Use Tax Requirement for Tobacco Delivery Sellers

Out-of-state tobacco delivery sellers without physical presence in Minnesota must collect and pay use tax owed on their delivery sales to consumers in Minnesota if they meet one of these Wayfair thresholds over the last 12 months:

• 200 or more delivery sales of tobacco products from outside Minnesota to destinations in Minnesota 
• Delivery sales of tobacco products totaling more than $100,000 from outside Minnesota to destinations in Minnesota

Note: Delivery sellers without physical presence in Minnesota that make delivery sales in Minnesota must still register with the department and file PACT Act reports regardless of whether they meet a Wayfair threshold.

If you meet one of the Wayfair thresholds, you must start collecting and paying the appropriate use tax on the first day of a calendar month no later than 60 days after reaching the threshold.

You must continue to collect and pay the tax for at least 12 months, even if you have no activity to report for the month.

After collecting and paying for 12 months, if you no longer meet any thresholds based on your last 12 months of delivery sales, you must notify us that you no longer need to pay the tax.

If you meet one of the thresholds again, you must collect and pay the use tax for at least another 12 months.

Note: You are required to give a receipt to the purchaser showing tax has been paid.  

The Wayfair thresholds for tobacco products and sales tax are the same. If you owe use tax on any tobacco products, you also owe sales tax. For more information, go to the Sales Tax Remote Sellers webpage.

If you are an out-of-state tobacco delivery seller making delivery sales of PACT Act products into Minnesota, you must comply with federal guidelines and submit your monthly PACT Act delivery sales report regardless of how many delivery sales you make to Minnesota consumers. For more information about PACT Act requirements, go to our PACT Act webpage.

Example One

You are a tobacco delivery seller with no physical presence in Minnesota. You have been making delivery sales of premium cigars into Minnesota, but before December 2021, you did not meet either of the Wayfair thresholds.

In January 2022, you do your monthly look back of 12 months from January 2021 through December 2021, and find that on December 31, 2021, you made your 200th delivery sale of premium cigars to Minnesota consumers. Your total sales amount from January 2021 through December 2021 is $22,000.

Because the number of delivery sales into Minnesota in the past 12 months is 200 or more, you must begin collecting and remitting the premium cigar use tax by the first day of the calendar month occurring no later than 60 days after December 31, 2021.

This means you must begin collecting tax by March 1, 2022. Tax collected in March 2022 is due April 18, 2022. 

You must continue to collect and remit tax for at least 12 months from when you began collecting and remitting tax. 

Example Two

You are a tobacco delivery seller with no physical presence in Minnesota. On October 1, 2021, you started making delivery sales of premium cigars and pipe tobacco products into Minnesota.

In February 2022, you do your monthly look back of 12 months and find that on January 15, 2022, you made your 110th delivery sale of premium cigars and your 90th delivery sale of pipe tobacco products. Your total delivery sales into Minnesota is 200. The total sales amount for these delivery sales is $4,000.

Because your total delivery sales to Minnesota consumers is 200 or more, you must begin collecting and remitting premium cigar use tax and tobacco products use tax by the first day of the calendar month occurring no later than 60 days after January 15, 2022.

This means you must begin collecting tax by March 1, 2022. Tax collected in March 2022 is due April 18, 2022.

You must continue to collect and remit tax for at least 12 months from when you began collecting and remitting tax.
 

You are a tobacco delivery seller with no physical presence in Minnesota. In July 2021, you started making delivery sales of nicotine solution products (commonly referred to as vapor products) into Minnesota.

In March 2022, you do your monthly look back of 12 months and find that on February 25, 2022, you made your 190th delivery sale of nicotine solution products to Minnesota consumers, which puts your Minnesota delivery sales total over $100,000.

Because your delivery sales to Minnesota consumers exceeds $100,000, you must begin collecting and remitting tobacco products use tax by the first day of the calendar month occurring no later than 60 days after February 25, 2022.

This means you must begin collecting tax by April 1, 2022. Tax collected in April 2022 is due May 18, 2022.

You must continue to collect and remit tax for at least 12 months from when you began collecting and remitting tax.

You are a tobacco delivery seller with no physical presence in Minnesota. You make delivery sales of premium cigars and nicotine solution products (commonly referred to as vapor products) into Minnesota, but before December 2021, you did not meet either of the Wayfair thresholds.

In January 2022, you do your monthly look back of 12 months and find that from January 2021 through December 2021, you made 110 delivery sales of premium cigars and 35 delivery sales of nicotine solution products to Minnesota consumers, for a total of $95,000 in sales.

Because both the total number of delivery sales and total sales amount fall below Wayfair thresholds, you are not required to begin collecting and remitting premium cigar use tax or tobacco products use tax.

However, the consumers that purchased these premium cigars and nicotine solution products must pay the applicable premium cigar use tax and tobacco products use tax unless they are exempt or excluded from tax.

Before you begin making delivery sales to Minnesota consumers and regardless of how many delivery sales you make to Minnesota consumers, you must register with the department using Form CT103, Retailer Registration for Delivery Sales of Cigarette and Tobacco into Minnesota.

You can file and pay:

• Electronically through our e-Services system
• On paper using Form CT301, Tobacco Monthly Return, and Schedule CT301-U, Tobacco Use Tax for Businesses
   

You must file your return and pay the use tax by the 18th of every month for the previous month’s delivery sales. For example, the January 2022 return and payment are due February 18, 2022. 

The excise use tax owed by tobacco delivery sellers is based on the cost to the consumer, which is the price for which the tobacco products are sold to the consumer.

The price for which the tobacco product is sold is the total amount paid by the consumer for a tobacco product, including, but not limited to, delivery charges and any packaging costs. It does not include any other taxes owed by the consumer that are separately stated on the invoice, such as sales tax.

Typically, a delivery sale is the sale of a tobacco product to a Minnesota consumer where either:

• The consumer places the order over the internet, phone, mail, or any other delivery service
• The tobacco products are delivered to the consumer through the mail or other delivery service

A delivery sale is one sales transaction. For example, one delivery sale to a Minnesota consumer may contain 10 items for one customer. That transaction counts as one delivery sale. 

Note: A sale of tobacco products to an individual in Minnesota must be treated as a sale to a consumer unless the individual is licensed as a distributor or retailer of tobacco products.

A retailer that makes a delivery sale of tobacco products.