HF2961

Purpose

• The bill expands the sales and use tax exemption to include meals and beverages provided free of charge to a customer by a restaurant.

Main Provisions

• Adds a new subdivision (Subdivision 47) to Minnesota Statutes 2024, section 297A.68.
• Creates an exemption for “complimentary meals and beverages.”
• Text specifies that meals and beverages, including alcoholic beverages, provided by a restaurant at no cost to the customer are exempt from sales and use tax.
• The exemption applies to meals and beverages as defined for restaurants under section 157.15, subdivision 12 (i.e., a restaurant context).

What this changes in practice

• Restaurants that give away meals or beverages for free to customers would not be required to collect or remit sales tax on those items.
• This changes how some promotional offers, freebies, or complimentary items are taxed under the state sales tax system.

Significance and potential impact

• Broadens the set of items that are not taxed when given away for free by restaurants.
• Could affect restaurant pricing, marketing promotions, and overall tax revenue from complimentary items.

Scope and definitions

• Applies specifically to “meals and beverages” provided by a restaurant (as defined by relevant restaurant definitions in current law).
• Includes alcoholic beverages within the exemption.

Relevant Terms - complimentary meals and beverages - exemption - sales and use tax - Minnesota Statutes 2024 section 297A.68 - subdivision 47 - restaurant - alcoholic beverages - section 157.15, subdivision 12