Sales Tax FAQs for Remote Sellers

On June 21, 2018, the U.S. Supreme Court ruled in South Dakota v. Wayfair that sellers can be required to collect sales taxes in states where the sellers do not have physical presence, overruling the 1992 case of Quill v. North Dakota. 

We are updating Fact Sheets, Industry Guides, and Revenue Notices based on the court’s decision and will post them on our website soon. Subscribe to Sales and Use Tax Updates and check back on our website for more information.

Minnesota law requires remote sellers to collect Minnesota Sales and Use Tax on their sales into the state. See Minnesota Statute 297A.66, subdivision 2(a).

Generally, a remote seller is a business that sells its products to customers in a state, using the Internet, mail order, or telephone, without having a physical presence in that state.

Remote sellers that were registered in Minnesota before the U.S. Supreme Court's decision in South Dakota v. Wayfair on June 21, 2018, are not impacted by this decision. You need to continue to collect and remit sales and use tax.

Remote sellers that were not already registered in Minnesota before June 21, 2018 must register. You must collect and remit sales tax in Minnesota unless you meet the Small Seller Exception (see below).

Starting October 1, 2019, Minnesota’s Small Seller Exception will require  remote sellers to collect and remit sales tax if their total sales over the prior 12-month period total either:

• 200 or more retail sales shipped to Minnesota
• $100,000 or more in retail sales shipped to Minnesota

A retail sale is one sales transaction. For example, one sale into Minnesota may contain 10 items for one customer. That transaction counts as one retail sale.

Note: When calculating this exception, do not include sales where the purchaser is buying for resale. The purchaser must give you a completed Form ST3, Certificate of Exemption claiming a resale exemption.

You must register, collect, and remit Minnesota sales tax on the first taxable retail sale into Minnesota that occurs no later than 60 days after you exceed the Small Seller Exception. You will also have a sales tax return filing obligation. See “How often will I need to file a return?” (below).

Note: If you know that you will be making sales into Minnesota, you may choose to collect and remit Minnesota sales tax at any time.

If you were not already registered in Minnesota before the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc., the earliest month you need to include to calculate the Small Seller Exception is August 2017.

Begin by reviewing your retail sales from August 2017 through July 2018 (12 months). If you exceed the Small Seller Exception, you must register, collect, and remit Minnesota sales tax on the first taxable retail sale into Minnesota that occurs no later than October 2018 (60 days after you exceed the Small Seller Exception).

If you do not exceed the Small Seller Exception, repeat the review for the next 12-month period: September 2017 through August 2018.

Minnesota law defines “retail sale” to mean any sale of tangible personal property (goods or products) or taxable services, excluding those purchased for resale.

No, you do not need to collect sales tax on the sales made prior to exceeding the Small Seller Exception plus the 60-day period within which you must register to begin collecting and remitting sales tax on sales made into Minnesota. Your customers may owe use tax on these transactions.

Under Minnesota law, your filing frequency depends on your average total tax liability for a year.

If you only make taxable sales into Minnesota through a marketplace, the marketplace is responsible for collecting and remitting Minnesota sales tax on your behalf unless you do both of the following:

• Provide a copy of your Minnesota registration to collect sales and use tax to the marketplace provider
• Enter into an agreement with the  marketplace provider that you will collect and remit sales and use taxes on the sales you make through the marketplace.

Otherwise, you do not need to register and collect Minnesota sales tax.

Determine your total retail sales made into Minnesota. Include those made through any marketplace, your own website, and through other sources.

If all your combined retail sales into Minnesota meet or exceed the Small Seller Exception, you must collect and remit Minnesota sales tax.

You are responsible for collecting and remitting sales tax on taxable sales made through your website and other sources.

When the marketplace is not required to collect Minnesota sales tax on your behalf, you must also collect and remit Minnesota sales tax on those taxable sales.

Each state’s remote seller laws are different. To determine which laws apply to your business, go to the Streamlined Sales Tax - State Website and Contact Information for collection requirements in all 24 Streamlined Sales Tax states.

If the state is not a member of Streamlined Sales Tax, we recommend you contact that state. For more information, see “What are the benefits of the Streamlined Sales Tax for my business?” (below)

Minnesota purchasers may see an increased number of remote sellers charging sales tax.

If a remote seller does not charge sales tax on a taxable item in Minnesota, the purchaser must report use tax on the purchase price. An individual may report the use tax on the Individual Use Tax Return, Form UT1.

Minnesota taxes most sales of tangible personal property (goods) and some services. For a listing of taxable items and services, download the Minnesota taxability matrix.

