Waste Management Services

Waste management services are not subject to sales tax, but are subject to Solid Waste Management Tax. This tax is reported on your sales tax return. Bags and stickers are subject to this tax. 

The following are examples of nontaxable sales: 

• Copies required to be furnished by law (Minnesota Data Practices Act)
• Educational lessons
• Meals and drinks when furnished, prepared, or served to
  • Patients at hospitals, sanitariums, nursing homes, or senior homes as part of routine care and included in the facilities charge
  • Anyone on Pre K-12 school premises
  • Inmates or residents at correctional, detention, or detox facilities
• Notary services
• Permit fees
• Pet licenses
• Primary residential heating during winter months
• Residential water and sewer services
• Security or detective services by an off-duty peace officer within the jurisdiction the peace officer normally serves

The following sales by a county agricultural society are exempt:

• Admissions to and parking at the county fairgrounds
• Admissions to separately ticketed events run by the county agricultural society
• Concessions and other sales made by employees or volunteers of the county agricultural society on the county fairgrounds

Starting May 25, 2023, the exemption of sales by county agricultural societies during regularly scheduled county fairs is expanded to include pre-sales. This exemption does not apply to sales or events held at a time other than at the time of the regularly scheduled county fair or for events not held on the county fairgrounds.

A county agricultural society must annually determine the amount of sales tax savings from the exempt sales and must use the amount equal to the sales tax savings to maintain, improve, or expand society-owned buildings and facilities on the fairgrounds.

Purchases to provide the following goods and services are not taxable:   

• Administration of housing programs
• Ambulance and public safety services
• Cemeteries
• Chore and homemaking services for elderly or disabled residents
• Correctional services
• Hospitals and nursing homes
• Housing facilities
• Ice arenas
• Licensing services (deputy registrar)
• Local festivals and fairs
• Public use/Municipal airports
• Public transit
• Road and street maintenance and lighting
• Sewer and water services
• Wastewater treatment service

To purchase items to provide these services exempt from tax, you must give the seller a completed Form ST3, Certificate of Exemption, at the time of purchase.

Examples of exempt inputs include:

• Cleaning and maintenance of buildings
• Lawn care and tree removal services
• Construction equipment that is not licensed for road use
• Most firefighting, police, and emergency equipment
• Office supplies, computers, software, printers, furniture
• Other vehicles that are not licensed for road use, such as aircraft, snowmobiles, and watercraft
• Road-building materials and the delivery of aggregate materials
• Utilities, chemicals, and fuels

Purchases to provide the following goods and services are taxable and do not qualify for the local government exemption:

• Cafes
• Campgrounds
• Gas and electric utilities (the Capital Equipment Exemption may apply, see Miscellaneous Exemptions)
• Golf courses
• Laundromats
• Liquor stores
• Marinas
• Landfills (machinery and equipment used directly for mixed municipal solid waste management service at the landfill may be exempt)
• Solid waste hauling
• Solid waste recycling (certain equipment used at a resource recovery facility may be exempt)

Purchases of the following goods and services also remain taxable:

• Construction materials for buildings or facilities which are not principally used by the local government
• Construction materials and supplies purchased by a contractor or subcontractor under a lump-sum contract, see Construction Contracts section below.
• Lodging
• Prepared food, candy, soft drinks, and alcoholic beverages, see exceptions under Other Government Exemptions
• Inputs to taxable services/activities as listed above
• Leases of motor vehicles
• Motor vehicles, see exceptions under Other Government Exemptions
• Employee purchases (even if reimbursed by the local government)

Purchases subject to other taxes, such as the solid waste management tax or petroleum tax

Some purchases may be used to provide both qualifying and non-qualifying goods and services.

In these cases, the local government entity may allocate the purchase total and pay use tax on the taxable portion. You must use a reasonable method of allocation and keep business records that clearly identify how you determined the tax.

Example

A city purchases office supplies for all of its agencies. Some of the supplies are used to provide services that qualify for the exemption, such as housing or public safety; some are used to provide services that do not qualify for the exemption, such as a city-owned liquor store or golf course.

The city may allocate what portion of the purchase is used for non-qualifying services. That portion is taxable and the city owes use tax on that amount.

Local governments are generally exempt from sales tax on purchases of construction materials for their own use. However, this exemption does not apply to materials purchased by a contractor under a lump-sum contract that includes both labor and materials.

Contractors must pay sales or use tax on the cost of all materials, supplies, and equipment to complete the construction contract unless they are authorized to act as the local government’s purchasing agent. A valid purchasing agent agreement is a written contract that must clearly show all of the following:

• That the local government authorized the contractor as the purchasing agent.
• That the local government took title to all materials and supplies at the point of delivery.
• That the local government is responsible for the risk of loss for all materials and supplies.
• That the local government, not the purchasing agent, is responsible for all defective materials and supplies, including those incorporated into real property.

