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Last Updated: 6/1/2017

Sales to Government

Sales of lodging to government agencies may or may not be taxable, depending on what type of agency purchases the lodging. See the table below for details.

Who is the customer?

The following conditions apply

Federal government

Lodging billed directly to and paid for by the federal government and its agencies is not taxable. If a federal credit or debit card is used, you must review the card to determine if the sale is taxable.

For more information, see the Governments – Federal and Foreign Diplomats Industry Guide.

Note: When a federal employee pays for lodging the sale is taxable, even if they are reimbursed.

State government

Lodging sold to state government agencies is taxable. This includes the state of Minnesota and all other states. State agencies must pay the state general rate sales tax and any local taxes that apply.

For more information, see the Governments – State Agencies Industry Guide.

Note: Minnesota agencies cannot use their Direct Pay authorization to buy lodging exempt from sales tax.

Local government

Local governments – located in – and outside Minnesota – must pay the state general rate sales tax on lodging. Examples include:

  • Cities
  • Commissions
  • Counties
  • Government boards
  • Municipalities
  • Political subdivisions
  • Special districts
  • Townships

For more information, see the Governments – Local Governments Industry Guide.

Note: Local governments are not required to pay local sales tax. But they must pay special local taxes such as lodging or food and beverage taxes. For more information, see Fact Sheet 164S, Special Local Taxes.

Tribal governments and members

Short-term lodging for tribal officials on an Indian reservation is exempt if both of the following apply:

  • The officials are acting in their tribal government capacity
  • The lodging is billed to and paid for by a tribal government

Short-term lodging and related services for tribal officials outside an Indian reservation are exempt only when the tribal government has a tax agreement with the Minnesota Department of Revenue. All Minnesota tribal governments have an agreement except for the Prairie Island Mdewakanton Community. For more information, see Fact Sheet 160, Tribal Governments and Members.

Note: Rooms are taxable when rented by a tribal government for use by others as part of a promotional package or for any similar business use.

Foreign Officials

Foreign officials may purchase lodging exempt if they provide you with a valid consular ID card that shows the purchase is exempt from sales tax.

For more information, see the Governments – Federal and Foreign Diplomats Industry Guide.

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