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SF1724 (Legislative Session 94 (2025-2026))

Exemption provisions modification for construction materials by certain contractors

Related bill: HF1248

AI Generated Summary

This Minnesota Senate bill (S.F. No. 1724) proposes modifications to the state's sales and use tax laws regarding exemptions for construction materials purchased by contractors. The bill expands the list of entities eligible for tax exemptions on building materials, supplies, and equipment used in construction projects.

Key Provisions:

  1. Tax Exemptions for Certain Entities:

    • The bill exempts construction materials purchased by contractors, subcontractors, or builders when used in buildings or facilities primarily operated by:
      • School districts
      • Local governments
      • Publicly owned hospitals and nursing homes
      • County law libraries and public library systems
      • Certain nonprofit organizations
      • Hospitals, outpatient surgical centers, and critical access dental providers
      • Nursing homes and boarding care homes

  2. Exemptions for Public Infrastructure Construction:

    • Tax exemptions also apply to materials used in the construction, repair, and improvement of public infrastructure (e.g., roads, bridges, water and wastewater facilities) when purchased by contractors working for school districts or local governments.

  3. Refund Mechanism:

    • Although the exemption applies, taxes must still be collected at the time of purchase.
    • A refund process is established under section 297A.75, allowing eligible contractors to reclaim sales taxes paid on qualifying purchases.

Impact:

This bill aims to reduce construction costs for public entities and nonprofit organizations by allowing contractors to be refunded for sales taxes incurred on materials used in qualifying projects. It promotes financial efficiency for schools, local governments, and healthcare providers by lowering expenses related to building and infrastructure improvements.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 19, 2025SenateFloorActionIntroduction and first reading
February 19, 2025SenateFloorActionReferred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "A provision exempting construction materials for certain entities like school districts and local governments."
      ],
      "removed": [],
      "summary": "The bill amends section 297A.71 by adding a new subdivision detailing exemptions for construction materials purchased by contractors.",
      "modified": []
    },
    "citation": "297A.71"
  },
  {
    "analysis": {
      "added": [
        "Specification of refund manner for taxes imposed on exempt purchases."
      ],
      "removed": [],
      "summary": "The bill modifies refund provisions related to the tax on purchases exempt under section 297A.71.",
      "modified": [
        "Updated subdivisions to outline the process for tax collection and refund."
      ]
    },
    "citation": "297A.75"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This section is referenced in defining entities eligible for exemptions.",
      "modified": [
        "Clarification of eligible entities using cross-references to specific paragraphs in section 297A.70."
      ]
    },
    "citation": "297A.70"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Defines public libraries and systems eligible for tax exemptions on construction materials.",
      "modified": []
    },
    "citation": "134.001"
  }
]

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