• Air
• Ship
• Tractor-trailer
• Train
• Truck

• Aircraft
• Bus
• Ferry
• Light rail
• limousine
• Taxicab and ride share services
• Train

Parking and Transportation Services

Delivery (Hauling) of Aggregate Materials

• Who delivers it (the seller or a third-party hauler).
• Whether it will be used to improve real property.
• How it is deposited at the delivery site.

• 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 Statutes 297A.61, subd. 3.
• To deliver aggregate material and concrete block outside of Minnesota.

Retail Sales

For more information, see:

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

Nontaxable Purchases

You do not pay sales tax on taxable purchases for resale. Give your vendor a completed Form ST3, Certificate of Exemption. Specify the Resale exemption.

Metropolitan Council Exemption

The Metropolitan Council qualifies for the local government exemption.

For more information, see Government – Local Governments and Motor Vehicle.

Taxable Purchases and Use Tax

Items you use to operate your business are taxable unless an exemption applies. Several services are also taxable. If you do not pay sales tax on a taxable purchase, then use tax is due.

Taxable Purchases

The following purchases are subject to sales or use tax.

Shipping (Intermodal) Containers

Shipping containers are taxable. Shipping containers, also known as intermodal containers, are used to transport freight on ships, tractor-trailers, and railways.

Complimentary Items

If you give away items while providing a nontaxable service, you must pay sales or use tax on any taxable items given away.

Example

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.

Aircraft Purchases

Airline companies that transport people or property in regular, intermittent, or irregularly scheduled flights, may purchase air flight equipment exempt from sales tax.

Air flight equipment includes:

• Airplanes
• Flight simulators
• Parts necessary for the repair and maintenance of air flight equipment

Note: This exemption does not apply to airplanes with a gross weight of less than 30,000 pounds that are used on intermittent or irregularly scheduled flights. Starting Jan. 1, 2018, the air flight equipment exemption does not apply to aircraft with a maximum takeoff weight of less than 30,000 pounds.

For more information, see the Aircraft Industry Guide.

Motor Vehicle Purchases

You may pay the Motor Vehicle Sales Tax to the dealer or to the motor vehicle registration office when you register your vehicle.

If you are involved in intrastate commerce doing business within Minnesota, the purchases of motor vehicles are taxable

If you are involved in interstate commerce doing business across a state line, you may qualify to pay a prorated tax on vehicle purchases. See Motor Carrier Direct Pay authorization.

For more information, see Motor Vehicle.

Motor Vehicle Leases

For more information, see Motor Vehicle.

Motor Carrier Direct Pay (MCDP) Authorization

Motor Carrier Direct Pay (MCDP) authorization allows you to pay a prorated tax directly to the Minnesota Department of Revenue on qualifying purchases, instead of paying sales tax to the seller at the time of purchase.

Eligibility

You are eligible for the MCDP authorization if any of the following apply to your business:

• You have a certificate or permit from the U.S. Department of Transportation (formerly the Interstate Commerce Commission)
• You lease to a carrier that holds a certificate or permit from the U.S. Department of Transportation
• You transport your own goods in interstate commerce and have a Minnesota prorate account
• You transport exempt commodities (under Interstate Commerce Laws)

Note: You must have a Minnesota Tax ID Number before you can apply for MCDP. Register for a Minnesota Tax ID number, or call us for assistance at 651-282-5225 or 1-800-657-3605 (toll-free).

Applying for MCDP Authorization

Complete and send in Form MCDP-AP, Motor Carrier Direct Pay Application.

If you qualify, we will send you an MCDP authorization letter. You can use Form ST3, Certificate of Exemption to purchase qualifying items exempt from sales tax and then pay a prorated tax amount directly to the Minnesota Department of Revenue. For details, see MCDP Purchases section below.

MCDP Purchases

If you have a Motor Carrier Direct Pay (MCDP) authorization and you buy a tractor or trailer, you pay the prorated Motor Vehicle Sales Tax directly to the Motor Vehicle Registrar Office at the time of registration.

For more information, contact the Minnesota Department of Public Safety at 651-201-7000 or visit its website at www.dps.mn.gov/.

Equipment That Qualifies for MCDP

Use your MCDP authorization when you:

• Lease trucks, tractors, and trailers used in interstate transportation
• Purchase repair parts and accessories that are attached to mobile transportation equipment. For example

• batteries
• communication equipment
• padlocks
• refrigeration equipment
• repair parts
• tires

Equipment That Does Not Qualify for MCDP

You must pay sales tax to the seller when you buy the following items which do not qualify for MCDP:

• Antifreeze
• Dollies
• Flares
• Flashlights
• Furniture pads
• Grease
• Tractors and trailers (purchased, not leased)
• Hand or forklift trucks
• Packing containers
• Pallets
• Snowplows
• Truck washes, towing
• Warehouse, office, and plant equipment
• Anything else that is not, or will not be, attached to interstate transport vehicles

Calculating Tax Due With MCDP

When you use MCDP, your sales tax is prorated based on the percentage of miles driven in Minnesota. To calculate the tax due:

1. Add all purchases of qualifying repair parts and accessories, and leases of mobile transportation equipment where you did not pay tax to the seller. Enter this amount as MCDP Purchases when you file your sales and use tax return.
2. Multiply the total from Step 1 by

• If you’re not leased to a carrier: Your Minnesota prorate mileage percentage (shown on your company’s prorate registration).
• If you’re leased to a carrier: That company’s prorate percentage.

