Minnesota Legislature
SF 2374
as introduced - 89th Legislature (2015 - 2016) Posted on 03/11/2016 09:38am
Current Version - as introduced
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A bill for an act
relating to taxation; sales and use; modifying requirements for collecting sales
and use tax; amending Minnesota Statutes 2014, section 297A.66, subdivisions
1, 3, 4, by adding subdivisions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2014, section 297A.66, subdivision 1, is amended to read:
Subdivision 1.
Definitions.
(a) To the extent allowed by the United States
Constitution and the laws of the United States, "retailer maintaining a place of business in
this state," or a similar term, means a retailer:
(1) having or maintaining within this state, directly or by a subsidiary or an affiliate,
an office, place of distribution, salesnew text begin , storage,new text end or sample room or place, warehouse, or
other place of businessnew text begin , including the employment of a resident of this statenew text end ; or
(2) having a representative, including, but not limited to, an affiliate, agent,
salesperson, canvasser, deleted text begin ordeleted text end new text begin marketplace provider, referrer, new text end solicitornew text begin , or other third party
new text end operating in this state under the authority of the retailer or its subsidiary, for any purpose,
including the repairing, selling, delivering, installing, new text begin facilitating sales, processing sales,
new text end or soliciting of orders for the retailer's goods or services, or the leasing of tangible personal
property located in this state, whether the place of business or agent, representative, affiliate,
salesperson, canvasser, or solicitor is located in the state permanently or temporarily, or
whether or not the retailer, subsidiary, or affiliate is authorized to do business in this state.
(b) "Destination of a sale" means the location to which the retailer makes delivery of
the property sold, or causes the property to be delivered, to the purchaser of the property,
or to the agent or designee of the purchaser. The delivery may be made by any means,
including the United States Postal Service or a for-hire carrier.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for sales and purchases made after
June 30, 2016.
new text end
Sec. 2.
Minnesota Statutes 2014, section 297A.66, subdivision 3, is amended to read:
Subd. 3.
Retailer not maintaining place of business in this state.
(a) To the
extent allowed by the United States Constitution and in accordance with the terms and
conditions of federal remote seller law, a retailer making retail sales from outside this state
to a destination within this state and not maintaining a place of business in this state shall
collect sales and use taxes and remit them to the commissioner under section 297A.77.
(b) To the extent allowed by the United States Constitution and the laws of the
United States, a retailer making retail sales from outside this state to a destination within
this state and not maintaining a place of business in this state shall collect sales and use
taxes and remit them to the commissioner under section 297A.77, if the retailer engages in
the regular or systematic soliciting of sales from potential customers in this state by:
(1) distribution, by mail or otherwise, of catalogs, periodicals, advertising flyers, or
other written solicitations of business to customers in this state;
(2) display of advertisements on billboards or other outdoor advertising in this state;
(3) advertisements in newspapers published in this state;
(4) advertisements in trade journals or other periodicals the circulation of which is
primarily within this state;
(5) advertisements in a Minnesota edition of a national or regional publication or
a limited regional edition in which this state is included as part of a broader regional or
national publication which are not placed in other geographically defined editions of the
same issue of the same publication;
(6) advertisements in regional or national publications in an edition which is not
by its contents geographically targeted to Minnesota but which is sold over the counter
in Minnesota or by subscription to Minnesota residents;
(7) advertisements broadcast on a radio or television station located in Minnesota; deleted text begin or
deleted text end
(8) any other solicitation by telegraphy, telephone, computer database, cable, optic,
microwave, or other communication systemdeleted text begin .deleted text end new text begin ;
new text end
new text begin
(9) engaging in direct response marketing in this state, either directly or indirectly
through a marketplace provider, referrer, or other third party. For purposes of this section,
"direct response marketing" includes but is not limited to the following:
new text end
new text begin
(i) sending, transmitting, or broadcasting of flyers, newsletters, telephone calls,
targeted e-mail, text messages, social media messages, or targeted mailings;
new text end
new text begin
(ii) collecting, analyzing, and utilizing individual data on purchasers or potential
purchasers in this state;
new text end
new text begin
(iii) using information or software, including cached files, cached software, cookies,
or other data-tracking tools, that are stored in or distributed within this state; or
new text end
new text begin
(iv) conducting any other actions that use persons, tangible property, intangibles,
digital files or information, or software in this state in an effort to enhance the probability
that a person's contact with a customer in this state will result in a sale to that customer;
new text end
new text begin
(10) conducting any part of the sale process in the state, regardless of whether that
part of the process has been subcontracted to an affiliate or third party, including listing
products or services for sale, soliciting, branding products, selling products, processing
orders, fulfilling orders, providing customer service, or accepting or assisting with returns
or exchanges. The sale process does not include shipping via a common carrier; or
new text end
new text begin
(11) offering its products for sale through one or more marketplaces operated by
any marketplace provider required to collect and remit sales and use taxes in this state
under this section.
new text end
This paragraph must be construed without regard to the state from which distribution
of the materials originated or in which they were prepared.