Note: These requirements apply to both the primary contractor and subcontractors who supply both materials and labor.

For more information, see:

• Contractors and Other Property Installers
• Revenue Notice 17-10, Construction Contracts with Exempt Entities

Materials used or consumed in producing electricity and treating water for sale at retail are not taxable. Machinery and equipment used for 50 percent or more of its operating time to create a tangible product for retail sale may not be taxable.

For more information, see:

• Capital Equipment
• Industrial Production

Construction materials and supplies used to build or improve an adult or juvenile correctional facility are eligible for a refund of sales tax paid. To qualify for a refund, the project must be required by state or federal law, rule, or regulation. If a contractor or builder buys materials, they must give the local government a statement that lists the cost of materials and the sales tax paid.

The local government must pay tax on the materials and supplies; a purchasing agent agreement is not allowed. For more information, see Revenue Notice 98-01, Materials Used to Construct or Improve Correctional Facilities.

To request a refund of sales tax paid, use Form ST11, Sales and Use Tax Refund Request.

Correctional Facility Meals and Drinks

Meals and drinks furnished, prepared, or served to inmates or persons residing at correctional detention or detoxification facilities are not taxable. However, sales by cafeterias, coffee shops, candy stands, or vending machines are taxable when sold to residents or patients.

Machinery and equipment used directly for mixed municipal solid waste management services at the landfill are exempt from sales tax. This exemption does not include motor vehicles.

Equipment designed to process, dewater, and recycle bio-solids for wastewater treatment facilities and the installation of that equipment. For more information, see Revenue Notice 98-17, Biosolids Processing Equipment.

Hospitals and nursing homes owned and operated by a local government entity mentioned above are exempt.

This exemption includes purchases of meals and snacks provided to patients at hospitals, sanitariums, nursing homes, or senior citizen homes as part of their routine care and included in the facility’s charge.

For more information, see Hospital and Nursing Home Meals.

Starting July 1, 2021, supplies and materials used in and equipment incorporated into the construction, remodeling, improvement, or expansion of fire and police stations, including their related facilities, owned by a local government are exempt from sales tax.

Local governments must pay sales tax on qualifying items at the time of purchase and request a refund on Form ST11, Sales and Use Tax Refund Request.

Mowing or spraying to control or kill weeds under a utility line, in ditches along roads, freeways, and railroad right-of-ways is not taxable unless the area is a lawn or garden.

Tree, bush, shrub, and stump removal services for construction or maintenance of roads, trails, or firebreaks are not taxable. For more information, see Lawn and Garden Maintenance, Tree and Shrub Services.

• 6.465, Definitions Political Subdivision and Special District
• 38.27, subd. 4, Use of a portion of county fair revenues
• 114E.10, Ambulance service licensing
• 115A.03, subd. 10, Disposal facility
• 168.012, subd. 1, Vehicles exempt from tax, fees, or plate display
• 174.90, Commuter Rail Operation
• 275.066, Special Taxing Districts
• 297A.67, subd. 25, Maintenance of cemetery grounds
• 297A.68, subd. 19, Petroleum products
• 297A.70:
  • subd. 2, Sales to government
  • subd. 3, Sales of certain goods and services to governments
  • subd. 21, County agricultural society sales at county fairs
• 297A.98, Local Governments exempt from local sales taxes
• 297B.03, Exemptions
• 471.59, Joint exercise of powers
• 473.448, Transit assets exempt from tax but must pay assessments
• 626.84, subd. 1, Definitions

• 8130.1200, Subpart 3 Construction contracts with exempt entities

• 17-10, Construction Contracts with Exempt Entities
• 12-09, Government Exemptions – Water Used Directly in Providing Fire Protection
• 98-17, Biosolids Processing Equipment
• 98-01, Materials Used to Construct or Improve Correctional Facilities
• 92-19, Application of Tax to Copies

• Capital Equipment
• Detective and Security Services
• Exercise Facilities and Health Clubs
• Health Care Facilities
• Hospital and Nursing Home Meals
• Industrial Production
• Lawn and Garden Maintenance, Tree and Shrub Services
• Residential Utilities
• Schools-Sales and Purchases

• Admissions and Amusement Devices
• Contractors and Other Property Installers
• Emergency Services
• Government - State Agencies
• Libraries
• Local Sales and Use Taxes
• Motor Vehicle
• Parking Service Providers
• Pets and Pet Services