SF 1164

as introduced - 90th Legislature (2017 - 2018) Posted on 02/28/2017 10:06am

A bill for an act
relating to taxation; sales and use; establishing sales tax collection duties for
marketplace providers and certain retailers; amending Minnesota Statutes 2016,
section 297A.66, subdivisions 1, 2, 4, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2016, 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, sales new text begin , storage, new text end or sample room or place, warehouse, or other
place of business new text begin , including the employment of a resident of this state who works from a
home office in this state new text end ; or

(2) having a representative, including, but not limited to, an affiliate, agent, salesperson,
canvasser, deleted text begin or deleted text end new text begin marketplace provider, new text end solicitor new 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. new text begin A retailer is represented by
a marketplace provider in this state if the retailer makes sales in this state facilitated by a
marketplace provider that maintains a place of business in this state.
new text end

(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 (c) "Marketplace provider" means any person who facilitates a retail sale by a retailer
by:
new text end

new text begin (1) listing or advertising for sale by the retailer in any forum, tangible personal property,
services, or digital goods that are subject to tax under this chapter; and
new text end

new text begin (2) either directly or indirectly through agreements or arrangements with third parties
collecting payment from the customer and transmitting that payment to the retailer regardless
of whether the marketplace provider receives compensation or other consideration in
exchange for its services.
new text end

new text begin (d) "Total taxable retail sales" means the gross receipts from the sale of all tangible
goods, services, and digital goods subject to sales and use tax under this chapter.
new text end

Sec. 2.

Minnesota Statutes 2016, section 297A.66, subdivision 2, is amended to read:

Subd. 2.

Retailer maintaining place of business in this state.

new text begin (a) Except as provided
in paragraph (b), new text end a retailer maintaining a place of business in this state who makes retail
sales in Minnesota or to a destination in Minnesota shall collect sales and use taxes and
remit them to the commissioner under section 297A.77.

new text begin (b) A retailer with total taxable retail sales to customers in this state 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. The provisions of this paragraph do not apply to a retailer that is or
was registered to collect sales and use tax in this state.
new text end

Sec. 3.

Minnesota Statutes 2016, 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), if new text begin the entity new text end :

(1) deleted text begin the entity deleted 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) deleted text begin the retailer and the entity are related parties. deleted text end new text begin has the same or a similar business name
to the retailer and sells, from a location or locations in this state, tangible personal property,
digital goods, or services, taxable under this chapter, that are similar to that sold by the
retailer;
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, digital goods, or services sold by the retailer to its customers in this state;
new text end

new text begin (4) maintains a place of business in this state and uses trademarks, service marks, or
trade names in this state that are the same or substantially similar to those used by the retailer,
and that use is done with the express or implied consent of the holder of the marks or names;
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, for tangible
personal property sold by the retailer;
new text end

new text begin (6) facilitates the delivery of tangible personal property to customers of the retailer by
allowing the customers to pick up tangible personal property sold by the retailer at a place
of business the entity maintains in this state; or
new text end

new text begin (7) shares management, business systems, business practices, or employees with the
retailer, or engages in intercompany transactions with the retailer related to the activities
that establish or maintain the market in this state of the retailer.
new 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
stock deleted 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.

Sec. 4.

Minnesota Statutes 2016, section 297A.66, is amended by adding a subdivision to
read:

new text begin Subd. 4b. new text end

new text begin Collection and remittance requirements for marketplace providers and
marketplace retailers. new text end

new text begin (a) A marketplace provider shall collect sales and use taxes and
remit them to the commissioner under section 297A.77 for all facilitated sales for a retailer,
and is subject to audit on the retail sales it facilitates unless either:
new text end

new text begin (1) the retailer provides a copy of the retailer'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) upon inquiry by the marketplace provider or its agent, the commissioner discloses
that the retailer is registered to collect sales and use taxes in this state.
new text end

new text begin (b) Nothing in this subdivision shall be construed to interfere with the ability of a
marketplace provider and a retailer to enter into an agreement regarding fulfillment of the
requirements of this chapter.
new text end

new text begin (c) A marketplace provider is not liable under this subdivision 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 paragraph does not apply if the marketplace provider and the marketplace
retailer are related as defined in subdivision 4, paragraph (b).
new text end

Sec. 5. new text begin SEVERABILITY.
new text end

new text begin If any provision of sections 1 to 4 or the application thereof is held invalid, such invalidity
shall not affect the provisions or applications of the sections that can be given effect without
the invalid provisions or applications.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6. new text begin EFFECTIVE DATE.
new text end

new text begin (a) The provisions of sections 1 to 4 are effective at the earlier of:
new text end

new text begin (1) a decision by the United States Supreme Court modifying its decision in Quill Corp.
v. North Dakota, 504 U.S. 298 (1992) so that a state may require retailers without a physical
presence in the state to collect and remit sales tax; or
new text end

new text begin (2) July 1, 2020.
new text end

new text begin (b) Notwithstanding paragraph (a) or the provisions of sections 1 to 4, 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 must enforce the
provisions of this section and sections 1 to 4 to the extent allowed under federal law.
new text end

new text begin (c) The commissioner of revenue shall notify the revisor of statutes when either of the
provisions in paragraph (a) or (b) apply.
new text end