State Sales Tax Nexus and General Overview

Need to Understand a State's Sales Tax Situation? Here it is...

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Minnesota (MN)

MN Sales Tax - Name of Tax and General Application:

Minnesota imposes a tax on sales at the retail level of tangible personal property and on supplies of certain services in the state. This tax is known as a "sales tax". There is also a tax imposed on the use, consumption, distribution or storage of tangible personal property in the state and does not apply where sales tax has already been paid. This tax is known as a "use tax".

MN Nexus - General Requirements:

The word "nexus" means a link or connection. If you are determined to have nexus to a U.S. state then you are subject to that state's sales and use tax rules and must collect and remit sales tax to the state. This is known as a "filing obligation."

Each state has a different definition of nexus. However, if the answer to any of the following questions is yes, it is likely that a company has nexus as legally defined in most U.S. States.

Does the company own property in the state? Does the company have employees living in the state? Does the company regularly send employees in the state to perform services? Does the company have an agent acting on behalf of the company in the state?

In Minnesota, out-of-state retailers are required to collect tax when they maintain a place of business in the state either directly or through agents or other representation, or they regularly solicit sales from customers in the state by catalogs, advertisements, billboards, publications, radio, etc.

Nexus exists if an out-of-state company conducts business activities in Minnesota for at least four days during a 12-month period. The company must begin tax collection of the fourth date, and continue for at least the next eleven months. For companies in the state for trade shows, attendance is considered conducting business; however, days spent putting up and taking down displays at such trade show is not counted. Minn. Rev. Notice 00-10 (Nov. 6, 2000) also provides a number of examples where nexus is created.

MN Local Tax - Do Localities Impose Tax?

Yes, Minnesota imposes local sales tax.

MN Resale Certificate Renewal Agreements:

Minnesota does not issue resale certificates as purchases for resale are not considered taxable sales, however, the purchaser must indicate on the purchase order "for resale at retail" and include their sales tax license number. In order to qualify for the a sale for resale exemption the purchaser must provide a certificate of exemption.

MN Resale Certificate Renewal Periods

There are no resale certificates in Minnesota. Exemption certificates are valid indefinitely but should be updated as needed so as to reflect accurate information.

MN Statute of Limitations

The later of three and a half years from the date the return was due or from the date the return was filed. If taxes are under-reported by more than 25%, later of six and a half years.