1. Multiply the result of Step 2 by the general state sales tax rate (6.875 percent). Enter this amount as tax when you file your sales and use tax return.

Note: Local taxes do not apply to qualifying items purchased with the MCDP authorization.

Example

You paid $4,500 for repair parts ($4,000), antifreeze ($100), and packing containers ($400) for a vehicle that qualifies for MCDP. Your Minnesota prorate mileage percentage is 5 percent. Calculate the tax as follows.

1. Only the repair parts ($4,000) qualify for MCDP
2. $4,000 x 5% = $200
3. $200 x 6.875% = $13.75

Report $4,000 as the MCDP purchases and $14 ($13.75 rounded to the nearest number) as the tax amount.

Requesting Refund of Tax

For more information on refunds of tax paid on tractors or trailers, contact the Minnesota Department of Public Safety at 651-201-7000 or visit its website at www.dps.mn.gov/.

Canceling Your MCDP Authorization

If you no longer want to report your tax directly to the state of Minnesota, start paying tax directly to your vendors. Inform your vendors that the Form ST3, Certificate of Exemption you gave them is no longer valid.

Legal Status Change

If you change your business’s legal status you must get a new Minnesota Tax ID number and a new MCDP authorization (if your business still qualifies).

Example

You change your transportation business from a sole proprietor to a corporation, or from a partnership to a sole proprietor. You must apply for both a new Minnesota Tax ID Number and a new MCDP authorization.

Railroad Purchases

Railroad businesses involved in interstate or intrastate commerce can buy certain rolling-stock items exempt from sales or use tax.

Nontaxable Purchases

The following railroad purchases are nontaxable (the rolling-stock exemption applies to them).

• Rolling stocks (railcars and engine compartments that travel on a track)
• Accessories or equipment attached to rolling stocks
• Diesel fuel
• Oil and lubricants
• Repair and replacement parts for rolling stocks

To claim this exemption, give your vendor a completed Form ST3, Certificate of Exemption. Specify the rolling-stock exemption.

Taxable Purchases

The following railroad purchases are taxable (the rolling-stock exemption does not apply to them).

• Equipment and accessories not attached to rolling stocks
• Materials used to build the track
• Tools
• Trucks and hand carts used to repair the track

Ship and Vessel Purchases

The taxability of ships, vessels, and related items depends on how they are used, whether for interstate or foreign commerce or for intrastate commerce.

Examples include:

• Accessories or equipment attached to the ship or vessel
• Diesel fuel
• Leases of ships or vessels
• Oil and lubricants
• Purchases of vessels with a gross registered tonnage of at least 3,000 tons
• Rebuilding parts and materials
• Repair and replacement parts

Interstate or Foreign Commerce

Purchases that are used primarily for interstate or foreign commerce – doing business across state or national borders – qualify for an exemption and are not taxable.

To claim this exemption, give your vendor a completed Form ST3, Certificate of Exemption. Specify the ship repair or replacement parts and lubricants exemption.

Intrastate Commerce

Purchases that are used primarily for intrastate commerce – doing business within Minnesota – are taxable.

Exception: Purchases of ships or vessels with a gross registered tonnage of  at least 3,000 tons are exempt from tax.

Filing Returns and Record-Keeping

When filing your return, you must report all sales tax collected and use tax you owe.

Filing Returns

When filing your return, you must report all sales tax collected and use tax you owe.

If you are not registered for sales and use tax, you must contact the Minnesota Department of Revenue and register to collect and report taxes. Call Business Registration at 651-282-5225 or 1-800-657-3605 (toll-free).

For more information, see Sales Tax Return Due Dates.

How to Report Sales and Use Tax

You must file a Sales and Use Tax return online through our e-Services system. For more information, see Filing Information.

Record-Keeping

It is important to keep good records to determine the correct amount of state and local tax you owe.

Your records should include:

• Bills, receipts, invoices, cash-register tapes, and any other documents that support the entries in your books
• Exemption certificates
• Shipping documents
• Worksheets used to prepare your tax returns

For more detailed and specific information on Transportation Service Providers , you can visit at Transportation Service Providers Industry Guide – Minnesota Department of Revenue