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Last Updated: 7/19/2016

Sales to Governments and Exempt Organizations

Federal government and foreign consular officials

Prepared food and drinks are not taxable when billed to and paid for by the federal government and its agencies.  

Prepared food and drinks may not be taxable when sold to foreign consular officials, depending on the type of exemption card used and what is purchased.

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

State and local governments

Prepared food and drinks are taxable when sold to state and local government agencies. Local governments do not pay local sales taxes but must pay special local taxes (lodging, restaurant, entertainment, liquor).

Tribal governments

Prepared food and drinks are not taxable when sold to tribal governments, no matter where the food and drink are consumed.

Note: This exemption does not apply to the Prairie Island Mdewakanton Community.

For more information, see Fact Sheet 160, Tribal Governments and Members.

Nonprofit organizations

Prepared food and drinks are taxable when sold to nonprofit organizations; the nonprofit exemption does not apply.

The only exception is if a nonprofit organization buys prepared food and drink from a distributor for resale. In that case, the purchase is exempt. The organization must give you a completed Form ST3, Certificate of Exemption.

Note: You cannot sell alcoholic beverages to a nonprofit organization for resale. Only liquor distributors are allowed to sell liquor for resale.

Direct Pay authorization holders

Prepared food and drinks are taxable when sold to businesses with Direct Pay authorization; the direct pay exemption does not apply.

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