To apply, your nonprofit must be exempt from federal income tax and meet other requirements. The requirements are listed in the table below.

Organizations that may qualify include:

• Churches
• Museums and historical societies
• Private schools, colleges, and universities
• Senior citizen groups
• Volunteer fire departments
• Youth organizations, including scouts, 4-H clubs, YMCA, YWCA, and youth sports associations

To apply for nonprofit exempt status, you must complete Form ST16, Application for Nonprofit Exempt Status – Sales Tax. We will send you a letter notifying you if you qualify or not. 

If your organization does not meet the criteria listed above, your organization does not qualify for nonprofit exempt status. Examples include:

• Adult sports clubs of any type
• Chambers of Commerce
• City-run celebrations
• Fraternities or sororities
• Homeowners’ associations
• Jaycees, Kiwanis, and Lions Clubs
• Knights of Columbus and Masonic Lodges  
• Lake improvement associations
• Medical clinics
• Prayer societies
• Social clubs
• Trade and professional associations

Note: Veteran organizations do not qualify for Nonprofit Exempt Status but may claim a limited exemption on some purchases. For details, see Purchases.

Some cities and counties have local sales and use taxes. If you make sales into or are located in an area with a local tax, you may owe local sales or use tax. For more information, see Local Sales and Use Taxes.

To determine the sales tax rate, use the location where the product is received by the customer, typically your business or a delivery address. You can use the Sales Tax Map or Sales Tax Rate Calculator to help you determine the sales tax rate.

Note: The map and rate calculator do not include special local taxes. 

For more information, see:

• Local Sales Tax Information
• Minneapolis Special Local Taxes
• Special Local Taxes

Tickets or admissions to certain nonprofit activities are exempt from sales tax. Examples include:

• Community theater tickets
• Nonprofit museum tickets

Admissions tickets are not taxable if the organization meets the following criteria:

1. Their primary mission is to provide an opportunity for state residents to participate in the creation, performance, or appreciation of the arts.
2. They are one of the following:
   • A 501(c)(3) organization that received at least 5% of its revenue from voluntary contributions in its most recent fiscal year (or current fiscal year if the organization has not completed a full year).
   • A municipal board that promotes cultural and arts activities.
   • Part of a state college or university (including the University of Minnesota), or a private nonprofit college or university that owns the facility where the event is being held.

Examples

• A historical society operating a historically preserved home provides an annual art fair for an additional fee. Art fair admissions are taxable. However, museum admission charges are not taxable if separately stated on the customer bill or invoice.
• A nonprofit museum provides birthday parties for an additional fee. Party charges, such as for pizza and party favors, are taxable. However, museum admission charges are not taxable if separately stated on the customer bill or invoice.

Sales of memberships to qualifying “nonprofit organizations offering similar services” to the YMCA, YWCA, or JCC are exempt from sales tax. Nonprofit organizations offering similar services means:

• An exempt organization under section 501(c)(3) of the Internal Revenue Code
• Whose mission is to support youth and families through a variety of activities (including memberships allowing access to athletic facilities)
• Who provide free or reduced-price memberships to seniors or low-income persons or families

The exemption includes one-time initiation fees and periodic membership dues. Previously, only sales of memberships to the YMCA, YWCA, and JCC qualified for the exemption.

Separate charges for access to and use of the organization’s sports and athletic facilities are taxable. For example, swimming pool admissions, racquetball, and tennis court charges are taxable.

Tickets or admissions to performances or events held by a nonprofit agricultural heritage organization are exempt from sales tax.

Performances or events must meet all of the following requirements for the exemption:

• Be organized on at least 115 acres
• Educate the public about rural history and farms in Minnesota
• Be sponsored and conducted exclusively by volunteers, employees, and board members
• Be consistent with the nonprofit’s tax-exempt purpose

This exemption applies to up to $20,000 in fundraising sales, regardless of the number of days you spend fundraising. (Before Jan. 1, 2015, the limit was $10,000.)

If you exceed $20,000 in sales, you must start charging sales tax on your fundraising sales at that point. No tax is due on the first $20,000.

Note: The limit does not apply to candy sales by a youth group.

This exemption applies to:

• All sales by a nonprofit organization that exists solely to provide educational or social activities for young people primarily age 18 and under.
• All sales by senior citizen groups that limit membership to persons age 55 or older and operate exclusively for recreation and other nonprofit purposes.

