Purpose

This bill creates a refundable sales tax exemption for construction materials, supplies, and equipment used in specific renovation and building projects at two Minnesota airports: Duluth International Airport and Sky Harbor Airport. The goal is to reduce costs on these airport improvement projects by letting builders avoid paying sales tax upfront and then getting the tax back.

Main Provisions

• Exemption and refund
  • Materials, supplies, and equipment used in building, reconstructing, upgrading, expanding, renovating, or remodeling the following projects are exempt from sales and use tax:
  • A new air traffic control tower at Duluth International Airport
  • Two general aviation hangars at Duluth International Airport
  • A new terminal at Sky Harbor Airport
  • Eligible purchases must occur after June 1, 2023 and before January 1, 2028.
  • The tax is collected as if the normal rate applies, and then refunded to the purchaser in the same manner used for other approved projects.
• Refund timing and administration
  • Refunds for these eligible purchases cannot be issued until after January 1, 2028.
  • Applicants may apply for refunds under this section through June 30, 2028, even though refunds are issued after 2028.
  • The refund process references existing Minnesota statutes for how refunds are handled (specifically the rate application and the refund method used for similar projects).
• Scope and targeted projects
  • The exemption applies only to the three listed airport projects at Duluth International Airport and Sky Harbor Airport.
• Funding to pay refunds
  • The money needed to pay these refunds is appropriated from the state's general fund to the commissioner of revenue.

Significant Changes to Law

• Introduces a new refundable sales tax exemption specifically for construction materials used on selected airport construction projects.
• Aligns the tax treatment with existing refund procedures (refunding the tax after it is collected).
• Extends the eligible purchase window to mid-2023 through the end of 2027 (purchasers must buy within this window to qualify).
• Establishes a dedicated funding mechanism (general fund appropriations to the commissioner of revenue) to pay the refunds.

Practical Impact

• Builders and suppliers for the three airport projects could avoid upfront sales tax costs, effectively lowering project expenses.
• The state will initially collect tax as usual and later refund it, subject to the specified timelines.
• The refund window is limited to 2028, with filings allowed through mid-2028.

Notable Details

• The exemption is described as a “refundable exemption,” meaning tax is collected and later refunded.
• The statutory references guide how refunds are handled (matching the usual process for refundable projects).
• An explicit deadline allows refunds through mid-2028, even though actual refunds begin after 2028.

Relevant Terms - sales tax exemption - refundable exemption - refunds - construction materials - Duluth International Airport - Sky Harbor Airport - air traffic control tower - general aviation hangars - new terminal - purchase window (after June 1, 2023 and before January 1, 2028) - Minnesota Statutes 297A62 - Minnesota Statutes 297A75 - refund timing (after January 1, 2028) - Notwithstanding 289A50 - appropriation - general fund - commissioner of revenue