
auxiliary unit of an organization of military service veterans are exempt if:
(1) the organization or auxiliary unit is organized within the state of Minnesota and is exempt
from federal taxation under section 501(c), clause (19), of the Internal Revenue Code; and
(2) the tangible personal property is for charitable, civic, educational, or nonprofit uses and
not for social, recreational, pleasure, or profit uses.
    Subd. 6. Ambulances. The lease of a motor vehicle for use as an ambulance by an ambulance
service licensed under section 144E.10 is exempt.
    Subd. 7. Hospitals and outpatient surgical centers. (a) Sales, except for those listed in
paragraph (c), to a hospital are exempt, if the items purchased are used in providing hospital
services. For purposes of this subdivision, "hospital" means a hospital organized and operated
for charitable purposes within the meaning of section 501(c)(3) of the Internal Revenue Code,
and licensed under chapter 144 or by any other jurisdiction, and "hospital services" are services
authorized or required to be performed by a "hospital" under chapter 144.
(b) Sales, except for those listed in paragraph (c), to an outpatient surgical center are
exempt, if the items purchased are used in providing outpatient surgical services. For purposes
of this subdivision, "outpatient surgical center" means an outpatient surgical center organized
and operated for charitable purposes within the meaning of section 501(c)(3) of the Internal
Revenue Code, and licensed under chapter 144 or by any other jurisdiction. For the purposes of
this subdivision, "outpatient surgical services" means: (1) services authorized or required to be
performed by an outpatient surgical center under chapter 144; and (2) urgent care. For purposes
of this subdivision, "urgent care" means health services furnished to a person whose medical
condition is sufficiently acute to require treatment unavailable through, or inappropriate to be
provided by, a clinic or physician's office, but not so acute as to require treatment in a hospital
emergency room.
(c) This exemption does not apply to the following products and services:
(1) purchases made by a clinic, physician's office, or any other medical facility not operating
as a hospital or outpatient surgical center, even though the clinic, office, or facility may be owned
and operated by a hospital or outpatient surgical center;
(2) sales under section 297A.61, subdivision 3, paragraph (g), clause (2), and prepared
food, candy, and soft drinks;
(3) building and construction materials used in constructing buildings or facilities that will
not be used principally by the hospital or outpatient surgical center;
(4) building, construction, or reconstruction materials purchased by a contractor or a
subcontractor as a part of a lump-sum contract or similar type of contract with a guaranteed
maximum price covering both labor and materials for use in the construction, alteration, or repair
of a hospital or outpatient surgical center; or
(5) the leasing of a motor vehicle as defined in section 297B.01, subdivision 5.
(d) A limited liability company also qualifies for exemption under this subdivision if (1)
it consists of a sole member that would qualify for the exemption, and (2) the items purchased
qualify for the exemption.
    Subd. 8. Regionwide public safety radio communication system; products and services.
Products and services including, but not limited to, end user equipment used for construction,
ownership, operation, maintenance, and enhancement of the backbone system of the regionwide
public safety radio communication system established under sections 403.21 to 403.34, are
exempt. For purposes of this subdivision, backbone system is defined in section 403.21,
subdivision 9
. This subdivision is effective for purchases, sales, storage, use, or consumption for
use in the first and second phases of the system, as defined in section 403.21, subdivisions 3, 10,
and 11
, and that portion of the third phase of the system that is located in the southeast district of
the State Patrol and the counties of Benton, Sherburne, Stearns, and Wright.
    Subd. 9. Sacramental wine. Wine for sacramental purposes in religious ceremonies, as
described in section 340A.316, is exempt if the wine is purchased from a nonprofit religious
organization meeting the requirements of subdivision 4 or from a person authorized to import
sacramental wine without a license as provided in section 340A.316.
