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The Minnesota Supreme Court has held that sales of customized prewritten software are subject to sales tax as prewritten computer software because the seller did not separately state its charges for the software customization on its customer invoices. When the seller made a sale of the software, it would customize previous versions of its software to meet the customer’s needs. In Minnesota, customized portions of prewritten software are exempt if the taxpayer separately states the charges for customization. The seller failed to separate the prewritten charges from the customization charges on its customer invoices. The court also declined to disregard the form of the sales transactions in favor of their economic substance. The court upheld the assessed late filing and payment penalty because the seller failed to establish that it had reasonable cause to believe that it was not required to file a return or pay the tax. (LumiData, Inc. v. Commissioner of Revenue, Supreme Court of Minnesota, No. A14-0254, September 10, 2014)


On March 10, 2015, a bipartisan group of senators introduced the Marketplace Fairness Act of 2015. Similar legislation – the Marketplace Fairness Act of 2013 – was previously introduced in February 2013 and passed by the Senate on May 6, 2013. That legislation failed to be enacted. If passed, the Marketplace Fairness Act of 2015 would authorize states meeting certain requirements to require remote sellers that do not meet a "small seller exception" to collect their state and local sales and use taxes. For more information on the previous legislation, visit Federal Government Introduces New Remote Seller Bill. (Marketplace Fairness Act of 2015, March 10, 2015)


UPDATE: This bill failed to pass during the 114th Congressional Session running from January 3, 2015 to January 3, 2017.  Therefore, this bill has died and would need to be reintroduced to be considered and voted on.


Minnesota has combined its sales and use tax refund claim forms into one form, Form ST11, Sales and Use Tax Refund Request and Multiple Period Amended Return. Form ST11 can be used to request capital equipment refunds, purchaser sales tax refunds, and special purchase refunds. Form ST11 can also be used by taxpayers to amend their returns for multiple periods, so they no longer need to make changes to individual returns in e-Services. The following forms have been discontinued: Form ST11P, Special Purchase Refund Claim; Form ST11-PUR, Purchaser Sales Tax Refund Claim; and Form ST11-UL, Utilities Sales Tax Refund Claim. The Form ST11 can be accessed here. (Email and Revised Form ST11, Sales and Use Tax Refund Request and Multiple Period Amended Return, Minnesota Department of Revenue, December 12, 2014)


On December 16, 2014, President Barack Obama signed the Consolidated and Further Continuing Appropriations Act, 2015, for sales and use tax purposes. The Act includes a provision that extends the Internet Tax Freedom Act (ITFA) until October 1, 2015 with all provisions unchanged.


On January 9, 2015, the House of Representative introduced a bill (un-numbered) that would permanently extend the ITFA, banning states and local jurisdictions from imposing any new tax on internet access. The proposed bill removes the current effective dates of November 1, 2003 through October 1, 2015 and changes the effective date to be effective for new taxes imposed after the date of the enactment.  It is not clear if states that have been grandfathered under the existing provision could retain their current tax on internet access but it appears that may be the case.  No formal legislation has been introduced that would incorporate the Marketplace Fairness Act into this bill. The bill is sponsored by House Judiciary Committee Chairman Bob Goodlatte, among others.


For our previous news item on this topic, see Internet Tax Freedom Act is Extended Through December 11, 2014.


For an update on this news item, see Internet Tax Freedom Act Extended Until December 11, 2015.


(Consolidated and Further Continuing Appropriations Act, 2015; H.R. 235)


President Barack Obama has signed federal legislation extending the Internet Tax Freedom Act (ITFA) through December 11, 2014 as part of the joint resolution which made continuing appropriations for fiscal year 2015. The ITFA was previously set to expire on November 1, 2014. The ITFA bars state and local governments from imposing multiple or discriminatory taxes on electronic commerce and taxes on Internet access.


For an update to this news item, see Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.


(P.L. 113-164 (H.J. Res. 124), 113th Congress, 2nd Session, Laws 2014)



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