Minnesota has provided clarity to the taxability of non-fungible tokens (NFTs) due to an increase in use. NFTs entitle the purchase of goods and services, according to the recently updated fact sheet, when NFTs are used to purchase taxable products. The NFTs are also subject to sales and use tax.
Examples of some products that can be purchased with NFTs include but are not limited to digital products (music, audio visual works or video games), admissions to events, tangible personal property such as collectables. The fact sheet also includes guidance on bundled transactions, sourcing, and nontaxable products.
While this has helped reduce the complexity of taxing and reporting use of NFTs those receiving or using payments of NFTs are encouraged to check the Minnesota DOR’s website for further details.
(Minnesota Department of Revenue, Digital Products Sales Tax Fact Sheet 177, updated August 2022)