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Minnesota Legislature

Office of the Revisor of Statutes

297A.668 SOURCING OF SALE; SITUS IN THIS STATE.
    Subdivision 1. Applicability. The provisions of this section apply regardless of the
characterization of a product as tangible personal property, a digital good, or a service; but do not
apply to telecommunications services or the sales of motor vehicles. These provisions only apply
to determine a seller's obligation to pay or collect and remit a sales or use tax with respect to the
seller's sale of a product. These provisions do not affect the obligation of a seller as purchaser to
remit tax on the use of the product.
    Subd. 2. Sourcing rules. (a) The retail sale, excluding lease or rental, of a product shall be
sourced as required in paragraphs (b) through (f).
(b) When the product is received by the purchaser at a business location of the seller, the sale
is sourced to that business location.
(c) When the product is not received by the purchaser at a business location of the seller,
the sale is sourced to the location where receipt by the purchaser or the donee designated by the
purchaser occurs, including the location indicated by instructions for delivery to the purchasers
or the purchaser's donee, known to the seller.
(d) When paragraphs (b) and (c) do not apply, the sale is sourced to the location indicated
by an address for the purchaser that is available from the business records of the seller that are
maintained in the ordinary course of the seller's business, when use of this address does not
constitute bad faith.
(e) When paragraphs (b), (c), and (d) do not apply, the sale is sourced to the location
indicated by an address for the purchaser obtained during the consummation of the sale, including
the address of a purchaser's payment instrument if no other address is available, when use of this
address does not constitute bad faith.
(f) When paragraphs (b), (c), (d), and (e) do not apply, including the circumstance where
the seller is without sufficient information to apply the previous paragraphs, then the location is
determined by the address from which tangible personal property was shipped, from which the
digital good or the computer software delivered electronically was first available for transmission
by the seller, or from which the service was provided. For purposes of this paragraph, the seller
must disregard any location that merely provided the digital transfer of the product sold.
(g) For purposes of this subdivision, the terms "receive" and "receipt" mean taking possession
of tangible personal property, making first use of services, or taking possession or making first use
of digital goods or the computer software delivered electronically, whichever occurs first. The
terms receive and receipt do not include possession by a carrier for hire on behalf of the purchaser.
    Subd. 3. Lease or rental of tangible personal property. The lease or rental of tangible
personal property, other than property identified in subdivision 4 or 5, shall be sourced as required
in paragraphs (a) to (c).
(a) For a lease or rental that requires recurring periodic payments, the first periodic payment
is sourced the same as a retail sale in accordance with the provisions of subdivision 2. Periodic
payments made subsequent to the first payment are sourced to the primary property location for
each period covered by the payment. The primary property location must be as indicated by an
address for the property provided by the lessee that is available to the lessor from its records
maintained in the ordinary course of business, when use of this address does not constitute bad
faith. The property location must not be altered by intermittent use at different locations, such as
use of business property that accompanies employees on business trips and service calls.
(b) For a lease or rental that does not require recurring periodic payments, the payment is
sourced the same as a retail sale in accordance with the provisions of subdivision 2.
(c) This subdivision does not affect the imposition or computation of sales or use tax on leases
or rentals based on a lump sum or accelerated basis, or on the acquisition of property for lease.
    Subd. 4. Lease or rental of motor vehicles, trailers, semitrailers, or aircraft that do not
qualify as transportation equipment. The lease or rental of motor vehicles, trailers, semitrailers,
or aircraft that do not qualify as transportation equipment, as defined in subdivision 5, shall be
sourced as required in paragraphs (a) to (c).
(a) For a lease or rental that requires recurring periodic payments, each periodic payment is
sourced to the primary property location. The primary property location must be as indicated by
an address for the property provided by the lessee that is available to the lessor from its records
maintained in the ordinary course of business, when use of this address does not constitute bad
faith. This location must not be altered by intermittent use at different locations.
(b) For a lease or rental that does not require recurring periodic payments, the payment is
sourced the same as a retail sale in accordance with the provisions of subdivision 2.
(c) This subdivision does not affect the imposition or computation of sales or use tax on leases
or rentals based on a lump sum or accelerated basis, or on the acquisition of property for lease.
