Greater MN Business Expansion Tax Refunds

The Greater Minnesota Business Expansion Sales Tax Refund Program provides tax benefits to businesses located in Greater Minnesota that increase employment. Qualifying businesses that meet job-growth goals may receive sales tax refunds for purchases made during a seven-year period.

Benefits

Purchases and use of tangible personal property and taxable services made by a qualified business are eligible for a sales tax refund. The purchase must be made, and the property or service must be delivered, during the business’ certification period.

The purchase and use of construction materials and supplies for property improvements by a qualified business in Greater Minnesota are also eligible for a sales tax refund. This refund applies whether the purchases are made directly by the business or by a contractor.

The maximum sales tax refund amount for each qualifying business is based on the application material submitted to DEED, subject to a maximum of $2 million annually and $10 million over the seven-year certification period.

Refunds

The program is jointly administered by DEED, which certifies qualifying businesses and ensures that job-creation goals are reached, and by the Minnesota Department of Revenue, which processes the sales tax refunds.

Sales tax refunds are provided by the Department of Revenue, with a maximum of $7 million in refunds available to all businesses in a single fiscal year.  File for the refund using the Department of Revenue's Form ST11P.


Eligibility

To become certified to participate in the Greater Minnesota Business Expansion Sales Tax Refund Program, a business must meet the following qualifications:

1) Increase employment at the business’s facility by a minimum of two full time equivalent (FTE) employees or 10 percent of the current number of employees, whichever is greater, within three years.

2) Pay compensation, which includes wages and benefits not mandated by law, which on an annualized basis equals at least 120 percent of the federal poverty level for a family of four, to all employees at the business’ facility. For 2014, these amounts are $28,620 per year or $13.76 per hour.

3) Be in operation for at least one year within a city, or a county if an agricultural processing facility, in Greater Minnesota, which generally excludes the seven county metropolitan area (the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington). See Eligibility FAQs for more details.

4) Meet prevailing wage guidelines at the business’ facility if a construction or improvement project is undertaken and if the business is awarded $200,000 or more in sales tax refunds. See more about prevailing wage requirements.

In addition, the business must not be engaged primarily in:

  • Retail sales to purchasers physically present at the business’ facility
  • Serving as a public utility
  • Lobbying
  • Gambling
  • Entertainment
  • Professional sports
  • Political consulting
  • Leisure
  • Hospitality
  • Professional services provided by attorneys, accountants, business consultants, physicians, or health care consultants

Am I Eligible?

Complete this initial assessment. If you can answer 'yes' to all the questions, you may be eligible.


Apply

Applications for the Greater Minnesota Business Expansion Sales Tax Refund Program are accepted until all funds for the fiscal year have been awarded.

Before you apply, complete this initial assessment to see if you are eligible to participate. If you can answer 'yes' to all the questions, you may apply. 

Applying is a three-step process:

Step One

Submit a Greater Minnesota Business Expansion Sales Tax Refund Program Application.

  • Send a copy to the city clerk or the city's chief financial officer OR
  • Send a copy to the county auditor, if the business is an agricultural processing facility located outside the boundaries of a city.

The application fee is $500 or 3 percent of the award, whichever is greater. Only businesses that receive an award pay the application fee.

Step Two

Participate in a business subsidy public hearing if the award amount is $500,000 or more. DEED will hold hearings will be held on a regular basis.

Step Three

Execute a Business Subsidy Agreement with DEED. Sales tax refund eligibility is valid for a seven-year period, beginning on the first day of the calendar month following DEED’s certification of the business.


Reporting

Businesses certified to participate in the program must submit periodic reports to DEED:

  • A First Claim Report must be submitted to DEED 60 days prior to the business filing its first sales tax refund claim with the Minnesota Department of Revenue
  • An Annual Report must be submitted to DEED by July 1 during each year of the seven-year certification period

No refunds will be provided until all the reports are submitted and approved by  DEED.

A business is no longer eligible to qualify for the program if it:

  • Breaches the Business Subsidy Agreement (including failure to meet or maintain employment expansion goals)
  • Fails to submit an Annual Report
  • Reaches the end of the seven-year certification period

Contact Us

Contact DEED ...

With questions regarding business qualification and certification.

Contact the Minnesota Department of Revenue ...

With questions related to the sales tax refund.

Contact the Minnesota Department of Labor and Industry ...

With questions related to prevailing wages.

Other Program Information

Download the program fact sheet.

Read the Minnesota statutes establishing and governing the program, 116J.8738 and 297A.68 subd. 44.