For purposes of the $20,000 limit, a “youth group” is an elementary or secondary school club, association, or other student organizations that is separate from the school district (or school) and exists to provide sports, educational, or other extracurricular activities.

Note: This exemption does not apply to admission charges or activities for which the money must be deposited with the school district treasurer under Minnesota Statutes 123B.49, subd. 2, or must be recorded in the same way as other school district revenues or expenditures under M.S. 123B.49, subd. 4.

Fundraising Example

• A youth group sells wrapping paper and raises $21,000. Since the sales are over $20,000, the $1,000 is taxable.

Fundraising not Subject to the $20,000 Limit

Some activities that qualify for this exemption are not subject to the $20,000 limit. These activities are:

• Candy sales for fundraising purposes by a youth group.
• Sales of tickets or admissions to a Minnesota golf tournament for the benefit of a tax-exempt 501(c)(3) organization. Note: This exemption does not apply to green fees, cart rentals, or other charges to golf participants.
• Sales where proceeds are contributed to a registered combined charitable organization (see Minnesota Statutes 43A.50) and the contributions will be used exclusively for charitable, religious, or educational purposes. Note: These sales are subject to the 24-day fundraising limit, described below.

Nonprofit organizations that have 24 days or less of fundraising events in a year qualify for this exemption. If your nonprofit organization qualifies for this exemption, you may sell otherwise taxable goods or admissions at fundraising events without charging sales tax.

Fundraising event means an activity that:

• Is of limited duration
• Is not regularly carried out in the normal course of business
• Attracts people for community, social, or entertainment purposes

Fundraising events do not include business operations that provide services or sell goods during regular hours, such as a bookstore, gift shop, or thrift store.

Examples of fundraising events include:

• Auctions
• Bake sales
• Concerts

All fundraising event days count toward the 24-day limit.

• Count any days when your organization makes only tax-exempt fundraising sales.
• If your organization has more than 24 days of fundraising events, the sales in the first 24 days are taxable retroactively. You must pay tax on those sales and charge tax on your sales for the rest of the year.

• If your organization takes orders for goods to be delivered in the future, only count the number of days when customer deliveries are made.
• If your organization sells tickets for admissions, amusements, or meals for a fundraising event, only count the days when the activity actually takes place.

Exemption Requirements

To qualify for this exemption, a nonprofit organization and its events must meet all of the following requirements:

• The organization must be a nonprofit that is organized and operated for charitable, religious, educational, civic, fraternal, and senior citizens’ or veterans’ purposes. None of its net earnings can benefit a private individual.
• All proceeds must only be used for charitable, religious, or educational purposes, minus necessary expenses for the event.
• The organization must keep separate accounting records for each fundraising event, including receipts and disbursements. All expenses must be documented.
• The organization cannot make sales as an active or passive agent of any for-profit organization or person. Otherwise, sales at that event are taxable and the event counts toward the 24-day limit.
• Starting July 1, 2017, the fundraising events cannot be held on premises that are leased or occupied for more than 10 days, but less than 30 days. Otherwise, sales at that event are taxable and the event counts toward the 24-day limit. Previously, the lease could not be over 5 days.
• The organization must bear the financial risk of the event and its net revenue from the event must equal or exceed the total state and local taxes that are exempted. Otherwise sales at that event are taxable and the event counts toward the 24-day limit.
• Charges for admission and use of amusement devices are taxable if the event has bingo or other gambling activities. The event counts toward the 24-day limit (see examples).

Examples

1. A nonprofit organization schedules two fundraising events a year that are seven days each and include bingo. The organization charges admission and sells meals at the events.
   • The admissions charge is taxable because one of the activities at the event is gambling (bingo). But the food sales are not taxable because they qualify for the 24-day fundraising event exemption.
2. A nonprofit organization sells pottery as part of its regular business activities.
   • These pottery sales are subject to sales tax.
3. A nonprofit organization also holds a fundraising event. Tickets for the fundraising event are $100, which entitles the buyer to a buffet reception and a gift of handmade pottery.
   • For income tax purposes, $50 of the $100 ticket price is deductible as a charitable contribution.
   • For sales tax purposes, ticket sales for the fundraising event are exempt if the nonprofit organization does not exceed the 24-day limit. (The fundraising exemption applies here because the pottery is a gift to the ticket buyer and the ticket price is for the buffet reception.)

