On July 1, 2021, Minnesota Governor Tim Walz signed an omnibus tax bill that included new exemptions and considerations for businesses required to make June accelerated sales tax payments. These new provisions took effect July 2, 2021.
Under Minnesota law, taxpayers with a Sales and Use tax liability of $250,000 or more over the previous fiscal year (July 1 to June 30) are required to make a payment of 87.5% of their real or estimated June liability two business days prior to June 30th. New provisions require the state to reduce this percentage each year based on the amount of excess tax collected by the department until the percentage equals zero. The act also exempts vendors of construction materials, including contractors, from the accelerated payment going forward.
An exemption has been created for sales by school-associated student groups, even if the money is recorded as part of the school district’s revenue. The sales must be for fundraising purposes for an organization or club for students formed for the purpose of sports, educational, or extracurricular activities, and the revenue from the fundraising must remain reserved for the specific activity for which it was raised.
Materials or supplies used in constructing, remodeling, or improving a fire station or police station owned by a local government and its related facilities are now exempt from tax. Related facilities include access roads, lighting, sidewalks, and utility components required for safe access to the buildings. Local governments must pay the tax upfront on the materials used to construct public safety facilities, and then may petition the state for a refund of tax paid. Specific projects to construct and upgrade police and fire stations in several cities have additional exemptions. (Minnesota H.F. 9)