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Last Updated: 9/9/2014

Sales Tax Exemption for Nonprofit Organizations

Some nonprofit organizations may purchase certain items without paying sales tax. Qualifying nonprofits must have their “sales tax-exempt status” authorized by the Minnesota Department of Revenue (see “How to Apply,” below).

Note: This exemption applies only to purchases made by nonprofit organizations; it does not allow them to sell items without collecting sales tax.

Who Qualifies

You can qualify for the nonprofit sales tax exemption if your group is:

  • Organized and operated exclusively for charitable, religious or educational purposes and is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code; or
  • A senior citizen group organized for pleasure, recreation or other nonprofit purposes, not including housing. The group must be exempt under 501(c)(3) of the Internal Revenue Code and must limit membership to members 55 or older, or who are physically disabled.

Organizations That May Qualify

Examples of organizations that may qualify for the exemption:

  • Churches
  • Private schools, colleges and universities
  • Home schools
  • Museums and historical societies
  • Youth organizations
  • Senior citizen groups
  • Volunteer fire departments

Organizations That Don’t Qualify

Examples of organizations that don’t qualify for the exemption include:

  • Chambers of commerce
  • Knights of Columbus and Masonic lodges
  • City-run celebrations
  • Homeowners’ associations
  • Fraternities and sororities
  • Lake improvement associations
  • Medical clinics
  • Jaycees, Kiwanis and Lions clubs
  • Adult sports clubs of any type
  • Trade and professional associations
  • Prayer societies
  • Social clubs
  • Cemetery associations not owned by religious organizations
  • Hospitals and outpatient surgical centers

How to Apply

All applicants must complete Form ST16, Application for Nonprofit Exempt Status—Sales Tax. Your application must include all the material listed below for us to determine if you qualify. 

Educational Organizations

  • Home schools must provide signed affidavits stating that the schools are nonprofit home schools.
  • Parent-teacher associations must provide copies of their signed articles of incorporation, or constitutions and bylaws; and letters from the principals of the schools indicating the organizations’ affiliation with the schools.
  • Schools (except home schools) must provide copies of their signed articles of incorporation, or constitutions and bylaws; copies of their federal 501(c)(3) letters granting exemption from income tax, along with the applications (Federal Form 1023) submitted to the Internal Revenue Service (IRS) for federal income tax exemption; letters or brochures describing the specific purposes and activities of the organizations;  income and expense statements for the last accounting periods, or budgets for the most recent years; and  letters describing the schools’ curricula, location, how many students attend the schools, and listings of faculty members and their positions.
  • School booster clubs must provide copies of their signed articles of incorporation, or constitutions and bylaws; letters from the principals of the schools indicating the organizations’ affiliation with the schools; and copies of their federal 501(c)(3) letters granting exemption from income tax, along with the applications (Federal Form 1023) submitted to the IRS for federal income tax exemption, if applicable.
  • Youth organizations such as Boy Scouts, Girl Scouts, YMCA, YWCA, 4-H Clubs and youth athletic and recreational programs must provide signed copies of their articles of incorporation, or constitutions and bylaws. Scout troops may provide copies of their charters if they do not have articles of incorporation or constitutions.
  • Other educational organizations such as museums, historical societies, zoos, and symphony orchestras must provide copies of their signed articles of incorporation, or constitutions and bylaws; copies of their federal 501(c)(3) letters granting exemption from income tax along with the applications (Federal Form 1023) submitted to the IRS for federal income tax exemption; letters or brochures describing the specific purposes and activities of the organizations; and income and expense statements for the last accounting periods, or budgets for the most recent years.

Religious Organizations

  • All religious organizations must provide signed copies of their articles of incorporation; copies of the 501(c)(3) letters granting exemption from income tax, along with copies of the applications (Federal Form 1023) submitted to the IRS for federal income tax exemption; letters or brochures describing the specific purposes and activities of the organizations; and income and expense statements for the last accounting periods, or budgets for the most recent years.
  • If the organizations own real property, they must include statements indicating whether the property is exempt from local property taxes. They must also include statements if the organizations don’t own real property or haven’t applied for property tax exemption.
  • Churches must also provide documentation, such as bulletins, showing their places of worship and times of worship services.
  • Other religious organizations (such as ministries) must provide letters, featuring the letterheads of the churches with which they are affiliated, explaining the affiliations.

Charitable Organizations

  • All charitable organizations must provide signed copies of their articles of incorporation; copies of the 501(c)(3) letters granting exemptions from income tax, along with a copies of the applications (Federal Form 1023) submitted to the IRS for federal income tax exemption; letters or brochures describing the specific purposes and activities of the organizations; and income and expense statements for the last accounting periods or budgets for the most recent years.
  • If the organizations own real property, they must include statements indicating whether the property is exempt from local property taxes. They must also include statements if the organizations don’t own real property or haven’t applied for property tax exemption.

Senior Citizen Groups must provide signed copies of their articles of incorporation; copies of the 501(c)(3) letters granting exemption from income tax, along with copies of the applications (Federal Form 1023) submitted to the IRS for federal income tax exemption; and letters or brochures describing the specific purposes and activities of the organizations.