    Subd. 10. Nonprofit tickets or admissions. (a) Tickets or admissions to an event are exempt
if all the gross receipts are recorded as such, in accordance with generally accepted accounting
principles, on the books of one or more organizations whose primary mission is to provide an
opportunity for citizens of the state to participate in the creation, performance, or appreciation of
the arts, and provided that each organization is:
(1) an organization described in section 501(c)(3) of the Internal Revenue Code in which
voluntary contributions make up at least the following percent of the organization's annual
revenue in its most recently completed 12-month fiscal year, or in the current year if the
organization has not completed a 12-month fiscal year:
(i) for sales made after July 31, 2001, and before July 1, 2002, for the organization's fiscal
year completed in calendar year 2000, three percent;
(ii) for sales made on or after July 1, 2002, and on or before June 30, 2003, for the
organization's fiscal year completed in calendar year 2001, three percent;
(iii) for sales made on or after July 1, 2003, and on or before June 30, 2004, for the
organization's fiscal year completed in calendar year 2002, four percent; and
(iv) for sales made in each 12-month period, beginning on July 1, 2004, and each subsequent
year, for the organization's fiscal year completed in the preceding calendar year, five percent;
(2) a municipal board that promotes cultural and arts activities; or
(3) the University of Minnesota, a state college and university, or a private nonprofit college
or university provided that the event is held at a facility owned by the educational institution
holding the event.
The exemption only applies if the entire proceeds, after reasonable expenses, are used solely
to provide opportunities for citizens of the state to participate in the creation, performance, or
appreciation of the arts.
(b) Tickets or admissions to the premises of the Minnesota Zoological Garden are exempt,
provided that the exemption under this paragraph does not apply to tickets or admissions to
performances or events held on the premises unless the performance or event is sponsored and
conducted exclusively by the Minnesota Zoological Board or employees of the Minnesota
Zoological Garden.
     Subd. 11. School tickets or admissions. Tickets or admissions to regular season school
games, events, and activities, and to games, events, and activities sponsored by the Minnesota
State High School League under chapter 128C, are exempt. For purposes of this subdivision,
"school" has the meaning given it in section 120A.22, subdivision 4.
    Subd. 12. YMCA, YWCA, and JCC memberships. The sale of memberships, meaning
both onetime initiation fees and periodic membership dues, to an association incorporated under
section 315.44 or an organization defined under section 315.51, are exempt. However, all separate
charges made for the privilege of having access to and the use of the association's sports and
athletic facilities are taxable.
    Subd. 13. Fund-raising sales by or for nonprofit groups. (a) The following sales by the
specified organizations for fund-raising purposes are exempt, subject to the limitations listed in
paragraph (b):
(1) all sales made by an organization that exists solely for the purpose of providing
educational or social activities for young people primarily age 18 and under;
(2) all sales made by an organization that is a senior citizen group or association of groups if
(i) in general it limits membership to persons age 55 or older; (ii) it is organized and operated
exclusively for pleasure, recreation, and other nonprofit purposes; and (iii) no part of its net
earnings inures to the benefit of any private shareholders;
(3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if the
beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization under section
501(c)(3) of the Internal Revenue Code; and
(4) sales of candy sold for fund-raising purposes by a nonprofit organization that provides
educational and social activities primarily for young people age 18 and under.
(b) The exemptions listed in paragraph (a) are limited in the following manner:
(1) the exemption under paragraph (a), clauses (1) and (2), applies only if the gross annual
receipts of the organization from fund-raising do not exceed $10,000; and
(2) the exemption under paragraph (a), clause (1), does not apply if the sales are derived
from admission charges or from activities for which the money must be deposited with the school
district treasurer under section 123B.49, subdivision 2, or be recorded in the same manner as other
revenues or expenditures of the school district under section 123B.49, subdivision 4.
(c) Sales of tangible personal property are exempt if the entire proceeds, less the necessary
expenses for obtaining the property, will be contributed to a registered combined charitable
organization described in section 309.501, to be used exclusively for charitable, religious, or
educational purposes, and the registered combined charitable organization has given its written
permission for the sale. Sales that occur over a period of more than 24 days per year are not
exempt under this paragraph.
