An “off-road vehicle” is a vehicle that is not designed or licensed to be used on public streets or highways. Examples include:

• All-terrain vehicles (ATVs)
• Boats and personal watercraft
• Dirt bikes
• Dune buggies and sand-rails
• Rock crawlers
• Snowmobiles

For off-road vehicles, the purchase price is determined by subtracting any trade-in allowance from the sales price as shown below.

Note: Rebates can reduce the purchase price, be used as a down payment, or be refunded to the customer. A rebate must have a fixed value. If a third party entered into an agreement with a vehicle manufacturer to offer rebates, the rebate can reduce the vehicle’s sales price.

The sales price includes:

• Price of the off-road vehicle
• Charges for labor performed (for example, rustproofing, undercoating, dealer preparation, and transportation)
• Charges for accessories (for example, running boards and mud flaps)

• A trade-in allowance reduces the purchase price when an off-road vehicle is taken in trade by the seller.
• A trade-in allowance does not reduce the purchase price when an off-road vehicle is taken in trade by a third party. (For example, a dealer sells an off-road vehicle to a customer, but the customer sells their off-road vehicle to a third party. The proceeds received from the third party do not reduce the purchase price of the vehicle.)

Do not charge sales tax on:

• Registration, license, and document fees
• Extended warranties

A customer leases an ATV and picks up the ATV from your store in St. Paul. The customer will keep the ATV at their home in St. Cloud.

• The first lease payment is subject to the Minnesota general rate sales tax, St. Paul local tax, and Ramsey County Transit tax.
• The later lease payments are subject to the Minnesota general rate sales tax and St. Cloud Area local tax.

Labor to add or install something new or different to an off-road vehicle is taxable. The parts are also taxable. Examples include:

• Custom lettering on watercraft
• Installing platforms or GPS systems
• Adding ATV wheel spacers, hunting accessories, fish finders, or sonar

Repair or maintenance labor is not taxable when stated separately from other taxable charges on the bill.

Parts and other materials used to provide the repair or maintenance are taxable to the customer.  They are not taxable if covered by a manufacturer’s warranty or recall. See the Maintenance Contracts and Warranties.

If you subcontract with another business for repair work or services:

• Do not pay sales or use tax on your purchase.
• Give the subcontractor a completed Form ST3, Certificate of Exemption. Specify the resale exemption.
• You must charge sales tax to your customer for any taxable labor, parts, or materials.

Optional maintenance contracts provide prepaid coverage for things like scheduled oil changes and tire rotations. These contracts are taxable if they include any taxable items, unless the cost of those items is insignificant (less than 10 percent of the total price of the contract).

Note: The sales tax is due when the contract is sold, not when the maintenance is performed.

Repair or replacement parts are not taxable when they are covered by a manufacturer’s warranty or recall.

Extended warranties cover unexpected repair costs and are not taxable. However, sales or use tax applies to the parts used for contracted repairs as outlined below.

Sales of personal items (not used in a trade or business) between individuals may be exempt as an isolated or occasional sale. For more information, see Isolated and Occasional Sales.

Retailers must charge tax on sales of new and used taxable items. When a retailer acts as a broker (selling property for an individual and receiving a fee or commission for doing so), sales tax does not apply if all of the following conditions are met:

• The property is not business equipment.
• The buyer and owner of the property directly exchange money and (if applicable) title for the sale. (The money does not pass through any of the broker’s accounts.)
• The broker does not take title to the property, does not carry insurance on the property, and does not have control over the property, except for leasing or storage arrangements.
• The broker’s only function is to advertise the property for sale, obtain offers to purchase, and inform the owner of potential buyers. The owner must have rights to accept or reject any offer.

Examples

1. A boat marina sells a boat on behalf of an individual. The marina advertises the boat for sale and obtains purchase offers. The marina informs the individual, who can accept or reject the offers. Title to the boat passes directly from the individual to the buyer. Payment is made directly to the individual. The marina receives a commission from the seller. The sale is exempt from tax.
2. A boat marina sells a boat on behalf of an individual. The boat owner has no involvement in the sale. Payment for the boat is deposited in the marina’s account. The sale is subject to tax.

For more information, see Isolated and Occasional Sales.

The exchange of taxable goods or services between two or more parties is considered bartering. Sales tax is due on the value of each item or service bartered.

Racing fuel sold for use in an off-road vehicle such as snowmobiles and other ATVs is taxable.

Towing a boat is not taxable. For more information, see Towing, Cleaning, and Rustproofing Services.

The only taxable food sold through vending machines and honor boxes is prepared food, soft drinks, candy, and dietary supplements. Previously, all food sold through vending machines or honor boxes were taxable.

For more information, see Vending Machines and Other Coin-Operated Devices.

Off-road vehicles sold to another dealer for resale are exempt from tax. The dealer must give you a completed Form ST3, Certificate of Exemption.

Generally, ATVs do not qualify for an exemption from sales tax. If the customer uses an ATV more than 50 percent of its operating time in agricultural production, it may qualify for the farm machinery exemption. The purchaser must give you a completed Form ST3, Certificate of Exemption.

If you sell an off-road vehicle to a customer who does not live in Minnesota, where the customer takes possession of the item determines if Minnesota sales tax is due on the sale.

• 297A.61, Definitions
• 297A.665, Presumption of tax; burden of proof
• 297A.668, Sourcing of sale; situs in this state
• 297A.67, General exemptions
• 297A.70, Exemptions for governments and nonprofit groups
• 297A.72, Exemption certificates
• 297A.73, Improper use of item obtained with exemption certificate
• 297A.74, Commingling exemption certificate items
• 297A.77, Collection of sales and use taxes
• 297A.78, Liability for use tax; receipt as evidence

• 8130.3200, Nonexempt use of purchase obtained with exemption certificate

• 03-12, Sales and Use Tax – Sales Price – Separately Stated Charges
• 05-05, Sales and Use Tax – Definitions of Reasonable Rental Value of Motor Vehicles
• 06-11, Sales and Use Tax – Sales Price – Labor Charges
• 07-02, Sales and Use Tax – Exemptions – Interstate Commerce
• 16-03, Sales and Use Tax – Optional Warranty and Maintenance Contracts on Equipment

• Advertising
• Delivery Charges
• Detective and Security Services
• Laundry and Cleaning Services
• Lawn and Garden Maintenance, Tree and Shrub Services
• Isolated and Occasional Sales
• Use Tax for Businesses

• Agricultural and Farming
• Building Cleaning and Maintenance
• Local Sales and Use Taxes
• Motor Vehicle
• Motor Vehicle Repair
• Vending Machines and Other Coin-Operated Devices