    Subd. 5. Transportation equipment. (a) The retail sale, including lease or rental, of
transportation equipment shall be sourced the same as a retail sale in accordance with the
provisions of subdivision 2, notwithstanding the exclusion of lease or rental in subdivision 2.
(b) "Transportation equipment" means any of the following:
(1) locomotives and railcars that are utilized for the carriage of persons or property in
interstate commerce;
(2) trucks and truck-tractors with a gross vehicle weight rating (GVWR) of 10,001 pounds or
greater, trailers, semitrailers, or passenger buses that are:
(i) registered through the international registration plan; and
(ii) operated under authority of a carrier authorized and certified by the United States
Department of Transportation or another federal authority to engage in the carriage of persons
or property in interstate commerce;
(3) aircraft that are operated by air carriers authorized and certificated by the United States
Department of Transportation or another federal or a foreign authority to engage in the carriage of
persons or property in interstate commerce; or
(4) containers designed for use on and component parts attached or secured on the
transportation equipment described in items (1) through (3).
    Subd. 6. Multiple points of use. (a) Notwithstanding the provisions of subdivisions 2 to 5, a
business purchaser that is not a holder of a direct pay permit that knows at the time of its purchase
of a digital good, computer software delivered electronically, or a service that the digital good,
computer software delivered electronically, or service will be concurrently available for use in
more than one jurisdiction shall deliver to the seller in conjunction with its purchase a multiple
points of use exemption certificate disclosing this fact.
(b) Upon receipt of the multiple points of use exemption certificate, the seller is relieved of
the obligation to collect, pay, or remit the applicable tax and the purchaser is obligated to collect,
pay, or remit the applicable tax on a direct pay basis.
(c) A purchaser delivering the multiple points of use exemption certificate may use any
reasonable, but consistent and uniform, method of apportionment that is supported by the
purchaser's business records as they exist at the time of the consummation of the sale.
(d) The multiple points of use exemption certificate remains in effect for all future sales
by the seller to the purchaser until it is revoked in writing, except as to the subsequent sale's
specific apportionment that is governed by the principle of paragraph (c) and the facts existing at
the time of the sale.
(e) A holder of a direct pay permit is not required to deliver a multiple points or use
exemption certificate to the seller. A direct pay permit holder shall follow the provisions of
paragraph (c) in apportioning the tax due on a digital good, computer software delivered
electronically, or a service that will be concurrently available for use in more than one jurisdiction.
    Subd. 7. Direct mail. (a) Notwithstanding other subdivisions of this section, a purchaser of
direct mail that is not a holder of a direct pay permit shall provide to the seller, in conjunction
with the purchase, either a direct mail form or information to show the jurisdictions to which the
direct mail is delivered to recipients.
(1) Upon receipt of the direct mail form, the seller is relieved of all obligations to collect,
pay, or remit the applicable tax and the purchaser is obligated to pay or remit the applicable tax on
a direct pay basis. A direct mail form remains in effect for all future sales of direct mail by the
seller to the purchaser until it is revoked in writing.
(2) Upon receipt of information from the purchaser showing the jurisdictions to which the
direct mail is delivered to recipients, the seller shall collect the tax according to the delivery
information provided by the purchaser. In the absence of bad faith, the seller is relieved of any
further obligation to collect tax on any transaction for which the seller has collected tax pursuant
to the delivery information provided by the purchaser.
(b) If the purchaser of direct mail does not have a direct pay permit and does not provide the
seller with either a direct mail form or delivery information, as required by paragraph (a), the
seller shall collect the tax according to subdivision 2, paragraph (f). Nothing in this paragraph
limits a purchaser's obligation for sales or use tax to any state to which the direct mail is delivered.
(c) If a purchaser of direct mail provides the seller with documentation of direct pay authority,
the purchaser is not required to provide a direct mail form or delivery information to the seller.
History: 1Sp2001 c 5 art 12 s 35; 2002 c 379 art 1 s 68; 2003 c 127 art 1 s 19; 2004 c 228
art 1 s 49; 2005 c 151 art 7 s 9,10; 2006 c 259 art 6 s 9