When you deliver and spread aggregate material in a manner so that no further leveling or movement is required by the purchaser, the sale is an improvement to real property. You must pay sales tax on any taxable products or services used to complete the contract.

You must charge sales tax on the material and delivery charges when:

• the aggregate materials are dumped in a pile
• the construction contract does not require you to deposit the material so that no further leveling or movement is required

Note: Sales to cities, counties, and townships are generally not taxable. For more information, see Government – Local Governments.

Delivery (hauling) of aggregate is not taxable when the charges are:

• To move customer-owned aggregate or concrete block from one location to another.
• For delivery of aggregate by third-party haulers, if the aggregate will be used in road construction as defined in Minnesota Statute 297A.61, subd. 3.

Examples

• You enter into a contract to build a parking lot. You provide and haul aggregate materials to the construction site in your own vehicles. You spread and level the aggregate materials so that no further leveling or movement is required. This is an improvement to real property and is not taxable.
• You buy aggregate materials to build a parking lot and hire a third-party hauler to pick up the aggregate from the seller’s pit and deliver it to the construction site. You owe sales or use tax on the purchase of the aggregate and the third-party hauling charges. The third-party hauling charge is taxable even if the third-party hauler is required to spread or level the aggregate materials on the parking lot. Your charge to your customer is not taxable.

For more information, see:

• Delivery Charges
• Revenue Notice 02-12, Taxable Delivery Charges – Aggregate Materials
• Revenue Notice 02-17, Taxable Sales – Delivery of Aggregate Materials and Concrete Block