Note: For purposes of this exemption, lawful gambling activities that occur on a regular basis are not considered fundraising events and do not count towards the 24-day limit.

Sales or leases of gambling equipment and supplies to organizations that conduct lawful gambling activities are taxable.

Items purchased to be given away as prizes that are won through lawful gambling or the state lottery are taxable when they are purchased.

A nonprofit organization’s income from gambling, such as bingo and pull-tabs, is subject to the state’s Lawful Gambling Tax. For more information:

• See Gambling Taxes. 
• Call the Gambling Control Board at 651-539-1900.
• Visit the Gambling Control Board website.

If you have Nonprofit Exempt Status

• The exemption is limited to items used to perform the charitable, religious, or educational functions of the nonprofit organization.
• Purchases must be made and paid for directly by the nonprofit organization.
• To claim the exemption, give your supplier a completed Form ST3, Certificate of Exemption.

Note:  If your employee purchases taxable items that you later reimburse them for, the items are taxable even if they would be exempt if the nonprofit organization purchased the items directly.

Items That Do Not Qualify for Exemption

The Nonprofit Exempt Status does not apply to purchases of:

• Prepared food, candy, soft drinks, alcoholic beverages, and catered food
• Lodging
• Gambling equipment and supplies
• Most motor vehicle purchases, leases, and rentals (including the 9.2% car rental tax and 5% rental fee)
• Waste collection and disposal services

Do not pay sales tax on items that are sold for fundraising. Give your vendor a completed Form ST3, Certificate of Exemption. Specify the Resale exemption. Examples include:

• Alcoholic beverages
• Arts and crafts
• Books
• Prepared food
• Soft drinks

If you sell alcoholic beverages at a fundraising event, you must do the following:

• Contact the city office where the fundraising event is located for a temporary retail liquor license
• Purchase your liquor from a licensed liquor distributor

Qualifying health care facilities may be eligible for a sales tax exemption on certain purchases. Examples include:

• Boarding care homes
• Clinics
• Critical access dental providers
• Hospitals
• Nursing homes
• Outpatient surgical centers
   

For more information, see Health Care Facilities.

Veteran organizations do not qualify for Nonprofit Exempt Status. However, these organizations do qualify for a limited exemption if both of the following apply:

• The organization is organized in Minnesota
• The organization is exempt from federal tax under section 501(c)(19) of the Internal Revenue Code

The exemption applies to purchases for charitable, civic, educational, or nonprofit use. Examples include:

• Educational brochures and posters
• Equipment for youth sports teams
• Flags
• Items given away though programs like Operation Comfort Warriors
   

To claim the exemption, give your vendor a completed Form ST3, Certificate of Exemption. Specify the Veteran organization exemption.

Not all purchases for a nonprofit organization are exempt from sales tax. Some examples of taxable purchases are listed below.

Taxable Services

Several services are taxable. Examples include:

• Building Cleaning and Maintenance
• Detective and Security Services
• Laundry and Cleaning Services
• Lawn and Garden Maintenance
   

For more information, see Taxable Services.

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.

• Minnesota Statutes 43A.50, Registered and combined charitable organizations
• Minnesota Statutes 123B.49, Extracurricular activities; insurance
  • subd. 2, Cocurricular activities authorization
  • subd. 4, Board control of extracurricular activities
• Minnesota Statutes 297A.70, Exemptions for governments and nonprofit groups
  • subd. 4, Sales to nonprofit groups
  • subd. 5, Veterans groups
  • subd. 7, Hospitals, outpatient surgical centers, and critical access dental providers
  • subd. 10, Nonprofit tickets or admissions
  • subd. 12, YMCA, YWCA, JCC, and similar memberships
  • subd. 13, Fundraising sales by or for nonprofit groups
  • subd. 14, Fundraising events sponsored by nonprofit groups
  • subd. 18, Nursing homes and boarding care homes

• 8130.1200, Sales of building material, supplies or equipment
• 8130.5700, Sales to exempt entities, their employees, or agents
• 8130.6200, Charitable, religious, and educational organizations

• 03-14, Nonprofit Admission Ticket and Fund-Raising Sales
• 04-10, Exemption for Fund-Raising Events – Lawful Gambling Activities
• 17-10, Construction Contracts with Exempt Entities

• Health Care Facilities
• Local Sales and Use Taxes
• Sales to Government
• Schools – Sales and Purchases

• Building Cleaning and Maintenance
• Contractors and Other Property Installers