(c) The location within or without this state of independent vendors that provide
products or services to the retailer in connection with its solicitation of customers within this
state, including such products and services as creation of copy, printing, distribution, and
recording, is not considered in determining whether the retailer is required to collect tax.
(d) A retailer not maintaining a place of business in this state is presumed, subject to
rebuttal, to be engaged in regular solicitation within this state if it engages in any of the
activities in paragraph (b) and:
(1) makes 100 or more retail sales from outside this state to destinations in this state
during a period of 12 consecutive months; or
(2) makes ten or more retail sales totaling more than $100,000 from outside this state
to destinations in this state during a period of 12 consecutive months.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for sales and purchases made after
June 30, 2016.
new text end
Sec. 3.
Minnesota Statutes 2014, section 297A.66, subdivision 4, is amended to read:
Subd. 4.
Affiliated entities.
(a) An entity is an "affiliate" of the retailer for purposes
of subdivision 1, paragraph (a), ifnew text begin the entitynew text end :
(1) deleted text begin the entitydeleted text end uses its facilities or employees in this state to advertise, promote, or
facilitate the establishment or maintenance of a market for sales of items by the retailer
to purchasers in this state or for the provision of services to the retailer's purchasers in
this state, such as accepting returns of purchases for the retailer, providing assistance in
resolving customer complaints of the retailer, or providing other services; deleted text begin and
deleted text end
(2) new text begin sells under the same or a similar business name tangible personal property or
taxable services similar to that sold by the person against whom the presumption is asserted;
new text end
new text begin
(3) maintains an office, distribution facility, salesroom, warehouse, storage place, or
other similar place of business in this state to facilitate the delivery of tangible personal
property or taxable services sold by the person against whom the presumption is asserted
to that person's in-state customers;
new text end
new text begin
(4) uses, with consent or knowledge of the person against whom the presumption
is asserted, trademarks, service marks, or trade names in this state that are the same or
substantially similar to those used by the person against whom the presumption is asserted;
new text end
new text begin
(5) delivers, installs, or assembles tangible personal property in this state, or
performs maintenance or repair services on tangible personal property in this state, if the
tangible personal property is sold to in-state customers by the person against whom the
presumption is asserted;
new text end
new text begin
(6) facilitates the delivery of tangible personal property to in-state customers of the
person against whom the presumption is asserted by allowing the customers to pick up
tangible personal property sold by the person at an office, distribution facility, salesroom,
warehouse, storage place, or other similar place of business maintained in this state;
new text end
new text begin
(7) shares management, business systems, business practices, or employees with the
person against whom the presumption is asserted, or engages in intercompany transactions
with the person against whom the presumption is asserted related to the activities that
establish or maintain the market in this state of the person against whom the presumption
is asserted; and
new text end
new text begin (8) is a related party to new text end the retailer deleted text begin and the entity are related partiesdeleted text end .
(b) Two entities are related parties under this section if one of the entities meets at
least one of the following tests with respect to the other entity:
(1) one or both entities is a corporation, and one entity and any party related to that
entity in a manner that would require an attribution of stock from the corporation to the
party or from the party to the corporation under the attribution rules of section 318 of the
Internal Revenue Code owns directly, indirectly, beneficially, or constructively at least 50
percent of the value of the corporation's outstanding stock;
(2) one or both entities is a partnership, estate, or trust and any partner or beneficiary,
and the partnership, estate, or trust and its partners or beneficiaries own directly, indirectly,
beneficially, or constructively, in the aggregate, at least 50 percent of the profits, capital,
stock, or value of the other entity or both entities; deleted text begin or
deleted text end
(3) an individual stockholder and the members of the stockholder's family (as
defined in section 318 of the Internal Revenue Code) owns directly, indirectly, beneficially,
or constructively, in the aggregate, at least 50 percent of the value of both entities'
outstanding stockdeleted text begin .deleted text end new text begin ;
new text end
new text begin
(4) the entities are related within the meaning of subsections (b) and (c) of section
267 or 707(b)(1) of the Internal Revenue Code; or
new text end
new text begin
(5) the entities have one or more ownership relationships and the relationships were
designed with a principal purpose of avoiding the application of this section.
