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S.F. No. 283 - Sales Tax Exemption for Contractor Purchases of Construction Materials for Certain Local Government and Nonprofit Entities
 
Author: Senator Ann H. Rest
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: February 13, 2017



 

Under current law, construction materials for projects purchased directly by certain local government organizations and nonprofits under a non-lump sum contract are exempt from sales tax. Materials purchased by contractors for such projects are not exempt. This bill provides a refundable sales tax exemption for construction materials purchased by a contractor, subcontractor, or builder under a lump sum contract with eligible local government and nonprofit entities, and for building materials purchased by contractors for local government and school district public infrastructure projects.  The exemption is effective for sales and purchases made after June 30, 2017. 

Section

Provision

1

Provides a sales tax exemption for contractor purchases of building materials, supplies, and equipment used or consumed in buildings or facilities principally used by the following entities:

  • School districts;
  • Local governments;
  • Nonprofit or local government-owned hospitals and nursing homes;
  • Public libraries;
  • Nonprofit organizations organized exclusively for charitable, religious, or educational purposes;
  • Nonprofit senior citizen organizations; and
  • Boarding care homes, outpatient surgical centers, and critical access dental providers.

Also provides an exemption for materials purchased by contractors for infrastructure facilities owned by local governments and schools. 

The sales tax on qualifying purchases must be paid upfront and refunded as required in sections 2 to 4
 

2

Requires that the sales tax on qualifying purchases must be paid upfront and refunded. This section also strikes provisions pertaining to obsolete sales tax exemptions.
 

3

Requires that an applicant for a sales tax refund on qualifying purchases must be an eligible entity listed in section 1
 

4

Requires the contractor, subcontractor, or builder to provide the eligible entity with information sufficient to apply for the sales tax refund. 

 

 
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