(d) For purposes of this subdivision, a club, association, or other organization of elementary
or secondary school students organized for the purpose of carrying on sports, educational, or
other extracurricular activities is a separate organization from the school district or school for
purposes of applying the $10,000 limit.
    Subd. 14. Fund-raising events sponsored by nonprofit groups. (a) Sales of tangible
personal property at, and admission charges for fund-raising events sponsored by, a nonprofit
organization are exempt if:
(1) all gross receipts are recorded as such, in accordance with generally accepted accounting
practices, on the books of the nonprofit organization; and
(2) the entire proceeds, less the necessary expenses for the event, will be used solely and
exclusively for charitable, religious, or educational purposes. Exempt sales include the sale of
prepared food, candy, and soft drinks at the fund-raising event.
(b) This exemption is limited in the following manner:
(1) it does not apply to admission charges for events involving bingo or other gambling
activities or to charges for use of amusement devices involving bingo or other gambling activities;
(2) all gross receipts are taxable if the profits are not used solely and exclusively for
charitable, religious, or educational purposes;
(3) it does not apply unless the organization keeps a separate accounting record, including
receipts and disbursements from each fund-raising event that documents all deductions from
gross receipts with receipts and other records;
(4) it does not apply to any sale made by or in the name of a nonprofit corporation as the
active or passive agent of a person that is not a nonprofit corporation;
(5) all gross receipts are taxable if fund-raising events exceed 24 days per year;
(6) it does not apply to fund-raising events conducted on premises leased for more than
five days but less than 30 days; and
(7) it does not apply if the risk of the event is not borne by the nonprofit organization and
the benefit to the nonprofit organization is less than the total amount of the state and local tax
revenues foregone by this exemption.
(c) For purposes of this subdivision, a "nonprofit organization" means any unit of
government, corporation, society, association, foundation, or institution organized and operated
for charitable, religious, educational, civic, fraternal, and senior citizens' or veterans' purposes, no
part of the net earnings of which inures to the benefit of a private individual.
    Subd. 15. Statewide amateur athletic games. Notwithstanding section 297A.61, subdivision
3
, or any other provision of this chapter, the gross receipts from the following sales made to or by
a nonprofit corporation designated by the Minnesota Amateur Sports Commission to conduct a
series of statewide amateur athletic games and related events, workshops, and clinics are exempt:
(1) sales of tangible personal property to or the storage, use, or other consumption of tangible
personal property by the nonprofit corporation; and
(2) sales of tangible personal property, admission charges, and sales of prepared food, candy,
and soft drinks by the nonprofit corporation at fund-raising events, athletic events, or athletic
facilities.
    Subd. 16. Camp fees. Fees to camps or other recreation facilities are exempt for:
(1) services primarily for children, adults accompanying children, or persons with
disabilities; or
(2) educational or religious activities;
and the camp or facilities are owned and operated by an exempt organization under section
501(c)(3) of the Internal Revenue Code.
History: 2000 c 418 art 1 s 14,44 subd 3; 2000 c 490 art 8 s 9-11; 1Sp2001 c 5 art 7 s 52;
art 12 s 56-64; 1Sp2001 c 8 art 2 s 63; 1Sp2001 c 13 s 16; 2002 c 377 art 3 s 12; art 10 s 24;
2003 c 2 art 1 s 35; 1Sp2003 c 1 art 2 s 135; 1Sp2003 c 21 art 8 s 5-8; 1Sp2005 c 3 art 5 s
12,13; 2006 c 257 s 2; 2006 c 259 art 6 s 18-24
NOTE: The amendment to subdivision 11 by Laws 2006, chapter 257, section 2, is effective
for sales after June 30, 2006, and before July 1, 2011. Laws 2006, chapter 257, section 2, the
effective date.