Senate Counsel, Research
and Fiscal Analysis
Minnesota Senate Bldg.
95 University Avenue W. Suite 3300
St. Paul, MN 55155
(651) 296-4791
Tom Bottern
Director
   Senate   
State of Minnesota
 
 
 
 
 
S.F. No. 1164 - Sales tax collection and remittance for marketplace providers and marketplace retailers (as proposed to be amended by the A-1 amendment)
 
Author: Senator Ann Rest
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: March 6, 2017



 

This bill expands nexus for purposes of triggering collection and remittance of sales tax for remote sales transactions, and modifies collection, remittance, and reporting requirements for sellers.

1

Modifies the definition of a “retailer maintaining a place of business in the state” for purposes of the requirement to collect and remit Minnesota sales and use taxes.  A retailer maintaining a place of business in the state includes having storage facility in the state, employing a state resident who works from a home office in the state, or having a marketplace provider or other third party operating in the state under the retailer’s authority to facilitate or process sales in the state. Defines “marketplace provider” and “total taxable retail sales.”
 

2

Provides that the duty to collect and remit sales taxes does not apply to a retailer making less than $10,000 of taxable retail sales into the state in a year whose sole physical connection to the state is through a marketplace provider located in the state, unless they are or were previously registered in the state.
 

3

Modifies the definition of “affiliated entities.” A retailer having an in-state affiliate is required to collect and remit sales and use tax. Adds criteria by which an affiliate entity is deemed to be a related party to the retailer (and thus required to collect and remit sales and use tax) to include:

  • selling taxable products that are the same as or similar to the retailer or selling under the same or similar name;
  • maintaining a facility such as an office, warehouse, distribution center, or the like to facilitate sales in the state made by the out-of-state retailer;
  • using intellectual property with consent or knowledge that is the same or similar to the out-of-state retailer’s intellectual property;
  • delivering, installing, assembling, performing maintenance or repair services on tangible personal property in the state if the property is sold to in-state customers by the out-of-state retailer;
  • facilitating delivery of tangible personal property to in-state customers by allowing a customer to pick up the property at a facility in the state; or
  • sharing information systems or employees with, or engaging in intercompany transactions with the out-of-state retailer.

Also deems two entities as related parties if the entities are related taxpayers under the Internal Revenue Code for purposes of certain disallowed deductions, or if the transactions are disallowed losses between partnerships and their owners under the Code. Entities that have one or more ownership relationships designed with the purpose of avoiding establishment of affiliate nexus would also be deemed related parties.
 

4

Establishes collection and remittance requirements for marketplace providers. Marketplace providers are required to collect and remit sales and use tax under provisions in existing law, except when a marketplace seller for whom the marketplace facilitates a sale either provides a copy of its registration to collect and remit sales and use tax to the marketplace provider before the marketplace provider facilitates the sale, or the commissioner of revenue discloses to the marketplace provider, upon inquiry, that the marketplace seller is registered to collect and remit sales and use taxes in the state. Relieves a marketplace provider of liability to collect and remit sales and use taxes, in most cases, to the extent that the provider demonstrates that failure to collect and remit was due to incorrect or insufficient information provided by the marketplace seller.
 

5

Provides that if any provision in sections 1 to 4 are held invalid, other provisions not affected by the invalidity are given effect. Effective the day following final enactment.
 

6

Establishes that the provisions of sections 1 to 4 are effective upon the U.S. Supreme Court overturning or expanding its Quill decision, or July 1, 2021, whichever is earlier.  If Congress enacts a law authorizing states to impose collection and remittance requirements for retailers without physical presence in the state, Minnesota must enforce the provisions of sections 2 to 5 to the extent allowed under federal law.

 
 
Check on the status of this bill
 
Back to Senate Counsel and Research Bill Summaries page
 

 
This page is maintained by the Office of Senate Counsel, Research, and Fiscal Analysis for the Minnesota Senate.
 
Last review or update: 03/06/2017
 
If you see any errors on this page, please e-mail us at webmaster@senate.mn