new text end
(c) An entity is an affiliate under the provisions of this subdivision if the requirements
of paragraphs (a) and (b) are met during any part of the 12-month period ending on the
first day of the month before the month in which the sale was made.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for sales and purchases made after
June 30, 2016.
new text end
Sec. 4.
Minnesota Statutes 2014, section 297A.66, is amended by adding a subdivision
to read:
new text begin Subd. 4b. new text end
new text begin Marketplace provider and marketplace seller. new text end
new text begin
(a) For purposes of
subdivisions 1, paragraph (a), and 4c, "marketplace provider" means any person who
facilitates a retail sale by a seller. A marketplace provider facilitates a retail sale when
the marketplace provider:
new text end
new text begin
(1) lists or advertises in any forum tangible personal property for sale or taxable
services for sale; and
new text end
new text begin
(2) either directly or indirectly through agreements or arrangements with third parties
collects payment from the customer and transmits that payment to a seller, regardless
of whether the marketplace provider receives compensation or other consideration in
exchange for its services.
new text end
new text begin
(b) "Marketplace seller" means a seller that has any sales facilitated by a marketplace
provider.
new text end
new text begin
(c) A seller is presumed to have a marketplace provider in this state if the seller
enters into an agreement with a marketplace provider that maintains a place of business in
the state for the facilitation of retail sales.
new text end
new text begin
(d) This subdivision applies only if the seller's total gross receipts are at least
$10,000 in the 12-month period ending on the last day of the most recent calendar quarter
before the calendar quarter in which the sale is made. For purposes of this paragraph,
"gross receipts" means receipts from sales to customers located in the state that were
facilitated by the marketplace provider.
new text end
new text begin
(e) Nothing in this subdivision shall be construed to narrow the scope of the terms
affiliate, agent, salesperson, canvasser, solicitor, or other representative for purposes
of subdivision 1, paragraph (a).
new text end
new text begin
(f) This subdivision does not apply to chapter 290 and does not expand or contract
the jurisdiction to tax a trade or business under chapter 290.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for sales and purchases made after
June 30, 2016.
new text end
Sec. 5.
Minnesota Statutes 2014, section 297A.66, is amended by adding a subdivision
to read:
new text begin Subd. 4c. new text end
new text begin
Collection and remittance requirements for marketplace providers
and marketplace sellers.
new text end
new text begin
(a) A marketplace provider that facilitates sales to customers
in this state shall collect sales and use taxes and remit them to the commissioner under
section 297A.77.
new text end
new text begin
(b) The requirement under paragraph (a) does not apply to a marketplace provider if
the marketplace seller for whom the marketplace provider facilitates a sale either:
new text end
new text begin
(1) provides a copy of the seller's registration to collect sales and use tax in this state
to the marketplace provider before the marketplace provider facilitates a sale; or
new text end
new text begin
(2) the marketplace seller appears on a list published by the commissioner of revenue
of the entities registered to collect sales and use taxes in this state.
new text end
new text begin
(c) The commissioner of revenue shall promulgate regulations regarding the content
and publication of the list under paragraph (b), clause (2). Nothing in this subdivision
shall be construed to interfere with the ability of a marketplace provider and a marketplace
seller to enter into an agreement regarding fulfillment of the requirements of this chapter.
new text end
new text begin
(d) A marketplace provider is relieved of liability under this subdivision for failure
to collect and remit sales and use taxes to the extent that the marketplace provider
demonstrates that the error was due to incorrect or insufficient information given to the
marketplace provider by the marketplace seller. This paragraph does not apply if the
marketplace provider and the marketplace seller are related as defined in subdivision 4,
paragraph (b).
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for sales and purchases made after
June 30, 2016.
new text end
Sec. 6.
