Mining Tax Guide - Minnesota State Legislature

Aggregate material is nonmetallic natural mineral aggregate
including, but not limited to, sand; silica sand; gravel; stone;
boulders; and crushed and uncrushed rock, including landscape
rock, rip-rap, crushed granite and crushed limestone.
Industrial Production Exemption
Aggregate producers are allowed to make purchases exempt from
sales or use tax if the purchases are used or consumed in the
production of personal property intended to be sold ultimately
at retail. This includes chemicals, fuels, petroleum products,
lubricants, gas and electricity.
Capital Equipment Refund
New or used original or replacement capital equipment, repair,
replacement and spare parts, accessories, special purpose buildings
and foundations for capital equipment qualify for the capital
equipment refund of the 6.875 percent sales tax paid.
Aggregate Materials Sales
Sales to Contractors
Taxable: Generally, sales tax does not apply when contractors
make improvements to real property and purchases of aggregate
by a contractor to make the improvement to real property are
taxable. Generally, charges by third parties to deliver of aggregate
are subject to the tax. If the person delivering aggregate materials
has a contract requiring both the delivery and the depositing
substantially in place of the aggregate materials, the transaction
will be treated as an improvement to realty. The aggregate material
will be considered to be deposited substantially in place if the
aggregate material is deposited directly from the transporting
vehicle or through spreaders from the transporting vehicle at the
actual place where it will be graded or compacted. If the aggregate
material is merely dumped in a pile, the delivery charges are
subject to sales tax.
Nontaxable: The purchase of aggregate by a contractor from
a pit owner for resale is exempt from sales tax if the contractor
provides the pit owner with a completed exemption certificate,
Form ST3. A retail sale by a contractor involves only the dumping
of aggregate; no leveling, spreading, or further action by the
contractor is provided. The contractor must charge sales tax to
the end user of the aggregate. Effective Jan. 1, 2002, all delivery
charges are subject to sales tax.
Sales to Townships
Purchases by townships of aggregate,machinery, equipment and
accessories used exclusively for road and bridge maintenance
are exempt from sales tax. Charges to deliver gravel to a township
are also exempt. Purchases of aggregate, machinery, equipment
and accessories used for parking lots, playgrounds, trails, etc., are
subject to sales tax. Also, all culverts, bridge decking or railing,
structural steel and any road surfaces, such as asphalt, concrete
or chloride are subject to sales tax.
Aggregate Material
Sales and Use Tax
(M.S. 297A)
45
Sales to Cities, Counties or Special Taxing Districts
All sales of aggregate to cities, counties or special taxing districts
are subject to sales tax when they are used by these entities, unless
they will be resold in the same form. No exemption is allowed for
purchases used for road and bridge maintenance.
Aggregate Pit Owned by a Government Unit
If a pit is owned or leased by a government unit, aggregate
removed for its own use is not subject to sales tax. However, all
aggregate sold to others is subject to sales tax, unless the purchaser
provides an exemption certificate.
Aggregate Crushing and Screening
Screening and crushing of aggregate is fabrication labor subject
to sales tax. Fabrication labor is the making or creating of a new
product or altering an existing product into a new or changed
product, even when the customer provides the materials to be
screened or crushed.
Sales Tax on Purchases: Ready-Mix Concrete
Producers
Nontaxable Purchases: The purchase of aggregate by a ready-mix
concrete producer to be used in making the product is exempt from
sales tax if the producer provides a completed exemption certificate
(ST3) to the aggregate seller. Ready-mix concrete producers are
not classified as contractors.
Nontaxable Purchases: If a ready-mix producer makes retail sales
of aggregate, the aggregate may be purchased exempt from sales
tax if they provide a completed exemption certificate (ST3) to the
aggregate seller.
Sales Tax on Purchases: Bituminous Producers
Taxable Purchases: All purchases of aggregate are taxable if the
bituminous producer is primarily a contractor (makes and installs
the product).*
Exempt Purchases: If a bituminous producer is primarily a retailer
and makes retail sales of bituminous product (does not include
installation), the purchase of the aggregate is exempt from sales
tax provided the retailer provides a completed resale exemption
certificate (ST3) to the aggregate seller.
Note: If the bituminous producer is a contractor-retailer, it
must decide which function constitutes at least 50 percent of the
business. If the producer is primarily a contractor, it must pay
sales tax on all purchases. If the producer is primarily a retailer,
it may purchase aggregate exempt from sales tax if a completed
exemption certificate (ST3) is provided to the aggregate seller.
* Purchases by a contractor while acting as a purchasing agent for
exempt entities may be purchased without paying sales tax only
if the contractor has a written agreement with the exempt entity.
This written agreement must contain certain criteria. For more
information regarding purchasing agreement criteria, contact the
Department of Revenue.