Taxable Purchases and Use Tax
Taxable Purchases and Use Tax
Machinery, equipment, tools, and other durable items used in agricultural production are taxable unless an exemption applies. Several services are also taxable.
If you do not pay sales tax on a taxable purchase, then use tax is due.
| Taxable Purchases | Examples |
|---|---|
| General items |
|
| Machinery and equipment |
|
| Taxable services | For more information, see Taxable Services. |
Items That Are Not Farm Machinery
Certain items used in agricultural production do not qualify for an exemption. For more information, see Taxable Items Used in Agricultural Production.
ATVs
All-terrain vehicles (ATVs) are taxable. However, if the purchaser uses the ATV directly and principally in agricultural production, it qualifies for the farm machinery exemption. You must give the seller a completed Form ST3, Certificate of Exemption.
Motor Vehicles
Motor vehicles that must be registered for road use are taxable. This includes cars, vans, utility vehicles, trucks, and horse and livestock trailers.
For more information, see Motor Vehicle.
Grain Hopper Tanks and Bins
Grain hopper tanks and bins do not qualify as exempt farm machinery and are generally taxable.
Grain hopper tanks and bins are not grain dryers (which are exempt). This is true even if some drying occurs in the grain hopper tanks and bins, or if there are component parts such as ladders connecting the bin to a grain dryer.
The purchase of a grain hopper tank or bin is taxable unless they are sold installed because the installation is considered an improvement to real property. In that case, the contractor (installer) does not charge sales tax on the installed tank or bin. But the installer must pay sales tax on the cost of any materials and supplies used to install the items.
Use Tax
If you buy equipment, supplies, or other taxable items for your business and the seller does not charge Minnesota sales tax, you owe use tax on the cost of the items. If your business is located in an area with a local tax, you may also owe local use tax.
Some common situations where you may owe use tax include:
- You buy taxable items or services online without paying sales tax
- You withdraw an item from inventory to use (instead of selling it), donate, or give away
- You buy taxable items outside of Minnesota
- You buy taxable items in another Minnesota city or county with a lower (or no) local sales tax
For more information, see Use Tax for Businesses and Local Sales and Use Taxes.