Minnesota: Sales Tax Handbook
What constitutes sales tax nexus in Minnesota?
One of the more complicated aspects of Minnesota sales tax law is sales tax nexus, the determination of whether a particular sale took place within the taxation jurisdiction of Minnesota, and is thus subject to state (and possibly local) sales taxes.
If a vendor's transactions are determined to have nexus in Minnesota, the vendor must register for a Minnesota sales tax license and collect appropriate sales taxes from the buyer for all transactions with nexus in the state. On this page, we have compiled some of the most commonly needed facts about what constitutes sales tax nexus in Minnesota.
Sales Tax Nexus in Minnesota
According to Minnesota law, retailers who have tax nexus can be defined as those who has any of the following within the state's boundaries:
An office, warehouse, sample room, or any other place of business(directly or by subsidiary), makes deliveries into the state using their own vehicles, provides a taxable service, has an employee or other representative (permanent or temporary, who operates under any authority figure retailer or subsidiary for any and all purposes), or who have entered into any agreement with any solicitor for the referral of the Minnesota customers (it must be noted that this must be for a commission, and your gross receipts over the course of twelve months must be a minimum of ten thousand dollars).
For additional details on sales tax nexus law in Minnesota, see the nexus information page from the Department of Revenue at http://www.revenue.state.mn.us/Forms_and_Instructions/sales_tax_booklet.pdf
Taxation of Internet-Based Sales in Minnesota
NOTE: 2018 Supreme Court Ruling Regarding Online Sales Taxes
In the 2018 Supreme Court case South Dakota vs. Wayfair Inc, Et Al., the court overturned a previous ruling that required a merchant to have physical nexus in order for a state to collect sales tax. This means that any state is now free to enforce collection of sales taxes on out-of-state online merchants. The information provided here may be subject to change, and many states are expected to begin collecting online sales taxes following this ruling.
Depending on the situation, Minnesota may or may not charge sales tax on Internet-based transactions. Minnesota's statute does indicate that it is possible for tax nexus to exist. However, in the case Quill Corp. v. North Dakota, the U.S. Supreme Court declared that due to the Commerce Clause, a seller must have a physical presence in the state of Minnesota for the state to legally require the seller to collect sales tax. The state's click-through nexus became applicable as of June 30, 2013
The nexus status and taxability of Internet-based sales, by vendors and/or consumers within Minnesota, have been the subject of hot debate in recent years. You can learn more on our introduction to Internet-based sales taxes.
Does my business have tax nexus in Minnesota?
The folks at the sales tax compliance company Avalara are an approved Minnesota sales tax partner, and you can use their free Minnesota nexus wizard tool to determine whether or not your business has nexus, and is therefore required to pay Minnesota sales taxes. If you're interested in automating your sales tax collection and filing process, click here to get more information.
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