SF5201

Purpose

• Create a sales tax exemption for nonprofit carshare organizations on purchases of items used to provide carshare services. The bill adds a new subdivision (Subdivision 22) to Minnesota Statutes 2024, section 297A.70, to define and apply this exemption.

Main Provisions

• Adds Subdivision 22 to Minnesota Statutes 297A.70.
• Exemption: Sales are exempt for a nonprofit carshare organization when the items purchased are used in providing carshare services.
• Definition: A nonprofit carshare organization is a nonprofit that primarily provides carshare services and is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code.
• Exclusions: The exemption does not apply to sales of prepared food, candy, soft drinks, alcoholic beverages (as defined in section 297A.67 subdivision 2), or taxable cannabis products (as defined in section 295.81 subdivision 1 paragraph r).

How the Provisions Work

• The exemption applies to purchases made by a qualifying nonprofit carshare organization for use in delivering carshare services.
• The exemption is limited to items used in providing carshare services; items not used for that purpose would not qualify for the exemption.
• The listed exclusions (food, beverages, and cannabis products) remain subject to sales tax.

Changes to Existing Law

• Creates a new targeted sales tax exemption within the existing framework of Minnesota’s sales tax code (Minnesota Statutes 2024, section 297A.70).
• Establishes a formal definition for “nonprofit carshare organization” to determine eligibility.
• Maintains current tax rules for food, beverages, and cannabis products by explicitly excluding them from the exemption.

Eligibility and Definitions

• Eligible entity: A nonprofit organization whose primary purpose is to provide carshare services and that is exempt from federal taxation under 501(c)(3).
• Eligible purchases: Items bought by the nonprofit organization that are used in providing carshare services.
• Ineligible purchases: Items like prepared foods, candy, soft drinks, alcoholic beverages, and taxable cannabis products.

Significance and Potential Impact

• May lower operating costs for nonprofit carshare programs, potentially enabling more affordable or expanded carshare services.
• Targets a specific type of nonprofit transportation provider, rather than broad tax relief for all nonprofits or all carsharing activities.

Relevant Terms nonprofit carshare organization; sales tax exemption; Minnesota Statutes 2024; section 297A.70; subdivision 22; primary purpose; 501(c)(3); federal tax-exemption; carshare services; items purchased; prepared food; candy; soft drinks; alcoholic beverages; taxable cannabis products; section 297A.67 subdivision 2; section 295.81 subdivision 1 paragraph r