Minnesota ~ Sales and Use Tax: Nexus Amendments Introduced

CCH Tax Day Report

Legislation introduced in the Minnesota Senate includes amendments to sales and use tax nexus laws that would add certain nexus-creating activities to the definition of “retailer maintaining a place of business in this state”; add collection and remittance provisions for certain businesses; specify additional activities that meet the definition of “affiliated entities” for nexus purposes; and make other changes.

Retailer Maintaining a Place of Business in Minnesota

A “retailer maintaining a place of business in this state” would include a retailer who has storage in Minnesota; employs a Minnesota resident who works from a home office in Minnesota; has a marketplace provider or other third party operating in Minnesota under the retailer’s authority; or has a representative in Minnesota who facilitates or processes sales.

“Marketplace provider” would mean a person who facilitates a retail sale by a retailer by listing or advertising taxable tangible personal property, services, or digital goods for sale in any forum and, through agreements or arrangements with third parties, collecting payment from the customer and transmitting it to a retailer.

Collection and Remittance Provisions

Marketplace providers: Generally, a marketplace provider would be required to collect and remit sales and use taxes for all sales it facilitates for a retailer, and would be subject to audit on the retail sales it facilitates, unless:

the retailer provides a copy of the retailer’s registration to collect sales and use tax in Minnesota to the marketplace provider before the marketplace provider facilitates a sale; or

upon inquiry by the marketplace provider or its agent, the Commissioner of Revenue discloses that the retailer is registered to collect sales and use taxes in Minnesota.

Small retailers: A retailer with total taxable retail sales to customers in Minnesota of less than $10,000 in the 12-month period ending on the last day of the most recently completed calendar quarter would not be required to collect and remit sales tax if it is determined to be a retailer maintaining a place of business in Minnesota solely because it made sales through one or more marketplace providers. However, this provision would not apply to a retailer that is or was registered to collect sales and use tax in Minnesota. “Total taxable retail sales” would mean the gross receipts from the sale of all tangible goods, services, and digital goods subject to sales and use tax.

Affiliated Entities

An entity would be considered an affiliate of a retailer for nexus purposes if the entity:

– has the same or a similar business name as the retailer and sells, from a location or locations in Minnesota, taxable tangible personal property, digital goods, or services that are similar to those sold by the retailer;

– maintains an office, distribution facility, salesroom, warehouse, storage place, or other similar place of business in Minnesota to facilitate the delivery of tangible personal property, digital goods, or services sold by the retailer to its customers in Minnesota;

– maintains a place of business in Minnesota and uses trademarks, service marks, or trade names in Minnesota that are the same or substantially similar to those used by the retailer, and that use is done with the express or implied consent of the holder of the marks or names;

– delivers, installs, or assembles tangible personal property in Minnesota, or performs maintenance or repair services on tangible personal property in Minnesota, for tangible personal property sold by the retailer;

– facilitates the delivery of tangible personal property to customers of the retailer by allowing the customers to pick up tangible personal property sold by the retailer at a place of business the entity maintains in Minnesota; or

– shares management, business systems, business practices, or employees with the retailer, or engages in intercompany transactions with the retailer related to the activities that establish or maintain the retailer’s market in Minnesota.

In addition, the legislation would repeal the requirement that, in order to be considered affiliated entities, the retailer and entity must be related parties.

MN SF 45, iintroduced 1-9-17

S.F. 45, as introduced in the Minnesota Senate on January 9, 2017

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