Lawful Gambling Combined Net Receipts Tax
Minnesota’s Combined Net Receipts Tax is a progressive tax that starts July 1 and runs through June 30. The tax is based on the combined net receipts (gross receipts minus prizes) from linked bingo, tipboards, paper and electronic pull-tabs, as well as interest and other income.
The four-tier tax rates are:
- 9 percent on the first $87,500 in net receipts
- 18 percent on net receipts over $87,500 and less than $122,500
- 27 percent on net receipts over $122,500 and less than $157,500
- 36 percent on net receipts over $157,500
Organizations use Worksheet E, Lawful Gambling Combined Net Receipts Tax, to help calculate their monthly liability. The organization adds the net receipts for the year (July through June) and then applies the correct rate based on the Worksheet E tax table. When calculating the tax liability, the organization subtracts tax paid in the prior month from the current month’s liability so it is not double taxed from tier to tier. Some organizations will fall into different brackets over the course of the year. The receipts reset to zero again July of each year.
In July 2019, the organization had $5,000 in combined net receipts. Using the tax table on Worksheet E, the organization calculated tax of $450 (based on the 9 percent rate).
The following month, the organization had an additional $10,000 in combined net receipts, totaling $15,000 for the year (July through June). Using the tax table on Worksheet E it would appear that the organization would owe $1,350 (based on the 9 percent rate). However, the organization must first subtract the prior month’s tax liability to determine the tax liability for August. In this case, $1,350 minus $450 equals $900. The organization would be required to pay $900 in tax for the month of August.