For more information on specific topics, see the Fact Sheets and Industry Guides page.

No. Sales tax laws vary from state to state. If you have questions on what items are taxable in other states, contact that state directly.

Streamlined Sales Tax states have uniform product definitions, but may tax those products differently. For more information, see Taxability Matrices on the Streamlined Sales Tax website.

Streamlined Sales Tax benefits to your business include:

You can use a Certified Service Provider (CSP) to calculate, collect, remit, and file sales tax returns in all member states. For more information, see “What is a Certified Service Provider?” (below)

You can register at one time for all full member and associate states through the Streamlined Sales Tax Registration System (SSTRS)

Member states have uniform product definitions for consistency for businesses that sell in multiple states.

The following states are Streamlined Sales Tax members:

The SSTRS is a quick and easy way to register for a sales and use tax account in all Streamlined Sales Tax member states.

When you register through the SSTRS, you receive sales tax accounts to collect and remit sales and use tax in all Streamlined Sales Tax full member states. You may also choose to register in any associate member states. Once you are registered, you must collect and remit sales and use taxes in those states.

You need to register for each non-member individually. For more information, contact each non-member state directly.

If you use a Certified Service Provider (CSP), they may register you for non-member states. For more information, see “What is a Certified Service Provider?” (below)

You must file returns and make payments directly to the state where taxes are due. You will not file returns or make payments directly to Streamlined Sales Tax.

Each state will send you registration information and filing instructions.

For filing frequency information, see How often do I need to file Sales and Use Tax?

Note: If you use a Certified Service Provider (CSP), they will file monthly returns and remit taxes to each state for you. If you have questions on filing or paying the taxes, contact your CSP.

A CSP can file sales and use tax returns and remit sales taxes for you. Your business is responsible to pay use tax on its own purchases. Any business may contract with a CSP.

CSP benefits

• The CSP software works with your accounting system to identify which products and services are taxable, apply the appropriate tax rate, and record the transaction.
• The CSP sets up their software with your system, prepares and files returns, and remits tax to each member state.
• The CSP resolves any notices or audits by member states.
• Streamlined Sales Tax member states certify the accuracy of the CSP software and provide liability relief for incorrect tax calculation based on the certification.
• Free monthly return processing in states where you are a remote seller. If you have nexus in member states, a small fee may apply to file those returns.

Certified CSPs

• Avalara
• Sovos
• Exactor (Intuit)
• Tax Cloud
• AccurateTax
• Taxify by Sovos
• Taxometry

Note: Some CSPs also provide services in non-Streamlined states. Check their websites for more information.

Minnesota’s general sales tax rate is 6.875%. Local taxes may also apply. Local taxes apply to the same taxable items and services as the Minnesota general sales tax rate.

All sellers, regardless of the seller’s location, are required to collect local sales and use taxes based on where their customer receives the taxable product or service.

Local taxes you need to collect will depend on where your customer receives your product or service and if that location has a local tax. For details and to see the tools we provide to determine your total tax rate, see Local Tax Information.

If you use a, CSP, they use state data to calculate the tax rate on your sales, including most local taxes.

Where applicable, a seller is also required to collect and remit special local taxes. Examples include:

• Car rental     
• Entertainment      
• Food and beverage     
• Liquor      
• Lodging   
• Solid waste management

For details, see Local Tax Information.

For instructions, see Add Local Tax and Other Taxes to a Sales and Use Tax Return.

How do I register to collect Minnesota sales tax?

​You have several options to register depending on where you make sales.

Minnesota Only

You can register:

• Online – Go to Business Registration
• By phone – Call 651-282-5225 or 1-800-657-3605 (toll-free)

Multiple States

The easiest way to register for multiple states is through the Streamlined Sales Tax Registration System.

For more information, see “What are the benefits of the Streamlined Sales Tax for my business?” (above)

Is there a fee to register?

No. Minnesota and the Streamlined Sales Tax Registration System do not charge fees to register.

No. Remote Sellers do not have to register with the Secretary of State to make taxable retail sales into Minnesota. But if you exceed the Small Seller Exemption, you must register with the Minnesota Department of Revenue to collect and remit Minnesota sales tax.

No. Once you receive a Minnesota Tax ID Number it remains active until you request for it to be cancelled or the Minnesota Department of Revenue revokes the sales tax permit for noncompliance. 

Remote sellers are subject to audits like any other business. For remote sellers using a CSP, the department works with the CSP for the audit. The department has no direct contact with the remote seller.