Sales Tax Information for Farmers, Manufacturers

Minnesota Statute 297A.25, Subd. 9, provides a sales tax exemption for utilities consumed in agricultural or industrial production. The exemption does not apply to service businesses or restaurants.

Utilities, such as electricity, used by industries to produce items that are ultimately sold at retail are exempt from sales tax if the utilities are used directly in the production process. The exemption does not include utilities used for space heat and lighting of the production area, or of office, administration, or other non-production areas.

To claim the exemption, you must provide the utility a completed Form ST-3, Certificate of Exemption.

If your production and non-production equipment are not metered separately, you will need to do an energy study to determine the percentage of exempt utility usage. Sales Tax Fact Sheet 129, Utilities Used in Production briefly outlines how each type of energy study is done. It is designed to help you choose an appropriate method.
Forms and Fact sheets are available from your Cooperative at (800) 788-7784 or from the MN Dept. of Revenue at (651) 296-6181 or at their website at www.taxes.state.mn.us. 

The ST-3 Certificate of Exemption can be downloaded from the department's Web site at http://www.taxes.state.mn.us/taxes/sales/index.shtml.

Sales Tax Fact Sheet 100 Agricultural Production, 129 Utilities Used in Production and 145 Industrial Production can also be read or downloaded from the Web site