Effective July 1, 2015, capital equipment used in Minnesota in the manufacturing process is exempt from sales tax at the time of purchase.
Equipment eligible for the exemption is defined as follows: "Machinery and equipment purchased or leased, and used in this state 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 online computerized data retrieval system.”
To receive the up-front sales tax exemption, the purchaser must provide the seller a completed copy of MN Form ST3. Refund claims can be filed for sales tax paid on capital equipment purchases prior to this date. Additionally, if sales tax was not charged by the seller on purchases made before July 1, 2015, the purchaser is still liable for remittance of use tax on the equipment. Once the use tax is paid, a capital equipment refund claim can be filed to recover this tax.
For more information on this topic, or to learn how Baker Tilly manufacturing specialists can help, contact our team.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.