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Last Updated: 12/21/2017

Marketplace Providers and Online Retailers

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Sales and Use Tax

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Businesses that use a marketplace providers’ fulfillment center within Minnesota may have established a physical presence in this state. When a physical presence is established, the business is currently required to be registered to collect and remit sales tax.

If a business that has established nexus is not registered, they may qualify for the Minnesota Voluntary Disclosure Program.

What is a marketplace provider?

“Marketplace provider" means any person, other than the seller, who facilitates a retail sale by:

  • listing or advertising the seller’s products; and
  • processes the payments from the customer, either directly or indirectly through a third party, regardless of whether the marketplace provider receives compensation or other consideration in exchange for its services.

Am I currently required to collect and remit Minnesota sales tax?

Businesses located in Minnesota

Businesses located in Minnesota are already responsible for collecting and remitting the proper Minnesota sales taxes. This is true even when the business is making sales via an online marketplace.

Businesses not located in Minnesota but using a marketplace provider

If the business uses a marketplace provider who has a physical presence in Minnesota and the businesses’ inventory is located in Minnesota, it is currently responsible for collecting and remitting the proper Minnesota sales taxes.

Businesses not located in Minnesota but may have nexus in Minnesota

A business that has nexus in Minnesota must register, collect, and remit sales tax to the Minnesota Department of Revenue. You may have nexus in Minnesota if:

  • You have inventory in Minnesota,
  • You deliver products in your own vehicles, or
  • You own property or have agents in Minnesota

If you are unsure whether or not you have nexus, complete Form ST101, Business Activity Questionnaire.

Also, refer to Revenue Notice 00-10, Sales & Use Tax - Nexus Standards.

2017 Law Change

The 2017 Minnesota Legislature passed a law imposing sales and use tax collection obligations on marketplace providers. It requires an out-of-state retailer or their marketplace provider to collect and remit tax when the marketplace provider has a physical presence in Minnesota, unless sellers on the marketplace site are already collecting the tax. Minnesota Statute 297A.66

When will this take effect?

The law is effective the earliest of the following:

  • July 1, 2019,
  • The United States Supreme Court modifying its decision in Quill Corp. v. North Dakota, or
  • Any federal law that authorizes states to require out of state vendors to collect and report sales tax.

What Online Marketplaces are affected?

Only the online marketplace providers which maintain a place of business within Minnesota are affected.

Marketplace providers who meet all of the criteria below are affected by this law change:

  • Maintain a place of business in Minnesota,

  • List or advertise taxable sales in any forum, and

  • Either directly or indirectly handle the payment from the customer to the vendor.

How will the 2017 law change impact businesses that use these marketplaces?

Under the 2017 law change, online marketplace providers will be required to collect and remit Minnesota sales tax on all taxable transactions. Unless:

  • The business that uses the marketplace to make taxable sales within Minnesota of less than $10,000 in the 12-month period ending on the most recently completed calendar quarter.

  • The business that uses the marketplace elects to register and collect Minnesota sales tax directly. Note: If the Marketplace collects the sales tax, then the $10,000 in 12 month period exclusion does not apply, and sales tax is due on all taxable transactions.

  • The Marketplace does not maintain a place of business within Minnesota.

Other Resources

Sales and Use Tax File and Pay Frequently Asked Questions

Registration Requirements for Sales and Use Tax