2019 Sales Tax Law Changes

The following construction exemptions were added:

• Dakota County Safety & Mental Health Alternative Response Training (SMART) Center
• Inver Grove Heights fire station
• Mendota Heights fire station
• Minneota school building
• Minnetonka fire and police station
• Monticello fire station

Starting July 1, 2019, sales made by a county agricultural society on the fairgrounds during its regularly scheduled county fair are exempt from sales tax. Sales made before or after the county fair are not exempt.

Expands the existing sales tax exemption at the Duluth Heritage Center to include the owner or operator of the ice arena or rinks at the David M. Thaler Sports Center in Mound.

Starting July 1, 2019, herbicides used under an invasive aquatic plant management permit are exempt from sales tax. The exemption only applies to herbicides labeled for use in water and registered with the Minnesota Department of Agriculture for use on invasive aquatic plants.

To qualify for exemption, the herbicides must be purchased by lakeshore property owners, a lakeshore property association, or a contractor hired to provide invasive aquatic plant management. Use Form ST3, Certificate of Exemption to claim the exemption.

Tickets or admissions to performances or events held by a nonprofit agricultural heritage organization are exempt from sales tax.

Performances or events must meet all of the following requirements to qualify for the exemption:

• Be organized on at least 115 acres
• Educate the public about rural history and farms in Minnesota
• Be sponsored and conducted exclusively by volunteers, employees, and board members
• Be consistent with the nonprofit’s tax-exempt purpose

The June 2020 and 2021 accelerated payments will be 87.5% for taxpayers that have a Sales and Use Tax liability that exceeds $250,000 in the state's prior fiscal year (July 1 to June 30). The June 2022 accelerated payment percentage will reduce to 84.5%.

Starting October 1, 2019, the existing marketplace law will change.

Marketplace providers and remote sellers that solicit sales in Minnesota, but do not maintain a physical place of business in Minnesota, must register, collect, and remit Minnesota sales tax no later than 60 days after they either make or facilitate:

• 200 or more retail sales into Minnesota during the last 12-month period
• Retail sales totaling more than $100,000 into Minnesota during the last 12-month period

The marketplace provider must collect sales tax on sales they facilitate unless the marketplace provider and seller agree that the seller will collect the sales tax. The seller is required to give the marketplace provider a copy of its registration to collect sales tax in Minnesota.

Marketplace providers are subject to audit on sales they are required to collect and remit sales tax. However, they are not liable for failing to file, collect, and remit sales tax if the error is due to the remote seller providing incorrect or insufficient information.

The Minnesota Legislature updated the provisions for a political subdivision to impose a local sales tax.

The following provisions were added:

• The political subdivision must provide:
  • A resolution detailing a maximum of five specific projects to be funded and the costs
  • Documentation showing a clear regional benefit to individuals and businesses outside the city taxing jurisdiction
• The Minnesota Legislature must approve the local tax before the political subdivision can seek voter approval at a general election
• When a local tax ends, the Minnesota Department of Revenue may retain and transfer a portion of any excess revenues to the state’s general fund
• Political subdivisions are prohibited from imposing a motor vehicle excise tax in future sales tax legislation

Starting October 1, 2019, the Minneapolis combined city tax rate that may be imposed on lodging establishments of 50 or more rooms cannot exceed 6.5%. This does not include the Hennepin County taxes.

This change eliminates reductions in the lodging tax that were caused by increases in county and state tax rates.

The city of St. Paul is approved to increase their local lodging tax to 7% for lodging establishments with 50 or more rooms.