Minnesota Statutes 2014, section 297A.66, is amended by adding a subdivision
to read:
new text begin Subd. 4d. new text end
new text begin Referrer; registration and reporting requirements. new text end
new text begin
(a) "Referrer"
means any person who:
new text end
new text begin
(1) contracts or otherwise agrees with a seller to list for sale multiple items of
tangible personal property or services and the sales price of those items in any forum,
including a catalog or Web site;
new text end
new text begin
(2) receives a fee, commission, or other consideration from a seller for the listing;
new text end
new text begin
(3) transfers, via telephone, Internet link, or otherwise, a customer to the seller or the
seller's Web site to complete a purchase; and
new text end
new text begin
(4) does not collect a receipt from the customer for a transaction.
new text end
new text begin
(b) By the first day of the last month of a calendar year, a referrer must file a notice
with the commissioner, in a form and manner prescribed by the commissioner, stating the
referrer's intent to provide the services described in paragraph (a) for the calendar year
immediately following the calendar year the notice is filed, if the referrer:
new text end
new text begin
(1) received more than $10,000 in compensation from all sellers in the 12-month
period ending on the last day of the most recent calendar quarter; or
new text end
new text begin
(2) received more than $7,500 in compensation from all sellers in the first three
quarters of the current calendar year.
new text end
new text begin
For purposes of this paragraph, "gross receipts" means receipts from sales to customers
located in the state who were referred to the seller by the referrer.
new text end
new text begin
(c) The notice under paragraph (b) constitutes an application for a permit for the
referrer to provide referrer services to a seller. Within 15 days of receipt of the notice
under paragraph (b), the commissioner shall issue a permit to the referrer to provide
referrer services to a seller.
new text end
new text begin
(d) A referrer required to file the notice under paragraph (a) who fails to obtain a
permit under paragraph (b) must not refer customers in this state to any seller. A referrer
who refers customers to a seller without a permit is liable for sales and use taxes payable
under paragraph (j).
new text end
new text begin
(e) In addition to any other return or report required to be filed under this chapter, a
referrer that receives more than $10,000 in compensation from all sellers for the activities
described in paragraph (a) in the 12-month period ending on the last day of the most recent
calendar quarter shall annually file a report with the commissioner listing the following:
new text end
new text begin
(1) the name and address of each seller who contracted with the referrer to refer
customers within this state to the seller;
new text end
new text begin
(2) if available, the total gross receipts price and any available transactional-level
detail for referrals made by the referrer of customers in this state to each seller, including
the listed price of items and the number of referrals made to a seller for those items. In
no instance must the referrer be required to provide any information that could identify a
purchaser; and
new text end
new text begin
(3) if available, the number of potential customers located in this state that were
referred to the seller and, if available, the number of customers who made purchases
after a referral.
new text end
new text begin
(f) A referrer that receives more than $10,000 in compensation from all sellers in the
12-month period ending on the last day of the most recent calendar quarter shall provide
notice to each seller with whom the referrer has an agreement under paragraph (a) that
the seller's sales may be subject to sales and use tax and that the referrer is required to
provide the seller's contact information and total gross receipts to the commissioner.
The commissioner may promulgate rules establishing the notice to sellers sufficient to
meet the requirements of this paragraph.
new text end
new text begin
(g) The commissioner must revoke the permit issued under paragraph (c) if the
referrer does not fulfill the requirements under paragraphs (e) and (f).
new text end
new text begin
(h) A referrer is not required to provide the information under paragraph (e) if
the seller either:
new text end
new text begin
(1) provides a copy of the seller's sales tax permit issued under section 297A.84 to
the referrer; or
new text end
new text begin
(2) the seller appears on a list of sales tax permit holders published by the
commissioner.
new text end
new text begin
(i) A referrer is not required to provide the information under paragraph (e) if the
referrer is a marketplace provider that collects and remits sales and use taxes under
subdivision 4c.
new text end
new text begin
(j) When a referrer refers a customer to a seller who makes a retail sale to that
customer in this state, the referrer is liable for the sales and use tax resulting from the retail
sale in the amount of the sales and use tax that would have been due on the transaction,
based on the sales price listed by the seller, unless the seller provides a copy of the seller's
sales tax permit issued under section 297A.84 to the referrer, or appears on a list of sales
tax permit holders published by the commissioner. This paragraph does not apply to any
referrer that has complied with paragraphs (e) and (f).
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for sales and purchases made after
June 30, 2016.
new text end
Sec. 7. new text begin SEVERABILITY.
new text end
new text begin
If any provision of sections 1 to 6 or the application thereof is held invalid, such
invalidity shall not affect the provisions or applications of the sections which can be given
effect without the invalid provisions or applications.
new text end