HF 3190

Introduction - 94th Legislature (2025 - 2026)

Posted on 04/21/2025 11:34 a.m.

A bill for an act
relating to taxation; imposing a gross receipts tax on various services; proposing
coding for new law in Minnesota Statutes, chapter 295.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [295.90] BUSINESS-TO-BUSINESS SERVICES GROSS RECEIPTS TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the definitions in this
subdivision have the meanings given.
new text end

new text begin (b) "Commissioner" means the commissioner of revenue.
new text end

new text begin (c) "Gross receipts" means the total amount received in money or by barter or exchange
for taxable services as measured by the sales price, but does not include any taxes imposed
directly on the consumer that are separately stated on the invoice, bill of sale, or similar
document given to the purchaser.
new text end

new text begin (d) "Retail sale" means any sale of a taxable service for any purpose other than resale
by the purchaser in the normal course of business as defined in section 297A.61, subdivision
21.
new text end

new text begin (e) "Taxable services" means the sale of the following services by a trade or business
entity to another trade or business entity:
new text end

new text begin (1) legal;
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new text begin (2) accounting and bookkeeping;
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new text begin (3) architectural and engineering;
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new text begin (4) research and development;
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new text begin (5) specialized design;
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new text begin (6) computer;
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new text begin (7) management consulting;
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new text begin (8) other consulting and development;
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new text begin (9) office administrative;
new text end

new text begin (10) facilities support;
new text end

new text begin (11) employment;
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new text begin (12) business support;
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new text begin (13) professional and technical;
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new text begin (14) automotive repair and maintenance;
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new text begin (15) electronic equipment repair and maintenance;
new text end

new text begin (16) commercial machinery repair and maintenance;
new text end

new text begin (17) repair and maintenance of personal property; and
new text end

new text begin (18) any service enumerated in section 297A.61, subdivision 3, paragraph (g), clauses
(3), (5), and (6), items (i), (iii), (iv), and (vi).
new text end

new text begin (f) "Trade or business" means activity carried on for the production of income from
selling goods or performing services.
new text end

new text begin (g) "Trade or business entity" means an entity that engages in a trade or business.
new text end

new text begin Subd. 2. new text end

new text begin Gross receipts tax imposed. new text end

new text begin (a) A tax equal to two percent of gross receipts
from retail sales in Minnesota of taxable services is imposed on any trade or business entity
that provides taxable services to another trade or business entity. A trade or business entity
may but is not required to collect the tax imposed by this section from the purchaser as long
as the tax is separately stated on the receipt, invoice, bill of sale, or similar document given
to the purchaser.
new text end

new text begin (b) The tax imposed under this section is in addition to any other tax imposed on the
retail sale of services under chapter 297A or income received for services provided under
chapter 290.
new text end

new text begin Subd. 3. new text end

new text begin Use tax imposed; credit for taxes paid. new text end

new text begin (a) A person who receives taxable
services for use in Minnesota, other than from a trade or business entity that paid the tax
under subdivision 2, is subject to tax at the rate imposed under subdivision 2. Liability for
the tax is incurred when the person has received the taxable services to completion in
Minnesota. The tax must be remitted to the commissioner in the same manner prescribed
for taxes imposed under chapter 297A.
new text end

new text begin (b) A trade or business entity that has paid taxes to another state or any subdivision
thereof on the same transaction and is subject to tax under this section is entitled to a credit
for the tax legally due and paid to another state or subdivision thereof to the extent of the
lesser of (1) the tax actually paid to the other state or subdivision thereof, or (2) the amount
of tax imposed by Minnesota on the transaction subject to tax in the other state or subdivision
thereof.
new text end

new text begin Subd. 4. new text end

new text begin Tax collection required. new text end

new text begin A trade or business entity with nexus in Minnesota
that is not subject to tax under subdivision 2 is required to collect the tax imposed under
subdivision 3 from the purchaser of the taxable services and give the purchaser a receipt
for the tax paid. The tax collected must be remitted to the commissioner in the same manner
prescribed for the taxes imposed under chapter 297A.
new text end

new text begin Subd. 5. new text end

new text begin Taxes paid to another state or any subdivision thereof; credit. new text end

new text begin A trade or
business entity that has paid taxes to another state or any subdivision thereof measured by
gross receipts and is subject to tax under this section on the same gross receipts is entitled
to a credit for the tax legally due and paid to another state or any subdivision thereof to the
extent of the lesser of (1) the tax actually paid to the other state or any subdivision thereof,
or (2) the amount of tax imposed by Minnesota on the gross receipts subject to tax in the
other taxing state or any subdivision thereof.
new text end

new text begin Subd. 6. new text end

new text begin Sourcing of sales. new text end

new text begin Section 297A.668 applies to the taxes imposed by this
section.
new text end

new text begin Subd. 7. new text end

new text begin Administration. new text end

new text begin Unless specifically provided otherwise, the audit, assessment,
refund, penalty, interest, enforcement, collection remedies, appeal, and administrative
provisions of chapters 270C and 289A that are applicable to taxes imposed under chapter
297A apply to taxes imposed under this section.
new text end

new text begin Subd. 8. new text end

new text begin Returns; payment of tax. new text end

new text begin (a) A trade or business entity must report the tax on
a return prescribed by the commissioner and must remit the tax in a form and manner
prescribed by the commissioner. The return must be filed and the tax must be paid using
the filing cycle and due dates provided for taxes imposed under section 289A.20, subdivision
4, and chapter 297A.
new text end

new text begin (b) Interest must be paid on an overpayment refunded or credited to the taxpayer from
the date of payment of the tax until the date the refund is paid or credited. For purposes of
this subdivision, the date of payment is the due date of the return or the date of actual
payment of the tax, whichever is later.
new text end

new text begin Subd. 9. new text end

new text begin Deposit of revenues. new text end

new text begin The commissioner must deposit the revenues, including
penalties and interest, derived from the tax imposed by this section to the general fund.
new text end

new text begin Subd. 10. new text end

new text begin Personal debt. new text end

new text begin The tax imposed by this section, and interest and penalties
imposed with respect to the tax, are a personal debt of the person required to file a return
from the time that the liability for it arises, irrespective of when the time for payment of the
liability occurs. The debt must, in the case of the executor or administrator of the estate of
a decedent and in the case of a fiduciary, be that of the person in the person's official or
fiduciary capacity only, unless the person has voluntarily distributed the assets held in that
capacity without reserving sufficient assets to pay the tax, interest, and penalties, in which
event the person is personally liable for any deficiency.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable services received after
December 31, 2025.
new text end