Effective Date: October 1, 2018; October 1, 2019 for new thresholds
Threshold: $100,000 and 10 sales or 100 transactions; $100,000 or 200 or more retail sales – effective October 1, 2019
Measurement Date: The 12-month period ending on the last day of the most recently completed calendar quarter is
Includable Transactions: Retail sales; Marketplace sales included towards the threshold for individual sellers
When You Need to Register Once You Exceed the Threshold: On the first taxable retail sale into Minnesota that occurs no later than 60 days after you exceed the Small Seller Exception
Minnesota has enacted a number of sales and use tax nexus amendments, including marketplace nexus and affiliate nexus provisions. The state has amended the definition of “retailer maintaining a place of business in this state” to 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 for any purpose, including facilitating and processing sales. A retailer is represented by a marketplace provider in Minnesota if the retailer makes sales in Minnesota facilitated by a marketplace provider that maintains a place of business in Minnesota.
“Marketplace provider” means any person who facilitates a retail sale by a retailer by:
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 is not required to collect and remit sales tax if it is determined to be a retailer maintaining a place of business in the state solely because it made sales through one or more marketplace providers. This provision does not apply to a retailer that is or was registered to collect sales and use tax in Minnesota.
A marketplace provider will be required to collect and remit sales and use taxes for all facilitated sales for a retailer, and will be subject to audit on the retail sales it facilitates unless either:
A marketplace provider will not be liable for failure to file and collect and remit sales and use taxes if the marketplace provider demonstrates that the error was due to incorrect or insufficient information given to the marketplace provider by the retailer. This does not apply if the marketplace provider and the marketplace retailer are related parties.
Nexus is also established if a retailer who is a remote seller has an entity perform duties on its behalf which is considered affiliate nexus. Common ownership is not required. An entity is considered an affiliate of a retailer for nexus purposes if the entity:
Additionally, the requirement that, in order to be considered affiliated entities, the retailer and entity must be related parties is repealed.
As enacted in H 2546 in May 2014, Minnesota also states that to the extent allowed by the U.S. Constitution and the laws of the United States, a retailer making retail sales from outside Minnesota to a destination within Minnesota and not maintaining a place of business in Minnesota shall collect and remit sales and use taxes if the retailer engages in the regular or systematic soliciting of sales from potential customers in this state by:
A retailer not maintaining a place of business in Minnesota is presumed, subject to rebuttal, to be engaged in regular solicitation within Minnesota if it engages in any of the activities listed above and:
The marketplace and affiliate nexus amendments are effective on the earlier of July 1, 2019, or the date of a U.S. Supreme Court decision modifying its decision in Quill Corp. v. North Dakota, so that a state may require retailers without a physical presence in the state to collect and remit sales tax. However, if a federal law is enacted authorizing a state to impose a requirement to collect and remit sales tax on retailers without a physical presence in the state, the Commissioner of Revenue must enforce the nexus amendments to the extent allowed under federal law. (Ch. 1 (H.F. 1 a), First Special Session, Laws 2017)
UPDATE: The state has released a bulletin that they are evaluating the effective date – we will update as they release information.
UPDATE: Minnesota released another news bulletin saying that the Department of Revenue plans to announce sales tax enforcement date for remote sellers and marketplace providers on July 25. The DOR is also hosting and participating in an emergency governing board meeting for the Streamlined Sales Tax (SST) Governing Board on July 19 and 20, 2018 at its office in St. Paul.
UPDATE: Minnesota announced an October 1, 2018 effective date for their remote seller legislation, for more information visit the DOR’s Update for Remote Sellers page.
UPDATE: Minnesota has changed its thresholds for remote retailers and marketplace providers. Effective October 1, 2019, a remote retailers or marketplace provider must register to collect and remit sales tax if it:
(1) makes or facilitates 200 or more retail sales from outside this state to destinations in this state during the prior 12-month period; or
(2) makes or facilitates retail sales totaling more than $100,000 from outside this state to destinations in this state during the prior 12-month period.
If all retail sales into Minnesota combined – including sales made through any marketplace, your own website, and through other sources – exceed the thresholds, then sales tax must be collected and remitted to Minnesota. Individual sellers must collect and remit sales tax on taxable sales through their website and other sources. If the marketplace is not collecting Minnesota sales tax on sellers’ behalf, then a seller must also collect Minnesota sales tax on taxable sales made through that marketplace.