Minnesota Clarified Rules for Non-Profit Sales Tax Exemptions
In Notice 21-04, the Minnesota Department of Revenue added six requirements for non-profits to meet in order to be exempt from sales tax in the state:
“1. The organization is exempt under section 501(c)(3) of the Internal Revenue Code, as provided under Minnesota Rules 8130.6200, subpart 5.
- The organization is “charitable” as described in the first two sentences of Minnesota Rules 8130.6200, subpart 2.
- The organization provides a substantial portion of its goods and services for free or considerably reduced rates under Minnesota Rules 8130.6200, subpart 2, Item C.
- Dividends, in form or substance, or assets must not be available to private interests upon dissolution of the organization under Minnesota Rules 8130.6200, subpart 2, Item F.
- The organization satisfies at least one of the four factors provided under Minnesota Rules 8130.6200, subpart 2, Items A, B, D, and E.
- The organization satisfies the organizational and operational tests provided under Minnesota Rules 8130.6200, subpart 5.”
These requirements were put in place to ensure the “non-profit” services are for free or at low cost and may not benefit private parties upon their dissolution. (Minnesota Department of Revenue, Notice 21-04, effective immediately)
on November 11, 2021